Cap.98] MORTGAGE

CHAPTER 98

MORTGAGE

AN ACT TO AMEND AND CONSOLIDATE THE LAW RELATING TO MORTGAGE.AdsNos. 6 of 1949,

53 of 1949,I I of 1953.

Short title.

Interpretation.

Approvedcreditagencies.

PARTI

SHORT TITLE AND INTERPRETATION

1. This Act may be cited as theMortgage Act.

2. In this Act, unless the contextotherwise requires—

" appointed date " means the 16th day ofJanuary, 1950;

" hypothecary action " means an action toobtain an order declar ing themortgaged property to be boundand executable for the payment ofthe moneys due upon the mortgageand to enforce such payment by a

. judicial sale of the mortgagedproperty;

" land " includes things attached to theearth or permanently fastened toanything attached to the earth, andany estate, right, or interest in orover land ;

" mortgage" includes any charge onproperty for securing money ormoney's worth;

" mortgagee " includes any person fromtime to time deriving title under orthrough the original mortgagee.

3. In this Act " approved credit agency "means—

(a) any banking company as defined insection 333 of the CompaniesOrdinance*, which is declared bythe Director of Commerce, by

[16th January, 1950.}

N o t i f i c a t i o n p u b l i s h e d in theGazette, to be an approved creditagency for the purposes of this Act;

(b) the State Mortgage and InvestmentBank, the Loan Board, the NationalSavings Bank, and the Local Loansand Development Commissioners ;

(c) any other company, firm, institution,or individual for the time beingdeclared by the Director ofCommerce, by Notificationpublished in the Gazette, to be anapproved credit agency for thepurposes of this Act.

PART II

HYPOTHECARY ACTIONS ON MORTGAGESOF LAND

GENERAL

5. (1) For the purposes of this Part—

"person entitled to notice ", in relation toa hypothecary action in respect ofany land, means any person who—

(a) has any interest in the land(whether by way of mortgageor otherwise), being aninterest (i) to which themortgage in suit in thehypothecary action haspriority ; and (ii) which wascreated or arises by virtue of

4. The provisions of this Part shall Applicationapply only to a mortgage of land, to any of thisPart.action to enforce payment of the moneysdue upon a mortgage of land, and to anyhypothecary action in respect of any land.

I nterp retationof terms inthis Part.

• Repealed and replaced by the Companies Act, No. 17 of 1982.

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Registrationof addressfor serviceof documents.

an instrument duly registeredunder the Registration ofDocuments Ordinance, as aninstrument affecting the land,prior to the time of theregistration of the Us pendensof the hypothecary action, and

(b) has, prior to such time, registeredan address for the service onhim of legal documents inaccordance with theprovisions of section 6 of thisAct,

and includes a person declared bysubsection (2) of this section to beentitled to notice of the action ;

"registered address" means an addressregistered in accordance with theprovisions of section 6 of this Act.

(2) Where a notice of seizure of any landis, after the registration of a mortgage ofthat land but before the registration of thelis pendens of a hypothecary action uponsuch mortgage, duly registered for the timebeing under the Registration of DocumentsOrdinance, the judgment creditor in theaction in which such seizure was effectedmay register an address under section 6, andif such address is registered, shall be aperson entitled to notice of the hypothecaryaction.

6. (1) Application for the registration ofan address for the service of legaldocuments shall be made substantially inthe form set out in the First Schedule to thisAct.

(2) The address for service shall beregistered in or in continuation of the folioin which is registered the mortgage of theland in respect of which the applicant has aninterest :

Provided, however, that where suchmortgage includes more than one land, itshall be sufficient if the address of theapplicant is registered in the folio relating tothe land in which he has an interest.

(3) Where the applicant declares in hisapplication that a previously registeredaddress is cancelled, the Registrar shall

make a new entry in the register and cancelthe registration of the previous address.

(4) The fee for registration of an addressfor service or for a change of such addressshall be fifty cents for each address, with anaddition of ten cents for each folio after thefirst in which the address is to be registered.

7. (1) Notwithstanding anything in Actions onsection 34 of the Civil Procedure Code, a mortgage.claim to enforce payment of the moneys dueupon a mortgage may be joined to a claimin a hypothecary action, or a separate actionmay be brought in respect of each suchremedy.

(2) In every such action the mortgagorshall be sued as defendant whether or not heis in possession of the mortgaged land at thetime when the action is instituted.

8. An order for the issue of summons ina hypothecary action shall not be made byany court unless a declaration under thehand of an attorney-at-law is filed ofrecord—

(a) certifying that the lis pendens of suchaction has been duty registeredunder the Registration ofDocuments Ordinance as aninstrument affecting the land towhich the action relates, and thatsuch registration has been effectedin or in continuation of the folio inwhich the mortgage bond suedupon in the action was registered ;

(b) certifying that the register maintainedunder the Registration ofDocuments Ordinance or a certifiedextract therefrom, and all relevantentries in such register, have beenpersonally inspected by suchattorney-at-law or by any otherspecified attorney-at-law, at or afterthe time if the entry in the registerof the lis pendens of the action ;and

»(c) containing a -statement of the name

and registered address of everyperson, if any, found upon suchinspection to be a person entitled tonotice of the action.

Lis pendensto be regis-tered, &c.

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Notice ofhypothecaryaction.

Manner ofissue ofnotice.

ISSUE OF NOTICE OF HYPOTHECARYACTION. ADDITION OF PARTIES,

INTERVENTION, &C.

9. (1) Notice of a hypothecary actionshall, upon an order being made for theissue of summons on the defendants in theaction, be issued to every person who isstated in the declaration filed under section8 to be a person entitled to notice of suchaction, but who has not been joined as adefendant to the action.

(2) Where notice is not issued undersubsection (1) to any person entitled to suchnotice, any party to the action maythereafter, but before the sale of themortgaged land in execution of ahypothecary decree, apply to the court forthe issue of notice of the action to suchperson, (whether or not his name wasmentioned in the declaration filed undersection 8), and notice shall be issuedaccordingly.

10. (1) Notice of a hypothecary actionmay be issued to a person entitled to noticeof such action in the manner provided inparagraph (a) hereunder or in the mannerprovided in paragraph (A) hereunder, at theoption of the plaintiff:—

(a) (i) The Registrar of the court shallsend to that person by registeredpost to his registered address anotice in the prescribed form; itshall be the duty of the Registrar tomake an entry that the notice wassent in the journal of theproceedings in the action, and tofile in such journal the receiptissued by the post office in respectof such notice ; and such entry andreceipt shall be taken as conclusiveproof, in the absence of fraud thatthe notice was duly sent;

(ii) A copy of such notice shall,within the period of two weeks fromthe date of the posting of the noticeunder sub-paragraph (i), be affixedin a conspicuous position upon themortgaged land by the Fiscal undera precept from the court ;

(iii) A copy of such notice shall bepublished in a newspaper specifiedby the court ;

(b) The notice of action may be servedin any manner provided by the CivilProcedure Code for the service ofsummons.

(2) The notice referred to in sub-paragraphs (i) and (ii) of paragraph (a) ofsubsection (!) shall be in both Sinhala andTamil or in Sinhala only as the court maydirect.

11. (1) Where the p l a i n t i f f in ahypothecary action joins as a defendant anyperson entitled to notice of the action, theprovisions of section 10 shall apply inrelation to the service on such person of thesummons in the action in like manner asthey apply in relation to the issue of noticeof the action.

Manner ofissue ofprocess. &c.,where personentitled tonotice is aparty to theaction.

(2) Where any person entitled to noticeof a hypothecary action is added as a partyto the action, the provisions of section 10shall apply in relation to the service onsuch person of any notice, process, order,decree or other document or writtencommunication, in like manner as theyapply in relation to the issue of notice of theaction.

12. Where notice of a hypothecary Rights ofaction is issued to any person under section person to/, , . , . , , , . whom notice is9 and in the manner provided by section issued10

a) such person shall be entitled at hisoption to be added as a party to theaction upon application made tothe court in that behalf within onemonth of the date of the posting ofthe notice to him under section 10(1) (a) or of the publication of acopy thereof under that section,whichever is the later, or where thenotice is served in like manner as a

• summons, within one month of the- date of such service ;

(b) such person may, in the discretion ofthe court upon such terms as thecourt thinks just, be added as aparty to the action upon application

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Right ofpersonentitled tonotice to beadded as aparty beforesale.

Rights ofperson addedduring pen-dency ofaction.

made after the expiry of the periodof one month referred to inparagraph (a) but before the sale ofthe land under the hypothecarydecree :

Provided, however, that every finding,order, decree or thing done in the actionprior to the date of the application underparagraph (b) shall, unless the court in itsdiscretion otherwise orders, bind the personso added in like manner as though he hadpreviously been a party to the action.

13. Any person entitled to notice of ahypothecary action to whom such notice hasnot been issued under section 9 and in themanner provided by section 10 shall beentitled, on application made by him to thecourt at any time before the sale of themortgaged land in execution of ahypothecary decree, to be added as a partyto the action.

14. Where any person, to whom noticeof a hypothecary action has been issuedunder subsection (2) of section 9 and in themanner provided by section 10, is added asa party to the action under paragraph {a) ofsection 12, or any person entitled to noticeof a hypothecary action is added as a partyunder section 13—

(a) no finding, order, decree orproceeding previously made ortaken in the action shall bind himexcept in so far as he may consentto be bound thereby ;

(b) such person shall be entitled to raiseany question or issue which hecould have raised if he hadoriginally been a party to theaction, and any other party mayraise any question or issue arising inconsequence ;

(c) a fresh trial shall be had on everyissue previously raised in the action,unless such person consents to bebound by the previous findingthereon;

(d) upon the trial of any issue whether*previously raised or not, no part ofthe evidence previously taken shallbe evidence upon that issue, exceptin so far as all the parties to the actionagree to be bound by such evidence ;

Personsnoticed oradded to bebound bydecree andsale.

(e) if a decree had been entered in theaction prior to the addition of suchperson as a party thereto, the courtshall, if such person so requires,make order suspending theoperation of such decree, and shall,after the trial of all the issues ashereinbefore provided, confirm thejudgment previously given and thedecree entered thereon or annulsuch judgment and decree and givea new judgment and enter a newdecree, as the circumstances of thecase may require.

15. Every party to a hypothecary action,and every person entitled to notice of theaction and to whom notice of the action isissued under section 9 and in the mannerprovided by section 10, and every personwho is added as a party under section 12 orsection 13, shall be bound by the decree andsale in the hypothecary action.

16. Every person having any interest inthe mortgaged land by virtue of aninstrument to which the mortgage in suithas priority, but who is not a person entitledto notice of the action as hereinbeforedefined, shall be bound by every order,decree or sale or thing done in thehypothecary action:

Provided, however, that any such personmay at any time before the entry of thedecree in the action be added as a party onapplication made by him in that behalfupon such terms as the court may impose,but any person so added shall be bound byevery finding or order previously made inthe action and by the proceedings previouslytaken therein except in so far as the courtmay in its discretion otherwise order.

-17. In sections 18 to 23," party omitted Meaningoffrom a hypothecary action " means a person party. , , ' . . , , , - omitted".entitled to notice of the hypothecary actionbut who is not declared by section 15 to bebound by the decree and sale in that action.

Interventionby personinterestedwho is notentitled tonotice.

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Party omittedmay inter-vene aftersale anddispute theamount ofdecree orclaim balanceproceeds.

Action by oragainstparty omittedfor settlementof rights. &c.

18. (1) A party omitted from ahypothecary action may at his optionintervene in the action after the sale of themortgaged land in execution of a hypothecarydecree, but before the distribution of theproceeds of the sale, for the purpose of raisingan issue as to the sum due under the mortgagein suit in the hypothecary action, and thecourt shall, if it finds after inquiry and hearingsuch evidence as may be adduced upon suchissue, that the sum actually due is less thanthe sum stated in the decree to be due underthe mortgage, amend the decree in so far asit relates to the sum found to be due underthe mortgage.

(2) The raising of any issue or theamendment of any decree under subsection(1) shall not in any way affect the validity ofthe sale in execution of the hypothecarydecree.

(3) A party omitted from a hypothecaryaction who intervenes in that action undersubsection (1) shall, whether or not he makesa claim under section 57 to participate in thebalance proceeds of sale of the mortgagedland, be bound by the sale in that action andby the decree (whether or not it is amendedunder that subsection) in like manner asthough he had been a party to the action.

(4) Where a party omitted from ahypothecary action makes a claim undersection 57 to participate in the balance of theproceeds of sale of the mortgaged land, then,notwithstanding that he may not haveintervened in the action under subsection (1)of this section, he shall be bound by thedecree and sale in the action in like manner asthough he had been a party thereto.

19. (1) Where a party omitted from ahypothecary action is not a person who is bysubsection (3) or subsection (4) of section 18declared to be bound by the decree and sale inthat action, and a conveyance of themortgaged land has been executed in favourof the person who had purchased that land atthe sale (hereinafter referred to as " the priorsale ") in execution of the hypothecary decreein that action—

(a) the party omitted may institute anaction, to which the mortgagor andthe purchaser at the prior sale shallbe added as parties, for the purposeof obtaining a decree declaring him

to be entitled to the land or to anyinterest therein, or where such partyomitted is a mortgagee, for thepurpose of obtaining a hypothecarydecree in respect of the land ;

(b) the purchaser of the land at the priorsale may institute an action to whichthe mortgagor and the party omittedshall, be added as parties, for thesettlement of the rights and liabilitiesof the purchaser, the mortgagor andthe party omitted.

(2) In this section and in sections 20 to 23," purchaser at the prior sale " includes anyperson deriving title under or from the personwho purchased the land at the prior sale.

(3) The court may, if it thinks fit so to dohaving regard to the circumstances of anycase, permit the party omitted to institute anaction under subsection (1), notwithstandingthat a conveyance of the mortgaged land maynot have been executed in favour of thepurchaser of the land.

20. In any action instituted under section19, the party omitted from the hypothecaryaction may raise any issue as to the moneysdue under any mortgage, which had priorityover the interest of the party omitted andwhich was wholly or partly paid off out of theproceeds of the prior sale. Where such issue israised, the mortgagee under that mortgageshall be added as a party to the actioninstituted under section 19 and the court shalldetermine afresh the sum actually duethereunder.

21. (1) Where the court, in any actioninstituted under section 19, finds that anymoneys are due from the mortgagor to theparty omitted by virtue of the instrumentunder which he claims, the court shall enter adecree ordering that the land sold at the priorsale shall be resold, unless the purchaser at theprior sale pays to the party omitted, before adate specified in the decree, the moneys sofound to be due to the party omitted from themortgagor.

,(2) Upon the resale of the mortgaged landunder the decree entered under subsection (1),the proceeds of resale shall be distributed asfollows;—

(i) firstly, the purchaser at the prior saleshall be entitled to payment of theamount at which he purchased the

Issue may beraised as toamountproperly dueunder mort-gages paid offout ofproceeds ofprior sale.

Procedurewhere courtfinds thatmoneys aredue to partyomitted frommortgagor.

