# ACHALDAS DURGAJI OSWAL (DEAD) THROUGH LRS v. ~ RAMVILAS GANGABISAN HEDA (DEAD) THROUGH LRS. AND ORS

- **Citation:** [2003] 1 S.C.R. 340
- **Court:** Supreme Court of India
- **Decided:** 2003
- **Case number:** Civil B Revision Application No. 310 of 1998
- **Bench:** V.N. Khare, S.B. Sinha, Dr. Ar. Lakshmanan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/achaldas-durgaji-oswal-dead-through-lrs-v-ramvilas-gangabisan-heda-dead-through-19079
- **Pages:** 23

## Headnote

~
Code o/Civil Procedure, 1908-0rder XXXIV Rules 7 and 8-Limitation
c Act, 1963-Articles 61 and 137-Transfer of Property Act, 1882-Sections
58(d) cmd 60-Usufructuary Mortgage-Redemption of-Suit-Preliminary
decree directing deposit of money within fvced time but the same not depositedRejection of application for extension of time-Deposit of amount after seeking
permission-Application for preparation of final decree within three years
from date of deposit-Trial Court dismissing the same as barred by limitationD High Court allowing the revision-On appeal held, in preliminary decree in
such suit court may fvc time for payment of amount but default in depositing
the amount cannot debar him from the right to redeem the mortgage property.
Respondent No.I-mortgagor filed a suit for redemption of
usufructuary mortgage. Trial court passed a preliminary decree and
E directed respondent No.I to deposit certain sum within the stipulated time.
Respondent No.I did not deposit the sum and filed an application for
extension of time which was rejected. He did not challenge the order but
obtained permission to deposit the money and complied with the same.
Respondent No.I then filed an application for preparation of a final decree
F within three years from the date of depositing the amount. Civil Judge
dismissed the application as it was barred by limitation. Aggrieved
respondent No.1 filed revision application. High Court allowed the same.
Hence the present appeal.
Appellant contended that having regard to the plain language used
G in Order XXXIV Rule 8 C.P.C. read with Article 137 of 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 firial
,..i..-
decree in a suit for redemption of usufructuary mortgage and the
provisions of Limitation Act are applicable in such a suit independent of
H
the provisions of C.P.C.
340
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD)
. 341
Respondents contended that the right of a mortgagor to redeem the A
mortgage would continue unless the same is extinguished either by a decree
passed by court of law or by an agreement of parties; and that the
application for preparation of a final decree was filed within three years
from the date of making the deposit and thus the same was not barred by
limitation.
B
Dismissing the appeal, the Court
HELD: 1.1. The statutory provisions, are required to he construed
having regard to the redeeming features of ususfructuary mortgage,
namely, there is a delivery of possession to the mortgagee, he is to retain
possession until repayment of money and to receive rents and profits or C
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, there is
redemption when the amount due is personally paid or is discharged by
rents or profits received and there is no remedy by sale or foreclosure.
(352-C, DI D
1.2. Order XXXIV Rule 7(2) of CPC empowers the court to extend
the time fixed for payment. Rule 8 of Order XXXIV provides for final
decree in redemption suit. 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 Rule 8 E
of Order XXXIV, a mortgagor is entitled to make •n 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 Order XXXIV Rule F
8(1), 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 which

## Text

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A
ACHALDAS DURGAJI OSWAL (DEAD) THROUGH LRS.
v.
~
RAMVILAS GANGABISAN HEDA (DEAD) THROUGH LRS. AND
ORS.
·;
B
.•.
JANUARY IS, 2003
[V.N. KHARE, CJ, S.B. SINHA AND DR. AR. LAKSHMANAN, JJ.]
