26 May 2020


Judgments

Supreme Court

Allokam Peddabbayya and Ors. v. Allahabad Bank and Ors.

MANU/SC/0700/2017

19.06.2017

Property

Right to redemption survived only till confirmation of sale and not thereafter

In facts of present case, Appellants' Suit for redemption of mortgage was decreed by Principal Junior Civil Judge. Decree was reversed in AS No. 65 of 2002, appeal preferred by auction purchaser, Defendant No. 2, by VIII Additional District Judge (FTC), Guntur. Second Appeal by Appellants against reversal of decree has been dismissed. Defendant Nos. 3 and 4 created an equitable mortgage of their property for a loan of Rs. 10,000/- in favour of the Bank, Defendant No. 1, by deposit of title deeds. Bank instituted O.S. No. 68 of 1987 for recovery of loan by sale of mortgaged property. Property was auction sold on 05th September, 1993. Defendant No. 2 being highest bidder at Rs. 50,000/-, sale certificate was issued and he was put in possession on 2nd July, 1997 in Execution Petition No. 203 of 1997.

Plaintiffs were stated to have purchased mortgaged property by different sale deeds in year 1985. Asserting possession, they preferred O.S. No. 165 of 1994, seeking permanent injunction restraining Defendant Nos. 2 to 4 only from interfering with their peaceful possession. Suit and the Appeal A.S. No. 67 of 1997, against same were dismissed. Execution Appeal No. 996 of 1997 preferred by Plaintiffs in Execution Petition No. 203 of 1997 was also dismissed. Plaintiffs thereafter preferred O.S. No. 96 of 1999 for redemption of mortgage under Order XXXIV Rule 1 of Code of Civil Procedure, now impleading Bank as Defendant also. Suit was decreed on 27.02.2002, but reversed in appeal by auction purchaser, Defendant No. 2 holding that consequent to auction sale and issuance of sale certificate along with possession delivered, Defendant Nos. 3 and 4 were no more the owners of property, and there stood no debt to be redeemed on date of filing of Suit. Plaintiffs were thus, not purchasers of equity of redemption, dismissing Suit. High Court in Second Appeal held that, right to redemption in Plaintiffs, by stepping into shoes of Mortgagor under Section 59A of Transfer of Property Act, 1882 stood extinguished in view of final decree for foreclosure in O.S. No. 68 of 1987 filed by Bank, Defendant No. 1, and consequent sale certificate issued in favour of auction purchaser, Defendant No. 2.

Right to enforce a claim for equity of redemption is a statutory right under Act. It necessarily pre-supposes existence of a mortgage. Right to redeem can stand extinguished either by act of parties or by operation of law in form of a Decree of Court under proviso to Section 60 of Act. Appellants being purchasers of equity of redemption can have or claim no better rights under Section 91, than what their predecessor-in-interest had under Section 60 of Act.

Decree for foreclosure in O.S. 68 of 1987, and subsequent auction sale followed by issuance of sale certificate, extinguished right to redemption by reason of proviso to Section 60 of Act. Plaintiffs having interest in mortgaged property through their predecessor-in-interest and in right to redeem the same were competent to do so under Section 91 of Act, but subject to limitation under proviso to Section 60. Their rights could not be any superior or separate from that of their predecessor-in-interest. If right to redeem stood extinguished by operation of law under proviso to Section 60 of Act prior to period of limitation, it cannot be contended that, right could nonetheless be enforced anytime before expiry of limitation of 30 years. If there remained no subsisting mortgage, it is difficult to fathom what was to be redeemed.

No challenge was laid out in O.S. No. 96 of 1999, either to auction sale or to set aside sale certificate issued to Defendant No. 2. Reliance upon Order XXXIV Rule 1, Code of Civil Procedure is completely misconceived as under Rule 8, right to redemption survived only till confirmation of sale and not thereafter. Suit was instituted only after issuance of sale certificate and question for redemption had become irrelevant.

In Mrutunjay Pani and Anr. v. Narmada Bala Sasmal and Anr., it was observed that, governing principle is "once a mortgage always a mortgage" till the mortgage is terminated by act of parties themselves, by merger or by order of Court. Where a mortgagee purchases equity of redemption in execution his mortgage decree with leave of Court or in execution of a mortgage or money decree contained by a third party, equity of redemption may be extinguished; and, in that event, mortgagor cannot sue for redemption without getting sale set aside.

In Mhadagonda Ramgonda Patil Ors. v. Shripal Balwant Rainade and Ors., it was observed that, mortgagor has a right of redemption even after sale has taken place pursuant to final decree, but before confirmation of sale. Plaintiffs lost right to sue for redemption of mortgaged property by virtue of proviso to Section 60 of Act, no sooner that, mortgaged property was put to auction sale in a suit for foreclosure and sale certificate was issued in favour of Defendant No. 2. There remained no property mortgaged to be redeemed. Right to redemption could not be claimed in abstract. There was no reason to interfere with order of High Court and Supreme Court dismissed the appeal.

Relevant

Mrutunjay Pani and Anr. v. Narmada Bala Sasmal and Anr.MANU/SC/0357/1961
: AIR 1961 SC 1353, Mhadagonda Ramgonda Patil and Ors. v. Shripal Balwant Rainade and Ors. MANU/SC/0280/1988
: AIR 1988 SC 1200

Tags : Mortgage Redemption Grant

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