MORTGAGE ACT

Arrangement of Sections

PART I

SHORT TITLE AND INTERPRETATION

1. Short title.

2. Interpretation.

3. Approved credit agencies.

PART II

HYPOTHECARY ACTIONS ON MORTGAGES OF LAND GENERAL

4. Application of this Part.

5. Interpretation of terms in this Part.

6. Registration of address for service of documents.

7. Actions on mortgage.

8. Lis pendens to be registered.

ISSUE OF NOTICE OF HYPOTHECARY ACTION, ADDITION OF PARTIES, INTERVENTION

9. Notice of hypothecary action.

10. Manner of issue of notice.

11. Manner of issue of process where person entitled to notice is a party to the action.

12. Rights of person to whom notice is issued.

13. Right of person entitled to notice to be added as a party before sale.

14. Rights of person added during pendency of action.

15. Persons noticed or added to be bound by decree and sale.

16. Intervention by person interested who is not entitled to notice.

17. Meaning of "party omitted”.

18. Party omitted may intervene after sale and dispute the amount of decree or claim balance proceeds.

19. Action by or against party omitted for settlement of rights.

20. Issue may be raised as to amount properly due under mortgages paid off out of proceeds of prior sale.

21. Procedure where court finds that money are due to party omitted from mortgagor.

22. Provisions applicable where party omitted is a transferee.

23. Order against prior mortgagee if overpayment was made from proceeds of prior sale.

EFFECT OF SALE IN EXECUTION OF DECREE UPON PUISNE MORTGAGE

24. Meaning of "prior mortgage puisne mortgage”.

25. Effect of conveyance upon sale under puisne mortgage.

DEATH, INSOLVENCY OR DISABILITY OF MORTGAGOR OR PERSON ENTITLED TO NOTICE

26. Appointment of representative of deceased mortgagor or of deceased party to hypothecary action.

27. Effect of representative being made a party.

28. Provision for death, insolvency, unsoundness of mind or minority of party entitled to notice and for registration of addresses and issue of notice in such cases.

29. Estate to be bound if notices issued as provided in section 28.

30. Estate to be bound notwithstanding death if address not registered.

31. Special provision for actions on mortgages created before the appointed date.

32. Death, insolvency or unsoundness of mind of mortgagor after entry of decree.

POWER OF PLAINTIFF TO JOIN CLAIMANTS ADVERSE TO MORTGAGOR OR TO APPLY
FOR DECLARATION AS TO POSSESSION OF LAND IN THE EVENT OF SALE

33. Power of plaintiff to join claimant adverse to mortgagor.

34. Provision for declaration by court as to removal from land of persons claiming adversely to mortgagor.

35. Right of claimant to be added as party and to raise issues as to right of possession.

36. Order of court upon application under section 35.

APPOINTMENT OF RECEIVER OF MORTGAGED LAND

37. Application for appointment of receiver of mortgaged land.

38. Cases where court may refuse to appoint receiver.

39. Cancellation of appointment.

40. Order for appointment.

41. Rights and powers of receiver.

42. Duties and liabilities of receiver.

43. Payment of subsistence allowance to mortgagor.

44. Net profits to be kept in court.

45. Registration of appeal against orders under sections 37 to 43.

SALE UNDER HYPOTHECARY DECREE

46. Property liable to sale in execution of decree.

47. Operation of section 46.

47A. Effect of the execution of a separate instrument at the execution of the mortgage bond.

48. Order for sale in decree.

49. Special provision for seizure and sale.

50. Directions and other provisions as to sale.

51. Leave to plaintiff to bid and purchase.

52. Directions for second sale if highest bid is less than current market value.

53. Form of conveyance to purchaser.

54. Delivery of possession.

55. Removal of all persons whomsoever where declaration has been made under section 36.

56. Fiscal to prepare plan of the land of which possession is delivered.

57. Claims to balance proceeds of sale.

58. Rights of seizing creditor to participate in balance proceeds of sale.

MISCELLANEOUS

59. Decree absolute in default of appearance.

60. Costs.

61. Application of Chapter XXII of the Civil Procedure Code.

62. Application of the Part.

PART IIA

A SPECIAL PROVISIONS FOR RECOVERY WHERE PARATE EXECUTION OF
IMMOVABLE PROPERTY IS EMPOWERED

62A. Provisions of this Part to be in addition to provisions of certain other laws.

