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CASE NO.:

Appeal (civil) 288 of 2003

PETITIONER:

ACHALDAS DURGAJI OSWAL (DEAD) THROUGH LRS.

RESPONDENT:

RAMVILAS GANGABISAN HEDA (DEAD) THROUGH LRS. & ORS.

DATE OF JUDGMENT: 15/01/2003

BENCH:

V.N. KHARE CJ & S.B. SINHA & DR. AR. LAKSHMANAN

JUDGMENT:

JUDGMENT

2003 (1) SCR 340

The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

This appeal is directed against a judgment and order dated 9th November.

2001 passed by a learned Single Judge of the Bombay High Court in Civil

Revision Application No. 310 of 1998 whereby and whereunder he allowed the

revision application filed by the respondent herein questioning an order

dated 17th October, 1990 passed by the Joint Civil Judge, S.D. Kolhapur in

final decree proceeding registered as Application No. 21 of 1975 rejecting

an application purported to be under Order XXXIV, Rule 8 of the Code of

Civil Procedure (C.P.C. for short) for preparation of final decree in

Special Civil Suit No. 78 of 1969 wherein preliminary decree was drawn on

18th January, 1972 on the ground that the same was barred by limitation.

FACTS:

The property in suit is a building bearing City Survey No. 281 situated at

Ward B, in the town of Kolhapur. Admittedly, Pandit Govind Shinde Naik. the

owner of the property, mortgaged the same with Achaldas Oswal (Original

Defendant No. 1 since deceased for a period of five years. The mortgage was

an usufructuary one. As the dues in relation to the suit property was not

repaid by Pandit G.S. Naik to Kolhapur Bank, the property was sold in

auction which was purchased by the first respondent herein. He filed a suit

marked as Special Civil Suit No, 78 of 1969 inter alia for redemption of

mortgage wherein a preliminary decree was passed on 18th January, 1972; the

operative portion whereof reads thus:-

"The plaintiff shall deposit into Court the mortgaged money amounting to

Rs. 11,000 within three months on or before 17.4.1972.

The amount of expenses proportionately incurred by the mortgage or

defendant no, 1 to the above debt in respect of the mortgage security

including the payment of Municipal taxes and refers to the mortgaged

property together with interest be taken through Commissioner. The

plaintiff shall apply for appointment of the Commissioner in this respect

in final decree proceedings.

Order regarding possession of the suit property and cost of the suit would

be passed in final decree. The preliminary decree be drawn accordingly."

Within the stipulated time, namely, on or about 17th April, 1972, the said

sum of Rs. 11,000 was not deposited by the plaintiff-Respondent No.l.

He, however, filed an application marked as Misc. Application No. 85 of

1972 for extension of time to make the payment as directed in the

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preliminary decree, which was rejected by order dated 30th January, 1975.

Although the said order was not challenged by the plaintiff, he obtained

the permission to make necessary deposit which was complied with by the

plaintiff on or about 6th February, 1975. The said order, however, was

passed without prejudice to the rights of the parties. Within a period of

three years from the said date, namely, 6th February, 1975, the first

respondent filed an application for preparation of a final decree. An

objection thereto was filed by the original defendant no.l, inter alia, on

the ground that the same was not maintainable as being barred by

limitation. In the said objection it was also contended out that the

respondent's application for extension of time having been dismissed by the

court by the said order dated 30th January, 1975, the said proceeding was

not maintainable. The learned Civil Judge accepting the plea of the

appellant herein that the said application was barred by limitation

dismissed the said application for preparation of a final decree. Aggrieved

by and dissatisfied therewith, the first respondent herein filed a revision

application before the Bombay High Court which, as noticed hereinbefore,

was allowed by the impugned judgment holding that there is no period of

limitation for filing an application for preparation of a final decree in

respect of redemption of usufructuary mortgage.

Submissions:

Mr. V.A. Bobde, learned senior counsel appearing on behalf of the appellant

herein, would submit that the High Court committed a manifest error in

arriving at the said findings insofar as it failed to take into

consideration that the provisions of the C.P.C. and in particular Order

XXXIV Rule 7 read with Rule 8 thereof cannot supersede Article 137 of the

Limitation Act, 1963. The learned counsel would contend that having regard

to the plain language used in Order XXXIV Rule 8 C.P.C. read with Article

137 of the Limitation Act, there cannot be any doubt whatsoever that the

period of limitation as prescribed therein shall apply in an application

for preparation of a final decree in a suit of redemption of usufructuary

mortgage. It was contended that the provisions of the Limitation Act are

applicable in such a suit independent of the provisions of the C.P.C.