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land at the prior sate, or of thetotal amount of the moneys paid offout of such purchase money to everymortgagee under a mortgage whichhad priority over the interest of theparly omitted, whichever amount isthe less:

Provided, however, that wherethe court has under section 20determined the amount of themoneys due under any suchmortgage, and the amount sodetermined is less than the moneysactually paid off thereon in the prioraction, the amount so determinedshall be taken, for the purposes ofthe preceding provisions of thisparagraph, to be the moneys dueunder that mortgage ;

(ii) secondly, after payment of anyamount to which the purchaser isentitled under paragraph (i), theparty omitted shall be entitled topayment of the amount found undersubsection (1) to be due to him fromthe mortgagor;

(iii) thirdly, the purchaser at the prior saleshall be entitled to any balanceremaining after the payments referredto in sub-paragraphs (i) and (ii), havebeen made.

(3) Where any moneys are paid to theparty omitted by the purchaser at the priorsale in compliance with the decree undersubsection (1) or any moneys are paid to theparty omitted under paragraph (ii) ofsubsection (2), the following provisions shallapply :—

(a) If the mortgage was created before theappointed date, the purchaser of theland at the prior sale shall be entitled,in the action instituted under section19, to an order directing themortgagor to pay to such purchaseran amount equal to the amount sopaid to the party omitted ;

(b) If the mortgage was created after theappointed date, then, if, but only if,any amount had in the priorhypothecary action been paid*to themortgagor out of the proceeds of saleof the mortgaged land at the priorsale, the purchaser at such prior saleshall be entitled, in the actioninstituted under section 19, to anorder directing the mortgagor to pay

to such purchaser an amount equalto the moneys actually so paid to theparty omitted under this section or tothe moneys paid to the mortgagorout of the proceeds of the prior sale,whichever amount is the less. •

(4) Any order made under subsection (3)may be enforced in the same manner as anorder or decree for the payment of money inan ordinary action.

22. (1) Where the court is satisfied that Provisionsthe instrument, under which the party applicable

, ,. , , , . . . where part]omitted from the hypothecary action claims omitted isan interest in the land, transferred to him the a transfereetitle of the mortgagor to the land, but thatsuch title was subject to the mortgage in suitin the prior hypothecary action, the courtshall enter decree declaring the party omittedto be entitled to the land subject to the rightof the purchaser at the prior sate to ahypothecary charge to the extent of theamount at which he purchased the land atthe prior sale or of the total amount of themoneys paid off out of such purchase moneyto every mortgagee under a mortgage whichhad priority over the interest of the partyomitted, whichever amount is less, andordering that in default of the payment ofsuch amount to the purchaser by the partyomitted the land shall be sold against theparty omitted for the recovery of suchamount:

Provided, however, that where the courthas under section 20 determined the amountof the moneys due under any such mortgage,and the amount so determined is less than thesum actually paid off thereon out of theproceeds of the prior sale, the amount sodetermined shall be taken, for the purposesof the preceding provisions of this subsection,to be the moneys due under that mortgage.

(2) In any case to which subsection (1) ofthis section applies the court shall, if satisfiedthat any moneys were paid to the mortgagorout of the proceeds of the prior sale, makeorder directing the mortgagor to pay to thepurchaser at the prior sale an amount equalto the moneys so paid to the mortgagor outof those proceeds, and such order may beenforced in the same manner as an order ordecree for the payment of money in anordinary action.

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Order againstpriormortgagee ifover-paymentwas made fromproceeds ofprior sale.

23. (1) In any case where, by reasonthat the amount of the moneys determinedby the court under section 20 to be due onany mortgage is less than the amount of themoneys actually paid off on that mortgageout of the proceeds of the prior sate, therehas been an over-payment to the mortgageeunder that mortgage (hereinafter referred toin this section as " the prior mortgagee "),the following provisions shall apply :—

(a) If no moneys are paid to the partyomitted under section 21 (1) incompliance with the decree enteredthereunder or under paragraph (ii)of section 21 (2) out of the proceedsof the resale, the party omitted shallbe entitled, in the action institutedunder section 19, to an orderdirecting the prior mortgagee to payto him the amount found undersection 21 (1) to be due to him fromthe mortgagor or the amount ofsuch over-payment, whicheveramount is less;

(b) If any moneys are paid to the partyomitted under section 21 (1) incompliance with the decree enteredthereunder or under paragraph (ii)of section 21 (2) out of the.proceedsof the resale—

(i) the purchaser at the prior saleshall be entitled, in the actioninstituted under section 19, toan order directing the priormortgagee to pay to suchpurchaser the amount of themoneys so paid to the partyomitted or the amount of suchover-payment, whicheveramount is less;

(ii) if the moneys so paid to theparty omitted are less than theamount found under section21 (1) to be due to him fromthe mortgagor, the partyomitted shall be entitled, inthe action instituted undersection 19, to an orderdirecting the prior mortgageeto pay to him the amount ofthe deficiency :

Provided, however, that noorder shall be made under thissub-paragraph against theprior mortgagee unless, andexcept to the extent to which,the amount of the over-payment exceeds the amountspecified in the order madeagainst the prior mortgageeunder sub-paragraph (i) ofthis paragraph ;

(c) if the party omitted is a transferee, andthe provisions of section 22 areaccordingly applicable, thepurchaser at the prior sale shall, inthe action instituted under section19, be entitled to an order directingthe prior mortgagee to pay to himthe amout of such over-payment.

(2) Any order made under subsection (1)may be enforced in the same manner as anorder or decree for the payment of money inan ordinary action.

EFFECT OF SALE IN EXECUTION OF DECREEUPON PUISNE MORTGAGE

24. In section 25—

" prior mortgage ", in relation to anyother mortgage of the same land,means a mortgage which haspriority over such other mortgage;and " prior mortgagee" has acorresponding meaning;

" puisne mortgage", in relation to anyother mortgage of the same land,means a mortgage over which suchother mortgage has priority; and** puisne mortgagee" has acorresponding meaning.

25. Where any mortgaged land is sold inexecution of a decree in a hypothecaryaction upon a puisne mortgage, and theconveyance of the mortgaged land isexecuted in favour of the purchaser at suchsale (hereinafter in this section referred to as" the purchaser under the puisnemortgage "), the following provisions shallapply :—

(a) The puisne mortgagee, and everyperson who being entitled to noticeof the action upon the puisnemortgage is by virtue of any of the

Meaning of" priormortgage "," puisnemortgage ",&c.

Effect ofconveyanceupon saleunder puisnemortgage.

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preceding provisions of this Partbound by the decree and sale in thataction, shall not be entitled tonotice of any hypothecary actioninstituted subsequent to the date ofsuch conveyance on any priormortgage of that land, but shall bebound by the decree and sale in thelatter action;

(b) The purchaser under the puisnemortgage shall, if the mortgagedland is subsequently sold inexecution of the decree in anyhypothecary action upon a priormortgage, be entitled upon makinga claim in that behalf under section57, to the entirety of the balance ofthe proceeds of the sale of the landremaining after satisfaction of themoneys found to be due in thataction to the prior mortgagee andof the claim, if any, of any otherperson preferred by virtue of anyother instrument having priority tothe puisne mortgage;

(c) If the purchaser under the puisnemortgage is a person entitled tonotice of a subsequent hypothecaryaction upon a prior mortgage of theland but is a party omitted from thelatter action, and if an action isinstituted under section 19, then,for the purposes of the applicationof the provisions of subsection (1)of section 22, no mortgage shall bedeemed to have priority over theinterest of such party omitted unlessit had priority over the puisnemortgage in suit in the action inwhich the land was sold to suchpurchaser;

(d) if the conveyance to the purchaserunder the puisne mortgage wasexecuted after the date of theregistration of the lis pendens of ahypothecary action upon a priormortgage of the land, and if thepuisne mortgagee under themortgage in suit in the action inwhich such purchaser purchased themortgaged land is a party omittedfrom the subsequent hypothecaryaction, then such purchaser, unlesshe is added as a party to the latteraction under section 16 or makes aclaim under section 57 in,the latter

Appointmentofrepresentativeof deceasedmortgagor orof deceasedparty tohypothecaryaction.

action, shall be deemed to be aparty omitted from the latter actionand the provisions of paragraph (c)of this section shall be applicable;

(e) Except in the cases referred to inparagraphs (c) and (d) of thissection, the purchaser under thepuisne mortgage shall, whether ornot he is a party to any hypothecaryaction upon any prior mortgage ofthe mortgaged land, be bound bythe decree and sale in the latteraction.

DEATH. INSOLVENCY OR DISABILITY OFMORTGAGOR OR

PERSON ENTITLED TO NOTICE

26. (1) Where any mortgagor diesbefore the institution of a hypothecaryaction in respect of the mortgaged land, orany mortgagor or any person who is orbecomes a party to a hypothecary actiondies after the institution of the action, andgrant of probate of the will or issue ofletters of administration to the estate of thedeceased has not been made, the court inwhich the action is to be or has beeninstituted may in its discretion, after theservice of notice on such persons, if any,and after such inquiry as the court mayconsider necessary, make order appointing aperson to represent the estate of thedeceased for the purpose of the hypothecaryaction, and such person may be made oradded as a party to the action :

Provided, however, that such order maybe made only if—

(c) the court is satisfied that delay in theinstitution of the action wouldrender the action not maintainableby reason of the provisions of thePrescription Ordinance.

(a) the value of the mortgaged property [§4,24 of 1969,]does not exceed twenty thousandrupees; or

(b) a period of six months has elapsedafter the date of the death of thedeceased ; or

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Effect ofrepresentativebeing made aparty.

Provision fordeath,insolvency,unsoundness ofmind orminority ofparty entitledto notice andfor registrationof addressesand issue ofnotice in suchcases.

(2) In making any appointment undersubsection (1) the court shall appoint asrepresentative a person who after summaryinquiry appears to the court to be theperson to whom probate of the will orletters of administration to the estate of thedeceased would ordinarily be issued ;

Provided, however, that in the event of adispute between persons claiming to beentitled to be so appointed, the court shallmake such an appointment (whether of oneof those persons or of any other person) aswould in the opinion of the court be in theinterests of the estate of the deceased.

27. Where any appointment is madeunder section 26 and the person soappointed is a party to the action, everyorder, decree and sale or thing done in thehypothecary action (including the seizureand sale in execution of the property of thedeceased mortgagor not included in themortgage in suit) shall have the like effect asthough the executor or administrator of thedeceased were a party to the action.

28. (1) The duly appointed executor ofthe will or the administrator of the estate ofa deceased person, or the duly appointedassignee of the estate of an insolvent, or theduly appointed curator or manager of theestate of a minor or person of unsoundmind, may, whether or not such deceasedperson, insolvent, minor or person ofunsound mind has himself registered hisaddress under section 6, register an addressunder that section on behalf of such estate.

(2) Where the registration of the addressof the executor or administrator or of theassignee, curator or manager, as the casemay be, is not effected as provided insubsection (1), any other person interestedmay register an address under section 6 onbehalf of the estate of the deceased personor of the insolvent, minor or person ofunsound mind. The address so registeredshall be cancelled forthwith upon theregistration of an address under subsection(1) on behalf of such estate.

(3) Where notice of a hypothecary actionis issued under section 9 and in mannerprovided by section 10—

(a) to any executor or administrator or toany assignee, curator or managerwho has registered an address asprovided in subsection (1) ; or

(b) to any other person who has registeredan address as provided insubsection (2) and whose address isfor the time being registered, and ifthe deceased person, insolvent,minor or person of unsound mindhad himself registered an addressunder section 6, to the addressregistered by him,

notice of the hypothecary action shall bedeemed to have been duly issued for thepurpose of binding the estate of suchdeceased person, insolvent, minor or personof unsound mind.

(4) In any case referred to in paragraph(b) of subsection (3), any person to whomnotice of the hypothecary action is issued orany other person may, within one month ofthe date of the posting of the notice or ofthe publication thereof, whichever is thelater, or where the notice is served in likemanner as a summons, within one month ofthe date of such service, make application tothe court for the appointment of someperson to represent the estate of thedeceased or of the insolvent, minor orperson of unsound mind as the case may be,and the court shall appoint a personaccordingly.

In making such appointment the courtshall appoint as representative a person whoafter summary inquiry appears to court tobe the person to whom probate of the willor letters of administration to the estate ofthe deceased would ordinarily be issued, orwho would ordinarily be appointed to bethe curator, assignee or manager of theestate, as the case may be :

Provided, however, that in the event of adispute between persons claiming to beentitled to be so appointed, the court shallappoint as representative such of thosepersons or such other person, whoseappointment in the opinion of the court willbe in the interests of the estate.

Where the court is satisfied thatproceedings are pending for theappointment of an executor, administrator,assignee, curator or manager, the court mayon that ground postpone the appointmentof a representative for any period notexceeding three months.

29. (1) Where notice of a hypothecary Estate to beaction is issued under section 9 and in bound ifmanner provided by section 10 to the notices issuedregistered address of a person entitled to as provided in notice of the action, then, notwithstanding section 28.

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that such person may be or may have beendead or an insolvent or a minor or person ofunsound mind at the lime of the issue of thenotice, the estate of such person shall bebound by every order, decree or sale orthing done in the hypothecary actionwhether or not application is made undersubsection (4) of section 28 for theappointment of a representative, unless theexecutor or administrator or assignee,curator or manager or any other person hadregistered an address on behalf of the estateunder subsection (1) or subsection (2) ofthat section.

(2) In any case where notice of ahypothecary action is in manner provided insection 10 issued to an executor,administrator, curator, assignee or managerwho has registered his address as providedin subsection (I) of section 28, then,notwithstanding such death, insolvency,minority or unsoundness of mind, the estateshall be bound by every order, decree or saleor thing done in the hypothecary action,whether or not such executor,administrator, assignee, curator or managerbecomes a party to the action.

(3) Where—

(a) notice of .a hypothecary action isissued under section 9 and inmanner provided by section 10 toany person who has registered anaddress under subsection (2) ofsection 28 on behalf of the estate ofa deceased person or insolvent orperson of unsound mind or minor ;and

(b) if the deceased person, insolvent,person of unsound mind or minorhad himself registered an address,such notice is issued to that address,

then, notwithstanding the death, insolvency,minority, or unsoundness of mind, theestate shall be bound by every order, decreeor sale or thing done in the hypothecaryaction, whether or not a representative isappointed under subsection (4) of section 28and becomes a party to the action,

in subsection (1) or subsection (2) of section28, then, notwithstanding that the personhaving such interest may be dead or aninsolvent, minor, or person of unsoundmind at the time of the institution of thehypothecary action, the estate of suchperson shall be bound by every order,decree or sale or thing done in thehypothecary action.

31. (1) The provisions of sections 28 to30 shall not apply in the case of any actioninstituted for the enforcement of a mortgagecreated before the appointed date.

(2) Where a hypothecary action isinstituted for the enforcement of a mortgagecreated before the appointed date, and thecourt is satisfied that any person entitled tonotice of the action is or was dead or aninsolvent, minor or person of unsound mindbefore or at the time of the issue to him ofnotice of the action, the person to whomprobate of the will or letters ofadministration to the estate of the deceasedis granted, or, as the case may be, the dulyappointed assignee or curator or managershall be added as a party to the action uponapplication made to the court in that behalfwhether by such person or by any party tothe action :

Provided, however, that it shall be lawfulfor the court in the circumstances andsubject to the conditions set out in section26 to appoint a representative of thedeceased for the purpose of the hypothecaryaction, and in any such case therepresentative so appointed may be addedas a party to the action in lieu of theexecutor or administrator.

