Mortgage (Amendment)

46. No decree in any hypothecary action upon any mortgage of land which is created after the coming into force of this section, and no decree in any action for the recovery of any moneys due upon any such mortgage, shall order any property, whatsoever, other than the mortgaged property to be sold for the recovery of any money found to be due under the mortgage, and no property whatsoever, other than the mortgaged property, shall be sold or be liable to be sold in execution of any such decree. In this section “action for the recovery of moneys due upon a mortgage” includes any action for the recovery of any debt secured by a mortgage whether the cause of action sued upon arises by reason of the mortgage or otherwise._

47A. (1) Where at the time of the execution of a mortgage bond in favour of a lending institution for the payment of a loan, the principal of which exceeds one hundred and fifty thousand rupees the mortgagor executes a separate instrument, attested by the notary attesting the bond and by the witnesses to the bond containing

(a) a special declaration on the part of the mortgagor that he renounces the benefit of section 46 and that the effect of such renunciation has been explained to him by the notary; and

(b) an endorsement signed by the notary to the effect that he has explained to the mortgagor the effect of such renunciation, then, in addition to the mortgaged property, any other property belonging to the mortgagor shall, subject to the provisions of subsection (2), be liable to be ordered to be sold and to be sold under the decree in an action upon the mortgage, and the provisions of section 218 of the Civil Procedure Code (Chapter 101) shall, mutatis mutandis, apply to the seizure and sale of such other property.

(2) In any case referred to in subsection (1), no process shall issue for the seizure and sale of any property of the mortgagor, other than the mortgaged property, until the mortgaged property is sold and the proceeds thereof applied in satisfaction of the decree.

(3) Where the separate instrument referred to in subsection (1) is to be executed by any mortgagor, it shall be the duty of the notary to explain to the mortgagor, that the instrument provides for the renunciation of the benefit of section 46 and that the effect of such renunciation is that, in addition to the mortgaged property, other property of the mortgagor is liable to be sold in execution of a decree in an action upon the mortgage.

(4) No stamp duty shall be payable upon the further instrument referred to in this section.

(5) Where the mortgage is created by an instrument referred to in section 69 which is attested by an officer of a lending institution, then for the purpose of the application of the provisions of subsection (1) and sub section (3) of this section, any reference in those provisions to the notary attesting the mortgage bond shall be deemed to be a reference to such officer.

(6) Nothing in this section shall apply to any action upon a mortgage created before the coming into force of this section.

(7) For the purpose of this section ” lending’ institution ” means

(a) a licensed Commercial Bank within the meaning of the Banking Act, No. 30 of 1988 ;

(b) the State Mortgage and Investment Bank established by the State Mortgage and Investment Bank Act, No. 13 of 1975 ;

(c) the National Development Bank established by the National Development Bank of Sri Lanka Act, No. 2 of 1979;

(d) the National Savings Bank establish- ed by the National Savings Bank Act, No. 30 of 1971; and

(e) the Development Finance Corporation of Ceylon established by the Development Finance Corporation of Ceylon Act (Chapter 165).’.

62A. The provisions of this Part shall be in addition to and not in derogation of the provisions of any laws which empower certain banks and other institutions to exercise the powers of parate execution for the purpose of recovery of loans granted by them on the security of immovable property, in the event of default.

62B. (1) Where bank or an institution is empowered to authorize any person to enter into possession of or to maintain and to manage the property mortgaged and such person is unable or apprehends that he will be unable to take possession of that land because of any obstruction or resistance which has been or is likely to be offered, such officer shall, on his making an application in that behalf to the Magistrate’s Court having jurisdiction over the place where that land is situated, be entitled to an order of that court directing the Fiscal to deliver possession of the land to him.

(2) Where an order under subsection (1) is issued to the Fiscal by a Magistrate’s Court he shall forthwith execute such order and shall in writing report to that Court the manner in which the order was executed.

(3) For the purpose of executing an order issued by a Magistrate’s Court under subsection (l)s the Fiscal or any person acting under his direction may use such force as may be necessary to enter the land to which that order relates and to eject any person in occupation of that land and to deliver possession of that land to the officer who is authorized to take possession of that land, for or on behalf of the bank or institution.

62c. Where after sale by public auction and the delivery of a certificate of sale to the purchaser of the property mortgaged, the purchaser is unable to take effective possession of it, he shall on application to the District Court of Colombo or the District Court having jurisdiction over the place where the property is situate, and on production of the certificate of sale be entitled to an order for the delivery of possession of the property.

62D. Every application under section 62c shall be made, and shall be disposed of, by way of summary procedure in accordance with the provisions of Chapter XXIV of the Civil Procedure Code ; and on all documents filed for the purpose of each such application and on all proceedings held thereon, stamp duties and other charges shall be payable at the respective rates payable under any written law for the time being in force, on application for, and proceedings connected with or incidental to, the execution of a decree of a District Court for the delivery of possession of any immovable property of the same value as the property to which such application relates.

62E. Where any immovable property sold in pursuance of the law empowering the mortgagee to sell, is in the possession or occupation of a person under a possession or dent of the debtor or under a title created by the debtor prior to the mortgage by an instrument duly executed and duly registered prior to the mortgage, the right of such person shall have priority over the rights of the purchaser, and the purchaser shall not be entitled to an order for delivery of possession of such immovable property.

62F. Where any immovable property sold in pursuance of the preceding provisions is in the occupancy of the debtor or of some person on his behalf or of some person claiming under a title created by the debtor subsequent to the mortgage of the property to the bank or institution the District Court shall order delivery to be made by putting the purchaser, or any person whom he may appoint to receive possession on his behalf in possession of the property.

62G. (1) .Where any immovable property sold in pursuance of the law empowering the mortgagee to sell, is in the occupancy of a tenant or other person entitled to occupy the same by virtue of an agreement entered into before the date of execution of the mortgage, but which transaction has not been duly registered, the following provisions shall apply:

62H. Every order under section 62F shall Order under be deemed to be an order for delivery of section 62F possession under section 287 of the Civil order made Procedure Code, and every order made under section on 287 of the Civil Procedure Code, and every order made under section 62G shall be deemed to be an order for delivery of possession under section 288 of the same Code and may be enforced in a like manner as an order so made.”