Bombay HC: Applicability of Section 4 vs Section 5 of the Maharashtra Stamp Act to a Common Mortgage Deed.

 Issue- Whether a single mortgage deed securing obligations under multiple loan agreements should be treated as:

i) an instrument relating to several distinct matters/transactions (Section-5) or

ii) an instrument dealing with multiple documents used for one single transaction (Section-4).

Bombay High Court – Neepa Real Estate Pvt. Ltd. v. State of Maharashtra (23-12-2025) read with Supreme Court Chief Controlling Revenue Authority vs Coastal Gujarat Power Limited and Others held that-

Where a single mortgage deed secures liabilities arising out of multiple independent loan agreements, each constituting a separate and enforceable transaction and each requiring creation of security, such mortgage deed is treated as an instrument relating to several distinct transactions under Section 5 of the Stamp Act.

Section-4 applies only where there is one composite loan transaction and multiple documents are merely procedural or incidental.

If one mortgage deed secures more than one independent loan then law treats it as multiple transactions and Section-5 of the Stamp Act applies.

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Who are necessary parties for suit relating to mortgages?

 Order XXXIV, Rule 1 of the Code of Civil Procedure, 1908 deals with the parties that must be joined in suits relating to mortgages of immovable property.

Main Provision

"Subject to the provisions of this Code, all persons having an interest either in the mortgage-security or in the right of redemption shall be joined as parties to any suit relating to the mortgage."

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The Finer Nuances of Debt Funding. (Real Properties).

 Submitted by:

A.M. Ibrahim. B. Arch, MIBC, FIV, FICA, FIE (I), MCIT, MBIM (U.K).

https://drive.google.com/file/d/1vtpmtGFVUUs72SDtT6Gy9MTsFLAhprlP/view?usp=sharing

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Notification removing area restriction for Mortgage by deposit of title-deeds

 Section 58 in The Transfer of Property Act, 1882

. 4[(f) Mortgage by deposit of title-deeds.—Where a person in any of the following towns, namely, the towns of Calcutta, Madras, 5[and Bombay], 6[* * *] and in any other town7 which the 8[State Government concerned] may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immoveable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.

https://drive.google.com/file/d/1Fr_PcJJBlldvt1BlkeMT44fuvn7ObNzg/view?usp=sharing

By way of this notification, area restrictions have been removed.

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Whether purchaser of mortgaged property can claim the right of redemption even after passing the decree of foreclosure?

  The equity of redemption is a right which is subsidiary to the right of ownership. Such right is not over and above the right of ownership purchased by the plaintiff. The expression equity of redemption is a convenient maxim but an owner, who has stepped into the shoes of the mortgagor, after the purchase from the mortgagor but before filing a suit for foreclosure is entitled to redeem the property in terms of Section 60 of the Act. The second issue which needs to be addressed is,

(ii) Whether the decree obtained in a suit for foreclosure operates as res judicata and the right of redemption stands extinguished by the decree of the Court? {Para 19}

20. The High Court has held that the decree for foreclosure will operate as res judicata on account of the fact that the appellant filed an application for stay of the execution proceedings. The Executing Court has dismissed such an application. Such dismissal of the application in execution proceedings would operate as res judicata. It was also held that the appellant has lost right of redemption which is coextensive with the right of foreclosure.

21. An application for stay of execution does not have any trapping of a decree as is contained in Order XXI Rules 101 & 103 of the Code. The said provision reads as under:

“101. Question to be determined.-All questions (including questions relating to right, title or interest in the property) arising between the parties to a proceeding on an application under rule 97 or rule 99 or their representatives, and relevant to the adjudication of the application, shall be determined by the Court dealing with the application, and not by a separate suit and for this purpose, the Court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions.

xx xx xx

103. Orders to be treated as decrees. – Where any application has been adjudicated upon under rule 98 or rule 100, the order made thereon shall have the same force and be subject to the same conditions as to an appeal or otherwise as if it were a decree.”

22. The only effect of filing of an application for stay of the execution would be that the appellant can be said to be aware of the fact that there is a decree for foreclosure passed against him which has not been stayed by virtue of the order of the Court. There is no determination of the claim as is contemplated in terms of Order XXI Rule 97 or Rule 99 of the Code having force of decree. The declining of stay of execution will not operate as res judicata only because Section 11 Explanation VII of the Code is applicable to the execution as well.