62B. Possession.

62C. Delivery of possession in certain circumstances.

62D. Application to be in accordance with Chapter XXIV of the Civil Procedure Code.

62E. Safeguarding of rights of a person having an independent title.

62F. Right of a debtor whose title was created subsequent to the mortgage of the property.

62G. Where immovable property sold is in the occupation of a tenant or other persons entitled to occupy such property.

62H. Order under section 62F to be an order made under section 287 of the Civil Procedure Code.

PART III

CONVENTIONAL GENERAL MORTGAGE-FLOATING AND CONCURRENT
MORTGAGE-POWER OF ATTORNEY TO CONFESS JUDGMENT

63. General mortgages abolished.

64. Effect of mortgages to secure future liability.

65. Action by concurrent mortgagee.

66. Warrant of attorney to confess judgment in mortgage action.

67. Production to court of title deeds of mortgaged land.

68. No security for costs in actions on mortgage.

PART IV

SPECIAL MORTGAGE OF LAND ACCOMPANIED BY DEPOSIT OF TITLE DEEDS

69. Creation of mortgage by deposit of deeds and prescribed instrument.

70. Execution and attestation of instrument.

71. Special provisions as to payment of stamp duty.

72. Right of mortgagee to make and recover payments of stamp duty.

PART V

MORTGAGE OF MOVABLES: SPECIAL PROVISIONS APPLICABLE
WHERE MORTGAGEE IS AN APPROVED CREDIT AGENCY

73. Right of approved agency to realise shares mortgaged in specified circumstances.

74. Address of mortgagor and issue of notice of demand.

75. Effect of exercise of right of sale.

76. Proceeds of sale or purchase to be applied in satisfaction of debt.

77. Rights of mortgagor on discharge of mortgage.

78. Right to damages for wrongful sale.

79. Savings for application of company law as to transfers and registration.

80. Meaning of "shares”.

81. Rights of approved agency to surrender mortgaged life policy in specified circumstances.

82. Address of mortgagor and issue of notice of demand.

83. Money received upon surrender to be applied in satisfaction of debt.

84. Right to damages for wrongful surrender.

85. Power of approved credit agency to sell corporeal movables which are subject to mortgage.

86. Notice of demand of payment prior to exercise of power of sale.

87. Application of proceeds of sale.

88. Damages for wrongful sale of mortgaged property.

89. Meaning of "book debt”.

90. Rights of approved credit agency to which book debts are assigned by way of mortgage.

91. Manner of giving notice of assignment to person owing book debt.

92. Application of money received in payment of mortgage debt.

93. Damages for wrongful exercise of power to recover book debt.

94. Provision for recovery of book debt by assignor notwithstanding assignment.

95. Protection for debtor paying without notice of assignment.

PART VI

MORTGAGE OF MOVABLES: GENERAL APPOINTMENT OF RECEIVER

96. Application for appointment of receiver where entire stock in trade is mortgaged.

97. Refusal to appoint receiver.

98. Directions in order of appointment.

99. Duties and liabilities of receiver.

100. Money to be kept in court.

101. Restriction of appeals against appointment of receiver.

MORTGAGE OF MOTOR VEHICLES

102. Special registration of mortgage of motor vehicle.

103. Registered mortgage of motor vehicle to subsist notwithstanding sales to third party.

104. Cancellation of registration of mortgage of motor vehicle.

RIGHTS OF MORTGAGEE OF MOVABLES IN SPECIFIED CIRCUMSTANCES

105. Rights of mortgagee of movables seized by other creditor.

106. Rights of mortgagee of movables upon insolvency of mortgagor.

DECREE AND SALE OF MOVABLES IN HYPOTHECARY ACTION

107. Order for sale and directions.

108. Manner of sale of mortgaged movables.

109. Application of this Part.

PART VII

MISCELLANEOUS

RIGHTS OF LANDLORD IN RELATION TO GOODS UPON PREMISES OF WHICH RENT IS IN ARREAR

110. Injunction to restrain removal of goods from premises the rent of which is in arrear.

111. Liability of goods to seizure under decree for rent.

112. Rights of landlord in relation to goods on premises.

113. "Member of the family” defined.

