Usufructuary mortgage is a form of mortgage where the mortgagor delivers possession of the property to the mortgagee, who retains possession and receives rents and profits in lieu of interest or in repayment of the mortgage money. Under Indian law, it is defined in Section 58(d) of the Transfer of Property Act, 1882, and is distinguished by the absence of personal liability on the mortgagor to repay.
Legal definition
Section 58(d) of the Transfer of Property Act, 1882 provides:
Section 58(d): Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest, or in payment of the mortgage-money, or partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee.
Two critical features distinguish this from other mortgage types. First, the mortgagor parts with possession — the mortgagee occupies the property or receives its income. Second, the mortgagee is not entitled to foreclose or sue for the mortgage money — the only remedy is to retain possession and appropriate the rents and profits until the debt is satisfied.
Section 62 establishes that in the absence of a contract to the contrary, the mortgagee is not personally liable to the mortgagor for the mortgage money. The mortgagor's only obligation is to redeem the property by paying the outstanding amount, at which point the mortgagee must surrender possession.
How courts have interpreted this term
Shivdev Singh v. Sucha Singh [AIR 1964 SC 946]
The Supreme Court held that in a usufructuary mortgage, the mortgagee cannot foreclose or sue for the mortgage money. The mortgagee's only right is to retain possession and receive rents and profits until the mortgage money is paid. The Court distinguished this from a simple mortgage, where the mortgagee has the right to seek a decree for sale of the property.
Raja of Venkatagiri v. Revenue Divisional Officer [AIR 1954 SC 405]
The Court clarified that in a usufructuary mortgage, the rents and profits received by the mortgagee are applied towards the mortgage debt. If the agreement specifies that rents go towards interest only, the principal remains outstanding until the mortgagor redeems. If rents go towards both principal and interest, the mortgage is progressively discharged.
Mahant Ganesh Das Ji Maharaj v. State of U.P. [(2019)]
The Court reiterated that the mortgagor's right of redemption in a usufructuary mortgage is indefeasible and subsists even after a prolonged period. Unlike the Limitation Act's general provisions, Article 61 of the Limitation Act provides 30 years for redemption of a usufructuary mortgage — the longest limitation period for any mortgage type.
Why this matters
The usufructuary mortgage was historically the most common form of mortgage in rural India, particularly in agricultural communities. Before the advent of modern banking, farmers would mortgage their land to moneylenders, who would then cultivate the land or collect crop shares until the debt was repaid. The unique feature — no personal liability and no right of foreclosure — provided a degree of protection to mortgagors who might otherwise lose their land permanently.
In modern practice, usufructuary mortgages are less common in institutional lending but remain prevalent in informal lending arrangements in rural and semi-urban areas. The form is particularly relevant in agricultural contexts where the value of the property lies in its productive capacity rather than its sale value.
For practitioners, the key distinction from other mortgage types is the limitation period. Article 61 of the Limitation Act provides 30 years for a suit to redeem a usufructuary mortgage (from the date the right to redeem or recover possession accrues), compared to 30 years for simple mortgages under Article 61(a) as well. However, the practical implication of the no-foreclosure rule means that a usufructuary mortgage can endure indefinitely if neither party takes action.
Related terms
Broader concepts:
Sibling mortgage types:
Related concepts:
Frequently asked questions
Can a usufructuary mortgagee foreclose on the property?
No. Under Section 67 TPA, a usufructuary mortgagee has no right of foreclosure and no right to sue for the mortgage money. The mortgagee's only remedy is to retain possession and appropriate rents and profits until the debt is satisfied. This distinguishes it from a simple mortgage or English mortgage, where the mortgagee can seek a court decree for sale.
What is the limitation period for redeeming a usufructuary mortgage?
Article 61 of the Limitation Act, 1963 provides a 30-year limitation period for a suit to redeem a usufructuary mortgage, running from the date when the right to redeem or recover possession accrues. This is the longest limitation period for mortgage redemption under Indian law.
How does a usufructuary mortgage differ from a lease?
In a usufructuary mortgage, the transferee (mortgagee) receives possession as security for a debt and appropriates rents towards repayment — the relationship is debtor-creditor. In a lease under Section 105 TPA, the transferee (lessee) receives possession in exchange for periodic rent — the relationship is landlord-tenant. The mortgagor can redeem and recover possession by paying the debt; the lessee's rights are governed by the lease terms.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.