Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Bank’s First Right on Mortgage Property - The bank holds a statutory and contractual priority over the mortgaged property, giving it the right to initiate proceedings under laws like SARFAESI Act for recovery through sale or auction. Once the property is auctioned and the sale is confirmed, the title passes to the auction purchaser, extinguishing the security interest of the mortgage 2023 0 Supreme(Mad) 3248,
Navata Eco Bricks VS Punjab National Bank - Andhra Pradesh
, 2023 0 Supreme(Telangana) 297.Mortgage and Auction Rights - The legal framework recognizes the bank’s exclusive right to enforce security via auction, and the auction process is considered valid once conducted in accordance with law. The mortgage creates a charge that is superior to subsequent claims, and the bank can proceed with auction even if the property has been previously sold or encumbered, provided the legal procedures are followed 2025 0 Supreme(Ker) 2364, 2024 0 Supreme(AP) 413, 2023 0 Supreme(Telangana) 297.
Interference by Builders or Interveners - Builders or third parties cannot interfere with the bank’s right to auction the mortgaged property. The bank's right to sell the property is protected under law, and interference or claims by builders or other parties are subject to the priority of the mortgage and legal proceedings. The builder’s prior agreements or sale deeds do not override the bank’s mortgage rights 2024 0 Supreme(AP) 413, 2023 0 Supreme(AP) 775.
Participation in Auction and Validity of Sale - The auction conducted by the bank, if properly notified and following due process, is legally valid. Parties like the borrower or third parties who participate or oppose must do so within the legal framework; the bank’s right to sell the property remains unaffected by subsequent claims or alleged irregularities unless proven otherwise 2023 0 Supreme(Mad) 815, 2023 0 Supreme(Telangana) 297, 2023 0 Supreme(AP) 775.
Protection of Mortgage and Statutory Dues - Statutory dues, such as those owed to DDA or other authorities, do not override the bank’s first charge or mortgage rights. The law recognizes the bank’s priority, and claims for unearned increases or statutory dues are separate and do not affect the bank’s right to recover dues through auction 2025 0 Supreme(SC) 1741.
Analysis and Conclusion:The legal position clearly establishes that the bank, as a mortgagee, has the first right to recover dues through auction of the mortgaged property. Once the auction is conducted lawfully and sale confirmed, the title passes to the purchaser, and third parties, including builders or other claimants, cannot interfere or claim superior rights unless they have a prior, valid, and enforceable interest that overrides the mortgage. The law prioritizes the bank’s security interest, and its right to auction and recover dues remains protected against interference, provided due process is followed.
References:- Law of Mortgage and Transfer of Property Act, SARFAESI Act- Court judgments and legal interpretations from the provided sources
In the complex world of real estate financing, disputes often arise between banks, borrowers, builders, and auction purchasers. A common question emerges: Does the bank have the first right on mortgage property, and can a builder interfere in the auction of mortgage property? This issue is critical for homeowners, investors, and developers navigating loan defaults and property sales.
This blog post explores the legal principles establishing the bank's priority rights under Indian laws like the and the . We'll break down court judgments, key precedents, and why builders typically cannot obstruct bank-led auctions. Note: This is general information based on legal precedents and not specific legal advice. Consult a qualified lawyer for your situation.
The law clearly establishes that the bank, as the holding the mortgage, has the primary right over the mortgaged property. Builders or other third-party interests generally cannot interfere with or obstruct the auction conducted by the bank. This principle protects public money lent by banks and ensures orderly recovery processes. 2017 5 Supreme 158
Key court rulings affirm that a mortgage creates a , giving the bank a priority claim that overrides subsequent claims. Courts have held that the (bank) enjoys the exclusive right to realize its security through sale or auction, free from third-party obstruction. 2017 5 Supreme 158
From additional precedents, even attachments or charges created later do not gain priority: Even assuming any such charge has been created, then the same would not have priority over the mortgage in favour of the bank and cannot come in the way of the property being transferred in favour of the auction purchasers.2021 0 Supreme(P&H) 1523
Mortgages are governed by , particularly Sections 67 and 68, which outline the 's right to or sale. Rights and liabilities of have been provided in Chapter-IV of TPA and Sections 67 and 68 are relevant... 67 Right to or sale... a suit to obtain a decree that a shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for .
