DRAFTING PROJECT

Mortgage deed
Submitted to lovely professional university
In the proper fulfillment of requirements for the award of the degree of bachelors of Commerce
Course Code: LAW 391
CLASS: BCOM L.L.B.
SECTION: L1603
Roll no.:06
SUBMITTED TO: POOJA AGRAWAT
SUBMITTED BY:
MANIK BANSAL
(11617020)

1|Page
Acknowledgement
Working on the drafting of mortgage deed was a very knowledgeable experience. The
documentation has actually helped me in enrichment my knowledge on the case and the subject.
The topic along with relevant sections and case laws was discussed at deep lengths in the class
which helped me in making this project.
I feel highly privileged to work under the guidance of Man and sincerely acknowledge her
efforts in directly and indirectly contributing of this piece of work.

Thank you Mam!

#Pooja Agrawat

2|Page
Introduction to mortgage
Section 58(a) of the Transfer of Property Act 1882 defines Mortgage as "A mortgage is the
transfer of an interest in specific immovable property for the purpose of securing the payment of
money advanced or to be advanced by way of loan, an existing or future debt, or the performance
of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest
of which payment is secured for the time being are called the mortgage-money, and the
instrument (if any) by which the transfer is affected is called a mortgage-deed.

What is mortgage deed

A mortgage deed can be defined as a document that provide the lender or mortgage with the
absolute legality in terms of right and interest in the property. where a borrower or a mortgagor
pledges his property or a home as a collateral in obtaining a loan, the lenders ownership in the
deal is legalized in the mortgage deed. As according to Section 59 of the Transfer of Property
Act, 1882 it states that under Simple Mortgage the principal money is irrelevant, and the
mortgage deed must be registered duly signed by the mortgagor (The transferor is called a
mortgagor.) and attested by at least two witnesses. For instance, when you purchase a home, you
make payments on a home loan. The mortgage deed is the paperwork you sign that allows the
lender to put a lien on the property until the loan is paid. When people say they make a monthly
mortgage payment, they actually mean they make a monthly loan payment while the mortgage
deed secures the property for the lender.

Situation
Suresh kumar is a sub inspector at Sangrur and wants a loan of sum amount Rs 2500000 for his
family expenses at 8.5% p.a for which he gives his property situated at dawarka as security to the
mortgagee. Suresh kumar wants to make a simple mortgage deed.

3|Page
There are 17 components of deed that are to be dealt while making deed. Following components
are explained:

Name of the Deed/Document:

A deed should start with its name, if possible. For example, “Deed of Conveyance” or “Leave
and License Agreement”. This is merely for convenience. It should be noted that the
nomenclature does not finally decide whether the document is, in fact, as described by the name
and the same would depend on the entire contents of the document.

(Simple Mortgage Deed)

Date and Place:

The insertion of the date of execution plays an important role from various aspects such as
limitation, priority, registration. The place of execution gains importance in the event a dispute
arises, with regards to the jurisdiction of the Court.

(30th June 2019) (Sangrur)

Parties:

There are ordinarily at least two parties to a document, depending upon the nature of the
transaction. It is common practice to mention the name, capacity in which one is executing the
document, age, place of residence etc. for purposes of correct identification. It is important to
note that a document is only binding upon the parties thereto and thus and therefore it is common
practice to have the definition given to a particular party to mean and include “his heirs,
executors and assigns” in case of individuals and “successors and assigns” in the case of a
corporate body. The nomenclature of the parties varies in case of individual, corporate, trust,
partnership firm etc.

Mortgagor (Suresh Kumar son of Babu Rao)

4|Page
Mortgagee (Sheikh singh son of Sukhchain singh)

Recitals:

This is synonymous with the preamble to a document and sets forth a brief history of the facts
and circumstances that have led to the execution of the document. They usually consist of two
types; (i) narrative recitals that trace the title of the property and (ii) introductory recitals that
state the object of executing the document.

(The property is yet with the mortgagor and only the possession has been transferred to the
mortgagee as to which he can sell only by permission of court on non-payment of loan amount.)

(The object is to give the property as security as he is taking loan.)

Testatum:

Recitals are usually followed by the provisions relating to the transfer which usually begin with
the words

“Now This Deed Witnesseth and it is hereby agreed by and between the parties as follows: -This
is known as a testatum.

(The witness names are Gurmeet Kaur w/o Karamjeet Singh and Kiran Singh s/o Sukhpreet
Singh)

Receipt clause:

This is inserted in the event any money is paid before or on execution of the document. It is not
usually required if receipt has been acknowledged in the operative part, however, it is often
inserted out of abundant caution.

(the loan amount taken is 2500000 for which the mortgage has been given)

5|Page
Operative part:

Arguably the heart and soul of your document, the operative part consists of words or
expressions of the nature of transfer intended to be made. It also includes (i) clauses relating to
consideration, (ii) a full description of the property etc. (iii) an “all estate clause” which transfers
all appurtenances to the property intended to be transferred, (iv) a Habendum clause which
defines the estate the purchaser takes such as absolute owner or otherwise; (v) clauses regarding
any exceptions or reservations such as right of way etc., (vi) terms and conditions, (vii)
covenants including for title, possession, further assurances etc.

