Mortgage Bond

 Mortgage is a security furnished by a person for the repayment of a loan.

 It is important to note that by a mortgage neither the ownership nor the possession of
the property changes.
 A mortgagee is an entity that lends money to a borrower for the purpose of purchasing
real estate. In a mortgage lending deal the lender serves as the mortgagee and the
borrower is known as the mortgagor.
 Mortgage in immovable property and Pledge in movable property.
 The same property can be subject to more than one mortgage, where the first mortgage
is known as the primary mortgage and second and further mortgages are known as
secondary mortgages. In the secondary mortgage the first mortgage must be mentioned
and in the process of recovery, the primary mortgage will get the priority.
 Where the repayment of a loan is being defaulted, the mortgagee has to file an action in
the District Court and the procedure to such action is set out in the Mortgage Act No. 06
of 1949 (as amended). The action which will be filed to execute the mortgage is known
as Hypothecary action.
 A mortgage can only be created through writing and it has to be executed by before a
notary public including two witnesses in terms of section 02 of Prevention of Fraud
Ordinance.
 Once the Mortgage is created, it should be registered by respective land registry
according to the Registration Ordinance.
 It should be noted that, the land to mortgaged must belong to the mortgager and he
may be in full ownership or qualified ownership.
 The mortgage act has mentioned approved credit agencies to enter into mortgage bonds
in addition to the individuals.
 In RDL only mode of realizing the mortgage was by obtaining a judgment of a court upon
a mortgage debt and taking execution order (writ of execution) against the property
mortgaged therefore it is known as judicial sale.
 In the case of HSBC versus krishna Pillai in some instances out of the court the execution
could be done.
 Only the land subject to the mortgage can be sold in the judicial sale. Any other land
owned by the defendant cannot be taken into consideration for the recovery of the loan.
 According to Section 48 the judicial sale has to be taken place within two months from
the date of the decree. The direction of the sale will be made by Court in terms of
Section 50 of the act.
 Accordingly the land will be sold by Fiscal of the Court to the highest bidder in a public
auction. (Section 52)
 The plaintiff in a hypothecary action is not entitled to bid for or purchase anymortgaged
land sold in execution of the decree unless leave to bid and purchase isgranted by the
court. (Section 51)
 Where the property is being sold for a price higher than the amount stated in the
decree, the balance proceeds can be claimed by the defendants, after establishing their
claims and rights.
 Banking Act No. 30 of 1988. This is an act to provide for the introduction and operation
of a procedure for the licensing of persons carrying on banking business and of carrying
on the business of accepting deposits and investing such money; for the regulation and
control of matters relating to such business; and to provide for matters connected
therewith or incidental thereto.

 Debt Recovery No. 6 March 1990 an act to provide for the regulation or the procedure
relating to debt recover by lending institutions and for matters connected therewith ok
incidental thereto.
 Section 15 Debt Recovery Ordinance talks about Alienation of property by judgment
debtor after Institution of action.