Later mortgage documents breaching prior charge covenants can be restrained as voidable against the earlier lender.

A later mortgage executed in breach of an earlier mortgage covenant and without effective prior consent may be treated as void or voidable against the prior charge holder, supporting interlocutory protection and deposit of the impugned deeds. The Court applied the rule that contractual documents must be read as a whole, with ambiguity construed against the grantor, and held that the challenged transaction could not be insulated as a valid second charge on the disclosed facts. It also rejected the contention that insolvency law displaced the suit, noting that the dispute concerned the validity of the mortgage instruments and no admitted insolvency proceedings had ousted jurisdiction on the record.

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Issues: (i) Whether the interim injunction restraining reliance on the subsequently executed mortgage deeds and directing their deposit was justified on the ground that the later mortgages were void or voidable against the prior charge holder. (ii) Whether the suit reliefs were barred or displaced by the jurisdictional regime under the Insolvency and Bankruptcy Code.

Issue (i): Whether the interim injunction restraining reliance on the subsequently executed mortgage deeds and directing their deposit was justified on the ground that the later mortgages were void or voidable against the prior charge holder.

Analysis: The financing documents created an earlier mortgage in favour of the prior lender and prohibited creation of further encumbrances without prior written consent. The later mortgage deeds were executed before a clear and effective consent or no-objection was in place and were inconsistent with the earlier contractual restrictions. The Court applied the settled approach that a document must be construed as a whole, giving effect to all clauses where possible, and that ambiguity operates against the grantor. The Court also held that the subsequent transaction could not be protected by treating it as a valid second charge when it was created in breach of the earlier mortgage terms and the supporting contractual undertakings. On those facts, the plaintiff had made out a prima facie case for preventive relief under the law relating to cancellation of void or voidable instruments and the apprehension of serious injury.

Conclusion: The interim relief was justified and the challenge to the exercise of discretion failed.

Issue (ii): Whether the suit reliefs were barred or displaced by the jurisdictional regime under the Insolvency and Bankruptcy Code.

Analysis: The Court held that the controversy before it concerned the legality of the impugned mortgages and the plaintiff's asserted status as exclusive charge holder, not merely inter-creditor ranking. It further held that, on the facts before it, no insolvency proceedings had been admitted against the relevant mortgagors so as to oust the Court's jurisdiction, and that the statutory forum under the Insolvency and Bankruptcy Code would not necessarily determine the validity of the challenged mortgage instruments themselves. The Court therefore rejected the submission that the suit reliefs should be confined to or displaced by insolvency proceedings.

Conclusion: The jurisdictional objection failed.

Final Conclusion: The appellate challenge was rejected because the discretionary interim order was neither arbitrary nor perverse and the plaintiff's case for protection of its prior charge was sustainable at the interlocutory stage.

Ratio Decidendi: A later mortgage created in breach of an earlier mortgage covenant and without an effective prior consent can be treated as void or voidable against the prior charge holder, and an appellate court will not interfere with a well-reasoned interlocutory injunction absent arbitrariness, perversity, or disregard of settled principles.

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