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Report No. 178

"Order Xxxiv- Suits Relating to Mortgages of Immovable Property

1. Parties to suits for foreclosure, sale and redemptio.- Subject to the provisions of this Code, all persons having an interest either in the mortgage security or in the right of redemption shall be joined as parties to any suit relating to the mortgage.

Explanation:- A puisne mortgagee may sue for foreclosure or for sale without making the prior mortgagee a party to the suit; and a prior mortgagee need not be joined in a suit to redeem a subsequent mortgage.

2. Decree in foreclosure suits.- (1) In a suit for foreclosure, if the plaintiff succeeds, the court shall pass a decre.-

(a) declaring the amount due to the plaintiff on the date of such decree for

(i) principal and interest on the mortgage;

(ii) the costs of the suit, if any, awarded to him; and

(iii) other costs, charges and expenses properly incurred by him up to that date in respect of his mortgage-security, together with interest thereon; and

(b) directing that,-

(i) if the defendant pays into Court the amount so declared due with future interest and subsequent costs as are mentioned in rule 7 on a day within six months from the date of the decree to be fixed by the Court, the plaintiff shall deliver up to the defendant, or to such persons as he appoints, all documents in his possession or power relating to the mortgaged property, and shall, if so required, re-transfer the property to the defendant at the cost of the defendant free from the mortgage and from all encumbrances created by the plaintiff or any person claiming under him or, where the plaintiff claims by derived title, by those under whom he claims, and shall also, if necessary, put the defendant in possession of the property; and

(ii) if such payment is not made on or before the day fixed by the Court, the defendant and all persons claiming through or under him shall be debarred from all rights to redeem the property; and also if necessary the defendant shall put the plaintiff in possession of the property.

(2) Where, in a suit for foreclosure, subsequent mortgages or persons deriving title from, or subrogated to the right of, any such mortgages are joined as parties, the Court shall adjudicate upon the respective rights and liabilities of all the parties to the suit in the manner and form set forth in Form No. 9 or Form No. 10 as the case may be, of Appendix D with such variations as the circumstances of the case may require.

(3) On the expiry of the date fixed for payment of the amount declared due to the mortgagee, all liabilities to which the defendant is subject in respect of the mortgage 46 or on account of the suit shall be deemed to have been discharged.

3. Decree in suit for sale.- (i) In a suit for sale, if the plaintiff succeeds, the Court shall pass a decree to the effect mentioned in clause (a) and sub-clause (i) of clause (b) of subrule (1) of rule 2 and also directing that, in default of the defendant paying as therein mentioned, the mortgaged property or a sufficient part thereof be sold, and that the proceeds of the sale (after deducting the there from the expenses of the sale) be applied in payment of what is declared due to the plaintiff as aforesaid, together with subsequent interest and subsequent costs, and that the balance, if any, be paid to the defendant or other persons entitled to receive the same; and that, in case the proceeds of such sale be insufficient to pay the amount due to the plaintiff, the balance, if legally recoverable from the defendant otherwise than out of the property sold be paid by the defendant personally.

(ii) In a suit for foreclosure, if the plaintiff succeeds and the mortgage is an anomalous mortgage, the Court may, at the instance of the plaintiff or of any other person interested either in the mortgage money or in the right of redemption, pass a like decree (in lieu of a decree for foreclosure) on such terms as it thinks fit, including the deposit in Court of a reasonable sum fixed by the Court to meet the expenses of the sale and to secure the performance of the terms.

(iii) Where in a suit for sale or a suit for foreclosure in which sale is ordered, subsequent mortgages or persons deriving title from, or subrogated to the rights of, any such mortgages are joined as parties the Court shall adjudicate upon the respective rights and liabilities of all the parties to the suit in the manner and form set forth in Form No. 9, Form No.10 or Form No. 11, as the case may be, of Appendix D, with such variations as the circumstances of the case may require. 47

4. Decree in redemption suit.- In a suit for redemption, if the plaintiff succeeds, the Court shall pass a decree

(a) declaring the amount due to the defendant at the date of such decree for

(i) principal and interest on the mortgage;

