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Thursday, September 4, 2014

Sec.62 of T.P. Act & Art.61 of Indian Limitation Act - limitation for redemption of mortgaged property when time not fixed for payment - suit for declaration after 60 years by mortgagee predecessors against the mortgagor predecessors - trial court dismissed the suit as the plaintiff never pleaded that he or his predecessors made demands for payment of mortgage money and the mortgagor or his predecessors refused to pay the same - Appellant court and High court too confirmed the same - Apex court held that In cases where distinction in usufructuary mortgagor’s right under Section 62 of the T.P. Act has been noted, right to redeem has been held to continue till the mortgage money is paid for which there is no time limit while in other cases right to redeem has been held to accrue on the date of mortgage resulting in extinguishment of right of redemption after 30 years.We, thus, hold that special right of usufructuary mortgagor under Section 62 of the T.P. Act to recover possession commences in the manner specified therein, i.e., when mortgage money is paid out of rents and profits or partly out of rents and profits and partly by payment or deposit by mortgagor. Until then, limitation does not start for purposes of Article 61 of the Schedule to the Limitation Act. A usufructuary mortgagee is not entitled to file a suit for declaration that he had become an owner merely on the expiry of 30 years from the date of the mortgage. We answer the question accordingly. On this conclusion, the view taken by the Punjab and Haryana High Court will stand affirmed and contrary view taken by the Himachal Pradesh High Court in Bhandaru Ram (D) Thr. L.R. Ratan Lal vs. Sukh Ram (supra) will stand over-ruled.The appeals are dismissed.= CIVIL APPEAL NO.5198 OF 2008 Singh Ram (D) Thr. L.Rs. ... Appellant (s) Versus Sheo Ram & Ors. ... Respondent (s) = 2014 - Aug. Part - http://judis.nic.in/supremecourt/filename=41839

Sec.62 of T.P. Act & Art.61 of Indian Limitation Act - limitation for redemption of mortgaged property when time not fixed for payment - suit for declaration after 60 years by mortgagee predecessors against the mortgagor predecessors - trial court dismissed the suit as the plaintiff never pleaded that he or his predecessors made demands for payment of mortgage money and the mortgagor or his predecessors refused to pay the same - Appellant court and High court too confirmed the same - Apex court held that  In cases where distinction in usufructuary mortgagor’s right under  Section  62 of the T.P. Act has been noted, right to redeem has been  held  to  continue till the mortgage money is paid for which there is no time  limit  while  in other cases right to redeem has been held to accrue on the date of  mortgage resulting in extinguishment of right of redemption after 30 years.We, thus, hold that special  right  of  usufructuary  mortgagor  under Section 62 of the T.P. Act to recover possession  commences  in  the  manner specified therein, i.e., when mortgage  money  is  paid  out  of  rents  and profits or partly out of rents and profits and partly by payment or  deposit by mortgagor.  Until  then,  limitation  does  not  start  for  purposes  of Article 61 of the Schedule to the Limitation Act.  A usufructuary  mortgagee is not entitled to file a suit for declaration that he had become  an  owner merely on the expiry of 30 years from the date of the mortgage.   We  answer the question accordingly. On this conclusion, the view taken by  the  Punjab  and  Haryana  High Court will stand affirmed and contrary view taken by  the  Himachal  Pradesh High Court in Bhandaru Ram (D) Thr. L.R. Ratan  Lal  vs.  Sukh  Ram  (supra) will stand over-ruled.The appeals are dismissed.=

“1.  Whether the right to  seek  redemption  would  arise  on  the  date  of
mortgage itself in case of usufructuary  mortgage  when  no  time  limit  is
fixed to seek redemption?
2.      Whether there is any time  limit  in  the  case  of  a  usufructuary
mortgagor to get his property redeemed?”

“As it appears that observations made by this Court
in  Prabhakaran  &  Ors. vs. M. Azhagiri Pillai & Ors., reported in 2006 (4) SCC 484,
 in  regard  to
the  interpretation  and/or  application  of  Article  61  of  the  Schedule
appended to the Limitation Act, 1963 are contrary  to  the  principles  laid
down by this Court in a  large  number  of  decisions,
including  Jayasingh Dhyanu Mhoprekar & Anr.  vs. Krishna Babaji Patil  &  Anr.,  [1985  (4)  SCC 162] as also various decisions referred to by the Full  Bench  of  the  High
Court, we are of the opinion that the matter should be  heard  by  a  larger
Bench.”=

The predecessor of the respondents  mortgaged  the  suit  property  on
11.08.1903 to the predecessor of the appellants for a sum  of  Rs.80/-.
The
appellant-plaintiffs filed a suit for declaration that the suit land  having
not been redeemed for a period of more than 60 years,  the  defendants  lost
all rights, title and interest therein and the appellants became the  owners
by prescription.
4.    The trial Court considered the matter under Issue No.2 and  held  that
limitation starts running from the  date  when  the  mortgagee  demands  the
money and the mortgagor refused the same.
 Discussion on  the  said  issue
is as follows:-
“There is merit in the second contention made on behalf of  the  defendants.
It is case of usufructuary mortgage and in  case  of  usufructuary  mortgage
and no period for the payment of mortgage amount was fixed.  It is  not  the
case of the  plaintiffs  that  the  plaintiffs  ever  made  demand  for  the
mortgage amount and they refused.  In this situation,  no  cause  of  action
could accrue to the plaintiffs, which could only accrue  on  demand  of  the
mortgage amount from the defendants and refusal of same by  the  defendants.
This view also finds support from the  decision  in  the  case  of  Nilkanth
Balwant Natu & Ors. vs. Vidya Narasinh Bharathi Swami &  Ors.  AIR  1930  PC
188).
The law laid down in several cases referred to by the  learned  counsel  for
the plaintiffs relating to the interpretation of provisions  of  Section  28
and Article 148 of the Limitation Act, does not apply on the  facts  of  the
instant case at all as the periods of limitation is to run from the date  on
which the  cause  of  action  arises.   In  the  result,  I  hold  that  the
plaintiffs have not become owners of the suit land on the expiry  of  period
of more than 60 years.   Issue  No.1  is  thus  decided  in  favour  of  the
plaintiffs and against the defendants, and Issue  No.2  is  decided  against
the plaintiffs and in favour of defendants.”=
T.P. Act and the Limitation Act:-
“T.P. Act

58. "Mortgage", "mortgagor", "mortgagee", "mortgage-money"  and  "mortgaged"
defined.


(a) A mortgage is  the  transfer  of  an  interest  in  specific  immoveable
property for the purpose of securing the payment of money advanced or to  be
advanced by way of loan, an existing or future debt, or the  performance  of
an engagement which may give rise to a pecuniary liability.


The transferor is called  a  mortgagor,  the  transferee  a  mortgagee;  the
principal money and interest of which payment is secured for the time  being
are called the mortgage-money, and the instrument  (if  any)  by  which  the
transfer is effected is called a mortgage-deed.


(b) Simple mortgage-Where, without delivering possession  of  the  mortgaged
property, the mortgagor binds himself personally to pay the  mortgage-money,
and agrees, expressly or impliedly, that, in the event  of  his  failing  to
pay according to his contract, the mortgagee shall have  a  right  to  cause
the mortgaged property to be sold and the proceeds of sale  to  be  applied,
so  far  as  may  be  necessary,  in  payment  of  the  mortgage-money,  the
transaction  is  called  a  simple  mortgage  and  the  mortgagee  a  simple
mortgagee.


(c) Mortgage by conditional sale-Where, the mortgagor ostensibly  sells  the
mortgaged property-


on condition that on default of payment of the mortgage-money on  a  certain
date the sale shall become absolute, or


on condition that on such payment being made the sale shall become void, or


on condition that on such payment being made the buyer  shall  transfer  the
property to the seller,


the transaction is called a mortgage by conditional sale and  the  mortgagee
a mortgagee by conditional sale:


PROVIDED that no such transaction shall be deemed to be a  mortgage,  unless
the condition is embodied in the  document  which  effects  or  purports  to
effect the sale.


(d) Usufructuary  mortgage-Where  the  mortgagor  delivers   possession   or
expressly or by implication binds  himself  to  deliver  possession  of  the
mortgaged property to the mortgagee,  and  authorizes  him  to  retain  such
possession until payment of the mortgage-money, and  to  receive  the  rents
and profits accruing from the  property  or  any  part  of  such  rents  and
profits and to appropriate the same in lieu of interest  or  in  payment  of
the mortgage-money, or partly in lieu of interest or partly  in  payment  of
the mortgage-money, the transaction is called a  usufructuary  mortgage  and
the mortgagee a usufructuary mortgagee.


(e) English  mortgage-Where  the  mortgagor  binds  himself  to  repay   the
mortgage-money on a certain  date,  and  transfers  the  mortgaged  property
absolutely to the mortgagee, but subject to  a  proviso  that  he  will  re-
transfer it to the mortgagor upon payment of the mortgage-money  as  agreed,
the transaction is called an English mortgage.


(f) Mortgage by  deposit  of  title-deeds-Where  a  person  in  any  of  the
following towns, namely, the towns of Calcutta, Madras, and Bombay,  and  in
any other town which the State Government concerned may, by notification  in
the Official Gazette, specify in this behalf, delivers to a creditor or  his
agent documents of title to immovable property,  with  intent  to  create  a
security thereon, the transaction is called a mortgage by deposit of  title-
deeds.


