Encumbrances And Court Sale

By | April 9, 2020
Encumbrances And Court Sale

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The term encumbrance has not been defined in the Transfer of Property Act, 1882. In legal parlance, the word ‘encumbrance’ signifies a claim, charge or liability attached to immovable property.

The section is borrowed from Section 5 of the Conveyancing and Law of Property Act, 1881, now replaced by Section 50 of the Law of Property Act, 1925.

Encumbrances and court sale

Section 57 – Discharge of encumbrances on sale : Where any immovable property, subject to any encumbrance is, sold by the court or in the execution of a decree or out of court, the court may, on the application of any party to the sale, direct or allow payment into court –

  1. In a case of an annual or monthly sum charged on the property or of a capital sum charged on a determinable interest in the property of such amount as, when invested in securities of the Government of India will be sufficient by means of the interest thereof, to keep down or otherwise provide for the charge;
  2. And in any other case, of a capital sum charged on the property of the amount sufficient to meet the encumbrances and any interest due thereon;

In either case, such additional amount as the court considers sufficient to meet the contingency of further costs, expenses, and interest and any other contingency must also be paid into the court.

Thereon, the court may, if it thinks fit, and after notice to the encumbrancer, declare the property to be free from the encumbrance, and make any order for conveyance, or vesting order, for giving effect to the sale.

After notice is served on the persons interested in, or entitled to, the money or fund in court, the court may direct payment or transfer thereof to the person entitled to receive or give the discharge for the same, and generally may give direction respecting the application or distribution of the capital or income thereof.

An appeal lies from any declaration, order, or direction under this section as if the same were a decree.

This section gives the procedure for discharging an encumbrance on a property which is sold free an encumbrance. This can be done only by the court’s order. The court cannot act suo motu. The power given to the court under the section is intended to facilitate the alienation of encumbered estates by relieving the land from the encumbrance and substituting for the land another form of security. Different rules for payment are prescribed for different kinds of encumbrances.

At present, a prospective purchaser can easily find out about any existing encumbrance over a property either by inspection of the Registration Registers or by securing a certificate relating to encumbrances (that is copies of entries in the Registration Registers) from the jurisdictional Sub-Registrar under Section 57 of the Registration Act, 1908. [i]

[i] T.G. Ashok Kumar v. Govindammal and Ors. Civil Appeal No. 10325 of 2010 (Arising out of SLP (C) No. 163 of 2010)

  1. Mortgage: Meaning, Explanation And Kinds
  2. Sale of Immovable Property: Explained As Under TPA, 1882
Author: Kanishta Naithani

Kanishta is a student at Symbiosis Law School, Pune. She has published research papers, participated and placed National Essay Writing competition(s) and also presented a paper in a national seminar. She enjoys writing and researching, she aims to be a professional writer.