Section 64: Renewal of Mortgaged Lease

Section 64 of the Transfer of Property Act, 1882 protects a mortgagor where the mortgaged property consists of a leasehold interest and the mortgagee obtains a renewal of that lease. On redemption, the mortgagor is ordinarily entitled to the benefit of the renewed lease, subject to any contract by the mortgagor to the contrary.

Complete text of Section 64 - Renewal of mortgaged lease

Meaning of Section 64

A mortgage, under Section 58(a), is the transfer of an interest in specified immovable property to secure repayment of a loan or another specified obligation. The mortgagor is the person who gives that security; the mortgagee is the person in whose favour it is given. A lease, under Section 105, is a transfer of a right to enjoy immovable property for a certain time, express or implied, or in perpetuity, in consideration of the specified price, rent, service or other consideration.

A mortgaged lease means that the interest offered as security is the mortgagor's leasehold right, not necessarily the freehold ownership of the land. Renewal means the obtaining of a fresh or extended leasehold interest when the existing lease is renewed. Section 64 prevents the mortgagee from retaining the benefit of that renewal against the mortgagor after lawful redemption, unless the mortgagor has contracted otherwise.

Conditions for the benefit of a renewed lease

1. Leasehold security: the mortgaged property must be a leasehold interest.
2. Renewal by the mortgagee: the mortgagee must obtain a renewal of the lease during the relevant mortgage relationship.
3. Redemption: the mortgagor claims the benefit upon redemption of the mortgage, in accordance with the governing legal requirements.
4. Contractual exception: the rule operates in the absence of a contract by the mortgagor to the contrary.

Legal effect and practical example

Suppose a tenant mortgages a transferable leasehold interest to secure a loan. Before redemption, the mortgagee obtains renewal of that lease. Upon valid redemption, Section 64 ordinarily gives the mortgagor the benefit of the renewed lease. The mortgagee cannot treat the renewal as an independent benefit that is automatically excluded from redemption. The precise relief still depends on the lease terms, the mortgage, the renewal instrument and applicable law.

The provision does not itself confer a right to force the lessor to renew a lease, nor does it override restrictions on transfer, renewal or occupancy imposed by the governing lease or other applicable law.

Connection with other provisions

Section 60 provides the general right of redemption. Section 63 concerns accessions to mortgaged property, while Section 63A addresses improvements. Section 71 deals separately with renewal of a mortgaged lease obtained by the mortgagor and the mortgagee's security interest in it. Section 64 should therefore be read in the context of the respective rights of mortgagor and mortgagee.

Frequently asked questions

Does the mortgagor receive the renewed lease automatically?

The statutory entitlement arises upon redemption, provided Section 64 applies and there is no contrary contract by the mortgagor. Documentary and procedural steps may still be needed to give effect to that entitlement.

Can the parties agree otherwise?

Section 64 expressly recognises a contract by the mortgagor to the contrary. Any such term must be assessed under applicable law, including the law governing redemption.

Is Section 64 the same as Section 71?

No. Section 64 concerns renewal obtained by the mortgagee and the mortgagor's benefit on redemption; Section 71 concerns renewal obtained by the mortgagor and the mortgagee's security.

Official legislation and references

Consult the Transfer of Property Act, 1882 on India Code and the India Code official portal for statutory text and applicable amendments. State-specific amendments, lease conditions and court orders may affect a particular case.