APPROVAL OF CREDIT AGENCIES

114. Approval of credit agencies.

RULES

115. Rules.

SAVINGS FOR APPOINTMENT OF RECEIVERS UNDER CIVIL PROCEDURE CODE

116. Savings for appointment of receivers under Civil Procedure Code.

SCHEDULES

6 of 1949,

53 of 1949,

11 of 1953,

24 of 1969,

27 of 1987,

3 of 1990.

AN ACT to amend and consolidate law relating to Mortgage.

[Date of Commencement: 16th January, 1950]

PART I

SHORT TITLE AND INTERPRETATION

1. Short title.

This Act may be cited as the Mortgage Act.

2. Interpretation.

In this Act, unless the context otherwise requires—

"appointed date” means the 16th day of January, 1950;

"hypothecary action” means an action to obtain an order declaring the mortgaged property to be bound and executable for the payment of the money due upon the mortgage and to enforce such payment by a judicial sale of the mortgage property;

"land” includes things attached to the earth or permanently fastened to anything attached to the earth, and any estate, right, or interest in or over land;

"mortgage” includes any charge on property for securing money or money's worth;

"mortgagee” includes any person from time to time deriving title under or through the original mortgagee.

3. Approved credit agencies.

In this Act "approved credit agency” means—

(a) any banking company as defined in section 333 of the 1Companies Ordinance, which is declared by the Director of Commerce, by Notification published in the Gazette, to be an approved credit agency for the purposes of this Act;

(b) the State Mortgage and Investment Bank, the Agricultural and Industrial Credit Corporation, the Loan Board, the National Savings Bank, and the Local Loans and Development Commissioners;

(c) any other company, firm, institution, or individual for the time being declared by the Director of Commerce, by Notification published in the Gazette, to be an approved credit agency for the purposes of this Act.

PART II

HYPOTHECARY ACTIONS ON MORTGAGES OF LAND GENERAL

4. Application of this Part.

The provisions of this Part shall apply only to a mortgage of land, to any action to enforce payment of the money due upon a mortgage of land, and to any hypothecary action in respect of any land.

5. Interpretation of terms in this Part.

(1) For the purposes of this Part—

"person entitled to notice”, in relation to a hypothecary action in respect of any land, means any person who—

(a) has any interest in the land (whether by way of mortgage or otherwise), being an interest—

(i) to which the mortgage in suit in the hypothecary action has priority; and

(ii) which was created or arises by virtue of an instrument duly registered under the Registration of Documents Ordinance, as an instrument affecting the land, prior to the time of the registration of the lis pendens of the hypothecary action, and

(b) has, prior to such time, registered an address for the service on him of legal documents in accordance with the provisions of section 6 of this Act, and includes a person declared by subsection (2) of this section to be entitled to notice of the action;

"registered address” means an address registered in accordance with the provisions of section 6 of this Act.

(2) Where a notice of seizure of any land is, after the registration of a mortgage of that land but before the registration of the lis pendens of a hypothecary action upon such mortgage, duly registered for the time being under the Registration of Documents Ordinance, the judgment creditor in the action in which such seizure was effected may register an address under section 6, and if such address is registered, shall be a person entitled to notice of the hypothecary action.

6. Registration of address for service of documents.

(1) Application for the registration of an address for the service of legal documents shall be made substantially in the form set out in the First Schedule to this Act.

(2) The address for service shall be registered in or in continuation of the folio in which is registered the mortgage of the land in respect of which the applicant has an interest:

Provided, however, that where such mortgage includes more than one land, it shall be sufficient if the address of the applicant is registered in the folio relating to the land in which he has an interest.

(3) Where the applicant declares in his application that a previously registered address is cancelled, the Registrar shall make a new entry in the register and cancel the registration of the previous address.

(4) The fee for registration of an address for service or for a change of such address shall be fifty cents for each address, with an addition of ten cents for each folio after the first in which the address is to be registered.

7. Actions on mortgage.

(1) Notwithstanding anything in section 34 of the Civil Procedure Code, a claim to enforce payment of the money due upon a mortgage may be joined to a claim in a hypothecary action, or a separate action may be brought in respect of each such remedy.

(2) In every such action the mortgagor shall be sued as defendant whether or not he is in possession of the mortgaged land at the time when the action is instituted.

