Sunday, 31 January 2016

Whether mortgaged property can be redeemed on payment of a part of mortgage money?

Section 60 clearly provides that at any time after the
principal money has become due, the mortgagor has a right to seek
redemption of the mortgaged property on him paying or tendering the
mortgage money. If the mortgage money is paid/tendered as required
under section 60, the mortgagee is required (a) to deliver to the
mortgagor the mortgage deed and all documents relating to the
mortgaged property which are in the possession or power of the
mortgagee; (b) where the mortgagee is in possession of the mortgaged
property, to deliver possession thereof to the mortgagor; and (c) at the

cost of the mortgagor, either to re-transfer the mortgaged property to
him or to such third person as he may direct, or to execute and (where
the mortgage has been effected by a registered instrument) to have
registered, an acknowledgment in writing that any right in derogation
of his interest transferred to the mortgagee, has been extinguished.
The said section further provides that nothing therein shall entitle a
person interested in a share only of the mortgaged property to redeem
his own share only, on payment of a proportionate part of the amount
remaining due on the mortgage, except where a mortgagee, or if there
are more mortgagees than one, all such mortgagees, has or have
acquired, in whole or in part, the share of a mortgagor. This section
therefore clearly provides that a mortgaged property cannot be
redeemed on payment of a part of the mortgage money. If the
mortgaged property has to be redeemed in terms of section 60 of the
Transfer of Property Act, 1882, the entire mortgage money has to be
tendered in terms of section 60, before redemption can be ordered.
The only exception is when a mortgagee has acquired, in whole or in
part, the share of a mortgagor. We find that the DRT, Pune has
completely lost sight of this fundamental principle enshrined in

section 60 of the Transfer of Property Act, 1882. We therefore find
that the DRAT, Mumbai was fully justified in setting aside the order
passed by the DRT, Pune.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.2714 OF 2015
Mr Dipak Digambar Naik and others ... Petitioners
v/s
Bank of Maharashtra and another ... Respondents

CORAM: V.M. KANADE &
 B.P. COLABAWALLA JJ.

Pronounced on : 10th August, 2015


1. “Hope springs eternal in the human breast” is the best
way to describe this Petition. This Petition is one more attempt, in

many, to try and stall the measures taken by the Respondent – bank
under the provisions of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (the
SARFAESI Act). For the reasons stated hereafter, we have no
hesitation in dismissing this Petition and imposing heavy costs on the
Petitioners.
2. In this Writ Petition, the Petitioners have assailed the
order dated 12th March, 2015 passed by the DRAT, Mumbai in
Appeal No.64 of 2014. This Appeal was filed by the Respondent –
Bank against the order dated 8th January, 2014 passed by the DRT,
Pune under which Petitioner Nos.1 and 2 were allowed to redeem the
secured property bearing Plot No.41, Ex-Servicemen Co-op. Society,
CTS No.406, S.No.48/2, Paud Road, Village Erandwane, Pune,
consisting of basement, ground, first and second floor (the
mortgaged property), for a sum of Rs.1,65,05,000/-, even though
admittedly, the dues of the Bank, for which this property was secured,
was an amount of Rs.23,12,15,977.99 as on 18th February, 2014. We
were informed by the learned counsel appearing for the Respondent 
Bank that as on date, the dues owed to the Respondent – Bank are
over Rs.30,00,00,000/-.
3. When arguments were first heard in this Writ Petition, the
Petitioners submitted that they had filed M.A. No.159 of 2015 in
Appeal No.64 of 2014 filed by the Respondent – Bank inter alia
seeking to restrain the Respondent – Bank from taking physical
possession of the mortgaged property. It is the case of the Petitioners
that this Misc. Application was argued by the Petitioners on 12th
March, 2015 and no arguments were advanced by them in Appeal
No.64 of 2014 which was filed by the Respondent – Bank. In these
circumstances, it was urged before us that the DRAT, Mumbai could
not have passed the order dated 12th March, 2015 allowing the Appeal
filed by the Bank when in fact it was only the Misc Application that
was argued and heard by the DRAT. It was therefore submitted that
the order of the DRAT dated 12th March, 2015 was vitiated on the
grounds of impropriety and breach of principles of natural justice and
required interference by us in our extraordinary writ jurisdiction.

