Transfer of Property Act Section 68 — Right to sue for mortgage-money
CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagee
General
Summary
A mortgagee (the lender) can sue the mortgagor (the borrower) to recover the mortgage money only in these specific situations: when the borrower has personally promised to repay the loan; when the property is destroyed or the security becomes insufficient due to reasons other than the fault of either party, and the borrower fails to provide extra security after being given a reasonable chance; when the borrower's wrongful act causes the lender to lose part or all of the security; or when the borrower fails to hand over possession of the property to the lender who is entitled to it. However, if the borrower has sold the property to someone else, that new owner cannot be sued for the mortgage money based on the borrower's personal promise to repay. In cases where the lender sues based on the borrower's personal promise or the property's destruction, the court can pause the lawsuit until the lender first tries to recover from the property itself, unless the lender gives up the security and returns the property.
Official Text
(1) The mortgagee has a right to sue for the mortgage-money in the following cases and no others, namely:—
(a) where the mortgagor binds himself to repay the same;
(b) where by any cause other than the wrongful act or default of the mortgagor or mortgagee, the mortgaged property is wholly or partially destroyed or the security is rendered insufficient within the meaning of section 66, and the mortgagee has given the mortgagor a reasonable opportunity of providing further security enough to render the whole security sufficient, and the mortgagor has failed to do so;
(c) where the mortgagee is deprived of the whole or part of his security by or in consequence of the wrongful act or default of the mortgagor;
(d) where, the mortgagee being entitled to possession of the mortgaged property, the mortgagor fails to deliver the same to him, or to secure the possession thereof to him without disturbance by the mortgagor or any person claiming under a title superior to that of the mortgagor:
Provided that, in the case referred to in clause (a), a transferee from the mortgagor or from his legal representative shall not be liable to be sued for, the mortgage-money.
(2) Where a suit is brought under clause (a) or clause (b) of sub-section (1), the Court may, at its discretion, stay the suit and all proceedings therein, notwithstanding any contract to the contrary, until the mortgagee has exhausted all his available remedies against the mortgaged property or what remains of it, unless the mortgagee abandons his security and, if necessary, re-transfers the mortgaged property.]