A party made register mortgage to bank in 2012 for loan. After that he gifted the same property to his daughter thro registered gift deed in 2013. Finally he escaped with out clearing loan amount. Now the bank is conducting auction under SARFACE ACTduly following the procedure against him. But the bank not considering the gift deed, as it made after mortgage and they were not informed to his daughter regarding auction. Is she have any right against the property? can i go for the property thro auction?
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1) party could not have created third party rights on flat without bank consent
2) bank can move court for setting aside gift deed by mortgagor in favour of his daughter
3) daughter should file application in DRT seeking stay of auction proceedings
4) dont purchase property in auction
The transaction from father to daughter by way of gift is not sustainable if there is a valid mortgage created before executing the Gift deed. The bank has first charge on the property so bank can conducting auction under SARFACE ACT .If you need to protect from auction file petition before DRT court seeking stay of auction proceedings
1. Equatable mortgage of the property was created by the owner of the property by depositing the noriginal title deed of the property,
2. No mortgaged property can be dealt with in any manner,
3. So, the Gift Deed, registered by the mortgagor is invalid,
4. The donee shall have no legal right, title and interest on the said mortgaged property,
5. The mortgagee bank can sell the property by initiating SARFAESI Proceeding and issue valid sale certificate to its successful bidder in the acution sale.
1. When equitable mortgage is created the title deed of the property is deposited with the bank/financial institution which advances loan. The possession of the property remains with the mortgagor, but his right to deal with the property at his sweet will remains suspended.
2. Until and unless the mortgage is released the property in respect of which mortgage is created by depositing its title deed, cannot be dealt with by the mortgagor without the permission of the mortgagee.
3. The gift deed executed by the mortgagor is illegal.
4. Since the gift deed is illegal the title has not passed to the daughter of the mortgagor's daughter.
5. The bank has initiated the proceedings under SARFAESI Act, which can now be taken to logical conclusion.
6. If the daughter applies to the court for a stay order against the bank the latter may, in addition to opposing the grant of stay, also challenge the gift deed executed by the mortgagor.
A. Firstly, father has created interest and transferred right under the execution of the mortgage deed in the Bank. Hence, it is unequivocally established no one has right to acquire the property and sell the same without obtaining the consent of the Bank. So, Gift Deed executed by father can be revoked through court of law.
B. Daughter i.e, Donee shall have no any right or interest over the property.
C. The bank has liberty to sell or auction the property by exercising the right under the SURFAESI act subject to non clearance of the loan.
mortgage property may be given in gift to any person and donee shall accept that gift with all liabilities. if mortgaged is not redeemed then gifted property may be forfeited in order to satisfy the mortgagee. due to principle of marshaling later transaction of property is always being the subject for satisfaction of prior transaction so gift is also a subject for satisfaction of mortgagee. you have right to pay the outstanding loan amount and stop auction because you have vested interest in the property. if you not agree then you have right to get surplus amount after satisfaction of loan.
