 Good afternoon, friends, and good afternoon, ma'am Chitra Sampa, the senior advocate for medicine. I, on behalf of Beyond Law CLC, welcome you all to get another webinar, by which we can all improve our knowledge as we believe in the principle of that sharing is caring. As long as we are sharing the knowledge, it gives once a different perspective of law and understanding of law. In a pursuit for having speakers who can share their insights, we requested ma'am Chitra Sampath, a senior advocate from Madras High Court, to give the insights on the topic of security interest in mortgages, a bane or a boom. That is a different facet to be discussed, but to have ma'am on giving the insights on this topic is definitely a boon not only for the lawyers, students of law and all those who are directly and indirectly connected with the matters and perspective of law. Though ma'am does not require as such any introduction, but brief is that she has been also training in the judicial academy which speaks volumes of her knowledge and her insights given on different perspectives of law which have already been uploaded on the YouTube etc. The number of shares and likes are a testimony of the fact that the insights given by her is well-last upon by not only the participants during the platform and even thereafter. Though we have taken I can say just like a tip of an iceberg of her knowledge to be shared on this, she has been sharing as she has knowledge in different spectrums of law that is rich, law of property, rent control law, company law, winding up probate interstate, Hindu law specifically said. This only shows that her knowledge is as vast as one could imagine and to have the knowledge being shared by a person of such a stage it gives us immense knowledge. Over to you ma'am. Good evening everyone. I am grateful to Vikas for giving me this opportunity to talk on a topic which I love most as a trial lawyer. Mortgages has always been an elusive subject for many juniors and the very nomenclature has always put some she was down the spine and people right to run away from mortgages while practicing on the legal side but that has become the order of the day. Day in and day out we are facing with different type of mortgages, securities, interests and the whole world now world's around and spins around the creation of mortgages and things. So I took this opportunity to say something about it which I have learnt and I shall be concentrating more on the mortgages in the second part of my lecture. And my introduction to you is today why we are in this particular scenario and whether this creation of mortgages or securities in other words has been helpful to the human society for their upliftment of their causes or it is actually a deterioration in the Kali Yuga is what I pose a question to myself. In the olden days a person is not supposed to borrow, if he borrows he is supposed to commit a sin and when he departs his world he has to go without leaving any debt. Therefore under the Hindu law what I have learnt from Raghavacharya, the main Hindu law it has been that if a man dies some debts even though he may not have left properties but he has left only debts for his children to inherit it. It was the highest obligation of his sons to have to discharge it without any debt. The same thing also applied to Mohammedan law and I was in fact surprised when I was looking up the Google which gives all the answers to you. Under the Shafi Islamic law a person when he borrows though he assures the return he returns once he is the principal and the creditor is not supposed to charge interest. It was interesting to learn that a creditor will not charge interest because according to them they are lending a helping hand to a person in need and in case he imposes some penalty as per the terms of contract the penalty will go only towards charity and it not go to the personal pockets of the creditor. This seems to be the law which has been dispensed with the Islamic world but not that way in our country. Therefore please just thinking a little looking back I found that how we have been changing our attitude towards borrowing starts from the fact that for a day to day life we have been borrowing by way of a higher purchase agreement for buying our necessities. We started buying on installments with saris as ladies we started buying mixing we started buying grinder we bought a scooter we bought a cycle we bought an AC then we bought something all your household consumer durables were purchased only by way of higher purchase installments. So now we have become immune to this concept of loan becoming a sin. Now what happens is for buying a house he also start borrowing. Now the banks are flush with funds they have to invest somewhere there are some people who are in you know flush with funds they want to get return. So in the Indian continent there's no bar for getting interest or return so no person in India will be giving any lending any money unless he gets a good return on his investment. So this is how the progress went and today the credit card drew a balloon has come and everybody is having a credit card what are we doing with the credit card is what a question to ask myself initially they were under the hold a particular account with so much of balance they used to give me a credit card in fact I could even say that as an advocate when I applied for a credit card the bank said no I cannot give you a credit card because you're an advocate. Then I fought with him and they said I'm having voting you a bank account in my name or your you know as a policy we don't want to give credit card to other banks then I have to really fight with the bank manager to get a credit card but there are banks which are giving credit card even without own account why because they want to have more return on the amount they are having in their accounts. So now the credit card oh wow oh we also because of this COVID and everything we are not going to use any cash transaction when there's no cash transactions we are trying to use credit cards so this whole thing goes so how are we going to get credit see as far as credit card is concerned it depends upon how we have been having an operations in the bank the customer is trusted then the credit card is in it now but how we progress slowly slowly we start getting loans for various other aspects like card we are going to get a loan for our house so these are all ways in which the banks give the other financial institutions give even individual money lenders give but on what basis can I trust you I don't know you need and you may have your other card you may have a ration card but how will I trust you it can trust me only when I give you something to hold on for as an assurance that I can realize my money so that is called the security see there are three types of securities which are there which in the one is a form of pledge we call the other one is called a hypothecation next is a mortgage what are the differences between these three pledge and hypothecation refer to movables or goods they don't refer to creation of security over an immovable property what is a pledge pledge is a thing where I don't give my movables to the creditor he gives me money like a jewelry loan gold loan or where I don't keep my share certificates and take loan so the movables which are in my hand goes to the hands of the creditor he keeps it in safe custody like a baby you know you all know about bail out baby relationship then he retains it and I'm sure when you return the money with interest ask for the contract he gives back your goods otherwise he's entitled to sell and realize the truth this is called the pledge this is one form of security the next one is hypothecation hypothecation is a place there is a concept goods are not given to the creditor but it is kept with the debtor the debtor retains position of the goods but borrows money on the basis of these goods and once he repays the loan is discharged what will happen because goods are not with the creditor it's only with the debtor so the creditor will have a right to come and seize the goods realize his truth see this is the hypothecator right where we get all these it is all in these vehicle loans where they have even in my machinery purchases where they hypothecate the machinery and they get it discharged