The mortgagee has the following rights, after the mortgage debt has become due:
(1) to file a suit for foreclosure or sale of the mortgage property (sec.67). A suit to obtain a decree that the mortgagor shall be absolutely debarred of his right to redeem the mortgage property, is called as “suit for foreclosure”. Notice however that a simple mortgagee cannot foreclose. His right is to sue for sale. Limitation for a suit for sale is 12 years from the time the mortgage money becomes due(art. 132).A usufrucuary mortgage cannot sue either for sale or for foreclosure. This is because it is on those terms that the mortgage is created. He can only remain in the possession till the mortgage money is paid off.
A mortgagee by conditional sale can only sue for foreclosure. This is because the property is already sold to him under the mortgagee. Only the other hand an English mortgagee can only sue for sale. He cannot foreclose. The remedy of an equitable mortgagee also is a suit for sale, as provided by sec. 67. Notice that the mortgagee of a railway, canal or other public work is prohibited by the sec. from suing for sales as well as foreclosure. Notice further that the mortgage security being one and indivisible, there can be no partial foreclosure for sale [sec.67, cl. (d)].
Thus one of several mortgagees cannot sue for foreclosure sale in respect of his fractional share of the mortgage security, This is allowed only where the mortgagees have severed their interests under the mortgage with the consent of the mortgagor. Similarly where the mortgagee holds different mortgages of different properties for the same mortgagor or successive mortgages on the same property of the mortgagor, he is bound in law, to enforce in one suit, all his mortgages against the same mortgagor and not spilt up his mortgages into different suits, unless the contract otherwise provides (sec.67A). In other words, “consolidation” is compulsory against the mortgagee, though it is not compulsory in case of the mortgagor (see sec.60).
(2) A mortgagee may also sue for the mortgage money. This right is available to him only if (i)the mortgage deed contains a covenant to repay;(ii)where, without any fault of the mortgagor or the mortgagee, the mortgaged property is wholly or partially destroyed and the mortgagee to do so; (iii)where the mortgagee is deprived partly or wholly of his security by the wrongful act or default of the mortgagor; iv) where the mortgagee being entitled to possession of the mortgaged property, the mortgagor fails to secure the same to the mortgagee (sec.6). in cases(i) and (ii), the Court may stay the suit and require the mortgagee to enforce his claim first, against the mortgage security. As transferee from the mortgagor, or his legal representatives, cannot also be sued only the personal covenant (ibid).
(3) The mortgagee has also a right to sell the mortgaged property without the intervention of the Court. The power is exercisable only (a) where the mortgage is an English mortgage and none of the parties is a Hindu, Mahomedan or Buddhist, or any of the notified classes, or (b) where the mortgagee is the Crown and such power is expressly given by the mortgage deed, or (c) where the mortgaged property is situate in any of the Presidency Towns and such power is expressly given by the mortgage. The power , however, cannot be exercised, unless (a) written notice for payment of the principal amount is served on the mortgagor and a default has occurred for 3 months or (b) unless interest , not less than Rs. 500, is unpaid for 3 months after it is due (sec.69).
(4) The mortgagee can also appoint a receiver of the income of the mortgaged property (under sec. 69A), in cases where he has power of sale under sec. 69. If a person is named in the mortgage deed, he can be appointed such receiver. If no such person is mentioned, the mortgagee may appoint as receiver a person agreed to by the mortgagor. Failing such agreement, the mortgagee must apply to the Court to make a suitable appointment.
Such receiver is regarded as the agent of the mortgagor. He is entitled to recover the income of the mortgaged property, to give valid receipts and file suits for making such recoveries. Out of moneys so recovered, he is bound to discharge all rates, taxes etc. accruing due with regard to the mortgaged property, all annual sums, which have priority over the mortgage in question, premiums due or payable under the mortgage or under the Act and costs of such repairs as are desired by the mortgagee in writing. The balance must be used in payment of the interest due and the principal.
(5) The mortgagee is also entitled to the benefit of any accession to the mortgaged property, while the mortgage continues (sec.70), e.g. digging a well or setting up an electric installation on the mortgaged property by the mortgagor. It does not matter whether the mortgagee is in possession or not.
(6) If the mortgagor obtains as renewal of a lease, the mortgagee is similarly entitled to the benefit thereof during the continuance of the mortgage (sec.71).
(7) If the mortgaged property is sold for arrears of land revenue or is acquired under the land acquisition Act or otherwise, the mortgagee is entitled to claim payment of the mortgage amount or part thereof, out of the proceeds of such sale or acquisition (sec.73).
Rights of mortgagee in possession (sec.72): A mortgagee in possession is entitled, out of recoveries made by him, to spend money for the following:(a) for the preservation of the mortgaged property from forfeiture, destruction or sale;(b) for supporting the mortgagor’s title to the property;(c) for making his own title good against the mortgagor; (d) for renewal of lease, if the mortgage is of leasehold. Sums spent as above may be added to the principal sum due under the mortgage and shall carry interest at the mortgage rate. (e) The mortgagee can also insure the property, if the mortgagor has not done so, but not for more than two-thirds of its value. Premiums paid under such policy can be added to the principal amount shall carry the same rate of interest.