(g) Anomalous  mortgage-A  mortgage  which  is  not  a  simple  mortgage,  a
mortgage by conditional sale, a usufructuary mortgage, an  English  mortgage
or a mortgage by deposit of title-deeds within the meaning of  this  section
is called an anomalous mortgage.


60. Right of mortgagor to redeem


At any time after the principal money has become due, the  mortgagor  has  a
right, on payment or tender, at a proper time and place,  of  the  mortgage-
money, to require  the  mortgagee  (a)  to  deliver  to  the  mortgagor  the
mortgage-deed and all documents relating to  the  mortgaged  property  which
are in the possession or power of the mortgagee, (b) where the mortgagee  is
in possession of the mortgaged property, to deliver  possession  thereof  to
the mortgagor, and (c) at the cost of the mortgagor  either  to  re-transfer
the mortgaged property to him or to such third person as he may  direct,  or
to execute and (where  the  mortgage  has  been  effected  by  a  registered
instrument) to have registered an acknowledgment in writing that  any  right
in derogation  of  his  interest  transferred  to  the  mortgagee  has  been
extinguished:
Provided that the right conferred by this section has not been  extinguished
by the act of the parties or by decree of a court.


xxx xxx xxx


62. Right of usufructuary mortgagor to recover possession


In the case of a  usufructuary  mortgage,  the  mortgagor  has  a  right  to
recover possession of the property together with the mortgage-deed  and  all
documents relating to the mortgaged property which are in the possession  or
power of the mortgagee,-


(a) where the mortgagee is authorised  to  pay  himself  the  mortgage-money
from the rents and profits of the property,-when such money is paid;


(b) where the mortgagee is authorised to pay himself  from  such  rents  and
profits or any part thereof a part only  of  the  mortgage-money,  when  the
term (if any) prescribed for the payment of the mortgage-money  has  expired
and the mortgagor pays or tenders to the mortgagee  the  mortgage  money  or
the balance thereof or deposits it in court hereinafter provided.

xxx xxx xxx

Limitation Act:-

Art. 61 By a mortgagor

|a) To redeem or      |Thirty    |When the right to    |
|recover possession of|years     |redeem or to recover |
|immovable property   |          |possession accrues   |
|mortgaged            |          |                     |
|b)  xxxxxxx          |          |xxxxxxxx             |
|                     |          |                     |
|                     |xxxxxx    |                     |



 In
cases where distinction in usufructuary mortgagor’s right under  Section  62
of the T.P. Act has been noted, right to redeem has been  held  to  continue
till the mortgage money is paid for which there is no time  limit  while  in
other cases right to redeem has been held to accrue on the date of  mortgage
resulting in extinguishment of right of redemption after 30 years.

15.   We, thus, hold that special  right  of  usufructuary  mortgagor  under
Section 62 of the T.P. Act to recover possession  commences  in  the  manner
specified therein, i.e., when mortgage  money  is  paid  out  of  rents  and
profits or partly out of rents and profits and partly by payment or  deposit
by mortgagor.  Until  then,  limitation  does  not  start  for  purposes  of
Article 61 of the Schedule to the Limitation Act.  A usufructuary  mortgagee
is not entitled to file a suit for declaration that he had become  an  owner
merely on the expiry of 30 years from the date of the mortgage.   We  answer
the question accordingly.

16.   On this conclusion, the view taken by  the  Punjab  and  Haryana  High
Court will stand affirmed and contrary view taken by  the  Himachal  Pradesh
High Court in Bhandaru Ram (D) Thr. L.R. Ratan  Lal  vs.  Sukh  Ram  (supra)
will stand over-ruled.
17.    The appeals are dismissed.

2014 - Aug. Part - http://judis.nic.in/supremecourt/filename=41839

                                                                  REPORTABLE



                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO.5198 OF 2008




Singh Ram (D) Thr. L.Rs.                          ...   Appellant (s)
                                   Versus
Sheo Ram & Ors.                             ...   Respondent (s)

                            With

Civil Appeal No. 7941 of 2014 @ S.L.P.(C) No. 26861 of  2008,  Civil  Appeal
No. 1113 of 2009, Civil Appeal No. 7942  of 2014 @  S.L.P.(C)  No.  2097  of
2009, Civil Appeal No. 7943  of 2014 @ S.L.P.(C)  No.  6355  of  2009  Civil
Appeal No. 5562 of 2009, Civil Appeal No. 7944   of  2014  @  S.L.P.(C)  No.
22604 of 2009, Civil Appeal No. 7947  of  2014  @  S.L.P.(C)  No.  23963  of
2009, Civil Appeal No. 8551 of 2009,  Civil  Appeal  No.  7948   of  2014  @
S.L.P.(C) No. 25422 of 2011, Civil Appeal No. 7951  of 2014 @ S.L.P.(C)  No.
34380 of 2011, Civil Appeal No. 7953  of 2014 @ S.L.P.(C) No. 1274 of  2012,
Civil Appeal No. 7954  of 2014 @ S.L.P.(C) No. 1275 of  2012,  Civil  Appeal
No. 5256 of 2012, Civil Appeal No.  7955  of 2014 @ S.L.P.(C) No.  19048  of
2012, Civil Appeal No. 7956-58  of 2014 @ S.L.P.(C) Nos.  772-774  of  2013,
Civil Appeal No.  7959  of 2014 @ S.L.P.(C) No.5790 of  2013,  Civil  Appeal
No. 9616 of 2010, Civil Appeal No. 6014 of 2014, Civil Appeal  No.  5727  of
2011, Civil Appeal No. 8132 of 2011 and Civil Appeal No. 7573 of 2009




                               J U D G M E N T


Adarsh Kumar Goel, J.

1.    Leave granted in SLPs.

2.    These matters have been put up before this Bench in pursuance  of  the
order passed by a Bench of two Judges on 18.08.2008, as under:-
“As it appears that observations made by this Court in  Prabhakaran  &  Ors.
vs. M. Azhagiri Pillai & Ors., reported in 2006 (4) SCC 484,  in  regard  to
the  interpretation  and/or  application  of  Article  61  of  the  Schedule
appended to the Limitation Act, 1963 are contrary  to  the  principles  laid
down by this Court in a  large  number  of  decisions,  including  Jayasingh
Dhyanu Mhoprekar & Anr.  vs. Krishna Babaji Patil  &  Anr.,  [1985  (4)  SCC
162] as also various decisions referred to by the Full  Bench  of  the  High
Court, we are of the opinion that the matter should be  heard  by  a  larger
Bench.”

Before adverting to the question  of  reconciling  conflicting  opinions  in
various decisions,  including  the  two  decisions  referred  to  above,  we
consider it appropriate to mention that by the impugned judgment,  the  Full
Bench of the High Court of Punjab and Haryana at Chandigarh, considered  the
question "whether there is any time  limit  for  usufructuary  mortgagor  to
seek redemption?” and decided the said question in the negative,  in  favour
of the respondent-mortgagor as follows:-

“Therefore, we  answer  the  questions  framed  to  hold  that  in  case  of
usufructuary mortgage, where no time limit is fixed to seek redemption,  the
right to seek redemption would not arise on the date of  mortgage  but  will
arise on the date when the mortgagor pays or tenders  to  the  mortgagee  or
deposits in Court, the mortgage money or the balance thereof.  Thus,  it  is
held that once a mortgage always a mortgage and is always redeemable.”

The correctness of the above view is the  subject  matter  of  consideration
before this Court.

3.    The predecessor of the respondents  mortgaged  the  suit  property  on
11.08.1903 to the predecessor of the appellants for a sum  of  Rs.80/-.  The
appellant-plaintiffs filed a suit for declaration that the suit land  having
not been redeemed for a period of more than 60 years,  the  defendants  lost
all rights, title and interest therein and the appellants became the  owners
by prescription.
4.    The trial Court considered the matter under Issue No.2 and  held  that
limitation starts running from the  date  when  the  mortgagee  demands  the
money and the mortgagor refused the same.    Discussion on  the  said  issue
is as follows:-
“There is merit in the second contention made on behalf of  the  defendants.
It is case of usufructuary mortgage and in  case  of  usufructuary  mortgage
and no period for the payment of mortgage amount was fixed.  It is  not  the
case of the  plaintiffs  that  the  plaintiffs  ever  made  demand  for  the
mortgage amount and they refused.  In this situation,  no  cause  of  action
could accrue to the plaintiffs, which could only accrue  on  demand  of  the
mortgage amount from the defendants and refusal of same by  the  defendants.
This view also finds support from the  decision  in  the  case  of  Nilkanth
Balwant Natu & Ors. vs. Vidya Narasinh Bharathi Swami &  Ors.  AIR  1930  PC
188).
The law laid down in several cases referred to by the  learned  counsel  for
the plaintiffs relating to the interpretation of provisions  of  Section  28
and Article 148 of the Limitation Act, does not apply on the  facts  of  the
instant case at all as the periods of limitation is to run from the date  on
which the  cause  of  action  arises.   In  the  result,  I  hold  that  the
plaintiffs have not become owners of the suit land on the expiry  of  period
of more than 60 years.   Issue  No.1  is  thus  decided  in  favour  of  the
plaintiffs and against the defendants, and Issue  No.2  is  decided  against
the plaintiffs and in favour of defendants.”