the next comes the mortgages the mortgages is over an immovable property so when an immovable property or a property which is embedded in the earth is given as a security to a creditor it is called a mortgage all other forms are not mortgages only immovable property or property which is embedded in the earth see there may be machineries which cannot be moved just like that they'll be fixed to the earth with the concrete and all that so it will be treated as almost equal to an immovable property so they are all treated as immovable property which are embedded to the earth and when that is mortgaged it is called it has to be by way of a registered instrument now we come to pledges pledges are over it is by way of a independent contract the creditor position is given to the creditor that is over hypothecation position is with me the creditor is having a right to seize and sell it is like any other HP agreement for sale of vehicles and all that next the third one is the mortgages now as far as the pledging and hypothecation is concerned it is very simple they can seize and sell there's no court proceedings are required any balance do they can file a suit for a career plan that is done for mortgages now mortgages are the basis on which today's entire bank transactions financial institution transactions are being built now let us first understand the concept of mortgages mortgages are defined under and explained under section 58 to 98 of the transfer of property actually now what are the types of mortgages we have why we should have so many mortgages because each person will have a different type of transaction so in order to see that each person's requirements are satisfied and the remedy is also different each mortgage will have a different remedy the mortgager will have a different remedy mortgages we will have a different remedy now let us go one by one what are all the first types of mortgages under the transfer property simple mortgages next is the use of a tree mortgage next we have mortgage by deposit of right units next is mortgage by conditional sale that is also called a English mortgage next we have an anomalous mortgage therefore the types of mortgages are clearly defined under the transfer property now let me take simple mortgage first why we call it a simple mortgage because the transaction is simple the man borrows he gives his property as a security the creditor his creditor is called the mortgage and they have to execute a document which has to be registered under the registration act because section 17 of registration act requires that any transaction by way of mortgage since it creates interest in the property it has to be registered so over 100 rupees it has to be registered so it is to be registered and more over just like a will or a settlement deal mortgage deed also has to be attested by two witnesses as per section 68 of the empty side if you don't have proper attestation then the mortgage deed cannot be enforced so any mortgage document if it creates an interest in a property which is worth more than 100 rupees it has to be by a registered instrument attested by at least two witnesses this is the requirement of basic requirement of all mortgages now in a simple mortgage what this is like a promsary mode little the mortgage data says here i'm going and borrowed so much of money from you i will pay this back to you with interest at so much of rupees so till i pay the amount with interest you keep this property with you that is the property will be their security you and in the event of any default you can proceed against this property sell it and realize it this is all a simple mortgage is what is contemplated now what is the remedy of the mortgage in these simple mortgages what is my remedy i want to go and redeem the property i go to the month was ready to give the money get a document which says discharge the receipt the discharge receipt also has to be registered under law it cannot be just put us cancel it and give it has to be registered under law so now you get a discharge it will be over suppose there is a tiff between the creditor and the data regarding the amount wave that is where that is all the dispute that can arise in the simple mortgage so the data says no no so much of money is due but the creditor says no more about you he will spend penal interest he puts other charges i have to save by the property so the mortgage are what he can do is he can come to the court we call to file a suit for redemption redemption means a right to take back the property after discharge of the market it is called redemption so the suit for redemption is filed by the mortgage that is the data against the creditor saying that this is all the amount you i am willing to deposit this amount in court please give me a decree for redemption of the property now the creditor will contest and take a with the suit will be declared now in this suit i come to that how these decrees are drafted in a subsequent slide for under order 34 so when the redemption right is given to the mortgage now what is the remedy of the mortgage he has borrowed he is not paying the money it's a simple mortgage he's not paid any interest can the mortgage keep quiet he has to come to court within 12 years from the date when the amount becomes due in a simple mortgage the amount becomes due on the date of execution of the document itself so within 12 years as per article 62 of the limitation hand he has to come and file a suit for recovery of money due on the mortgage otherwise his remedy is bar bundle document so mortgage creditor will have to approach the court within 12 years under article 62 to recover his money and enforce the mortgage on the contrary the mortgagee is given 30 years to redeem this property under article 61 so he has to 30 years to redeem his property whereas mortgagee is given only 12 years to sue for this mortgage money this is as far as the simple mortgage is concerned we have one other aspect in a simple mortgage in the presidency towns of bombay calcutta and madras when the british were there they were also giving a lot of loans and all that so they wanted to have a private power to sell the property so they brought in section 69 you can remove you can see the transfer property act is of year 1882 it has not been amended or revamped subsequently except for some minor changes now what happened was these british rulers decided that in these presidency towns when we give loan we want to have our right to infer real estate money so abhi would retain one section 69 of the transfer property was incorporated which gave a right of sale private sale to the mortgage that's why even today in section 69 of transfer property act it is basically say it will apply only to residency towns or presidency towns of madras bombay and calcutta so in these cases where a simple mortgage is executed it is open to the parties to agree for a private sale also under section 69 it's not available that remedy is not available in any other district or any other state so what happens in the section 69 is the mortgage he will decide yes you have not paid me the money i'm going to bring the property for sale you're not paid me the interest i'm going to bring the property for sale so he'll bring he'll make an announcement he has first to give a notice he'll make an announcement then he'll put up it in public auction you can realize the money he can kinsman execute his sale date and then only for possession they purchase it has to come to the court so this sweeping power is given to the mortgage we have i have come across several cases under section 69 where a mortgage has been really put into trouble because of the improper conduct of the sale of the exercise under section 69 but our remedy is very limited the mortgage can only ask for compensation it is going to get irregular sale you can never seek to set aside the sale in fact there's a leading judgment of the uh madras cycle which has been reported in 2013 uh will be sloshed just as rama subramaniam has said that section 69 power is left to the mortgage to decide and it is for him to decide to whom he can sell and even in the auction sale you will decide whether to go ahead with the auction whatever there's no he'll even even violate the terms and conditions of the auction notice the court cannot be kidnapped