23. Therefore, the findings recorded by the High Court that the appellant is bound by the decree passed in the suit for foreclosure  is not tenable inter alia because the appellant was not impleaded as a party, though mandated under Section 91 of the Act and Order XXXIV Rule 1 of the Code. The mortgagee was aware of the transaction of purchase in view of the judgment of this Court in Dr. Govinddas as well as for the reason that the possession of the appellant was recorded in the revenue record. The subsequent conduct of mortgagee who has taken possession from the appellant also corroborates the fact that the mortgagee was aware of the factum of sale and possession of the appellant but still have chosen not to implead him as a necessary party. Still further, it is apparent from the pleadings itself that the original mortgagor had colluded with the mortgagee. Therefore, the right conferred by Section 60 of the Act does not stand extinguished by decree of the Court which is to be binding and had to be passed in the presence of the necessary parties and should not be collusive.

Reportable

Supreme Court of India

Narayan Deorao Javle (Deceased ) ... vs Krishna on 17 August, 2021

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Questions and Answers on law Part 17

Q 1:- Whether Judgments and orders passed by Civil court are executable throughout the territory of India?

Ans:-Yes, as per Article 261(3) in The Constitution Of India 1949

(3) Final judgments or orders delivered or passed by civil courts in any part of the territory of India shall be capable of execution anywhere within that territory according to law.

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Whether mortgagee is under obligation to hand over any advantage he has received from mortgage to mortgagor?

 It is well-settled that the right of redemption under a

mortgage deed can come to an end or be extinguished only by a

process known to law, i.e., either by way of a contract between the

parties to such effect, by a merger, or by a statutory provision that

debars the mortgagor from redeeming the mortgage. In other

words, a mortgagee who has entered into possession of the

mortgaged property will have to give up such possession when a

suit for redemption is filed, unless he is able to establish that the

right of redemption has come to an end as per law. This emanates

from the legal principle applicable to all mortgages – “Once a

mortgage, always a mortgage”.

15. In the present case, it is clear that none of the

aforementioned conditions in which the right of redemption comes

to an end exist with respect to the mortgage deed dated

14.05.1947. As regards the impact of the re-grant on such right of

redemption, it must be noted that such re-grant in favour of the

mortgagee could not have been made but for the fact that he was

in actual possession of the property by virtue of his position as a

possessory mortgagee. There is no doubt that had the Mirashi

tenant––mortgagor applied for a re-grant, the suit land would have

certainly been granted in his favour, as the rights of permanent

tenants in watan lands were allowed to subsist even after the

coming into force of the Abolition Act. Thus, in our considered

opinion, the re-grant to the Appellants’ predecessor based on

actual possession as mortgagee cannot be divorced from the

existence of the underlying mortgagor-mortgagee relationship

between the parties. Therefore, any benefit accruing to the

mortgagee must necessarily ensue to the Mirashi tenant––

mortgagor.

16. In this regard, it is apposite to note Section 90 of the

Indian Trusts Act, 1882, which reads as under:

“Section 90. Advantage gained by qualified owner.—

Where a tenant for life, co-owner, mortgagee or other

qualified owner of any property, by availing himself of

his position as such, gains an advantage in derogation

of the rights of the other persons interested in the

property, or where any such owner, as representing all

persons interested in such property, gains any

advantage, he must hold, for the benefit of all persons

so interested, the advantage so gained, but subject to

repayment by such persons of their due share of the

expenses properly incurred, and to an indemnity by the

same persons against liabilities properly contracted, in

gaining such advantage.”

A bare reading of this provision indicates that if a

mortgagee, by availing himself of his position as a mortgagee, gains

an advantage which would be in derogation of the right of the

mortgagor, he must hold such advantage for the benefit of the

mortgagor.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4594 OF 2010

SHANKAR SAKHARAM KENJALE  Vs  NARAYAN KRISHNA GADE 

MOHAN M. SHANTANAGOUDAR, J.

Dated: April 17, 2020

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Whether tenant can file appeal against decree of possession passed against landlord?

An important aspect of the matter is that Defendant Nos. 1 and 2 only claimed to be the tenants in the property. They did not claim any ownership rights. It is true that according to them, it was Defendant No. 3 Mustaffa Shah Khan who was the mortgagee of the property but the trial court in the presence of the owner after contest decreed the suit in favour of the Plaintiff and against the Defendants. It specifically held that the Plaintiff had become the full owner of the whole property which stood redeemed and Defendant No. 3 Mustaffa Shah Khan had no share in the property. This finding should have been challenged by Defendant No. 3. This finding cannot be challenged by the tenants.

