Transfer of Property Act Section 134 — Mortgaged debt
CHAPTER VII OF GIFTS
General
Summary
When a debt is handed over to someone as security for another debt, any money that comes in from that first debt—whether the original owner collects it or the person holding it as security does—must be used in a set order. First, it pays for the costs of collecting that money. Next, it goes toward paying off the debt that the transfer was meant to secure. Whatever is left over after those two steps belongs to the original owner of the debt or anyone else who is legally entitled to it.
Official Text
Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, if received by the transferor or recovered by the transferee, is applicable, first, in payment of the costs of such recovery: secondly, in or towards satisfaction of the amount for the time being secured by the transfer; and the residue, if any, belongs to the transferor or other person entitled to receive the same. 1 [