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Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
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Gehan - Defined as a special charge on movable or immovable property in favor of a bank or cooperative society, created by a mere declaration in writing by the borrower, possessing all characteristics of a mortgage ["[Kerala State Financial Enterprises Ltd. v. Meenachil Cooperative Agricultural and Rural Development Bank Ltd. - Kerala"], ["Kunjumohammed M.M. vs State of Kerala - Kerala"], ["Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776"]].
Creation of Charge - Section 36A of the Kerala Cooperative Societies Act, 1969, explicitly provides for a statutory charge (Gehan) on the property of a borrower once a borrower executes a Gehan, which has all the features of a mortgage under the Transfer of Property Act. This charge is prior and has precedence over other charges ["West Chalakudy Service Co-Operative Bank Ltd. VS Special Sale Officer - Current Civil Cases"], ["Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776"], ["[Kerala State Financial Enterprises Ltd. v. Meenachil Cooperative Agricultural and Rural Development Bank Ltd. - Kerala"].
Registration and Effect - The Gehan, once executed, creates a valid and enforceable security interest. Subsequent attachments or sales do not negate the prior Gehan; the statutory charge remains effective unless set aside by a competent court ["West Chalakudy Service Co-Operative Bank Ltd. VS Special Sale Officer - Current Civil Cases"]. The court has recognized that the Gehan confers a prior charge on the property, which can be enforced even if the property is subsequently sold or alienated ["[Kerala State Financial Enterprises Ltd. v. Meenachil Cooperative Agricultural and Rural Development Bank Ltd. - Kerala"].
Registration of Society and Security - The question of whether the cooperative society was registered or whether the property was registered in favor of the society is critical. However, the main point is that once a Gehan is executed, it creates a statutory charge that may be enforceable regardless of the registration status of the property in the society's name, provided the Gehan was validly executed ["[Kerala State Financial Enterprises Ltd. v. Meenachil Cooperative Agricultural and Rural Development Bank Ltd. - Kerala"], ["KANDAL SERVICE CO-OPERATIVE BANK vs DIRECTORATE OF ENFORCEMENT - Kerala"].
Execution in Favor of Unregistered Society - Even if the cooperative society was not registered at the time of the Gehan, the security created (Gehan) still confers a prior charge on the property if executed properly ["[Kerala State Financial Enterprises Ltd. v. Meenachil Cooperative Agricultural and Rural Development Bank Ltd. - Kerala"]. The main requirement is the execution of the Gehan, which has all the characteristics of a mortgage, to establish the security interest.
Conclusion - In the absence of specific evidence that the Gehan was invalid or set aside, the execution of a Gehan in favor of a cooperative society (registered or not) generally results in the society obtaining a statutory charge over the property for the loan advanced. The fact that the society was not registered does not necessarily negate the charge if the Gehan was validly created ["[Kerala State Financial Enterprises Ltd. v. Meenachil Cooperative Agricultural and Rural Development Bank Ltd. - Kerala"], ["West Chalakudy Service Co-Operative Bank Ltd. VS Special Sale Officer - Current Civil Cases"].
Summary:Gehan, as a statutory charge under Section 36A of the Kerala Cooperative Societies Act, creates a prior and enforceable security interest on the property once executed, possessing all the features of a mortgage. Its validity and effect are independent of the registration status of the cooperative society, provided it was properly executed and not challenged or set aside in court.
In the world of cooperative banking and agricultural credit in India, particularly in Kerala, borrowers often execute a Gehan to secure loans. But what happens if this Gehan isn't registered? Does the cooperative society still hold a legal charge over the property for the loan advanced?
This question arises frequently: A Gehan was executed in favour of the cooperative society but not registered. Whether the cooperative society got any charge in the above property for the loan advanced. The short answer is generally no—a mere unregistered Gehan does not confer a legally enforceable charge or mortgage. This post dives deep into the legal nuances, drawing from key statutes like the Kerala Cooperative Societies Act, 1969, and relevant judicial insights. Note: This is general information, not specific legal advice. Consult a qualified lawyer for your situation.
A Gehan is a unique security instrument commonly used in Kerala for loans from cooperative societies. It is defined as a special charge on movable or immovable property, in favour of the Kerala State Co-operative Bank or a Primary Agricultural Credit Society or a Primary Housing Society or an Urban Co-operative Bank or any Primary Co-operative Societies dealing with credit activities by a mere declaration in writing by the borrower, for securing the payment of money advanced or to be advanced by a loan, which will have all the characteristics of a valid mortgage Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776.
