Section 79 of Transfer of Property Act - Mortgagee to secure uncertain amount when maximum is expressed

Section 79 Transfer of Property Act Description

If a mortgage made to secure future advances, the performance of an engagement or the balance of a running account, expresses the maximum to be secured thereby, a subsequent mortgage of the same property shall, if made with notice of the prior mortgage, be postponed to the pirior mortgage in respect of all advance or debits not exceeding the maximum, though made or allowed with notice of the subsequent mortgage.

Illustration

A mortgages Sultanpur to his bankers, B and Co., to secure the balance of his account with them to the extent of Rs. 10,000. A then mortgages Sultanpur to C, to secure Rs. 10,000, C having notice of the mortgage to B and Co., and C gives notice to B and Co. of the second mortgage. At the date of the second mortgage, the balance due to B and Co., does not exceed Rs. 5,000 B and Co. subsequently advance to A sums making the balance of the account against him, exceed the sum of Rs. 10,000. B and Co. are entitled, to the extent of Rs. 10,000, to priority over C.

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