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Difference between Mortgage and Charge

BASIS
MORTGAGE
CHARGE
Statute Mortgage is defined under Section 58 of the Transfer of Property Act of 1882. Charge is defined in Section 100 of the Transfer of Property Act, 1882.

Definition
The transfer of ownership interest in a specific immovable asset is referred to as a mortgage. Charge deals with the protection used to secure an obligation, such as a pledge, hypothecation, or mortgage.
Applied To Levied on Immovable property. Charged on movable and immovable property.
Time Limit A mortgageis created for a definite period. A charge can be made for an indefinite period of time.
Instrument For Execution A mortgage deed, which is perpetrated in writing, is used to execute a mortgage. A charge on a property, on the other hand, can be created orally or in writing.
Registration A mortgage must be registered under the Transfer of Property Act 1882. A charge may or may not be registered accordingto the Act. It must be registered when it is created by the actions of parties. Registration is not required when it is made on a property by operation of law.

Personal Liability
Personal liability is generally attached to mortgages unless expressly stated otherwise in the contract. Personal liability is not established, but if it comes into force due to a contract, personal liability may be generated.
Right In Rem A mortgage creates a right that can be enforced against the world. A charge is only applicable against a specific group of people. However, when a decree is secured, it may acquire a right in rem.

Mortgage Case Laws

  • In Harris v. Harris (1681) 1 Vern 33, Lord Nottingham established the principle: 'Once a mortgage, always a mortgage.' This doctrine protects the right of redemption of the mortgagor. In Noakes vs. Rice (1901), the same was observed.
  • In Stanley v. Wilde [1899 2 Ch 474], Lord Lindley defined a mortgage as a transfer of land or chattels as a security for the payment of a debt or the discharge of some other obligation for which it is provided.

Charge Case Laws

  • In J&K (Bombay) Pvt. Ltd. v. New Kaiser-i-hind Spg. &Wvg. Ltd. [AIR 1970 SC 1041], the Supreme Court ruled that no specific words are required to make a charge. However, there must be a clear desire to give a property as security for payment of money owed.
  • In Jnanendra Nath v Sashi Mulch (AIR 1940 Cal 60), it was observed that a charge is nothing but a device to create security that can be enforceable in Court.

Conclusion

In general, creating a charge provides the lender with the assurance that the amount lent to the borrower will be repaid. However, in the case of a mortgage, the borrower is obligated to pay the mortgage money, or else the amount will be realized through selling the asset that has been mortgaged, but only by order of the Court in a suit.

As a result, a charge is not a mortgage. A mortgage, on the other hand, can be considered a charge. When a lender holds an immovable property as security for the return of money without any transfer of interest or ownership, it is referred to as a charge rather than a mortgage.


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