8. Lis pendens to be registered.

An order for the issue of summons in a hypothecary action shall not be made by any court unless a declaration under the hand of an attorney-at-law is filed of record—

(a) certifying that the lis pendens of such action has been duly registered under the Registration of Documents Ordinance as an instrument affecting the land to which the action relates, and that such registration has been effected in or in continuation of the folio in which the mortgage bond sued upon in the action was registered;

(b) certifying that the register maintained under the Registration of Documents Ordinance or a certified extract therefrom, and all relevant entries in such register, have been personally inspected by such attorney-at-law by any other specified attorney-at-law, at or after the time of the entry in the register of the lis pendens of the action; and

(c) containing a statement of the name and registered address of every person, if any, found upon such inspection to be a person entitled to notice of the action.

ISSUE OF NOTICE OF HYPOTHECARY ACTION, ADDITION OF PARTIES INTERVENTION.

9. Notice of hypothecary action.

(1) Notice of a hypothecary action shall, upon an order being made for the issue of summons on the defendants in the action, be issued to every person who is stated in the declaration filed under section 8 to be a person entitled to notice of such action, but who has not been joined as a defendant to the action.

(2) Where notice is not issued under subsection (1) to any person entitled to such notice, any party to the action may thereafter, but before the sale of the mortgaged land in execution of a hypothecary decree, apply to the court for the issue of notice of the action to such person, (whether or not his name was mentioned in the declaration filed under section 8), and notice shall be issued accordingly.

10. Manner of issue of notice.

(1) Notice of a hypothecary action may be issued to a person entitled to notice of such action in the manner provided in paragraph (a) hereunder or in the manner provided in paragraph (b) hereunder, at the option of the plaintiff—

(a) —

(i) The Registrar of the court shall send to that person by registered post to his registered address a notice in the prescribed form; it shall be the duty of the Registrar to make an entry that the notice was sent in the journal of the proceedings in the action, and to file in such journal the receipt issued by the post office in respect of such notice; and such entry and receipt shall be taken as conclusive proof, in the absence of fraud that the notice was duly sent;

(ii) A copy of such notice shall, within the period of two weeks from the date of the posting of the notice under sub-paragraph (i), be affixed in a conspicuous position upon the mortgaged land by the Fiscal under a precept from the court;

(iii) A copy of such notice shall be published in a newspaper specified by the court;

(b) The notice of action may be served in any manner provided by the Civil Procedure Code for the service of summons.

(2) The notice referred to in sub-paragraphs (i) and (ii) of paragraph (a) of subsection (1) shall be in Sinhala and Tamil and shall be accompanied by a translation thereof in English as the court may direct.

11. Manner of issue of process where person entitled to notice is a party to the action.

(1) Where the plaintiff in a hypothecary action joins as a defendant any person entitled to notice of the action, the provisions of section 10 shall apply in relation to the service on such person of the summons in the action in like manner as they apply in relation to the issue of notice of the action.

(2) Where any person entitled to notice of a hypothecary action is added as a party to the action, the provisions of section 10 shall apply in relation to the service on such person of any notice, process, order, decree or other document or written communication, in like manner as they apply in relation to the issue of notice of the action.

12. Rights of person to whom notice is issued.

Where notice of a hypothecary action is issued to any person under section 9 and in the manner provided by section 10—

(a) such person shall be entitled at his option to be added as a party to the action upon application made to the court in that behalf within one month of the date of the posting of the notice to him under section 10(1)(a) or of the publication of a copy thereof under that section, whichever is the later, or where the notice is served in like manner as a summons, within one month of the date of such service;

(b) such person may, in the discretion of the court upon such terms as the court thinks just, be added as a party to the action upon application made after the expiry of the period of one month referred to in paragraph (a) but before the sale of the land under the hypothecary decree:

Provided, however, that every finding, order, decree or thing done in the action prior to the date of the application under paragraph (b) shall, unless the court in its discretion otherwise orders, bind the person so added in like manner as though he had previously been a party to the action.

13. Right of person entitled to notice to be added as a party before sale.

Any person entitled to notice of a hypothecary action to whom such notice has not been issued under section 9 and in the manner provided by section 10 shall be entitled, on application made by him to the court at any time before the sale of the mortgaged land in execution of a hypothecary decree, to be added as a party to the action.

