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Report No. 70

Chapter 87

Merger

Section 101

87.1. Section 101.-

Section 101 practically abolishes the doctrine of merger in relation to a subsequent encumbrance. The section reads as follows:

"101. Any mortgagee of, or person having a charge upon immovable property, or any transferee from such mortgagee or charge-holder, may purchase or otherwise acquire the rights in the property of the mortgagor or owner, as the case may be, without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee of, or person having a subsequent charge upon, the same property; and no such subsequent mortgagee or charge-holder shall be entitled to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto."

87.2. Possession.-

With reference to this section, it is necessary to refer to one matter on which there has arisen a controversy. Where a charge is kept alive under section 101, it can always be used as a shield against subsequent incumbrancer.1 This general proposition is clear enough. What is to happen where the charge-holder has obtained possession as a purchaser or in some other manner; that is to say, not qua charge-holder but in another capacity? Can he retain the possession so acquired until the charge is redeemed? This controversy can arise in regard to mortgagees as well as in regard to charge-holders.

Now, according to one view, the mortgagee can retain possession in such circumstances until he is redeemed. This seems to be the view of Calcutta,2 Nagpur,3 and Oudh4 Courts, whilst the Madras5 and Allahabad6 decisions show a fluctuation of views. The Madras cases are discussed in the under-mentioned judgment.7 The Bombay High Court has taken the view8 that a prior mortgagee entering into possession as purchaser under a money decree obtained by third party is bound to account for the rents and profits of the property when accounts are taken between the prior mortgagee and a puisne mortgagee.

We have to counterbalance the considerations of equity relied upon by the Calcutta and other High Courts against the other consideration that a person cannot get a better right than what he would have had if the change had been kept alive, so that if the mortgage or charge did not give him right to retain possession as against a particular person„ he cannot resist the delivery of possession as against that person or his successors in interest or persons deriving title under him.

1. AIR 1922 PC 11 (13) followed in AIR 1944 Nag 163 (171).

2. (1903) 7 CWN 11 (20).

3. AIR 1933 Nag 241 (244).

4. AIR 1935 Oudh 411 (412).

5. Contrast ILR 7 All 568 with AIR 1939 All 660 (612).

6. Contrast AIR 1940 Mad 646 (649) with (1910) 5 Indian Cases 490 (491).

7. AIR 1922 Mad 249 (252, 253).

8. AIR 1948 Born 379 (380).

87.3. Recommendation.-

On principle, it appears to us that the latter argument is more convincing and juristically sound. Having regard to the conflict of decisions it may be desirable to make it clear, say, by adding an Explanation, that nothing in this section shall entitle a person to retain possession of the property by virtue of this section as against a person against whom he could not have retained possession under the mortgage or charge, as the case may be.



The Transfer of Property Act, 1882 Back




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