(3) Where the executor or administratoror the duly appointed representative of adeceased person, or, as the case may be, theassignee, curator, or manager of the estateof the insolvent, minor, or person ofunsound mind is not added as a party undersubsection (2), the executor or administratoror, as the case may be, the assignee, curatoror manager shall—

Specialprovision foractions onmortgagescreated beforethe appointeddate.

Estate to beboundnotwithstan-ding death,&c,, if addressnot registered.

30. Where any 'person having any (a)interest in a mortgaged land, to which themortgage in suit has priority, has notregistered an address under section 6, andno other person registers an address on hisbehalf or on behalf of his estate as provided

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be entitled upon making a claim inthat behalf under section 57 toparticipate in the proceeds of saleremaining after satisfaction of theamount decreed to be due upon themortgage in suit in the action ; or

Cap.98] MORTGAGE

Death,insolvency orunsoundness ofmind ofmortgagorafter entry ofdecree.

Power ofplaintiff to joinclaimantadverse tomortgagor.

(b) if he does not so participate, bedeemed to be a party omitted forthe purpose of enabling an action tobe brought by or against him undersection 19 and if such an action isbrought the provisions of sections20 to 23 shall apply accordingly.

32. Where any mortgagor dies or isadjudged an insolvent or a person ofunsound mind at any time after the entry ofdecree in a hypothecary action and beforethe sale of the mortgaged land under thedecree, no proceedings for the execution orenforcement of the decree shall be taken, orif taken shall be of any effect, unless theduly appointed executor of the will oradministrator of the estate of the deceasedor a representative appointed under section26, or, as the case may be, the assignee ormanager of the estate of the insolvent orperson of unsound mind, is made a party tothe action.

POWER OF PLAINTIFF TO JOIN CLAIMANTSADVERSE TO MORTGAGOR OR TO APPLY FORDECLARATION AS TO POSSESSION OF LAND

IN THE EVENT OF SALE

33. (1) The plaintiff in a hypothecaryaction may at his option join as a party tothe action any person alleged by the plaintiffto claim any right to ownership orpossession of the mortgaged land by titleadverse to that of the mortgagor.

(2) Where any person is so joined as aparty to the action, such person or anyother party may raise any issue upon anyquestion relating to the right of ownershipor possession of the land ; and in any suchcase the court shall, after hearing suchevidence as may be adduced by any party tothe action, make an adjudication upon theissue so raised.

(3) Where the adjudication of the courtupon any issue raised as hereinbeforeprovided is to the effect that the mortgagoris not entitled to the land or any part orshare thereof, no decree shall be entered inthe action for the sale of the land or suchpart or share thereof, as the case may be.

(4) Where any person is joined as a partyto the action under subsection (1), everyadjudication by the court on any questionrelating to the title of the land or to theright of possession thereof shall beres adjudicata as between all parties to theaction including the party so added.

34. (1) Upon the institution of a provision forhypothecary action in respect of any land, declaration bythe plaintiff may at his option, at any time court as toafter the registration of the lis pendens of removal fromthe action and before the issue of a precept land of personsor order for the service of summons, make claimingapplication to the court for a declaration. adversely tothat, in the event of decree being entered mortgagor.for the sale of the land the court will orderthe removal from the land of all personswhomsoever who may resist the delivery ofpossession to the purchaser at the sale.

No such application shall be entertainedby the court unless it is accompanied by aplan of the land.

(2) Upon such application being made,the court shall direct—

(a) that notices of the application shall bepublished in two separate issues ofeach of two newspapers specified bythe court ;

(b) that such notices shall be posted bythe Fiscal under a precept fromcourt in at least three conspicuousplaces on the land, and that similarnotices shall be posted at theDistrict Court, Magistrate's Courtand Primary Court if any, havingjurisdiction in the area in which theland is situated, at the kachcheri ofthe district in which the land issituated, and at such other places asthe court may think fit ;

(c) that notice of the action shall bepublished by beat of tom-tom in thevicinity of the land on two specifieddates in the presence of a Fiscal'sofficer or grama seva niladhari orother officer specified by the court.

(3) Every notice under subsection (2) shallcontain a statement to the effect that a planof the land has been filed in the court andwill be available for inspection by anyperson interested.

(4) For the purposes of paragraph (a) ofsubsection (2), the court shall directpublication in two newspapers which appearto the court to be the most appropriate forthe purpose of conveying information of theaction to the residents of the area in whichthe land is situated.

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Right ofclaimant to beadded as parlyand to raiseissues as toright ofpossession, &c.

Order of courtuponapplicationunder section35.

(5) The notices required to be posted byparagraphs (b) and (c) of subsection (2)shall be posted either before the date of thelast publication of the notice underparagraph (a) of subsection (2) or not laterthan two weeks after that date.

35. (1) Where notices have beenpublished and posted as provided in section34, any person claiming to be entitled topossession of the land or of any part orshare thereof under any right or title adverseto that of the mortgagor shall be entitled, onapplication made to the court in that behalfat any time within two months of the dateof the last publication of the notice underparagraph (a) of section 34 (2), to be addedas a party to the action .for the purpose ofsecuring an adjudication by the court uponhis claim.

(2) Where any person is added as a partyunder subsection (1), such person or anyother party may raise any issue (includingan issue on a question of title) relevant tothe claim to possession of the land and inany such case the court shall, after hearingsuch evidence as may be adduced by anyparty to the action, make an adjudicationupon the issue so raised.

36. ( I ) Where no person makesapplication to be added as a party undersection 35, or where the court is satisfiedthat none of the persons so added is entitledto possession of the land, the court shallmake the declaration for which applicationwas made by the plaintiff under subsection(1) of section 35 :

Provided, however, that where any personappears before the court at any time withinthe period of two months specified insubsection (1) of section 35, and satisfies thecourt—

(a) that he was placed in charge of theland by a person who is absentfrom Sri Lanka ; and

(b) that there is no duly appointedattorney in Sri Lanka of such last-mentioned person,

the court shall not make such declaration.

(2) Where the adjudication of the courtupon any issue raised as hereinbeforeprovided is to the effect that the mortgagor

is not entitled to the land or to any part orshare thereof, the court shall make orderdismissing the hypothecary action in so faras it relates to the land or such part orshare.

(3) Where the adjudication of the courtupon any such issue is that any party addedunder section 35 is entitled to possession ofthe land or any part thereof and that themortgage in suit in the action is subject tothe rights of such person, no declarationshall be made under subsection (1) of thissection in respect of the land or that partthereof, as the case may be.

(4) Where any person is added as a partyto the action under section 35, everyadjudication by the court upon any questionrelating to the title to the land or to theright to possession thereof shall be resadjudicata as between all the parties to theaction including the parties so added.

(5) The making of a declaration underthis section, or the removal from the land ofany person in pursuance of the order madeunder section 55 in terms of suchdeclaration—

(a) shall not affect or prejudice the rightof any person (other than (i) aperson declared by the precedingsections of this Act to be bound bythe decree, or (ii) a person added asa party under this section) toinstitute proceedings for therecovery of possession of the landfrom the purchaser or fordeclaration of title thereto ; and

(b) shall not operate as res adjudicata insuch proceedings upon any questionas to the right to possession orownership of the land.

APPOINTMENT OF RECEIVER OFMORTGAGED LAND

37. (1) The plaintiff in a hypothecaryaction may, at any time after theregistration of the lis pendens of the action,make application to the court by petitionfor the appointment of a receiver of the landwhich is the subject of the action.

Such application shall be supported byaffidavit of the plaintiff stating the sum lentto the mortgagor, the sum, if any, repaid

Application forappointment ofreceiver ofmortgagedland.

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Cases wherecourt mayrefuse toappointreceiver.

out of the loan, the sums due to themortgagee by way of principal and interest,and the current market value of themortgaged land.

(2) Subject as hereinafter provided, theapplication for the appointment of areceiver shall, unless the plaintiff otherwisedesires, be dealt with exparte by the court :

Provided, however, that where theapplication is made at any time after thefiling, of an answer by the mortgagor, theapplication shall be dealt with after noticeto the mortgagor.

(3) This section and sections 38 to 45 shallnot apply to any action upon a mortgagecreated before the appointed date.

38. (1) The court may refuse to make anorder for the appointment of a receiver—

(a) if, having regard to the situation,nature and value of the land andthe amount which in thecircumstances of the case canreasonably be allowed asremuneration to a receiver, thecourt is of opinion that a suitableperson is not available for suchappointment;

. (b) if it appears to the court that theamount claimed by the plaintiff tobe due on the mortgage, less suchamount, if any, as may have beenbrought into court by themortgagor is not more than one-half of the current market value ofthe land;

(2) Save as provided in subsection (1), thecourt shall not refuse to make an order forthe appointment of a receiver uponapplication duly made in that behalf.

Notwithstanding anything in subsection(1), the court shall not refuse to make anorder for the appointment of a receiver in.any case where the court is satisfied that themortgagor or other person in possession ofthe mortgaged land has committed any actof waste in respect of the land and that theappointment of a receiver is necessary forthe purpose of the prevention of such acts.

39. (1) The court may cancel the Cancellation ofappointment of a receiver— appointment.

(a) at the instance of the plaintiff; or

(b) where the appointment had been madewithout notice to the mortgagor, ifit is subsequently shown to thesatisfaction of the court that theamount claimed by the plaintiff tobe due on the mortgage, less suchamount If any as may have beenbrought into court by themortgagor, is not more than one-half of the current market value ofthe land ; or

(c) if the court considers such cancellationexpedient owing to any default ornegligence on the part of thereceiver, or if the court is satisfiedthat the amount of theremuneration allowed to thereceiver is excessive and that he isunwilling to accept as remunerationthe amount which the court, afterhearing the mortgagor, considers tobe reasonable ; or

{d) at the instance of the receiver, if he isunwilling to continue in hisappointment as such.

(2) Where the appointment of a receiver iscancelled under paragraph (c) or paragraph(d) of subsection .(1), the court may, if theplaintiff so desires, make a newappointment of a receiver.

40. (1) Every order for the appointment Orderforof a receiver shall— appointment,

&.C.

(a) provide for the committal of the landto the custody and management ofthe receiver ;

(b) fix the amount of the remuneration tobe payable to the receiver, whetherspecifically or by reference to aspecified percentage of the amountof the rents and profits derivedfrom the land.

(2) The court may, if it considers itnecessary so to do, require the receiver togive such security as the court may consideradequate.

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Rights andpowers ofreceiver.

Duties andliabilities ofreceiver.

Payment ofsubsistenceallowance tomortgagor.

(3) Where the receiver is obstructed byany person in taking custody of the land,the court may, after considering suchrepresentations as may be made by suchperson, by order direct the removal of suchperson from the land.

- -41. (I) The person appointed under thisPart to be the receiver of any land shallhave and may exercise all the rights andpowers of the owner of the land for themanagement, protection, and preservationof the land and the collection of the rentsand profits thereof.

(2) The court may on application made bythe receiver or any party to the action—

(a) give such directions as it may considernecessary relating to the exercise ofthe rights and powers conferred bysubsection (1) ;

(b) by order authorize the receiver toinstitute or defend any action orproceedings in respect of any matteraffecting the land or theadministration or managementthereof.

42. Every receiver appointed under thepreceding provisions of this Part shall—-

to) render accounts to the court in suchform and at such times as the courtmay direct in that behalf ;

(b) make payment into court to the creditof the action, from time to time asthe court may direct, of the nettrents and profits of the land ;

(c) be responsible for any damage to theland, or for any loss of income,incurred by his gross negligence orby any intentional act of omissionon his part.

43. (1) Where it is shown to thesatisfaction of the court—

(a) that the income, if any, derived by themortgagor from sources other thanthe land is insufficient to enable themortgagor to meet the expensesnecessary for the subsistence ofhimself and his dependants, and

(b) that any balance remains out of thenett rents and profits of the land'after payment therefrom of theremuneration of the receiver,

the court may, after considering how far it isnecessary to keep in court the amount of therents and profits or any part thereof for thepurpose of securing that the land and theamount so kept will provide adequatesecurity for the payment of the amountclaimed by the plaintiff to be due to him,direct the payment to the mortgagor, out ofthe balance so remaining, of a monthlyallowance sufficient to meet such expensesof the mortgagor.

(2) Any directions given under subsection(1) may be varied or revoked by the courton application made by the plaintiff or themortgagor.

44. (1) AH moneys paid into court bythe receiver shall, unless the court otherwisedirects, be kept in court to the credit of theaction until the final disposal thereof :

Provided that payment may from time totime be made, out of such moneys, of theremuneration due to the receiver, or of suchamounts as may be directed under section43 to be paid to the mortgagor, or of suchamounts as may from time to time beordered by the court to be paid to thereceiver for the purposes of the managementof the land.

(2) The amount of the moneys in courtshall be applied in satisfaction of the sums ifany for which decree is entered in theaction.

(3) No seizure of such moneys inexecution of any order or decree in anyother action shall affect the operation ofsubsection (2) of this section.

45. No appeal shall lie against therefusal of the court to make any order forthe appointment of a receiver or against anyorder appointing a receiver or against anyother order or directions made or givenunder any of the provisions of sections 37 to43, other than an . order made undersubsection (3) of section 40.

SALE UNDER HYPOTHECARY DECREE

46. No decree in any hypothecary actionupon any mortgage of land which is createdafter the appointed date and no decree inany action for the recovery of any moneysdue upon any such mortgage, shall orderany property whatsoever, other than themortgaged land, to be sold for the recovery

Nett profits tobe kept incourt.

Restriction ofappeals againstorders undersections 37 to43.

Property liableto sale inexecution ofdecree.

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Operation ofsection 46.

Order for salein decree, &c.

of any moneys found to be due under themortgage, and no property whatsoever,other than the mortgaged land, shall be soldor be liable to be sold in execution of anysuch decree.

In this section "action for the recovery of-moneys due upon a mortgage" includes anyaction for the recovery of any debt securedby a mortgage whether the cause of actionsued upon arises by reason of the mortgageor otherwise.

47. The provisions of section 46 shallhave effect notwithstanding anything in anyother law or in any mortgage bond or otherinstrument.

48. (1) Where in a hypothecary actionthe court finds that the mortgage ought tobe enforced, the decree shall, in relation tothe mortgaged land, order that the landshall be sold in default of payment, within aperiod of two months from the date of thedecree, of the moneys due under themortgage :

Provided, however, that the court may, inits discretion and subject to such conditionsincluding the making of specified paymentson specified dates as it thinks fit, onapplication made in that behalf before theentry of the decree and after considerationof the circumstances of both the mortgagorand mortgagee, fix, in lieu of the aforesaidperiod of two months, such longer period asthe court may consider reasonable.

(2) In issuing the commission for the saleof the mortgaged land the court shall specifythe amount due under the decree at the timeof the issue of the commission and theamount so specified shall be mentioned inthe advertisement of the sale.