14. Rights of person added during pendency of action.

Where any person, to whom notice of a hypothecary action has been issued under subsection (2) of section 9 and in the manner provided by section 10, is added as a party to the action under paragraph (a) of section 12, or any person entitled to notice of a hypothecary action is added as a party under section 13—

(a) no finding, order, decree or proceeding previously made or taken in the action shall bind him except in so far as he may consent to be bound thereby;

(b) such person shall be entitled to raise any question or issue which he could have raised if he had originally been a party to the action, and any other party may raise any question or issue arising in consequence;

(c) a fresh trial shall be had on every issue previously raised in the action, unless such person consents to be bound by the previous finding thereon;

(d) upon the trial of any issue whether previously raised or not, no part of the evidence previously taken shall be evidence upon that issue, except in so far as all the parties to the action agree to be bound by such evidence;

(e) if a decree had been entered in the action prior to the addition of such person as a party thereto, the court shall, if such person so requires, make order suspending the operation of such decree, and shall, after the trial of all the issues as herein before provided, confirm the judgment previously given and the decree entered thereon or annul such judgment and decree and give a new judgment and enter a new decree, as the circumstances of the case may require.

15. Persons noticed or added to be bound by decree and sale.

Every party to a hypothecary action, and every person entitled to notice of the action and to whom notice of the action is issued under section 9 and in the manner provided by section 10, and every person who is added as a party under section 12 or section 13, shall be bound by the decree and sale in the hypothecary action.

16. Intervention by person interested who is not entitled to notice.

Every person having any interest in the mortgaged land by virtue of an instrument to which the mortgage in suit has priority, but who is not a person entitled to notice of the action as herein before defined, shall be bound by every order, decree or sale or thing done in the hypothecary action:

Provided, however, that any such person may at any time before the entry of the decree in the action be added as a party on application made by him in that behalf upon such terms as the court may impose, but any person so added shall be bound by every finding or order previously made in the action and by the proceedings previously taken therein except in so far as the court may in its discretion otherwise order.

17. Meaning of "party omitted”.

In sections 18 to 23, "party omitted from a hypothecary action” means a person entitled to notice of the hypothecary action but who is not declared by section 15 to be bound by the decree and sale in that action.

18. Party omitted may intervene after sale and dispute the amount of decree or claim balance proceeds.

(1) A party omitted from a hypothecary action may at his option intervene in the action after the sale of the mortgaged land in execution of a hypothecary decree, but before the distribution of the proceeds of the sale, for the purpose of raising an issue as to the sum due under the mortgage in suit in the hypothecary action, and the court shall, if it finds after inquiry and hearing such evidence as may be adduced upon such issue, that the sum actually due is less than the sum stated in the decree to be due under the mortgage, amend the decree in so far as it relates to the sum found to be due under the mortgage.

(2) The raising of any issue or the amendment of any decree under subsection (1) shall not in any way affect the validity of the sale in execution of the hypothecary decree.

(3) A party omitted from a hypothecary action who intervenes in that action under subsection (1) shall, whether or not he makes a claim under section 57 to participate in the balance proceeds of sale of the mortgaged land, be bound by the sale in that action and by the decree (whether or not it is amended under that subsection) in like manner as though he had been a party to the action.

(4) Where a party omitted from a hypothecary action makes a claim under section 57 to participate in the balance of the proceeds of sale of the mortgaged land, then, notwithstanding that he may not have intervened in the action under subsection (1) of this section, he shall be bound by the decree and sale in the action in like manner as though he had been a party thereto.

19. Action by or against party omitted for settlement of rights.

(1) Where a party omitted from a hypothecary action is not a person who is by subsection (3) or subsection (4) of section 18 declared to be bound by the decree and sale in that action, and a conveyance of the mortgaged land has been executed in favour of the person who had purchased that land at the sale (hereinafter referred to as "the prior sale”) in execution of the hypothecary decree in that action—

(a) the party omitted may institute an action, to which the mortgagor and the purchaser at the prior sale shall be added as parties, for the purpose of obtaining a decree declaring him to be entitled to the land or to any interest therein, or where such party omitted is a mortgagee, for the purpose of obtaining a hypothecary decree in respect of the land;

(b) the purchaser of the land at the prior sale may institute an action to which the mortgagor and the party omitted shall be added as parties, for the settlement of the rights and liabilities of the purchaser, the mortgagor and the party omitted.