Under Section 36A of the Kerala Cooperative Societies Act, 1969, executing a Gehan creates a special charge on the borrower's property in favor of the society West Chalakudy Service Co-Operative Bank Ltd. VS Special Sale Officer West Chalakudy Service Co-Operative Bank Group - 2024 Supreme(Ker) 1395. This provision aims to simplify securing credit for members, giving it mortgage-like features without always needing a full-fledged mortgage deed initially Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776.
However, this simplicity comes with a critical caveat: registration.
While a Gehan declaration may seem sufficient at first glance, Indian law, particularly the Transfer of Property Act, 1882 (TPA), and the Registration Act, 1908, mandates registration for mortgages or charges over immovable property to be valid and enforceable. The creation of a valid mortgage or charge over immovable property in India fundamentally requires compliance with the Registration Act, 1908, and the Transfer of Property Act, 1882, which mandate that a mortgage or transfer of interest in immovable property must be executed through a registered deed to be legally enforceable Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776.
Explicitly, a Gehan executed but not registered does not produce the effect of a mortgage or charge in law and registration of the deed is a necessary condition for the creation of a valid mortgage or charge Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776. Without it, the document remains an ineffective promise.
In practice, cooperative societies relying on unregistered Gehans risk loan recovery challenges, as courts prioritize registered securities.
If a Gehan is executed but not registered, the cooperative society does not acquire a legally recognized charge. A charge created by Gehan that is not registered does not have legal effect as a mortgage or security interest in the property Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776. The society cannot enforce it as a mortgage, treat it as collateral in auctions, or prioritize it over other creditors.
This was underscored in analyses where a charge created by a deed must be registered; otherwise, it does not operate as a valid mortgage Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776. Borrowers may challenge enforcement, and properties could be sold free of the society's claim.
Could an unregistered Gehan qualify as an equitable mortgage? Equitable mortgages arise via deposit of title deeds or clear declarations, but even these typically need registration for full enforceability, especially against third parties Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 0 Supreme(Ker) 2776.
Other cases highlight cooperative recovery powers but stress formalities. For instance, under Maharashtra Co-operative Societies Act, attachments via revenue certificates override unregistered transfers, but Gehan-specific registration remains key Narsinha N. Naik VS Divisional Joint Registrar Co-op Societies - 2012 Supreme(Bom) 2331.
Judicial precedents reinforce these principles:
These rulings show unregistered Gehans expose societies to risks, as seen in auction challenges where agriculturist status or formalities were scrutinized Mustufakhan R. Pathan VS State of Gujarat - 2016 Supreme(Guj) 756.
To avoid pitfalls:- Always Register: Execute and register the Gehan deed promptly to secure a valid charge.- Deposit Title Deeds: Combine with equitable mortgage elements for added protection.- Document Compliance: Ensure Gehan aligns with society bye-laws and state acts.- Legal Review: Before advancing loans or recoveries, verify registration status.- Alternatives: Use revenue recovery under cooperative acts for dues, but pair with registered securities Narsinha N. Naik VS Divisional Joint Registrar Co-op Societies - 2012 Supreme(Bom) 2331.
Borrowers should note that unregistered Gehans offer little real security to lenders, potentially leading to stricter recovery via personal guarantees or other assets.
In summary, while Gehan simplifies credit access, skipping registration leaves the cooperative society unprotected. Prioritize compliance to safeguard interests. For tailored guidance, seek professional legal counsel.
#GehanLaw #CoopCharge #MortgageRegistration
Gehan, mortgage or hypothecation created or executed by the applicant as security for the loan granted. ... ... 11 As defined under S.2(e) of the Act, a Gehan is a special charge on properties in favour of the lending Bank. ... Under S.58(a) of the Act, a mortgage is a transfer of interest in specific immovable property. This may be for the purpose of securing the payment of money advanced or to be advanced by way of a ....
Explanation.-- For the purpose of the section, Gehan means a special charge on movable or immovable property, in favour of the Kerala State Cooperative Bank or a Primary Agricultural Credit Society or a Primary Housing Society or an Urban Cooperative Bank or any Primary Cooperative ... - Notwithstanding anything contained in any other provisions of this Act, charge on movable or immovable property#HL_END....
Charge on movable or immovable property of borrower by creating Gehan - Notwithstanding anything contained in any other provisions of this Act, charge on movable or immovable property of a borrower in favour of the *Kerala State Co-operative Bank *[xx] or a Primary Agricultural Credit Society or a Primary ... Explanation.- For the purposes of this section, Gehan means a special charge on movable or immovable property#HL_E....