Where the sale is stayed or adjourned anda subsequent advertisement is necessary, thecourt shall on applicaton made by theplaintiff and upon his certifying that anypart payment has been made of the amountdue under the decree, give notice to theFiscal or auctioneer of the amount dueunder the decree at the time of suchapplication, and in such event the amountso notified shall be mentioned in thesubsequent advertisement.

49. Subject as hereinafter provided,where the plaintiff desires that the land shallbe seized prior to the sale, the court mayorder that the land shall be seized by theFiscal under section 237 of the CivilProcedure Code and where the land is soseized the provisions of the Civil ProcedureCode relating to the seizure, sale,confirmation of the sale, and conveyanceand delivery of immovable property sold inexecution of a decree for the payment ofmoney shall apply accordingly and theprovisions of sections 53 to 56 of this Actshall not apply :

Provided that no such order shall bemade in any case where a declaration hasbeen made under section 36.

50. (I) Where no order is made undersection 49 for the seizure of the land, thecourt may in the decree or subsequently givedirections—

(a) specifying the person by whom theland shall be sold ;

(b) specifying the manner and time of theadvertisement of the sale and theperson by whom the conveyance tothe purchaser is to be executed ;

(c) prescribing the conditions of the sale ;

(d) in relation to such other matters forwhich the court considers directionsto be necessary.

(2) Where the plaintiff so desires the courtmay direct the land to be sold by the Fiscal,and in any such case the sale may beconducted on behalf of the Fiscal by theDeputy Fiscal or by any other personauthorized in writing by the Fiscal.

(3) Any directions given under thepreceding provisions of this section may bealtered by subsequent directions of thecourt.

(4) Where no order is made under section49 for the seizure of the land, the followingprovisions shall apply in relation to the

.sale ;—

'(a) The person conducting the sale shallput up the land for sale first at thecurrent market value of the land asappraised by him, or if theappraised value is fixed by the courtunder section 51 (3) at such

Specialprovision forseizure andsale,

Directions andotherprovisions asto sale.

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appraised value, and if there be nobidders then at the amountmentioned as required by section 48in the advertisement as the amountdue under the decree and in the eventof there being no bidders at such salealso, then immediately thereafter theland shall be put up for sale to thehighest bidder :

Provided that where an order hasbeen made under section 52 (1), theland shall not be sold at the first saleif the highest bid is less than theappraised value as fixed undersection 51 (3) ;

(b) If the judgment debtor or any otherperson on his behalf, at any timebefore the hour fixed for the sale,pays to the officer conducting thesale the full amount mentioned asrequired by section 48 in theadvertisement as the amount dueunder the decree and also the chargesincurred for advertisement andincidental to the sale of the land, thesale shall be stayed ;

(c) In every case where a sale has takenplace the person conducting the saleshall (i) not later than forty-eighthours after the time of the sale,deposit at the nearest kachcheri tothe credit of the action the amountrealized at the sale and forward thekachcheri receipt to the court bywhich the order to sell was issued,and (ii) in making the report requiredby section 282 of the Civil ProcedureCode, specify the manner in whichthe sale has been held, the name ofeach bidder and each bid made bysuch bidder ;

(d) Every person making a bid at the saleshall be bound by the conditions ofsale prescribed by the court under thepreceding provisions of this sectionwhether or not he signs an agreementto be bound thereby ;

(e) If the court finds that any sum is due inrespect of the sale by reason of theoperation of the conditions of salefrom any person bound by suchconditions, the court may makeorder directing the payment of suchsum by such person to the credit ofthe action, and such order may beenforced in the same manner as anorder or decree entered by the courtin an ordinary action.

51. (1) The plaintiff in a hypothecaryaction shall not be entitled to bid for orpurchase any mortgaged land sold inexecution of the decree unless leave to bid andpurchase is granted to him by the court.

(2) Every application by the plaintiff forleave to bid for and purchase any mortgagedland shall be accompanied by anappraisement from the person directed toconduct the sale setting out the currentmarket value of the land.

A copy of such appraisement shall be sentby the Registrar by registered post to theregistered attorney for the mortgagor orwhere no proxy has been filed shall be servedon the mortgagor in like manner as asummons and copies shall be sent byregistered post to every other party to theaction who has registered an address undersection 6 ; the mortgagor or any such partymay within a period of fourteen days from thedate of the service or posting of the copymake objection to the valuation set outtherein.

(3) The court shall, after consideration ofsuch objections, if any, as may be made undersubsection (2), by order fix the amount whichshall be taken, for the purposes of thesucceeding provisions of this section, to be theappraised value of the land.

(4) Leave to the plaintiff to bid for andpurchase any mortgaged land shall in everycase be subject to the condition that theplaintiff shall not bid for or purchase the landexcept at or above the amount of theappraised value of the land as fixed undersubsection (3) or the amount required bysection 48 to be mentioned in theadvertisement as the amount due under thedecree, whichever such amount is the less.

(5) Where two or more lands are subject tothe mortgage and one advertisement only ispublished in respect of the sale of such lands,it shall be the duty of the Fiscal or auctioneerto specify in the advertisement the order inwhich such lands will be sold, whether or notdirections prescribing the order of sale aregiven under section 52.

(6) Where application is made undersubsection (2) after the publication of theadvertisement of the sale, and it is necessaryin consequence of such application to alter thedate of the sale and publish a freshadvertisement of the sale, the court may orderthat the costs of the postponement and of thefresh advertisement, shall be borne by theplaintiff.

Leave toplaintiff to bidand purchase.

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Directions forsecond sale ifhighest bid isless thancurrent marketvalue.

Order of salewhere morethan one landis mortgaged.

Form ofconveyance topurchaser.

Delivery ofpossession, &c.

Removal of allpersonswhomsoeverwheredeclaration hasbeen madeunder section36.

(7) No appeal shall lie against any ordermade under this section.

52. (1) The court may in anyhypothecary action on application made bythe mortgagor and upon such terms as thecourt may think fit, direct that if the highestbid at the sale of any mortgaged land is lessthan the amount of the appraised value ofthe land as fixed under section 51 (3), theland shall not be sold at that sale, and that asecond sale of the land shall be held.

(2) Where more .than one land is subjectto the mortgage in suit in the action, thecourt may upon application made by themortgagor in that behalf, prescribe theorder in which the lands shall be sold andmay fix different dates for the sales ofdifferent lands.

53. The conveyance to the purchaser ofany mortgaged land sold in execution of ahypothecary decree shall, except in a case towhich section 49 applies, be in the form inthe First Schedule to this Act :

Provided, however, that such form may inany case be varied or modified by the courtin such manner as the court may considernecessary in the circumstances of the case.

54. In any case, other than a case inwhich a declaration has been made undersection 36 or in which an order is madeunder section 49, the court shall onapplication made by the purchaser make anorder for the delivery of possession to thepurchaser or any other person on his behalf,and an order so made shall have the likeeffect and be enforced in the same manneras an order made under section 287 of theCivil Procedure Code in the case of a saleby the Fiscal under that Code.

55. (1) In any case where a declarationhas been made under section 36, the courtshall on application made by the purchaserorder delivery to be made by putting thepurchaser or any person whom he mayappoint to receive delivery on his behalf inpossession of the land, and if need be, byremoving therefrom all persons whomsoeverwho may refuse to vacate the same.

(2) Where an order is made undersubsection (1), and the Fiscal reports to thecourt that he was unable to put the purchaseror any other person on his behalf inpossession of the land, the court shall directthe Fiscal to post in conspicuous places on theland a notice in the form set out in the FirstSchedule to this Act and to report to thecourt within seven days of the posting of suchnotice—

(a) whether or not the purchaser or suchother person was put in possession ofthe land ; and '

(b) whether he was obstructed inattempting to put the purchaser orsuch person in possession, and if so,the manner of such obstruction andthe person or persons by whom suchobstruction was caused.

(3) Where the court is satisfied upon thereport of the Fiscal that any personwhosoever refused to yield up possession atany time after the date of the posting of thenotice referred to in subsection (2) orobstructed or resisted the Fiscal at any timeafter that date, the court may commit theperson so refusing to yield up possession orcausing such obstruction or resistance to jailfor a term which may extend to thirty days,and direct the purchaser to be put intopossession of the land.

(4) Where possession of the land isdelivered to the purchaser and he is at anytime within two months thereafter hindered orobstructed by any person in maintainingeffective possession of the land, the court maycommit the person causing such hindrance orobstruction to jail for a term which mayextend to thirty days :

Provided, however, that nothing in thepreceding provisions of this subsection shallaffect or prejudice the right of the purchaserupon any such hindrance or obstruction beingcaused (whether within or after the period oftwo months aforesaid) to any remedy whichmay be claimed in that behalf under anywritten or other law.

9 (5) Nothing in sections 323 to 330 of theCivil Procedure Code shall apply in any casewhere an order for the delivery of possessionto the purchaser or any other person on hisbehalf is made under this section.

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Fiscal toprepare plan ofthe land ofwhichpossession isdelivered.

Claims tobalanceproceeds ofsale.

Rights ofseizing creditorto participatein balanceproceeds ofsale.

56. Where delivery of possession of amortgaged land has been made to thepurchaser under section 54 or section 55, theFiscal shall upon a request made in thatbehalf by the purchaser and the payment bythe purchaser of the necessary expenses,cause a plan to be prepared of the land ofwhich possession was delivered. The plan soprepared shall after being endorsed by theFiscal with a certificate to the effect that it isa plan of the land of which possession wasdelivered be furnished to the purchaser.

57. Where any land is sold in executionof a hypothecary decree in respect thereof,any person who claims any interest in thebalance of the proceeds of sale remainingafter satisfaction of the moneys due underthe mortgage in suit in the action shall(whether or not he is a party to the action ora person entitled to a notice thereof) beentitled to establish such claim, and wheresuch claim is established to participate insuch balance proceeds.

58. (1) Where any land is sold inexecution of a hypothecary decree in respectthereof—

(a) any judgment-creditor claiming undera notice of seizure of the land whichhad been duly registered underthe Registration of DocumentsOrdinance before the registration ofthe lis pendens of the hypothecaryaction shall, whether or not he hasregistered an address under section6 of this Act, be entitled to make aclaim under section 57 and toparticipate in the proceeds of saleremaining after satisfaction of themoneys due on the mortgage in suitin the hypothecary action ;

(b) no person claiming under any seizureof the land effected or registeredafter the date of the registration ofthe lis pendens of the hypothecaryaction shall, by reason of suchseizure, be entitled to participate insuch balance proceeds, but nothing

: in this paragraph shall prejudice theright of such person after the sale ofthe land to seize the right, title andinterest of the mortgagor in suchbalance proceeds.

Decreeabsolute indefault ofappearance.

(2) The rights of any person claimingunder a notice of seizure to participate inthe balance proceeds as provided inparagraph (a) of subsection (1), shall, asbetween himself and any other personclaiming whether under a notice of seizureor any other instrument, have priorityaccording to the time of registration :

Provided, however, that where two ormore notices of seizure of any land areregistered by different persons and no otherperson has any interest in the land by virtueof any other instrument registered betweenthe dates of the registration of such noticesof seizure, such different persons shall beentitled to claim a rateable distribution ofthe balance proceeds of sale remainingavailable for distribution.

MISCELLANEOUS

59.* Where a hypothecary action is heardex parte under sections 84 and 85 of theCivil Procedure Code the decree enteredthereunder shall not be set aside under theprovisions of section 86 of that Code, andthe judgment entered thereunder shall notbe deemed to be a judgment entered upondefault for the purpose of section 88 of thatCode.

60. (1) A mortgagee's costs recoverable Costs.in a hypothecary action include all costs,charges and expenses properly incurred byhim in relation to the action whether beforeor after the institution of the hypothecaryaction notwithstanding that they may havebeen incurred after the entry of decree in theaction.

(2) In any case where notice of ahypothecary action is not issued undersubsection (1) of section 9 to a personentitled to such notice and such person isthereafter added as a party whether inpursuance of a notice under subsection (2)of that section or under section 13 or suchperson intervenes in the action under section18, the court shall have the power to makesuch orders as to costs, whether as againstthe plaintiff or otherwise, and to revise anyorders previously made in the proceedings,as the court may think fit in thecircumstances of the case.

* This section has been recast as references to "decree nisi" and "decree absolute" in sections 84 and 85 of theCivil Procedure Code have been omitted by a 1977 amendment of that Code.

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Application ofChapter XXIIof the CivilProcedureCode.

61. (1) Where the mortgaged land isdirected to be sold by any person other thanthe Fiscal, or where the mortgaged land isdirected to be sold by the Fiscal withoutbeing previously seized as provided insection 49— .

(a) sections 271, 273, 282, 283, 289 and291 to 295 of the Civil ProcedureCode shall be applicable ;

(b) section 297 of that Code shall beapplicable if the property is sold bythe Fiscal;

(c) sections 338 to 340, 342, 344, 345, 346,349 and 350 of that Code shall beapplicable ;

(d) section 343 of that Code shall beapplicable, subject to themodification that the court shallnot under that section stayexecution proceedings for thepurpose only of allowing time forpayment by the judgment-debtor,unless he satisfies the court thatthere is reason to believe that theamount of the decree may be raisedby mortgage, lease or private sale ofthe mortgaged land or of any otherimmovable property of the debtor,and to the further modification thatthe time allowed for the purposeaforesaid shall not be longer thansix months ;

(e) sections 288 and 323 to 330 of thatCode shall be applicable in everycase where an order is made undersection 54 of this Act for thedelivery of possession of themortgaged land to the purchaser atthe sale ;

(f) save as hereinbefore provided, nothingin Chapter XXII of the CivilProcedure Code shall be applicable.

(2) For the purpose of the application ofthe provisions of the Civil Procedure Codewhere the land is sold by a person otherthan the Fiscal, any reference in thoseprovisions to the Fiscal shall be deemed tobe a reference to the person conducting thesale.

(3) Nothing in sections 298 to 319 of theCivil Procedure Code shall apply in anyhypothecary action or any action to enforcepayment of the moneys due upon amortgage of land.

(4) Where the mortgaged land is sold bythe Fiscal after being seized as provided insection 49, and an order for the delivery ofpossession is made under section 287 of theCivil Procedure Code, the provisions ofsections 323 to 330 of that Code shall beapplicable.

62. Save as otherwise hereinbeforeprovided, the provisions of this Part shallapply to mortgages created before theappointed date :

Provided that nothing in those provisionsshall apply to any action instituted beforethe appointed date, and the provisionsof the M o r t g a g e O r d i n a n c e sha l l ,notwithstanding the repeal thereof, continueto apply in relation to any action institutedbefore that date.

PART III

CONVENTIONAL GENERAL MORTGAGE-FLOATING AND CONCURRENT

MORTGAGE—POWER OF ATTORNEY ToCONFESS JUDGMENT

63. No conventional general mortgage,executed after the 14th day of January,187.1, shall be valid and effectual, so asthereby to give the mortgagee any lien,charge, claim, or priority over or in respectof any property movable or immovable.