(2) In this section and in sections 20 to 23, "purchaser at the prior sale” includes any person deriving title under or from the person who purchased the land at the prior sale.

(3) The court may, if it thinks fit so to do having regard to the circumstances of any case, permit the party omitted to institute an action under subsection (1), notwithstanding that a conveyance of the mortgaged land may not have been executed in favour of the purchaser of the land.

20. Issue may be raised as to amount properly due under mortgages paid off out of proceeds of prior sale.

In any action instituted under section 19, the party omitted from the hypothecary action may raise any issue as to the money due under any mortgage, which had priority over the interest of the party omitted and which was wholly or partly paid off out of the proceeds of the prior sale. Where such issue is raised, the mortgagee under that mortgage shall be added as a party to the action instituted under section 19 and the court shall determine afresh the sum actually due thereunder.

21. Procedure where court finds that money are due to party omitted from mortgagor.

(1) Where the court, in any action instituted under section 19, finds that any money are due from the mortgagor to the party omitted by virtue of the instrument under which he claims, the court shall enter a decree ordering that the land sold at the prior sale shall be resold, unless the purchaser at the prior sale pays to the party omitted, before a date specified in the decree, the money so found to be due to the party omitted from the mortgagor.

(2) Upon the resale of the mortgaged land under the decree entered under subsection (1), the proceeds of resale shall be distributed as follows—

(i) firstly, the purchaser at the prior sale shall be entitled to payment of the amount at which he purchased the land at the prior sale, or of the total amount of the money paid off out of such purchase money to every mortgagee under a mortgage which had priority over the interest of the party omitted, whichever amount is the less:

Provided, however, that where the court has under section 20 determined the amount of the money due under any such mortgage, and the amount so determined is less than the money actually paid off thereon in the prior action, the amount so determined shall be taken, for the purposes of the preceding provisions of this paragraph, to be the money due under that mortgage;

(ii) secondly, after payment of any amount to which the purchaser is entitled under paragraph (i), the party omitted shall be entitled to payment of the amount found under subsection (1) to be due to him from the mortgagor;

(iii) thirdly, the purchaser at the prior sale shall be entitled to any balance remaining after the payments referred to in sub-paragraphs (i) and (ii), have been made.

(3) Where any money are paid to the party omitted by the purchaser at the prior sale in compliance with the decree under subsection (1) or any money are paid to the party omitted under paragraph (ii) of subsection (2), the following provisions shall apply—

(a) If the mortgage was created before the appointed date, the purchaser of the land at the prior sale shall be entitled, in the action instituted under section 19, to an order directing the mortgagor to pay to such purchaser an amount equal to the amount so paid to the party omitted;

(b) If the mortgage was created after the appointed date, then, if, but only if, any amount had in the prior hypothecary action been paid to the mortgagor out of the proceeds of sale of the mortgaged land at the prior sale, the purchaser at such prior sale shall be entitled, in the action instituted under section 19, to an order directing the mortgagor to pay to such purchaser an amount equal to the money actually so paid to the party omitted under this section or to the money paid to the mortgagor out of the proceeds of the prior sale, whichever amount is the less.

(4) Any order made under subsection (3) may be enforced in the same manner as an order or decree for the payment of money in an ordinary action.

22. Provisions applicable where party omitted is a transferee.

(1) Where the court is satisfied that the instrument, under which the party omitted from the hypothecary action claims an interest in the land, transferred to him the title of the mortgagor to the land, but that such title was subject to the mortgage in suit in the prior hypothecary action, the court shall enter decree declaring the party omitted to be entitled to the land subject to the right of the purchaser at the prior sale to a hypothecary charge to the extent of the amount at which he purchased the land at the prior sale or of the total amount of the money paid off out of such purchase money to every mortgagee under a mortgage which had priority over the interest of the party omitted, whichever amount is less, and ordering that in default of the payment of such amount to the purchaser by the party omitted the land shall be sold against the party omitted for the recovery of such amount:

Provided, however, that where the court has under section 20 determined the amount of the money due under any such mortgage, and the amount so determined is less than the sum actually paid off thereon out of the proceeds of the prior sale, the amount so determined shall be taken, for the purposes of the preceding provisions of this subsection, to be the money due under that mortgage.

