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In a recent judgment, the Karnataka High Court has ruled that a bank acting as a mortgagee has the right to claim compensation as a "person interested" under Section 64 of the Land Acquisition Act, 2013, if the mortgaged property is acquired. Justice Krishna S Dixit allowed the petition filed by DBS Bank and directed the special land acquisition officer to refer the bank's claim to the district court with all necessary papers.
In a recent judgment, the Karnataka High Court has ruled that a bank acting as a mortgagee has the right to claim Advertisement
compensation as a "person interested" under Section 64 of the Land Acquisition Act, 2013, if the mortgaged property
is acquired. Justice Krishna S Dixit allowed the petition filed by DBS Bank and directed the special land acquisition
officer to refer the bank's claim to the district court with all necessary papers.
Under the amended provisions of Section 73 of the Transfer of Property Act, 1882, the mortgagee is entitled to claim
payment of mortgage money and this claim should prevail against all other claims except those of prior encumbrances.
The ruling clarifies that when the mortgaged property has been acquired, the bank has the right to claim compensation
and recover the mortgage money owed.
The case involved DBS Bank, which had lent money to Chandrasekhar Reddy in 2017 and received certain pieces of
land at Hiriyur as security for the loan. However, the lands were subsequently acquired for a railway project. After
discovering the acquisition, the bank submitted representations to the authorities to consider its claim and adjust the
compensation amount against the amount payable by Reddy, who had defaulted on the loan.
This ruling provides clarity on the rights of banks acting as mortgagees in cases of land acquisition. The court has
affirmed that such banks are entitled to claim compensation and recover the mortgage money owed in the event of
property acquisition. This decision will be particularly beneficial to banks and financial institutions that have lent
money and taken property as collateral in cases where the property is subsequently acquired.
It is important to note that the ruling does not automatically entitle all banks to claim compensation in cases of land
acquisition. Each case will be decided on its own merits, and the bank must prove that it has a legitimate claim to the
compensation amount. The ruling simply confirms that banks acting as mortgagees have a right to claim compensation
under certain circumstances.
Overall, this judgment provides clarity and guidance to banks and other financial institutions regarding their rights in
cases of land acquisition. It will help them make informed decisions when lending money and taking property as
collateral. The judgment also clarifies the legal rights of mortgagees and ensures that they are adequately protected in
cases where the property is acquired by the government or other authorities.
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