Mortgage

Respondent/mortgagee sought specific performance of the penal clause of mortgage deed upon failure of the petitioner/mortgagor to return the mortgaged amount

Contention of the mortgagor was that mortgagee had alternative remedies of foreclosure and sale of mortgaged property, thus, mortgagee could not seek specific performance of the penal clause

Validity

Owner can mortgage his property but mortgagee has no right to get transferred the mortgaged property in his name through a decree for specific performance

If the mortgage money was not being returned by the mortgagor, the mortgagee could resort to remedy provided under S.67 of the Transfer of Property Act, 1882

Mortgagee could approach the civil court claiming that mortgagor be absolutely debarred of his right to get the mortgaged property redeemed or could pray for decree for sale of the property, but the recitals of the suit filed by the mortgagee spoke otherwise

Suit for specific performance could be filed for enforcement of an agreement to sell, but the same was not maintainable on the basis of a penal clause in an agreement, which otherwise did not fulfill the standards set for an agreement to sell, thus, mortgagee was not entitled for decree for specific performance on the basis of penal clause in the mortgage deed

Civil revision was allowed, in circumstances.

Agreement to mortgage does not create charge.

Mortgage is transfer of an interest in specific immovable property for the purposes of securing the payment of money advanced or to be advanced by way of loan or financing, an existing or future debt or the performance of an agreement which may give rise to a pecuniary liability

Once the mortgage is validly created against a specific immovable property, the interest of mortgagor in the property, to the specific extent, stands transferred to the mortgagee

Upon creation of mortgage, the charge travels with the property and not with the person

Thus, if a mortgagor manages to part with the property or confers further interest to third party then the buyer or the third party will step into the shoes of mortgagor and he cannot claim any better title or rights in the property or any interest free from the charge of mortgage.

Concept of mortgage and rights of a 'mortgagor' and 'mortgagee' explained.

Plaintiff failed to deposit the said amount within the time fixed by the Trial Court and application was moved for extension of time which was dismissed concurrently

Validity

Court seized with the matter with regard to passing of final decree could extend time fixed for payment of amount fixed or decreed or of the amount adjudged due with regard to subsequent costs, charges, expenses and interests on good cause shown and upon such terms to be fixed by the said court

Mortgagee-respondent had not applied to the court for final decree

No decree could be passed in favour of respondent being usufructuary mortgagee

Right to redeem could not be extinguished till the final decree was passed

Impugned judgments passed by the courts below were set aside and matter was remanded for proceeding in accordance with law

Applicant might be allowed to deposit the required mortgage money within a reasonable time

Revision was allowed in circumstances.

No bar existed to bring second suit where property was not redeemed despite on earlier decree for redemption.

No bar existed to bring second suit where property was not redeemed despite on earlier decree for redemption.

Even if there was a clause in the mortgage deed to the effect that mortgagee would become owner in possession of property on non-payment of mortgage money on expiry of any stipulated period even then the possession of mortgagee over the said property would remain as mortgagee and would not stand converted in possession as owner thereof

Lawful owner could not be deprived of his right merely by efflux of time nor a person enjoying possession for a long time could be awarded with premium of ownership

Mortgagors, in the present case, had simply prayed for closure by paying the redemption money to the mortgagees and correction of the revenue record thereof

Mortgagee could not take plea of prescription of a mortgaged property when he had no possession of the same

Suit could not be dismissed simply that the land was not redeemed within sixty years

Mortgagee even otherwise could not bring a suit of ownership on the plea of prescription

Both the courts below had misread the revenue record and settled law on the subject

Impugned judgments and decrees passed by both the courts below were set aside and suit was decreed as prayed for subject to payment of mortgage amount within one month

Revision was allowed in circumstances.

Receipt of income of propertyby mortgagee in possession as payment of interest on loan would amount to acknowledgment on his part

Such acknowledgement would give fresh start to period of limitation by virtue of S.20 of Limitation Act, 1908

No period of limitation would run against mortgagor, who could redeem property at any time without mischief of law of limitation barring redemption after expiry of sixty years in terms of Art.158 of Limination Act, 1908.

Receipt of rent or produce of the mortgaged land by the mortgagee, when it was in his possession, was deemed to be the acknowledgment of the payment of debt

Time period would be computed from the date of acknowledgment

When a mortgaged property was in possession of the mortgagee and he was receiving its rent or usufruct, the receipt of the produce on every harvest, was deemed to be an acknowledgment

Time would be reckoned from every harvest and the mortgagor would have recurring cause of action on each harvest, regardless of what the intention of the mortgagee may be or might have been.