(As the possession has been given to the mortgagee the rights have been given but with certain
restriction and the unlawful activity as provided under law. For instance the property can’t be
sold without permission, he/she has to take care of the property.)

Description of property

Registration laws in India require full description of property for example Side east, west, north,
south etc. Area, location, permitted use, survey no.

(south-east)

Parcels clauses

This is a technical expression. Usually starts with the words “All Those “Unless a different
intention is expressed or necessarily implied, a transfer of property passes forthwith to the
transferee all the interest which the transferor is then capable of passing in the property, and in
the legal incidents thereof.

(When the mortgagor does not pay the loan amount back then with permission of court the
ownership transfers to mortgagee)

Exceptions and reservations.

6|Page
Deeds may contain exceptions and reservations. They both have in common the fact that each
diminishes the interest a grantee would have otherwise taken under the deed in which they may
appear. An exception in a deed has the purpose of eliminating or excepting out of the grant a part
of the property or thing granted which:

(a) then remains in the grantor; or

(b) was previously granted by the grantor to another; or 
(c) was never owned by the grantor.
A reservation in a deed has the purpose to create a right for the benefit of the grantor in the
property granted which did not exist prior to the reservation as a separate and distinct right.

In a reservation, nothing is withheld or excepted from the grant, but the grantor retains in the
grantor's name a new right to the property which would otherwise pass by the grant.

(The same property can again be mortgaged by way of doctrine of marshalling only when
mortgagee accepts the same condition)

Habendum

Habendum is a part of deed which states the interest, the purchaser is to take in the property. The
habendum clause starts with the words. “THE HAVE AND THE HOLDS”

Covenants and Undertakings : The term "covenant" is defined as an agreement under seal,
which stipulates for the truth of certain facts. In Whasten’s Law Lexicon, a covenant has been
explained as an agreement or consideration or promise by the parties, by deed in writing, signed,
sealed and delivered, by which either of the parties, pledged himself to the other than something
is either done or shall be done for stipulating the truth of ceratin facts.

Covenant clause includes undertakings also. Usually, covenant is stated first. In some instances
the covenants and “undertaking” are mixed, i.e. can not be separated in that case, they are joint

7|Page
together, words put for this as "The Parties aforesaid hereto hereby mutually agree with each
other as follows." Such covenants may be expressed or implied.

Testimonium:

A deed generally ends with a Testimonium clause which is usually worded as “In Witness
whereof the parties hereto have put their hands/signatures on the day and year first hereinabove
written”. Testimonium is the clause in the last part of the deed. Testimonium signifies that the
parties to the document have signed the deed.

(The document is been signed by the witnesses)

Signature clause or execution:

Every document is required to be properly executed by the parties thereto. In certain cases,
failure to properly execute a document could render the document invalid. The correct method of
execution depends upon the nature of the document, the nature of the parties and the relevant
laws relating to attestation by witness thereof, if applicable.

Attestation is necessary in the case of some transfer like mortgage, gift, sale etc. In case where
the mortgagor does not know the language, deed must be explained to him by some competent
person. Registration & Stamp duty is compulsory in case of mortgage value of Rs.100/- and
above.
(It is been attested)

Endorsement & Supplemental deed

Endorsement means to write on the back or on the face of a document where in it is necessary in
relation to the contents of that document or instruments. The term endorsement is used with
reference to negotiable documents like - (a) Cheque (b) Bill of exchange (c) Hundies etc. (d)
Promissory notes. For e.g. - On the back of the cheque to sign one name as payee to obtain cash
is an endorsement on the cheque.

8|Page
Supplemental deed - is a document which is entered into between the parties on the same subject
on which there is a prior/ex documents existing an operative for adding new fact to the document
on which the parties to the document have agreed which otherwise cannot be done by way of
endorsement. Thus supplemental deed is executed to give effect to the new fact in the deed.

Schedule: Often, to ensure that a document flows correctly and is not interrupted by lengthy
descriptions and details, certain portions are referred to in a Schedule, usually appearing at the
end of the document. It may include a complete description of the property to be conveyed, or
rights to be transferred.

(south-east of dawarka village,Sangrur and the house number of property is #222)

9|Page
 SIMPLE MORTAGAGE DEED

The indenture made this simple mortgage deed on the day of 30th June two thousand and nineteen
between Suresh Kumar son of Babu Rao aged about 49 years and residing at B-X 829, patel
Nagar street No.7 College road Sangrur and at present employed as Sub Inspector in the office of
Sangrur Thana at Sangrur (hereinafter called “THE MORTGAGOR” which expression shall
unless excluded by or repugnant to the subject or context include his/her heirs, executors,
administrators, trustees, legal representatives and assigns).

To and in the favor of thiru Sheikh singh son of Sukhchain singh aged about 41 years and
residing at C-VI 895, Model Nagar street No.1, Sangrur and at present employed as a
businessman (hereinafter called “THE MORTGAGEE” which expression shall unless excluded
by or repugnant to the subject or context include his/her heirs, executors, administrators, trustees,
legal representatives and assigns).

