Section 69 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.
Section 69 lets a mortgagee sell the mortgaged property without going to Court, but only in three listed cases and only after notice or a stated arrear has run for three months. It also protects the buyer and says how the sale money is to be used. This is explained as per the text of the Act consulted.
A mortgagee may sell without the intervention of the Court only in three cases and "in no others": (a) an English mortgage between persons outside the communities named in the clause; (b) the mortgagee is the Government and the deed expressly gives the power; (c) the deed expressly gives the power and the property was, on the date of the deed, in the listed towns or any area notified by the State Government. No sale may be made until a written notice has gone unanswered for three months, or interest of at least five hundred rupees is three months overdue. The buyer's title is protected.
Source and State 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. Some States have amended the Act or notified towns and areas under this section, and the position in your State should be checked; nothing from any State is described here. The usual way to enforce a mortgage by a Court is in our article on sections 67 and 67A. Banks and financial institutions may have a separate statutory route, covered in our SARFAESI guide; that law is not in the text consulted.
Lenders using this power should treat the notice and the deed wording with care. Our legal dispute resolution service can review them.
Sub-section (1): the three cases
A mortgagee, or a person acting on his behalf, has power "to sell or concur in selling the mortgaged property or any part thereof, in default of payment of the mortgage-money, without the intervention of the Court", in the following cases and in no others.
| Clause | Case |
|---|---|
| (a) | The mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Muhammadan or Buddhist, or a member of any other race, sect, tribe or class from time to time specified by the State Government in the Official Gazette (as printed) |
| (b) | A power of sale without the Court's intervention is expressly conferred on the mortgagee by the mortgage-deed and the mortgagee is the Government |
| (c) | A power of sale without the Court's intervention is expressly conferred by the mortgage-deed and the property, or part of it, was on the date of execution of the deed situate within the towns of Calcutta, Madras, Bombay, or any other town or area the State Government specifies by notification in the Official Gazette |
Between "Bombay" and "or in any other town" the copy shows "[ *]", marking omitted words.
Two things are worth noting. First, the power in (b) and (c) must be expressly conferred by the deed; it is not implied. Second, the Act treats the place of the property on the date of the deed, not on the date of sale.
Sub-section (2): when the power can be used
Printing note: the sub-section opens as "[(2]" in the copy, with a bracket missing, and "[ *]" follows sub-section (5); both mark print or omission features.
No such power may be exercised unless and until one of two things has happened:
- Notice in writing requiring payment of the principal money has been served on the mortgagor, or on one of several mortgagors, and default has been made in paying the principal, or part of it, for three months after service; or
- Some interest under the mortgage amounting to at least five hundred rupees is in arrear and unpaid for three months after becoming due.
Either route needs a full three months. The notice route needs service on the mortgagor or on one of several mortgagors; the interest route needs no notice but needs the arrear to be at least the stated amount.
Sub-section (3): the buyer's title
When a sale is made in professed exercise of the power, the title of the purchaser is not impeachable on the ground that no case had arisen to authorise the sale, that due notice was not given, or that the power was otherwise improperly or irregularly exercised. But any person damnified by an unauthorised, improper or irregular exercise has a remedy in damages against the person exercising the power.
So the buyer is protected, while the borrower's remedy is a claim for damages against the seller-lender. This section does not say that a defective sale is valid for every purpose; it says the purchaser's title cannot be attacked on those grounds.
Sub-section (4): what happens to the sale money
The money received by the mortgagee from the sale, after discharge of prior encumbrances to which the sale is not made subject, or after payment into Court under section 57 of a sum to meet any prior encumbrance, is held in trust and applied, in the absence of a contract to the contrary:
- first, in payment of all costs, charges and expenses properly incurred as incident to the sale or any attempted sale;
- secondly, in discharge of the mortgage-money and costs and other money, if any, due under the mortgage; and
- the residue paid to the person entitled to the mortgaged property, or authorised to give receipts for the proceeds of the sale.
Payment into Court under section 57 is explained in our article on sections 56 and 57.
Sub-section (5): earlier powers
Nothing in section 69 or section 69A applies to powers conferred before the first day of July, 1882. Receivers appointed by a mortgagee with such a power are in our article on section 69A.
A worked example
Vikram's company mortgaged an office in a town notified by the State Government for this purpose, and the deed expressly gives the lender a power of sale. The lender sends a written demand for the principal to Vikram. Three months pass without payment. Only then may the lender sell without going to Court. After the sale, he pays costs of sale first, then his dues and costs, and hands any balance to Vikram. If the buyer later finds the notice was defective, sub-section (3) protects the buyer's title, and Vikram's remedy is damages against the lender.
Checklist for lenders and borrowers
- Confirm which of (a), (b) or (c) applies and read the deed for an express power.
- Check the date of the deed and where the property stood on that date.
- Keep proof of the notice and its service; count the three months from service.
- For interest, check that the arrear is at least five hundred rupees and three months old.
- Use the sale money in the order the sub-section sets.
Need help with a mortgage sale or a notice?
If you are a lender about to serve a notice, or a borrower who has received one, the order of steps and the wording of the deed make a difference. Our legal dispute resolution team can look at the documents with you.
Key takeaways
- Sale without the Court is possible only in the three cases in sub-section (1).
- The power under (b) and (c) must be expressly conferred by the mortgage-deed.
- A written notice unanswered for three months, or interest of five hundred rupees overdue for three months, must come first.
- The purchaser's title cannot be attacked on the grounds listed; the person wronged can claim damages.
- Sale money is held in trust and applied in the order the sub-section sets.
- Some States have amended the Act or notified towns; check your State.
Read next
- Sections 67 and 67A: foreclosure or sale
- Section 69A: appointment of a receiver
- Sections 56 and 57: sale discharged from encumbrances
- Mortgage types: simple, English, usufructuary
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.