Right Of Mortgagor For Redemption Is Not Extinguished Until Sale Is Completed By Registration: Karnataka HC

The Karnataka High Court observed that the right of the mortgagor for redemption is not extinguished until the sale is completed by registration.

The Bench of Justice CM Poonacha held that, "the right of the mortgagor for redemption is not extinguished until the sale is completed by registration. In the present case, as noticed hereinabove, the order dated 12.1.1990 whereunder the sale in favour of the auction purchaser was confirmed has been set aside by order dated 7.9.1992 passed in MA No.32/1990. JDR No.5 is entitled to redeem the mortgage so as to save the mortgaged property."

Counsel Harsh Desai appeared for the petitioner, while Counsel Umesh V Mamadapur, among others, appeared for the respondents.

In this case, the revision petition challenged the orders of the First Appellate Court and the Executing Court. The dispute arose from a suit filed by the bank (Respondent No.1) for recovery, leading to an auction of mortgaged properties. The legal representatives of the judgment-debtor (JDR) contested the auction, alleging irregularities. Despite a remand and valuation evidence, the Executing Court dismissed the application, and the First Appellate Court upheld this decision.

The counsel for the petitioners contended that the respondent-bank did not have the locus standi to initiate execution proceedings without a final decree. It was further argued that the Executing Court and the First Appellate Court overlooked the Petitioners' payment of over Rs. 2 lakhs during the proceedings and asserted that, with the debt satisfied, the Bank should not have proceeded with the property sale.

The respondent-bank argued that the auction purchaser deposited Rs 80,000 as the highest bidder, and the Executing Court and the First Appellate Court rightly dismissed the Petitioners' application, emphasizing the potential hardship to the purchaser if the relief is granted after 33 years of deposit.

The Court noted that the order under which the sale of the property in favour of the auction purchaser was confirmed had been set aside by Additional District Judge. In light of the same, it was observed that, "the order confirming the bid of the auction purchaser being the highest bid having been set aside, it is expedient that an opportunity is required to be afforded to the JDRs., to save the property that was mortgaged."

In a similar vein, the Court further observed that it could not be said that the right of the auction purchaser could be considered to the derogation of the rights of the JDRs. It was also noted that the auction purchaser was the son of JDR No.6, and serious allegations of fraud were alleged in the manner in which the property was purchased by the auction purchaser in the auction. 

In light of the same, the petition was allowed. The auction sale was set aside, and the parties were directed to appear before the Executing Court.

Cause Title: Shoukatali Bankapure & Ors. vs The United Western Bank Ltd. & Ors.

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