KIIT SCHOOL OF LAW, KIIT DEEMED TO BE UNIVERSITY

BHUBANESWAR-24

SUBJECT NAME:
PROPERTY LAW

TOPIC:
CASE LAWS ON MORTGAGE

SUBMITTED TO:
PURANJOY GHOSH
ASST. PROFESSOR,
KIIT SCHOOL OF LAW

SUBMITTED BY:
PARCHALA LAVSHIKA
2183161, B.A.LL.B [B]

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 CASE LAWS
1. Prakash (Dead) By LR. v. G. Aradhya & Ors [2023] 13 SCC 657

Facts of the case:

In 1973, the father of the appellant, Gangaramaiah, sold the appellant's property to
one Rudramma for a sum of ₹5,000. On the same day, another unregistered document
was executed between the parties, claiming to be a Reconveyance Deed, in which
Rudramma agreed to reconvey the property back to Gangaramaiah within five years
of the sale deed if the sale consideration of ₹5,000 was paid. In 1987, Rudramma's
heirs sold the property to defendant no. 4 in the suit, namely, N. Shashidar.
Gangaramaiah died in 1987. In 1987, the appellant filed a suit seeking a declaration
that the sale of the property to Rudramma was a mortgage and not an outright sale,
and for reconveyance of the property.

Issues raised:
Whether a transaction is a mortgage if it contains a condition that the property will be
reconveyed to the mortgagor upon payment of the loan, even if the condition is not
contained in the same document as the sale deed.

Held:
The Supreme Court held that the transaction was a mortgage. The Court relied on
Section 58(c) of the Transfer of Property Act, 1882, which states that a transaction is
a mortgage if it contains a condition that the property will be reconveyed to the
mortgagor upon payment of the loan. The Court held that the condition of
reconveyance was contained in the Reconveyance Deed, which was executed on the
same day as the sale deed and was part of the same transaction.

Significance:
The case of Prakash (Dead) By LR. v. G. Aradhya & Ors is a significant case because
it clarifies the law on mortgages in India. The Court's decision will help to protect the
rights of mortgagors and prevent them from losing their property due to technicalities.

2. Harinder Singh v. M.P. State Housing Board [2011] 1 SCC 465

Facts of the case:

The appellant, Harinder Singh, purchased a house from the Madhya Pradesh State
Housing Board (MPSHB) on an installment plan. The appellant defaulted on the
payment of installments. The MPSHB issued a notice to the appellant asking him to
pay the arrears within a specified period. The appellant did not pay the arrears. The
MPSHB forfeited the appellant's property. The appellant filed a suit seeking a
declaration that the forfeiture of his property was illegal and for the restoration of his
property.
Issues raised:
Whether a housing board can forfeit a property for non-payment of installments
unless it has given the borrower a reasonable opportunity to pay.

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 Held:
The Supreme Court held that the MPSHB could not forfeit the appellant's property
without giving him a reasonable opportunity to pay. The Court held that the MPSHB's
notice to the appellant was not a reasonable opportunity to pay because it did not give
the appellant a sufficient period of time to pay the arrears.

Significance:
The case of Harinder Singh v. M.P. State Housing Board is a significant case because
it protects the rights of borrowers who are facing forfeiture of their properties. The
Court's decision ensures that borrowers are given a fair chance to rectify their defaults
before their properties are forfeited.

3. Barclays Bank plc v. Khan [2022] UKSC 3

Facts of the case:

The appellant, Mr. Khan, took out a mortgage with Barclays Bank plc. The mortgage
agreement contained a clause that allowed Barclays Bank plc to foreclose on the
mortgage without a court order if Mr. Khan was in default of his repayments. Mr.
Khan fell into arrears with his mortgage repayments. Barclays Bank plc issued a
notice to Mr. Khan seeking possession of the mortgaged property. Mr. Khan applied
to the court for an order setting aside the notice of possession on the grounds that the
clause allowing Barclays Bank plc to foreclose without a court order was unfair.

Issues raised:
Whether a mortgage lender can rely on a clause in a mortgage agreement that allows
it to foreclose on a mortgage without a court order if the clause is unfair.

Held:
The Supreme Court held that Barclays Bank plc could not rely on the clause in the
mortgage agreement that allowed it to foreclose without a court order because the
clause was unfair. The Court held that the clause was not transparent or easily
understandable by a non-lawyer, and that it did not give Mr. Khan a fair opportunity
to challenge the foreclosure proceedings.

Significance:
The case of Barclays Bank plc v. Khan is a significant case because it protects the
rights of borrowers from unfair terms in mortgage agreements. The Court's decision
ensures that borrowers have a fair opportunity to challenge foreclosure proceedings
before their properties are repossessed.

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4. ANZ Bank Limited v. Bayne [2022] NSWSC 1525

Facts of the case:

The appellant, Ms. Bayne, took out a mortgage with ANZ Bank Limited to finance
the purchase of a property. The mortgage agreement contained a clause that stated
that Ms. Bayne was responsible for obtaining her own independent legal and financial
advice before entering into the mortgage agreement. Ms. Bayne did not obtain
independent legal or financial advice before signing the mortgage agreement. Ms.
Bayne subsequently defaulted on her mortgage repayments. ANZ Bank Limited
commenced foreclosure proceedings against Ms. Bayne's property. Ms. Bayne
defended the foreclosure proceedings on the grounds that ANZ Bank Limited had
engaged in misleading and deceptive conduct by failing to disclose to her the risks of
taking out a mortgage.

Issues raised:
Whether a mortgage lender can be held liable for misleading and deceptive conduct if
it fails to disclose to a borrower the risks of taking out a mortgage.

Held:
The Supreme Court of New South Wales held that ANZ Bank Limited was liable for
misleading and deceptive conduct. The Court held that ANZ Bank Limited had a duty
of care to disclose to Ms. Bayne the risks of taking out a mortgage, and that this duty
of care was not discharged by the inclusion of the clause in the mortgage agreement
that stated that Ms. Bayne was responsible for obtaining her own independent legal
and financial advice.

Significance:
The case of ANZ Bank Limited v. Bayne is a significant case because it expands the
liability of mortgage lenders for misleading and deceptive conduct. The Court's
decision ensures that borrowers are provided with adequate information about the
risks of mortgages, and that lenders are held accountable for failing to disclose such
information.