• Validity of registered agreement of mortgaged property

The question concerns a family property.

1. Leasehold property 999 years (3 joint plots) is mortgaged with bank years ago (single owner)
2. Bank serves notice under Sarfaesi Act and also possession notice around 2010-11
3. In 2012 august registered agreement to sell is entered by owner without permission/NOC from bank (only verbally informed) mentioning in agreement that property is with bank for one plot and another agreement a month later for the balance 2 plots. Of amount received part was deposited with bank.
4. In April 2013 bank approached CMM for taking physical possession and got order in august 2013
5. there was a dispute earlier with proposed buyer of single plot as he did not give balance money to pay to the bank, but we had given possession of ground floor at the time of agreement
6. single plot proposed buyer contested CMM order and later went to DRT and part paid amount to delay or get property registered (got stay from DRT) and also filed specific performance case against our agreement and got injunction from lower court on assumption that we may sell to another person
7. this resulted in our one time settlement with bank getting disturbed and high losses for us.
8  we want to return money and get this one plot agreement rescinded in specific performance case

how valid is agreement as property is mortgaged as we are told by bank verbally that we cannot do so. and what to do? isnt specific performance premature? We are not able to get right guidance. Thanks
Asked 2 years ago in Property Law from Kanpur, Uttar Pradesh
1) at the outset it may be clarified that without going through the documents cited by you in your query no clear opinion can be given . 

2)if your leasehold property was mortgaged to bank no third party rights could be created by the owner without prior approval of bank . verbal information is not sufficient . you need NOC in writing from bank . 

3)you could not part with possession of leasehold property to proposed buyer . your sales agreement with buyer is invalid . 

4) let the bank take steps to declare your agreement with buyer void . since public money is involved and property is mortgaged to bank DRT would be inclined to garnt bank necessary reliefs . 

5) as far as specific performance suit is concerned mention that since property was mortgaged to bank and bank has refused to give consent property could not have been sold to buyer . offer to refund money with interest to buyer
Ajay Sethi
Advocate, Mumbai
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bank is only concerned with recovery of its money . if its dues are recovered it wont be interested in any legal battle . 

 try to arrive at an amicable settlement with buyer . if not possible then dont repay the bank . let bank take recovery proceedings .
 if settlement is arrived at with bank then bank would have no objection to sale of property to the buyer
Ajay Sethi
Advocate, Mumbai
23151 Answers
1216 Consultations
5.0 on 5.0
bank is only concerned with recovery of its money if  dues are recovered will not be interested in any legal action
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
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thanks for your appreciation . bank wont raise any  objections for sale of the property  to the buyer . obviously buyer  will before making payment insist that bank give its consent as it s dues are being paid
Ajay Sethi
Advocate, Mumbai
23151 Answers
1216 Consultations
5.0 on 5.0
my pleasure
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
3.5 on 5.0

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