INDIA Law and Practice Contributed by: Divyanshu Pandey, Utsav Johri, Sucheta Bhattacharya and Nishal Makharia, JSA Advocates & Solicitors
Immovable Property In the case of an English mortgage, the mort - gagee has the authority to sell the mortgaged property without court intervention, subject to specific notification requirements. In the case of an equitable mortgage, the mortgagor must seek a court order to sell the mortgaged property in order to recover the debt. Debenture trustees of listed and secured NCDs can enforce a mortgage under the Securitisa - tion and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), offering a quicker method of secu - rity enforcement by way of private sale without the intervention of courts. Any proceedings taken against any mortgagor under the SARFAESI in relation to immovable properties could take two to four years. The enforcement of security through the courts may be more time consuming. Movable Property and Current Assets The rights and remedies of a hypothecatee are governed by the deed of hypothecation with the hypothecator (security provider) and are enforced either by appointing a receiver to sell the charged assets or by obtaining a court decree to sell the movable property. Debenture trustees for listed and secured NCDs can enforce hypothecation under the SARFAESI, providing a quicker mode of security enforce - ment by way of private sale without the interven - tion of courts. Pledge Over Shares A pledgee may enforce a pledge by giving rea - sonable notice to the pledgor. The pledgee does not need a court order to sell the pledged shares.
A pledge can be enforced in the depository sys - tem, which provides for ease of enforcement. Please note that the time periods for the enforce - ment of security may vary depending upon the facts and circumstances surrounding the enforcement, disputes raised by the security provider, non-co-operation in case of security enforcement, the backlog of cases at the court level and any cross-claims filed by the relevant security provider. 6.2 Foreign Law and Jurisdiction Transaction documents for finance raised by an Indian borrower domestically and for NCD issu - ances by an Indian company are governed by Indian law. Security documents for security provided by an Indian company are governed by Indian laws. The choice of foreign law for an agreement is generally upheld by Indian courts, unless the choice of law is not bona fide or the application of the foreign law is opposed to public policy. A foreign judgment is conclusive as to any mat - ter directly adjudicated upon in such decree, other than in certain specified cases. Where the judgment is in the nature of a money decree and is passed by a “superior court” of a “reciprocat - ing territory”, then it can be filed with an Indian court and would be enforceable as a decree of an Indian court. Where the judgment is not a money decree, a fresh suit must be filed in a competent Indian court, where the foreign judg - ment will be admitted only as evidence. 6.3 Foreign Court Judgments Please see 6.2 Foreign Law and Jurisdiction .
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