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 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 bank can retain one property against any other loan taken by mortgagee?

 On perusal of the documents on record, this Court is of the considered opinion that both the loans are separate and distinct. Different properties have been mortgaged under the loan. The property in question was mortgaged under the present loan, which has admittedly been repaid. It is admitted fact that the property was not mortgaged in another loan. Although, the other loan remains to be payable, but different properties were mortgaged in that loan. Admittedly, one of the properties which was mortgaged in this loan has been released by the respondent-bank itself. This property does not fall within the definition of 'secured asset' as defined under Section 2(zc) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which means 'the property on which the secured interest is created'.

 In view of above, the writ petition succeeds. A mandamus is issued directing the respondent-bank to return the title deeds and other documents relating to Plot No. A-7, Industrial Estate, Kashipur, which are in possession of respondent No. 1, under mortgage for loan bearing No. 0850500000571, to the petitioners.

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL

Writ Petition No. 2524 of 2015 (M/S)

Decided On: 01.03.2016

Appellants: Meetu Jain and Ors.
Vs.
Respondent: Bank of Baroda and Ors.

Hon'ble Judges/Coram:Umesh Chandra Dhyani, J.

Citation:AIR 2016 Uttarakhand 60

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Whether Subsequent written agreement between mortgagor and mortgagee reducing rate of interest requires registration?

Equivalent Citation: AIR1952SC153, 1952(54)BOMLR543, [1952]1SCR491

IN THE SUPREME COURT OF INDIA

Decided On: 22.02.1952

Appellants:Kashinath Bhaskar Datar
Vs.
Respondent:Bhaskar Vishweshwar Karve

Hon'ble Judges/Coram:
S. Murtaza Fazal Ali and Vivian Bose, JJ.

Indian Registration Act 1908 - s. 17(1)(b)—Subsequent document varying terms of the previous document—“Interest” in Immovable property being limited and extinguished

Indian Registration Act (XVI of 1908), Section 17(1)(b), 17(2)(v)(xi)-Indian Evidence Act (I of 1872), Section 92, prov. 4-Mortgage-Mortgagee entitled to certain rate of interest under mortgage bend- Subsequent written agreement between mortgagor and mortgagee reducing rate of interest-Whether agreement requires registration.

One part of the "interest" which a mortgagee has in mortgaged property within the meaning of Section 17(1)(b) of the Indian Registration Act, 1908, is the right to receive interest at a certain rate when the document provides for interest. If that rate is varied, whether to his advantage or otherwise, then his "interest" in the property is affected. If the subsequent agreement substitutes a higher rate, then to the extent of the difference it "creates" a fresh "interest" which was not there before. If the rate is lowered, then his original "interest" is limited.

U Po Thin v. The Official Assignee (1938) R.L.R. 293 : s.c. [1938] A.I.R. Ran. 285, approved.

Tika Ram v. Deputy Commissioner of Bara Banki (1899) L.R. 26 I.A. 97 100 : s.c. 1 Bom. L.R. 692 referred to.

There is a difference between a receipt acknowledging payment of the mortgage debt and a remission or a release by the mortgagee. A receipt is not the payment, nor does the document in such a case serve to extinguish the mortgage or limit the liability. It is the payment of the money which does that and the receipt does no more than evidence the fact. Not so a release. The extinguishment or diminution of liability is in that event effected by the agreement itself and not by something external to it. If the agreement is oral, it is hit by proviso 4 to Section 92 of the Indian Evidence Act, 1872, for it "rescinds" or "modifies" the contract of mortgage. If it is in writing, it is hit by Section 17(1)(b) of the Indian Registration Act, 1908, for in that case the writing itself "limits" or "extinguishes" the liability under the mortgage.

If the mortgagee cannot, in the face of the subsequent agreement, enforce the terms of his bend, then the subsequent undertaking has effected a modification, and if that has the effect of limiting or extinguishing the mortgagee's interest, it is hit either by Section 17(7)(b) of the Indian Registration Act, 1908, or a. 92, prov. 4, of the Indian Evidence Act, 1872. But when there is a mere payment of money, that is done under the terms of the bend, for the contract of mortgage postulates that the mortgagor should repay the money borrowed, and (that when he does so, the mortgagee's interest in the property shall be "limited" to the extent pf the repayment or, when all is repaid, be wholly extinguished ; nor does a payment have to be made by a written or registered instrument, or oven evidenced by one. Clause (xi) to Section 17(2) of the Indian Registration Act is based on this principle. It draws a distinction between a document which, by force of its terms, effects the extinguishment, or purports to do so, and one which merely evidences an external fact which brings about that result.

If a document itself creates an interest in Immovable property, the fact that it contemplates the execution of another document will not exempt it from registration under Section 17(2)(v) of the Indian Registration Act, 1908.

Vivian Bose, J.

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Whether right of tenants of mortgagees are protected after redemption of mortgage?

 On the second aspect of the question whether the right of the tenants of the mortgagees are protected after the redemption of mortgage, reliance was placed by the First Appellate Court on the decision of the Full Bench of the Gujarat High Court inLalji Purshottam v. Thacker Madhavji Meghaji. There urban immovable property was mortgaged with possession, mortgagee creating lease during the subsistence of the mortgage. The question was whether after redemption of mortgage such lease is binding on the mortgagor. It was held that Section 76(a) of the Transfer of Property Act would not apply to such cases. There must be express words showing an intention if tenancy was to be created beyond the term of the mortgage. Mere reference that mortgagee is entitled to lease property does not create a binding tenancy on the mortgagor. After the redemption of the mortgage the relationship of landlord and tenant does not exist. Such tenant, therefore, does not get any protection under Section 12 of the Bombay Rent Control Act, it was held. The Gujarat High Court had referred to several decisions of this Court. In Mahabir Gope v. Harbans Narain Singh which was a decision dealing with a lease created by a mortgagee with possession under the Bihar Tenancy Act, this Court reiterated that the general rule is that a person cannot by transfer or otherwise confer a better title on another than he himself has. A mortgagee cannot, therefore, create an interest in the mortgaged property which will enure beyond the termination of his interest as mortgagee. 

Supreme Court of India

Thakar Singh (D) By Lrs. & Anr vs Mula Singh(Dead) Thr.Lr. & Ors on 14 October, 2014

Bench: Dipak Misra, Rohinton Fali Nariman

Citation;(2015) 5 SCC 209

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