4. In view of the specific stand taken by the Petitioners, we
had directed the DRAT, Mumbai to submit a report to this Court. The
DRAT has submitted its report in which it is mentioned that both, the
Appeal (Appeal No.64 of 2014) as well as the Miscellaneous
Application (M. A. No.159 of 2015) were disposed of on 12th March,
2015. Even otherwise, from the record, we find that counsel for the
Petitioners as well as the Respondent – Bank were present and were
heard by the DRAT as recorded in the impugned order. In fact, a
separate order has been passed in M. A. No.159 of 2015 by the DRAT
on the same day which categorically records that since the Appeal
itself is disposed of, nothing survives in the Miscellaneous
Application, and the same is also disposed of accordingly. In view of
the specific orders passed by the DRAT, as well as the report
submitted to this Court, we are unable to take cognizance of the
argument on behalf of the Petitioners that only M. A. No.159 of 2015
was argued on 12th March, 2015 and that Appeal No.64 of 2014 was
allowed without hearing the Petitioners.
5. Be that as it may, and not to give an opportunity to the

Petitioners to make any grievance about the fact that they were
allegedly not heard, we have heard the Petitioners in this Writ Petition
and are clearly of the view that the impugned order of the DRAT
dated 12th March, 2015 requires no interference by us under article
226 of the Constitution of India. In our view, the DRAT has correctly
set aside the order passed the DRT, Pune dated 8th January, 2014
under which the DRT allowed Petitioner Nos.1 and 2 to redeem the
mortgaged property for a sum of Rs.1,65,05,000/-, when in fact, the
dues of the Respondent – Bank for which this property was secured,
were more than Rs.23,00,00,000/- as on 18th February, 2014.
6. The brief facts for the purpose of disposing of the present
Petition are that the Respondent – Bank had sanctioned certain credit
facilities to Petitioner No.3 alongwith Petitioner No.1 who was the
guarantor for the said transaction. The mortgaged property was
owned by one Smt Vimala Naik (who expired on 4th September,
2010), and Petitioner No.1. This property was mortgaged by the said
deceased alongwith Petitioner No.1 for securing the dues of the
Respondent – Bank. As defaults were committed in repayment of the

facilities, the Respondent – Bank initiated proceedings under the
SARFAESI Act by issuing a notice dated 21st April, 2010 under
section 13(2) thereof. In furtherance of the proceedings under the
SARFAESI Act, the Tahasildar and Executive Magistrate, Pune City,
Pune, Khadakmal Ali, Pune (Respondent No.2 herein), passed an
order dated 11th September, 2012 under section 14 of the SARFAESI
Act. This order under section 14, was challenged by Petitioner Nos.1
and 2 before the DRT, Pune, by filing Securitization Application
No.121 of 2012. It is important to note that as recorded in the order
of the DRT, Pune, creation of the mortgage has not been disputed and
there is a finding of fact in the said order that the said property was
mortgaged by Smt Vimala Naik alongwith Petitioner No.1 who were
the owners thereof.
7. The contention raised by Petitioner Nos.1 and 2 before the
DRT, Pune was that they were ready to redeem the mortgaged
property and therefore, there was no question of proceeding further
under the SARFAESI Act. It was contended by Petitioner Nos.1 and
2 that the mortgaged property was valued at Rs.1,65,05,000/- and that

they were willing to pay the said price for the purpose of redemption
of the mortgaged property. Though this Application was vehemently
opposed by the Respondent – Bank, this argument seems to have
found favour with the DRT, Pune, and by its order dated 8th January
2014, the DRT, Pune allowed the said Securitization Application
No.121 of 2012 and directed Petitioner Nos.1 and 2 to pay a sum of
Rs.1,65,05,000/- towards redemption of the mortgaged property in the
following manner :-
(i) 25% of the amount within one month from 8th
January, 2014; and
(ii) the balance 75% of the amount in five equal
monthly installments;
8. It is important to note that the DRT, Pune also directed
that in case Petitioner Nos.1 and 2 failed to follow the above
repayment schedule, the Respondent – Bank was at liberty to
appropriate the payments already made, if any, and thereafter dispose
of the mortgaged property in accordance with law. Being aggrieved
by this order, on 28th February 2014, the Respondent – Bank filed
Appeal No.64 of 2014 before the DRAT, Mumbai. The Petitioners