Mortgage is a charge and not ownership.

Registered mortgage would be a notice to entire world of factum of its registration.

Registered mortgage would be a notice to entire world of factum of its registration.

Mortgage deed placed on the record by the Bank envisaged the mortgage for "E" company, whereas ,in the present case the borrower was "T" company

Only for the reason that the Managing Director or the managing structure of said two companies was the same, the mortgage should be presumed was not prima facie, tenable and the question/proposition needed the recording of evidence

Resultantly, to the extent of "E" company leave to defend the suit was granted.

Money received by mortgagee, arising from sale, after discharge of prior encumbrances, after payment into court under S.57 of Transfer of Property Act, 1882 of a sum to meet prior encumbrances, would, in the absence of a contract to the contrary, be held by him in trust to be applied by him; firstly, in payment of all costs, charges and expenses, properly incurred by him as incidental to the sale or any attempted sale; and secondly in discharge of the mortgage-money and costs and other money, if any due under the mortgage

Residue Of the money so received would be paid to person entitled to the mortgaged property or authorized to give receipts for the proceeds of the sale thereof

If mortgaged property was offered and sold under the orders of the court, auction purchaser would acquire clean and unencumbered right and title in the property, unless such charge, lien or encumbrance was notified in the sale proclamation as required under Rr.61 and 66 of O.XXI, C. P. P.C.

Held, auction purchaser had acquired right in the property free from all encumbrances, specifically notified in sale proclamation.

Effect of mortgage and legal consequences which flow therefrom stated.

Creation of second charge in favour of the same mortgagee by the mortgagor does not affect the right of the mortgagee under the second charge.

Transferee of the previously encumbered property steps into the shoes of the debtor.

No mortgage can be created in respect of property the title whereof does not vest in the mortgagor or the mortgagor does not have any explicit authority to create a charge upon such property.

Decision of Civil Court upheld by First Appellate Court and not challenged any further, had become final in so far as the question of prescription of title by the mortgagee was concerned and Revenue Courts were not possessed of jurisdiction to hold otherwise or to ignore the findings of Civil Court concerning title.

Respondents' land was mortgaged with non-Muslim evacuee, 1/4th of which was got redeemed within statutory period of sixty years

Time stood extended by such redemption and remaining land could be redeemed within further period of next sixty years

Respondents having been held entitled to redeem the land within further extended time, leave to appeal was refused in circumstances.

Mutation of mortgage attested on 9-6-1916 showed that mortgage created in 1892 was no longer a subsisting mortgage but redemption as well as fresh mortgages had taken place during four years preceding the preparation of the quadriennial Jamabandi

Old mortgage stood redeemed and two mortgages, one of 1/3 share of the owners and the other 2/3 share of the other owners, were created enhancing the mortgages amount

Mortgagees remained the same as well as the mortgaged property i.e. the right to cultivation in the land but the owners in each mortgage were different, shares were different and mortgage amount was also different

Held, redemption

High Court holding that question of effect of M.L.R. 64 could not be examined by civil Courts and had to be raised before Land Commission

Leave to appeal against such finding of High Court refused by Supreme Court

Such finding, held, became final and could not, therefore, be reopened.

Art. 185(3)-Mortgage-Redemption-Leave to appeal granted to examine whether in view of entries of mutations mortgage in favour of plaintiff-respondent created in 1911 did not stand redeemed and a fresh mortgage had not come into existence period for redeeming which had not expired under Limitation Act (IX of 1980).

[Mortgage].

[Res judicata].

Whether or not a particular mortgage falls within one or other definition contained in S. 58 of Act, held, depends upon circumstances of each case and in particular on phraseology used in each transaction.

A mortgaging his land with B in 1915 ; redeeming it and creating a new mortgage of same property in favour of C in 1917-Suit instituted by C in 1976 for declaration that he being a mortgagee of land in dispute for over 60 years had become its owner by efflux of time and that mortgagor had lost right to redeem mortgage which stood extinguished-Courts below not guilty of misreading of entries contained in relevant mutation indicating suit land being in self-cultivating possession of mortgagor-Period during which land remained mortgaged with B, held, could not be tagged with mortgage created in favour of C in 1917.

Mortgage - Right to redeem and right to foreclose-Held, co-extensive only in absence of any stipulation express or implied to contrary.

Receipt of mortgage money denied by mortgagee and redemption= not proved-Mutation of redemption, held, rightly rejected.

Rule "once a mortgage always a mortgage" Applicable to Punjab-Mortgage deed containing condition that land shall stand sold to mortgagee if not redeemed within specified time-Such condition, held, invalid being clog on equity of redemption- Transfer of Property Act (IV of 1882), S. 58.

