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CS Professional · Drafting, Pleadings and Appearances · Laws relating to Drafting and Conveyancing

Neha Textiles Ltd registers a deed of mortgage over its factory land with Bank A. Later, the company executes and registers another mortgage-deed over the same property for Bank B. A dispute arises on priority. Which statement matches the proviso to Section 48 of the Registration Act, 1908?

A mortgage as defined in section 58 of the Transfer of Property Act, 1882 takes effect against a subsequently executed and registered mortgage-deed on the same property. The proviso to Section 48 of the Registration Act therefore gives Bank A's earlier mortgage priority over Bank B's later one.

  1. ABank B's later registered mortgage takes priority as the latest document
  2. BA mortgage as defined in section 58 of the Transfer of Property Act takes effect against a subsequently executed and registered mortgage-deed on the same propertyCorrect
  3. CBoth mortgages rank equally because both are registered
  4. DNeither mortgage is effective without delivery of possession

Explanation

The proviso to Section 48 states that a mortgage as defined in section 58 of the Transfer of Property Act, 1882 takes effect against any mortgage-deed subsequently executed and registered relating to the same property. So Bank A's earlier mortgage prevails over Bank B's.

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