This framework ensures the bank's security interest remains intact until redeemed. In 2017 5 Supreme 158, the court emphasized: The sale in its favour stood concluded, issued along with possession delivered, long before the Suit for redemption was filed. There existed no mortgage to be redeemed on the date of institution of the Suit. This underscores that post-auction, the bank's rights are conclusively established.
Banks hold statutory priority, often under SARFAESI, allowing recovery through auction without court intervention initially. Builders' agreements or sales do not alter this: He submitted that if the seller like builder has not disclosed to other party that there is mortgage with the bank, it would not alter or affect the right of the bank.
Even revenue record omissions do not weaken the mortgage: The purpose of creating mortgage in favour of the Institution like the bank is to protect their loan or advances, which is a public money.
Patel Piyushkumar Ranchhodbhai VS Ashram Road Branch - Dishonour Of Cheque
Third parties, including builders, lack standing to obstruct auctions. In cases where properties are auctioned multiple times due to low bids, the bank's process prevails: The property is then brought to auction. The first auction is held on but no bidders come forward. The second auction was held on and the 3rd auction on .2024 0 Supreme(Kar) 27
Builders claiming affected rights must prove , but mortgages supersede: Such a mortgage is created to protect the right and interest of the bank in such property, which is mortgaged in favour of the bank.2018 0 Supreme(Guj) 219
Auction purchasers gain clear title: In the considered view opinion of this Court, since the Respondents/ Plaintiffs have purchased the suit property in Auction it cannot be said that the First Appellant/First Defendant has a right to redeem the mortgage.2010 0 Supreme(Mad) 4510
While banks generally prevail, exceptions may apply if a builder holds a prior lien or was properly joined in proceedings. Statutory dues (e.g., to DDA) do not override the . However, banks must follow due process: proper notices, title clearances, and notifications. 2025 0 Supreme(SC) 1741
Interveners like property owners in auctions must act within legal timelines: One of such property also belongs to undersigned and that's why my right has been affected... Information asked by me relate to this loan and with the auction notice in which my property has been also put on auction by the Bank.2024 Supreme(Online)(CIC) 3609
In conclusion, Indian law prioritizes the bank's first right on mortgaged property, prohibiting builder interference in auctions. This balance safeguards lending institutions while allowing fair recovery. For tailored advice, consult legal experts. Stay informed on evolving precedents under TPA and SARFAESI.
References:1. 2017 5 Supreme 158: Bank's auction rights and no redemption post-sale.2.
: TPA mortgage enforcement.3. 2021 0 Supreme(P&H) 1523: No priority for subsequent charges.4. Others as cited above. #BankMortgageRights, #PropertyAuction, #MortgageLaw
The subject property was also brought for sale by the first respondent towards the recovery of the loan and the petitioner participated in the auction. According to the petitioner, the Bank officials had convinced him to participate in the auction and to submit his bid for the sale of the property. ... Section 60 of the Transfer of Property Act, 1882, deals with the right#HL_EN....
One of such property also belongs to undersigned and that's why my right has been affected and I have also become a party to the commercial transaction between the bank and the builder. e. ... Information asked by me relate to this loan and with the auction notice in which my property has been also put on auction by the Bank. 8. Appeal grounds for pray....
Kerala Co-operative Societies Act , 1969, a mortgage would create a special charge over the property and that the charge in the decree cannot override the statutory charge of the mortgage. ... When EA No.633/2019 was filed to serve notice of sale on the Bank, it had resisted the execution petition on the ground that the appellant had a primacy of charge over the decree-scheduled property....
being finalised and the mortgaged property is sold by the Bank the borrower has to hand over the peaceful and vacant possession of the property to the Bank and/or the auction-purchaser”. ... Thirdly, when the secured creditor like the bank having advanced the loan gets back the money from the borrower, there is no justification to argue that the auction pruc....