(2) In any case to which subsection (1) of this section applies the court shall, if satisfied that any money were paid to the mortgagor out of the proceeds of the prior sale, make order directing the mortgagor to pay to the purchaser at the prior sale an amount equal to the money so paid to the mortgagor out of those proceeds, and such order may be enforced in the same manner as an order or decree for the payment of money in an ordinary action.

23. Order against prior mortgagee if overpayment was made from proceeds of prior sale.

(1) In any case where, by reason that the amount of the money determined by the court under section 20 to be due on any mortgage is less than the amount of the money actually paid off on that mortgage out of the proceeds of the prior sale, there has been an over-payment to the mortgagee under that mortgage (hereinafter referred to in this section as the prior mortgagee), the following provisions shall apply—

(a) If no money are paid to the party omitted under section 21(1) in compliance with the decree entered thereunder or under paragraph (ii) of section 21(2) out of the proceeds of the resale, the party omitted shall be entitled, in the action instituted under section 19, to an order directing the prior mortgagee to pay to him the amount found under section 21(1) to be due to him from the mortgagor or the amount of such over-payment, whichever amount is less;

(b) If any money are paid to the party omitted under section 21(1) in compliance with the decree entered thereunder or under paragraph (ii) of section 21(2) out of the proceeds of the resale—

(i) the purchaser at the prior sale shall be entitled, in the action instituted under section 19, to an order directing the prior mortgagee to pay to such purchaser the amount of the money so paid to the party omitted or the amount of such over-payment, whichever amount is less;

(ii) if the money so paid to the party omitted are less than the amount found under section 21(1) to be due to him from the mortgagor, the party omitted shall be entitled, in the action instituted under section 19, to an order directing the prior mortgagee to pay to him the amount of the deficiency:

Provided, however, that no order shall be made under this sub-paragraph against the prior mortgagee unless, and except to the extent to which, the amount of the over-payment exceeds the amount specified in the order made against the prior mortgagee under sub-paragraph (i) of this paragraph;

(c) If the party omitted is a transferee, and the provisions of section 22 are accordingly applicable, the purchaser at the prior sale shall, in the action instituted under section 19, be entitled to an order directing the prior mortgagee to pay to him the amount of such over-payment.

(2) Any order made under subsection (1) may be enforced in the same manner as an order or decree for the payment of money in an ordinary action.

EFFECT OF SALE IN EXECUTION OF DECREE
UPON PUISNE MORTGAGE

24. Meaning of "prior mortgage puisne mortgage”.

In section 25—

"prior mortgage”, in relation to any other mortgage of the same land, means a mortgage which has priority over such other mortgage; and

"prior mortgagee” has a corresponding meaning;

"puisne mortgage”, in relation to any other mortgage of the same land, means a mortgage over which such other mortgage has priority; and

"puisne mortgagee” has a corresponding meaning.

25. Effect of conveyance upon sale under puisne mortgage.

Where any mortgaged land is sold in execution of a decree in a hypothecary action upon a puisne mortgage, and the conveyance of the mortgaged land is executed in favour of the purchaser at such sale (hereinafter in this section referred to as "the purchaser under the puisne mortgage”), the following provisions shall apply—

(a) The puisne mortgagee, and every person who being entitled to notice of the action upon the puisne mortgage is by virtue of any of the preceding provisions of this Part bound by the decree and sale in that action, shall not be entitled to notice of any hypothecary action instituted subsequent to the date of such conveyance on any prior mortgage of that land, but shall be bound by the decree and sale in the latter action;

(b) The purchaser under the puisne mortgage shall, if the mortgaged land is subsequently sold in execution of the decree in any hypothecary action upon a prior mortgage, be entitled upon making a claim in that behalf under section 57, to the entirety of the balance of the proceeds of the sale of the land remaining after satisfaction of the money found to be due in that action to the prior mortgagee and of the claim, if any, of any other person preferred by virtue of any other instrument having priority to the puisne mortgage;

(c) If the purchaser under the puisne mortgage is a person entitled to notice of a subsequent hypothecary action upon a prior mortgage of the land but is a party omitted from the latter action, and if an action is instituted under section 19, then, for the purposes of the application of the provisions of subsection (1) of section 22, no mortgage shall be deemed to have priority over the interest of such party omitted unless it had priority over the puisne mortgage in suit in the action in which the land was sold to such purchaser;

