Difference
NAVDEEP SINGH SRAN
(Querist) 31 August 2011
This query is : Resolved
what is difference ,common & relation between hypothecation ,mortgage & pledge.please deep detail with example.
Shailesh Kr. Shah
(Expert) 31 August 2011
Hypothication : The item will be fixed. But individual items will vary from time to time. example: stock, Debtors. OD from banks on hypothication of stock and debtors.
Mortgage: The asset will be with you. there will not any change in the nomenclature of the asset. For example: Building, Term loan on fixed assets.
Pledge : The physical posession will be with the person from whom loan has been taken. example: Gold loan.
ajay sethi
(Expert) 31 August 2011
Hypothecation is the practice where a borrower pledges collateral to secure a debt. ...
mortgage is legal document by which owner or borrower transfers interest in property to secure repayment of debt
pledge is hypothecation without transfer of posession
K.S.Srinivas
(Expert) 31 August 2011
Very clearly explained by Mr.Shailesh Kr.Shah.
prabhakar singh
(Expert) 31 August 2011
Mortgages in India are governed by law laid down in Transfer of property Act.For reference of terms you are advised to look into provisions of s58 of the said Act where "A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability."
The principal money and interest thereon, the payment of which is secured are called the ‘mortgage money’.
Coming to PLEDGE you will require to go by law laid down in section 172 of the Indian Contract Act where it lays "172. "Pledge", "Pawnor", and "Pawnee" defined -
The bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called "pawnor". The bailee is called "pawnee".".
NOW coming to HYPOTHECATION which is a 'charge' against property for an amount of debt where neither ownership nor possession is passed to the creditor. Hypothecation is a charge against movable property. The goods will, unlike a pledge, be retained by the borrower and be in the borrower’s possession. The borrower gives only a letter stating that the goods are hypothecated to the banker/creditor as security for the loan granted. There will be no transfer of the property from the borrower in favor of creditor.
Features:0f HYPOTHECATION
It is an equitable charge created against movable property.
Neither the possession nor the ownership of the property is transferred to the banker.
The contents of the letter of hypothecation determine the rights of the banker.
The banker has the right to take possession of the property (if there is default) and sell the hypothecated goods to realize his dues.
If selling rights are not incorporated in the letter, the banker has to approach a court of law to recover the dues against the hypothecated property.
Hypothecated goods can be sold any time to the genuine purchaser for value without the knowledge of the banker or the hypothecated property can be pledged to another person provided the pledgee has no knowledge of the previous hypothecation.
Differences:
In a mortgage there is transfer of interest in the IMMOVABLE property till the re-payment of the loan with or without possession(in class of equitable mortgages only title deed deposit is sufficient,possession not parted).
While in case of a Pledge some valuable immovable is bailed out from hands of debtor to the hands of creditor as security
of payment on due date,till then creditor enjoys only custody of article but in case of default on due date of payment by debtor,the creditors' right exceeds from custody to right to sale the goods bailed.
Examples may be loan taken against pledge of jewels or FDs or SHARES etc.
In hypothication the item will be fixed but the individual items will vary from time to time, example OD from banks on hypothication of stock and debtors. And the physical possession is with the person who has taken the loan.
In other illustration you will see that bank finances motor vehicles hypothicated in its'favor creating a charge on its title of borrower but possession remains with the borrower so whoever subsequently buys before the discharge of debt shall also buy
the debt of bank over it.
.
Raj Kumar Makkad
(Expert) 31 August 2011
Mortgage: The asset will be with you. there will not any change in the nomenclature of the asset. For eg. Building, car, etc., Term loan on fixed assets.
Pledge : The physical position will be with the person from whom loan has been taken. EG Jewel loan.
Hypothication : The item will be fixed. But individual items will vary from time to time. Eg stock, Debtors. OD from banks on hypothication of stock and detbtors.