Strong reliance in support of the said contentions was placed in K.

Parameswaran Pillai Dead v. K. Sumathi alias Jesis Jessie Jacquiline and

Anr., [1993] 4 SCC 431 and Mohd. Abdul Khader Mohd. Kastim and Anr. v.

Pareethij Kunju Sayed A hammed and Ors. [1996] 11 SCC 83.

Mr. Mohta, learned senior counsel appearing on behalf of the respondents on

the other hand, would submit that whereas Order XXXIV Rule 7 would apply

both in respect of the suit for foreclosure and redemption of mortgage,

Order XXXIV; 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 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 year from the date of making the deposit and thus the same was not

barred by limitation.

Findings:

Usufructuary mortgage is defined in Section 58(d) of the Transfer of

Property Act in the following terms:

"Where the mortgagor delivers possession or expressly or by implication

binds himself to deliver possession of the mortgage 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 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

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called an usufructuary mortgage and the mortgagee an usufructuary

mortgagee."

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 edition Volume 32 page 264)

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 his 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.

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 Thumbuswami v.

Hossain 21A 241; ILR (1875) 1 Mad, 1 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:-

"Right of mortgagor to redeem.-At any time after the principal money has

become due, the mortgagor has a right on a 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 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 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

been allowed to pass or no such time has been fixed, the mortgage shall be

entitled to reasonable notice payment or tender of such money."

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 that said right so long as the same is not

extinguished by act of the parties or by decree of court.

In the Law of Mortgage by Dr. Rashbehary Ghose at page 231-232 under

heading 'Once a mortgage, always, a mortgage' it is noticed.

"In 1681 Lord Nottigham in the leading case of Harris v. Harris 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 incumbrances

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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 Noakes v. Rice, 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.

Shankarlal.

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 mortgage 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 round 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 co-

extensive with the mortgage itself. The right subsists until it is

appropriately and effectively extinguished either by the acts of the

parties concerned or by a proper decree of the competent court.

In 'The Law of Mortgages' by Edward F. Cousins at Page 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,

mortgages 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 terms "clogs" on the equity of redemption. Greene M.R. in

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Knightsbridge Estates v. Byrne, 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."

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 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 to the mortgagor

and the mortgagee, a proviso is inserted expressly stating that the term

will ceased 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)."

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.

Order XXXIV of the C.P.C. deals with suits relating to mortgages of

immovable property. Rule 7 thereof deals with preliminary decree in

redemption suit. Sub-clause (i) of clause (c) of Rule 7 of Order XXXIV

empowers the court to direct as under:-

"(i) that, if the plaintiff pays into Court the amount so found or declared

due on or before such date as the Court may fix within six months from the

date on which the Court confirms and countersigns the account taken under

clause (a), or from the date on which such amount is declared in Court

under clause (b), as the case may be, and thereafter pays such amount as

may be adjudged due in respect of subsequent costs, charges and expenses as

provided in rule 10 together with subsequent interest on such sums

respectively as provided in rule 11, the defendant shall deliver up to the

plaintiff, or to such person as the plaintiff appoints, all documents in

his possession or power relating to the mortgaged property, and shall, if

so required, re-transfer the property to the plaintiff at his cost free

from the mortgage and from all incumbrances created by the defendant or any

person claiming under him, or, where the defendant claims by derived title,

by those under whom he claims, and shall, also, if necessary put the

plaintiff in possession of the property; and"

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The consequence for non-payment has been contained in sub-clause (ii) of

clause (c) which is in the following terms:-

(ii) that, if payment of the amount found or declared due under or by the

preliminary decree is not made on or before the date so fixed, or the

plaintiff fails to pay, within such time as the Court may fix, the amount

adjudged due in respect of subsequent costs, charge, expenses and interest,

the defendant shall be entitled to apply for a final decree

(a) in the case a mortgage other than a usufructuary mortgage, a

mortgage by conditional sale, or an anomalous mortgage the terms of which

provide for foreclosure only and not for sale, that the mortgaged property

be, sold, or

(b) in the case of a mortgage by conditional sale or such an anomalous

mortgage as aforesaid that the plaintiff be debarred from all right to

redeem the property."