The above view was affirmed by the appellate Court as follows:-

“I find force in the contention of the learned counsel for the  respondents.
 The present one is a case of usufructuary mortgage and in case  of  such  a
mortgage no period of payment is fixed.  A  reading  of  the  mortgage  deed
would show that no time had been fixed.  The plaintiffs had nowhere  pleaded
that they ever made demand for the mortgage amount and it was  refused.   In
such a situation, the trial Court was right  in  coming  to  the  conclusion
that no cause of action could accrue to  the  plaintiffs  which  could  only
accrue on demand of the mortgage amount from the defendants and the  refusal
of the same by them.  Reliance was rightly placed  by  the  trial  court  on
Nilkanth Balwant Natu & Ors. vs. Vidya Narasingh Bhorathiswami &  Ors.,  AIR
1930 PC 188.  No contrary view law has been cited to persuade me to  take  a
contrary view.”

5.    On second appeal by the plaintiffs before the High Court,  the  matter
was directed to be placed before the Full Bench to  consider  the  following
questions:-

“1.  Whether the right to  seek  redemption  would  arise  on  the  date  of
mortgage itself in case of usufructuary  mortgage  when  no  time  limit  is
fixed to seek redemption?
2.      Whether there is any time  limit  in  the  case  of  a  usufructuary
mortgagor to get his property redeemed?”


6.    The Full Bench held that in case of usufructuary mortgage,  limitation
for recovery of possession under Article 61 of the Limitation Act starts  on
payment of mortgage money as provided under Section 62 of  the  Transfer  of
Property Act (for short ‘the T.P. Act’) and not from the date  of  mortgage.
Relevant observations are:-


“After considering the aforesaid judgments, we respectfully agree with   the
view of the Full Bench of this Court in Lachhman Singh’s  case  (supra)  and
that of Patna High Court in Jadubans Sahai’s case (Supra).   The  provisions
of Sections 60,  62  and  67  of  the  Transfer  of  Property  Act  are  not
applicable  within  the  jurisdiction  of  this  Court.   Therefore,   these
provisions are required to be interpreted keeping in view the principles  of
equity  and  good  conscience.   Since  the  mortgage  is  essentially   and
basically a conveyance in law or an assignment of  chattels  as  a  security
for the payment of debt or for  discharge  of  some  other  obligations  for
which it is given, the  security  must,  therefore,  be  redeemable  on  the
payment or discharge of such debt or obligation.  That is the  view  of  the
Hon’ble Supreme Court in Pomal Kanji Govindji’s case (supra) wherein it  has
also been held that poverty should not be unduly permitted to curtail  one’s
right to borrow money.  Since at one point of time the mortgagor for one  or
the other reason mortgaged his property to  avail  financial  assistance  on
account of necessities of life, the mortgagor’s right  cannot  be  permitted
to be defeated only on account  of  passage  of  time.   The  interpretation
sought to be raised  by  the  mortgagee  is  to  defeat  the  right  of  the
mortgagor and is wholly inequitable and unjust.  The  mortgagee  remains  in
possession of the mortgaged  property;  enjoys  the  usufruct  thereof  and,
therefore, not to lose anything by returning  the  security  on  receipt  of
mortgage debt.

Section 60 of the Act is general  in  nature  applicable  to  all  kinds  of
mortgages including usufructuary mortgage which is evident from  clause  (b)
of Section 60  of  the  Act,  where  the  mortgagee  in  possession  of  the
mortgaged property is required to deliver possession to the mortgagor.   But
Section 62 of the Act is a special provision dealing only  with  the  rights
of usufructuary mortgagor.  In terms of clause(a) of Section 62 of the  Act,
the suit is for possession after the  mortgage  comes  to  an  end  by  self
redeeming process  as  the  mortgagee  is  authorised  to  pay  himself  the
mortgage money from the rents and profits of the  property.   The  mortgagee
has to look to the rents and profits only to  repay  himself  and  when  his
entire charge  is  so  liquidated  he  must  re-deliver  possession  of  the
mortgaged property to the mortgagor.  However,  in  terms  of  clause(b)  of
Section 62 of the Act, the right of the  mortgagor  will  arise  only  after
rents and profits derived by the  mortgagee  out  of  the  usufruct  of  the
mortgaged property are adjusted towards the interest or  the  principal  and
on  mortgagor  paying  the  balance  in  the  manner  prescribed.   In  such
mortgages, rents and profits are to be set  off  against  interest  and  the
mortgagee is entitled to retain possession until such time as the  mortgagor
chooses to redeem on payment of the principal sum secured.  Such  right  for
possession will accrue after the mortgage money is paid off.


The limitation of 30 years under Article  61(a)  begins  to  run  “when  the
right to redeem or the possession accrues”.   The  right  to  redemption  or
recover possession accrues to the mortgagor on payment  of  sum  secured  in
case of usufructuary mortgage, where rents and profits are  to  be  set  off
against interest  on  the  mortgage  debt,  on  payment  or  tender  to  the
mortgagee, the mortgage money or balance thereof or deposit  in  the  court.
The right to seek  foreclosure  is  co-extensive  with  the  right  to  seek
redemption.  Since right to seek redemption accrues only on payment  of  the
mortgage money or the balance thereof after adjustment of rents and  profits
from the interest thereof, therefore, right of foreclosure will  not  accrue
to the mortgagee till such time the mortgagee remains in possession  of  the
mortgaged security and is  appropriating  usufruct  of  the  mortgaged  land
towards the interest on the mortgaged debt.  Thus, the period of  redemption
or possession would not start till  such  time  usufruct  of  the  land  the
profits are being adjusted towards interest  on  the  mortgage  amount.   In
view of the said interpretation, the principle that once a mortgage,  always
a mortgage and, therefore always redeemable would be applicable.


The argument that after the expiry  of  period  of  limitation  to  sue  for
foreclosure, the mortgagees have a right to seek declaration in  respect  of
their title over the suit property  is  not  correct.   From  the  aforesaid
discussion, it is apparent that the mortgage cannot be extinguished  by  any
unilateral act of the mortgagee.  Since the mortgage cannot be  unilaterally
terminated, therefore, the declaration claimed is nothing  but  a  suit  for
foreclosure.  It is equally well settled that it is not title of  the  suit,
which determines the nature  of  the  suit.   The  nature  of  the  suit  is
required to be determined by reading all the averments in the plaint.   Such
declaration cannot be claimed by an usufructuary mortgagee.


Thus, we prefer to follow the dictum of law laid down by  the  larger  Bench
in Seth Ganga Dhar’s case(supra) as well as  judgments  of  Hon’ble  Supreme
Court in Jaysingh Dnyanu Mhoprekar’s  case(supra),  Pomal  Kanji  Govindji’s
case(supra), Panchannan Sharma’s case(supra) and  Harbans’s  case(supra)  in
preference to the judgments relied upon by the mortgagees  in  Prabhakaran’s
case(supra) and Sampuran Singh’s case (supra).”


7.    We have heard learned counsel for the parties.

8.    The main contention urged on behalf of  the  appellants  is  that  the
right of mortgagor to redeem is governed by Article 61 of  the  Schedule  to
the Limitation Act and the right to redeem or recover possession accrues  on
the date of the mortgage itself, unless a different time is  agreed  between
the parties.  Since the mortgagor has right to  redeem  on  payment  of  the
mortgage money and there can be no restriction on the mortgagor to  exercise
his right on the date of mortgage itself, period  of  limitation  starts  on
the date of mortgage and on expiry  thereof,  right  to  recover  possession
comes to an end. The expiry of limitation not only bars the remedy but  also
the right to seek possession as provided under Section 27 of the  Limitation
Act. It is submitted that this Court has dealt with the  issue  in  Sampuran
Singh & Ors. vs. Niranjan Kaur (smt.) & Ors., (1999) 2 SCC  679.   There  is
no occasion to reconsider the said view.  Reliance is also placed on a  Full
Bench decision of the High Court of Himachal Pradesh  in  Bhandaru  Ram  (D)
Thr. L.R. Ratan Lal vs. Sukh  Ram,  AIR  2012  (H.P.)  1  (FB)  wherein  the
impugned judgment of the Full Bench of the Punjab  and  Haryana  High  Court
has been expressly dissented from and it has been concluded that the  period
of limitation for filing a suit for  recovery  of  possession  of  immovable
property or redemption of usufructuary mortgage, which have  not  fixed  any
time for  repayment of  mortgage  money,  is  30  years  from  the  date  of
mortgage, as prescribed under Article 61 of the Schedule to  the  Limitation
Act, 1963 (60 years under Article 148 as per Indian Limitation  Act,  1908).

9.    Learned counsel for the respondents support  the  view  taken  by  the
High Court and submit that the usufructuary mortgage was different from  any
other mortgage and the person, who parts with  possession  of  his  property
from rents and profits of which the mortgagee was entitled  to  recover  the
mortgage money, could not be placed at par with  a  mortgagor  who  had  not
given possession of the property to mortgagee and allowed  the  usufruct  of
the property to be used for payment  of  mortgage  money.   In  such  cases,
limitation could not run from  the  date  of  mortgage  but  from  the  date
mortgage money is paid out of rents and  profits  of  the  property  to  the
knowledge of the mortgagor or from the date of payment  or  deposit  by  the
mortgagor.  Mere expiry  of  time  from  the  date  of  mortgage  could  not
extinguish the right of redemption and to recover possession.
10.   We have given  our  anxious  consideration  to  the  question  of  law
arising in the cases.
11.   We are in agreement with the view taken in the impugned judgment  that
in a usufructuary mortgage, right to recover possession continues  till  the
money is paid from the rents and profits or where it is partly paid  out  of
rents and profits when the balance is paid by the mortgagor or deposited  in
Court as provided under Section 62 of the T.P. Act.
12.   It will be appropriate to refer to the  statutory  provisions  of  the
T.P. Act and the Limitation Act:-
“T.P. Act

58. "Mortgage", "mortgagor", "mortgagee", "mortgage-money"  and  "mortgaged"
defined.