WHEREAS the mortgagor is the absolute and sole beneficial owner and is seized and possessed
of or otherwise well and sufficiently entitled to the land and/ or house, hereditaments and
premises and paying taxes and levies thereon, as sole and absolute owner thereof hereinafter
described in the schedule hereunder written and for greater clearness delineated on the plan
annexed hereto and thereon shown with the boundaries thereof coloured white and expressed to
be hereby conveyed, transferred and assured (hereinafter referred to as “scheduled property”).

Whereas Mortgagor being in need of money for the purpose of his family expenses and the
Mortgagor requested the Mortgagee to lend him a sum of Rs. 2500000 (Rupees only) which the
Mortgagee has agreed to lend to the Mortgagor executing these presents with a view to secure
the repayment thereof with interest as herein after provided.

NOW THIS DEED WITNESSETH that pursuant to the said agreement and in consideration of
the sum of Rs.2500000 (Rupees only) lent and advanced by the Mortgagee to the Mortgagor on
the execution of these presents (receipt whereof the Mortgagor hereby admit). He, the Mortgagor
hereby covenants with the Mortgagee that he the Mortgagor will pay to the Mortgagee the sum

10 | P a g e
of Rs. 2500000 (Rupees only) on the day of 30 th June 2019 (herein after referred to as the 'due
date') with interest thereon in the meanwhile and until repayment of the said sum in full, at the
rate of 8.5% P.A on the day of and each subsequent installment on the day of 30 th of each
succeeding month until the said principle sum of Rs. 2500000 (Rupees only) repaid in full, and
the Mortgagor further covenants with the Mortgagee that in the event of the Mortgagor failing to
pay any installment of interest, he will be liable to interest on the said installment in default at
the same rate as aforesaid from the date of default until payment such installment as and by way
of compound interest.

Without prejudice to the right of the Mortgagee to take any action on default as herein under
provided, and it is agreed and declared that in the event of Mortgagor committing default in
payment of any installment of interest or committing breach of any other term of this deed, the
whole amount of principal then due with interest thereon will at the option of the Mortgagee
become payable forthwith as if the said date had expired.

And this deed further witnesseth that in consideration aforesaid, the Mortgagor hereby mortgage
his said scheduled property hereunder written as a security for repayment of the said sum with
interest and all other moneys due and payable hereunder with a condition that on the Mortgagor
repaying the said principal sum of Rs.2500000 with all interest and other moneys due to the
Mortgagee (hereinafter referred to as the Mortgage amount) the Mortgagor will redeem the said
scheduled property from the mortgage security and shall if so required by the Mortgagor execute
a deed of Release but at the costs of the Mortgagor.

And it is further agreed and declared by the Mortgagor that in the event of the Mortgagor failing
to pay the said principal sum with all interest and other moneys when the same shall become due
and payable under these presents, the Mortgagee will become entitled to have the said scheduled
property sold through any competent court and to realise and receive the said mortgage amount
out of the net sale proceeds of the said scheduled property.

And it is further agreed and declared by the Mortgagor that he shall also be liable to pay and
shall pay all the costs, charges and expenses that the Mortgagee will incur for the protection of

11 | P a g e
the mortgage security and or for the realisation of the mortgage amount and the same shall be
deemed to form part of the mortgage amount and the security there for as aforesaid.

And it is further agreed that during the pendency of the security hereby created and until
repayment of the mortgage amount, the Mortgagor will get insured and keep insured the
buildings and structures standing on the said land against loss and damages due to fire or any
other accident in the sum of at least Rs. 500000 with some Insurance Company of repute and pay
all premium in the insurance policy as and when it becomes due and payable in respect thereof to
such company and shall hand over the policy to the Mortgagee duly endorsed in his name as
assignee and in the event of the Mortgagor failing to do so or to pay the premium, the Mortgagee
will be entitled to insure the said buildings and structures and/or to pay the premium thereon and
the amount paid by the Mortgagee in respect thereof will be deemed to form part of the mortgage
amount.

And it is further agreed that in the event of the said scheduled property being destroyed or
damaged by fire or any accident as aforesaid. The Mortgagee will be entitled to receive the
insurance claim under such policy to the exclusion of the Mortgagor and to appropriate the same
first towards all arrears of interest and then the principal amount or as any part thereof as may be
sufficient to pay the mortgage amount due and if any surplus remains the same only will become
payable to Mortgagor.

SCHEDULE
Schedule I: The title of the document is simple mortgage deed.

Schedule II: The property is situated at south-east of dawarka village,sangrur. The house number
of property is #222. The connections of water and electricity are attached

(Mortgaged under this deed)

12 | P a g e
IN WITNESS WHEREOF the Mortgagor has put his hand and signature on the 30th June 2019
first hereunder written

In the presence of witnesses:

1st Witness: Gurmeet Kaur w/o Karamjeet Singh
Address: C-V 77, Patel Nagar Street No.5 College road Sangrur
Occupation: Housewife

2nd Witness: Kiran Singh s/o Sukhpreet Singh

Address: H.No 555, Adarsh Nagar Street No.2 Sangrur
Occupation: Business Man

MORTGAGOR

13 | P a g e