13. The tenants remain tenants whoever be the landlord/owner. Once Defendant No. 3 Mustaffa Shah Khan had not challenged the decree of the trial court with regard to his title, Defendant Nos. 1 and 2 cannot be allowed to challenge the finding of ownership with which they are not directly concerned. Therefore, the appeal filed by them before the District Judge on the issue as to whether the Plaintiffs had become the full owner of the property or not, was not maintainable. They could have challenged the decree on other grounds but not on this ground.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4610 of 2014

Decided On: 12.09.2019

Mohan Chandra Tamta  Vs.  Ali Ahmad (D) thr L.Rs and Ors.

Hon'ble Judges/Coram:

Deepak Gupta and Aniruddha Bose, JJ.

Citation: (2019) 9 SCC 471

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How to ascertain whether a transaction is lease or mortgage?

The guidelines for deciding - whether a transaction is a lease or a mortgage contemplate that the name given to the document is not conclusive. The question has to be decided with reference to the predominant intention of the parties as gathered from the recitals and the terms of the documents and the surrounding circumstances including conduct of the parties. In the case of a mortgage, there is a transfer of interest to secure repayment of debt and in the case of a lease, there is a transfer of a right to enjoy the property [See: T.P. Act by Mulla - 9th Edn. Page 621]. In the case of Fuzhakkal Kuttappu v. C. Bhargavi and Ors.MANU/SC/0366/1976 : [1977]1SCR696 , it has been observed that the nomenclature given to a document by the writer or even by the parties is not always conclusive. In construing a document, it is necessary to find out the intention of the parties executing such document. Such intention has to be gathered from the recital, the terms in the document and from surrounding circumstances. When there is a document of a composite character disclosing features of mortgage and lease, the Court will have to find out the pre-dominant intention of the parties executing the document viewed from the essential aspect of the reality of the transaction. In that case, it was further observed that the mortgages are not always simple, English, usufructuary as defined in T.P. Act. They may be anomalous. Even so, the essential feature of a mortgage, which is not there in a lease, is that the property transferred is a security for repayment of a debt in a mortgage whereas in a lease, it is transfer of a right to enjoy the property. In the instant case, the suit property is a shop; the transferee was put in possession as he was to carry on his business; however, he had no power to lease or sell; no rate of interest was fixed; there is nothing to indicate as to how Rs. 16,200/- was to be appropriated. In the present matter there is no evidence to show that Ex.P5 was executed as security for the alleged loan. As slated above, the tenancy of the respondent continued even after 1969 and in the above circumstances the High Court was right in holding that Ex.P5 was a device to defeat the said Act.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4122 of 1999

Decided On: 22.07.2004

Kaveripatnam Subbaraya Setty Annaiah Setty Charities Trust

Vs. S.K. Viswanatha Setty

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Whether mortgagee can take benefit of part performance if there is sale agreement between him and mortgagor?

 The plaintiffs’ suit for redemption of
mortgage of four properties was initially decreed
by the learned trial Court. In appeal, the decree
was partially reversed insofar as the two items of
properties are concerned. The said two items are
properties were the subject matter of sale
agreements between the mortgagor and the mortgagee
pursuant whereto on full payment of the agreed
amount by the mortgagee to the mortgagor the
mortgagee was allowed to continue to remain in
possession under the sale agreements. It is in

these circumstances that the First Appellate Court
and the High Court took the view that the
plaintiffs’ suit insofar as the redemption of the
aforesaid two items of properties are concerned
could not have been decreed in view of the
provision of Section 53A of the Transfer of
Property Act, 1882.

4. The plaintiffs’ suit for redemption in
the face of the terms of the sale agreements
insofar as the two items of properties are
concerned, could not have been decreed in view of
Section 53A of the Transfer of Property Act, 1882.
The plaintiffs could have but did not not bring an
action for declaration of title and recovery of
possession on the basis of title. In such
circumstances “the fault” on the part of the
defendants to bring a suit for specific
performance of the sale agreements to enable the
transaction of agreement to sell to fructify into
a valid sale cannot defeat their right under

Section 53A of the Transfer of Property Act, 1882.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S).566 OF 2016

RAMESH CHAND  Vs  NAND LAL

Dated:APRIL 24, 2018.