64. (1) In any of the following cases,that is to say :—

(a) where a mortgage is given to securefuture advances (whether with orwithout any previous advances orother liability) ;

(b) where a mortgage is given to securethe floating balance from time totime due upon any account;

(c) Where a mortgage is given to secureany contingent liability,

such mortgage shall, subject to theprovisions of subsections (2) and (3), beeffective to the full extent of the chargeintended to be created thereby as againstany person claiming under any subsequentmortgage or transfer, notwithstanding thatno money may have been actually due at thedate of such subsequent mortgage ortransfer in respect of the liability intended to

Application ofthis Part.

Generalmortgagesabolished.

Effect ofmortgages tosecure futureliability, &c.

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MORTGAGE [Cap. 98

be secured, and irrespective of the actualamount so due on such date.

(2) Where any property which is subjectto a mortgage given for any purposementioned in paragraph (a) or paragraph(b) or paragraph (c) of subsection (1) isseized in execution of a decree in favour ofany person other than the mortgagee, theseizing creditor may make application to thecourt by which the decree was entered forthe issue of a notice of such seizure on themortgagee ; and where such notice is issued,then, notwithstanding anything insubsection (1), the mortgage shall as againsta person purchasing such property at a saleunder the seizure or any other personclaiming under him, be effective only to theextent of the moneys actually due under themortgage at the date of the receipt by themortgagee of the notice issued by the court,under the preceding provisions of thissubsection.

(3) The preceding provisions of thissection shall apply to the mortgage of anyproperty movable or immovable :

Provided, however, that where amortgage of movable property is given forany purpose referred to in paragraph (a) orparagraph (b) or paragraph (c) of subsection(1), the preceding provisions of this sectionshall affect only the extent to which theproperty is subject to the mortgage, and themovable property shall not, by reason of theoperation of those provisions, be deemed orconstrued to continue to be subject to themortgage to any extent whatsoever asagainst any person claiming under asubsequent mortgage or transfer, unless—

(a) such property continues, by virtue ofany law other than this Act, to besubject to the mortgage to theextent of the moneys actually duethereunder at the date of thesubsequent transfer or mortgage ;or

(b) where no moneys are actually due atthat date, unless such propertywould by virtue of such other lawhave continued to be subject to themortgage if moneys had beenactually due thereunder at thatdate.

(4) Nothing in subsection (2) shall applyin the case of any mortgage given for thepurpose of guaranteeing the fidelity of aperson employed as the servant or agent ofanother person or of securing the duecustody and payment of moneys which maycome into the hands of any person in hiscapacity as such servant or agent.

(5) In this section "transfer" includes anyinstrument creating any interest in themortgaged property -

65. (1) Where a mortgage bond isexecuted in favour of two or more persons(each of whom is hereinafter referred to as a"mortgagee") in consideration of sums dueor to be due to each of such persons by themortgagor,

(a) any such mortgagee to whom anymoneys secured by the mortgageare due and payable, may institutea hypothecary action for theenforcement of the mortgage, andin such action join as a defendantevery such mortgagee who is not aplaintiff in the action ;

(b) any such mortgagee, whether or nothe is a plaintiff in the action, shallbe entitled to prove before decreethe amount of the moneys due tohim under the mortgage, and thedecree shall order payment ofseparate amounts to eachmortgagee who has so proved theamount due to him ;

(c) the mortgaged property shall be liableto be sold under the decree onapplication made by any of themortgagees to whom payment isordered by the decreenotwithstanding that the amountsdue to all the mortgagees have notbeen proved before decree, and thesale of the mortgaged property inexecution of the hypothecary decreeshall extinguish the rights inrelation to the property of everysuch mortgagee, whether he isjoined as a plaintiff or as adefendant;

(d) the court shall make such orders inrelation to the distribution of theproceeds of the sale or the retention

Action byconcurrentmortgagee.

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thereof in court, as may be necessaryhaving regard to the rights of theparties to payment out of suchproceeds or to any other interests ofthe parties in such proceeds ; and anymortgagee who has not proved hisclaim before decree may prove suchclaim after decree :

Provided, however, that ifpayment out of the proceeds of thesale is not made to any suchmortgagee by reason that a claim ofany other such mortgagee in suchproceeds has not been proved, and ifsuch other claim remains unprovedfor a period of six months after thesale, the court shall order payment tobe made out of such proceeds to suchmortgagees whose claims have beenproved whether before or afterdecree.

(2) In any action upon any mortgage bondreferred to in subsection (1) no leave to bidfor and purchase any mortgaged land shall begranted to any mortgagee under section 51except upon the condition that he shall notbid for or purchase the land except at orabove the total amount due under the decreeto all the mortgagees to whom payment isordered to be made thereby, or the appraised-value of the land as fixed under subsection (3)of that section, whichever is less.

(3) Where in any action upon any mortgagebond referred to in subsection (1), the courthas made an adjudication as to the amountdue under the mortgage to every mortgagee,then any such mortgagee shall, at the sale ofthe mortgaged land—

(a) if the full amount ordered in the decreeto be paid to all the mortgagees isgreater than the appraised value ofthe land, be given credit • in anamount which bears to the appraisedvalue the same proportion as theamount ordered in the decree to bepaid to him bears to the full amountso ordered to be paid to all themortgagees ; or

(b) if the appraised value is the same as orgreater than the full amount so

ordered to be paid, be given credit upto the amount ordered in the decreeto be paid to him.

(4) Where in any action upon a mortgagebond referred to in subsection (1) the courthas made an adjudication as to the amountdue under the mortgage to one or some only,but not all, of the mortgagees, no mortgageeshall at the sale of the mortgaged land begiven any credit notwithstanding that anyamount may be ordered in the decree to bepaid to him.

(5) The preceding provisions of this sectionshall apply in the case of every bond referredto in subsection (1) notwithstanding anythingin the bond contained :

Provided that those provisions shall notapply where the bond contains provisionexpressly referring to this section andexcluding its operation.

66. (I) In the case of any mortgagecreated after the appointed date, no warrantor power of attorney shall be given to anyperson to confess judgment in any action forthe enforcement of the mortgage, and nowarrant or power so given shall be of anyforce or effect in law :

Provided that nothing in the precedingprovisions of this section shall apply in anycase where a general power of attorneyreferred to in section 25 of the CivilProcedure Code has been granted by anymortgagor.

(2) Where a warrant or power of attorneyto confess judgment in any action for theenforcement of a mortgage has, at any timebefore the appointed date, been given to aproctor, no judgment or decree in such action,whether entered before or after such date, andno sale in execution of such decree, shall be orbe held to be invalid on the ground that—

(a) the warrant or power, being executed inthe form No. 12* in the FirstSchedule to the Civil ProcedureCode, did not authorize the proctorto consent to the entry of judgmentor decree for the sale of any propertyof the mortgagor ; or

•

(b) the warrant or power was not executedin the aforesaid form No. 12* in thatit contained provision authorizing

Warrant ofattorney toconfessjudgment inmortgageaction.

* Form No. 12 is omitted from this Edition.— See Civil Procedure Code.

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MORTGAGE [Cap.98

Production tocourt of titledeeds ofmortgagedland.

No security forcosts in actionson mortgage.

Creation ofmortgage bydeposit ofdeeds andprescribedinstrument.

Execution andattestation ofinstrument.

or purporting to authorize theproctor to consent to the entry ofjudgment or decree for the sale ofany property of the mortgagor ; or

(c) the warrant or power authorized theproctor to consent to the entry ofjudgment or decree for a specifiedsum and not for the sum due andpayable under the mortgage.

67. Where the mortgagee of any land isin possession of the title deeds relating tothe mortgaged land, the court -havingjurisdiction to entertain an action upon themortgage may, whether or not such action isinstituted, if it is satisfied on applicationmade by the mortgagor by petition andaffidavit that the mortgagor is likely to beable to effect a sale, mortgage or lease of theland to any other person, make orderdirecting the mortgagee to produce suchtitle deeds and to keep them in the custodyof the court during such period as may bespecified in the order, for the purpose ofenabling them to be inspected and examinedby such person.

68. Nothing in Chapter XXVIII of theCivil Procedure Code shall apply in anyhypothecary action or in any action toenforce payment of the moneys due uponany mortgage.

PART IV

SPECIAL MORTGAGE OF LANDACCOMPANIED BY DEPOSIT OF TITLE

DEEDS

69. The owner of any land may create amortgage of such land in favour of anyapproved credit agency by—

(a) the execution of an instrument in theform set out in the Second Scheduleto this Act ; and

(b) the deposit with such agency of thetitle deeds of such land.

70. (1) The instrument referred to insection 69 may be signed in the presence of,and the execution of such instrument maybe attested by, the manager or secretary orany director or other person holding anyprescribed office in the agency and at least

one other witness ; and where suchinstrument is so signed and attested, nothingin section 2 of the Prevention of FraudsOrdinance shall apply thereto.

(2) Every instrument referred to in section69 shall be executed in duplicate.

(3) Every approved credit agency—

(a) shall cause to be numbered withconsecutive integral numbers theinstruments executed in its favourunder section 69 according to theorder in which they are executed ;

(b) shall, before the fifteenth day of eachmonth, deliver or transmit to theRegistrar of Lands of the district inwhich it carries on business theduplicates of all such instrumentsexecuted in its favour during thepreceding month together with a listof the instruments ;

(c) shall deliver or transmit to theRegistrar of Lands of the district inwhich it carries on business, so as toreach the Registrar on or beforeWednesday in each week, a list ofsuch instruments executed in itsfavour during the week ending theprevious Saturday ;

(d) if any such instrument affects a landsituated in any district other thanthat in which the agency carries onbusiness, shall, on or before thefifteenth day of the monthfollowing that in which the samewas executed, besides transmittingthe duplicates in manner aforesaid,deliver or transmit a copy of theinstrument to the Registrar of thedistrict in which such land issituated, together with a list of allsuch instruments as relate to landsin such last-mentioned district; and

(e) if any such instrument is executed byan attorney, shall forward a copy ofthe power of attorney to theRegistrar of Lands, together withthe duplicate of the instrument.

(4) An instrument referred to in section 69may be registered under the Registration ofDocuments Ordinance as an instrumentaffecting land.

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Specialprovisions asto payment ofstamp duty.

(5) The provisions of section 23 of theRegistration of Documents Ordinance shallapply in relation to any instrument referredto in section 69 in any case where movableproperty is also affected thereby.

71. (1) In the case of an instrumentreferred to in section 69, an amount equal toone-fifth of the duty chargeable underSchedule A* to the Stamp Ordinance in thecase of a bond or mortgage of a like nature(which duty so chargeable is hereinafterreferred to as the "statutory stamp duty")may be paid at the time of execution, andwhere such amount is paid, the instrumentshall be deemed to be duly stamped for thepurposes of that Ordinance if proceedingsfor the recovery of the moneys secured bythe instrument are instituted, or theinstrument is discharged, during the periodof six months commencing on the date ofthe execution thereof.

(2) In any case where one-fifth of thestatutory stamp duty is paid at the time ofthe execution of any instrument referred toin section 69, the following provisions shallhave effect :—

(a) A further amount equal to one-fifth ofthe statutory stamp duty may bepaid to the Commissioner-General ofInland Revenue before the expiry ofthe period of six months referred toin subsection (1) or within fourteendays thereafter, and upon suchpayment being certified by theCommissioner-General of InlandRevenue as hereinafter provided,the instrument shall be deemed tobe duly stamped for the purposes ofthe Stamp Ordinance if proceedingsfor the recovery of the moneyssecured by the instrument areinstituted, or the instrument isdischarged, during the period of sixmonths immediately succeeding theperiod referred to in subsection (1) ;

(b) A further amount equal to two-fifthsof the statutory stamp duty may bepaid before the expiry of thesucceeding period of six monthsreferred to in paragraph (a) of thissubsection or within fourteen daysthereafter, and upon such payment

being certified by theCommissioner-General of InlandRevenue as hereinafter provided,the instrument shall be deemed tobe duly stamped for the purposes ofthe Stamp Ordinance if proceedingsfor the recovery of the moneyssecured by the instrument areinstituted or the instrument isdischarged, during the period ofone year immediately succeedingthe said period of six months ;

(c) Where proceedings for the recovery ofthe moneys secured by theinstrument are not insti tuted, or theinstrument is not discharged beforethe expiry of a period of two yearsfrom the date of the executionthereof, the instrument shall bedeemed for the purposes of theStamp Ordinance to be aninstrument which is not dulystamped unless a further amountequal to one-fifth of the statutorystamp duty is paid before the expiryof the aforesaid period of two yearsor within fourteen days thereafter,and such payment is certified by theCommissioner-General of InlandRevenue as hereinafter provided ;and where such payment is so madeand certified the instrument shallfor alt purposes be deemed to beduly stamped in like manner asthough the statutory stamp dutyhad been paid at the time of theexecution of the instrument ;

(d) Where, by reason of the fact thatpayments of duty have not beenmade as provided in the precedingparagraphs, the instrument isdeemed for the purposes of theStamp Ordinance to be not dulystamped, then, for the purposes of

. the application of the proviso tosection 41 of that Ordinance, theamount of the duty chargeable onsuch instrument under that

Ordinance shall be deemed to be anamount equal to six-fifths of thestatutory stamp duty and theamount of the deficiency to berecovered under that proviso shallbe determined accordingly.

* See List of Enactments omitted from the Revised Edition.

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MORTGAGE [Cap.98

Right ofmorlgagee tomake andrecoverpayments ofstamp duty.

Right ofapprovedagency torealise sharesmortgaged inspecifiedcircumstances.

(3) Where the Commissioner-General ofInland Revenue, or any other officer of hisdepartment duly authorized by him in thatbehalf, is satisfied, upon presentation to himof an instrument, that a payment has beenduly made in accordance with any provisionof paragraphs (a) to (c) of subsection (2),the Commissioner-General or such officer shallby means of an endorsement under his handon such ins t rument certify that suchpayment has been duly made.

No payment shall be certified by theCommissioner-General or any officer underthe preceding provisions of this subsectionunless the instrument is presented to himwithin fourteen days of the date of suchpayment ;

Provided, however, that theCommissioner-General or such officer mayin his discretion certify such paymentnotwithstanding any delay in thepresentation of the instrument, if he issatisfied that the delay was due toinadvertence.

(4) All payments of stamp duty undersubsection (2) of this section shall be madeby sending to the Commissioner-General theamount of the further duty from time totime to be paid under that subsection,

72. ( 1 ) The payments for which -provision is made by section 71 may bemade by the approved credit agency withoutprior reference to the person executing theinstrument.

(2) The amount of every payment made asprovided by section 71 may be added to theamount the payment of which is secured bythe instrument, and if so added, shall berecoverable accordingly.

