I am a CA and I have a doubt with respect to an issue which has differing views amongst lawyers community. It is not a consultation but request your expert views based on your experience to throw some light on the following general areas!
1. Can a Mortgaged Property (property in Chennai bought by way of bank loan) be Leased out to a 3rd party (not the mortgagee)?
2. By creating a mortgage , I only create a charge , so lawfully I am still the owner (absolute?) of the property and my title is not affected right?
3. Is bank's NOC necessary to get the lease deed registered? The jurisdictional registrar was insisting but somehow I convinced that funding and ownership are 2 different things! So I told that the bank is in no way a party to the lease since I am exercising my right as an owner and finally he registered the lease deed. I thought this was just a ploy to extract more money!
However I googled asked a few forums , even Madras high court advocates give differing views on the subject confusing me still on ownership and charge..
Also I read sec 65A of TP Act and in the rights of Mortgagor , lease is mentioned (So I can presume when I say enjoyment of property it need not mean only self occupation but also leasing).
But there are some conditions like lease should not exceed 3 years , should not have renewable clause , come into force within 6 M etc. Sub section 3 also states that if there is anything contrary to the section in the mortgage deed is mentioned , then the deed shall prevail) . Is this mandatory? Suppose the lease registered violates this section then will it be invalid? This is a tricky situation as so far all the parties do not commit default everything is okay , but when one of the party's interest is affected everything assumes significance!
(As far as I am concerned the bank is not the owner and only if I default in payment , he can recover unpaid portion (Loan + Interest) from the security by sale / otherwise (SARFAESI) . Since the bank is covered only upto the value of Loan + Interest , it cannot make any profit from sale of such property (similar to official liquidator) , so how can the bank deemed an owner in this case is my doubt)