A bare perusal of the aforementioned provisions would clearly show that

sub-clause (ii) has no application in relation to usufructuary mortgage.

Sub-rule (2) of Rule 7 of Order XXXIV empowers the court to extend the time

fixed for payment. Rule 8 of Order XXXIV provides for final decree in

redemption suit. The right of the mortgagor to file an application for

passing a final decree has been provided in the manner laid down therein.

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 mortgage, (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 is discharged by

rents or profits received (d) there is no remedy by scale of foreclosure.

Order XXXIV Rules 7 and 8 do not confer any right upon the usufructuary

mortgagee to apply for final decree which is conferred on mortgagee on

other types of mortgages. By reason of sub-rule (1) of Rule 8 of Order

XXXIV, a mortgagor is entitled to make an application for final decree at

any time before a final decree debarring the plaintiff from all right 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 XXXIV,

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.

The right of redemption of 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.

Admittedly, in the instant case, no decree has been passed extinguishing

the right of the mortgagor nor such right has come to an end by act of the

parties.

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 not also entitled to

receive any payment under the preliminary decree nor the mortgagor is

required to make an application to recover before paying the same.

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Even, indisputably, despite expiry of the time for deposit of mortgaged

money in terms of the preliminary decree, a second suit for redemption

would be maintainable.

A bare perusal of the provisions of Order XXXIV Rule 7 & 8 would show that

despite failure to pay the amount found or declared due by the preliminary

decree on or before the date fixed by the Court, the mortgagee-defendant

shall be entitled to apply for a final decree under clause c(ii) of rule 7

of Order XXXIV. In a case of a mortgage by conditional sale or anomalous

mortgage, the mortgagee can pray for passing of a final decree debaring the

mortgagor from claiming his right to redeem the properly. In a case of a

usufructuary mortgage, however, the mortgagee is not entitled to apply for

a final decree. The right of mortgagee to apply for a final decree is

provided in sub-clause (3) of rule 8 of Order XXXIV. His application for a

final decree must be confined to for declaration that the plaintiff and all

persons claiming under him are debarred from all right to redeem the

property in the case of a mortgage by a conditional sale or of an anomalous

mortgage the terms whereof provide for foreclosure only and not for sale.

In the case of the mortgage other than usufructuary mortgage, the mortgagee

can file an application to pass a final decree that the mortgaged property

or a sufficient part thereof be sold, and the proceeds thereof be paid into

Court and applied in payment of what is found due to the defendant, and the

balance, if any, be paid to the plaintiff or other persons entitled to

receive the same. Sub-rule (1) of Rule 8 shows that only a mortgagor can

apply to the Court to pass a final decree on payment of the amount found or

declared due under the preliminary decree on making this deposit and upon

filing the application as provided for in sub-rule (1) of Rule 8 the

mortgagor can request the Court to order the mortgagee to put him in

possession of the properties which were the subject matter of the mortgage.

The amount determined by the Court which the mortgagor is liable to pay to

the mortgagee can be deposited before the right of redeem is lost. It may

be noticed that even sub-rule (2) of Rule 7 of Order XXXIV does not apply

to the usufructuary mortgage. It may be noticed that by reason of the

amendment introduced in 1929 the right conferred earlier on a usufructuary

mortgage to bring the property to sale in case of the mortgagor not making

the payment within the time fixed in the decree was taken away; As sub-rule

(2) of Rule 7 is applicable only in a case of mortgages other than the

usufructuary mortgages, a usufructuary mortgagor is not entitled to seek

extension of time and in that view of the matter the fact that such an

application made by the First Respondent herein was rejected becomes

irrelevant.

As regards application of Article 137 of the Limitation Act, the different

High Courts have laid down different laws. The Oudh High Court in Banke

Behari Lal and Ors. v. Ghani Ahmad and On., AIR (1922) Oudh 33 held that

Article 181 of the old Limitation Act will have no application. Similar

view has been taken in Ramaiah v. Veeraiah ILR (1983) 1 Karnataka 114.

