Report No. 70
68.7. Section 68(1)(c).-
Clause (c) of section 68(1) deals with the case where the mortgagee is deprived of the whole or part of his "security" by or in consequence of the wrongful act or default of the mortgagor. The liability here is delictual. It is not reasonable that after the security is impaired by the mortgagor's own act or default, the mortgagee should be obliged to realise the security only. By hypothesis, the security is itself impaired. The expression "Wrongful act or default" can be illustrated by a number of instances-e.g., nonpayment of the amount due on prior encumbrances, non-disclosure of the prior mortgage; or defect in the title where the mortgaged property is not transferable.
68.8. Property not belonging to mortgagor.-
There appears to be some obscurity on the question whether, if a mortgagor includes in the mortgage property not his own, the remedy under this section exists-some cases taking the view that the remedy is on the basis of receipt, and not in the transaction.1
In the two Oudh cases referred to by Mulla, the mortgagee was given the remedy of a personal decree.2-3 We are of the opinion that section 68(1)(c) is wide enough to cover a case where the mortgagor transfers property which is not his own. It must be read with section 65(a), under which there is an implied contract by the mortgagor with the mortgagee-"that the interest which the mortgagor professes to transfer to the mortgagee subsists, and that the mortgagor has power to transfer the same." We do not think that it is necessary to recommend an amendment, since the language of section 65 is dear enough.
1. Shahzad Singh v. Narain Kurmi, AIR 1927 All 190 (Wash & Pullen, B.).
2. Budra Prasad v. Nasiruddin Khan, AIR 1927 Oudh 315.
3. Devi Prasad v. Shiv Narain, (1914) 21 IC 518.
68.9. Section 68(1)(d).-
Under section 68(1)(d), the mortgagee has a right to sue for the mortgage money where the mortgagee being entitled to possession of the property, the mortgagor fails to deliver the same to him or to secure the possession thereof to him without disturbance by the mortgagor or any person claiming under a title superior to that of the mortgagor.
We have no comments on this clause.
68.10. Section 68(2).-
Section 68(2) empowers the court, in the case of a suit under clause (a) or (b) to stay the suit until the mortgagee has exhausted all available remedies against the property, unless the mortgagee abandons the property and if necessary retransfers it.
The wording of this sub-section should be made less complex and more easy of reading. As the sub-section now stands, too many negatives detract from the simplicity, and create a jarring effect. Apart from that, the structure of the subsection does not bring out the fact that the stay of the suit is until the mortgagee has exhausted the remedies. We recommend that sub-section (2) should be redrafted on the following lines:-
"(2) Where a suit is brought under clause (a) or clause (b) of sub-section (1), then, notwithstanding any contract to the contrary, the court may, at its discretion, stay the suit and all proceedings therein until the mortgagee has exhausted all his available remedies against the mortgaged property or what remains of it:
Provided that such stay shall not be granted or, if granted shall, cease to operate if the mortgagee abandons his security, and, if necessary, re-transfers the mortgaged property."
68.12. Section 68-Anomalous mortgages-Recommendation.-
There appears to be a conflict of decisions on the question whether section 68 applies to anomalous mortgages. The answer given by certain High Courts1-2 is in the affirmative.
On the other hand, certain other High Courts have answered the question in the negative.3-5 Having carefully considered the matter, we are of the view that the former view is correct. In view of this conflict of decisions, it is advisable to make it clear-and we recommend accordingly-that the provisions of the section apply to an anomalous mortgage as they apply to any other mortgage. An Explanation could be added to that effect.
1. Qadir Parasan Khan v. Kehr Mir, AIR 1935 Lah 103 (104).
2. Hundaldas v. Balukhan, AIR 1943 Sing 59 (61).
3. Ramachandra Rao v. S.V. Co. Ltd., AIR 1952 Mys 125 (126) (reviews cases).
4. Ram Padarath v. Nimar Singh, AIR 1942 Oudh 172.
5. Gajadhar v. Sivanandan, AIR 1924 Cal 594.