Priority of Mortgages :

Indian Law of priorities is provided in Section 48 of the Transfer of PropertyAct. The rule is based on maxim ‘he has a better title who was first in point of time.’ It lays the general rule regarding priority of rights created by transfer by a person at different times in or over the same immoveable property and provides that, as between such rights, each later created right is subject to the rights previously created. We may further see, as how the rule of priorities operate in respect of different instruments creating mortgages.

(a) Priority among registered instruments

Section 47 of the Registration Act, 1908 provides that a registered document operates, not from the date of its registration, but from the time of its execution. Thus, a document executed earlier, though registered later than another, has priority over the documents executed later.

(b) Priority between registered and unregistered instruments

Let us now deal with the exceptions to the rule, that priority is determined by order of time, which either have been created by statute or owe their origin to the ancient rule of Hindu Law, which required delivery of possession in the case of a security of land. There are also some exceptions recognized in the Indian system founded upon those general principles of justice and equity, which in the absence of any express enactment, Indian judges are bound to administer, and which, have been mostly borrowed, from the English Law.

The first exception is that contained in Section 50 of the Registration Act, which under certain circumstances allows a registered mortgage priority over unregistered mortgage. However, it may be noted that prior mortgage by deposit of title deeds is not affected by subsequent registered mortgage as the same need not be registered. This, is provided in Section 48 of Indian Registration Act.