~
Code o/Civil Procedure, 1908-0rder XXXIV Rules 7 and 8-Limitation
c Act, 1963-Articles 61 and 137-Transfer of Property Act, 1882-Sections
58(d) cmd 60-Usufructuary Mortgage-Redemption of-Suit-Preliminary
decree directing deposit of money within fvced time but the same not depositedRejection of application for extension of time-Deposit of amount after seeking
permission-Application for preparation of final decree within three years
from date of deposit-Trial Court dismissing the same as barred by limitationD High Court allowing the revision-On appeal held, in preliminary decree in
such suit court may fvc time for payment of amount but default in depositing
the amount cannot debar him from the right to redeem the mortgage property.
Respondent No.I-mortgagor filed a suit for redemption of
usufructuary mortgage. Trial court passed a preliminary decree and
E directed respondent No.I to deposit certain sum within the stipulated time.
Respondent No.I did not deposit the sum and filed an application for
extension of time which was rejected. He did not challenge the order but
obtained permission to deposit the money and complied with the same.
Respondent No.I then filed an application for preparation of a final decree
F within three years from the date of depositing the amount. Civil Judge
dismissed the application as it was barred by limitation. Aggrieved
respondent No.1 filed revision application. High Court allowed the same.
Hence the present appeal.
Appellant contended that having regard to the plain language used
G in Order XXXIV Rule 8 C.P.C. read with Article 137 of 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 firial
,..i..-
decree in a suit for redemption of usufructuary mortgage and the
provisions of Limitation Act are applicable in such a suit independent of
H
the provisions of C.P.C.
340
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD)
. 341
Respondents contended that the right of a mortgagor to redeem the A
mortgage would continue unless the same is extinguished either by a decree
passed by court of law or by an agreement of parties; and that the
application for preparation of a final decree was filed within three years
from the date of making the deposit and thus the same was not barred by
limitation.
B
Dismissing the appeal, the Court
HELD: 1.1. The statutory provisions, are required to he construed
having regard to the redeeming features of ususfructuary mortgage,
namely, there is a delivery of possession to the mortgagee, he is to retain
possession until repayment of money and to receive rents and profits or C
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, there is
redemption when the amount due is personally paid or is discharged by
rents or profits received and there is no remedy by sale or foreclosure.
(352-C, DI D
1.2. Order XXXIV Rule 7(2) of CPC empowers the court to extend
the time fixed for payment. Rule 8 of Order XXXIV provides for final
decree in redemption suit. 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 Rule 8 E
of Order XXXIV, a mortgagor is entitled to make •n 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 Order XXXIV Rule F
8(1), 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 which is a statutory right, the same can
be taken away only in terms of the proviso appended to Section 60 of the G
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. This is extinguished either by a decree or by act of
parties. In the instant case, admittedly, no decree has been passed
extinguishing the right of the mortgagor nor such right has come to an
end by act of the parties. (352-8, D-G)
H
A
342
SUPREME COURT REPORTS
[2003] I S.C.R.
1.3. A bare perusal of the provisions of Order XXXIV Rules 7 and
8 would show that despite failure to pay the amount found or declared
· due by the p~eliminary decree on or before the date fixed by the Court,
· t,he mortgagee 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
B sale or anomalous mortgage, the mortgagee can pray for passing of a final
decree debarring the mortgagor from claiming his right to redeem the
property. In a case ofa 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 Order XXXIV Rule 8(3). His application
. for a final decree must be confined to for declaration that the plaintiff
C 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
D 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-rufo (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
E . this deposit and upon filing the application as provided for in sub-rule (I)
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 mortgagee. The. amount determined by the Court which the mortgagor
is liable to pay to the. mortgagee can be deposited before the right of
F
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. By reason of the
amendment introduced in 1929 the right conferred earlier on usufructuary
mortgagee 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
G than the usufructliary mortgages, a usufructuary mortgagor is not entitled
to seek extension of time and in that view of the matter of fact that such
. 11n application made by Respondent No.I was rejeCted becomes irrelevant.
Therefore, a1thoug·h by reason of preliminary decree in the suit· for
redemption of usufructuary mortgage, the Court may fix the time for
payment of the amou.nt declared due but default in depositing such
H payment would not debar him .from a right to redeem the mortgaged
•
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD)
343
property. (353-C-H; 354-A-B; 359-CJ
Mohd. Abdul Khader Mohd. Kastim and Anr. v. Pareethij Kunj11 Sayed
Ahammed and Ors., ( 1996( 11 SCC 83, overruled.
