Petitioners and their legal counsels attending the ruling hearing of Law No. 4 of 1996 on Mortgage over the Land and Objects Related to the Land, Tuesday (8/31/2021) virtually. Photo by Humas MK/Ifa.

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Tuesday, August 31, 2021 | 19:12 WIB

JAKARTA, Public Relations—The Constitutional Court (MK) rejected the entire judicial review petition of Law No. 4 of 1996 on Mortgage over the Land and Objects Related to the Land (Mortgage Law). The Decision No. 10/PUU-XIX/2021 was read out at a ruling hearing on Tuesday, August 31, 2021. The petition was filed by lecturer Sri Bintang Pamungkas.

The Petitioners argued that Article 21 of Law No. 4 of 1996 offered excessive legal protection to owners of mortgage rights and ignored debtors and givers of mortgage rights. In the legal considerations read out by Constitutional Justice Suhartoyo, the Court held that the provision ensured that debtors/givers of mortgage rights who were declared bankrupt and creditors holding mortgages would not lose their right to legal measures on the mortgage right objects.

The Court considered creditors holding mortgages should be prioritized over separatist creditors. Therefore, a court decision that declares the debtors’ bankruptcy would not eliminate the right of creditors holding mortgages over the bankrupt debtors’ settlement of their debt to the creditors. This is because according to their nature, creditors holding mortgages are separatist creditors whose right takes priority. Consequently, the curator as the verificator of the mortgage right object who has the executorial power must no longer be part of the estate that should be settled for other creditors.

“Therefore, creditors holding mortgages would not lose their right for guarantee of fulfillment of debts by the bankrupt debtors despite the debtors having been declared bankrupt,” Justice Suhartoyo explained.

Also read: House Facing Auction, Lecturer Challenges Mortgage Law

Specificity of Mortgage Rights

This, Justice Suhartoyo added, is affirmed by Article 55 paragraph (1) of Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment. Due to the specificity—privilege, separate nature, and executorial title—of the mortgage rights, from the outset it has been agreed upon in a credit agreement with mortgage rights carried out by debtors, creditors, and guarantors as well as other parties involved. Therefore, the Petitioner’s assumption that creditors holding mortgages receive excessive protection was disproved. Moreover, the rights of creditors holding mortgages also comes from a voluntary agreement, including from the debtors who give the mortgage rights.

“Based on the aforementioned considerations, the Court believes that the Petitioner’s argument that Article 21 of Law No. 4 of 1996 offered excessive legal protection to creditors holding mortgages was legally groundless,” stressed Justice Suhartoyo, who took turns reading out the Court’s legal considerations with Constitutional Justices Manahan M. P. Sitompul and Wahiduddin Adams.

Also read: Sri Bintang Pamungkas Challenge More Article of Mortgage Law

The Petitioner alleged that Article 6, Article 14 paragraph (3), Article 20 paragraphs (1) and (2), and Article 21 of the Mortgage Law are in violation of Article 28A, Article 28A paragraph (2), Article 28C paragraph (1), Article 28D paragraphs (1) and (2), Article 28G paragraph (1), Article 28H paragraphs (1) and (4), and Article 28I paragraph (2) of the 1945 Constitution.

The Petitioner was involved in a concrete case where in early December 2019 he received a letter from the Star Auction action house dated November 13, 2019 that declared that Persil Merapi (his residence) would be auctioned off on January 14, 2020. He had taken various legal measures and came to a BCA branch to discuss the debtor’s credit issues. Despite all of his efforts, he received a notification dated December 10, 2020 regarding the auction, to take place on January 5, 2021 until 13:00 WIB. He was also asked to empty the property. Motivated by his wish so that this wouldn’t happen to others, he requested that the norm be declared unconstitutional.

Writer        : Sri Pujianti
Editor        : Lulu Anjarsari P.
PR            : Fitri Yuliana
Translator  : Yuniar Widiastuti (NL)

Translation uploaded on 9/3/2021 10:19 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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