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

Print Page

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.

Print Page

When there is implied surrender of tenancy by tenant?

In the judgment of Tarachand V/s. Sagarbai Alias Chaiyalibai (supra) it is categorically held by the Hon'ble Apex Court that, if the tenant surrenders the tenancy, either explicitly or by necessary implication, the terms of mortgage shall prevail. It was held that the question whether rights of tenant would give way to rights of mortgagor would essentially depend upon the terms and conditions of the mortgage. As per the Hon'ble Apex Court, the facts that would separate the inference of surrender of tenancy are the fixed term for redemption of mortgaged property, the liability of tenant to pay rent not kept alive, right conferred on the mortgagee to get the property auctioned in the event of non-repayment of mortgage amount, etc.

20. In the facts of the present case, admittedly, there is no mention of the alleged tenancy in the mortgage deed. Moreover, the mortgage deed was admittedly for a fixed term of five years. The liability to pay rent was not kept alive and the right was given to consider it as a sale-deed, if the Respondent was unable to redeem the mortgage within stipulated period of 5 years. Therefore, the terms and conditions of the mortgage deed clearly spell out the implied surrender of the tenancy. Hence, as held in this judgment of Tarachand V/s. Sagarbai Alias Chaiyalibai (supra), assuming that the Appellant was in possession of the suit premises as a tenant, in view of the implied surrender of tenancy on execution of the mortgage deed, on redemption of mortgage the Respondent becomes entitled to get possession of the suit property. The Respondent-landlord was therefore not required to proceed against the Appellant under the provisions of Rent Control statute to recover the possession. Therefore, having surrendered his tenancy may be impliedly, the Appellant cannot retain his possession. Hence, on this ground also, the judgment and decree passed by the trial Court and confirmed by the Appellate Court does not call for any interference.

IN THE HIGH COURT OF BOMBAY

Second Appeal No. 265 of 1991 and Civil Application No. 1225 of 2017

Decided On: 27.06.2018

 Nivruti Dnyanu Patil Vs. Shankar Krishna Bhagat-Patil and Ors.

Hon'ble Judges/Coram:

Dr. Shalini Phansalkar Joshi, J.

Print Page

When jurisdiction of civil court is barred if dispute is between mortgager and secured creditor?

 We notice, at this juncture, Respondent Nos.1 to 5 filed
Civil Suit No.16A/07 in the Court of the District Judge,
Barwani against the appellant, as well as the bank and
Respondent Nos.6 to 9, alleging that the family members of
Respondent Nos.1 to 9 herein being sons/grandsons of
deceased Premji, constituted a HUF engaged in agriculture.
It was stated that the said properties were purchased in the
names of Respondent Nos.7 to 9 out of the funds of HUF and
house Nos.41/1, 42/3 and 42/2 were also purchased in the
names of Respondent Nos.6 to 8 respectively, out of the
funds of HUF and, therefore, the properties of HUF. But, the
facts would clearly indicate that the properties referred to
above were purchased by Respondent Nos.6 to 8 in their
individual names, long after the death of Premji and that too
by registered sale deeds and no claim was ever made at any
stage by any member of the HUF that the suit land was a HUF
property and not the individual property. Respondent Nos.7
to 9 had purchased those lands vide sale deed dated
14.09.1999 and the 6th respondent had also purchased in his
individual name House No.42/1 on 31.03.1998 vide
registered sale deed. Similarly, Respondent No.7 had also
purchased House No.42/3 in his individual name. No claim,
whatsoever, was made at any stage by any member of the
family that those properties and buildings were HUF
properties and not the individual properties of Respondent
Nos.6 to 8 herein.
 We are of the view that the civil court jurisdiction is
completely barred, so far as the “measure” taken by a
secured creditor under sub-section (4) of Section 13 of the
Securitisation Act, against which an aggrieved person has a
right of appeal before the DRT or the Appellate Tribunal. to
determine as to whether there has been any illegality in the
“measures” taken. The bank, in the instant case, has
proceeded only against secured assets of the borrowers on
which no rights of Respondent Nos.6 to 8 have been
crystalised, before creating security interest in respect of the
secured assets. In such circumstances, we are of the view
that the High Court was in error in holding that only civil
court has jurisdiction to examine as to whether the
“measures” taken by the secured creditor under sub-section
(4) of Section 13 of the Securitisation Act were legal or not.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 9771 OF 2013
(Arising out of Special Leave Petition (Civil) No.18 of 2011)
Jagdish Singh …….. Appellant
Versus
Heeralal and others ……. Respondents
Citation: 2014 AIR 371 SC 

Print Page

When right of mortgagor to redeem mortgage can not be extinguished by execution of agreement of sale?