be questioned in a court of law that's what the judgment is very sweeping in that but i feel that i am i personally feel that 69 should also be read down and the principles of setting aside sale under order 21 rule 89 and other proceedings should also be adopted but that is this is a judgment today so for simple mortgage we have these uh uh uh requirements and the redemption right is given to the mortgagee and a power of sale is given to the mortgagee now we go to the usurpatory mortgage what do you mean by usurpatory mortgage it is a possessory mortgage what is a possessory mortgage today i have a property a house property in Chennai and i want to create a loan over it what i do is i'm not in a position to pay interest per month so what i do i give the property itself to him and i record the fact in the mortgage it's deed itself that i'm putting you in position of this property you can realize the rent from this or towards the rent the whatever rent you realize can be adjusted towards interest and the principle and after the expiry of so many years say 10 years or five years or 15 years i'll pay back the principle if it is not otherwise i'm just right and take back the property so the possession will be with the mortgage when possession is given to the mortgagee and he is in enjoyment in lieu of interest alone or lieu of interest plus part of the principle that is depending upon the contractual terms it is called a useful three models now very interesting aspects in useful remodeling is more from the southern most districts of Tamil Nadu from Kanyakummi we call that as Utti Utti H I Utti in these Utti you can even now you can come across cases where 1924 Utti 1934 Utti has been is being sought to be redeemed even in 1990s 1920 case laws have been developed so the question arose what is the remedy of a useful remodeling and what is the remedy of a mortgagee in a useful remodeling a very interesting reading is the mortgagee continues to have his right of redemption which is the period of 30 years under article 61 whereas mortgagee has got more right to come to court he has to be in enjoyment of the property enjoy realize the money and stay put that's all he cannot come to court for asking for sale he cannot come to court saying he will not be a mortgagee will not be entitled to redeem the money he has got more such power if he comes to court for realization of his money then he creates he has abandoned his security he's not insisting on the enforcement of the mortgage so useful remodeling cannot come to court so what happens is the mortgagee mortgagee does sit tight because useful remodeling is not going to come to court so okay let me be happy I have not paid interest he is in enjoyment I can read him anytime so the question arose what is the period of limitation for a person useful remodeling a to come to court so there was a conflicting views which said it is done from the day on which when there's no period is fixed under the contract useful remodeling what normally we have seen in useful remodeling is from today within 10 years I will redeem and then after after the expiry of 10 years I'll pay the principal amount and then I'll redeem remodeling so then the 30 years limitation under article 61 of limitation that we start running from the date when the tenure period expires so 10 years and then after 30 years so we will have 40 years to redeem whereas there was a case where no time is fixed under the contract so the question was some judges supreme court said no it will start from the date on the date of mortgage the court said no when no time is fixed it means that unless and until the entire interest of the principles are adjusted out of the income from the property the right of redemption to the mortgage does not arise so there's no period of limitation we can sue anytime so that was the law that has been laid down by the supreme court in fact on this the judgment is 2018 5 SCC page 341 2018 5 SCC page 341 am i have also allowed you the screen sharing part if you want that you can do it not what the screen sharing you wanted that screen sharing that has been allowed to you I know I know I'm not going into that I'm going to give the PPT to you the after so that you can circulate okay that's fine because I'm just giving some of them in between itself okay for the for the lucifer tree mortgages mortgages right the redemption starts upon the expiry if any is prescribed under the document if no time is fixed till such time the entire for use of flux is utilized for the discharge of the mortgage amount under the and the interest now as I said lucifer tree mortgages has got no power to approach the court for any liberty you can note down the case law 2003 3 SCC 614 2003 volume 3 SCC 614 now the mortgage is in position of the property what he's going to do he can he create interest in the property can he visit out he saw the question which will come to your mind because I the mortgage he is already flushed with funds he may be residing in another house he may have palatial houses why he should occupy this property so he can rent it out but the whatever the lease mortgage he creates over the property will be only during the period of subsistence of this mortgage once the period of it is redeemed by the mortgage are the right of the sea to continue in possession also ceases so he has to be evicted as per law next we'll go to the mortgage by deposit of title beats which is the presented trend adopted by all financial institutions and the banks what do you mean by deposit of title beats when you own a property you have documents of title you'll have the registered sale and you will have the antecedent documents of title then you will have this fatta or the revenue records and you would have paid electricity charges so all these will show that you are the owner of the property so this is a role calling documents of title this document of title which are in original shall be handed over to the creditor on the issue on the intention that I'm borrowing so much money from you you keep these original documents with you in the event I don't return it within our time frame or whatever is agreed between the parties you are entitled to proceed with the sale of these properties so after a simple mortgage where there is a power of sale to the mortgage we have a right to sell under the mortgage in the deposit of title beats now this power of deposit of title beats which is there with the mortgage is what is now exercised by the banks under the DRT and the surfacey and this rate financial corporation or under a simple mortgage so these are only the two types of mortgages which are being adopted by various institutions for lending money to the various borrowers now what do you mean by deposit of title beats can I without having handing over the documents of title create a mortgage no the three conditions which are very much necessary for deposit of title beats are there must be a creditor-data relationship and there must be an existence of debt first so without a data credit relationship there cannot be any deposit of title beats number two there must be an actual deposit of documents of title next third is this documents of title must be with an intention to create it as a mortgage or as a security for the loan in fact in one of my cases when I was in the high on the high court there was a compromise decree somewhere my client was supposed to have submitted to a degree that was a suit on a mortgage by deposit of title beats so when I said that there was a fraudulent decree I filed an application to set aside the compromise decree and said that it is obtained by fraud and impersonation I also took out an application asking the plaintiff to produce the original documents of title said to have been deposited by me under document number three mentioned in the play so that application came before this lots of justice david christian jay was then sitting on the original side of the high court the because lots of them they asked for a time for counter you know what the learner judge says what is this you have filed a suit on the basis of documents of deposit of title mortgage based on deposit of title beats you should be having those original documents under your pillow in your house go and bring it and deposit I'm not giving you any time for counter