However, same High Courts have taken a view that the period of limitation

provided for under Article 137 starts from the date of deposit. See

Subramaniam Chettiar and Anr. v. Muthiah Pillai reported in AIR (1957)

Madras 189. Bhagabat Sit v. Balaram Sit reported in AIR (1963) Ori 61.

Krishnaji Moreshwar Joshi v. Bhakatram Sadashiv Patil and Ors., reported in

(1998) 2 Kar L.J. 290 K. Kunjamma and Ors. v. Bhageerathy Amma Gomathy Amma

and Ors., reported in AIR (1991) Kerala 111, Angammal v. V.K.M Muhammad

Sulaiman reported in AIR 33 (1946) Madras 38, Loknath Misir v. Smt. Daulta

Kuer reported in AIR (1953) All 503, Rudrappa v. Puttalakshamma reported in

AIR 1954 Mysore 118 and Mahomed Azim v. Md. Sultan reported in AIR (1946)

Pat 99.

A learned Single Judge of the Allahabad High Court in Yashpal Singh v. Ved

Prakash, (1998) 2 Civil 2 L.J. 356: (1988) All L.J. 594 held (wrongly

recorded by the High Court as a judgment of this Court):

"Similar observations have been made in AIR 1946 Pat 99 and in AIR 1954

Mys. 118 Rudrappa v, Puttalakshamma, these two cases have also indicated

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that a preliminary decree in a suit for redemption of an usufructuary

mortgage under clause (c)(i) or rule 7(1) of Order XXXIV of the Civil

Procedure Code fix a time for payment of the amount declared due under the

decree. But default in making payment of the amount declared under the

decree within the time fixed does not operate to debar the plaintiff-

mortgagor firm all right to redeem the mortgaged property."

In Mancheri Puthusseri Ahmed and Ors. etc. v. Kuthivattam Estate Receiver.

[1996] 6 SCC 185 it was observed:-

".......It is now well settled that despite the decree for redemption which

might have been passed by a competent court and which might have become

final till the mortgage amount is deposited by the mortgagor the

relationship of mortgagor and mortgagee does not come to an end. Conversely

once the amount is deposited by the mortgagor decree-holder even during the

execution proceedings the relationship between the parties as mortgagor and

mortgagee ceases and thereafter till actual delivery of possession the

erstwhile mortgagee-in possession remains merely as judgment-debtor in

illegal possession"

In Mhadagonda Ramgonda Patil and Ors. v. Shripal Balwant Rainde and Ors.,

[1988] 3 SCR 689 AIR = AIR (1988) SC 1200, this Court negatived the plea

raised therein that as a final decree was passed in the earlier redemption

suit, there was a merger of the mortgage-debt in the decretal-debt and the

second suit for redemption was barred would not be sustainable, in the

following terms:-

"12. In the instant case, the earlier suit was not a suit for foreclosure

nor was either of the mortgages, a mortgage by conditional sale or an

anomalous mortgage and, accordingly, there was no declaration in the final

decree passed in the earlier suit for redemption that the respondent would

be debarred from all right to redeem the mortgaged property, Rule 5(1) of

Order XXXIV expressly recognized the right of the mortgagor to redeem the

mortgagor at any time before the confirmation of a sale made in pursuance

of a final decree passed in a suit for sale. Similarly, Rule 8(1) of Order

XXXIV permits the mortgagor to redeem the mortgaged property before the

confirmation of the sale held in pursuance of a final decree in a

redemption suit, unless such final decree debars the mortgagor from all

right to redeem the mortgaged property which, as noticed earlier is

provided for in sub-rule (3)(a) of Rule 8 of Order XXXIV relating to a

mortgage by conditional sale or an anomalous mortgage. Thus, the provisions

of Order XXXIV have laid down in clear terms the circumstances when the

right of redemption of the mortgagor would stand extinguished. It is also

clear that in a suit for redemption, a mortgage other than a mortgage by

conditional sale or an anomalous mortgage, the mortgagor has right of

redemption even after the sale has taken place pursuant to the final

decree, but before the confirmation of such sale. In view of these

provisions, the question of merger of mortgage-debt in the decretal-debt

does not at all arise. We are, therefore, of the view that the decision in

Sheo Narain 's, case AIR (1948) Pat 208 supra, in so far as it lays down

the merger of the mortgage-debt in the decretal-debt and the consequent

extinguishments of the right or redemption of the mortgagor after the

passing of the final decree in a suit for redemption, is erroneous."