(a) A mortgage is  the  transfer  of  an  interest  in  specific  immoveable
property for the purpose of securing the payment of money advanced or to  be
advanced by way of loan, an existing or future debt, or the  performance  of
an engagement which may give rise to a pecuniary liability.


The transferor is called  a  mortgagor,  the  transferee  a  mortgagee;  the
principal money and interest of which payment is secured for the time  being
are called the mortgage-money, and the instrument  (if  any)  by  which  the
transfer is effected is called a mortgage-deed.


(b) Simple mortgage-Where, without delivering possession  of  the  mortgaged
property, the mortgagor binds himself personally to pay the  mortgage-money,
and agrees, expressly or impliedly, that, in the event  of  his  failing  to
pay according to his contract, the mortgagee shall have  a  right  to  cause
the mortgaged property to be sold and the proceeds of sale  to  be  applied,
so  far  as  may  be  necessary,  in  payment  of  the  mortgage-money,  the
transaction  is  called  a  simple  mortgage  and  the  mortgagee  a  simple
mortgagee.


(c) Mortgage by conditional sale-Where, the mortgagor ostensibly  sells  the
mortgaged property-


on condition that on default of payment of the mortgage-money on  a  certain
date the sale shall become absolute, or


on condition that on such payment being made the sale shall become void, or


on condition that on such payment being made the buyer  shall  transfer  the
property to the seller,


the transaction is called a mortgage by conditional sale and  the  mortgagee
a mortgagee by conditional sale:


PROVIDED that no such transaction shall be deemed to be a  mortgage,  unless
the condition is embodied in the  document  which  effects  or  purports  to
effect the sale.


(d) Usufructuary  mortgage-Where  the  mortgagor  delivers   possession   or
expressly or by implication binds  himself  to  deliver  possession  of  the
mortgaged property to the mortgagee,  and  authorizes  him  to  retain  such
possession until payment of the mortgage-money, and  to  receive  the  rents
and profits accruing from the  property  or  any  part  of  such  rents  and
profits and to appropriate the same in lieu of interest  or  in  payment  of
the mortgage-money, or partly in lieu of interest or partly  in  payment  of
the mortgage-money, the transaction is called a  usufructuary  mortgage  and
the mortgagee a usufructuary mortgagee.


(e) English  mortgage-Where  the  mortgagor  binds  himself  to  repay   the
mortgage-money on a certain  date,  and  transfers  the  mortgaged  property
absolutely to the mortgagee, but subject to  a  proviso  that  he  will  re-
transfer it to the mortgagor upon payment of the mortgage-money  as  agreed,
the transaction is called an English mortgage.


(f) Mortgage by  deposit  of  title-deeds-Where  a  person  in  any  of  the
following towns, namely, the towns of Calcutta, Madras, and Bombay,  and  in
any other town which the State Government concerned may, by notification  in
the Official Gazette, specify in this behalf, delivers to a creditor or  his
agent documents of title to immovable property,  with  intent  to  create  a
security thereon, the transaction is called a mortgage by deposit of  title-
deeds.


(g) Anomalous  mortgage-A  mortgage  which  is  not  a  simple  mortgage,  a
mortgage by conditional sale, a usufructuary mortgage, an  English  mortgage
or a mortgage by deposit of title-deeds within the meaning of  this  section
is called an anomalous mortgage.


60. Right of mortgagor to redeem


At any time after the principal money has become due, the  mortgagor  has  a
right, on payment or tender, at a proper time and place,  of  the  mortgage-
money, to require  the  mortgagee  (a)  to  deliver  to  the  mortgagor  the
mortgage-deed and all documents relating to  the  mortgaged  property  which
are in the possession or power of the mortgagee, (b) where the mortgagee  is
in possession of the mortgaged property, to deliver  possession  thereof  to
the mortgagor, and (c) at the cost of the mortgagor  either  to  re-transfer
the mortgaged property to him or to such third person as he may  direct,  or
to execute and (where  the  mortgage  has  been  effected  by  a  registered
instrument) to have registered an acknowledgment in writing that  any  right
in derogation  of  his  interest  transferred  to  the  mortgagee  has  been
extinguished:
Provided that the right conferred by this section has not been  extinguished
by the act of the parties or by decree of a court.


xxx xxx xxx


62. Right of usufructuary mortgagor to recover possession


In the case of a  usufructuary  mortgage,  the  mortgagor  has  a  right  to
recover possession of the property together with the mortgage-deed  and  all
documents relating to the mortgaged property which are in the possession  or
power of the mortgagee,-


(a) where the mortgagee is authorised  to  pay  himself  the  mortgage-money
from the rents and profits of the property,-when such money is paid;


(b) where the mortgagee is authorised to pay himself  from  such  rents  and
profits or any part thereof a part only  of  the  mortgage-money,  when  the
term (if any) prescribed for the payment of the mortgage-money  has  expired
and the mortgagor pays or tenders to the mortgagee  the  mortgage  money  or
the balance thereof or deposits it in court hereinafter provided.

xxx xxx xxx

Limitation Act:-

Art. 61 By a mortgagor

|a) To redeem or      |Thirty    |When the right to    |
|recover possession of|years     |redeem or to recover |
|immovable property   |          |possession accrues   |
|mortgaged            |          |                     |
|b)  xxxxxxx          |          |xxxxxxxx             |
|                     |          |                     |
|                     |xxxxxx    |                     |


                                           (emphasis supplied)


A perusal of above provisions shows that  Article  61  refers  to  right  to
redeem or recover possession.  While right of mortgagor to redeem  is  dealt
with under Section 60 of the T.P. Act, the right of  usufructuary  mortgagor
to recover possession is specially dealt with under Section 62.  Section  62
is applicable only to usufructuary mortgages and not to any other  mortgage.
 The said right  of  usufructuary  mortgagor  though  styled  as  ‘right  to
recover possession’ is for all purposes, right  to  redeem  and  to  recover
possession.  Thus, while in case of any other mortgage, right to  redeem  is
covered under Section  60,  in  case  of  usufructuary  mortgage,  right  to
recover possession is dealt with under Section 62 and commences  on  payment
of mortgage money out of the usufructs or partly out of  the  usufructs  and
partly on payment or deposit  by  the  mortgagor.   This  distinction  in  a
usufructuary mortgage and any other  mortgage  is  clearly  borne  out  from
provisions of Sections 58, 60 and 62 of the T.P. Act read  with  Article  61
of the Schedule to the Limitation  Act.   Usufructuary  mortgage  cannot  be
treated at par with any other mortgage, as doing so will defeat  the  scheme
of Section  62  of  the  T.P.  Act  and  the  equity.   This  right  of  the
usufructuary mortgagor is not only an  equitable  right,  it  has  statutory
recognition under Section 62 of the T.P. Act.     There is no  principle  of
law on which this right can be defeated.  Any contrary view, which does  not
take into account the special right of usufructuary mortgagor under  Section
62 of the T.P. Act, has to be held to be erroneous on this ground or has  to
be limited to a mortgage other than a usufructuary  mortgage.   Accordingly,
we uphold the view taken by the Full Bench  that  in  case  of  usufructuary
mortgage, mere expiry of a period of 30 years from the date of  creation  of
the mortgage does not extinguish the right of the  mortgagor  under  Section
62 of the T.P. Act.
13.   We may now refer to decisions of this Court.
(i)   In Prabhakaran & Ors. vs. M. Azhagiri Pillai  &  Ors.,  (2006)  4  SCC
484, suit of mortgagor for redemption was  held  to  be  within  limitation.
However, in para 13, it was observed:-
“13. Article 148 of the Limitation Act, 1908 (referred to as “the old  Act”)
provided a limitation of 60 years for a suit against a mortgagee  to  redeem
or to recover possession of immovable property mortgaged. The  corresponding
provision in the Limitation Act, 1963 (“the  new  Act”  or  “the  Limitation
Act” for short),  is  Article  61(a)  which  provides  that  the  period  of
limitation for a suit by a mortgagor to redeem or recover possession of  the
immovable property mortgaged is 30 years. The period  of  limitation  begins
to run when the right to redeem or to recover  possession  accrues.  In  the
case of a usufructuary mortgage which does not fix any  date  for  repayment
of the mortgage money, but merely stipulates that the mortgagee is  entitled
to be in possession till  redemption,  the  right  to  redeem  would  accrue
immediately on execution of the mortgage deed and the mortgagor has to  file
a suit for redemption within  30  years  from  the  date  of  the  mortgage.
Section 27 of the Limitation Act provides that “at the determination of  the
period hereby limited to any person for instituting a  suit  for  possession
of any property, his right to such property  shall  be  extinguished”.  This
would mean that on the expiry of the period of limitation  prescribed  under
the Act, the mortgagor would lose his right  to  redeem  and  the  mortgagee
would become entitled to continue in possession as the full owner.”