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Whether Mortgagor has right to redeem mortgage even after sale of mortgaged property

 It would be necessary to examine as to when the right of the petitioner in the present case could be said to be extinguished by application of Section 60 of the Transfer of Property Act, 1882. In the case of Allokam Peddabbayya .vs. Allahabad Bank - MANU/SC/0700/2017 : (2017) 8 S.C.C. 272, the Hon'ble Supreme Court has taken into consideration Section 60 and proviso thereto of the Transfer of Property Act, 1882 and earlier judgments on the said provision have been taken into consideration. In the said judgment, the Hon'ble Supreme Court has concluded as follows:-

"22. In Mhadagonda Ramgonda Patil it was observed that the mortgagor has a right of redemption even after sale has taken place pursuant to the final decree, but before the confirmation of sale.

23. Therefore, the crucial aspect even under the said provision is "confirmation of sale". The mortgagor has a right of redemption even after sale has taken place but before confirmation of sale. In the present case, the fact remains that there was no confirmation of sale in favour of respondent no. 5 under the provisions of the said Act and Rules particularly sub-rule (14) of Rules 107 of the said Rules.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition No. 2564 of 2016

Decided On: 12.09.2018

Aniruddha Vs. The Divisional Joint Registrar Co-operative Societies, Amravati and Ors.

Hon'ble Judges/Coram:

Manish Pitale, J.

Citation: 2019(2) MHLJ 478

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Whether court can pass decree granting benefit of paying decretal amount in installments in mortgage suit?

By virtue of Rule 4 read with Rule 2 of Order 34 C.P.C., in passing a preliminary decree, the Court shall fix a period (and that period must be 6 months or less) within which the defendants shall pay the amount determined to the plaintiff. The decree should specifically refer to the time so granted and direct the defendant to pay the amount determined within such time and allow the plaintiff to apply for a final decree in case the amount is not paid within time fixed. Sub-rule (2) of Rule 4 enables the Court to extend the time for payment of the amount. In a case where the mortgage document does not allow the mortgagor to repay the "amount in instalments, the Court in passing decree under Rule 4 of Order 34, CPC can only grant to the defendant time not exceeding 6 months and cannot grant him the benefit of paying the amount in instalments. Payment in instalments is foreign to the scope of Rule 4 Order 34, CPC.

6. In this connection it may be relevant to notice that Sub-rule (1) of Rule 11 of Order 20, CPC reads thus -

Decree may direct payment by installments --(l)Where and in so far as a decree is for the payment of money, the Court may for any sufficient reason incorporate in the decree, after hearing such of the parties who had appeared personally or by pleader at the last hearing, before judgment, an order that payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable."

The above provision enables the Court passing the decree to grant defendant benefit of paying decretal amount in instalments in the case of "decree for payment of money". It is argued a decree for recovery of money on mortgage can be regarded as decree for recovery of money. A decree under Order 34 Rule 4, CPC is not a decree for payment of money, but it is a decree for recovery of money by sale of mortgaged property. Such a decree has to be passed in conformity with the provisions of Order 34, CPC, and has to be regarded as a decree passed on a mortgage and not a decree for money simpliciter. Therefore, the provisions of Rule 11 of Order 20 , CPC cannot enable the Court to grant the benefit of instalments while passing a decree for enforcement of a mortgage. 

IN THE HIGH COURT OF GAUHATI

Civil Revision No. 351 of 1985

Decided On: 10.02.1992

 Sher Alam Vs.  United Bank of India

Hon'ble Judges/Coram:

U.L. Bhat, C.J.

Citation: AIR 1993 Gauhati 25

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Whether issue of validity of mortgage can be raised for the first time before high court?

The issue with regard to validity of the mortgage on the strength of which the loan was sanctioned and obtained was not raised at any point of time in any of the earlier proceedings. It was so raised for the first time before the High Court. The High Court, in our considered view, therefore, ought not to have gone into the said question at such a belated stage. The fact that the mortgage was acted upon by the parties to sanction and obtain the loan is another fact that the High Court had overlooked. The mortgage was also in respect of certain other properties, the sale of which has attained finality. This is a vital aspect of the case that the High Court ought to have taken into account while passing the impugned order. Above all, an independent Special Leave Petition (Special Leave Petition (Civil) No. 13173 of 2017) has also been filed by the auction purchaser who is also aggrieved by the order of the High Court. The auction purchaser is an innocent third party who, it is stated, has obtained a loan to pay the sale price and is presently servicing the said loan. It is also stated that the auction purchaser is in possession of the property since March 2016 and has spent considerable amount of money in renovating/repairing the premises in question.