It is submitted that DDA cannot foist its right to claim an amount of unearned increase over and above the auction price on the Auction Purchaser. ... It is contended that the Bank had the knowledge that the property was not a freehold property and DDA is entitled for statutory dues. ... Clause 5(b) of the lease deed provided that previous consent in writing of Lieutena....
Therefore, under law the 1st respondent bank has a right to take proceedings afresh, under the provisions of SARFAESI Act for taking physical possession of the subject property and to conduct auction sale. ... the subject property and the said lease will be subsisting till 30.11.2022 whereas the 1st respondent bank granted term loan to the 2nd respondent on mortgage of ....
cannot have any preferential right of realization and since the owner of the property had executed agreements of sale prior to mortgaging the subject property, the right of the bank to realize shall be subject to the rights of respondent nos.7 to 9 created over the subject property by virtue of agreements ... In the instant case, as observed supra, not only the restrain....
The bank cannot deliver the possession of the property to the petitioner as the sale was held without taking physical possession of the property by the bank. ... While so, as per the e-auction notice dated 28.05.2021, the respondent-bank sold the subject property in public auction on 21.06.2021. Thus, it is needless to emphasize, ther....
The 6th respondent-bank was having first charge over the suit flat in view of equitable mortgage created on 28.04.1993 in their favour. ... Therefore, the bank has exercised of its right to recover the amount due by sale of mortgaged property by invoking the provisions of SARFAESI Act. ... Thus, the bank has first charge over the mortgaged pr....
The property is then brought to auction. The first auction is held on 08-03-2014 but no bidders come forward. The second auction was held on 02.07.2014 and the 3rd auction on 27-10-2014. ... The Bank then puts the property to auction to be held on 08-03-2014 by issuing a notification on 04-02-2014. It appears that the auctio....
Even assuming any such charge has been created, then the same would not have priority over the mortgage in favour of the bank and cannot come in the way of the property being transferred in favour of the auction purchasers. Further in the present case, it cannot be stated that by virtue of the said attachment, any charge had been created on the property and attachment was only to secure the presence of the accused persons in the proceedings under Section 138 of the Act of 188....
Such a mortgage is created to protect the right and interest of the bank in such property, which is mortgaged in favour of the bank. It is not only this fact but as stated, the title clearance certificates have been obtained by the petitioners in the year 2014 and at that time, as there was no entry with the Registrar, they have proceeded further and they have obtained loan from other financial institution including other banks. The submission made by learned advocate, Shri R....
He submitted that if the seller like builder has not disclosed to other party that there is mortgage with the bank, it would not alter or affect the right of the bank. The submission made by learned advocate, Shri Rao that if the entry of the mortgage is not made in the revenue record, the bank is not responsible, reflect a casual approach inasmuch the prudent man or the Institution like the bank having legal department would not ignore or overlook of the registration of the ....
In other words, the purpose of creating mortgage in favour of the Institution like the bank is to protect their loan or advances, which is a public money and, therefore, the Institution like the respondent no.1bank cannot afford to be indifferent and it is only reflecting the casual approach. The submission made by learned advocate, Shri Rao that if the entry of the mortgage is not made in the revenue record, the bank is not responsible, reflect a casual approach inasmuch the prudent man or th....
In the considered view opinion of this Court, since the Respondents/ Plaintiffs have purchased the suit property in Auction it cannot be said that the First Appellant/First Defendant has a right to redeem the mortgage. The First Appellant/First Defendant during her life time has not exercised her right of redemption of the mortgage in respect of the suit property and since the mortgage amount has not been paid by the First appellant/First Defendant she has lost her right of redemption on the d....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