PART V

MORTGAGE OF MOVABLES : SPECIALPROVISIONS APPLICABLE WHERE

MORTGAGEE Is AN APPROVED CREDITAGENCY

73. (1) Where the holder of any shares—

(a) creates a mortgage of such shares infavour of an approved credit agencyby means of an instrument in theform set out in the Third Scheduleto this Act, and

(b) deposits with such agency thecertificate or certificates issued tohim in respect of such shares, and

(c) executes and delivers to such agencyan instrument of transfer of suchshares in favour of such agency orof any nominee of such agency, oran instrument of transfer in whichthe name of the transferee is notentered at the time of the execution(hereinafter referred to as a"transfer in blank"),

the provisions hereinafter set out shallapply, that is to say—

(i) if the shares are mortgaged as securityfor the payment of any moneysstated to be payable on demand,and the mortgagor fails to makepayment of the moneys due andpayable under the mortgage withinone month of the issue to him bythe agency of a notice of demand inaccordance with the provisions ofsection 74, or

(ii) if the shares are mortgaged as securityfor the payment of any moneysstated to be payable on a specifiedor ascertainable date, and themortgagor fails to make payment ofthe moneys due and payable underthe mortgage within one month ofthe issue to him by the agency, afterthat date, of a notice of demand inaccordance with the provisions ofsection 74,

it shall be lawful for the agency to sell, or asthe case may be to cause the nominee to sell,the shares, at their current market value,and where a transfer in blank had beenexecuted, to complete the sale by theinsertion in the transfer in blank of thename of the purchaser as the transferee ofthe shares.

(2) The right of the agency to sell anyshares under subsection (1) shall include theright to purchase the shares at the currentmarket value, or where the transfer hadbeen executed in favour of the agency toretain the shares, credit being in either eventgiven to the mortgagor to the extent of thecurrent market value.

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Cap.98] MORTGAGE

Address ofmortgagor andissue of noticeof demand.

Effect ofexercise ofright of sate,&c.

Proceeds ofsale orpurchase to beapplied insatisfaction ofdebt.

(3) The rights of the agency under thepreceding provisions of this section may beexercised in respect of all the shares whichare for the time being subject to themortgage under the instrument referred toin subsection ( I ) (a) or separately in respectof any shares so subject.

74. (1) Every instrument of mortgagereferred to in paragraph (a) of section 73 (1)shall contain the address to which notice ofdemand of payment may be sent to themortgagor by the agency :

Provided, however, that upon any changeof address the mortgagor may notify thenew address to the agency and such newaddress, if acknowledged in writing by theagency, shall, for the purposes of section 73,be the address to which a notice of demandof payment may be sent.

(2) Every such notice of demand shall besent by registered post in a letter to theaddress of the mortgagor as stated in theinstrument referred to in paragraph (a) ofsection 73 (1) or to such new address as mayfor the time being have been notified andacknowledged as provided in subsection (1)of this section.

75. ( I ) Upon the exercise under section73 of the right of sale or purchase of anyshares and the completion of a transfer inblank by the insertion of the name of thepurchaser as transferee of the shares, thetransfer as so completed shall have the likeeffect as though it had been executed by themortgagor at the time of completion.

(2) Where a transfer (other than in blank)of any shares has been executed by themortgagor as provided in section 73 infavour of an approved credit agency or anominee of such agency, the fact that thetransfer had been executed by way ofmortgage shall not affect the right of theagency or the nominee, during the pendencyof the mortgage, to apply to be registered asholder of the shares and to be so registered.

76. Upon the sale or purchase of anyshares in exercise of the right conferred bysection 73—

(a) the moneys realized upon such sale orcredited as provided in section 73(2) shall be applied by the agency in

satisfaction of the debt due andpayable under the mortgage, andthe mortgagor shall be entitled toreceive the balance, if any,remaining after such debt issatisfied ;

(b) if the moneys realized or creditedupon the sale or purchase of all theshares mortgaged by the instrumentare insufficient to satisfy such debt,the deficiency may be recoveredfrom the mortgagor in the ordinarycourse of law.

77. Where a mortgage of shares hasbeen created as provided in section 73, andthe mortgage is discharged by payment ofthe moneys due and payable thereunder, orby reason that the moneys realized upon asale or purchase of some only of the sharesso mortgaged are sufficient to satisfy thedebt, or otherwise—

(a) the mortgagor shall be entitled, in thecase of a transfer . in blank, toreceive from the agency thecertificate or certificates in respectof such shares or of the sharesremaining unsold, as the case maybe, together with the transfer inblank in respect thereof ;

(b) the mortgagor shall be entitled in thecase of a transfer otherwise than inblank, to receive from the agency orits nominee at the instance of theagency, a duly executed instrumentof retransfer of the share or of theshares remaining unsold, as the casemay be.

78. (1) Where any shares mortgaged asprovided in section 73 are sold or caused tobe sold, or arc purchased by the agency,otherwise than in the due exercise of theright conferred in that behalf by thatsection, the mortgagor shall be entitled torecover from the agency the amount of anyloss or damage suffered or incurred byreason of such sale or purchase :

Provided, however, that no such actionfor any loss or damage shall bemaintainable by the mortgagor on theground that notice of demand under section74 was not received by him, if it is provedthat such notice was sent by registered postin a letter addressed to the mortgagor at the

Rights ofmortgagor ondischarge ofmortgage

Right todamages, &c.,for wrongfulsale.

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MORTGAGE [Cap. 98

Savings forapplication ofcompany law,&c., as totransfers andregistration,

Meaning of" shares "

Rights ofapprovedagency tosurrendermortgaged lifepolicy inspecifiedcircumstances.

proper address referred to in the aforesaidsection 74, and that the right of sale orpurchase was exercised after one monthfrom the date of such posting.

79. The operation of any other writtenlaw or of any regulations or provisionswhich apply to the transfer of shares, or tothe registration of the transferee of anyshares as the holder thereof, or which conferany right to decline to effect suchregistration shall not in any way be affectedor modified by reason that a transfer of anysuch shares is effected in the exercise of theright conferred by section 73.

80. For the purpose of sections 73 to 79—

" shares " means any shares, debentures,stock or other securities in thefunds of the Government of SriLanka or in the capital of anycompany incorporated or registeredin Sri Lanka ;

" certificate " means any share certificateor any other document certifyingthat a person is the holder of anyshares as hereinbefore defined.

81. Where the holder of a policy of lifeinsurance—

(a) creates a mortgage of the policy" infavour of an approved credit agencyby means of an instrument in theform set out in the Third Scheduleto this Act, and

(b) assigns the policy to the agency byway of mortgage and deposits itwith such agency,

the following provisions shall have effect,that is to say—

(i) if the policy is mortgaged as securityfor the payment of any moneysstated to be payable on demand,and the mortgagor fails to makepayment of the moneys due andpayable under the mortgage withinsix months of the issue of notice ofdemand of payment in accordancewith the provisions of section 82, or

(ii) if the policy is mortgaged as securityfor the payment of any moneys

stated to be payable on anyspecified or ascertainable date, andthe mortgagor fails to makepayment of the moneys due andpayable under the mortgage withinsix months of the issue, after thatdate, of notice of demand ofpayment in accordance with theprovisions of section 82, or

(iii) if any premium due on the policyremains unpaid after one monthfrom the issue, in accordance withthe provisions of section 82, by theagency of a notice demandingpayment of such premium to bemade to the insurer,

such agency shall be entitled to surrenderthe policy to the insurer and to receivepayment of the surrender value of the policyor of such amount as would have beenpayable to the assured if the policy had beensurrendered by him.

In any case to which this section applies,the payment to the agency by the insurer ofthe surrender value of the policy or of suchother- amount of which the agency isdeclared by this section to be entitled toreceive payment shall be a discharge of theliability of the insurer upon the policy.

82. (1) Every instrument of mortgagereferred to in paragraph (a) of section 81shall contain the address to which notice ofdemand of payment may be sent to themortgagor by the agency :

Provided, however, that upon any changeof address the mortgagor may notify thenew address to the agency which shallthereupon acknowledge the new address inwriting ; and such new address, if soacknowledged, shall, for the purposes ofsection 81, be the address to which a noticeof demand of payment may be sent.

(2) Every such notice of demand shall besent by registered post in a letter to theaddress of the mortgagor as stated in theinstrument referred to in paragraph (a) ofsection 81 or to such new address as may forthe time being have been notified andacknowledged as provided in subsection (I)of this section.

Address ofmortgagor andissue of noticeof demand.

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Cap.98] MORTGAGE

Moneysreceived uponsurrender to beapplied insatisfaction ofdebt.

Right todamages, &c,for wrongfulsurrender.

Power ofapprovedcredit agencyto sellcorporealmovableswhich aresubject tomortgage.

83. Where any policy of insurance issurrendered in the exercise of the rightconferred by section 81—

(a) the moneys received by the agencyfrom the insurer shall be applied insatisfaction of the debt due andpayable under the mortgage ;

(b) the mortgagor shall be entitled topayment from the agency of thebalance, if any, remaining aftersatisfaction of such debt;

(c) if the moneys so received areinsufficient to satisfy such debt, theagency shall be entitled to recoverthe deficiency in the ordinarycourse of law.

84. If the policy is surrendered by theagency otherwise than in the due exercise ofthe right conferred by section 81, themortgagor shall be entitled to recover fromthe agency the amount of any loss ordamage suffered or incurred by him inconsequence of such surrender :

Provided, however, that no such actionfor any loss or damage shall bemaintainable by the mortgagor on theground that notice of demand under section82 was not received by him, if it is provedthat such notice was sent by registered postin a letter addressed to the mortgagor at theproper address referred to in the aforesaidsection 82, and that the right of surrenderwas exercised after the period of six monthsor the period of one month of the date ofsuch posting, whichever such period isapplicable.

85. (1) Where a mortgage of anycorporeal movables is created in favour ofan approved credit agency, it shall be lawfulfor the agency, subject to the provisions ofsubsections (2) and (3), to sell any of themovables subject to the mortgage whichmay for the time being be actually in thepossession and custody of the agency.

(2) The power conferred on the agency bysubsection (1) to sell any movables shall beexercised only if the instrument of mortgageor an agreement between the partiescontains provision referring to this sectionand empowering the agency to exercise thepower of sale conferred thereby, and if

either of the following conditions is fulfilled,that is to say—

(a) where the mortgage is created assecurity for the payment of anymoneys stated to be payable ondemand, if the mortgagor fails tomake payment of the moneys dueand payable under the mortgagewithin one month of the issue tohim by the agency of a notice ofdemand in accordance with theprovisions of section 86 ; or

(b) where the mortgage is created assecurity for the payment of anymoneys stated to be payable on aspecified or ascertainable date, ifthe mortgagor fails to makepayment of the moneys due andpayable under the mortgage withinone month of the issue to him bythe agency, after that date, of anotice of demand in accordancewith the provisions of section 86.

(3) Every sale in exercise of the powerconferred by subsection (1) shall be bypublic auction, and it shall be the duty ofthe agency to take such steps as arenecessary to ensure—

(a) that a notice containing a descriptionof the movables to be sold andspecifying the date fixed for thesale, is published in two issues of adaily newspaper circulating in SriLanka at least one week before thedate fixed for the sale, and

(b) that the sale takes place on the date sospecified, or if the sale is postponed,that a further notice containingthe particulars specified in sub-paragraph (a) is pub l i shed atleast one week before the date towhich the sale is postponed. .

86. (1) The power of sale conferred bysection 85 shall not be exercised unless the

instrument of mortgage contains an addressto. which notice of demand of payment maybe sent to the mortgagor by the agency ; orwhere there is no such instrument unless themortgagor has in writing signed by himfurnished an address as aforesaid to themortgagee :

Notice ofdemand ofpayment priorto exercise ofpower of sale.

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Provided, however, that upon any changeof address, the mortgagor may notify hisnew address to the agency, and such newaddress, if acknowledged in writing by theagency, shall for the purposes of section 85be the address to which a notice of demandof payment may be sent.

(2) Every such notice of demand ofpayment shall be sent by registered post in aletter to the address of the mortgagor asstated in the instrument of mortgage or thewriting referred to in subsection (1), or tosuch new address as may, for the time being,have been notified and acknowledged asprovided by that subsection.

Application of 87. Upon a sale of any movables in theproceeds of exercise of the right conferred by sectionsale- 85-

89. In sections 90 to 95 " book debt " Meaning ofmeans any debt which— " book debt

(a) is due or may become due to anyperson on account of any loanmade in the ordinary course of any

business carried on by that personas a money-lender, or on account ofgoods sold in the ordinary course ofany business carried on by thatperson as a seller of such goods, oron account of work or servicesperformed or rendered in theordinary course of any businesscarried on for profit by that person,and

(b) is shown in the books kept by suchperson in the ordinary course of thebusiness.

(a) the moneys realized upon such saleshall be applied by the agency insatisfaction of the debt due andpayable under the mortgage, andthe mortgagor shall be entitled toreceive the balance, if any,remaining after such debt issatisfied ;

(b) if the moneys realized upon the saleare insufficient to satisfy such debt,the deficiency may be recoveredfrom the mortgagor in the ordinarycourse of law.

88. Where any movables are caused tobe sold by the agency otherwise than in thedue exercise of the powers conferred in thatbehalf by section 85 or where the provisionsof subsection (3) of that section are notcomplied with in relation to the sale, themortgagor shall be entitled to recover fromthe agency the amount of any loss ordamage suffered or incurred by reason ofthe sale or of the non-compliance, as thecase may be ;

Provided, however, that no action for anyloss or damage shall be maintainable by themortgagor on the ground that notice ofdemand of payment was not received byhim, if it is proved that such notice was sentby registered post in a letter addressed tothe mortgagor at the proper address referredto in section 86, and that the power of salewas exercised after one month from the dateof such posting.

Damages forwrongful saleof mortgagedproperty.

90. (1) An assignment of any book debtshall, if such assignment is executed infavour of an approved credit agency and isexpressed to be by way of mortgage and isduly registered under the Registration ofDocuments Ordinance, confer on theagency, in addition to the right to enforcesuch mortgage by action in any competentcourt, the right to demand, accept andrecover payment of such debt from theperson owing such debt to the assignor :

Provided, however, that no righthereinbefore conferred on the agency shallbe exercisable—

(a) unless notice of the assignment isgiven by the agency, to the personowing such debt, in any mannerprovided by section 91, and thedebt is due and unpaid at the dateon which notice is so given ;

(b) • if the right to demand, accept orreceive such payment is, by theinstrument of the mortgage,declared to be conditional upon thehappening of any event or the non-fulfilment of any obligation by theassignor, unless such event hashappened or such obligation hasnot been fulfilled within the timespecified in that behalf in theinstrument, as the case may be.

Rights ofapprovedcredit agencyto which bookdebts areassigned byway ofmortgage.

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Manner ofgiving notice ofassignment toperson owingbook debt.

Application ofmoneysreceived inpayment ofmortgage debt.

Damages forwrongfulexercise ofpower torecover bookdebt.

(2) The provisions of subsection ( I ) shallapply in relation to a book debtnotwithstanding—

(a) that it may not be specially assigned ;or

(b) that it may not have been due, or thatthe consideration therefor may nothave passed, at the time of theexecution of the assignment.

91. (1) Notice of the assignment of abook debt may be given by the agency to aperson owing such debt in any manner setout hereunder, that is to say—

(a) by sending or presenting to the personowing such debt a notice addressedto such person and signed by theassignor to the effect that the debthas been assigned to the assignee ;or

(b) by sending or presenting to suchperson (i) a general notice signed bythe assignor to the effect that allbook debts which are due or maybecome due have been assigned tothe assignee, or (ii) a copy of suchnotice certified by a director,manager, partner or secretary of theagency.

(2) Any notice referred to in paragraph(a) or paragraph (b) of subsection (1) maybe signed by the assignor at the time of theexecution of the assignment or at any timethereafter, and may be sent or presented tothe person owing the debt at any time whitethe assignment is operative.

