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Report No. 3

Chapter III

Suits Relating To Immovable Property

Mortgages

124. Articles 105, 132, 134 (second part), 135, 146, 147 and 148 relate to mortgages. The Transfer of Property Act as amended in 1929 deals with the following kinds of mortgages:

(1) Simple mortgage,

(2) Mortgage by conditional sale,

(3) Usufructuary mortgage,

(4) English mortgage,

(5) Mortgage by deposit of title deeds, and

(6) Anomalous mortgage.

Apart from suits on the covenant to pay, if any, the remedies available to a mortgagee, are stated in section 67 of that Act. After the mortgage money becomes payable the mortgagee is entitled under the Act to a decree either for foreclosure or for sale depending on the nature of the mortgage. The right of foreclosure is given only to a mortgagee under mortgage by conditional sale or a mortgagee under an anomalous mortgage by the terms of which he is entitled to foreclosure. Under the law as it stood before 1929 the English mortgagee was entitled to foreclose or sell. As the right of foreclosure is restricted under the present Act to the two kinds of mortgage stated above, a simple mortgage or an English mortgage or a mortgage by deposit of title deeds carries with it only a right of sale.

In the case of an anomalous mortgage the remedy depends upon the terms of the mortgage; the mortgagee under it may be entitled to foreclosure or sale, or possession. The only right of a usufructuary mortgagee is to recover possession of the property but he cannot sue either for sale or for foreclosure. Though there was some difference of opinion before the amendment as to whether a usufructuary mortgage could be created without delivery of possession to the mortgagee, the amended definition of a usufructuary mortgage enables the creation of a usufructuary mortgage even without delivery of possession. If the usufructuary mortgagee is not put in possession or if his possession is disturbed, he is entitled to recover possession of the property.

125. Articles 135 & 146.-

Before the decision of the Privy Council in Vasudeva v. Srinivasa, 30 Mad 426 (PC) the view was taken that a suit by a mortgagee for sale of the property was governed by Article 147 which gives a period of 60 years for foreclosure or sale. This view is no longer tenable in view of the decision of the Privy Council where it was pointed out that Article 147 applied only to an English mortgage under which the mortgagee has the alternative of either bringing a suit for foreclosure or for sale and that the proper Article to apply in the case of a suit for sale under a simple mortgage was Article 132 which provides a period of 12 years from the date when the money sued for becomes due. Under the existing law, the English mortgagee has no right of foreclosure. Like a simple mortgagee, he has to institute a suit for sale. Whether in view of the definition of English mortgage in the Transfer of Property Act, he is entitled to recover possession also, is a debatable point.

126. In the Limitation Act there are two Articles, 135 and 146 which provide a period of limitation for recovery ,of possession by a mortgagee. If the suit is instituted in a court not established by Royal Charter, the period is 12 years (Article 135) and if the suit is instituted in a court established by a Royal Charter the period is 30 years (Article 146). In the former case, time begins to run when the mortgagor's right to possession determines while in the latter, time begins to run when the principal or interest was last paid on account of the mortgage debt. It seems to be unnecessary to maintain this distinction even assuming that under the present law the English mortgagee is entitled to recover possession of the property.

The usufructuary mortgagee is undoubtedly entitled to recover "possession of the property, either from the date of mortgage if possession is not delivered or, subsequently, if having been put in possession, his possession is disturbed. It would be sufficient, therefore, to provide only one Article for a suit by a mortgagee for possession of immovable property mortgaged to him. A period of 12 years may be allowed. Time should run from the date when his right to possession accrues.

127. Article 147.-

As under an English mortgage there is no right of foreclosure or sale in the alternative, Article 147 which, in view of the Privy Council decision applies only to such mortgages, should be deleted. It is, however, necessary to make a fresh provision for a suit for foreclosure. A period of 12 years for such a suit may be provided counting limitation from the date when the money secured by the mortgage becomes due, as in the case of a suit for sale.

128. Article 132.-

Article 132 may also be amended by making it clear that it applies to mortgages. The article may run as follows:

"To enforce payment of money secured by a mortgage or otherwise charged upon immovable property-12 years when the money sued for becomes due."

Clause (c) of the Explanation is unnecessary as the amendment now proposed covers all mortgages whether a simple mortgage or mortgage by deposit of title-deeds or an English mortgage. The articles so amended will govern all suits by a mortgagee.

129. Article 148.-

We may next consider the question of redemption for which a period of 60 years is provided under Article 148. In England, the period now is only 12 years and a suit for redemption is treated as a suit for possession of land (vide section 12 of the Limitation Act, 1939). We propose that the period may be cut down to 12 years here also and in respect of any rights which have already accrued, a saving provision may be introduced in the sections of the Act limiting the period to 6 years from the date of the amendment or 12 years from the accrual of the right to redeem whichever is longer. The proviso to Article 148 is unnecessary as Lower Burma is no longer a part of India.

130. Articles 105 and 134.-

Article 105 may be retained as it is. Article 134 relates to trust property and also to property mortgaged. It may be split up and the portion relating to mortgages may be deleted as the period of redemption is proposed to be reduced to 12 years.



Limitation Act, 1908 Back




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