RIGHT OF REDEMPTION AND STATE FINANCIAL CORPORATION ACT

 

RIGHT OF REDEMPTION AND STATE FINANCIAL CORPORATION ACT

Under the State Financial Corporation Act, the enforcement of the mortgage is part of the mechanism provided under section 29 of the Act, which provided for Rights of Financial Corporation in case of default. By such provision, the Financial Corporation was entitled to take possession of the assets and deal with the same by sale or lease. It did not speak about specifically on the right of redemption and hence in terms of section 60 of TP Act  the right was available till the transfer was made. 

 

Similarly, section 31 provided for enforcement of claims by Financial Corporation by approaching the District Judge by filing a petition for sale of the assets. In the said process also, the question of right of redemption comes up for consideration. 

 

In the case of Achamma Cyriac Vs The Kerala Financial

Corporation, reported in AIR 1997 Ker 75, the Hon’ble High Court of Kerala considered the various issues, held that in exercise of power under section 31 if the property is sold without an attachment the same is illegal and that the right of the mortgagor to redeem the mortgage is not lost. Since the sale was found to be void and that there is no foreclosure of the mortgage, the right of redemption was found to be continuing and not extinguished.