Description

Order 34 of the Civil Procedure Code (CPC) deals with suits concerning mortgages of immovable property. It prescribes the procedure for dealing with such suits, including the rights and responsibilities of the parties involved in a mortgage dispute.

Key Provisions of Order 34 CPC:

1. Rule 1 - Scope of the Order:

   • This order applies to suits involving the enforcement of mortgages of immovable property. It provides the procedure for the sale, redemption, or foreclosure of mortgaged properties and the settlement of accounts between the mortgagor (borrower) and mortgagee (lender).

2. Rule 2 - Pleading in a Suit for Sale of Mortgaged Property:

   • When a suit is filed for the sale of mortgaged property, the plaintiff (mortgagee) must specify:
     • The mortgage deed.
     • The amount due.
     • The legal basis for the mortgage, including any stipulations for the sale of property.

3. Rule 3 - Decree for Sale:

   • If the mortgagor defaults on payment, the court may issue a decree for the sale of the mortgaged property to recover the debt.
   • The court may order that the property be sold in lots or as a whole, depending on what is most beneficial for the parties involved.

4. Rule 4 - Redemption of Mortgaged Property:

   • The mortgagor has the right to redeem the mortgaged property by paying the owed amount before the sale takes place. This is known as redemption and can occur up until the moment the property is sold.

5. Rule 5 - Sale of Property:

   • If the mortgagee requests a sale, the court will oversee the sale of the property, ensuring the sale proceeds go towards clearing the outstanding debt. The court may also provide instructions for conducting the sale, such as issuing public notices and inviting bids.
   • Sale proceeds will first be used to pay off the debt, and any remaining amount will be returned to the mortgagor.

6. Rule 6 - Foreclosure and Possession:

   • If the mortgagor is unable to pay the debt, the mortgagee may seek a foreclosure, which means obtaining full ownership of the property in lieu of the unpaid debt.
   • The court may pass a decree for foreclosure, which extinguishes the mortgagor’s right to redeem the property.

7. Rule 7 - Account of Mortgage Money:

   • The mortgagee must provide a clear account of the mortgage money and any interest or additional costs incurred. This ensures transparency in the transaction and prevents any unjust enrichment on the part of the lender.

8. Rule 8 - Procedure for Payment of Money into Court:

   • If the mortgagor wishes to redeem the property, they may pay the owed money into the court. This rule outlines the procedure for such payments, ensuring that the mortgagor’s funds are properly accounted for.

9. Rule 9 - Sale of Property by Mortgagee:

   • If the property is sold by the mortgagee, it must be done in accordance with the decree passed by the court. This includes following the guidelines for the sale procedure, which are designed to ensure fairness.

10. Rule 10 - Application of Rules to Other Mortgages:

    • The rules of this order apply not only to simple mortgages but also to other types of mortgages, such as conditional sale, usufructuary mortgages, etc., subject to the terms and conditions of the mortgage deed.

Punishment

Failure to Adhere to the Decree:

• If a party (particularly the mortgagor) fails to adhere to the court’s decree—such as failing to repay the debt or redeem the property within the prescribed time frame—the court may order the sale of the mortgaged property. There is no direct criminal punishment, but the mortgagor loses ownership of the property if they fail to pay.

Contempt of Court:

• If either party disobeys a court order related to the mortgage suit (e.g., refusing to allow the sale of property or to hand over possession after foreclosure), they may be held in contempt of court, which could lead to penalties or imprisonment under the Contempt of Court Act.

Misrepresentation:

• If a party engages in fraudulent misrepresentation of the mortgage agreement or in providing false documents to deceive the court, they could face penalties for fraud and civil liability under the law.

Unlawful Sale:

• If the mortgagee carries out an unauthorized sale of the mortgaged property or violates the rules of the sale process, they may be held liable for the illegal sale, which may lead to civil action, including compensation to the mortgagor or a reversal of the sale.

Failure to Provide Accurate Accounts:

• A mortgagee who fails to maintain a clear account of the mortgage debt and related payments, as required by Rule 7, may face consequences for financial mismanagement or fraud.

Foreclosure and Loss of Rights:

• If foreclosure occurs, the mortgagor loses their right to redeem the property. This is not a punishment in the criminal sense but is a serious financial consequence of defaulting on the mortgage terms.