The above observations do  not  take  into  account  the  special  right  of
usufructuary  mortgagor  under  Section  62  of  the  T.P.  Act  to  recover
possession which commences after mortgage money is paid  out  of  rents  and
profits or partly out of rents and profits and  partly paid or deposited  by
mortgagor.  Thus, we are unable to accept the same as correct view in law.
(ii)  In Jayasingh Dhyanu Mhoprekar & Anr. vs. Krishna Babaji Patil &  Anr.,
1985 (4) SCC 162,  the  question  of  limitation  for   redemption  was  not
involved. Question was whether mortgagor’s right of redemption was  affected
when mortgaged land was allotted to mortgagees by way  of  grant  under  the
provisions of  the Bombay Paragana  and  Kulkarni  Watans  (Abolition)  Act,
1950, it was observed:-
“6. The only question which arises for decision in this case is  whether  by
reason of the grant made in favour of the defendants  the  right  to  redeem
the mortgage can be treated  as  having  become  extinguished.  It  is  well
settled that the right of redemption under a mortgage deed can  come  to  an
end only in a manner known to law. Such extinguishment  of  right  can  take
place by a contract between the parties, by  a  merger  or  by  a  statutory
provision  which  debars  the  mortgagor  from  redeeming  the  mortgage.  A
mortgagee who has entered into possession of the mortgaged property under  a
mortgage will have to give up possession of the property when the  suit  for
redemption is filed unless he is able to show that the right  of  redemption
has come to an end or that the suit is liable to be dismissed on some  other
valid ground. This flows from the legal principle  which  is  applicable  to
all mortgages, namely “Once a mortgage, always a mortgage”. It is  no  doubt
true that the father of the first defendant and the  second  defendant  have
been granted occupancy right  by  the  Prant  Officer  by  his  order  dated
February 5, 1964 along with Pandu, the uncle of Defendant 1. But it  is  not
disputed that the defendants would not have been able  to  secure  the  said
grant in their favour but for the fact that they were in  actual  possession
of the lands. They were able to be in possession of the  one-half  share  of
the plaintiffs in the lands in question  only  by  reason  of  the  mortgage
deed. If the mortgagors had been in possession of the lands on the  relevant
date, the lands would have  automatically  been  granted  in  their  favour,
since the rights of the tenants in the watan lands were allowed  to  subsist
even after the coming into force of the Act and the consequent abolition  of
the watans by virtue of Section 8 of the Act. The question  is  whether  the
position would be different because they had mortgaged land with  possession
on the relevant date.”

Apart from judgments mentioned in reference order, reference may be made  to
some other judgments dealing with the issue.
(iii) In Harbans vs. Om Prakash, (2006) 1 SCC 129,  this  Court  upheld  the
view that limitation for redemption does not start from date of mortgage  in
a usufructuary mortgage and held that view in State of  Punjab  &  Ors.  vs.
Ram Rakha & Ors., (1997) 10 SCC 172 was contrary to  earlier  view  in  Seth
Gangadhar vs. Shankar Lal, 1959 SCR 509. It was observed:-
“7. Reference may be made to  certain  paragraphs  in  Seth  Ganga  Dhar  v.
Shankar Lal, 1959 SCR 509 which read as follows:

“[4.] It is admitted that the case is governed by the Transfer  of  Property
Act. Under Section 60 of that Act, at any time  after  the  principal  money
has become due, the mortgagor has a  right  on  payment  or  tender  of  the
mortgage money to require the mortgagee to reconvey the  mortgaged  property
to him. The right conferred by this section has been  called  the  right  to
redeem and the appellant sought to enforce this right  by  his  suit.  Under
this section, however, that right can be exercised only after  the  mortgage
money has become due. In Bakhtawar Begam v. [pic]Husaini  Khanam,ILR  (1914)
36 All 195 (IA at p. 89) also the same view was expressed in these words:

‘Ordinarily, and in  the  absence  of  a  special  condition  entitling  the
mortgagor to redeem during the term for which the mortgage is  created,  the
right of redemption can only  arise  on  the  expiration  of  the  specified
period.’
Now, in the present case the term of the mortgage is eighty-five  years  and
there is no stipulation entitling the mortgagor to redeem during that  term.
That term has not yet expired. The respondents, therefore, contend that  the
suit is premature and liable to be dismissed.
*     *     *
[6.] The rule against clogs on the equity of redemption is that, a  mortgage
shall always be redeemable and a mortgagor’s right to redeem  shall  neither
be taken away nor be limited  by  any  contract  between  the  parties.  The
principle behind the rule was expressed  by  Lindley,  M.R.  In  Santley  v.
Wilde, (1899) 2 Ch. 474 in these words:

‘The principle is this: a mortgage is a conveyance of land or an  assignment
of chattels as a security for the payment of a  debt  or  the  discharge  of
some other obligation for  which  it  is  given.  This  is  the  idea  of  a
mortgage: and the security is redeemable on  the  payment  or  discharge  of
such debt or obligation, any  provision  to  the  contrary  notwithstanding.
That, in  my  opinion,  is  the  law.  Any  provision  inserted  to  prevent
redemption on payment or performance of the debt  or  obligation  for  which
the security was given is what is meant by a clog or fetter  on  the  equity
of redemption and is therefore void. It follows  from  this,  that  “once  a
mortgage always a mortgage”.’

[7.] The right of redemption, therefore, cannot be taken  away.  The  courts
will ignore any contract the effect of which is to deprive the mortgagor  of
his right to redeem the mortgage. One thing, therefore,  is  clear,  namely,
that the term  in  the  mortgage  contract,  that  on  the  failure  of  the
mortgagor to redeem the mortgage within the specified period of  six  months
the mortgagor will have no  claim  over  the  mortgaged  property,  and  the
mortgage deed will be deemed  to  be  a  deed  of  sale  in  favour  of  the
mortgagee, cannot be  sustained.  It  plainly  takes  away  altogether,  the
mortgagor’s right to redeem the mortgage after the  specified  period.  This
is not permissible, for ‘once a mortgage always a  mortgage’  and  therefore
always redeemable. The same result also  follows  from  Section  60  of  the
Transfer of Property Act. So it was said in Mohd. Sher Khan  v.  Seth  Swami
Dayal, AIR 1922 PC 17:

‘An anomalous mortgage enabling a mortgagee after a lapse  of  time  and  in
the absence of redemption to enter and take the rents  in  [pic]satisfaction
of the interest would be perfectly valid  if  it  did  not  also  hinder  an
existing right  to  redeem.  But  it  is  this  that  the  present  mortgage
undoubtedly purports to effect. It  is  expressly  stated  to  be  for  five
years, and after that period  the  principal  money  became  payable.  This,
under Section 60 of the Transfer of Property Act, is the event on which  the
mortgagor had a right on payment of the mortgage money to redeem.

[14.] In comparatively recent times  Viscount  Haldane,  L.C.  repeated  the
same view when he said in G. and C. Kreglinger v.  New  Patagonia  Meat  and
Cold Storage Co. Ltd, 1914 AC 25 (AC at pp. 35-36):

‘This jurisdiction was merely a special application of a more general  power
to relieve against penalties and to mould them  into  mere  securities.  The
case of the common law mortgage of land was indeed a  gross  one.  The  land
was conveyed to the creditor upon the condition that if  the  money  he  had
advanced to the feoffor was repaid on a date and at a place named,  the  fee
simple would revest in the  latter,  but  that  if  the  condition  was  not
strictly and literally fulfilled he should lose the land forever. What  made
the hardship on the debtor a glaring one was that the  debt  still  remained
unpaid and could be recovered from the feoffor notwithstanding that  he  had
actually forfeited the land to the mortgagee. Equity therefore, at an  early
date began to relieve against what was virtually  a  penalty  by  compelling
the creditor to use his legal title as a security.

My Lords, this  was  the  origin  of  the  jurisdiction  which  we  are  now
considering, and it is important to bear that origin in mind.  For  the  end
to accomplish which the jurisdiction has been evolved ought  to  govern  and
limit its exercise by equity judges. That end has always been to  ascertain,
by parol evidence  if  need  be,  the  real  nature  and  substance  of  the
transaction, and if it turned out to be in truth one of mortgage simply,  to
place it on that footing. It was, in ordinary cases, only  where  there  was
conduct which the Court of Chancery  regarded  as  unconscientious  that  it
interfered with freedom of contract.  The  lending  money,  on  mortgage  or
otherwise, was looked on with suspicion, and the court was on the  alert  to
discover want of conscience in the terms imposed by lenders.’

[15.] The reason then justifying the Court’s power to  relieve  a  mortgagor
from the effects of his bargain is its want of conscience.  [pic]Putting  it
in more familiar language the Court’s jurisdiction to  relieve  a  mortgagor
from his bargain depends on whether it was obtained by taking  advantage  of
any difficulty or embarrassment that he might have been in when he  borrowed
the moneys on the mortgage. Was the  mortgagor  oppressed?  Was  he  imposed
upon? If he was, then he may be entitled to relief.

[16.] We then have to see  if  there  was  anything  unconscionable  in  the
agreement that the mortgage would not be redeemed for eighty-five years.  Is
it oppressive? Was he forced to agree to it  because  of  his  difficulties?
Now this question is essentially one of fact and has to be  decided  on  the
circumstances of each case. It would be  wholly  unprofitable  in  enquiring
into this question to examine the large number  of  reported  cases  on  the
subject, for each turns on its own facts.

