MAHARASHTRA NATIONAL LAW UNIVERSITY MUMBAI

CODE OF CIVIL PROCEDURE

FIRST DRAFT

Mortgage suits: Contemporary Issues

Semester -IV

Submitted To- Prof. Milind Gawai Submitted By- Pratik Irpatgire

Prof.Sadhashiv Deshmukh Enrolment - 2016-063

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 Sr. Content Page no.
No.

1. INTRODUCTION 4

1.2 SCOPE OF RESEARCH 6

1.3 RESEARCH QUESTION 6

2 MEANING OF 7
MORTGAGE

2.1 ANALYSIS OF LAW 8

COMMISSION
REPORT

3 WHO CAN BE 8
PARTIES TO
MORTGAGE SUITS

3.1 NON-JOINDER OF
PARTIES AND ITS 10
CONSEQUENCES IN
MORTGAGE SUIT

3.2 10
. JURISDICTION
FOR MORTGAGE
SUIT
11
4 TYPE OF PROPERTY
ATTACHED WITH THE

MORTGAGE SUIT

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 4.1 12
LIMITATION IN
FILING THE SUIT OF
MORTGAGE

4.2 12
CONCLUSION
(TENTATIVE)

13
BIBLIOGRAPHY

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Mortgage suits in India and its critical analysis with reference to judicial
interpretation.

1. INTRODUCTION –

In India the Civil Law incorporates the various types of suits, in which the
mortgage suit is considered as the one of the important form suit. Thus institution
of suit is important facet under Civil Procedure Code. Order XXXIV of Civil
Procedure Code consist the provision of mortgage suit of immovable property.
The mortgage suit incorporates the relation between the mortgager and
mortgagee. In the preliminary explanation of aforementioned order it states that, a
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
1
redeem a subsequent mortgage. Order 34 of CPC is exhaustive which
incorporates various facets in terms of mortgage. The instant order of is equally
applicable to mortgagee of possessions2. Considering the object and the scope this
rule, it applies to Hindu as well as to Muslim debtor’s estate.3 The object of this
rule is to prevent multiplicity of suits to secure that no injury is done to the rights
of any property not impleaded.

The researcher in the project report will incorporate various facets of mortgage
suits by comparative analysis of present status of mortgage suits in India. The
mortgager under the Indian Law is the owner who had parted with some rights of
ownership. In the mortgage suit the mortgager enjoys the right of redemption of
property and the right is exercised by the virtue of his residuary ownership to
resume what he has parted with. In India the right of redemption is the statutory
right. In simple terminology it can be stated that, unless there is an order for
foreclosure or a decree for sale, the mortgage will, in the eye of law, subsist.
Once the mortgage is in subsistence, the right of redemption is not extinguished.
If the right of redemption is not extinguished, successive suits for enforcing that
right can be filed in the court of law. The right of redemption on the part of the

1
3, Mulla, The Code of Civil Procedure, 3224-3297 (19th ed.2017)
2
Mahamaya Debi Vs Haridas, I.L.R 42 Cal. 455 at pp.477, 478 :27 I.C 400
3
N.K Mohd. Sulaiman Sahib Vs N.C Mohd. Ismail Saheb, A.I.R 1966 S.C 792 at p.798

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mortgagor and the right to foreclosure on the part of the mortgagee are co-
extensive. In the text of instant order of mortgage property suit it is a general
accepted rule that, all persons who have an interest either in the right of
redemption or in the security, must be joined, though the result may be the trial of
legal right between the parties thus brought before the court for different purpose.
The provision of mortgage suit under the Code of Civil Procedure consist of
variety of principles, the researcher in the project report will emphasize on the
same general principles by critically analysing them with respect to status of
present mortgage suits in India across various courts.

When a suit is to be files before the court, the court has to rectify the various
procedural facets in terms parties to suit, institution of suit, jurisdiction of where
it has to files, the cost of suit, necessary and mis-joinder and non-joinder of
necessary party to the suit. As earlier stated by the researcher the mortgage suit is
the vide topic, the researcher will be focusing on the fundamental facets of
mortgage suits and its institution with reference to present issues of the mortgage
suits in India and various interpretation by court.

There is also a limitation for the mortgage suit in India; section 62 of Limitation
Act incorporates the provision for the limitation of mortgage suit. The researcher
in the paper will elaborate on same with respect to provision mention in Code of
Civil Procedure. The researcher for the paper relied on secondary data of such as
books, case law various observation derived by the courts in India, keeping the
reliance on same the researcher will emphasize on same in his paper. A mortgage
is a transfer of an interest in property while a charge is merely a right to receive
payment out of some specified property.

