Suits for Foreclosure, Sale and Redemption

In one line

A borrower who cannot find his lender can pay the money into court instead, and that stops the interest; and the procedure for mortgage suits is no longer in this Act at all.

In exam wording: section 83 permits the mortgagor, or any other person entitled to sue for redemption, at any time after the principal money has become due and before a redemption suit is barred, to deposit in Court the amount remaining due; and section 84 provides that interest on the principal ceases from the date of such tender or deposit.

Where the procedure went

Sections 85 to 90, 97 and 99 of this Act originally contained the machinery of mortgage suits: who had to be joined as parties, the form of a preliminary decree, what happened when the defendant paid, how the proceeds were applied, and the attachment of mortgaged property.

All of them were repealed by the Code of Civil Procedure 1908, and re-enacted as Order XXXIV of that Code. That is where a practitioner now finds the preliminary and final decrees for foreclosure, sale and redemption.

The reason for the move is a tidy one worth stating: this Act is a statement of substantive property law, and rules about parties, decrees and execution are procedure. Keeping them here duplicated the Code and risked the two drifting apart.

What to write in an exam. Sections 85 to 90, 97 and 99 stand repealed, and the procedure for suits on mortgages is contained in Order XXXIV of the Code of Civil Procedure 1908. The substantive rights those suits enforce remain in sections 60 and 67 of this Act.

Section 83: deposit in Court

When. At any time after the principal money payable in respect of the mortgage has become due, and before a suit for redemption is barred.

Who. The mortgagor, or any other person entitled to institute such a suit, which by section 91 includes a puisne mortgagee, a surety and others.

Where. In any Court in which he might have instituted the suit, to the account of the mortgagee.

What. The amount remaining due on the mortgage.

What follows. The Court causes written notice of the deposit to be served on the mortgagee. The mortgagee may then, on presenting a verified petition stating the amount then due and his willingness to accept the money in full discharge, and on depositing the mortgage-deed and all documents in his possession or power relating to the property, apply for and receive the money. The deed and documents are then delivered to the mortgagor or other depositor.

Where the mortgagee is in possession, the Court must, before paying him, direct him to deliver possession to the mortgagor and, at the mortgagor's cost, either to re-transfer the property to the mortgagor or a third person he directs, or to execute and, where the mortgage was by a registered instrument, register an acknowledgement that any right in derogation of the mortgagor's interest has been extinguished.