92. Where payment of a book debt ismade to the agency upon demand made inthat behalf of the person owing such debt,the amount of the payment shall be appliedin satisfaction of the moneys for the timebeing due and payable to the agency underthe mortgage, and the balance, if any,remaining out of such proceeds shall bepayable to the assignor.

93. Where any book debt is recoveredby the agency otherwise than in the dueexercise of the powers conferred by section90, the assignor shall be entitled to recoverfrom the agency the amount of any loss ordamage suffered or incurred by reason ofsuch recovery.

94. (1) Notwithstanding the execution ofany assignment referred to in section 90, butsubject as hereinafter provided, the assignorshall, unless and until notice of theassignment is given to the person owing thedebt, have the same right to recover suchdebt from such person whether by way ofaction or otherwise, and to appropriate tohis own use any moneys so recovered, asthough the assignment had not beenexecuted :

Provided, however, that the agency shallbe entitled, upon making application to anycourt in which an action for theenforcement of the assignment can properlybe instituted, by petition supported by anaffidavit declaring that moneys are due andpayable to him under the mortgage, toobtain ex parte an injunction restraining theassignor from recovering any such debt, andif need be an order authorizing the Fiscal—

(a) to enter the premises in which theassignor carries on his business,together with a person nominatedin that behalf by the assignee andapproved by the court;

(b) to take possession of any such bookskept or found therein as maycontain entries relating to the bookdebts which are subject to theassignment ; and

(c) to deliver such books to the assigneefor the purpose of enabling him torecover such debts from the personsby whom they are owing,

and where an injunction is so issued nothingin the preceding provisions of this sectionshall authorize or be deemed to authorizethe assignor to recover or sue for any debtin breach of such injunction.

(2) Where an injunction has been issuedunder subsection (1) or any order relating tothe books has been made under thatsubsection, the court may thereafter uponapplication made by the assignor and aftersuch inquiry as it may consider necessary,make such order in relation to theinjunction and to the books as the courtmay think fit.

95. Notwithstanding the execution ofany assignment referred to in section 90, theassignee shall not be entitled to demand orrecover payment of any book debt which is

Provision forrecovery ofbook debt byassignornotwithstan-dingassignment.

Protection fordebtor payingwithout noticeof assignment.

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Applicat ion torappointment ofreceiver whereentire stock intrade, &c., ismortgaged.

Refusal toappointreceiver.

subject to the assignment from the personowing such debt if such debt had been paidby such person to the assignor before noticeunder section 91 is received by him.

PART VI

MORTGAGE OF MOVABLES : GENERAL

APPOINTMENT OF RECEIVER

96. (1 ) Where a mortgage is created inrespect of the entirety of the goods whichare, or may at any future time be, in anyspecified premises, or of the goods whichconstitute or may at any future timeconstitute the entire stock in trade in anyspecified premises, and an action isinstituted by the mortgagee for theenforcement of the mortgage or the recoveryof the moneys due thereunder, themortgagee may, at or after the time of theinsti tution of the action, make applicationto the court by petition for the appointmentof a receiver of the mortgaged property.

(2) Such application shall be supported byaffidavit of the mortgagee stating the sumlent to the mortgagor, the sum, if any,repaid out of the loan, and the sums due tothe mortgagee by way of principal andinterest.

hereinafter provided, thethe appointment of aunless the mortgageebe dealt with ex parte by

(3) Subject asapplication forreceiver shall,otherwise desires,the court :

Provided, however, that where theapplication is made at any time after thefiling of an answer by the mortgagor, theapplication shall be dealt with after noticeto the mortgagor.

97. The court may refuse to make anorder for the appointment of a receiverunder section 96, if having regard to thevalue and nature of the business the stock intrade of which is the subject of themortgage, or the nature and value of thegoods, as the case may be, and to theamount which in the circumstances of the*case can reasonably be allowed as theremuneration of the receiver, the court is ofopinion that a suitable person is notavailable for such appointment.

the appointment of a receiver uponapplication duly made in that behalf in anycase to which section 96 applies.

98. (1) Every order for the appointment Directions inof a receiver in any case to which section 96 orderof

. . . . . appointment,applies shall— &c.

(a) provide for the committal of themortgaged property and if need be ,of the business carried on by themortgagor at the specified premisesto the custody and the managementof the receiver ;

(b) contain such directions as the courtmay in its discretion considernecessary authorizing the receiverto carry on the business of themortgagor at the premises, to sellall or any of the mortgagedproperty whether by public auctionor otherwise, and to exercise inrespect of the mortgaged propertysuch other rights as may bespecified in the order.

(2) The court may, by subsequent order,on application made by the receiver, themortgagor or the mortgagee—

(a) give any directions which might havebeen given in an order undersubsection (!), or vary anydirections previously given whetherunder that subsection or under thepreceding provisions of thissubsection ;

(b) authorize the receiver to institute ordefend any action or proceedings inrespect of any matter affectingthe mortgaged property or themanagement and administration ofthe business or the recovery of anymoneys due upon the sale of themortgaged property.

(3) The person appointed to be thereceiver of the mortgaged property shall, forthe purposes of the exercise of the rightsconferred on him by any directions givenunder the preceding provisions of thissection, have and be entitled to exercise allthe rights and powers of the owner of themortgaged property.

Save as hereinbefore expressly provided, (4) Where the receiver is obstructed inthe court shall not refuse to make order for t ak ing possession of the mortgaged

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Duties andliabilities ofreceiver.

Moneys to bekept in court.

Restriction ofappeals againstappointment,&c., of

property, the court may after inquiry makesuch orders as may be necessary for thepurpose of securing that delivery ofpossession is given to the receiver.

99. Every receiver appointed in any caseto which section 96 applies shall—

(o) render accounts to court in such form, and at such times as the court may•- direct in that behalf ;

(b) make payment to court to the credit ofthe action, from time to time as thecourt may direct, of the nettreceipts received by him in hiscapacity as such-;

(c) be responsible for any damage to themortgaged property, or for the lossof any income, incurred by his grossnegligence or by any intentional acton his part.

100. (1) All moneys paid into court bythe receiver under section 99, shall, unlessthe court otherwise directs, be kept in courtto the credit of the action until the finaldisposal of the action :

Provided that payment may from time totime be made out of such moneys of theremuneration due to the receiver.

(2) The amount of the moneys in court tothe credit of the action at the date of thedecree entered in the action shall be appliedin satisfaction of the amount stated in thedecree to be due upon the mortgage.

(3) No seizure of such moneys inexecution of any order or decree in anyother action (other than an action for theenforcement of a mortgage having priorityto the mortgage in suit in the action referredto in section 96) shall affect the operation ofsubsection (2) of this section.

101. No appeal shall lie against therefusal of the court to make any order forthe appointment of a receiver upon

receiver. application under section 96 or against anyorder or directions made or given under anyof the provisions of sections 97 to 100, otherthan the provisions of subsection (4) ofsection 98.

MORTGAGE OF MOTOR VEHICLES

102. (1) Where any motor vehicle is Specialmortgaged to any person— registration of

mortgage of(a) the instrument of mortgage shall , on motor vehicle.

presentation to the Registrar ofMotor Vehicles, be registered bymeans of an entry made in theRegister of Motor Vehicles keptunder the Motor Traffic Act ;

(b) the certificate of registration issuedunder that Act to the registeredowner of the motor vehicle may bepresented to the Registrar of MotorVehicles, who shall, on suchpresentation, make an endorsementon the certificate to the effect thatthe motor vehicle has beenmortgaged by the instrument ofmortgage.

(2) Application for registration undersubsection (1) shall be made by themortgagor and shall be accompanied by afee of one rupee.

(3) The Registrar shall, on applicationmade in that behalf by any person interestedand on payment of a fee of one rupee, issuea certified copy of any entry made undersubsection (1).

(4) In this section and in sections 103 and104, " motor vehicle " has the same meaningas in the Motor Traffic Act.

103. Where the instrument of mortgage Registeredof any motor vehicle has been registered mortgage of

motor vehicleunder section 102, the following provisions to subsistsha l l apply ;— no twi th-

standing sales,(a) Notwithstanding anything in any other &c"to thlrd

law, any sale or other disposition of partythe motor vehicle by or against themortgagor shall not, so long as themortgage continues in force,extinguish or be deemed toextinguish the mortgage of themotor vehicle, which shall remainsubject to the mortgage in thehands of the transferee or other

person in whose favour suchdisposition is effected ;

(b) Upon the issue by the Registrar underthe Motor Traffic Act of any newcertificate of registration to anyperson registered as the new owner

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Cancellation ofregistration ofmortgage ofmotor vehicle.

Rights ofmortgagee ofmovablesseized by othercreditor.

or of a duplicate certificate, the Registrarshall make an endorsement on the certificateto the effect that the motor vehicle has beenmortgaged by the instrument referred to inparagraph (a) of section 102 (1).

104. The registration by the Registrar ofan instrument of mortgage of a motorvehicle and any endorsement made upon thecertificate of registration under section 102or under section 103 to the effect that themotor vehicle is mortgaged, shall becancelled by the Registrar at the request ofthe mortgagee or upon an order being madeby a District Court directing suchcancellation upon application made to it inthat behalf by petition and affidavit.

RIGHTS OF MORTGAGEE OF MOVABLES INSPECIFIED CIRCUMSTANCES

105. (1) Where any movable propertywhatsoever which is subject to a mortgage isseized in execution of a decree in favour ofany person other than the mortgagee—

(a) the claim of the mortgagee shall not beinvestigated or dealt with asprovided in sections 241 to 247 ofthe Civil Procedure Code ;

(b) the mortgagee shall be entitled tomake application to be added as aparty to the proceedings in whichthe seizure was effected ;

(c) where the mortgagee is so addedbefore the sale under the seizure,and makes application in thatbehalf supported by affidavitdeclaring that the property issubject to a mortgage in his favour,the court shall order that the saleunder the seizure be stayed and thatthe property be sold by publicauction by an auctioneer to beappointed under subsection (2).

(2) Notice of an order under subsection(1) (c) shall be given to the parties to theaction, and the court shall after such inquiryas may be necessary appoint an auctioneerto conduct the sale and give directions as tothe time and manner of such sale.

(3) Where the seizure of the movableproperty is released after the making of anorder under subsection (1) (c) for the salethereof, the order under that subsectionshall be annulled and no furtherproceedings shall be taken thereon.

(4) Where the mortgagee is added undersubsection (1) as a party to the action andthe movable property is or has been sold,whether under the seizure or under an ordermade under subsection (1) (c), and it isproved to the satisfaction of the court (aftertrial of such relevant issues as may beframed) that the movable property was atthe date of such addition subject to themortgage and either (i) that any sum wasdue and payable under the mortgage at thatdate or on demand, or (ii) that any sum, theamount of which is ascertain able, is certainto fall due for payment under the mortgageupon the effluxion of time without thehappening of any future event or the futurefulfilment of any condition-—

(a) the court shall order that paymentshall be made to the mortgagee, outof the proceeds of the sale of theproperty, of the sum so proved ;

(b) the balance, if any, remaining out ofsuch proceeds shall be deemed to bethe proceeds of a sale held under•the seizure and be available fordistribution accordingly ;

(c) if the proceeds of the sale are", insufficient to satisfy the sum so

proyed, the payment of suchproceeds to the mortgagee shall notprejudice his right to recover anyamount outstanding by subsequentaction against the mortgagor, but inany such action every determinationof the court under the precedingprovisions of this subsection shallbe res adjudicata as between allpersons who were parties to theproceedings under this section.

106. (1) Where any movable propertywhatsoever is subject to a mortgage, and the

• mortgagor is adjudicated insolvent, themortgagee shall, upon making anapplication in that behalf by petition andaffidavit in the proceedings upon suchinsolvency, be entitled to obtain in thoseproceedings an order directing that the

Rights ofmortgagee ofmovables uponinsolvency ofmortgagor.

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property be sold by public auction by anauctioneer approved by the court inaccordance with such directions as may beissued by the court in that behalf.

The court may, if it thinks fit, beforeapproving the auctioneer or giving suchdirections, issue notice to the assignee of theestate of the insolvent.

(2) Where any property is sold uponapplication made under subsection (1), andit is proved to the satisfaction of the court,after trial of such relevant issues as may beframed, that the movable property was atthe date of the application subject to themortgage and either (i) that any sum wasdue and payable under the mortgage on thatdate or (ii) that any sum, the amount ofwhich is ascertainable, is certain to fall duefor payment under the mortgage upon theeffluxion of time without the happening ofany future event or the future fulfilment ofany condition—

(a) the court shall order that paymentshall be made to the mortgagee, outof the proceeds of sale of theproperty, of the sum so proved ;

(b) the balance, if any, remaining out ofsuch proceeds shall be kept in courtto the credit of the assignee ;

(c) if the proceeds of sale are insufficientto satisfy the sum so proved, thepayment of such proceeds to themortgagee shall not prejudice hisright to prove his claim in respect ofthe deficiency in the proceedingsupon insolvency.

Provided, however, that the court may, inits discretion and subject to such conditions,including the making of specified paymentson specified dates as it thinks fit, onapplication made in that behalf before theentry of the decree, fix such longer periodthan one month as the court may considerreasonable.

. 108. Subject as hereinafter provided the Manner of salemortgaged movables shall be seized and of mortgagedsold by the Fiscal under Chapter XXII ofthe Civil Procedure Code and all theprovisions of that Code relating to theseizure and sale and delivery to thepurchaser of movable property seized inexecution of a decree for the payment ofmoney shall apply accordingly :

Provided, however, that the court may, inits discretion if it thinks fit so to do, eitherin the decree or subsequently, direct that theproperty shall be sold by the Fiscal or by anauctioneer approved by the court, withoutbeing previously seized, and shall in suchcase in the decree or subsequently givedirections as to the conduct and conditionsof sale to the delivery of possession to thepurchaser at such sale, and as respects suchother matters as the court may findnecessary.

109. The provisions of sections 96 to 106 Application ofshall not apply to any mortgage created this part-before the appointed date.

PART VII

MISCELLANEOUS

RIGHTS OF LANDLORD IN RELATION TOGOODS UPON PREMISES OF WHICH RENT IS

IN ARREAR

Order for saleand directions.

DECREE AND SALE OF MOVABLES INHYPOTHECARY ACTION

107. Where in a hypothecary action inrespect of any movable property the courtfinds that the mortgage ought to beenforced, the decree shall, in relation to themortgaged movables, order that themovables shall be sold in default of paymentwithin such period as may be specified bythe court not exceeding one month from thedate of the decree, of the moneys due underthe mortgage :

110. (1) A plaintiff in an action for therecovery of the rent due from a tenant inrespect of any premises shall be entitled,upon satisfying the court that rent is duefrom the tenant and has been in arrear forone month after it has become due, to in arrearobtain from the court, ex parte aninjunction restraining the tenant fromremoving any goods from the premises orcausing or permitting the removal therefromof any goods, at any time while any rentremains due and unpaid, unless authorityhas been granted in that behalf undersubsection (3).

Injunction torestrainremoval ofgoods frompremises therent of which is

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Liability ofgoods toseizure underdecree for rent.