The paper will be divided into Chapters and Sub- Chapters with relation to
various fundamental facets of mortgage suits and the interpretation of court on the
law of mortgage suits. The researcher will focus on critical analysis of court
interpretation in terms contemporary issues of mortgage suits. The paper will be
outline with briefing the articulate meaning of suits in CPC following with
explanation of mortgage suits under CPC. The scope of research is limited to
only some extent. The project report will consist of brief information about
concept of mortgage suits and few of the suggestion by the researcher. Where the

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property is not kept as a mortgage towards the security loan, a suit under order 34
of CPC for recovery of loan by sale of mortgaged property would not lie and the
property cannot be sold. 4

Order 34 was introduced in the Code of Civil Procedure, 1908 dealing with the
suits relating to mortgages of immovable property, prior to that the provision
relating to mortgages were in Section 85 to 99 of Transfer of Property Act of
1882.

1.2 SCOPE OF RESEARCH –

The mortgage suit is wide provision under Code of Civil Procedure Code.
Therefore the scope of research is limited up to the certain limit. Considering the
in-depth research on the topic of mortgage suit, the researcher will have a critical
analysis on the various landmark judgements on mortgage suits. The research is
totally dependent on the secondary material through books, journals, articles,
Bare Acts etc.

1.3 RESEARCH QUESTION –

1. What types of decree can court passed in mortgage suits?

2. What is a procedure for filing a mortgage suit under Code of Civil Procedure
Code?
3. What are the types of property which can be dealt under mortgage suits?

1.4 METHODOLOGY -

The researcher conducted his research by learning the basic objective of mortgage
suits with reference to secondary material through books, articles and case law,
the research methodology through books were limited to immovable property and

4
Balbir Singh Vs Sivpuri Guna Shetriya Gramin Bank, AIR 2005 MP 93

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CPC, mortgage is a wide topic, therefore the researcher relied on critical analysis
mortgage suit analysis.

2. MEANING OF MORTGAGE
‘Mortgage’ is the transfer of an interest in specific immovable property for the
purpose of securing the payment of money advanced or to be advanced by way of
loan, or an existing or future debt, or the performance of an engagement which
may give rise to pecuniary liability.5 Mortgage is a concept of ancient origin
which can be traced back to earliest phases of human civilisation and commercial
transactions. The Transfer of Property Act defines mortgage in terms of transfer
of interest in immovable property.6 It is a right in rem which enables the person
entitled to it to secure the payment of a pecuniary claim through the medium of
property itself which is pledged to him.7 In most systems of law, the transaction is
effected by the mortgager parting neither with his possession nor his ownership
even conditionally, but only with the right of sale which constitutes one of the
features of ownership. In this sense, a mortgage may be defined as a right
enabling the mortgagee to satisfy his demand by sale of property given to him in
security. Tracing the history of mortgage and securities, Mulla observes that in
ancient systems of law a mortgage was really a pledge, the property being a
security which was forfeited on default in payment.8 The transaction was affected
by actual delivery of possession or by conditional conveyance. The Roman law
recognised as earliest form of security in which property was forfeited in case of
non-payment.
The Privy Council, described mortgage as some right in addition to the personal
binding. The essence of transaction by way of loan on security is that the lender
unwilling to rely solely on the personal liability of borrower to be given a right in
rem and to insist in the same document, provision by which the borrower
bestowed the right in rem.9 In English mortgage there is a transfer of property to
mortgagee with a covenant to repay the debt on a given date and a provision that

5
Section 58 of Transfer of Property Act, Act of Parliament, 1882 (India)
6
Id. at 5
7
Transfer of property act, Act of Parliament, 1882 (India)
8
Mulla, Supra note, 1
9
NATHALAL V/S. RAMANMAL AIR 1937 (PRIVYCOUNCIL) 124

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on this condition being performed, the mortgagor will be entitled for re-
conveyance. In India, in case of property acquired as ancestral property title deeds
like registered sale deed are not available and creation of equitable mortgage in
such cases becomes difficult. Similarly copies of sale deed are not title deeds and
hence no equitable mortgage can be created on basis of the same.10