herein did not challenge this order of the DRT, Pune.
9. It appears that in part compliance of the order of the DRT,
Pune, Petitioner No.2 deposited through RTGS a sum of
Rs.41,26,250/- with the Respondent – Bank in the account of
Petitioner No.3. It is an admitted fact before us that the balance 75%
of the amount, as directed by the DRT, Pune, was not deposited in
five equal monthly installments. In fact, no further amount has been
deposited by the Petitioners. Furthermore, it is also an admitted fact
that till date, no application for extending the time to make the
aforesaid payment has been made by the Petitioners to the DRT,
Pune. In view of the fact that the Petitioners had not adhered to the
time schedule as set out in the order of the DRT, Pune, the
Respondent – Bank was entitled to proceed to take possession of the
mortgaged property. In view thereof, Respondent No.2 (i.e.
Tahasildar and Executive Magistrate, Pune City, Pune, Khadakmal
Ali, Pune), issued a notice dated 5th January, 2015 to the Petitioners
for the purpose of taking physical possession of the mortgaged
property. It is in these circumstances that the Petitioners moved M.

A. No.159 of 2015 in Appeal No.64 of 2014 to restrain the
Respondent – Bank from implementing and/or taking action as per the
said notice dated 5th January, 2015.
10. To our mind, once Petitioner Nos.1 and 2 did not adhere
to the time schedule set out in the order of the DRT, Pune, coupled
with the fact that the Respondent – Bank was thereafter granted
liberty to take possession of the mortgaged property and dispose it of
in accordance with law, the Appeal filed before the DRAT, Mumbai
itself did not survive. However, from the record it appears that the
DRAT heard the Miscellaneous Application No.159 of 2015 as well
as Appeal No.64 of 2014 (filed by the Respondent – Bank), in view of
the fact that the DRT, Pune had allowed redemption of the mortgaged
property for a sum of Rs.1,65,05,000/- when in fact, the dues of the
Bank were to the tune of more than Rs.23,00,00,000/- as on 18th
February, 2014. The DRAT therefore proceeded to hear the Appeal
itself and thereafter set aside the order of the DRT, Pune.
11. We have perused the orders passed by the DRT, Pune as

well as the order of the DRAT impugned in this Writ Petition. On
going through the aforesaid orders, we find that the DRAT was fully
justified in setting aside the order of the DRT, Pune. We are clearly
of the view that the DRT, Pune could not have allowed redemption of
the mortgaged property for the sum of Rs.1,65,05,000/- when the
mortgage was created for securing the dues of the Bank which was in
excess of Rs.23,00,00,000/- as on 18th February, 2014. In fact, even
the principal amount (as per the facilities granted by the Respondent –
Bank) was to the tune of Rs.12.30 crores. In this regard, it would be
apposite to refer to the provisions of section 60 of the Transfer of
Property Act, 1882 which read as under:-
“60. Right of mortgagor to redeem.— At any time after the
principal money has become due, the mortgagor has a right, on
payment or tender, at a proper time and place, of the mortgagemoney,
to require the mortgagee (a) to deliver to the mortgagor
the mortgage-deed and all documents relating to the mortgaged
property which are in the possession or power of the mortgagee,
(b) where the mortgagee is in possession of the mortgaged
property, to deliver possession thereof to the mortgagor, and (c) at
the cost of the mortgagor either to re-transfer the mortgaged
property to him or to such third person as he may direct, or to
execute and (where the mortgage has been effected by a registered
instrument) to have registered an acknowledgment in writing that
any right in derogation of his interest transferred to the mortgagee
has been extinguished:

