Transfer of Property Act Section 69 — Power of sale when valid
CHAPTER IV OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES — Rights and Liabilities of Mortgagee
General
Summary
A mortgagee can sell the mortgaged property without going to court only if the mortgage falls into one of the specific situations listed in this section. These situations include an English mortgage where neither party is from certain religious or racial groups, a mortgage where the government is the mortgagee and the deed gives a sale power, or a mortgage where the deed gives a sale power and the property is located in certain specified cities or areas.
Before selling, the mortgagee must first send a written notice demanding payment of the principal amount, and the borrower must fail to pay it for three months after receiving that notice. Alternatively, the mortgagee can sell if interest owed under the mortgage is at least 500 rupees and has remained unpaid for three months after it became due.
If a sale happens under this power, a buyer’s title cannot be challenged just because the sale conditions were not met or proper notice was not given, but anyone harmed by an improper sale can seek damages from the person who made the sale. The money from the sale must be used first to pay the mortgagee’s sale-related costs, then to clear the mortgage debt and any other amounts due, with any leftover money paid to the person entitled to the property. This section does not apply to powers granted before July 1, 1882.
Official Text
4[(1)] 5[6*** A mortgagee, or any person acting on his behalf, shall, subject to the provisions of this section, have power to sell or, concur in selling the mortgaged property, or any part thereof, in default of payment of the mortgage-money, without the intervention of the Court, in the following cases and in no others, namely:—] 1. Subs. by Act 20 of 1929, s. 31, for clause (a). 2. Ins. by s. 32, ibid. 3. Subs. by s. 33, ibid., for s. 68. 4. Section 69 re-numbered as sub-section (1) of that section by Act 20 of 1929, s. 34. 5. Subs. by s. 34, ibid., for certain words. 6. The words and figures “Notwithstanding anything contained in the Trustees’ and Mortgagees’ Powers Act, 1866 (28 of 1866)” omitted by Act 48 of 1952, s. 3 and the Second Schedule.
(a) where the mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Muhammadan or Buddhist 1[or a member of any other race, sect, tribe or class from time to time specified in this behalf by 2[the State Government], in the Official Gazette];
(b) where 3[a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage-deed and] the mortgagee is 4[the Government];
(c) where 3[a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage-deed and] the mortgaged property or any part thereof 5[was, on the date of the execution of the mortgage-deed], situate within the towns of Calcutta, Madras, Bombay, 6 *** 7 [or in any other town or area which the State Government may, by notification in the Official Gazette, specify in this behalf]. 8[(2)] 9*** No such power shall be exercised unless and until— 10[(a)] notice in writing requiring payment of the principal money has been served on the mortgagor, or, one of several mortgagors, and default has been made in payment of the principal money, or of part thereof, for three months after such service; or 11[(b)] some interest under the mortgage amounting at least to five hundred rupees is in arrear and unpaid for three months after becoming due. 12[(3)] When a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorize the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly exercised; but any person damnified by an unauthorised or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power. 13[(4)] The money which is received by the mortgagee, arising from the sale, after discharge of prior incumbrances, if any, to which the sale is not made subject, or after payment into Court under section 57 of a sum to meet any prior incumbrance, shall, in the absence of a contract to the contrary, be held by him in trust to be applied by him, first, in payment of all costs, charges and expenses properly incurred by him as incident to the sale or any attempted sale; and, secondly, discharge of the mortgage-money and costs and other money, if any, due under the mortgage; and the residue of the money so received shall be paid to the person entitled to the mortgaged property, or authorised to give receipts for the proceeds of the sale thereof. 14[
(5) Nothing in this section or in section 69A applies to powers conferred before the first day of July, 1882.] 15* * * * * 1. Ins. by Act 3 of 1885, s. 5. 2. The words “the L.G., with the previous sanction of the G. G. in C.” successively amended by A.O. 1937 and A.O. 1950 to read as above. 3. Ins. by Act 20 of 1929, s. 34. 4. The words “the Secretary of State for India in Council” successively amended by A.O. 1937 and A.O. 1950 to read as above. 5. Subs. by Act 20 of 1929, s. 34, for “is”. 6. The word “Karachi” omitted by A.O. 1948. 7. The words “or Rangoon” have been successively amended by Acts 6 of 1904, 11 of 1915, 20 of 1929, the A.O. 1937 and the A.O. 1950 to read as above. 8. Second paragraph numbered as sub-section (2) by Act 20 of 1929, s. 34. 9. The word “'But” omitted by s. 34, ibid. 10. Clause (1) was lettered
(a) by s. 34, ibid. 11. Clause (2) was lettered
(b) by s. 34, ibid. 12. Third paragraph numbered as sub-section (3) by s. 34, ibid. 13. Fourth paragraph numbered as sub-section (4) by Act 20 of 1929, s. 34. 14. Subs. by s. 34, ibid., for fifth paragraph. 15. The last paragraph of this section omitted by s. 34, ibid. 1[