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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Whether mortgaged property belonging to joint family can be sold in auction?

 Upon hearing the learned Counsel, we find it quite shocking that against the upset price of Rs. 41,97,550/-, the property has been sold only for Rs. 5,50,000/-. It is an admitted fact that the property belonged to all the family members and the said property was not mortgaged by all, but was mortgaged only by a few family members to secure the debt of Respondent No. 6.

9. The above facts, which are not disputed, clearly reveal irregularities and therefore, the sale in favour of Respondent No. 10 must be set aside, but Respondent No. 10 should also be compensated as he had paid the purchase price of Rs. 5,50,000/- on 16.6.1998 to the Respondent Bank.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 3812 of 2016.

Decided On: 29.03.2016

Olinda Femandes

Vs.

Goa State Co-operative Bank Ltd. and Ors.

Hon'ble Judges/Coram:

Anil R. Dave and A.K. Goel, JJ.

Citation:(2016) 13 SCC298

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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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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  v/s Bank of Maharashtra and another

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

Pronounced on : 10th August, 2015

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When territorial jurisdiction of court does not depend on place where mortgaged property is situated?

 In view of our discussion earlier in this judgment, we
hold that the DRT whilst deciding whether it has territorial
jurisdiction to entertain a Securitisation Application filed under
section 17 of the SARFAESI Act would be guided by the principles
enshrined in section 19(1) of the RDDB Act and not by section 16 of
the Code of Civil Procedure, 1908. Rule is accordingly made
absolute and the Petition is granted in terms of prayer clause (a).
Securitisation Application No.136 of 2011 is restored to the file of
the DRT – III, Mumbai, to be decided on merits and in accordance
with law
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.73 OF 2014
GSL (India) Ltd. .
v/s
Asset Reconstruction Co. (India) Ltd.
and others .
CORAM: S.C. DHARMADHIKARI &
 B.P. COLABAWALLA JJ.

Pronounced On : 15th December, 2015.

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What remedy is available if mortgaged property is attached as per provision of Maharashtra co-operative societies Act?

The question still arises, as to what remedy respondent No. 4 would 9 WP3511/2011 avail if she believed that the auction sale was tainted with irregularity/mistake or fraud and that because of such sale she had sustained substantial injury etc. As mentioned above, as per the provisions of sub-rule 14 (i), respondent No. 4 had an ample opportunity to challenge the legality of the sale on the grounds mentioned above. It is also observed above that soon after the auction sale, she came to this Court by filing Writ Petition No. 5112 of 2009 and this Court dismissed her petition probably on the ground that she had alternate remedy available to her. Despite of the clear suggestion of the Court, unfortunately respondent No. 4 was not given legal advice to approach Recovery Officer by making proper application under sub-rule 14 (i). The enquiry contemplated under sub-rule 14(i) is very important. It allows the applicant to prove her case on facts. After holding such enquiry the Recovery Officer is required to pass a reasoned order. And such order probably could be challenged in a revision under S.154.

Bombay High Court

The Manager Adarsh mahila nagri sahakari bank ltd vs The State Of Maharashtra on 13 October, 2011

Bench: A.V. Nirgude

Citation;2012(2) ALLMR 566

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Whether mortgagor can lease out mortagaged property when mortgage is not in existence?

 Upon consideration of the facts admitted and which have been reproduced earlier what emerges on record is that defendant no. 3 was inducted as tenant by mortgagors Vijay Kumar and Rajendra Kumar in the year 1971 and that was the time when the proceedings challenging the preliminary decree passed on 30.9.1958 in the mortgage suit bearing Civil Suit No. 3-A/1956 were pending before the Hon'ble Apex Court in the nature of Civil Appeal no. 582/1969. This appeal was allowed by the Hon'ble Supreme Court on 9.4.1974 whereby the judgment and decree of the High Court were set aside and the preliminary decree dated 30.9.1958 passed by the trial Court was restored. This judgment thus, brought to an end the mortgage on 9.4.1974, and restored the preliminary decree

 dated 30.9.1958 passed by the trial Court. That means, its effect would relate back to 30.9.1958 when the mortgage between Vijaysing Mohta and his two sons on one hand and original plaintiff Gangabai on the other was put to an end and preliminary decree for sale of joint half share of plaintiff was passed. Therefore, the question of holding lease created in or about the year 1971 by the mortgagors in favour of the respondents as legally valid on the basis of Section 65A of the TPA, 1882, would not arise. Under sub-Section 2(a) of Section 65 of the TPA, 1882, lease made by a mortgagor while being lawfully in possession of mortgaged property binds the mortgagee, if the lease is made in the ordinary course of management of property and is in accordance with any local law. But, in the instant case, mortgage itself being not in existence in 1971, by virtue of judgment of the Hon'ble Supreme Court confirming the preliminary decree dated 30.9.1958, there was no relationship of mortgagor-mortgagee at that time and therefore, Section 65-A power to lease was not available.

Bombay High Court

Original vs Smt. Jankibai Pyarelal Shrivas on 28 March, 2014

Bench: S.B. Shukre

Citation;AIR 2015(NOC)546 Bom

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