Provided that the right conferred by this section has not been
extinguished by act of the parties or by decree of a Court.
The right conferred by this section is called a right to redeem and
a suit to enforce it is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any
provision to the effect that, if the time fixed for payment of the
principal money has been allowed to pass or no such time has been
fixed, the mortgagee shall be entitled to reasonable notice before
payment or tender of such money.
Redemption of portion of mortgaged property.—Nothing in this
section shall entitle a person interested in a share only of the
mortgaged property to redeem his own share only, on payment of a
proportionate part of the amount remaining due on the mortgage,
except only where a mortgagee, or, if there are more mortgagees
than one, all such mortgagees, has or have acquired, in whole or
in part, the share of a mortgagor.
(emphasis supplied)
12. Section 60 clearly provides that at any time after the
principal money has become due, the mortgagor has a right to seek
redemption of the mortgaged property on him paying or tendering the
mortgage money. If the mortgage money is paid/tendered as required
under section 60, the mortgagee is required (a) to deliver to the
mortgagor the mortgage deed and all documents relating to the
mortgaged property which are in the possession or power of the
mortgagee; (b) where the mortgagee is in possession of the mortgaged
property, to deliver possession thereof to the mortgagor; and (c) at the

cost of the mortgagor, either to re-transfer the mortgaged property to
him or to such third person as he may direct, or to execute and (where
the mortgage has been effected by a registered instrument) to have
registered, an acknowledgment in writing that any right in derogation
of his interest transferred to the mortgagee, has been extinguished.
The said section further provides that nothing therein shall entitle a
person interested in a share only of the mortgaged property to redeem
his own share only, on payment of a proportionate part of the amount
remaining due on the mortgage, except where a mortgagee, or if there
are more mortgagees than one, all such mortgagees, has or have
acquired, in whole or in part, the share of a mortgagor. This section
therefore clearly provides that a mortgaged property cannot be
redeemed on payment of a part of the mortgage money. If the
mortgaged property has to be redeemed in terms of section 60 of the
Transfer of Property Act, 1882, the entire mortgage money has to be
tendered in terms of section 60, before redemption can be ordered.
The only exception is when a mortgagee has acquired, in whole or in
part, the share of a mortgagor. We find that the DRT, Pune has
completely lost sight of this fundamental principle enshrined in

section 60 of the Transfer of Property Act, 1882. We therefore find
that the DRAT, Mumbai was fully justified in setting aside the order
passed by the DRT, Pune.
13. Having said this, we will now deal with the decision of
this Court in the case of Bank of Poona, now merged with Sangli
Bank Ltd., v/s Navrajasthan Co-op. Housing Society Ltd., Poona
and others1 which has been relied upon by the DRT, Pune. In the
order passed by the DRT, Pune, the observation with reference to this
decision is as follows:-
“The above inference is supported by law laid down by Hon'ble
Bombay High Court in the case of Bank of Poona Vs Navrajasthan
Co-op. Housing society Ltd., Poona and others (AIR 1968 Bombay
106)”
14. To our mind, the reliance placed on the aforesaid decision
is totally misplaced. The facts before the Division Bench of this
Court in the case of Bank of Poona (supra) was that a portion of the
mortgaged property was sold by the mortgagor. The mortgagee, not
knowing this fact, obtained a decree, and in execution thereof, itself

1 AIR 1968 BOMBAY 106 : 1967 SCC OnLine Bom 34

purchased the entire mortgaged property. The purchaser from the
mortgagor was not made a party to the suit. It was in these
circumstances, and taking into consideration the provisions of Order
34 Rule 1 of the Code of Civil Procedure, 1908 that this Court held
the purchaser could redeem only the portion purchased by him on
payment of the proportionate amount, as he was not a party to the suit
in which the decree was passed in favour of the bank. The Court held
that the sale in execution, although valid and effective as against the
mortgagors who were parties to the action, did not affect the right of
redemption of the purchaser from the mortgagor, inasmuch as he had
not been impleaded as a party to the action as required under Order 34
Rule 1 of Code of Civil Procedure, 1908. We fail to see how this
decision supports the case of the Petitioners that a mortgagor can
redeem a mortgaged property on part payment of the mortgaged
money. In fact, paragraphs 8, 9 and 10 [of the SCC OnLine Report]
supports the view that we have taken earlier, and read thus:-
“8. The question then is what are the rights of the Society as an
assignee of a portion of the mortgaged property in its favour under
the provisions of the Transfer of Property Act. We would like to
consider the question first apart from authorities. The relevant
sections which fall to be considered are ss. 60, 82 and 91 of the

