Transfer of Property Act (TPA)
TPA Mortgage Suits Order 34 CPC
Mortgage Suits under Order XXXIV of the Code: Redemption, Foreclosure and Sale, Preliminary and Final Decrees, and Limitation
The Act says what a mortgagee may claim; the Code says how he gets it. When the procedural provisions of the mortgage chapter were repealed in 1908, their substance moved into Order XXXIV, which governs every mortgage suit — a suit by the mortgagor to redeem, a suit by the mortgagee to foreclose, and a suit by the mortgagee for sale. All three follow the same architecture: a preliminary decree that takes the accounts and fixes a date for payment, and a final decree that gives effect to what happens on that date.
1. The Three Suits
The suit | Who brings it | What he asks for | The rules |
|---|---|---|---|
Redemption | The mortgagor, or a person entitled under section 91 | An account, a date for payment, and on payment a re-conveyance and delivery of possession and documents | Rules 7 and 8 |
Foreclosure | A mortgagee by conditional sale, or an anomalous mortgagee whose terms allow | An account, a date for payment, and on default a decree debarring the mortgagor absolutely from redeeming | Rules 2 and 3 |
Sale | A simple, English or deposit-of-title-deeds mortgagee, or an anomalous mortgagee whose terms allow | An account, a date for payment, and on default a decree that the property be sold | Rules 4 and 5 |
2. Parties — Rule 1
All persons having an interest in the mortgage security or in the right of redemption must be joined as parties to any suit relating to the mortgage, subject to the exceptions the rule allows. The reason is practical: a decree binds only those before the court, and a sale in a suit to which a puisne mortgagee was not a party does not extinguish his rights. A mortgagee who omits a subsequent encumbrancer will find the property sold subject to a security he thought he had cleared.
3. The Preliminary Decree
What the preliminary decree does | Content |
|---|---|
Takes the account | It declares the amount due on the mortgage at the date of the decree — principal, interest and costs |
Fixes a date for payment | A period is allowed for payment, which under the rules is not less than six months from the date on which the court confirms the account, and which the court may extend |
States the consequence of payment | On payment the mortgagee must deliver the documents, re-convey the property and deliver possession where he holds it |
States the consequence of default | In a foreclosure suit, that the plaintiff may apply for a final decree debarring the defendant from redeeming; in a sale suit, that the property may be sold; in a redemption suit, that the mortgagor's suit is dismissed, or that the property is foreclosed or sold, according to the nature of the mortgage |
4. The Final Decree
Suit | If payment is made | If payment is not made |
|---|---|---|
Foreclosure | The mortgage is redeemed; the mortgagee delivers the documents and, where he is in possession, the property | A final decree debarring the defendant absolutely from all right to redeem the property |
Sale | The mortgage is redeemed on the same terms | A final decree that the property be sold, and the proceeds applied under Rule 13 |
Redemption | A final decree for re-conveyance and delivery of possession and of the documents | The mortgagor's right is dealt with under Rule 8(3) — the property is foreclosed, or sold, according to whether the mortgage is one carrying foreclosure or sale |
5. The Other Rules Worth Knowing
Rule | Provision |
|---|---|
Rule 6 | Decree for the balance. Where the net proceeds of the sale are insufficient to pay the amount due, and the balance is legally recoverable from the defendant otherwise than out of the property sold, the court may pass a decree for that balance — the procedural counterpart of the personal remedy in section 68 |
Rule 9 | Where nothing is found due to the mortgagee, or he has been overpaid, the decree declares it and directs repayment |
Rule 10 | Costs properly incurred by the mortgagee after the preliminary decree — for the protection of the property, or in a suit to which he was a necessary party — may be added to his security |
Rule 11 | Interest — the rates and periods for which interest is allowed on the principal, on costs and on the aggregate, from the date of the suit to the date fixed for payment and thereafter |
Rule 12 | Sale subject to a prior mortgage. Where property subject to a prior mortgage is sold, the prior mortgagee's rights are protected — he may be paid out of the proceeds, or the sale may be made subject to his mortgage |
Rule 13 | Application of the proceeds — expenses of the sale, the prior mortgagee, interest and costs of the mortgage under which the sale was held, principal, and the residue to those interested in the property |
Rule 14 | A mortgagee who has obtained a decree for payment of money in satisfaction of a claim arising under the mortgage cannot bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage |
Rule 15 | The rules apply to a mortgage by deposit of title deeds and to a charge within the meaning of section 100 |
6. Rule 14: The Trap for a Mortgagee
Why a mortgagee should not sue for the money alone A mortgagee who takes a simple money decree on the personal covenant cannot afterwards attach and sell the mortgaged property in execution of that decree. Rule 14 requires him to institute a suit for sale in enforcement of the mortgage. The object is to protect the mortgagor and the subsequent encumbrancers: a sale in enforcement of the mortgage brings in all interested parties and applies the proceeds in the statutory order, whereas an execution sale on a money decree would do neither. |
7. Limitation
The suit | Period | When time begins to run |
|---|---|---|
By a mortgagor to redeem or to recover possession of immoveable property mortgaged | Thirty years | When the right to redeem or to recover possession accrues |
To enforce payment of money secured by a mortgage or otherwise charged upon immoveable property | Twelve years | When the money sued for becomes due |
By a mortgagee for foreclosure | Thirty years | When the money secured by the mortgage becomes due |
By a mortgagee for possession of immoveable property mortgaged | Twelve years | When the mortgagee becomes entitled to possession |
- The asymmetry is deliberate. The mortgagor's right to redeem is given a long period because the equity of redemption is a valuable interest which the law is slow to extinguish.
- Expiry of the period extinguishes the right, not merely the remedy, so far as the Limitation Act so provides for suits for possession of property.
- And section 60 says the same thing from the other side — the right of redemption subsists until extinguished by the act of the parties or by the decree of a court, and limitation supplies the outer boundary.
8. The Course of a Suit, Step by Step
From plaint to satisfaction One. The plaint is filed, joining all persons interested in the security and in the equity of redemption. Two. The court takes the account and passes a preliminary decree declaring the amount due and fixing a date, not less than six months away, for payment. Three. If the amount is paid, the mortgage is discharged; documents are delivered, possession restored where the mortgagee held it, and a re-conveyance or acknowledgment executed. Four. If it is not paid, the plaintiff applies for a final decree — foreclosure, or sale, according to the nature of the mortgage and of the suit. Five. On a sale, the proceeds are applied in the order set by Rule 13, and any shortfall may be pursued under Rule 6 where a personal remedy exists. And throughout, the mortgagor may redeem until the sale is complete — the right does not end with the final decree but with the completed sale. |
9. Landmark Cases
📖 Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247 Held: The mortgagor's right of redemption subsists until the sale is complete by a registered conveyance. A contract for sale by the mortgagee does not extinguish it, and the equity of redemption can be exercised at any time before the conveyance is executed and registered. Ratio: The right to redeem survives the decree and the agreement to sell, and ends only when the sale is completed. |
10. Related Topics and Provisions
- Rights and Liabilities of the Mortgagee — sections 67 to 77, the substantive rights these suits enforce
- Foreclosure vs Sale — the two decrees compared
- Application of the Proceeds of a Sale — Order 34 Rule 13 in detail
- Right of Redemption, Section 60, and Persons Entitled to Redeem, Section 91
- Deposit of the Mortgage Money in Court, Section 83 — payment otherwise than under a decree
- Articles 61 to 63, Limitation Act, 1963 — the periods for mortgage suits