This court in Mhadagonda Ramgonda Paul (supra) cited with approval the

decisions of the Privy Council in Raghunath Singh v. Mt. Hansraj Kunwar,

AIR (1934) PC 205 as well that of the Federal Court in Subba Rao v. Raju,

AIR (1950) FC 1.

In Maganlal etc. v. M/s. Jaiswal Industries, Neemach and Ors., [1989] 3 SCR

696 = AIR (1989) SC 2113 this Court following the dicta in Mhadagonda

Ramgonda Patil supra stated thus:

"........It cannot be disputed that the provisions contained in O. 34 Rule

5 of the Code are attracted as is apparent from the plain language thereof

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during the proceedings in execution of a final decree for sale and are thus

provisions contained in the Code with regard to and having a material

bearing on the execution of a decree as aforesaid. As seen above the

provisions contained in O.34 R. 5 of the Code in substance permit the

judgment debtor to redeem the mortgage even at the stage contemplated by

O.34 R.5 unless the equity of redemption has got extinguished. Since the

contingency whereunder an equity of redemption gets extinguished is

contained in the proviso to S. 60 of the Transfer of Property Act and since

as indicated above, in the instant case the equity of redemption has not

extinguish we find no good ground to take the view that even though all the

remaining provisions with regard to execution of a decree for sale of

mortgaged property will apply to execution of an order under S. 32 of the

Act, the provision contained in O. 34 Rule 5 of the Code shall not apply.

Nothing has been brought to our notice as to how and why it is not

practicable to apply the said provision......"

In Pomal Kanji Govindji and Ors etc. v. Vrajlal Karsandas Purohit and Ors

etc., [1988] Supp. 3 SCR 826 = AIR (1989) SC 436, it is stated as under:-

"It is a right of the mortgagor on redemption, by reason of the very nature

of the mortgage, to get back the subject of the mortgage and to hold and

enjoy as he was entitled to hold and enjoy it before the mortgage. If he is

prevented from doing so or is prevented from redeeming the mortgage, such

prevention is bad in law. If he is so prevented, the equity of redemption

is affected by that whether aptly or not, and it has always been learned as

a clog. Such a clog is inequitable. The law does not countenance it."

In Haquik Mian v. Rajendra Prasad and Ors., AIR (1997) Patna 59, it is

stated thus:-

".....In other words mortgage is essentially a conveyance of an interest

in a property as a security for payment of debt. The security must be

redeemable on payment of debtor mortgage-money; Section 60 of the T.P. Act

confers a statutory right of redemption. It is an inviolable right of

mortgagor, on redemption to get back the subject of mortgage. Any clog on

the equity of redemption was inequitable, bad in law and void. The courts

must ignore any transaction or proceeding, as the proceeding for recovery

of rent from mortgagor when it was the obligation of mortgagee to pay rent

and order or decree obtained ex-parte without any notice and consequential

auction sale etc."

In Vora Aminbai Ibrahim v. Vora Taherali Molunedali and Ors., AIR (1998)

Gujarat 31 it is stated thus:-

"So far as the second substantial question of law is concerned it would be

useful to consider what is redemption and what is scope of a suit for that

purpose. "Redemption" presupposes existence of a "mortgage". "Mortgage" as

defined in the Transfer of Property Act, is the transfer of an interest in

immovable property for the purpose of securing the payment of a loan. A

mortgage is created by act of parties. In usufructuary mortgage, the

transfer is made of the right of the possession and enjoyment of the

usufruct. The rights of a usufructuary mortgage form part of the bundle of

rights, which constitute ownership the remainder still remains with the

mortgagor and can be transferred by him. On the execution of a mortgage two

distinct rights are carved out, namely (i) the mortgagee's right (1) and

(ii) the mortgagor's right. The mortgagee's right is the right of security

for the respondent of his loan. The mortgagor's right is as indicated in

Section 60 of the Transfer of Property Act i.e., after the principal money

has become due, the mortgagor has a right to pay the mortgage money and on

such payment he has a right to require the mortgagee, among others, to

deliver possession. This right cannot be extinguished except by the act of

parties or by a decree of a Court. This right is called the right to redeem

and a suit to enforce it is called a suit for redemption. Thus, the scope

of suit for redemption is primarily to enforce the right to make payment of

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the mortgage money. A claim to redeem a mortgage actually does into attach