Adish and others [ILR 2019 (1) KER 264], this Court has held that Section 36A of the Kerala Cooperative Societies Act, 1969 creates special charge on movable or immovable property of the borrower, in favour of the Society, on the borrower executing Gehan, which has all the characteristic features of ... In the case on hand, the Gehan in favour of the petitioner-Bank was executed on 29.04.2014. The attachments over the prop....
Adish and others [ILR 2019 (1) KER 264], this Court has held that Section 36A of the Kerala Cooperative Societies Act, 1969 creates special charge on movable or immovable property of the borrower, in favour of the Society, on the borrower executing Gehan, which has all the characteristic features of ... In the case on hand, the Gehan in favour of the petitioner-Bank was executed on 29.04.2014. The attachments over the prop....
According to the petitioners, the respondent Nos. 2 to 6 had executed Gehan with respect to their immovable properties in favour of the society and the society has got statutory charge over those properties under Sec. 36A of the a href="./.. ... Charge on movable or immovable property of borrower by creaitlng Gehan. ... It is also contended by the petitioners that they raised the same before the adjudicating author....
1The question that arises for consideration in this original petition is, whether a member of a cooperative society, who availed of a non agricultural loan after executing a declaration creating a charge on all his properties, would be legally justified in preventing the sale officer ... It was suppressing this fact, a mortgage deed was executed in favour of the 1st respondent bank by the petitioner along with her husband in respect of the said property#HL_....
Mortgaging of a property of a person who is not a member of the Cooperative Society would not take away the right of the Cooperative Society to sanction a loan in favour of the member by taking on security of a person who is not a member. 37. ... A perusal of Section 60 would indicate that a cooperative society shall not make a loan to any pers....
To substantiate his contention that a charge under section 100 of Transfer of Property stands created in favour of Respondent no.1. ... It is submitted that the charge under section 100 of Transfer of Property Act is not on property but on its proceeds. ... There is some dispute between the parties about fate of said section 91 dispute and whether any Appeal before the Cooperative Appellate Court in the matter is pending or not ? Ho....
Keshava Rao had been made a member of the Cooperative Society, immediately upon his becoming an employee in March, 1974, the Cooperative Society could not have executed the transfer deed Ex.A.12 on 19-02-1986 in favour of the 1st defendant but should have executed the transfer deed in favour of Kashav ... Keshava Rao was made the member of the Cooperative society and that he paid all the instalmen....
Cooperative Urban Banks, Cooperative House Building Society, Cooperative Credit Society, House Building Society, Industrial Cooperative Society, Cooperative Land Development Bank and there are many such Cooperative Societies which are registered for different purposes by the members and they are having bye-laws, which all are approved by the Competent Authorities of the Cooperative Department of the State Government. Each Cooperative Society has got different purposes and objects. The Cooperative Society may be registered for the purpose of grant of jewel loan, banking transactions....
However the aforesaid aspect of the matter has not been appreciated by the trial court. DW 3, namely Jitendra, who is manager of Adinath Cooperative Society Limited, has stated in his evidence that loan was advanced by the society for business and not for purchasing the property. In his evidence, DW 2 has not exhibited the aforesaid sale deed. The aforesaid witness has clearly stated that society has not paid any housing loan for purchasing the property thus the defendant number 2 has failed to discharge the burden that the property in question was his self acquired propert....
However the aforesaid aspect of the matter has not been appreciated by the trial court. In his evidence, DW 2 has not exhibited the aforesaid sale deed. The aforesaid witness has clearly stated that society has not paid any housing loan for purchasing the property thus the defendant number 2 has failed to discharge the burden that the property in question was his self acquired property. DW 3, namely Jitendra, who is manager of Adinath Cooperative Society Limited, has stated in his evidence that loan was advanced by the society for business and not for purchasing the property.#HL_EN....
It was also provided in the said agreement that a Cooperative Housing Society is to be got registered by the promoters in whose favour the conveyance of the property described in Schedule – II, was to be executed. Schedule-II is the property admeasuring 6683.82 sq.ft. i.e. plot notified as block C. The said agreement is the package deal agreement entered into between the promoters of the Defendant Nos.10 and 11 with the said K.K.Verma in respect of the purchase of 82 flats. It was also stated in the said agreement that the location of the proposed two buildings is also show....
(2) Nothing in this section shall be deemed to [prohibit the sale, gift, exchange or lease, or the agreement for sale, gift, exchange or lease of] a dwelling house or the site thereof or any land appurtenant to it in the favour of an agricultural labourer or an artisan [or a person carrying on any allied pursuit]. [(3) Nothing in this section shall apply or be deemed to have applied to a mortgage of any land or interest therein effected in favour of a cooperative society as security for the loan advanced by such society [or any transfer declared to be a mortgage by a court under Se....
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