question alone but the plaintiff had not produced even a single document to show whether there was any deposit of title beats ultimately the compromise decree was set aside but however the matter went up to supreme court I'm not going to all the other issues but what I'm saying is for creating a mortgage by deposit of title beats the original document deposit is assigned to an un for the existence of the mortgage if it is not there then there's merely writing a letter saying I hear where deposit of title beats will prove all that that's totally irrelevant there must be an actual custody of the original documents with the mortgage here that is the credit card now what is the remedy for a mortgage it is like a simple mortgage so I'll be the mortgage is entitled to file a suit for redemption if it is a mortgage he is entitled to sue for sale of the hypothetical that is what is provided under the ad and it will be having all the limitation aspects same as the simple mortgage next we have the mortgage by conditional sale or we call it as a English mortgage this is by far I feel the most toughest mortgage and it has been a matter of varying and conflicting judgments both by our high court as well as by the supreme court in one case they'll say that this is sufficient and this is required in other cases they don't even if you bring in with this there's no existence of it so they say it's a culmination of so many factors to make it to do a mortgage by conditional sale now what let us understand what is one way conditional sale so instead of executing a mortgage saying that I owe the I have borrowed so much of money from you I'll pay so much interest and I'll take back the property I'll discharge the mortgage loan and get the mortgage discharge later instead of writing it like that here there'll be a document which will be styled as a salee itself the salee will specifically say this is the amount paid by so-and-so to so-and-so that is the creditors paid to the debtor so much of money and the upon the completion of so many years the debtor shall make the payment or refund we said purchase money to so-and-so upon such refund the creditors shall retransfer the property to the debtor no I am for your understanding I am saying as debtor and creditor but in the sale deed it will only mean the seller and purchaser so the purchaser will be a creditor and the seller will be borrowed so the purchaser will give money to the seller on condition that the seller on refunding that's that money within a particular time frame he will execute a reconvene's deed so that will be that is being called as a mortgage by conditional sale now there were several authorities which has come it said the right to reconvene that is a contract to reconvene must be incorporated in the salee itself if the salee is complete and there is another document or another agreement by which there's a right to reconvene then it cannot be a mortgage by conditional sale then it can be only separately there's a separate agreement of sale so we were all under the belief yes once the term is incorporated and the document itself there's no it's a foolproof method therefore it will be straight away mortgage by conditional sale but that has been now given a go by by the supreme court in the latest statement in 2019 8 SCC page 651 2019 8 SCC page 651 by this what has happened is the supreme court says even if it has been incorporated in the same document still the court can find out whether there was an intention to create a mortgage or it is an outright sale now what are all the various other requirements for making it an outright sale one first and foremost they say to make to render a sale deed as one of mortgage by conditional sale there must be a debtor and creditor relationship there must be a no payment of interest or rate of foreclosure or sale then this will be position is there must be a view of interest there must be inadequacy of consideration suppose today the market value of the property is 10 crores and you sell the property for six crores then it says it presumes that there is an existence of its only a data creditor relationship then what is the contact of the party is subsequent there whether there has been actual transfer of position whether there have been a revenue transfer so many other culminating factors were considered the supreme court and now has said near because it is recorded in the same document a salee will not become a mortgage by conditional sale we have to look into various other aspects also now this is the what is mean by mortgage by conditional sale now what is the remedy of the mortgage and mortgage in these cases now we accept that is going to be a mortgage by conditional sale yes the mortgage as a right of redemption at age 61 30 years you can find the suit for redemption okay fine now what happened to the creditor mortgage he will be given a right of foreclosure not sale please understand there's a difference between a suit for sale and suit for foreclosure what do you mean by foreclosure you sale means realizing the property just sell it can be money yes but what do you mean by foreclosure now who here is a gritter who has already got a registered salee in this thing what he requires he says the mortgager should not redeem the property if that is done the sale will become perfect he need not go for sale because once he sells he will lose the property of this agent which is in this thing therefore what they say is it is called a right of foreclosure so the mortgage in the case of a mortgage by conditional sale will specifically find a suit asking for the court to declare that the mortgage has defaulted in payment of money so if there are no further money is payable therefore declare that his right to redemption is foreclosed so he is asking the authority of the court to declare that the mortgage shall not be allowed to redeem the property and the property will stay with the mortgagee that is the plaintiff or the mortgagee must find a suit for foreclosure so this is the concept of foreclosure in a mortgage by conditional sale then the last but not the least is a anomalous mortgage what do you mean by anomalous mortgage anomalous mortgage is where they don't come within any of these parameters of reciprocatory mortgage or a simple mortgage or a mortgage by conditional sale there are interchanges in those cases it is called as an anomalous mortgage and they will have the same rights which are incorporated in the document the parties are free to contract the way in which they can work out their limits so this is as far as the various mortgages are concerned now coming to the another aspect in the mortgage is called marshalling of securities what do you mean by marshalling of securities it is provided under section 81 of the transfer of property now I have two or three properties I mortgage two properties with one X and the other two properties with one Y now the X man wants to sell the property so when he is bringing it for sale the Y man can say please don't sell the property which has also been mortgaged to me you sell the property which has not been mortgaged to me about another security you try to realize from that if you are not able to get it then go for the property which is having the common mortgage this is called marshalling of securities which is permitted under law so even there are more than two or three properties mortgaged to two or more persons the subsequent mortgagee can ask the prior mortgager not to proceed against the sorry the property which are mortgaged to him but proceed against other properties it is only it's a statutory right will be given but they can contract out of this type of also next we have a concept called subrogation what do you mean by subrogation now mortgager is not alone he will have a lessee in his property he may have other co-owners who are also interested in the property there are various other creditors who will be interested in his property and there may be a person who is a surety or a grantor guarantor who has secured the loan so all these persons will be interested in safeguarding the mortgage property besides the mortgagee so in those circumstances when the mortgagee wants to bring the property for sale so what they do is they can these people who are interested in safeguarding the property and as well as