Source: https://chambersofnitinchopra.wordpress.com/tag/mortgage/
Timestamp: 2019-04-26 10:43:16+00:00

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Though no principle of law has been laid by the Hon’ble Supreme Court in the Judgment of Persn Medicinal Plants Pvt. Ltd. v. Indian Bank, decided on 25.02.2011 but it clearly indicates that in a given situation where an amount more than the amount due from the borrower/guarantor had already been realized by auction sale, which stands confirmed and the possession of the property also had been handed over to the Bank which is utilizing the same or is utilizing the property having purchased the same in the said auction, insistence on the deposit referred to under proviso to Section 18 would be contrary to the legislative intent as also the express provision as is evident from the use of the words “50% of the amount of debt due from him”.
“At this stage, we find that out of total due amount of Rs. 18.24 crores, Rs. 17.75 crores have been received by the bank in a public auction. Therefore, the deposit of 50% of the amount due prior to sale from the petitioner would be wholly unjustified. The proviso to section 18 of the Act restricts the entertainment of the appeal unless the borrower deposits 50% of the amount of the debt claimed by the Secured Creditors. Once Rs. 17.75 crores have been received by the secured creditors, that is more than 50% of the debt due from the petitioners, the purpose of the proviso stands satisfied”. Akash Ganga Airlines Ltd. v. DRAT, 2015 (5) AWC 5186.
In Triveni Shankar Saxena v. State of U.P., 1992 Supp (1) SCC 524, the Hon’ble Supreme Court held as follows: “The word ‘lien’ originally means binding from the latin ligamen. Its lexical meaning is ‘right to retain’. The word ‘lien’ is now variously described and used under different contexts such as ‘contractual lien’, ‘equitable lien’, ‘specific lien’, ‘general lien’, ‘partners lien’, etc. In Halsbury’s Laws of England, (4th Edition, Vol. 28 at p. 221, para 502) it is stated: “502. Legal Lien.—In its primary or legal sense “lien” means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims [of the person in possession] are satisfied.” Similarly in, K. Saradambal v. Jagannath and Brothers, (1972) 42 Comp Cas 359 (Mad), it was held: “A legal lien differs from a mortgage and pledge in being an unassignable personal right which subsists only so long as possession of the goods subsists. A mortgage is an assignable right in the property charged and does not depend on possession. A pawn or pledge gives a special assignable interest in the property to the pawnee . A lien is, however, included in the definition of mortgage in the Law of Property Act, 1925. Where an equitable mortgage is created by deposit of title deeds, the mortgagee has a legal lien on the deeds deposited.’ The word lien is defined in the Law Lexicon by P. Ramanatha Iyer as: “A lien may be defined to be a charge on property for the payment of a debt or duty, and for which it may be sold in discharge of the lien. A lien, in a limited and technical sense, signifies the right by which a person in possession of personal property holds and retains it against the owner in satisfaction of a demand due to the party retaining it; but in its more extensive meaning and common acceptation it is understood and used to denote a legal claim or charge on property, either real or personal, As security for the payment of some debt or obligation; it is not strictly a right in or right to the thing itself but more properly constitutes a charge or security thereon.’ The word ‘lien’ is defined in Stroud’s Judicial Dictionary, 3rd Edition, at p. 1644 as: “A lien.—(without effecting a transference of the property in a thing)-is the right to retain possession of a thing until a claim be satisfied; and it is either particular or general.’ Bombay Stock Exchange v. V.S. Kandalgaonkar, (2015) 2 SCC 1.
The word ‘sale’ has been defined under Section 54 of the Transfer of Property Act. The definition says that sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Ownership is defined as the relation between a person and an object forming the subject matter of his ownership. It consists in a complex of rights, all of which are right in rem, being good against all the world and not merely against specific person. Owner will have a right to possess the thing which he owns. He may not necessarily have possession of the property or he may have been wrongly deprived of it or may have voluntarily divested himself of it. The owner normally has the right to use and enjoy the thing and right to manage it, i.e. the right to decide how it shall be used. Whereas the right to possession is a right in the strict sense. The position of an owner differs from that of a non-owner in possession in that the latter’s interest is subject to be determined at some future set point. Lastly, the ownership has a residuary character. He might have divested his position by creating lease or mortgage, still his ownership would consist of residuary rights, i.e. the right which remains when all these lesser rights have been given away. Shanti Bhushan v. State of U.P., 2013 (3) AWC 2700.

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