An age old practice of mortgage is becoming a trending topic from the past few years. As it is evident a number of cases were filed on mortgage. Birla International Pvt.Ltd. Vs Karvy Financial Services Limited is a case on Appointment of Receiver decided by Mumbai Court on 14-01-2016.
The Transfer of Property Act 1882, Chapter-4 explains about the Mortgage, Mortgagor, Mortgagee, Appointment of a Receiver etc. The topic here is about Section-69a of TPA , 1882 which deals with the Appointment of Receiver. This section inserted by the Amending Act , 20 of 1929.
Mortgage is a legal agreement by which a bank , society etc.., lends money at interest in exchange for taking title of the debtor’s ( one who takes money ) with condition that the conveyance of title becomes void upon the payment of debt. The person who takes money in mortgage is generally called as Mortgagor. Mortgagor is also called as Debtor or Borrower. The person who lends or gives money in mortgage is generally called as Mortgagee. Mortgagee is also called as Creditor or Lender.
Section- 69(a) of TPA , 1882 provides for the appointment of receiver in all cases where power of sale is given to mortgagee under section- 69. As the mortgaged property belongs to Mortgagor who take loan from mortgagee on security of property. The mortgagee has right to recover his money from the security or property of Mortgagor on default . But , at first the mortgaged property belongs to Mortgagor , he has every right to see that his property is dealt with by mortgagee in an impartial way. Therefore the mortgagee or Mortgagor can appoint the receiver.
Under this section a receiver may be appointed in any of the following ways:-
1)The receiver may be appointed by the mortgagor himself by nominating a person to act as receiver. However it is necessary that such person is named in the mortgage-deed and he gives his consent to act as Receiver.
2)Receiver may be appointed also by mortgagee if
• All persons nominated by Mortgagor are dead or
• All persons nominated by Mortgagor has refused to act as receiver.
3)The receiver may be appointed by court also. If mortgagor doesn't agree on the name given by mortgagee , he may apply to the court for nominating a correct receiver. The person who got appointed as a receiver by court is regarded as a person have been appointed by Mortgagee.
Since the mortgagee appoints a receiver on behalf of the mortgagor, therefore the mortgagor’s consent is necessary. Appointment of receiver is possible only when both the mortgagor and mortgagee is agreed.
Receiver appointed under this section acts as an agent of the mortgagor. Receiver is appointed to take care of the mortgage- property. The mortgagor is responsible for the acts of receiver if it is mentioned in mortgage-deed. The beneficial person here is mortgagee because he can get the income of mortgaged property but he is not liable to take care the management of mortgaged property.
The remuneration of receiver is mentioned in the mortgage-deed. If it is not so fixed in deed sub section (6) provides that receiver may retrain 5% of the gross income for himself as a commission. Where a receiver finds that rate of 5% is less he may apply to the court for enhancement of remuneration or commission. If the court finds it is true and right he can get above 5% remuneration or compensation.