K. Parmeswaran Pillai (dead) v. K. Sumathi alias Jesis Jessie Jacquiline
A
and Anr., (1993) 4 sec 431, distinguished.
B
Thumbuswami v. Hossain, 2 IA 241; Banke Behari Lal and Ors. v. Ghani
Ahmad and Ors., AIR (1922) Oudh 33; Ramaiah v. Veeraiah, ILR (1983)
1 Karnataka lt4; Subramaniam Chettiar and Anr. v. Muthiah Pillai, AIR
(1957) Madras 189; Bhagatbat Sit v. Balaram Sit, AIR (1963) Ori. 61;
Krishnaji Moreswar Joshi_ v. Bhakatram Sadashiv Patil and Ors., (1998) 2 G
Kar. L.J 290, K. Kunjamma and Ors. v. Bhageerathy Amma Gomathy Amma
and Ors., AIR (1991) Kerala 111, Angammal v. V.K.M. Muhammad Sulaiman,
AIR (33) 1946 Madras 38; Loknath Misir v. Smt. Dau/ta Kuer, AIR (1953)
All 503, R11drappa v. Puttalakshamma, AIR (1954) Mysore 118; Mahomed
Azim v. Md. Sultan, AIR (1946) Pat. 99; Yashpal Singh v. Ved Prrikash, D
(1988) 2 Civil L.J. 356; Mancheri Puthusseri Ahmed and Ors. etc. v.
Kuthivattam Estate Receiver, (1996) 6 SCC 185; Mhadagonda Ramgonda
Patil and Ors. v. Shripal Ba/want Rainade and Ors., [1988) 3 SCR 689;
Magan/al etc. v. Mis. Jaiswa/ Industries, Neemach and Ors., (1989) 3 SCR
696; Poma/ Kanji Govindji and Ors. etc. v. Vraj/al Karsandas Purohit and E
Ors. etc., [1988( Supp. 3 SCR 826; Haquik Main v. Rajendra Prasad and
Ors., AIR (1997) Pat~a 59; Vora Aminbai Ibrahim v. Vora Tahera/i
Molunedali and Ors., AIR (1998) Gujarat 31 and Pranil Kumar Sett v.
Kishorila/ Bysack, AIR (2003) Calcutta 1, referred to.
Halsbury's Laws·of England, 4th Edition, Vol. 32, p. 264; Law of F
Mortgage by Dr. Rashbehary Ghose, p. 231-232; The Law of Mortgages by
Edward F. Cousins, p.294 and Law of Mortgage by Fishir and Lightwood,
referred to.
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 288 of
~3.
G
From the Judgment and Order dated 9.11.2001 of the Mumbai High
Court in C.R.A.No. 310 of 1998,
V.A. Bobde, V.A. Mohata, A.P. Mayee, Shlvaji M. Jadhav and Himanshu
Gupta for the appearing parties.
H
344
SUPREME COURT REPORTS
[2003] 1 S.C.R.
:A
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
B 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
C Procedure (C.P.C. for short) for preparation of final decree in Special Civil
Suit No. 78of1969 wherein preliminary decree was drawn on 18th January,
1972 on the ground that the same was barred by limitation.
FACTS:
D
The property in suit is a building bearing City Survey No. 281 situated
at Ward B, in the town ofKolhapur. Admittedly, Pandit Govind Shinde Naik,
the owner of the property, mortgaged the same with Achaldas Oswal (Original
Defendant No. I since deceased for a period of five years. The mortgage was
an usufntctuary one. As the 4ues in relation to the suit property was not
repaid by Pandit G.S. Naik to Kolhapur Bank, the property was sold in
E 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:-
F
G
"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.I 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
H
accordingly."
l
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD) [S.B. SINHA, J.)
