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Transfer of Property Act, 1882 · Chapter IV: Of Mortgages of Immoveable Property and Charges · Rights and liabilities of Mortgagee

Section 69: Power of sale when valid

In plain words

A lender can sell the mortgaged property without going to court only in limited cases.

  • Under an English mortgage where neither party is Hindu, Muslim or Buddhist or of a notified class.
  • Where the deed expressly gives a power of sale and the lender is the Government, or the property was in Calcutta, Madras, Bombay or another notified town.
  • First, written notice demanding payment must have been unpaid for three months, or interest of at least five hundred rupees must have been in arrears for three months.
  • A buyer's title cannot be challenged for irregularities in exercising the power, but anyone harmed can claim damages.
  • Sale money goes first to costs, then to the debt, and any surplus to the owner. This does not apply to powers given before the first day of July, 1882.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

[(1)] [*** a mortgatee, 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:—]

(a) where the mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Muhammadan or Buddhist [or a member of any other race, sect, tribe or class from time to time specified in this behalf by [the State Government], in the Official Gazette;

(b) where [a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage-deed, and] the mortgagee is [the Government];

(c) where [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 [was, on the date of the execution of the mortgage -deed], situate within the towns of Calcutta, Madras, Bombay, [*** [or in any other town or area which the State Government may, by notification in the Official Gazette, specify' in this behalf.]

[(2)] *** No such power shall be exercised unless and until—

[(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

[(b)] some interest under the mortgage amounting at least to five hundred repees is in arrear and unpaid for three months after becoming due.

[(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.

[(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.

[(5)] Nothing in this section or in section 69A applies to powers conferred before the first day of July, 1882.]

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Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 69