Report No. 70
Mortgagor's Enjoyment of Property
Sections 65A and 66
The creation of a mortgage does not necessarily transfer the possession and enjoyment of the property to the mortgagee. The mortgagee's interest in the property-a limited one in every case-does not extend to interference with the normal enjoyment by the mortgagor. This proposition has two aspects-positive and negative-given expression in sections 65A and 66, respectively.
65.2. Section 65A-Mortgagor's power to lease.-
The mortgagor's power to lease is governed by section 65A, quoted below:
"65A. (1) Subject to the provisions of sub-section (2), a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make lease thereof which shall be binding on the mortgagee.
(2) (a) Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage.
(b) Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance.
(c) No such lease shall contain a covenant for renewal.
(d) Every such lease shall take effect from a date not later than six months from the date on which it is made.
(e) In the case of a lease of buildings, whether leased with or without the land on which they stand, the duration of the lease shall in no case exceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid within a time therein specified.
(3) The provisions of sub-section (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed; and the provisions of subsection (2) may be varied or extended by the mortgage-deed and, as so varied and extended, shall as far as may be operate in like manner and with all like incidents, effects and consequences, as if such variations or extensions were "contained in that sub-section."
The section needs no change.
65.3. Section 66-Waste by the mortgagor.-
While the mortgagor remains in possession, he must not overlook the fact that his rights are limited by the security given to the mortgagee. His enjoyment of the property is, accordingly, subject to the following rule enacted in section 66:
"66. A mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but he must not commit any act which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act.
Explanation.-A security is insufficient within the meaning of this section unless the value of the mortgaged property exceeds by one-third or, if consisting of buildings, exceeds by one-half, the amount for the time being due on the mortgage."
65.4. No change.- No change appears to be needed in the section.