2.1 ANALYSIS OF LAW COMMISSION REPORT-

The civil procedure code recognises two types of decree, preliminary and final
decree. The Law Commission noted that in a suit for foreclosure, sale or
redemption, initially preliminary decree is passed in each case declaring the
amount of due on mortgage or directing an account to be taken of what is due to
the mortgage for principal, interest and the costs and for other costs, charges and
expenses in respect of mortgage security. The sums so found are included in one
report. Then the final decree is passed and the suit is disposed of.
The Law Commission then stated that,
A fundamental defect in the present procedure the Order 34 is that it necessities
two decrees in the same suit also the possibility of two appeals against decrees in
the same suit.11 Therefore the Law Commission recommended that this should be
avoided. The scheme which the Law Commission proposes is that there should be
only one decree in suits or mortgagees. That decree corresponds to preliminary
decree. All subsequent proceedings will take place in execution.12

3. WHO CAN BE PARTIES TO MORTGAGE SUITS-

The parties in any suit play the crucial role, as parties are the fundamental facet
for institution of any suit as a result the parties have to be formed in accordance to
legality and capacity of parties to institute suit. All persons having an interest in

10
M.P Jain, The Code Of Civil Procedure-Incorporating The Commercial Courts, Commercial
Division And Commercial Appellate Division Of High Courts Act, 2015 As Applicable To
Commercial Disputes (4th Ed.2015 )
11
2, A.N Saha, The Code of Civil Procedure, 1683, (5th ed.1999)
12
Law Commission Fifty –fourth Report, pp 248-61

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mortgage security or in right of redemption shall be joined as party to any suit
relating to mortgage.13
The Code of Civil Procedure basically deals with the foreclosure sale and
redemption of suit as mention in in Rule 1 of Order 33 of CPC. The object of the
suit is that all persons having an interest either in the mortgage - security or in the
right of redemption to be joined as parties, as it is to avoid the multiplicity of
suits14. The CPC provisions deals with the procedural part of mortgage suit and
merely is not substantial law.15 The question who can file a suit for redemption is
16
to be determined on a true construction of the Transfer of property Act. The
substantive part of mortgage deal with the Transfer of Property Act. The
17
provisions of this order are applicable to a suit to enforce a charge. The legal
heirs of the original mortgager cannot be non-suited in a suit for redemption,
where a defendant by fraud and misrepresentation obtained a decree for specific
performance of sale against the original mortgager, especially when the plea is in
appeal.18 In law there is also a provision for co-mortgager, whereas the several
co-mortgagers can sue for redemption on his behalf under section 60 of Transfer
of Property Act.19 In a suit for redemption legal representative of co- mortgagee
were not brought on record in appeal. The appeal would subside only in respect
of that mortagagee when the mortgagor is prepared to pay entire mortgage
amount to surviving mortgagee.20
On account of bona-fide error, the plaintiff instituted the suit against a person
who is not representing the estate of a deceased person, against whom the
plaintiff has a claim either at all or even partially. A mortgagee also is a necessary
party in such suit. The mortgagee will be seeking decree for foreclosure and
hence if the plaintiff succeeds a preliminary decree will be passed for amount due
and cost. If defendant pays the amount within 6 months, the claim of mortgagee
will come to an end and in case such payment is not so made final decree
debarring the defendant to property will be passed. The court has a power to

13
4, Sir John Woodroffe and Ameer Ali, Commentary on The Code of Civil Procedure 1908,
3348-3424 (7th ed.2018)
14
Lala Suraj Prasad Vs Golab Chand, (1909) ILR 28 Cal 517
15
Mulla, See Supra Note, 1
16
Jain, See Supra Note, 10
17
Upendranath Vs Prathanath, 1953 ILR 1 Cal 54
18
Beli Ram Vs Salig Ram, AIR 1996 SC 757
19
Id.at 6
20
Chhaganlal Vs Narandas, AIR 1982 SC 121 (125)

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extend the time given for payment.21 The plaintiff is also entitled to pray for
preliminary decree in suit for sale. In such case also time will be given to the
defendant to make payment and if no payment is made the court will pass
necessary order for sale of such property.