(d) If the conveyance to the purchaser under the puisne mortgage was executed after the date of the registration of the lis pendens of a hypothecary action upon a prior mortgage of the land, and if the puisne mortgagee under the mortgage in suit in the action in which such purchaser purchased the mortgaged land is a party omitted from the subsequent hypothecary action, then such purchaser, unless he is added as a party to the latter action under section 16 or makes a claim under section 57 in the latter action, shall be deemed to be a party omitted from the latter action and the provisions of paragraph (c) of this section shall be applicable;

(e) Except in the cases referred to in paragraphs (c) and (d) if this section, the purchaser under the puisne mortgage shall, whether or not he is a party to any hypothecary action upon any prior mortgage of the mortgaged land, be bound by the decree and sale in the latter action.

DEATH, INSOLVENCY OR DISABILITY OF MORTGAGOR OR PERSON ENTITLED TO NOTICE

26. Appointment of representative of deceased mortgagor or of deceased party to hypothecary action.

(1) Where any mortgagor dies before the institution of a hypothecary action in respect of the mortgaged land, or any mortgagor or any person who is or becomes a party to a hypothecary action dies after the institution of the action, and grant of probate of the will or issue of letters of administration to the estate of the deceased has not been made, the court in which the action is to be or has been instituted may in its discretion, after the service of notice on such persons, if any, and after such inquiry as the court may consider necessary, make order appointing a person to represent the estate of the deceased for the purpose of the hypothecary action, and such person may be made or added as a party to the action:

Provided, however, that such order may be made only if–

(a) the value of the mortgaged property does not exceed twenty thousand rupees; or

(b) a period of six months has elapsed after the date of the death of the deceased; or

(c) the court is satisfied that delay in the institution of the action would render the action not maintainable by reason of the provisions of the Prescription Ordinance.

[S 26(1) am by s 4 of Act 24 of 1969.]

(2) In making any appointment under subsection (1) the court shall appoint as representative a person who after summary inquiry appears to the court to be the person to whom probate of the will or letters of administration to the estate of the deceased would ordinarily be issued:

Provided, however, that in the event of a dispute between persons claiming to be entitled to be so appointed, the court shall make such an appointment (whether of one of those persons or of any other person) as would in the opinion of the court be in the interests of the estate of the deceased.

27. Effect of representative being made a party.

Where any appointment is made under section 26 and the person so appointed is a party to the action, every order, decree and sale or thing done in the hypothecary action (including the seizure and sale in execution of the property of the deceased mortgagor not included in the mortgage in suit) shall have the like effect as though the executor or administrator of the deceased were a party to the action.

28. Provision for death, insolvency, unsoundness of mind or minority of party entitled to notice and for registration of addresses and issue of notice in such cases.

(1) The duly appointed executor of the will or the administrator of the estate of a deceased person, or the duly appointed assignee of the estate of an insolvent, or the duly appointed curator or manager of the estate of a minor or person of unsound mind, may, whether or not such deceased person, insolvent, minor or person of unsound mind has himself registered his address under section 6, register an address under that section on behalf of such estate.

(2) Where the registration of the address of the executor or administrator or of the assignee, curator or manager, as the case may be, is not effected as provided in subsection (1), any other person interested may register an address under section 6 on behalf of the estate of the deceased person or of the insolvent, minor or person of unsound mind. The address so registered shall be cancelled forthwith upon the registration of an address under subsection (1) on behalf of such estate.

(3) Where notice of a hypothecary action is issued under section 9 and in manner provided by section 10—

This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.


Recent Updates

NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


NATIONAL TRANSPORT COMMISSION (AMENDMENT) ACT, NO. 6 OF 2017


ECONOMIC SERVICE CHARGE (AMENDMENT) ACT, NO. 7 OF 2017


CIVIL PROCEDURE CODE (AMENDMENT) ACT, NO. 8 OF 2017


OFFICE ON MISSING PERSONS (ESTABLISHMENT, ADMINISTRATION AND DISCHARGE OF FUNCTIONS) (AMENDMENT) ACT, NO. 9 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015