Section 63 - Accession to Mortgaged Property
Section 63 of the Transfer of Property Act, 1882 regulates a mortgagor's entitlement to additions or accessions to mortgaged property while the mortgagee has possession. On redemption, the accession ordinarily goes with the property, subject to contractual terms and rules about expenses, interest and profits.
Complete text of Section 63
63. Accession to mortgaged property
63. Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, received any accession, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession.
Accession acquired in virtue of transferred ownership
Where such accession has been acquired at the expense of the mortgagee, and is capable of separate possession or enjoyment without detriment to the principal property, the mortgagor desiring to take the accession must pay to the mortgagee the expense of acquiring it. If such separate possession or enjoyment is not possible, the accession must be delivered with the property; the mortgagor being liable, in the case of an acquisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal money, with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent per annum.
In the case last mentioned the profits, if any, arising from the accession shall be credited to the mortgagor.
Where the mortgage is usufructuary and the accession has been acquired at the expense of the mortgagee, the profits, if any, arising from the accession shall, in the absence of a contract to the contrary, be set off against interest, if any, payable on the money so expended.
What is accession to mortgaged property?
An accession is an addition to or increase in property occurring while a mortgage continues. It may include an addition of land or an interest that becomes attached to the property. The treatment depends on the nature of the accession, whether it was acquired at the mortgagee's expense, and whether it can be enjoyed separately without harming the original property. Section 63 applies when the mortgaged property is in the mortgagee's possession.
Under Section 58, a mortgage transfers an interest in specific immovable property to secure payment or performance of a specified obligation. The mortgagor creates the mortgage and the mortgagee receives the security interest. Redemption, dealt with in Section 60, is the process of recovering the mortgaged interest by satisfying the applicable mortgage obligation.
Rules under Section 63
- General entitlement: unless the contract provides otherwise, the mortgagor is entitled to accessions upon redemption as against the mortgagee.
- Separately enjoyable accession: if the mortgagee acquired an accession at their expense and it can be possessed or enjoyed separately without detriment to the main property, the mortgagor who wants it must reimburse the expense of acquisition.
- Inseparable accession: if separate enjoyment is impossible, the accession must be delivered with the property. The mortgagor owes the proper cost only where the acquisition was needed to preserve the property from destruction, forfeiture or sale, or was made with the mortgagor's assent.
- Interest: in those cases, the proper cost is added to principal and bears interest at the principal rate, or at 9% per annum if no rate is fixed.
- Profits: profits from the accession in the last-mentioned case must be credited to the mortgagor. In a usufructuary mortgage, where the mortgagee funded the accession, the profits are ordinarily set off against interest on the expenditure, unless the contract says otherwise.
Illustrative examples
Accession that cannot be separated
If the mortgagee must acquire an adjoining interest to save mortgaged land from forfeiture and it cannot be enjoyed separately, the accession passes with the land on redemption. The mortgagor may have to pay its proper cost with statutory interest, subject to the terms of Section 63.
Separately usable accession
If the mortgagee purchases an additional interest that can be held independently without harming the original property, the mortgagor choosing to take it must pay the mortgagee's acquisition expense.
Difference between Sections 63 and 63A
Section 63 deals with accessions received by the mortgaged property. Section 63A separately governs improvements made to property in the mortgagee's possession, including when the mortgagor must reimburse the proper cost of necessary improvements. The two provisions should not be treated as identical.
Related rights and official legislation
Read Section 62 on recovery of possession in usufructuary mortgages, Section 64 on renewal of a mortgaged lease, and Section 60B on title document inspection. For the official Act and amendments, consult India Code - Transfer of Property Act, 1882.
Frequently asked questions
Does an accession automatically belong to the mortgagee?
No. Section 63 generally entitles the mortgagor to accessions on redemption, in the absence of a contract to the contrary.
Must every accession be paid for?
No. Reimbursement depends on who paid, whether separate enjoyment is possible and whether the statutory conditions for charging the cost are satisfied.
What interest applies if no mortgage rate is fixed?
Where the statute permits the proper cost to be added to principal and no interest rate is fixed, Section 63 specifies 9% per annum.