their interest they can go and discharge the mortgage so okay they won't discharge the mortgage now what is the remedy they can only sue for money but will their money be secured no it has to be secured on the property which has been obtained by way of release that's where the concept of subrogation is provided under 91 and 92 of the transfer of property by this what the legislature says is if I as a surety or a guarantor of the mortgagee I offer myself and I go discharge the mortgage from the mortgagee what happens I have flow money has flowed from me to the mortgage so the mortgage or that mortgage it is deemed to have taken over the mortgage and I will become the mortgagee deemed to be mortgagee and I can proceed against the very same property if the mortgagee does not settle my claim so I actually stand stepping to the shoes of the mortgagee and I'll be enthalpy impose the mortgage rights this is called a doctrine of subrogation now there is a slight distinction between subrogation and assignment of a mortgage now a mortgage which is mortgagee when he assigns his interest the mortgagee is choose the assignment assign or assign he takes it over and he will sue on the mortgage there's no problem but I representing the mortgage or go and discharge the mortgage here I go and step into the shoes of the mortgagee it is called as subrogation even a co-modgager whether he was entitled to doctrine of subrogation was discussed with Supreme Court a co-modgager is not entitled to subrogation it's a very interesting aspect here also the co-modgager is there are two persons who are jointly modgating the property one person is refusing to take a reduction the other person is interested in going and redeeming and saving the property from auction so the co-modgager goes and discharges the mortgage can he sue on the mortgage no because he's also a co-modgager he cannot sue on the mortgage he can only sue for contribution from the co-modgager this is the law on the subject now I go to the miscellaneous rights of parties between the mortgage or the mortgage which will fall for consideration and the surface react and all that once you have created a mortgage it will always be a mortgage you can never turn your or whether you're putting possession or whatever right unless the mortgage is discharged the mortgagee continues to be only having mortgage rights you will not have any other now the question arose in these Utti and Kanyakumari district use of the mortgages whether the mortgagee can prescribe title to the property which has been mortgaged in a sphere the court said there can be no adverse position when the mortgage a lucrative mortgagee can never prescribe adverse position at all in fact the judgment is 2004 6 SCC 1 4 0 2004 6 SCC 1 4 0 now what I say already explained that the mortgagee has a right to lease the property what are the terms of the lease this should be within the period of the mortgage period but mortgagee are who is who is in position not a lucrative mortgagee but a person who is in position of the property what he whether he has a right to ease and create further incumbents and affect the rights of the mortgage later because when a mortgagee brings the property for sale and there are incumbrances on a leasee or a tenant in position the property will not be getting the same price as it is in a is a vacant position so that is governed by section 65 a of the transfer of the act which says that what are the terms and conditions on which the mortgagee are on lease the property he cannot ease it beyond where he should do it within six months from the date of creation of mortgage he should not extend it beyond three years which shall be governed with the terms of the mortgagee so all that has been prescribed under section 65 a of the transfer of property act so the same principles are now embodied in the surface act also and in the surface he act with the latest judgment 2019 9 SCC late 94 speaks about what type of leases are permitted under the surface here prior to the issue of the notice of the section 13 2 if there has been a creation of a mortgage by the mortgagee it is permitted on the road but not any lease which is created after that that has been explained by the supreme court in the latest judgment in 2019 9 SCC late 94 now a question arose whether they can be an arbitration clause in a suits or mortgage contract the supreme court in the judgment reported in 2011 5 SCC 5 3 2 2011 5 SCC 5 3 2 has said that a mortgage shoe a judgment in a mortgage shoe is a judgment in rent and therefore these rights cannot be subject matter of arbitration therefore mortgage suits it is called a booze Allen case the name is called as a booze Allen case and they have said that it is not arbitrable it cannot be subject matter of arbitration next we have you can come across several some clauses like clog on redemption CLOG clog on redemption what do you mean by clog on redemption you would have learned in your colleges and all that that when a sale deed is given to you or a settlement deed is given to you the property should be given to you free of any restriction only then you will be entitled to enjoy what they say you should not alienate you can enjoy for life life and even after your your your sentence also enjoying for like perpetuity cool against perpetuity all that we have come across same way when you prevent the mortgage are from redeeming and enjoying the property it is called as a clog on redemption so in a mortgage deed if it says that you should read in the property within 10 years failing with you will lose your right of redemption that clause is said to be invalid and void and it is said to be a clog on redemption so such a good offer that your clause in a mortgage deed which prevents a mortgage are from redeeming his property is amounting to a violation of the statutory right given to the mortgage are so it is called as a clog on redemption and it can never be enforced next we come to accession or improvements on the property suppose the mortgage are is in position and there are certain additions and improvements made by the mortgage today I have a hut in a one acre plot I will mortgage the one acre plot with a hut to the mortgage subsequently I put up a construction there that one acre palatial house and all that I borrow from loan and all that and they put up a construction what happens whether the mortgage is entitled to proceed against the entire property or he has to go on search of his hut that hut is no longer there or even if the hut is there you cannot restrict that to the hut because the entire one acre plot has been mortgaged so the mortgage will be entitled to all the improvements which the mortgage are makes on the mortgage property now I have come vice versa suppose the mortgage use of a mortgage is in position now he is forced to take by law or by some direction by the local authority says you have to do this you have to improve this property is going to fall down because in a use of a mortgage you all know that the man will be with mortgaging will be in continuous position therefore he will not be in a position to ask the owner to repair the property so the credit data is not going to come and do any repairs so whatever repair the mortgage he does or improvement he was forced to do in the property and all that money will be treated as a principle for which interest will be charged and he will be entitled to impose it against the mortgage now we have now learned what is a mortgage in various forms of mortgage now what are the ways and means to realize the money mortgage is rights and mortgage is rights in the under the common law that is under the civil procedure 4 order 34 prescribes the way in which you can enforce a mortgage now order 34 has clearly mentioned what will be the right of the mortgage or what will be the right of the mortgage in other different mortgages suppose i will file a suit for redemption in the suit for redemption it is all a simple mortgage or by deposit of title fees so in those two cases the mortgage is entitled to a right of sale so that you may remember so in a redemption suit the first premium decree will be passed what the minimum decree will say okay you've come to court you have to pay the defendant so much of money you will pay this money on or before a particular date so that