to the land, although the decree passed in that suit may ultimately affect

possession which is also an interest in land. An owner has a bundle of

interests in property. By executing a mortgage he transfers only some

interest to the mortgagee and that also by way of security. That interest

is confined to realisation of mortgage debt, which, in the event of non-

payment, may be realized out of the said security. What remains with the

mortgagor after execution of the mortgage, is the ownership of the

property, minus the interest transferred, and the right to repay the

mortgage money and to get the burden of security discharged. That right has

been created in the mortgagor and not in the property. Thus, when a

mortgagor enforces his right to redeem, he does not enforce a right in

land."

It was further observed:

"However, there is no manner of doubt that successive suits for redemption

of mortgage can be filed till right of redemption is not extinguished.

Having regard to provisions of Section 60 of the Transfer of Property Act

and Order XXIII, Rule 1 and 2 of the Code of Civil Procedure, it will have

to be held that dismissal of earlier suit for redemption whether as abated

or as withdrawn or in default would not debar the mortgagor from filing a

suit for redemption and that such second suit for redemption to redeem the

same mortgage can be brought so long as the mortgage subsists and the right

of redemption is not extinguished by afflux of time or by a decree of Court

passed in the prescribed form. This is because the right of redemption is

an incident of a subsisting mortgage and is inseparable from it so that the

right is co-extensive with the mortgage itself. It subsists so long as

mortgage itself subsists until it is appropriately and effectively

extinguished and the extinguishments of the right of redemption can only

happen either by the act of the parties concerned, or by a proper decree of

the competent Court. The right of redemption can be extinguished as

provided in Section 60 of the Transfer of Property Act and when it is

alleged to have been extinguished by a decree the decree should run

strictly in accordance with the form prescribed for the purposes."

In Pranil Kumar Sett v. Kishorilal Bysack AIR (2003) Calcutta 1 at page 4

it has been stated:

".........Moreover the right of redemption of the mortgagor in a suit for

foreclosure subsists till final decree debarring the defendant (mortgagor)

from all rights to redeem the mortgage property has been passed."

We are, therefore, of the opinion that although by reason of preliminary

decree in the suit for redemption of usufructuary mortgage, the Court may

fix the time for payment of the amount declared due but default in

depositing such payment would not debar him from a right to redeem the

mortgaged property.

In the aforementioned backdrop the decisions of this Court relied upon by

Mr. Bobde are required to be considered.

In K. Parameswaran Pillai's case (supra) whereupon Mr. Bobde has placed

strong reliance, a suit was filed by successors-in-interest of the

mortgagee of the usufructuary mortgage. Consequent to suborgation, the

appellant became a mere puisne mortgagee and the respondent therein after

the preliminary decree transposed herself to be mortgagor. The direction of

the court in the preliminary decree was, inter alia, as under:-

"And it is hereby further ordered and decreed that, in default of payment

as aforesaid, the defendants may apply to the court for a final decree for

the sale of the mortgaged property; and on such application being made, the

mortgaged property or a sufficient part thereof shall be directed to be

sold; and for the purpose of such sale the defendant shall produce before

the court or such officer as it appoints all documents in his possession if

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power relating to the mortgaged property."

