THE TRANSFER OF PROPERTY ACT 527
Right of mortgage to Priority
I. P RIORITY BY TIME .
The general rule regarding priority in the matter of transfers of interests in immovable property is laid down in Section 48 of the T. P. Act.
The same rule applies to questions in regard to mortgages, so that priority of mortgages in India depends upon the respective dates of their creation, the earlier in date having precedence over the latter— 56 Cal. 868.
Section 78 is an exception to this rule. It lays down that the Court would postpone the prior mortgagee to the subsequent mortgagee where the prior mortgagee has, through fraud, misrepresentation or gross neglect, induced the subsequent mortgagee to advance money on the security of the mortgaged property.
Misrepresentation:
1. Is defined in Section 18 of the Indian Contract Act.
2. It does not necessarily mean fraudulent misrepresentation.
Fraud
Gross Negligence.
There is a difference between English and Indian Law. According to English Law gross negligence means negligence amounting to fraud.
According to Indian Law gross negligence is different from fraud.
II. P RIORITY BY P AYMENT .
Q.—Can a mortgagee acquire priority over an intermediate mortgagee by buying the rights of an earlier mortgagee ?
Section 93
- A mortgagee cannot acquire priority over an intermediate mortgagee by paying off a prior mortgagee whether he pays with or without knowledge of the intermediate mortgagee.