Liability of mortgagor is co-extensive with other mortgagors/guarantors: HC

  • Blog|News|FEMA & Banking|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 8 June, 2022

Liability of mortgagor

Case Details: Phoenix Arc (P.) Ltd. v. Registrar - [2022] 138 516 (Bombay)

Judiciary and Counsel Details

    • Dipankar Datta, CJ. & V. G. Bisht, J.
    • Rohit Gupta for the Petitioner.
    • Gautam AnkhadAditya MehtaB.B. SharmaMohammed Ali Chunawala for the Respondent.

Facts of the Case

In the instant case, an application against measures to recover secured debts (Right to Appeal). The petitioner-ARC acquired debt of the original lender.

On default in repayment of the loan amount of Rs. 270 crores by the borrower, DRT issued a proclamation for the sale of the mortgaged property, which included property (flat) belonging to the guarantor/mortgagor.

The Mortgagor filed an appeal before the DRAT seeking stay of the scheduled sale. The Mortgagor deposited sum of Rs. 1.25 crores before the DRAT as a requirement of pre-deposit towards 25 percent of its alleged outstanding liability, which mortgagor asserted to be Rs. 5 crores on ground that its outstanding dues were to extent of Rs. 5 crores and that same was secured by equitable mortgage of a flat.

The DRAT by impugned order imposed stay on conducting public auction of mortgaged properties. The Petitioner challenged said order in the instant petition.

High Court Held

The Bombay High Court held that the liability of the mortgagor was not restricted to extent of Rs. 5 crores only and it was co-extensive with other mortgagors/guarantors and the amount due as determined by DRT was in excess of Rs. 270 crores. Thus, 25 per cent of Rs. 270 crores i.e., Rs. 67.57 crores was required to be pre-deposited by the mortgagor and the DRAT ought not to have accepted the sum of Rs. 1.25 crores, thus, the impugned order passed by DRAT was to be set aside.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied