On June 2, 2025, the Bombay High Court ruled that a mortgage executed in violation of a lease covenant is not automatically void if the lease deed outlines specific consequences for such a breach. This decision was delivered by a Division Bench comprising Justices A.S. Chandurkar and M.M. Sathaye.

The dispute centered on a plot in the Marol Maharashtra Industrial Development Corporation (MIDC) area, which was leased to M/s Benelon Industries (BI). BI mortgaged the plot to Union Bank of India (UBI) without obtaining prior consent from MIDC, thereby breaching Clause 2(t) of the lease deed. MIDC issued a show-cause notice under Clause 4 but did not pursue further action.

The High Court observed that since the lease deed specified the consequences of breaching its covenants, the mortgage could not be deemed void solely due to the breach. The court emphasized that the existence of stipulated remedies within the lease agreement precludes the automatic invalidation of the mortgage.

This ruling underscores the importance of the specific terms within lease agreements. It clarifies that when a lease deed provides remedies for breaches, such provisions take precedence, and actions like unauthorized mortgages are not inherently void but subject to the stipulated consequences.

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