will be the first order the court will quantify the amount due and payable by the mortgage or the mortgage and that will be decided that will be framed as a premium decree now if the premium decree is obeyed then the court will record the payment full satisfaction ask the defendant to hand over the documents everything and the whole thing will be closed so that there will be no issues suppose the mortgage does not make the payment under the premium decree what is the remedy of the mortgage in the very same suit the mortgage can apply for a final decree asking for the share of the property he did not file the separate suit please know if you go and see order 34 2 3 4 5 very beautifully it is written in a suit for redemption file by the mortgage or give the mortgage or does not pay up the money as for the premium decree a final decree for sale of the hypothetical can be passed in the very same suit for redemption at the instance of the mortgage so the mortgage it gets a defendant gets a relief in a suit file with the mortgage or it is very interesting to read order now similarly either where we have a right of foreclosure like a mortgage by conditional sale an anonymous market is where the power of sale is not there for the mortgage but it is for they have a right of foreclosure similarly in this room for redemption the defendant if they can come for a final decree to ask the court saying that since he did not deposit the amount as for the premium decree please foreclose his right and say that he's not entitled to redeem the property such a right is given to the defendant in this room for redemption and you all know that if the mortgage comes by way of a suit for recovery of money based on the mortgage there will be an initial preliminary degree asking the mortgage or defendant to make the payment feeling which the mortgage he can find a suit for sale or foreclosure as the case so this is the order 34 now very same provisions that is how to instead of coming to court the banks and other financial institutions were finding it very difficult to realize their money so the legislature had brought in the reality and it could be banks and institutions out of the purview of this of course you had bought then they brought in the further improvement by way of a surface yeah so if you see provisions section 16 to 17 they are almost similar to section 69 the application of section 69 and 69 a of the transfer of property act has been removed from the surface yet they do not apply but all other types of mortgage is registration all that aspect is retained but only enforcement is little different instead of order 34 CPC to impose a mortgage, banks and other financial institutions are entitled to invoke surfacey and to be dedicated under I'll go to enforce and that's about the mortgage concept will be the same similarly under sections 29 to 32 of the state financial corporation a similar provision like 100 surface is also there for realization of the mortgage security which has been offered to them so this is the enforcement of mortgages if you go to section 13 to 17 of surface the act of 29 to 30 of financial corporation the mortgage is given very very very drastic power to even go for a position they can appoint receiver they can take over the assets and management they can even run the company in fact the very sweeping power is being given only because these security credit security creditors are all handling public money and in the case of public interest whenever persons are borrowed and have defaulted they don't need to wait in the court you're for immense period of time to get back to money at this point I would like to make one thing here when I come to court by way of a mortgage even if it's a mortgagee who brings the property for sale the mortgager has got the he can put the last straw the last moment how before the confirmation of sale if he deposes the entire money in court then the whole sale is set aside so all the effort of the mortgagee to file a suit making mobile law criminal degree final degree sale execution everything will go to dogs the moment the mortgage jar is for depositing the money before the confirmation of sale so this is what is to avoid all that this is the even in these cases like 13 to 17 or 29 to 32 of the state financial corporation I give the mortgager deposits the money before the sale his sales certificate is issued then he's entitled to get back his property he can save his property that is because your man comes to borrow money only because of his intelligence circumstances and he's not in the same bargaining power so because he's not in the same bargaining power he must be given a chance to get back and enjoy his property without any difficulty so he's given the last till the last moment the sales certificate is registered till the last moment the sale is confirmed under the CPC he's given a right of redemption in fact in certain cases we say the application to set aside sale has been dismissed in case which an appeal is filed in the upper left state they make the payment of the entire money redemption has been granted saying appeal is only a continuation of the earlier proceedings even though there has been no stay and the sales certificate has been issued to the purchaser in the upper left stage the appellate has been the mortgager has been allowed to redeem the property next but not but not the least I just have three more points regarding the interest which has to be charged over the mortgage suits under order 34 is specifically provided under order 34 rule 11 you cannot put your contractual interest but from the date of decree it is only order 34 rule 11 will take effect and not section 34 of CPC this is as well the interest is concerned now questions are asked is the what is the limitation for passing of a final decree a preliminary decree is passed and within three years you have to file an application for passing of final decree otherwise you lose your right to pass a final decree therefore article 137 of limitation act will apply for passing of final decree next is there are there is one property there are various mortgagers suppose five or six mortgagers one of them want to discharge his share and move no one partial redemption of one single mortgage is not allowed he has to pay the entire money discharge the entire mortgage and seek for contribution from the core mortgagers he cannot say no I will pay my one foot share you please release my share which is not possible at all and that is the law on the subject now with this I think I have come to the back end of my lecture and I throw open the forum for questions from the participants so because yes yes ma'am I'm just taking the questions only though one has been posted so far in fact the person who had posted it could do because somehow the internet collapsed meanwhile I can ask ma'am like what you were saying I can ask a question meanwhile like what you said of the redemption order 21 rule 90 also speaks of that once you pay back the money along with 5% interest even in that case you can get the property back no sense the order 21 rule 89 rule 90 has to be filed within 30 days from the date of sale what the time is provided is 30 days you have to say it should be confirmed within 30 days if you have a file those two applications then the sale will not be confirmed the moment an application on 21 989 or 90 is filed in court the executing court will not confirm the sale it will be kept in abeyance so in the meantime if you make the payment fine if your obligation is dismissed and you go up in appeal even in the upper left side the court have said yes because normally what the court does the moment if they dismiss the application with 21 89 or 21 90 then the next call the order will be they'll take the next EP and say sale is confirmed so will that mean that my right of remedy to go to the appellate forum and challenge the order at 21 89 goes no on the appeal also I can seek for redemption pay my money and then it will be the sale certificate with no consequence it will be set aside this is my K. Shankaran when a mortgage is of 1956 was not redeemed can mortgagee now sell the property yes there is a law on the subject which says that it is a simple mortgage if he the mortgager has lost his power of redemption then the mortgagee becomes the absolute