(ii) the cost of the suit, if any, awarded to him;

(iii) other costs, charges and expenses properly incurred by him up to that date in respect of his mortgag.- security, together with interest thereon: and

(b) directing that,

(i) if the plaintiff pays into Court the amount so declared due with subsequent interest and costs as are mentioned in Rule 7, on a day within six months of the decree to be fixed by the Court, the defendant shall deliver up to the plaintiff, or to such person as he appoints, all documents in his possession or power relating to the mortgaged property, and shall if so required, re-transfer the property to the plaintiff at his costs, free from the mortgage and from all encumbrances created by the defendant or any person claiming under him, or, where the defendant claims by derived title, by those under whom he claims, and shall, if necessary, put the plaintiff in possession of the property; and

(ii) if such payment is not made on or before the date so fixed, the plaintiff shall in the case of a mortgage by conditional sale or an anomalous mortgage the terms of which provide for foreclosure only and not for sale, be debarred from all rights to redeem the property and also, if necessary, put the defendant in possession of the mortgaged property; and that if desired by the defendant in the suit itself, in the case of any mortgage other than a usufructuary mortgage,
a mortgage by conditional sale or such an anomalous mortgage as aforesaid the mortgaged property or a sufficient portion thereof be sold and the proceeds of the sale (after deducting therefrom the expenses of the sale) be applied 48 in payment of what is found due to the defendant, and the balance, if any, be paid to the plaintiff or other persons entitled to receive the same and that, in case the net proceeds of such sale be insufficient to pay the amount due to the defendant, the balance be paid by the plaintiff personally if the balance is legally recoverable from the plaintiff otherwise than out of the property sold.

5. Date of paymen.- The Court may, upon good cause shown and upon such terms, if any, as it thinks fit, postpone the date fixed for payment under this Order from time to time.

6. Decree where nothing is found due or where mortgage has been overpai.- Notwithstanding anything hereinbefore contained if it appears in a redemption suit nothing is due to the defendant or that he has been overpaid, the Court shall pass a decree directing the defendant if so required, to retransfer the property and to pay to the plaintiff the amount which may be found due to him; and the plaintiff shall, if necessary, be put in possession of the mortgaged property.

7. Costs of mortgagee subsequent to decree .- In finally adjusting the amount to be paid to a mortgagee in case of a foreclosure, sale or redemption the Court shall, unless the conduct of the mortgagee has been such as to disentitle him to costs, add to the mortgage money such costs of the suit and other costs, charges and expenses, as have been properly incurred by him since the decree for foreclosure, sale or redemption up to the time of actual payment.

8. Sale of property subject to prior mortgage.- Where any property the sale of which is directed under this Order is subject to a prior mortgage the Court may, with the consent of the prior mortgagee, direct that the property be sold free from the same giving to such prior mortgagee the same interest in the proceeds of the sale as he had in the property sold.

9. Application of proceeds.- (i) Such proceeds shall be brought into Court and applied as follows:- 49

First, in payment of all expenses incident to the sale or properly incurred in any attempted sale;

Secondly, in payment of whatever is due to the prior mortgagee on account of the prior mortgage, and costs, properly incurred in connection therewith;

Thirdly, in payment of all interest due on account of the mortgage in consequence where of the sale was directed, and of the suit in which the decree directing the sale was made;

Fourthly, in payment of the principal money due on account of the mortgage; and

Lastly, the residue, if any, shall be paid to the persons proving himself to be interested in the property sold, or if there are more such persons than one, then to such persons according to their respective interests therein or upon their joint receipt.

(ii) Nothing in this rule or in Rule 8 shall be deemed to affect the powers conferred by Section 57 of the Transfer of Property Act, 1882."

10. Suit for sale necessary for bringing mortgaged property to sale.- Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage, and he may institute such suit notwithstanding anything contained in Order II, Rule 2.

11. Mortgage by the deposit of title deeds and charges.- All the provisions contained in this Order which apply to a simple mortgage shall, so far as may be apply to a mortgage by deposit of title deeds within the meaning of section 58 and to a charge within the meaning of section 100 of the Transfer of Property Act, 1882."



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