Sale of property subject to prior mortgage
Full Text
Where any property the sale of which is directed under this Order is subject to a prior mortgage, the Court may, with the consent of the prior mortgagee, direct that the property be sold free from the same, giving to such prior mortgagee the same interest in the proceeds of the sale as he had in the property sold.
Plain English Summary
Permits the court, with the express consent of a prior mortgagee, to sell the mortgaged property free of the prior mortgage, transferring the prior mortgagee's first security claim directly onto the sale proceeds.
Key Legal Elements
- Prior Mortgagee Consent Mandatory: Court cannot sell property free of prior mortgage without express consent of the prior mortgagee.
- Transfer of Charge to Sale Proceeds: The prior mortgagee's security shifts from the immovable property to the cash realized in court.
- Better Realization at Auction: Selling free of encumbrances attracts higher market bids, benefiting both puisne mortgagee and mortgagor.
- Interplay with Rule 13: Sale proceeds must first satisfy the prior mortgagee's claim before puisne mortgagee receives any money.
Practical Note
Commercial Rationale & Consent Requirement: 1. Overcoming Stigmatized Title in Auctions: Properties sold 'subject to prior encumbrances' invariably fetch distressed, depressed prices because bidders fear uncertain prior claims. Rule 12 allows the court to negotiate the prior mortgagee's consent so the property can be sold clean at full market value. 2. Prior Mortgagee Not Bound Without Consent: If the prior mortgagee refuses consent, the court has no power to sell free of his charge; the sale can only be conducted subject to the prior mortgage.
हिंदी पाठ
जहां कोई संपत्ति जिसके विक्रय का निदेश इस आदेश के अधीन दिया गया है, किसी पूर्विक बंधक (Prior mortgage) के अध्यधीन है, वहां न्यायालय पूर्विक बंधकदार की सहमति से यह निदेश दे सकेगा कि संपत्ति उस बंधक से मुक्त करके बेची जाए, और ऐसे पूर्विक बंधकदार को विक्रय के आगमों में वही हित दिया जाएगा जो बेची गई संपत्ति में उसका था।