NATIONAL MORTGAGE, FINANCING AND GUARANTEE SCHEME ACT - 1976 (SMCD 23)

    Section - 24 - Sale of Mortgaged Property upon Default.

    (1) Upon failure of performance of an act or acts secured by the mortgage the mortgagee under a mortgage to which this Decree applies may sell or cause to be sold the mortgaged property.

    (2) A sale of any mortgaged property under this section may be by public auction or private contract and shall otherwise be subject to such conditions as the Bank may determine.

    (3) A mortgagee who wishes to exercise his power of sale under this section shall give reasonable notice of the sale to the mortgagor and every encumbrancer of whom he has notice.

    (4) The Bank may prescribe in respect of the failure to perform all or any class of acts what period is considered reasonable for the purpose of subsection (3) of this section so however that in the case of default in the payment of principal or interest or both the notice shall be not less than sixty days.

    (5) Where a mortgagee has in exercise of his power of sale under this section sold or caused to be sold the mortgaged property to another person the title of the purchaser shall not be impeachable on the ground-

    (a) that no case has arisen to authorise the sale; or

    (b) that the notice required under subsection (3) has not been given; or

    (c) that the power of sale was otherwise improperly or irregularly exercised;

    but the mortgagee shall be personally liable for any loss caused by that sale being carried out in any or all of the foregoing circumstances.

    (6) Neither the mortgagor nor any encumbrancer is precluded from purchasing the mortgaged property at a sale under this section:

    Provided that a mortgagee at whose instance the sale was made shall not have the right to purchase the mortgaged property except where the sale is carried out at a public auction or where it is carried out by a private contract approved by the mortgagor and all the encumbrancers or approved by the Court.

    (7) The mortgagee exercising his right of sale under this section may convey to the purchaser the whole of the interest of the mortgagor in the mortgaged property.

    (8) The purchaser of the mortgaged property under this section shall take title to the said property free of all interests to which the mortgage of the mortgagee who caused the sale has priority and free of that mortgage but subject to all interests which have priority to that mortgage and shall be entitled as against any person to all the documents relating exclusively to the mortgaged property other than those title documents held by a person with an interest having priority to the mortgage of the mortgagee who caused the sale.

    (9) The proceeds from a sale under this section shall be held in trust for distribution by the mortgagee who caused the sale.

    (10) Proceeds from a sale under this section shall be distributed first, in payment of all expenses properly incurred as incident to the sale or any prior attempted sale, secondly, in payment of all sums secured by the mortgage or with the same priority as the mortgage, thirdly, in payment in the order of priority of any encumbrances subsequent to that of the mortgagee who caused the sale and the residue to the mortgagor or his successors in interest.

    (11) For the removal of doubt it is hereby declared that a mortgagee on whom a right of sale is conferred by this section shall not be deemed to be a trustee of the mortgagor in respect of that right.