Facts of the case
- A house is legally owned by Malati.
- After marriage, her husband, without her knowledge or consent, mortgaged the house to a bank as security for a loan.
- Malati later sold the house to a third party through a valid and registered sale deed.
- The bank now seeks to recover the loan from the mortgaged property.
Issues in the case
- Whether the mortgage executed by Malati’s husband without her authority is valid.
- Whether the bank can enforce the mortgage against the new purchaser.
- Whether Malati’s sale overrides the bank’s claim.
Principles associated with the case
- Under property law, only the lawful owner or a duly authorized agent can create a valid mortgage.
- A mortgage created without the consent or authority of the owner is void ab initio (invalid from the beginning).
- A spouse does not acquire ownership or agency rights over the other’s property merely by marriage.
- A transferee (purchaser) acquiring property through a valid registered sale from the rightful owner gets a better title if there was no valid prior encumbrance.
- The bank has a duty to verify title and ownership documents before accepting property as mortgage security.
Judgement
- The mortgage is invalid as it was created by someone who had no legal title or authority.
- The bank cannot proceed against the house for debt recovery as there is no enforceable charge on the property.
- The bank’s remedy lies in initiating legal proceedings against the husband (borrower) for recovery of debt personally.
- The buyer who purchased the house from Malati gets clean title since the mortgage had no legal standing.