The section is unqualified in its terms, and contains  no  saving  provision
as other  sections  do  in  favour  of  contracts  to  the  contrary.  Their
Lordships therefore see no sufficient reason for withholding from the  words
of the section their full force and effect.’

[17.] First then, does the length of the term — and in this case it is  long
enough being eighty-five years itself lead to the conclusion that it was  an
oppressive term? In our view, it does not do so. It is not necessary for  us
to go so far as to say that the length of  the  term  of  the  mortgage  can
never by itself show that the bargain was oppressive. We do  not  desire  to
say anything on that question in this case. We think it enough to  say  that
we have nothing here to show that the length of the  term  was  in  any  way
disadvantageous to the mortgagor. It is quite conceivable  that  it  was  to
his advantage. The suit for redemption was brought  over  forty-seven  years
after the date of the mortgage. It seems to us impossible that if  the  term
was oppressive, that was not realised much  earlier  and  the  suit  brought
within a short time of the mortgage. The learned Judicial Commissioner  felt
that the respondents’ contention that the  suit  had  been  brought  as  the
price of landed property had gone up after the war, was  justified.  We  are
not prepared to say that he was wrong in this view. We cannot  also  ignore,
as appears from a large  number  of  reported  decisions,  that  it  is  not
uncommon in various parts of India to  have  long-term  mortgages.  Then  we
find that the property was subject to a prior mortgage.  We  are  not  aware
what the term of that mortgage was. But we find that that mortgage  included
another property which became free from it as a result of  the  mortgage  in
suit. This would show  that  the  mortgagee  under  this  mortgage  was  not
putting any  pressure  on  the  mortgagor.  That  conclusion  also  receives
support from the fact that the mortgage money  under  the  present  mortgage
was more than that under the earlier  mortgage  but  the  mortgagee  in  the
present case was satisfied with a smaller security. Again, no  complaint  is
made that the interest charged, which was to be measured by the rent of  the
property, was in any manner high. All these, to our mind, indicate that  the
mortgagee had not taken any unfair advantage of his position as the  lender,
nor that the mortgagor was under any financial embarrassment.

[18.] It is said that the mortgage  instrument  itself  indicates  that  the
bargain is hard, for, while the  mortgagor  cannot  redeem  for  eighty-five
years, the mortgagee is free to demand payment  of  his  dues  at  any  time
[pic]he likes. This contention is plainly fallacious. There  is  nothing  in
the mortgage instrument permitting the mortgagee to demand  any  money,  and
it is well settled that the mortgagee’s right to enforce  the  mortgage  and
the mortgagor’s right to redeem are coextensive.”

8. On the contrary, learned counsel for the  respondent  submitted  that  in
Panchanan Sharma v. Basudeo Prasad Jaganani, 1995 Supp (2) SCC  574  it  was
clearly  held  that  when  there  is  no  stipulation  regarding  period  of
limitation it can be redeemed at any time.  It  was,  inter  alia,  held  as
follows: (SCC p. 576, para 3)

“The  sale  certificate,  Ext.  C-II  does  not  bind  the  appellant   and,
therefore, the mortgage does not stand extinguished by reason of  the  sale.
It is inoperative as against the appellant.”

9. Though the decision in State of Punjab  case  prima  facie  supports  the
stand of the appellant, the decision rendered  by  a  three-Judge  Bench  of
this Court in Ganga Dhar case according to  us  had  dealt  with  the  legal
position deliberately and stated the same succinctly.”

(iv)  In Parichhan Mistry (Dead) by L.Rs. &  Anr.  vs.  Acchiabar  Mistry  &
Ors., (1996) 5 SCC 526, it was observed:-
“2. The High Court came to the conclusion that the mortgagors having  failed
to pay a portion of the rent for  realisation  of  which  the  landlord  had
filed a suit and obtained a  decree  and  that  said  decree  being  put  to
execution and the mortgagee having paid up the decretal dues, the  mortgagor
loses his right of redemption and, therefore the suit  for  redemption  must
fail. The [pic]learned Judge came to  the  conclusion  that  the  equity  of
redemption, in the facts and circumstances  of  the  case  was  extinguished
and, therefore, the mortgagor is not entitled to redeem. The short  question
that arises for consideration is whether in the facts and  circumstances  of
the case the High Court was right in coming to a conclusion  that  right  of
redemption got extinguished and the mortgagor had no  right  of  redemption.
It is true that a right of redemption under a mortgage deed can come  to  an
end, but only in a manner known to law. Such  extinguishment  of  right  can
take place by contract between the parties or by a decree of  the  court  or
by a statutory provision which debars  the  mortgagors  from  redeeming  the
mortgage. The mortgagor’s right of redemption is exercised  by  the  payment
or tender to the mortgagee at the proper time and at the  proper  place,  of
the mortgage money. When it is extinguished by the act of  the  parties  the
act  must  take  the  shape  and  observe  the  formalities  which  the  law
prescribes. The expression “act  of  parties”  refers  to  some  transaction
subsequent  to  the  mortgage  and  standing   apart   from   the   mortgage
transaction. A usufructuary mortgagee cannot by mere assertion  of  his  own
or by a unilateral act on his part, convert his position on  moiety  of  the
property as mortgagee into that of an absolute owner. It is  no  doubt  true
that the mortgagee would be  entitled  to  purchase  the  entire  equity  of
redemption from the mortgagor. The mortgagee occupies  a  peculiar  position
and, therefore, the question as to what he purchases at a court  sale  is  a
vexed question, but being in an advantageous position  where  the  mortgagee
availing  himself  of  his  position  gains  an  advantage  he  holds,  such
advantage is for the benefit of the mortgagor. It has been so held  by  this
Court in the case of Sidhakamal Nayan Ramanuj Das v. Bira Nayak,AIR 1954  SC
336 and Mritunjoy Pani v. Narmanda Bala  Sasmal,  (1962)  1  SCR  290.  This
being the position of law if for some default in  payment  of  rent  a  rent
decree is obtained and the  mortgagee  pays  off  the  same  even  then  the
mortgage in question  is  liable  to  be  redeemed  at  the  option  of  the
mortgagor. The mortgagee cannot escape from his obligation by  bringing  the
equity of redemption to sale in  execution  of  a  decree  on  the  personal
covenant. By virtue of purchase of the property by the  mortgagee  in  court
sale, no merger takes place between the two rights nor the  mortgage  stands
extinguished.”

(v)   In Achaldas Durgaji Oswal (Dead) Thr. L.Rs.  vs.  Ramvilas  Gangabisan
Heda (Dead) Thr. L.Rs. & Ors., (2003) 3 SCC 614, this Court upheld the  view
that right of redemption was not lost despite failure of a  mortgagor  in  a
usufructuary mortgage to make deposit in terms of a preliminary  decree  for
redemption. It was observed:-
“7. Mr Mohta, learned Senior Counsel appearing on behalf of the  respondents
on the other hand, would submit that whereas Order 34  Rule  7  would  apply
both in respect of the suit for  foreclosure  and  redemption  of  mortgage,
Order 34 Rule 8 thereof refers to final decree in redemption suit only.  The
learned counsel would contend that having  regard  to  the  well-established
rule “once a mortgage always a  mortgage”,  the  right  of  a  mortgagor  to
redeem the mortgage would continue unless the same  is  extinguished  either
by reason of a decree passed by a  court  of  law  or  by  an  agreement  of
parties. The learned counsel pointed out that in this case  the  application
for drawing up of a final decree was filed within a period  of  three  years
from the date of making the deposit and thus the  same  was  not  barred  by
limitation.

Findings

8. Usufructuary mortgage is defined in Section  58(d)  of  the  Transfer  of
Property Act in the following terms:

“58. (d)  Where  the  mortgagor  delivers  possession  or  expressly  or  by
implication binds himself to deliver possession of  the  mortgaged  property
to the mortgagee,  and  authorises  him  to  retain  such  possession  until
payment of  the  mortgage-money,  and  to  receive  the  rents  and  profits
accruing from the property or any part of such  rents  and  profits  and  to
appropriate the same  in  [pic]lieu  of  interest,  or  in  payment  of  the
mortgage-money, or partly in lieu of interest or partly in  payment  of  the
mortgage-money, the transaction is called an usufructuary mortgage  and  the
mortgagee an usufructuary mortgagee.”

9. Mortgagor, despite having mortgaged the property might  still  deal  with
it in any way consistent with  the  rights  of  the  mortgagee.  He  has  an
equitable right to redeem the property after the day fixed for  payment  has
gone by but his right or equity of  redemption  is  no  longer  strictly  an
equitable estate or interest although it  is  still  in  the  nature  of  an
equitable interest. (See Halsbury’s Laws of England, 4th Edn., Vol.  32,  p.
264.)

10. The right of the mortgagor, it is now well settled,  to  deal  with  the
mortgaged property as well as the limitation to which it is subject  depends
upon the nature of this ownership which is not absolute,  but  qualified  by
reason of the right of the  mortgagee  to  recover  his  money  out  of  the
proceedings. The right to redeem the  mortgage  is  a  very  valuable  right
possessed by the mortgagor. Such a right  to  redeem  the  mortgage  can  be
exercised before it is foreclosed or  the  estate  is  sold.  The  equitable
right of redemption is dependent  on  the  mortgagor  giving  the  mortgagee
reasonable notice of his intention to redeem and  on  his  fully  performing
his obligations under the mortgage.