7. For all the aforesaid reasons, we are of the view that the conclusion of the High Court is not tenable in law. We accordingly allow this appeal and set aside the order of the High Court.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 17372 of 2017 

Decided On: 30.10.2017

State Bank of India and Ors. Vs. Metta Chandra Sekhar Rao and Ors.

Hon'ble Judges/Coram:

Ranjan Gogoi and Navin Sinha, JJ.

Citation: (2017) 16 SCC 777

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How to ascertain that a document is mortgage by conditional sale or sale with condition to repurchase?

 The recitals reveal no reference to any loan taken or mortgage created with regard to any immovable property as security for such loan, much less to discharge any debt. It does not evince the creation of a debtor and creditor relationship. On the contrary, the recitals are specific that the vendor was in need of money to run the vehicle purchased by him on hire, and was selling the shop to raise money for the purpose. The suit for redemption was also filed beyond the period of 5 years. Significantly, the first appellate court observed that the recitals indicated that it was a sale deed, but concluded that it was a mortgage by conditional sale, only because the right to redemption was incorporated in the same document, which was but only one of the factors amongst others, to determine the true nature of the document.

9. In Tamboli Ramanlal Motilal (Dead) by L.Rs. v. Ghanchi Chimanlal Keshavlal (Dead) by L.Rs. and Anr. MANU/SC/0229/1992 : 1993 Supp. (1) SCC 295, the question was similar with regard to the nature of the document, in absence of any intention expressed with regard to creation of a debtor and creditor relationship. Holding that the document was not a mortgage by conditional sale but sale with an option to repurchase, it was held:

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 1300 of 2009

Decided On: 24.10.2017

 Suraj Narain Kapoor and Ors. Vs. Pradeep Kumar and Ors.

Hon'ble Judges/Coram:

Ranjan Gogoi and Navin Sinha, JJ.

Citation:(2017) 16 SCC 487

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Good article on subrogation( Transfer of property Act)

S 92 OF TRANSFER OF PROPERTY ACT -SUBROGATION

Subrogation is a Roman term meaning “substitution”. It is the right of person to stand in the place of a creditor. When a mortgagee transfers his mortgage debt, his assignee becomes vested with all his rights that is his assignee is substituted or subrogated in the place of mortgagee. In order to be entitled to subrogation, a person must pay off the entire amount of a prior mortgage, because subrogation takes place by redemption,and unless there is redemption, there can be no subrogation. Partial payment of mortgage-debt can not give rise to a claim for a partial subrogation.

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Whether right to seek sale of mortgaged property is available to mortgagee by conditional sale?

 It is important to remember that mortgage is a transfer of interest in specific immovable property towards "security for repayment of a debt". The interest itself may be different in different forms of mortgage. In a simple mortgage, what is transferred is a power of sale, whilst in a usufructuary mortgage it is the right of the mortgagor to the enjoyment of the usufruct. In a mortgage by conditional sale or an English mortgage what is transferred is the right of ownership subject to a condition that on default of payment on a certain date the sale shall become absolute, or that on such payment being made the sale shall become void, or that on such payment being made the buyer shall transfer the property to the seller. Whatever be the form of mortgage, the transfer is of "some" interest only and not of the "whole" interest of the mortgagor. Unlike in the case of a sale in payment of a debt which extinguishes the debt, the debt always subsists in a mortgage. When a mortgagor mortgages his immovable property, he does not cease to be its owner; the equity of redemption still vests in him. This equity is lost unto him only when there is a final decree of foreclosure or sale in favour of the mortgagee. This has always been our law and a mortgage by conditional sale is no exception to it.

