Mortgage created when sale deed is pending for registration
Manoj
(Querist) 28 August 2011
This query is : Resolved
A Deed of Conveyance in respect of property of Rs. 30,00,000/- that comes under the purview of disturbed area, Gujarat was executed between “A” the Purchaser and “B” the Vendor and presented before the Office of Sub-Registrar, Ahmedabad for registration. The Sub-Registrar has kept the Deed of Conveyance pending for registration due to absence of permission from Collector which is required before registration when a property comes under disturbed area declared by the Government, Subsequently an Equitable Mortgage was executed by “A”, the purchaser and registered in respect of same property of which registration of Deed of Conveyance is pending before the Office of Sub-Registrar of Assurances in favour of the Bank.
My Query is :
(1) What is the procedure/process of obtaining such permission from Collector in case of property situated in area declared as disturbed area in Gujarat.
(2) Whether any title is passed on by “B”, the Vendor to the “A”, the Purchaser, If yes what type of title is passed by “B” to “A”. Whether is a legal/ rightful owner
(3) Whether any such Deed of Conveyance which is executed between “A” and “B” which is still pending for registration before the office of Sub-Registrar for the above stated reason, makes “A” the legal owner,
(4) Whether the “A” the purchaser can create mortgage in favour of Bank when the registration of Sale Deed is still pending before the Office of Sub- Registrar as in this case mortgage has been created by “A” in favour of the Bank. If yes whether it is legally enforceable.
(5) Whether “Transfer of property Act” and “Registration Act” allow such transfer, whether it is valid in legal parlance.
(6) What will be the position in respect of the interest of the Bank in this case.
prabhakar singh
(Expert) 28 August 2011
1)a simple formal application with details of property and some cause or need to sale has to be shown in permission application with prayer to sale.
2)No title passed by 'b' to 'a'.
Not only that the permission being condition precedent to execution of sale,the deed having been executed earlier in point of time, even before moving for permission, is a bad execution and not only irregularity is my personal view over the matter and i think a subsequent permission can not validate the earlier execution even if gets registered after permission because after registration rights flow from date of execution and not from date of registration.
3)No,it does not make A legal owner at any cost.
4)No,A is not with title and can not validly create any mortgage in any body's favor and one created in favor of Bank is bad in law and is not binding on B.
5)NO
6)A would be treated simple Borrower and Bank would be treated unsecured creditor having no kind of any charge over the so called simple mortgage created on property of whose valid owner is still B.
ajay sethi
(Expert) 28 August 2011
The scheme of the Act goes to show that the Act was framed to declare certain transfers of immovable property in disturbed areas of the State to be void and to prohibit temporarily transfers of immovable property in such areas as well as for providing protection to tenants of certain immovable properties in such areas from eviction.
Section 3 of the Act provides for powers to declare a particular area as a disturbed area for a specified period. Section 4 declares that notwithstanding anything contained in any other law for the time-being in force but subject to Sub-sections (2) and (3) all transfers of immovable property situated in a disturbed area made during the specified period shall be null and void, with effect from the date of such transfer. However, Sub-section (2) carves out exception whereby any person intending to transfer may approach the Collector for a declaration that the transfer of immovable property was made by free consent of the transferor and the transferee and on receipt of such application, the Collector is required to hold an inquiry as provided in the said clause, and thereafter, either reject the application or declare that such transfer was made with free consent and for a fair value.
1)in your case no permission has yet been granted .
2)hence A is not the owner of the said property .
3) no legal title vest in A
4) A cannot create mortgage in favour of bank
Manoj
(Querist) 01 September 2011
Thanks to all experts for your reply.
