Second Mortgage Void Without Consent of Exclusive Charge Holder | HC

Case Details: [2025] 174 taxmann.com 1039 (Bombay)

Judiciary and Counsel Details

• Alok Aradhe, CJ. & M.S. Karnik, J.
• Venkatesh Dhond, Sr. Adv., Karl Tamboly, Ryan D’souza & Zaid Mansuri, Advs. for the Appellant.
• Pradeep Sancheti, Sr. Adv., Rohan Savant, Vinod Kothari, Ms Mitali Shahane, Kshitij Parekh, Ankit Lohia, Viraj Bansod & Tushar Goradia, Advs. for the Respondent.

Facts of the Case

In the instant case, SR availed of loan facilities from Yes Bank and mortgaged its property to Yes Bank. JCF acquired the loan and mortgage rights of Yes Bank. SR and its promoter group approached the appellant, O, for further loan. To secure loans advanced by O, mortgage deed was executed by SR in favor of O.

SR defaulted in making payments, so JCF issued a notice under section 13(2) of the SARFAESI Act, 2002. JCF also filed a suit for a declaration that it was the exclusive charge holder/mortgagee of the suit property and that the deeds of a simple mortgage in favour of O were void and illegal.

The Single Judge, by interim order, directed O to deposit the mortgage deed for the suit property with the Trial Court.

High Court Held

The High Court held that since the mortgage deed contained clauses stating that the mortgagee was the sole and exclusive charge holder of the subject properties, subsequent mortgage deeds executed by SR in favour of O without the prior written consent of JCF, the first charge holder, were void and dishonest. Thus, there was no error in the interim order passed by the Single Judge.

List of Cases Reviewed

• Order of Single Judge, dated 12-2-2025 [Para 36] affirmed.
• Life Insurance Corporation of India and another v. Dharam Vir Anand (1998) 7 SCC 34
• Radha Sundar Dutta v. Mohd. Jahadur Rahim and others AIR 1959 SC 24 [Para 24]; followed.

List of Cases Referred to

• Deccan Paper Mills Company Limited v. Regency Mahavir Properties and others (2021) 4 SCC 786 (para 15)
• Bikram Chatterji and others v. Union of India and others (2019) 19 SCC 161 (para 15)
• Wander Limited v. Antox India Pvt. Ltd. (para 22)
• Shyam Sel and Power Limited and another v. Shyam Steel Industries Limited (2023) 1 SCC 634 (para 22)
• Ramakant Ambalal Choksi v. Harish Ambalal Choksi and others 2024 SCC OnLine SC 3538 (para 22)
• Life Insurance Corporation of India and another v. Dharam Vir Anand (1998) 7 SCC 348 (para 24)
• Radha Sundar Dutta v. Mohd. Jahadur Rahim and others AIR 1959 SC 24 (para 24)
• Sahebzada Mohammad Kamgarh Shah v. Jagdish Chandra Deo Dhabal Deb and others AIR 1960 SC 953 (para 33)
• Zarina Siddiqui v. A. Ramalingam (2015) 1 SCC 705 (para 33).