(2) Every application for an injunctionunder subsection (1) shall be made in themanner provided by section 662 of the CivilProcedure Code and all the provisions ofChapter XLV1II of that Code, other thansection 664, shall apply accordingly.

(3) When an injunction has been issuedunder subsection (1) in respect of the goodsupon any premises and is for the time beingin force, the court may upon applicationmade by petition supported by affidavit,and after notice to the plaintiff and suchinquiry as the court may deem necessary, byorder authorize the removal of any goodsfrom the premises if satisfied—

(a) that such goods are owned by anyperson other than the tenant or amember of his family ; or

(b) that such goods are not householdgoods and are owned by a memberof the family of the tenant.

(4) Where an injunction has been issuedunder subsection ( I ) in respect of the goodsupon any premises and is for the time beingin force, any person who knowing or havingreason to believe that it is unlawful for thetenant to remove or cause or permit theremoval of the goods from the premises,removes or assists in the removal from thepremises of any goods the removal of whichis not authorized by order under subsection(3), may be punished as for a contempt ofcourt in l ike manner as a tenant in case ofdisobedience.

111. (1) Subject to the proviso to section218 of the Civil Procedure Code, all goodsbelonging to a tenant and all householdgoods belonging to any member of hisfamily as hereinafter defined and for thetime being upon any premises shall be liableto be seized in execution of a decree in anaction against the tenant for rent due inrespect of the premises, and where suchgoods are so seized and sold, the payment ofthe amount of the decree shall be a firstcharge on the proceeds of sale in preferenceto any other charge or interest whatsoeverother than a charge in favour of the State orof any local authority.

(2) No action for damages shall tie byreason of the seizure, in execution of anydecree in an action for rent due in respect ofany premises, of any goods for the timebeing upon the premises, on the groundonly that they do not belong to the tenantor to a member of his family as hereinafterdefined.

112. A landlord of any premises shallnot, by reason of the non-payment of rentof such premises, have any right in respectof the goods which are or may have beenupon the premises, other than the rightconferred by section 110 and the right toseize goods which are declared by section1 1 1 to be liable to such seizure, or which,being goods belonging to the tenant, areliable to seizure under the Civil ProcedureCode. -

Rights oflandlord inrelation togoods onpremises.

113. In sections 110 to 112, " member of "Memberofthe family ", in relation to a tenant, means thefamily "the wife or any child of the tenant residing definedwith him, and includes any relative or otherperson dependent upon the tenant andresiding with him.

APPROVAL OF CREDIT AGENCIES, &C.

114. (1) Every application for adeclaration of any company, firm,institution or individual as an approvedcredit agency under paragraph (c) of section3 shall be made to the Director ofCommerce.

Every such application shall be referred toa board consisting of a chairman and twoother persons nominated by the Minister.

(2) The Director shall, if the board sorecommends upon any application, byNotification published in the Gazette,declare the applicant to be an approvedcredit agency for the purposes of this Act.

(3) The decision of the board upon anysuch application shall be final.

(4) Where any company, firm, institution or individual has been declared underparagraph (c) of section 3 to be an approvedcredit agency, the board of its own motionor on representations made by the Directorof Commerce may recommend to theDirector that the declaration made under

Approval ofcredit agencies,&c.

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that paragraph should be revoked witheffect from a date specified by the board.The decision of the board in any such caseshall be final, and upon suchrecommendation being made the Directorshall by notification in the Gazette revokethe declaration with effect from the date sospecified :

Provided, however, that the revocationshall not in any way affect the validity orthe operation of any instrument dulyexecuted in favour of such agency under anyprovision of this Act or of any other writtenlaw prior to the date on which therevocation takes effect, or affect the powerof such agency to exercise after that dateany right which may be exercised under anysuch written law by virtue of the instrumentso executed before that date.

(5) The members of the board may bepaid such remuneration (not exceeding fiftyrupees for each sitting) as may be fixed bythe Minister, out of moneys voted for thepurpose by Parliament.

(6) The members of the board shall holdoffice for such period as may be specified bythe Minister at the time of appointment ;but any such appointment may be revokedby the Minister at any time.

(7) Nothing in Part IV or Part V of thisAct shall be deemed or construed toauthorize any institution mentioned inparagraph (6) of section 3 to make loansupon the security of any property, if thepower to make loans on such security is not

conferred on such institution by the writtenlaw providing for the establishment, powersand functions of such institution.

RULES

115. (1) The Minister in charge of the Rules.subject of Justice may make rules—

(a) providing for the amendment of anyof the forms set out in any of theSchedules to this Act or thesubstitution for any such form ofany new form ;

(b) authorizing the inclusion in anyinstrument executed under section69 of any covenants and agreementson the part of the person creatingthe mortgage or of the agency inwhose favour the mortgage iscreated ;

(c) declaring the offices which shall beprescribed offices for the purposesof section 70.

(2) Every rule made under subsection (1)shall be submitted to Parliament forapproval. Every rule so approved shall bepublished in the Gazette, and shall comeinto force upon such publication.

SAVINGS FOR APPOINTMENT OFRECEIVERS UNDER CIVIL PROCEDURE

CODE

116. The powers conferred by this Actfor the appointment of receivers ofmortgaged property shall be in addition toand not in substitution or derogation of thepower to appoint receivers which isconferred by Chapter L of the CivilProcedure Code :

Provided that nothing in that Chaptershall apply in any case where application isduly made under this Act for theappointment of a receiver.

Savings forappointment ofreceivers underCivilProcedureCode.

FIRST SCHEDULE[section 6] Form I

APPLICATION FOR REGISTRATION OF ADDRESS FOR SERVICE OF LEGAL DOCUMENTS

To the Registrar of Lands of...........

I (name in full and address) . . . . . . . . . . . . . . . . apply under section 6 of the Mortgage Act for registration inor in continuation of the folio (or folios) specified in B below of the address specified in A below as the address forservice on me of legal documents in any hypothecary action to enforce any mortgage registered in the folio orfolios specified in B below. Particulars of the instrument under which I derive title are given in C below.

AAddress/or for Service

(Name of person to whom legal documents are to be sent. This person may be the applicant or another person.)(Full postal address in Sri Lanka.)e.g., H. John Perera,

No. 18, Maliban Street,Pettah, Colombo.

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Folio (or folios) in which ihe Address is lobe registeredVolume : ...................................Folio : .................................Volume : ...................................Folio ; ...............................

cParticulars of Instrument under which Applicant derives Title

(1 ) Number and date of deed : ................(2) Name of attesting notary : ................(3) Volume and folio where the deed is registered :

2. I further declare that my address for service previously registered with you on . . . . . . . . . . . . . . . . . . .involume . . . . . . . . . . . . . . . . . . . fo l io .................. -is hereby cancelled.

.1- The registration fee of Rs. ................... is enclosed in stamps.

(Signature of applicant or agent.)*

* Agent means an agent authori'zed in writing by the applicant or atlorney-at-law or notary public.

[Sections 9 and Form 2

10] NOTICE OF HYPOTHECARY ACTION

In the District Court of ..........................

Action No. ................... .................. .Plaintiff/s.vs.

.................. -Defendant/s.*Nameofcach To*..............of (registered address).person towhom notice is Notice is hereby issued to you in terms of section 9(!)/9(2) of the Mortgage Act of the above action institutedissued, upon a mortgage of the land/s described in the Schedule hereto.

Registrar.

Schedule

(Description of Land/s.)

[Section 34.] Form. 3NOTICE

In the District Court of....................

Action No. .............. ................... .Plaintiff/s.vs.

............................Defendant/s.

Notice is hereby given -

(a) that the plaintiff in the above action has made application under section 34 of the Mortgage Act for adeclaration that in the event of decree being entered for the sale of the land described in the Schedulehereto, the court will order the removal of all persons whomsoever who may resist the delivery ofpossession of the land to the purchaser at the sale ;

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MORTGAGE

(h) that any person claiming to be entitled to possession of the land or any portion thereof shall he entitled tomake application within two months to this court under section 35 of the Act to be added as a party tothe above action and to secure an adjudication upon his claim ;

(<-) that a plan of the land has been filed of record in (his courl and is available for inspection by any personinterested.

Registrar.

Schedule

(Description of land.)

[section 53] Form 4CONVEY A NCE

(Title.)

To all to whom these presents shall come, greeting.

Whereas by a mortgage bond dated..............................., and bearing number.....................notary public, and registered in the.................................................

............................the payment to . . . . . . . . . . . . . . . . . . . . . . . . . .of the sum of

. . . . . . . . . . . . . . . . and attested byDistricI I .and Registry at folio. . . . . . . . .rupees was secured

with interest by mortgage of the property hereinafter described and hereby conveyed :

. . . . . . . . . . . . .of the District Court of . . . . . . . . . . . . . . .And whereas by a decree entered in action No.on the. . . . . . . . . . . . . . . . . day of .............the defendant in the said action do pay to .............. . . . . . . . . . . . . . . . .rupees (Rs. .................

.... it was ordered and decreed that. . . . . . . . . . . . . . . . . . . .

. . . . . . . . . .the plaintiff in the said action forthwith the sum of. being the aggregate amount of the principal, interest, and

costs due in respect of the said mortgage bond. together with interest thereon at the rate of . . . . . . . . . . . . . . . .per centum per annum from the dale of the said decree until payment : and that in default of payment of the said

sum. interest, and costs within (stale period) from the date of the said decree the said property be sold :

And whereas an order lor the sale of the said premises was subsequently given by Ihe court lo the Fiscal/*............ -under section 50 of the Mortgage Act :

And whereas after due notice and publication in manner by law prescribed the said properly was exposed topublic sale on ihe . . . . . . . . . . . . . . . . .day o f . . . . . . . . . . . . . . . . . . 19.......... by . . . . . . . . . . . . . . . . .actingunder the authority of the said Fiscal/* ................ .and was sold to . . . . . . . . . . . . . . . . .as the highestbidder at the said sale for the sum of.... . . . . . . . . . . . . . .rupees ; " -

And whereas the said (purchaser) has duly paid the whole of the said purchase money and thus became entitledto a conveyance of the said property (or, where the plaintiff is purchaser) and whereas the said (purchaser) hasbeen allowed the amount of the purchase money (or as the case may he) in reduction of his claim, and hasproduced Ihe order of court, copy whereof is hereunto annexed, and has thus become entitled, &c. :

And whereas ihe said court by an order dated the .....................day of...........................19 ,copyof which is hereunto annexed, has duty confirmed the said sale :

Now these presents witness that the said Fiscal/ *. . . . . . . . . . . in consideration of the said sum of .......................rupees so paid by (or credited to) ihe said (purchaser) as aforesaid, the receipt whereof the said Fiscal/* ..................doth hereby acknowledge, hath sold and assigned, and by these presents doth sell and assign unto the said(purchaser), his heirs, executors, administrators, and assigns, the properly described in the Schedule hereto. Tohave and to hold the same with their and every of their appurtenances to him, the said (purchaser), his heirs,executors. administrators, and assigns for ever.

In witness whereof the said Fiscal/* . . . . . . . . . . . . . . . . -hath hereunto subscribed his name a t . . . . . . . . . . . . .Ihis ................ .day of .................. 19. .....

(Signature). . . . . . . . . . . . . . . . .Witnesses : .................

Schedule

(To contain a description of the property conveyed.)*Slrike out what is inapplicable.

[section 55] Form 5In the Dislrict Court of...............

No..........................Whereas the land known as . . . . . . . . . . . . . . . . .situated at . . . . . . . . . . . . . . . . -and more fully described in

the Schedule hereto was, under the decree in the above action, sold to . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . .hereinafter referred to as "the purchaser" and whereas it has been reported to this court that the Fiscal wasobstructed in attempting to put the purchaser or some other person on his behalf in possession of such land interms of ihe order made under this action and dated ihe . . . . . . . . . . . . . . . . .day of . . . . . . . . . . . . . . . . . . . . . .

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MORTGAGE

Now, therefore, this is to direct ALL PERSONS WHOMSOEVER forthwith to yield up possession thereof,without obstruction or resistance, to the purchaser or such other person upon pain of suffering the penaltiesprescribed in that behalf in section 55 of the Mortgage Act.

By Order of the Court,

Registrar.Schedule

(Description of Land.)

SECOND SCHEDULEForm 6

[Section 69.] ofI/ We* . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . -do hereby, in terms of section . . . . . . . . . . . . . . . .the Mortgage Act, mortgage the land described in the First Schedule hereto to . . . . . . . . . . . . . . . . . of . . . . .. . . . . . . . . . . an approved credit agency as defined in that Act, as security for the payment of all sums due andowing or which may be or become due and owing from me/us* to the said agency/on* account of the matters andtransactions mentioned/(or)/* under the instrument entered into this day and referred to/in the Second Schedulehereto.

And I/We' hereby declare that the title deeds of the land aforesaid have been deposited with the agency interms of the said section.

(Signature) . . . . . . . . . . . . . . . . .+ (Where notnotanallyexecuted.)

•fSigned by the aforesaid . . . . . . . . . . . . . . . . . o f.........................................(Manager/fDirector/ + Prescribed Officer) and of ( I )....................................

. .in the presence of.and (2) .............(.witnesses).

(Signatures)Firsi Schedule

[Section 73.]

[Section 81.]

(Description of Land.)

Second Schedule(Matters or transactions referred to/(or)/ instrument referred to.)

* Delete if inapplicable-

THIRD SCHEDULEForm?

I/We*, . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . .do hereby mortgage the shares described in the FirstSchedule hereto to . . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . . . . an approved credit agency within the meaningof the Mortgage Act as security for the payment of all sums due and owing from me/ us* to the said agency/ on*account of the matters and transactions mentioned/for)* under the instrument entered into this day and referredto/in the Second Schedule hereto.

And I/We* hereby declare that the share certificates relating to the said shares have been deposited with the saidagency and that I/We* have executed a transfer/transfer in blank* of the said shares and delivered such transferto the said agency.

(Signature) . . . . . . . . . . . . . . . . .Signed by the said . . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . . .in the presence of (I) . . . . . . . . . . . . . . . .

.and (2) . . . . . . . . . . . . . . . . .(witnesses).(Signature) . . . . . . . . . . . . . . . . .

First Schedule(Description of shares.)

Second Schedule(Matters or transactions referred to/(or)/instrument referred to.)

*De!ete if inapplicable.

Form 8I/We* . . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . . . hereby mortgage my/our* rights under the policy of life

insurance mentioned in the First Schedule hereto to . . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . . . . an approvedcredit agency within the meaning of the Mortgage Act as security for the payment of all sums due and owing orwhich may be or become due and owing from me/us* to the agency/on* account of the matters andtransactions/(or)/*under the instrument entered into this day and referred to/ in the Second Schedule hereto.

And I/We* hereby declare that the policy has been assigned to the said agency by way of mortgage and hasbeen deposited with the agency.

(Signature) . . . . . . . . . . . . . . . . .

(2)Signed by the said............................of........................................

.(witnesses.) .in the presence of ( I )...................................and

First Schedule(Particulars of Policy.)

Second Schedule(Matters or transactions referred to/ (or)/instrument referred to.)

* Delete if inapplicable.

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