Section 59 TP Act | Mortgage Deed Need Not Be Signed by Mortgagee: Punjab & Haryana High Court Upholds Redemption Rights

“Section 59 of the Transfer of Property Act does not require signature of the mortgagee — Registered mortgage deed, validly attested and executed by mortgagor, cannot be discarded as sham merely for want of mortgagee’s signature,” Punjab & Haryana High Court

In a significant verdict Punjab and Haryana High Court reversed concurrent judgments of the lower courts and decreed a suit for possession by way of redemption in favour of the appellants — the legal heirs of one Ishwar Dayal, the original owner of the property.

The Bench of Justice Nidhi Gupta held that the courts below had misconstrued the law in declaring a registered mortgage deed dated 11.11.1971 invalid on the sole ground that it lacked the signature of the mortgagee. Citing Section 59 of the Transfer of Property Act, 1882, the High Court ruled that the law mandates execution by the mortgagor and attestation by two witnesses — but does not require the mortgagee's signature.

The Court further ruled that upon redemption, any tenancy created by the mortgagee comes to an end, and the tenant cannot claim continued possession unless expressly agreed to under the mortgage terms.

“Presumption of Validity Attaches to Registered Mortgage Deeds – Courts Below Ignored Statutory Safeguards”

At the core of the dispute was a registered mortgage deed (Ex. P-1) dated 11.11.1971, executed by the appellants’ predecessor and other co-owners, mortgaging a shop to one Karam Chand for ₹2,000/-. Subsequently, the mortgagee (Karam Chand) inducted defendant no. 2, Ram Chander, as tenant under a Rent Note dated 08.12.1971 (Ex. P-2).

Over time, the mortgagee rights were transferred to various persons, ultimately vesting with defendant no.1, Mahender Kumar, in 1993. The appellants, being the legal heirs of Ishwar Dayal, filed a suit for redemption and possession in 1999, offering to pay ₹2,000/- to redeem the mortgage.

The Trial Court (2006) and First Appellate Court (2007) both dismissed the suit, declaring the mortgage deed a sham due to lack of mortgagee’s signature and holding that Ram Chander was a tenant under the original owner Ishwar Dayal.

However, the High Court found these conclusions legally unsustainable.

“Section 59 of the Transfer of Property Act stipulates that a mortgage to secure a principal amount of ₹100 or more requires a registered instrument signed by the mortgagor and attested by two witnesses. There is no legal requirement for the mortgagee to sign the deed,” held Justice Nidhi Gupta, finding the lower courts’ interpretation of Section 59 to be perverse and contrary to law.

“Tenancy Created by Mortgagee Ends Upon Redemption – No Protection Under Rent Act Without Privity”

Defendant no. 2 — now represented through legal heirs — had argued that he was inducted as a tenant by Ishwar Dayal prior to the mortgage and thus could not be evicted without resort to the Haryana Rent Act. They further contended that even if the tenancy was created by the mortgagee, it survived redemption.

Rejecting both arguments, the High Court clarified that tenancy created by the mortgagee automatically terminates upon redemption, unless the mortgagor had expressly agreed to continue such tenancy beyond the mortgage term.

Citing Thakar Singh v. Mula Singh (2015) 5 SCC 209, the Court emphasized:

“The mortgagor’s right to reclaim possession cannot be rendered illusory. A tenant under a mortgagee does not acquire any independent right to continue after redemption, unless specifically provided for.”

The Court further relied on All India Film Corporation Ltd. v. Raja Gyan Nath and Jadavji Purshottam v. Dhami Navnitbhai to hold that Ram Chander's tenancy rights ceased upon redemption, and no protection under the Rent Act could be claimed.

“Admissions Made in Rent Proceedings Are Binding”

A particularly compelling factor in the Court’s decision was the admission by defendant no. 2 (Ram Chander) in earlier Rent Act proceedings initiated by the last mortgagee, Mahender Kumar (defendant no.1).

In proceedings dated 16.03.1998, Ram Chander tendered rent to the mortgagee, without protest.

“Such unqualified tender of rent amounts to a clear admission of tenancy under the mortgagee. It is well-settled that admissions made in earlier proceedings are relevant and binding,” the Court held, citing Thimmappa Rai v. Ramanna Rai (2007) 14 SCC 63.

“Presumption Under Section 90 of Evidence Act Ignored – Rent Note Over 30 Years Old Deemed Authentic”

The lower courts had also rejected the Rent Note (Ex. P-2) on the basis of a handwriting expert's report that disputed Ram Chander’s signature. However, the Court found this view legally flawed.

“The Rent Note is over 30 years old and attracts the presumption of authenticity under Section 90 of the Evidence Act. Furthermore, defendant no. 2 did not deny the signature outright, rather claimed he signed ‘unconsciously’. This is a clear admission.”

The execution of the Rent Note was further proved by an attesting witness and the scribe, reinforcing its validity.

“Concurrent Findings Based on Misreading of Law and Facts – Decrees Set Aside”

The Court held that the Trial Court and First Appellate Court had misconstrued the law, ignored key admissions, and overlooked statutory presumptions attached to registered and aged documents.

On the issue of the mortgage deed, the Court held:

“The courts below erred in discarding a legally valid registered mortgage deed, duly executed and attested, merely for want of mortgagee’s signature — a requirement not prescribed under Section 59.”

On tenancy and possession:

“There is no documentary evidence showing that Ram Chander was inducted as tenant by Ishwar Dayal before the mortgage. The findings of the lower courts to the contrary are perverse and unsustainable.”

The Court also rejected reliance on vague oral evidence by DW-3 and DW-4, noting their statements were inconclusive and based on hearsay.

Setting aside both decrees, the High Court decreed the plaintiffs' suit for possession upon redemption, ordering possession of the shop to be handed over upon payment of ₹2,000/- to defendant no.1, the last mortgagee.

“In view of the above-noted facts and case law, it is my clear opinion that the courts below were in patent error,” concluded Justice Nidhi Gupta.

The decision reinforces key principles relating to registered mortgage deeds, proof of execution, and the limited nature of a mortgagee’s authority to create enduring tenancies, marking a crucial precedent in property and mortgage law.

Date of Decision: 22 December 2025