 For the many reasons recorded above, it is held that the sale
agreement is hit by section 29 of the Contract Act for being vague,
ambiguous and uncertain. It was never intended by mortgagor to sell her
property to the mortgagee and was an extension of the mortgage deed in
existence prior thereto. It matters little if the term "agreement to sell" or
"sale deed" in incorporated in the Exhibited document. The sale agreement
is dated "2.6.1980" while the date of registration of sale deed was fixed as
"13.3.1980". What can any person of reasonable intelligence make of this?
Parties could not go back in time to execute the sale deed when the date of
execution was prior to the date of the agreement. Plaintiffs did not put the
defendant to notice of change by extension of the period of execution of
sale deed by a separate contract or a corrigendum signed by mutual consent
to go to office of the Sub Registrar for registration of the conveyance deed.
The lacuna was fatal enough and tended to remove the base of a suit for
specific performance which depends by the nature of things on future target
dates agreed upon and compliances made to fructify a contract into a sale
deed or a decree for execution of an agreement when defendant defaulted in
performance of his part of the contract or within reasonable time of it where
time is not the essence of the contract. The relief in any case is discretionary
and an order will not be passed only because it is lawful to do so. Besides,
the overarching principle against clogs in redemption found in section 60 of
the Transfer of Property Act, 1882 which contains the exception "Provided
that the right conferred by this section has not been extinguished by act of
the parties" but the proviso did not apply when ambiguity did not dictate an
extinguishment of a right to redemption by any of the material acts of theoriginal defendant in relation to the plaintiffs. On a comprehensive reading
between the lines of the agreement dated June 2, 1980 in the context of the
existing relationship of mortgagor and mortgagee between the parties and
for the variety of reasons recorded above I am unable to persuade myself to
commend the view that the right of redemption was "extinguished" by act of
parties irrevocably in the face inter alia of the brooding presence of
condition # 3 in the agreement. In any case the suit document was one sided
and not ad idem and thumb impressions of the plaintiff on the document are
not sufficient to conclude a contract based on consent of both the parties
that it should be treated as an intention to transfer property. Still murkier is
the condition lurking at the end of the deed which recites: "Hen ce, this sale
 deed ha s been got scribed so that it may serve as an authority at the time ofneed". If the document pretended to act in replacement of a sale deed or a
“need” [to do what?]it was not registered and then what was the legal basis
of effecting mutation of the suit property in the name of the plaintiffs whenproperty had not been legally passed on, is not clearly discernible amongst
the evidence oral and documentary on record when read as a whole. In any
event a revenue entry in the mutation confers no title rights. Only a
cumulative understanding of the totality of the facts and circumstances
presented can resolve the controversy logically and holistically and in this
pursuit allowance must rest finally in the court of second instance as the
final court on law and fact and for this Court to act in support of the
appellate decree even if it does so ex aequo et bono, that is, for a decision
based on what is fair and just. It is towards this salutary end the above

discussion proceeds to a culmination.
 For the variety of reasons recorded above, the appeal is accepted,
the appellate decree is set aside as not legally sustainable and that of the
trial court is restored being a just and proper adjudication of the dispute.
The suit for possession by way of specific performance is dismissed with
costs in all the courts. Refund adjustments, if any, would remain open to

redemption proceedings, if and when taken. 

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
 RSA No. 2256 of 1987 (O&M)
 Date of Decision: 15.05.2015

Bachan Kaur through her LRs
Sadhu Singh and others
... Appellants
 Versus
Kaka Singh and others ... Respondents
CORAM:- HON'BLE MR. JUSTICE RAJIV NARAIN RAINA
Citation: AIR 2016(NOC)291 P&H

Print Page

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.

Print Page

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

Print Page

Whether acknowledgement of liability by mortgagor after assignment of his interest whether valid?

