Sections 101-104 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The last sections of the mortgage Chapter deal with practical problems. Can a lender who buys the owner's rights lose his mortgage by merger? What if the person to be served or paid lives elsewhere, cannot be found, or cannot contract? Who makes the procedural rules? This is explained as per the text of the Act consulted.
Section 101: a mortgagee or charge-holder who acquires the owner's rights does not thereby merge his mortgage as against a subsequent mortgagee, and the subsequent one cannot foreclose or sell without redeeming the prior one. Section 102: notice or tender may be given to an agent with a general power-of-attorney or authorised agent; if nobody can be found, the Court directs service, and a deposit has the effect of a tender. Section 103: for a person incompetent to contract, a legal curator or a guardian ad litem acts. Section 104: the High Court may make rules.
Source note
The text consulted is a publisher's print of the Act showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003); later amendments should be checked. Parts of sections 101 to 103 are printed in square brackets, which marks inserted or substituted wording. Section 103 refers to Order XXXII in the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), as printed; the reader should check the current law for the corresponding provision of that Code, which is not explained here.
These sections work with the deposit procedure in our article on sections 83 and 84. If you need a notice drafted or reviewed, our legal notice drafting service can help.
Section 101: no merger
Any mortgagee of, or person having a charge upon, immovable property, or any transferee from such a mortgagee or charge-holder, may purchase or otherwise acquire the rights of the mortgagor or owner without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee or charge-holder on the same property.
The second half protects the prior lender in another way: no such subsequent mortgagee or charge-holder is entitled to foreclose or sell the property without redeeming the prior mortgage or charge, or otherwise than subject to it.
Example. Bank A holds a first mortgage on a plot. Lender B holds a second. Bank A buys the owner's rights in the plot at a sale. Section 101 says Bank A's mortgage is not merged, as between Bank A and Lender B, by that purchase. If Lender B later wants to foreclose or sell, he must either redeem Bank A's mortgage or act subject to it. Charges are explained in our article on Section 100.
Section 102: service or tender on or to an agent
Agent for an absent person
Where the person on or to whom any notice or tender is to be served or made under this Chapter does not reside in the district in which the mortgaged property (or some part) is situate, service or tender on or to an agent holding a general power-of-attorney from that person, or otherwise duly authorised to accept it, is deemed sufficient. Powers of attorney as a subject are covered in our article on the Powers-of-Attorney Act, 1882.
When no person or agent can be found
| Situation | What the person may do | Effect |
|---|---|---|
| Notice cannot be served because no person or agent can be found or is known | Apply to any Court in which a suit might be brought for redemption; the Court directs how notice is to be served | Notice served as directed is deemed sufficient |
| Notice required by section 83, in the case of a deposit | The application is made to the Court in which the deposit has been made (the proviso) | Same: service as directed is sufficient |
| Tender cannot be made because no person or agent can be found or is known | Deposit the amount in any Court in which a suit might be brought for redemption | The deposit has the effect of a tender |
This matters because interest ceases from tender (see section 84), so a lender who cannot be found does not stop a borrower from stopping interest. The text does not say how long a search must be before the person is treated as one who "cannot be found".
Section 103: persons incompetent to contract
Where, under this Chapter, a notice is to be served on or by, or a tender or deposit made, accepted or taken out of Court by, a person incompetent to contract, it may be done by the legal curator of that person's property.
Where there is no such curator, and it is requisite or desirable in that person's interest that a notice be served or a tender or deposit made, an application may be made to any Court in which a suit might be brought for redemption of the mortgage, to appoint a guardian ad litem for the purpose. The guardian can serve or receive notice, make or accept tender, make or take out a deposit and do all consequential acts. The provisions of Order XXXII in the First Schedule to the Code of Civil Procedure, 1908 apply, so far as may be, to the application, the parties and the guardian appointed.
Who is competent to contract is a matter of contract law; see our article on Section 11 of the Indian Contract Act, 1872 on who is competent to contract. That Act is not explained here.
Example. A minor, Aarav, owns a mortgaged flat, and the loan falls due. No legal curator of his property is in place. A suitable adult can apply to the Court for the appointment of a guardian ad litem to make the tender or deposit for him.
Section 104: power to make rules
The High Court may, from time to time, make rules consistent with this Act for carrying out, in itself and in the Courts of Civil Judicature subject to its superintendence, the provisions of the Chapter. The Act prints no rules; the rules in your State's High Court should be checked.
Practical points
- Serve notices on the right person. If the lender lives outside the district, an agent with a general power-of-attorney is enough.
- Keep proof of the efforts you made to find the person, and of the Court's direction and the service.
- Deposit to stop interest: if no one can be found to take a tender, a deposit counts as a tender.
- Protect those who cannot contract: use the legal curator or apply for a guardian ad litem.
- For the form of a legal notice, see the guide on legal notice format listed under Read next.
Need help with a notice or tender under a mortgage?
When a lender is out of reach, or the person concerned cannot contract, the way the notice or tender is made decides whether it counts. Our legal notice drafting team can prepare the notice and the supporting papers.
Key takeaways
- Buying the owner's rights does not merge a prior mortgage as against a subsequent mortgagee.
- A subsequent lender cannot foreclose or sell without redeeming the prior mortgage or acting subject to it.
- Notice or tender to an agent with a general power-of-attorney or other authority is sufficient for an absent person.
- If no one can be found, the Court directs the manner of notice, and a deposit has the effect of a tender.
- A legal curator, or a guardian ad litem appointed by the Court, acts for a person incompetent to contract.
- The High Court may make rules consistent with the Act.
Read next
- Sections 83 and 84: deposit of mortgage money in Court
- Section 100: charge on immovable property
- Power of attorney for property: types and validity
- Legal notice: format, requirements and drafting tips
Disclaimer: Based on a publisher's print of the Transfer of Property Act, 1882 showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003), as consulted on 2 October 2026. State amendments, later amendments, stamp duty and registration charges are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.