owner and this is by Angad he says can you explain the concept of charge with of his mortgage see a charge is different from a mortgage in the sense charge is actually it will be for various other purposes you can ask and it is like a maintenance see where the right is going to be created or suppose there's going to be a non-payment of sale price the charge can be created the credit or data relationship will bring in mortgage all other liabilities can for which you can secure it by way of a charge so please understand in a charge there can be no credit or data relationship only when there's a credit or data relationship the security is treated as a mortgage in all other aspects where any amount is due at payable to you which is secured by way of a charge like suppose you are supplying some goods to a person and he doesn't pay the money you have a charge or a leave over the goods instead of handing it over you can say I'll retail it and that is a leave that that is called a charge similarly you can have a charge over the stocks in a maintenance room the lady is entitled to recover some money from me it's not a debt it is a some payable by one next to why so in order to secure the payment of that money they can have a charge degree over a particular so the credit or data relationship will be significantly absent in the charge that is how you need how does a mortgage or a bank decide which is the most beneficial mortgage how does the mortgage or a bank decide which is the most beneficial mortgage for him and I didn't follow you sir sorry it says how does a mortgage or a bank decide which is the most beneficial mortgage like I just see the question the question is by Navneet see that now the banks follow invariably simple mortgage and mortgage be deposited they have not adopted the reusable market because mortgage or banks cannot take position of the mortgage securities they don't and conditional say also because they don't take a sale deed in the name of the bank because that will result in a payment of additional stamps and additional expenses the points as of now what I have understood from what I have experiences they take only simple mortgage and deposit of a mortgage this is by Samisha you said that mortgagee becomes owner if not redeemed is there is there any backing of this a case law I I'll give the citation to you I'll give it not no I don't have a no it is not ready it gets it is a 2015 judgment by SPC now I'll give it this is by Apia Pani you have simplified the no that is a word of praise but I can read that because that is also required with the questions we are grateful to you for your wonderful lecture on the mortgage you have simplified the most tough subject to be understood by young junior advocates we are grateful for your wonderful lecture you have simplified the most that's again repetition this again by Nehil if the original title deed or the property is not deposited with the bank and the mortgage by deposit of title deed is executed between the parties can the bank still proceed under the surface he act or not there's no creation of mortgage at all there's no creation of money deposit of the original title deed is a sign for creation of a mortgage when there's no document deposit at all there's no mortgage at all this is by bank Krishna Krishna on the Facebook please explain the difference between simple mortgage and deposit of title deed in a simple mortgage you have to be by a registered instrument there'll be a personal covenant to pay and there'll be a stipulation as to payment of interest everything will be recorded in the document and it will be registered and attested as for law whereas in the memorandum of deposit of title deeds all that is not there the memorandum will only record that it is already been documents have already been deposited for a promissory note will be executed simultaneously to give a personal covenant to pay that is all there's been no registered document attested by two witnesses it'll be only the basis of the custody of the original documents the person can claim that there is a deposit of title deeds that's why in cases where there has been a loss of original documents of title anybody can take custody of the original documents and say he has given me the original documents and I have given him money so much therefore it amounts to deposit of title deeds that's why we give paper publication to our calling for third persons to say whether there has been a lost or found and whether please file an FIR or not therefore custody of original documents is very important and if anybody has they can say I have a deposit of title this can be oral also there's no requirement of any writing only recently in Chennai they have said that even deposit of title deeds has to be registered and they know because they brought down the stamp value and they have said maximum of so much only for deposit of title deeds therefore there has been a state of registration of deposit of title deeds also yeah this is by Lal Tejwani in case of a symbolic position by a bank can the mortgagee sell the property to a third person with or without banks intervention what what can the mortgagee sell the property to a third party with or without banks intervention no no see once 13 for notice and position has already been taken any transaction between a person is of no avail and it is void it's not binding on the bank register himself will not register it sub register because they put on notice with the sub register also this is is there any period of limitation for MOTT MOTT that is memorandum of deposit of title deeds are in the same position as a simple mortgage so even memorandum of deposit of title deeds person mortgagee also has to sue within 12 years from the day the amount becomes due mortgagee has 30 years to read Angad can you explain the execution procedure when the suit for foreclosure is decreed can mortgagee file application and draw the 21 rule 90 slash 91 what what this is by Angad can you explain the execution procedure when the suit for foreclosure is decreed can the mortgagee file an application under order 21 rule 90 slash 91 I know suit for foreclosure 21 90 we not arise because there's no sale in a suit for foreclosure that what I'm saying in a suit for sale order 21 rule 89 everything can be invoked because the property will be brought for sale the executing court will bring the property for sale there will be an actual sale taking place but in a suit for foreclosure there can be no execution proceedings at all it will die with a premium decree immediately followed by a final decree they won't get a G with the plaintiff mortgagee becomes the owner that's all so there's no question of 21 18 and 90 in a suit for foreclosure this is by advocating Narayan from Chennai itself whether the NCLTE has jurisdiction on mortgage NCLTE will be deciding what is within their limitation no the mortgage is also part of the secured interest and they will do why you are finding out what are the secured interest how they are going to balance it they are not going to enforce the mortgage they come to the infirmary only because they have don't make the payment and they want to winding up the mortgage cannot be segregated and said that I want money on the mortgage that is not the concept in NCLTE another issue which invariably boils down is that the banks have not created a charge in the on the of the property but it has a title so what preventive measures can be taken let's assume that that has been the biggest problem because of the deposit of tight dates in very many cases the properties have been sold to disorderly and by uh by committing fraud saying that the original documents are lost and the property has been sold to third parties because nobody knows that the original documents are with the custody of a bank that is only to obviate all that and to bring down that we have now in Tamil Nadu we have brought in legislation which uh registration of even deposit of tight dates has been made mandatory by bringing down the cost of stamps and registration but other in other parts of India this particular aspect is still there so the purchases we wear caveat attempt or principle apply if you don't have the original documents and with that you have gone and purchased a property then in later point of time the bank or any