3.1 NON-JOINDER OF PARTIES AND ITS CONSEQUENCES IN

MORTGAGE SUIT
In the celebrated case of Mata din vs. Kazim Husain,22 it was held by Allahabad
high court that a non-joinder of a person who ought to have been made a party to
a suit on a mortgage was a defect fatal to the suit and that the suit should be
dismissed but the court if sees fit to do so, may add him as a party under section
32 of Code of Civil Procedure, in the same court it was held that the result of
non-joinder of a subsequent mortgagee in a suit on a prior mortgage, though
intentional would not be the dismissal as whole suit but only so much of it as
relates to the property affected by the subsequent mortgage.23 The same decision
was affirm by Bombay and Calcutta High Court in view of Allahabad High
Court. Order 1 Rule 9 of CPC states that no suit shall be defeated by the reason of
non-joinder of parties; as a result order 34 is subjected to order 9 of CPC.24

3.2 JURISDICTION FOR MORTGAGE SUIT

Jurisdiction is an important facet under the code of civil procedure for filing of
any suit. The jurisdiction clause empowers the court to proceed with any kind of
suit. Therefore the jurisdiction matters a lot in any suit. Section16 of Code of
Civil Procedure defines the rule of jurisdiction.25 The rule of jurisdiction
establishes the first step towards determining which Court would be competent to
try a matter concerning immovable property in the first instance. As mortgage
suit is limited to immovable property, but the Code of Civil Procedure does not
define immovable property, therefore it becomes difficult to analysis the basis of
jurisdiction based on territory pecuniary jurisdiction. The comprehensive

21
3,Justice M.L Singhal, Cases and Materials on Code of Civil Procedure (5th Ed.2012)
22
(1891) ILR 13 ALL 432
23
Madhavrao Paikaji Vs. Eknathrao Balappa, AIR 1948 Nag.56
24
Jain See Supra Note 10
25
5,C.K Thakker, Code of Civil Procedure , 838-976 (2014)

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definition of immovable property can be found in General Clause Act of 1872
which defines immovable property as including land, benefits arising out of land,
and things attached to the earth, or permanently fastened to anything attached to
the earth.26 It is important to note that territory is determined by the state and not
by the court. Thus, in order to determine what the territory is and which court has
jurisdiction over that territory, one must look at the Civil Courts Act, not the
CPC. Suits: for the recovery of immovable property, for partition, foreclosure,
sale or redemption, determination, compensation, recovery of movable property
actually under distrait or attachment, shall be instituted in the Court within the
local limits of whose jurisdiction the property is situate.27 The Supreme Court of
India has consistently held that an action can be instituted only in a Court where
the immovable property is situated28

4. TYPE OF PROPERTY ATTACHED WITH THE MORTGAGE SUIT-

The provision of order 33 with respect to mortgage suit only deal with
immovable, they have no application to mortgage of movable property. As court
held in the case of New Citizen Bank of India Ltd. Vs Burnel & Co.29 In rule 34 it
is clear classification in terms of property in terms of movable or immovable. A
suit for the realisation of an amount due on enforcement of mortgage of movable
property will not be governed by the principles underlying order 34 or by
procedure similar to the one prescribed by order 34. There is a case of distinction
between the case of mortgagor and that of mortgagee in relation to the right to
sue. It is a clear stated in the ambit of law that a mortgage suit requires an
attachment of immovable property any kind of movable property in a suit stands
dismissed. In the case of Mannathan Vs.Chinnu,30a suit for redemption, the
plaintiffs were the sons of the mortgager who were representing the estate of the
mortgagor as legal representative. The daughters of the deceased mortgagor were
not included in the suit, while deciding the question whether the suit for
redemption was bad for non-joinder of the daughters, the court held that as the

26
General Clause Act , Act of Parliament, 1872 (India)
27
Section 16 of Civil Procedure Code, Act of Parliament, 1908 (India)
28
Assam v. Biraj Mohan Sarkar
29
AIR 1984 Punj 180 : (1954)
30
AIR 2012 Mad.210

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daughters had surrendered their share in the property, the suit is not bad for non-
joinder of necessary parties. 31

4.1 LIMITATION IN FILING THE SUIT OF MORTGAGE

Section 62 of the Indian Limitation Act, 1963 provides limitation period for filing
of suit for recovery of mortgaged debt and sale of mortgaged property in the
event of non-payment of the mortgaged debt.32 Secrion 63(a) of the said Act
provides a limitation period, in case of foreclosure of the mortgaged property.
The limitation period for filing a suit for sale of mortgaged property is twelve,
from the date the mortgage debt becomes due.33 The limitation period for filing
suit, for foreclosure is thirty years; from the date the money secured by mortgage
becomes due. In the case of Manimala v. Indubala34 it has been held that a suit to
enforce a mortgage is governed by Art. 62 and has to be file within 12 years from
the date when the money became due unless the period of limitation prescribed
has been extended under any provision of the Limitation Act. Similarly in the
case of Bhabatmal v. Syed Abdul Hamid35 it has been held that the fact that
money secured is payable by instalment and there was a default clause making
the whole balance payable at once in case of default, does not make any
difference and the Art. 62 will govern such suit to recover the instalments charged
with immovable property. In the case of Gol Krishna v. Kessandas36 it has been
held that the mortgage property had been sold in execution and the objection of
the mortgagor against the execution was dismissed as the sale had already taken
place, the mortgagor’s only remedy is to enforce the mortgage against the
mortgagee and the auction purchaser and that suit will attract the Art. 62.