In the a aforementioned situation, a two-Judge Bench of this Court observed

as under:-

"In the case of usufructuary mortgage clause (a) of sub-rule (3) of Rule 8

expressly excludes the right to the mortgagee to apply for foreclosure or

sale or redemption. Necessary consequence is that so long as the right

subsists though there is delay in compliance of the condition imposed in

the preliminary decree, the right of redemption to the mortgagor is not

lost. It will be barred only on expiry of the period of limitation

prescribed under the Limitation Act. The reasons are obvious. Order 34 Rule

8(3) does not give any right to the mortgagee but the right is given only

to the mortgagor, to seek redemption of the usufructuary mortgage in a

decree under Rule 8(3) of Order 34. The mortgagee, having been in

possession and enjoyment of the hypotheca is not disabled by the

preliminary decree. On the other hand the liability continues to subsist

against the mortgagor. Therefore, it is up to the mortgagor to redeem the

mortgage. Till then his liability under the mortgage continues to run on

the estate. It is, therefore, clear that the limitation to file an

application under Order 34 Rule 8(1) to pass a final decree for redemption,

other than the preliminary decree for redemption of ususfructuary mortgage,

starts running and continues to run its course from the date of expiry of

the period fixed in the preliminary decree, unless it is stayed or

suspended or the time prescribed in the preliminary decree is extended by

an order of the court. In its absence on expiry of the limitation of three

years from the date fixed in the preliminary decree expired under Article

137 of the Schedule to Limitation Act, 1963 (Article 181 of Schedule I of

Old Act), the plaintiff is debarred to enforce the right to pass the final

decree. But in the case of preliminary decree for redemption of

usufructuary mortgage no limitation begins to run until deposit is made

though there is a conditional preliminary decree and default was committed

by the mortgagor for compliance thereof. "

(Emphasis supplied)

This Court, thus, made a distinction on the applicability of limitation as

regard initiation of a proceeding for passing a final decree between other

types of mortgages and usufructuary mortgage. This Court is no uncertain

terms held:-

"The proceeding in the preliminary decree does not get terminated by

dismissal of LA. No 58 of 1972, on June 26, 1975 or for non-prosecution,

Till date of passing the final decree and its execution or till the remedy

is barred by limitation under Article 137 of the Schedule to the Limitation

Act 1963 the court has power and jurisdiction to entertain the application

to pass the final decree. At any time before the remedy is barred, it is

open to the plaintiff to deposit the redemption money under the preliminary

decree. The dismissal of the earlier application or non-prosecution,

therefore does not per se bar the right of the plaintiff. But if remedy to

enforce preliminary decree for the redemption is barred by the limitation,

thereafter the right remains unenforceable. The deposit, therefore, is non

est and the court cannot proceed to pass final decree as the remedy is

lost. Therefore, the mere dismissal of the first application for non-

prosecution and withdrawal of the redemption money deposited thereunder per

se creates no bar to entertain second application. Equally instead of

availing the remedy of depositing the redemption amount in the pending

proceedings under Rule 8(1) of Order 34, the respondent instituted an

independent suit for redemption. Per force, though it does not operate as

bar to maintain the application to pass final decree, court cannot proceed

further with the application. Otherwise conflicting decisions would arise

giving rise to multiplicity of proceedings. The court would stop to proceed

further in the matter. In view of the finding that the application to pass

final decree is barred by limitation, the trial court has no jurisdiction

to proceed with the application under Rule 8(3) of Order 34 and to pass

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final decree. Accordingly, though for different reasons, the decree of the

High Court, in the second appeal, is legal and does not warrant

interference. The appeal is dismissed but without costs."

The aforementioned decision was, therefore, rendered in the facts of that

case and is distinguishable.

In Mohd. Abdul Khader Mohd. Kastim 's case (supra), this Court was

concerned with the question as to whether in absence of any time having

been fixed by the court passing the preliminary decree directing the

appellant to deposit the redemption money, the decree passed in terms of

Order XXXIV could be called a preliminary decree at all. This Court

examined the preliminary decree and held that the obligation and counter

obligation made therein are separate in, nature and by reason thereof the

appellant was required to deposit the redemption money of Rs. 18,000 within

the statutory period of six months provided under Order XXXIV Rule 7 C.P.C.

This Court in the facts of that case had not and could not have laid down a

law to the effect that the deposit must be made within a period of six

months as otherwise the application for passing a final decree was to

become barred by limitation.

In the said case, the contentions raised herein had not been raised

obviously because no such question arose for consideration and any passing

observation made therein without any argument and without any precedent

cannot be treated to be a declaration of law in terms of Article 141 of the

Constitution of India.

Any observation made therein contrary to what we have held above cannot be

said to be good law and is hereby overruled.

We, therefore, do not find any merit in this appeal which is accordingly

dismissed. No costs.