11. The doctrine of redemption of mortgaged property was not  recognised  by
the Indian courts as the essence of the doctrine  of  equity  of  redemption
was unknown to the ancient law of India. The Privy  Council  in  Thumbasawmy
Mudelly v. Mohd. Hossain Rowthen called  upon  the  legislature  to  make  a
suitable amendment which was given a  statutory  recognition  by  reason  of
Section 60 of the Transfer of Property Act which reads thus:

“60. Right of mortgagor to redeem.—At any time  after  the  principal  money
has become due, the mortgagor has a  right,  on  payment  or  tender,  at  a
proper time and place, of the mortgage-money, to require the  mortgagee  (a)
to deliver to the mortgagor the mortgage-deed and all documents relating  to
the mortgaged  property  which  are  in  the  possession  or  power  of  the
mortgagee, (b) where  the  mortgagee  is  in  possession  of  the  mortgaged
property, to deliver possession thereof to the mortgagor,  and  (c)  at  the
cost of the mortgagor either to retransfer the mortgaged property to him  or
to such third person as  he  may  direct,  or  to  execute  and  (where  the
mortgage has been effected by a registered instrument)  to  have  registered
an acknowledgement in writing that any right in derogation of  his  interest
transferred to the mortgagee has been extinguished:

Provided that the right conferred by this section has not been  extinguished
by act of the parties or by decree of a court.

The right conferred by this section is called a right to redeem and  a  suit
to enforce it is called a suit for redemption.

Nothing in this section shall be deemed to render invalid any  provision  to
the effect that, if the time fixed for payment of the  principal  money  has
[pic]been allowed to pass or no such time  has  been  fixed,  the  mortgagee
shall be entitled to reasonable notice before  payment  or  tender  of  such
money.”

12. A right of redemption, thus, was statutorily recognized as a right of  a
mortgagor as an incident of mortgage which subsists so long as the  mortgage
itself  subsists.  The  proviso  appended  to   Section   60,   as   noticed
hereinbefore, however, confines the said right so long as the  same  is  not
extinguished by an act of the parties or by a decree of court.

13. In the Law of Mortgage by Dr Rashbehary Ghose at pp.  231-32  under  the
heading “Once a mortgage, always a mortgage”, it is noticed:

“In 1681 Lord Nottingham in the leading case of  Howard  v.  Harris4  firmly
laid down the principle: ‘Once a mortgage, always a  mortgage’.  This  is  a
doctrine to protect the mortgagor’s right  of  redemption:  it  renders  all
agreements in a mortgage for forfeiture of the  right  to  redeem  and  also
encumbrances of or dealings with the property by the mortgagee as against  a
mortgagor coming to redeem. In 1902 the well-known maxim, ‘once a  mortgage,
always a mortgage’, was  supplemented  by  the  words  ‘and  nothing  but  a
mortgage’ added by Lord Davey in the leading case  of  Noakes  v.  Rice5  in
which the maxim was explained to  mean  ‘that  a  mortgage  cannot  be  made
irredeemable and a provision to that effect is void’.  The  maxim  has  been
supplemented in the Indian  context  by  the  words  ‘and  therefore  always
redeemable’, added by Justice Sarkar of the Supreme Court  in  the  case  of
Seth Ganga Dhar v. Shankar Lal.

It is thus evident that the  very  conception  of  mortgage  involves  three
principles.  First,  there  is  the  maxim:  ‘once  a  mortgage,  always   a
mortgage’. That is to  say,  a  mortgage  is  always  redeemable  and  if  a
contrary provision is made, it is invalid. And this is an exception  to  the
aphorism, modus et conventio vincunt legem (custom  and  agreement  overrule
law). Secondly, the mortgagee  cannot  reserve  to  himself  any  collateral
advantage outside the mortgage agreement. Thirdly, as a corollary  from  the
first another principle may be deduced, namely, ‘once a mortgage,  always  a
mortgage, and nothing but a  mortgage’.  In  other  words,  any  stipulation
which prevents a mortgagor from  getting  back  the  property  mortgaged  is
void. That is, a mortgage is always redeemable.

The maxim ‘once a mortgage always a mortgage’ may be said to  be  a  logical
corollary from the doctrine, which is the very  foundation  of  the  law  of
mortgages, that time  is  not  of  the  essence  of  the  contract  in  such
transactions; for the protection which the law throws around  the  mortgagor
might be rendered wholly illusory, if the right to redeem could  be  limited
by contract between the parties.  Right  to  redeem  is  an  incident  of  a
subsisting mortgage and  is  inseparable  from  it  so  that  the  right  is
coextensive with the  mortgage  itself.  The  right  subsists  until  it  is
[pic]appropriately and effectively extinguished either by the  acts  of  the
parties concerned or by a proper decree of the competent court.”

4. In The Law of Mortgages by Edward F. Cousins at p. 294,  in  relation  to
protection of the right to redeem, it is stated:

“But the protection of embarrassed mortgagors could not be achieved  by  the
mere creation of the equitable right of redemption. As soon as the  practice
in equity  to  allow  redemption  after  the  contract  date  became  known,
mortgagees  sought  to  defeat  the  intervention  of  equity   by   special
provisions in the mortgage-deed. These provisions were  designed  either  to
render the legal right to redeem illusory, and thus prevent  the  equity  of
redemption from arising  at  all,  or  to  defeat  or  clog  the  equity  of
redemption after it had arisen. For example,  the  mortgage  contract  might
provide for an option for the mortgagee to purchase the mortgaged  property,
thus defeating both the legal and equitable right to redeem, or might  allow
redemption after the contract date only upon payment of  an  additional  sum
or  upon  performance  of  some  additional  obligation.  Consequently,  the
Chancellor  began  to  relieve  mortgagors  against  such  restrictions  and
fetters on the legal and equitable  rights  to  redeem  imposed  by  special
covenants in the mortgage.

The protection of a mortgagor against all attempts to  defeat  or  clog  his
right of redemption involved the creation of  subsidiary  rules  of  equity,
invalidating the various contrivances which ingenious conveyancers  devised.
These rules are sometimes summed up in a maxim of equity  ‘once  a  mortgage
always a mortgage’. This means  that  once  a  contract  is  seen  to  be  a
mortgage no provision in the contract will be valid if  it  is  inconsistent
with the right of the mortgagor to recover his security on  discharging  his
obligations. Provisions offending against the maxim  may  either  touch  the
contractual terms of redemption, rendering the right to redeem illusory,  or
they may touch only the equitable right to redeem after the passing  of  the
contract date, hampering the  exercise  of  the  right.  Provisions  of  the
latter kind are termed ‘clogs’ on the equity of redemption. Greene, M.R.  in
Knightsbridge Estates v. Byrne7  emphasized  that  provisions  touching  the
contractual right to redeem are not properly to be classed as clogs  on  the
equity of redemption.  But  it  is  evident  that  such  provisions  are  in
substance clogs on the equity of redemption, since they tend  to  defeat  it
altogether.”

15. In Fisher and Lightwood’s Law of Mortgage, the nature of  the  right  of
redemption is stated thus:

“The rights of redemption.— The right to  redeem  a  mortgage  was  formerly
conferred on the mortgagor by a proviso or condition in the mortgage to  the
effect that, if the mortgagor  or  his  representative  should  pay  to  the
mortgagee the principal sum, with interest at the rate fixed, on  a  certain
day, the mortgagee, or the person in whom the estate was vested,  would,  at
the cost of the person redeeming, reconvey  to  him  or  as  [pic]he  should
direct (a). This is still the practice in the case of  a  mortgage  effected
by  an  assignment  of  the  mortgagor’s  interest  (b).   A   proviso   for
reconveyance was no longer appropriate after 1925 for a  legal  mortgage  of
land [which has to be made by demise (c)], and it is not necessary  to  have
a proviso for surrender of the term in  such  a  mortgage,  since  the  term
ceases on repayment (d). Nevertheless, in order to define the rights of  the
mortgagor and the mortgagee, a proviso is inserted  expressly  stating  that
the term will cease at the date fixed (e).

It has been seen (f) that, at law, whatever form  the  mortgage  took,  upon
non-payment by the appointed  time,  the  estate  of  the  mortgagee  became
absolute  and  irredeemable,  but  that  equity  intervened  to  enable  the
mortgagor to redeem after the date of repayment.

There are, therefore, two distinct rights  of  redemption  —  the  legal  or
contractual right to redeem on the appointed day and the equitable right  to
redeem thereafter (g). The equitable right  to  redeem,  which  only  arises
after the contractual date of redemption has passed, must  be  distinguished
from the equity of redemption, which arises when the mortgage is made (g).”

16. The question which falls  for  consideration  in  this  appeal  must  be
considered keeping in view the statutory right of the mortgagor in terms  of
Section 60 of the Transfer of Property Act. By reason of Article 61  of  the
Limitation Act, 1963, the limitation  provided  for  a  suit  to  redeem  or
recover the possession of immovable property mortgaged  by  a  mortgagor  is
thirty years from the  date  of  accrual  of  right  to  redeem  or  recover
possession.  Article  137  which  is  a  residuary  provision  provides  for
limitation of three years in  a  case  where  no  period  of  limitation  is
provided.