other purchase says the original documents are with me by way of a deposit you have to pay and disturb that money also but so that's an issue there it's been section 55 of tp will come into being or no 55 is how well this is regarding a sale no registered sale deed that is different that's what i'm saying non-gateway conditional sale and this is different it is like an registered sale deed under 55 but conditions and the clauses in the sale deed will be clearly point out whether it is a non-gateway conditional sale or an outbreak sale or an ostensibly this is by L. M. Venkat should M. O. D. be registered uh what is your take ma'am yes it should be registered in Tamil Nadu as well as Tamil Nadu's consent has been registered no no she's uh the questions in general should M. O. D. be registered no no see the M. O. D. means memorandum of deposit it is the document which creates the mortgage it has to be registered if it is only a record of a past transaction where documents have been deposited it does not require registration if it says that the the letter says i here but if you can always have a format of the letter to the bank it says i on this day i have deposited with the bank all these documents are tightly that's all the letter we say that means it is already with deposited it only a record of the deposit already made it doesn't require registration if on this day by this by this document i hear with the deposit the document then it requires registration uh this is by Samisha if section 69 is mentioned in the mortgage deed then can it be sold by private negotiations without going for an auction no it will be contract with the mortgage document permits private auction private sale by the mortgage it can be done otherwise it can be only by public auction this is by quita lawyer is there any similarity between the rent controls act with security interest and mortgage since now we have to register the rent control deeds as per the new laws this is any similar to the rent controls act with security interest and mortgage since now we have to register the rent controls do as per new laws see lease hold interest is also a security interest in law see where i have about 19 years lease over a property i can secure it with the it will be a security interest although the bank is concerned the bank can bring that security interest also under the for a for auction so the rent control act it is on a different platform this is on a different platform then control act will say that the existence of a lease on that basis your bank outruns loan that is on a different now it was on a different platform you can't come in good uh sarna kumari should all hold should all home loans be registered before the registrar see it all day yes home loans every home loan is being registered before the registrar every document or where you raise get a loan it is being registered by way of a simple mortgage see sometimes the borrow will be 3 lakhs but for 30,000 at least we go and make a registration to show that there is an incomprehensive property so that you will not deal with the property without the property advocate Narayan right to foreclosure is a mandatory for individual mortgage even after final decree no final decree itself will be a foreclosing decree see that i think you're not understood in a suit for foreclosure the mortgage he files a suit saying that please declare that the mortgage r is not entirely to redeem the property that will be the suit the court will what they'll do it will give an opportunity to the dependent mortgage r to pay up the money and save his property if he doesn't pay the money and save his property then immediately he they want the plaintiff will file an application for passing a final decree the final decree will say the mortgage r even after giving him several opportunities fail to redeem the property therefore he is debarred and foreclosed from redeeming the property that's all the whole thing ends there and the mortgage she becomes the owner of the property this is uh samisha post privately we have heard madam in the court and today also the same spirit is being maintained uh ma'am has remained same informative manner in the way she is in the court this is by Shah and Shah thank you um i don't think we have more questions uh because you have given the one ram ramath is raised uh i will unmute Mr Ramnath Mr Ramnath Mr Ramnath you will have to unmute yourself we have we are allowing you very good evening madam this is Ramnath TK Seshad research junior madam can you hear me yes ma'am i have two questions madam one if suppose within 12 years suit was not filed for recovery of money next 30 years he didn't file the suit for redemption what happens to the documents madam in the income run certificate the mortgage is once the mortgage he loses his right to realize his money then there's no mortgage at all the mortgage or can apply for file a suit for recovery of these documents it'll be deemed discharged so he has to file a suit for recovery of documents yes yes he need not go for redemption also directly he can follow up yes so he can directly go for recovery of documents yes he is in a department because his right to sue is lost one secondly madam if suppose if suppose by uh error no interest has been mentioned in the simple mortgage document rate of interest what is the rate of interest to be taken if you are not contracted to pay interest you cannot charge interest see the contract under the negotiable negotiable instrument act which is different under the contract the terms of contract we govern if you have not stipulated any term in the contract for payment of interest you cannot impose any payment of interest you will be entitled to interest only after the degree not prior to degree but but under the negotiable instruments act there's a particular section under which even if the promissory note does not contain a rate of interest I cannot apply that will not apply thank you ma'am thank you ma'am this is the last question we are taking uh consequences of a non-registration of degree once property is redeemed by paying amount pending suit consequence of non-registration of degree yes sir consequences of a non-registration of a degree once property is redeemed by paying by paying amount pending suit have they not got a full discharge satisfaction before the court that is sufficient even if there's no non-registration it's not of no it's not fatal the difficulty is it to be reflected in the registrar of assurances so you have to tell that that amount is no longer due it has already been discharged by a degree of that's all FS demo is sufficient thank you ma'am in fact we have been receiving the questions and at the same time the prayers that you have been very elucidatedly explained all the issues that goes without saying at least I can I feel quite satisfied that the issues which could have been raised in the mind of anyone but itself in the lecture you had clarified that but the questions which were raised they were also explained in that tough subject and every time that always the confusion when it comes to obligation unless you are a typical trial or was practiced on the trial site they're on mortgage suits otherwise you know in fact you know how to extend the litigation in a mortgage that frustrated the legislature to bring in surface ENDR that's right back it is a clerk's domain in the trial court not the advocate's domain that's true that's true so before we part for the day tomorrow's webinar would be reverse burden clauses and presumption of innocence that is by Mr. Bill Jindas Ra and additional district judge come member faculty Chandigarh Judicial Academy so do stay connected with us tomorrow at 4 p.m and I on behalf of Beyond Law CLC and all those participants who have participated on the platform as well as those who have watched us live on the Facebook and also those who will watch us subsequently once we upload the video link on the YouTube thank you Chitra ma'am for I'll also share the PPT to you Mr. Rekha I've stated that that we will be posting those PPTs on the Beyond Law group and those who have not subscribed to the YouTube channel of Beyond Law CLC they can do so that they can get all the YouTube links of all the webinars which we have conducted everyone stay safe and stay blessed and thank you everyone