Transfer of Property Act. Section 60 defines the rights and
liabilities of the mortgagor. The first part of the section entitles
him to redeem the property as soon as the mortgage amount
becomes payable it being subject to the proviso, “Provided that the
right conferred by this section has not been extinguished by the act
of the parties or by decree of a Court”. The last clause in this
section is relevant and it is:
“Nothing in this section shall entitle a person interested in a
share only of the mortgaged property to redeem his own
share only, on payment of a proportionate part of the
amount remaining due on the mortgage, except only where
a mortgagee, or, if there are more mortgages than one, all
such mortgagees, has or have acquired in whole or in part,
the share of a mortgagor”.
9. Now, the purport of this section seems to be very clear. As soon
as the mortgage money falls due the mortgagor is entitled to
redeem the property. But this right is subject to the continued
existence of the mortgage. If the right is extinguished either say by
conveyance of the said right by the mortgagor to the mortgagee by
a voluntary act or by a decree of a Court such as one of
foreclosure or by a completed sale in execution, then, the right
could no longer subsist. Subsequent provisions must be read in the
light of this fundamental requirement. The last clause in this
section provides that where a mortgagor owns only a share of the
mortgaged property to be redeemed, he cannot break up the
mortgage and insist on redemption of his share only. He must, if he
wants to redeem the property, redeem the entire mortgage. To this
again there is an exception and that is where a part of the equity of
redemption is acquired by the mortgagee he can redeem his share
only. The exception in this clause is a consequence to the proviso
to the first part of the section and recognises the principle that
redemption of the mortgage can be only to the extent to which the
equity of redemption is not extinguished. As has been frequently
observed this rule has been enacted both for the benefit of the
mortgagor and mortgagee in order to prevent multiplicity of suits.
If redemption can be permitted in part each one of the sharers may
institute separate suit against the mortgagee without making other
sharers parties and there may even be conflicting decrees and
confusion and chaos may result. Similarly, if the mortgagee was
entitled to file separate suits against the co-sharers a similar result
may follow. Where, however, the mortgagee acquires a part of the

property the mortgage is broken up and the sharer is entitled to
redeem his share only.
10. Section 91 provides for right of redemption and enables
amongst others redemption of the property by any person who has
any interest in, or charge upon, the property mortgaged or in or
upon the right to redeem the same, except the mortgagee of the
interest sought to be redeemed. Under this section a co-mortgagor
is entitled to redeem the mortgage and when read with the last
clause of s. 60 already referred to he must redeem the whole of the
mortgage but if the exception in that clause applies then of course
he can redeem his share.”
(emphasis supplied)
15. It is indeed not the case of the Petitioners that the facts in
present case would fall within the exception carved out in section 60
of the Transfer of Property Act, 1882.
16. In this view of the matter, we find absolutely no merit in
this Writ Petition and the same is hereby dismissed. We find from the
record that the Petitioners have been trying to constantly thwart and
frustrate the proceedings initiated by the Respondent – Bank by filing
one application after another. The details of these proceedings are set
out at paragraph 12 of the Affidavit of Mr. Manish Kumar Madhukar
(Senior Manager Law, of the Respondent – Bank) dated 28th April,
2015, in reply to the Writ Petition. We, therefore, are of the view that

this is a fit case to award costs of Rs.50,000/- to be paid by the
Petitioners jointly and / or severally to the Respondent – Bank within
a period of two weeks from today.
(B.P. COLABAWALLA, J.) (V.M. KANADE, J.)
After the judgment was pronounced, the learned counsel for the
Petitioner sought continuation of the interim stay granted earlier by
this Court. In view of what we have held earlier, we are unable to
accede to this request.
(B.P. COLABAWALLA, J.) (V.M. KANADE, J.)

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