7. The statutory provisions, which are reflected in Sections 58, 60 and 67 of the Transfer of Property Act and Order XXXIV of the Code of Civil Procedure make this position clear. Clause (a) of Section 58 of the Transfer of Property Act defines a mortgage as "transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability." Clause (c), which deals with mortgage by conditional sale, provides as follows :-

"(c) Mortgage by conditional sale.----Where the mortgagor ostensibly sells the mortgaged property-

on a condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or

on a condition that on such payment being made the sale shall become void, or

on a condition that on such payment being made the buyer shall transfer the property to the seller,

the transaction is called mortgage by conditional sale and the mortgagee, a mortgagee by conditional sale:

Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale."

Section 60 of the Transfer of Property Act provides for the mortgagor's right to redeem. At any time after the principal money has become due, the mortgagor has a right, on payment or tender of the mortgage money, at a proper time and place, to require the mortgagee to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in possession or power of the mortgagee and at the cost of the mortgagor either to re-transfer the mortgaged property to him or to his nominee and to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. Section 67 deals with the mortgagee's right to foreclosure or sale. In the absence of a contract to the contrary, the mortgagee has, at any time, after the mortgage-money has become due to him and "before a decree has been made for the redemption of the mortgaged property" or before the mortgage- money has been paid or deposited as provided in Section 67, a right to obtain from the court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property or a decree that the property be sold. It is pertinent to note that the right to seek foreclosure is not available to any mortgagee other than a mortgagee by conditional sale or a mortgage under an anomalous mortgage by the terms of which he is entitled to foreclose. So also, the right to seek sale is not available to a usufructuary mortgagee or a mortgagee by conditional sale. What the scheme of this Section indicates is that the only remedy of a mortgagee by conditional sale is to apply for foreclosure and not for a decree of sale. 

IN THE HIGH COURT OF BOMBAY

Second Appeal No. 306 of 1994

Decided On: 25.01.2017

Pandurang Maruti Dombale Vs. Bapurao Piraji Owal and Ors.

Hon'ble Judges/Coram:

S.C. Gupte, J.

Citation:2017(5) Bom CR 276

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How to ascertain limitation for redemption of usufructuary mortgage?

On the question of limitation on redemption of
usufructuary mortgage, the High Court has placed reliance on
Sampuran Singh & Others Vs. Niranjan Kaur & Others reported in
(1999) 2 SCC 679 and Prabhakaran & Others Vs. M. Azhagiri
Pillai reported in (2006) 4 SCC 484. The position taken by
the High Court in those decisions has been held to be no more
good law in Singh Ram Vs. Sheo Ram and Others reported in

(2014) 9 SCC 185 wherein it has been held that the starting
point of limitation for redemption of usufructuary mortgage
should run from the date the mortgage money is paid or is
otherwise satisfied.
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 788-789 OF 2016

MOHAN LAL
 V
MOHAN LAL.
Dated:JANUARY 29, 2016

Citation:(2016) 13 SCC 90

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Leading judgment on basic concept of mortgage

  It is important to remember that mortgage is a transfer of

interest in specific immovable property towards “security for repayment

of a debt”.   The interest itself may be different in different forms of

mortgage.  In a simple mortgage, what is transferred is a power of sale,

whilst in a usufructuary mortgage it is the  right of the mortgagor  to the

enjoyment of the  usufruct.   In a mortgage  by conditional sale or an

English mortgage what is transferred is the right of ownership subject to

a condition that on default of payment on a certain date the sale shall

become absolute, or that on such payment being made the sale shall

become   void,   or   that   on   such   payment   being   made   the   buyer   shall

transfer the property to the seller.  Whatever be the form of mortgage,

the transfer is of “some” interest only and not of the “whole” interest of

the mortgagor. Unlike in the case of a sale in payment of a debt which

extinguishes the debt,  the debt always subsists in a mortgage. When  a

mortgagor mortgages his immovable property, he does not cease to be

its owner; the equity of redemption still vests in him.  This equity is lost

unto him only when there is a final decree of foreclosure or sale in favour

of the mortgagee.   This has always been our law and a mortgage by

conditional sale is no exception to it.                                                                                                                    

    IN THE HIGH COURT OF JUDICATURE AT BOMBAY

              CIVIL APPELLATE JURISDICTION

SECOND APPEAL NO.306 OF 1994

Pandurang Maruti Dombale Vs  Bapurao Piraji Owal & Ors.

CORAM :  S.C. GUPTE, J.

      

  DATED  :  25 JANUARY 2017

Citation: 2017(3) ALLMR 348

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Whether court can decree for suit for specific performance of contract of mortgaged property?