The decree passed by the learned Sub Judge in the suit is challenged in the appeal memorandum on various grounds, both under facts and law, and also as against the evidence tendered in the case. However, at the time of hearing, learned senior counsel for the appellants confined his challenges to the decree on a solitary ground that the suit was barred by limitation. Reply notices sent by two among the legal heirs of Joseph (2nd and 4th defendants) admitting the liability of their father after they had assigned the right over the plaint property in favour of the 6th defendant would not constitute acknowledgment of liability even assuming that a mortgage had been created by the father over the plaint property in favour of the plaintiff is the submission of the learned senior counsel. An acknowledgment made by a mortgagor after he had parted with the mortgaged property to another person will not be valid and binding on the property transferred. Any admission of liability after such transfer of the mortgaged property by him do not bind the transferee/purchaser or extend the period of limitation to sue on the mortgage, is the submission of the counsel. The decree passed by the court below holding that the reply notices sent by defendants 2 and 4 as acknowledgments of liability extended the period of limitation is assailed by counsel stating that reply notices had been sent after they had assigned the rights over the mortgaged property, it cannot constitute valid acknowledgment of liability keeping alive the mortgage. There were conflicting decisions by different High Courts as regards the right of creditor to proceed against the property by virtue of acknowledgment made by the debtor after he had parted with his interest in the property after the period of limitation from the date of the original transaction. Previously, the High Court of the Travancore - Cochin had taken a consistent view that an acknowledgment of the debtor even after the transfer of the property would bind that property and also the purchaser. A conflicting and different view that he could not bind the property and the purchaser and the admission of liability by the debtor after transfer of his interest in the property would not constitute an acknowledgment to bind the property was the view taken by some other High Courts. In Pavayi v. Palanivelu Goundou (MANU/TN/0033/1940 : AIR 1940 Mad. 470 (F.B.)), a Full Bench of the Madras High Court, after referring to several conflicting decisions on the subject by various High Courts held that the mortgagor who had lost all interest in the mortgaged property, could not, by an acknowledgment within the meaning of S. 19 or by the payment of interest or principal, within the meaning of S. 20, bind the person on whom his interest had devolved (sections 19 and 20 under the Limitation Act, 1908 corresponding to the present Sections 18 and 19 respectively of the Limitation Act, 1963). Subsequently, the same principle has been laid down by the Privy Council in Bank of Upper India Ltd. v. R.H. Skinner MANU/PR/0017/1942 : (AIR 1942 PC 67). In the above decision, after having a survey and analysis of the conflicting decisions and questions involved, it was held that admission of liability by the mortgagor after he had parted with interest of the purchaser do not bind the purchaser and it would not constitute an acknowledgment under the Limitation Act keeping alive the liability on the mortgaged property. The Travancore - Cochin High Court, following the decision of the Privy Council, in Kunchi Pillai v. Sunny Rebella MANU/KE/0098/1952 : (AIR 1953 Travancore -Cochin 196 (F.B.)), referred to above, has held that an acknowledgment of liability by the mortgagor made after the assignment of the equity of redemption will not be a valid acknowledgment so as to bind the assignee. An acknowledgment by a mortgagor after parting with the mortgaged property cannot be recognised as a valid acknowledgment was the view taken by the High Court of Mysore following the principle laid down in the Privy Council decision, referred to above, in Raghoba Santanna Naik v. Shaba Nalo Naik & Anr. (AIR 1960 Mysore 187). Same view has been taken by the Full Bench of the Madras High Court in Nallathambi Nadar Chellakannu Nadar v. Ammal Nadachi Chellathankom Nadachi & Ors. (MANU/TN/0199/1963 : AIR 1964 Mad. 169 (F.B.)), referred to above, stating that an acknowledgment of liability must involve an admission of a subsisting jural relationship between the parties and a consciousness and an intention of continuing such a relationship until it is lawfully terminated. So, in the present case, where the 2nd and 4th defendants whose reply notices are relied on as acknowledgments had already parted their interest in the plaint property, with other legal heirs of Joseph under Ext. B3 sale deed in favour of 6th defendant much earlier to the suit, reply notices sent by them cannot constitute valid acknowledgment keeping alive the mortgage liability over the plaint property. The learned Sub Judge has gone wrong in holding that the suit is not barred by limitation treating the reply notices of defendants 2 and 4 as constituting acknowledgment extending the period of limitation. Suit was clearly barred by limitation.

IN THE HIGH COURT OF KERALA

A.S. No. 513 of 1994

Decided On: 17.01.2014

Appellants: Francis
Vs.
Respondent: Antony

Hon'ble Judges/Coram:S.S. Satheesachandran, J.

Print Page

Why court should pass order for attachment of property before judgment?

The object behind the order levying an attachment before judgment is to give an assurance to the plaintiff that his decree, if made, would be satisfied. Where an attachment has been made, any private transfer or delivery of the property attached would be void as against all claims enforceable under the attachment. What is claimed enforceable is claim for which the decree is made. A dismissal of the suit may terminate the attachment and would not be revived even if the suit is restored As a corollary, if attachment before judgment is obtained in a suit which ends in a decree but if in appeal the decree is set aside, the attachment of necessity must fall. It at an intermediate stage pursuant to the decree of the trial Court the attached property is sold at a Court auction and where an appeal is preferred, an attempt should be made to obtain stay of the execution of the decree of the trial court. If the execution proceeds and the property is

sold at a court auction before the appeal is disposed of, the equity in favour of a person as a auction purchaser may come into existence. In such a case if the auction purchaser is an outsider and if the execution of the decree was not stayed, the auction purchaser would be protected even if the decree in execution of which the auction sale had been held is set aside because the equity in favour of the stranger should be protected. 1

Supreme Court of India

Sardar Govindrao Mahadik & Anr vs Devi Sahai & Ors on 15 December, 1981

Equivalent citations: 1982 AIR 989, 1982 SCR (2) 186

Bench: Desai, D.A.

Print Page