Mortgage Mortgage-Sale-Mortgage deed stipulating payment of principal sum in 10 equal instalments and reciting that principal amount shall be repaid on or before a specified date (some 10 years ahead), such date being described as "due date"

Default clause of deed, however, providing, inter alia, that on any "default committed by mortgagor notwithstanding anything herein contained to the contrary the whole of mortgage debt shall become immediately payable as if the due date had elapsed"

Liability for payment of instalments being a covenant expressly accepted by mortgagor, failure to pay instalments, held, automatically accelerated due date, breach of covenant committed within meaning of default clause, and mortgaeee entitled to sale of mortgaged property.

S. 60-MortgagePartialredemption-Integrityof mortgage having been split up owing to redemption of its part-Partial redemption of remaining part can be allowed.

Mortgage-Mortgagees of evacuee lands can be dispossessed by Settlement Authorities without payment of mortgage money Mortgage amount could be recovered under Satisfaction of Charges (Land Settlement) Rules, 1961-Petition by way of writ, held, misconceived

Mortgage-Property mortgaged by some of heirs of deceased owner-Ejectment order passed by Rent Controller on application of mortgage Two non-mortgagor heirs filing suit and obtaining injunction restraining execution of order of Rent Controller-High Court, in revision, confining injunction issued only to extent of share of plaintiffs-Special Leave to Appeal granted by Supreme Court to consider whether such order did not in effect partition: property which in fact was a common tenancy.

(b) Mortgage Redemption, equity of an immovable property.

Mortgage - Redemption - Suit to redeem mortgage partially-Held not maintainable.

S. 65 and Specific Relief Act (I of 1877), S. 41 read with Transfer of Property Act (IV of 1882), Ss. 83 & 84 - Mortgage - Minor - Misrepresentation - Minor entering into mortgage fraudulently representing as to his age and subsequently bringing action for restitution of mortgaged property-Restitution of property to be ordered-Minor must, however, be made to refund consideration-Maxim : He who seeks equity must do equity.

Mortgage -Mortgage and charge-Distinction.

Interpretation of mortgage deed-Question whether document showed mortgage by conditional sale or out-and-out sale with condition of re-purchase-Special leave to appeal granted by Supreme Court to consider question.

Mortgaged property sold for realization of Municipal dues-Question whether even if Municipality had a first charge on mortgaged property whether it could not be sold free , from all encumbrances-Special leave to appeal granted by Supreme Court to consider question.

Deed providing that mortgage redeemable after expiry of six years-Mortgage, nevertheless redeemable even after expiry of that period-Limitation-Act (IX' of /908), Art. 148.

S. 58-MortgageMortgagor, during subsistence of mortgage, cannot transfer mortgaged properties or portion thereof without leave and permission of mortgagee-Such transfer, however, voidoble and not void ab initio-Transaction, unless avoided, would be treated valid for various purposes.

Ss. 58 & 60 read with Limitation Act (IX of 1908), Art. 148-Mortgage-RedemptionCreation of additional charge-Whether and when amounts to novation of mortgage so as to give fresh start to period o) limitation for redeeming property-Entry in revenue papers of faq-i-farzi-Effect.

Permanent alienation of land by member of agricultural tribe in favour of non-agriculturist-Not void ab initio-Refusal by Deputy Commissioner to ratify sale-Alienation takes effect as usufructuary mortgage for tent not exceeding 20 years-Nature and character of possession of such alienee-Not that of absolute owner or even wrongful or adverse but stands reduced to that of statutory mortgagee under law- Vendee cannot, during subsistence of statutory mortgage, convert his possession by unilateral act or omission into one adverse to mortgagor-Continued possession of vendee even after expiry of 20 years-Does not automatically become adverse or hostile towards vendor till a period of 60 years mentioned in Art. 148, Limitation Act, 1908-View expressed in A I R 1937 Lah. 408-Held obiter and dissented from—Limitation Act (IX of 1908), Arts. 144 & 148 - Civil Procedure Code (V of 1908), O. XXXIV, r. 9-[Deputy Commissioner, Gujrat v. Allahadad and others A I R 1937 Lah. 408 dissented from.]

Mortgage -Charge-Immovable property made security for payment of money-Whether security in mortgage or charge depends upon intention underlying transaction.

O. XXI, r. 94Mortgage-Decree-Auctionpurchaser cannot have more than what judgment-debtor had in property.

Mortgage Equitable mortgage may be created by deposit of title deeds to cover not only existing debt but also future debt

Transfer of Property Act (IV of 1882), S. 58.