4.2 CONCLUSION (TENTATIVE) –

Mortgage suit is a wide concept as a result it procedure for filing a suit is
complicated; the mortgage is totally related to property law. The property
attached with mortgage suit is immovable property as a result the immovable

31
3, Sarkar, Code of Civil Procedure (12th Ed.2014)
32
Singhal, See Supra Note21
33
Thakker, See Supra Note 25
34
AIR 1964 SC 1295
35
AIR 1949 Nag. 103
36
AIR 1964 MP 158

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property incorporates the wide facet. But still there are many loopholes in terms
of filing of mortgage suit. The mortgage law incorporates its provision in
Transfer of Property Act as well as in Civil Procedure Code. Therefore the
substantive law and procedure law in terms of mortgage property differs from
each other.
From avoiding multiplicity of suits, the order 34 has decree but the validity of
passing of decree is still an issue. The provision of order 34 ensure that all claims
affecting the equity of redemption or of the mortgage security are decided by the
court in one and the same suit. Such a course avoids multiple proceedings and
brings all interested parties before the court to put forward their claims so that no
prejudice is caused to any of them. The procedure under Order 34 is also distinct
and different execution of decree in mortgage suits than the procedure prescribed
in order 21 for execution of decree in other suits.

BIBLIOGRAPHY –

Books Referred –
1. 3, Mulla, The Code of Civil Procedure, 3224-3297 (19th ed.2017)
2. 5,C.K Thakker, Code of Civil Procedure , 838-976 (2014)
3. 4, Sir John Woodroffe and Ameer Ali, Commentary on The Code of Civil
Procedure 1908, 3348-3424 (7th ed.2018)
4. 2, A.N Saha, The Code of Civil Procedure, 1683, (5th ed.1999)
5. B.B Mitra, The Limitation Act, 664-860 (20th ed.1998 )
6. 3, Justice M.L Singhal, Cases and Materials on Code of Civil Procedure (5th
Ed.2012)
7. M.P Jain, The Code Of Civil Procedure-Incorporating The Commercial
Courts, Commercial Division And Commercial Appellate Division Of High
Courts Act, 2015 As Applicable To Commercial Disputes (4th Ed.2015 )
8. 3, Sarkar, Code of Civil Procedure (12th Ed.2014)

Statute Referred-
1. The Code of Civil Procedure, 1908

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2. Transfer of Property Act, 1882
3. General Clause Act, 1897

Reports-
1. 54th Law Commission Report.

Cases Referred –
1. Mahamaya Debi Vs Haridas, I.L.R 42 Cal. 455 at pp.477, 478 :27 I.C 400
2. N.K Mohd. Sulaiman Sahib Vs N.C Mohd. Ismail Saheb, A.I.R 1966 S.C 792
at p.798
3. Balbir Singh Vs Sivpuri Guna Shetriya Gramin Bank, AIR 2005 MP 93
4. NATHALAL V/S. RAMANMAL AIR 1937 (PRIVYCOUNCIL) 124
5. Lala Suraj Prasad Vs Golab Chand, (1909) ILR 28 Cal 517
6. Upendranath Vs Prathanath, 1953 ILR 1 Cal 54
7. Beli Ram Vs Salig Ram, AIR 1996 SC 757
8. Chhaganlal Vs Narandas, AIR 1982 SC 121 (125)
9. Madhavrao Paikaji Vs. Eknathrao Balappa, AIR 1948 Nag.56
10. Assam v. Biraj Mohan Sarkar
11. New Citizen Bank of India Ltd. Vs Burnel & Co AIR 1984 Punj 180 : (1954)
12. Mannathan Vs.Chinnu AIR 2012 Mad.210
13. Manimala v. Indubala AIR 1964 SC 1295
14. Bhabatmal v. Syed Abdul Hamid AIR 1949 Nag. 103
15. Gol Krishna v. Kessandas AIR 1964 MP 158

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