20. The statutory provisions, as noticed hereinbefore, are  required  to  be
construed having regard to the redeeming features of usufructuary  mortgage,
namely, (a) there is a delivery of possession to the mortgagee,  (b)  he  is
to retain possession until repayment of  money  and  to  receive  rents  and
profits or part thereof in lieu of interest,  or  in  payment  of  mortgage-
money, or partly in lieu of interest and  partly  in  payment  of  mortgage-
money, (c) there is redemption when the amount due is personally paid or  is
discharged by rents or profits received, and (d) there is no remedy by  sale
or foreclosure.

21. Order 34 Rules 7 and 8 do not confer any  right  upon  the  usufructuary
mortgagee to apply for final decree which is conferred on the  mortgagee  on
other types of mortgages. By reason of sub-rule (1) of Rule 8 of  Order  34,
a mortgagor is entitled to make an application for final decree at any  time
before a final decree debarring the plaintiff from all rights to redeem  the
mortgaged property has been passed or before  the  confirmation  of  a  sale
held in pursuance of a final decree passed under sub-rule (3) of this  Rule.
No  such  application  is  again  contemplated  at  the  instance   of   the
usufructuary mortgagee. By reason of sub-rule (1) of Rule 8 of Order  34,  a
right of redemption is  conferred  upon  the  mortgagor  of  a  usufructuary
mortgage. Such a provision has been made  evidently  having  regard  to  the
right of redemption of a mortgagor in terms of Section 60  of  the  Transfer
of Property Act and further, having regard to the fact that  a  usufructuary
mortgagee would be entitled to possess  the  property  in  question  till  a
final decree of redemption is passed.

22. The right of redemption of a mortgagor  being  a  statutory  right,  the
same can be taken away only in terms of the proviso appended to  Section  60
of the Act which is extinguished either by a decree or by  act  of  parties.
[pic]Admittedly,  in  the  instant  case,  no   decree   has   been   passed
extinguishing the right of the mortgagor nor has such right come to  an  end
by act of the parties.

23. A right for obtaining a final decree for  sale  or  foreclosure  can  be
exercised only on payment of such money. Such a right can  be  exercised  at
any time even before the sale is confirmed although the final  decree  might
have been passed in the meanwhile. The mortgagee is  also  not  entitled  to
receive any payment under  the  preliminary  decree  nor  is  the  mortgagor
required to make an application to recover before paying the same.

24. Even, indisputably, despite expiry  of  the  time  for  deposit  of  the
mortgaged money in terms of  the  preliminary  decree,  a  second  suit  for
redemption would be maintainable.”

(vi)  In Prithi Nath Singh vs. Suraj Ahir, (1963)  3  SCR  302,  this  Court
approved the observations  of  Allahabad  High  Court  in  Rama  Prasad  vs.
Bishambhar Singh, AIR 1946 All 400, that Sections 60  and  62  of  T.P.  Act
make distinction in right of a usufructuary mortgagor  and  other  mortgagor
as follows:-
“11. In Ramprasad v. Bishambhar  Singh,  AIR  1946  All  400,  the  question
formulated for determination was whether the suit being a  suit  to  recover
possession of the mortgaged property after the mortgage money had been paid-
off was a suit “against the mortgagee to redeem” or “to  recover  possession
of immovable property mortgaged”. Braund, J., said, at p. 402:
“Now, it is quite obvious that that section (Section 60 of the  Transfer  of
Property Act) can only refer  to  a  case  in  which  a  mortgagor  under  a
subsisting mortgage approaches the Court to establish his  right  to  redeem
and to have that redemption carried  out  by  the  process  of  the  various
declarations and orders of the Court by  which  it  effects  redemption.  In
other words, Section 60 contemplates a case in which the mortgage  is  still
subsisting and the mortgagor goes to the Court to obtain the return  of  his
property on repayment of what is still due. Section 62, on the  other  hand,
is in marked contrast to Section 60. Section 62 says that in the case  of  a
usufructuary mortgage the mortgagor has a right to “recover  possession”  of
the property when (in a case in which the mortgagee  is  authorised  to  pay
himself the mortgage money out of the rents and  profits  of  the  property)
the principal money is paid-off. As we  see  it,  that  is  not  a  case  of
redemption at all.  At  the  moment  when  the  rents  and  profits  of  the
mortgaged property sufficed  to  discharge  the  principal  secured  by  the
mortgage, the mortgage came to an end and the  correlative  right  arose  in
the mortgagor “to recover possession of the property”. The  framers  of  the
Transfer of Property Act have clearly  recognised  the  distinction  between
the procedure which follows a mortgagor's  desire  to  redeem  a  subsisting
mortgage and the procedure which  follows  the  arising  of  a  usufructuary
mortgagor's right to get his property back  after  the  principal  has  been
paid-off.”

(vii) In Hamzabi  & Ors. vs. Syed Karimuddin & Ors., (2001) 1  SCC  414,  it
was observed:-
“2. The right of the mortgagor to redeem had  its  origin  as  an  equitable
principle for giving relief against  forfeiture  even  after  the  mortgagor
defaulted in making payment under the mortgage deed. It  is  a  right  which
has been jealously guarded over the years by courts. The maxim  of  “once  a
mortgage always a mortgage” and  the  avoidance  of  provisions  obstructing
redemption as  “clogs  on  redemption”  are  expressions  of  this  judicial
protection. (See: Pomal Kanji Govindji v. Vrajlal Karsandas  Purohit  (1989)
1 SCC 458 in this context.) As far as this country is concerned,  the  right
is statutorily recognised in Section 60 of the  Transfer  of  Property  Act.
The section gives [pic]the mortgagor right to redeem  the  property  at  any
time after the principal money has become  due  by  tendering  the  mortgage
money and claiming possession of the mortgaged property from the  mortgagee.
The only limit to this right is contained in  the  proviso  to  the  section
which reads:

“Provided  that  the  right  conferred  by  this  section   has   not   been
extinguished by act of the parties or by decree of a court.”

3. While the expression “decree of court” is  explicit  enough,  the  phrase
“act of parties” has given rise to controversy. One such  act  may  be  when
the mortgagor sells the equity of redemption to the  mortgagee.  This  Court
in Narandas Karsondas v. S.A. Kamtam, (1977)  3 SCC 247 has said that:  (SCC
p. 254, para 34)”

(viii)      Contrary view has been expressed in Sampuran Singh &  Ors.   vs.
Smt. Niranjan Kaur(smt.) & Ors., (1999) 2 SCC 679 as follows:-
“14. Submission was, as aforesaid, that right to redeem  only  accrues  when
either the mortgagors tender  the  amount  of  mortgage  or  the  mortgagees
communicate satisfaction of the mortgage amount through  the  usufruct  from
the  land.  This  submission  is  misconceived,  as   aforesaid,   if   this
interpretation is accepted, then till this happens the period of  limitation
never start running and it could go on for an infinite period.  We  have  no
hesitation to reject this submission. The language recorded above  makes  it
clear that right of redemption  accrues  from  the  very  first  day  unless
restricted under the  mortgage  deed.  When  there  is  no  restriction  the
mortgagors have a right to redeem the mortgage from that very date when  the
mortgage was executed.  Right  accruing  means,  right  either  existing  or
coming into play thereafter. Where no period in the mortgage  is  specified,
there exists a right to a mortgagor to redeem the  mortgage  by  paying  the
amount that very day in case he receives the desired money for which he  has
mortgaged his  land  or  any  day  thereafter.  This  right  could  only  be
restricted through law or in terms of a valid mortgage  deed.  There  is  no
such restriction shown or pointed out. Hence, in our considered opinion  the
period of limitation would start from the very date the  valid  mortgage  is
said to have been executed and hence the period of limitation  of  60  years
would start from the very date of oral mortgage, that would  be  from  March
1893. In [pic]view of this, we do not find any error in the decision of  the
first appellate court or the  High  Court  holding  that  the  suit  of  the
present appellants is time-barred.”


However, facts mentioned in  para  3  show  that  possession  remained  with
mortgagor and it was not a case of usufructuary mortgage.
14.   We need not multiply  reference  to  other  judgments.   Reference  to
above judgments clearly spell out the reasons  for  conflicting  views.   In
cases where distinction in usufructuary mortgagor’s right under  Section  62
of the T.P. Act has been noted, right to redeem has been  held  to  continue
till the mortgage money is paid for which there is no time  limit  while  in
other cases right to redeem has been held to accrue on the date of  mortgage
resulting in extinguishment of right of redemption after 30 years.
15.   We, thus, hold that special  right  of  usufructuary  mortgagor  under
Section 62 of the T.P. Act to recover possession  commences  in  the  manner
specified therein, i.e., when mortgage  money  is  paid  out  of  rents  and
profits or partly out of rents and profits and partly by payment or  deposit
by mortgagor.  Until  then,  limitation  does  not  start  for  purposes  of
Article 61 of the Schedule to the Limitation Act.  A usufructuary  mortgagee
is not entitled to file a suit for declaration that he had become  an  owner
merely on the expiry of 30 years from the date of the mortgage.   We  answer
the question accordingly.

16.   On this conclusion, the view taken by  the  Punjab  and  Haryana  High
Court will stand affirmed and contrary view taken by  the  Himachal  Pradesh
High Court in Bhandaru Ram (D) Thr. L.R. Ratan  Lal  vs.  Sukh  Ram  (supra)
will stand over-ruled.
17.    The appeals are dismissed.


.............................................J.
                                                [ T.S. THAKUR ]





............................................J.
                                            [ C. NAGAPPAN ]




...........................................J.
                                            [ ADARSH KUMAR GOEL ]
New Delhi
August 21, 2014

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