A submission was also sought to be raised on behalf of the
Appellants that the Trial Court has erred in not appreciating the fact that

the rights of the Defendant No.3 Bank would get affected. As indicated
hereinabove, the Trial Court in the impugned judgment and order has
taken sufficient care to see to it that the rights of the third parties are not
affected by observing that the third parties would not be affected if their
dues   are   not   cleared   by   the   Defendant   Nos.1   and   2.   Moreover   the
Defendant No.3 it seems has withdrawn the suit filed by it against the
Defendant Nos.1 and 2. The submission of the Learned Counsel for the
Appellants   that   the   instant   decree   is   contrary   to   the   order   dated
04.05.1999 passed in the suit is only stated to be rejected as it is well
settled that all interim orders are subject to the final orders that are passed
in the suit. In my view, there is no merit in the above First Appeal, the
decree passed by the Trial Court granting specific performance to the
Respondent Nos.1 and 2 herein i.e. the Plaintiffs therefore does not merit
any   interference   in   the   Appellate   jurisdiction   of   this   Court.  
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO.795 OF 2016
ALONGWITH
CIVIL APPLICATION NO.2212 OF 2014

 Sham Pundlalik Dhumatkar 
V
 Smt. Pushpa Mohanlal Talreja  
CORAM  :  R.M. SAVANT, J.

 Dated : 09.08.2016
Citation: 2017(1) ALLMR 65

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How to ascertain whether registered document is sale with a condition of repurchase or is a mortgage?

The next question to be decided in this appeal is as to whether the registered document, Exh. 34 dated 20-3-1961 is out and out sale with a condition of repurchase within 10 years or is a mortgage. In the present case Exh. 34 the document relied on by both the parties to support their contentions refers to the fact that by the said document the suit property is absolutely transferred by the plaintiffs to the defendants. However, in the said document there is one recital to the effect that if within 10 years from the date of the execution of the said document the plaintiffs return the total amount of consideration he received under the agreement i.e. Rs. 200 the defendants agreed to transfer the said property in favour of the plaintiffs. Therefore, in this case the Court has to read the document as a whole and gather the intention of the parties. If after reading the document as a whole the Court comes to the conclusion that by the said document the plaintiffs sold the suit land absolutely to the defendants and only concession is given to the plaintiffs to repurchase the said property if they return the amount they have received under this salewithin 10 years, then the said document will be construed as a document of sale with the condition to repurchase. However, on the other hand if the Court comes to the conclusion that there is a sort or relationship of creditor and debtor between the defendants and plaintiffs and the property was transferred by way of security, then in that event the document, Exh. 34 shall be termed as mortgage. In the present case after going through the terms of the document, Exh. 34 the lower Appellate Court came to the conclusion that the document, Exh. 34 is a sale and not mortgage. The title of the said document, Exh. 34 to the effect that this is a sale deed for amount of Rs. 200/-, the averment in the said document to the effect that the land described in the document is sold to the defendants, the averments to the effect that the suit property is sold to the defendants and actual possession is handed over to the defendants and that the defendants and their heirs are entitled to use it as their own property by the said document and lastly the averment to the effect that in case any legal complication or objection arises in respect of the suit land, the same shall be removed by the plaintiffs, clearly show that the transaction entered into vide Exh. 34 was out and out sale. It is true that lastly it is stated in the said document that in the event the plaintiffs pay the amount which they received under the sale deedwithin 10 years from the execution of the sale deed, the defendants agreed to resell the said property to the plaintiffs. However, taking into consideration the clear averments made in the document to the effect that the property is out and out sold by the plaintiffs to the defendants it appears that in view of the near relationship of the parties, the defendants agreed to resell the said property on the plaintiffs paying the amount which they have received under the sale deed within 10 years from the execution of the sale deed. This being proper construction of the document after reading the document, Exh. 34, as a whole, I do not see any reason to interfere with the said finding given by the lower Appellate Court, in this second appeal.

IN THE HIGH COURT OF BOMBAY

Second Appeal No. 369 of 1986

Decided On: 28.03.1995

Decided On: 29.03.1995

 Vasant Pandu alias Pandurang Birwatkar
Vs.
Shankar Dhondu Ghole and Anr.

Hon'ble Judges/Coram:
M.L. Dudhat, J.

Citation:1995(2) MHLJ471

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