345
Within the stipulated time, namely, on or about 17th April, 1972, the A
said sum of Rs. 11,000 was not deposited by the plaintiff-Respondent No. I.
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
preliminary decree, which was rejected by order dated 30th January, 1975.
Although the said order was not challenged by the plaintiff, he obtained the B
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 C
defendant no. I, 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 D
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 E
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 F
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, 11)63.
The learned counsel would contend that having regard to the plain lang\.1age
used in Order XXXIV Rule 8 C.P.C. read with Article 13 7 of the Limitation G
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 H
346
SUPREME COURT REPORTS
[2003) 1 S.C.R.
A alias Jesis Jessie Jacquiline and Anr., [1993] 4 SCC 431 and Mohd. Abdul
Khader Mohd. Kastim and Anr. v. Pareethij Kunju Sayed Ahammed and Ors.
[1996] l l sec 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
B 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
C by reason of a decree passed by a court of law by an agreement of parties.
D
E
F
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 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
G 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
H upon the nature of his ownership which is not absolute, but qualified by
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD) [S.B. SINHA, J.)
347
reason of the right of the mortgagee to recover his money out of the A
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 B
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 2IA 241; !LR (1875) 1 Mad, I called upon the legislature to make C
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 D
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 retransfer the mortgaged property to him or to such third person as he E
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 F
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 G
to the effect that, ifthe 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 H
348
SUPREME COURT REPORTS
[2003] l S.C.R.
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
B under heading 'Once a mortgage, always, a mortgage' it is noticed.
c
D
"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 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.
E
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
F
G
H
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
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD) [S.B. SINHA, J.]
349
could be limited by contract between the parties. Right to redeem is A
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 B
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 C
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 D
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 E
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.
F
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 G
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
equi!y ofredemption. Greene M.R. in Knightsbridge Estates v. Byrne, H
350
SUPREME COURT REPORTS
[2003] I S.C.R.
A
emphasized that provisions touching the contractual right to redeem
are not properly to be classed as clogs on the equity of redemption,
-4...
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
B of redemption is stated thus:-
"The rights of redemption. The right to redeem a mortgage was
fonnerly conferred on the mortgagor by a proviso or condition in the
mortgage to the effect that, if the mortgagor or his representati've
c
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
'l
D
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 tenn 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 tenn will ceased the date
E
.fixed (e).
It has been seen (f) that, at law, whatever, form the mortgage took,
upori 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.
F
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
G
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 Prope1ty Act. By reason of Article 61 of the
Limitation Act, 1963, the limitation provided for a suit_to redeem or recover
H the possession of immovable property mortgaged by a mortgagor is thirty
A.D. OSWAL (DEAD) v. R.G. HEDA (DEAD) [S.B. SINHA, J.]
351
years from the date of accrual of right to redeem or recover possession. A
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
B
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 c
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 ruie I 0 together
'
with subsequent interest on such sums respectively as provided in
rule 11, the defendant shall deliver up to the plaintiff, or to such D
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
E
title, by those under whom he claims, and shall, also, if necessary put
the plaintiff in possession of the proper1Y; and"
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 F
~
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 G
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 H
A
352
SUPREME COURT REPORTS
[2003] 1 S.C.R.
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
B 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
C 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.
D
·E
F
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-rul«;1!l) 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 pnm£rty has been passed ,or before the c9,i;ifirmation
ofa sale held in pursuanc~~~.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 mbrtgagor 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.
G
The right of redemption of mortgagor being a statutory right, the same
can be taken away on!~· 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.
H 1
A right for obtaining a final decree for sale or foreclosure can be
~-
AD. OSWAL (DEAD) v. R.G. HEDA (DEAD) [S.B. SINHA, J.)
353
exercised only on payment of such money. Such a right can be exercised at A
any time even before the sale is confirmed although the final decree might
have been passed in the meanwhile. The mongagee is not also entitled to
receive any payment under the preliminary decree nor the mongagor is required
to make an application to recover before paying the same.
Even, indisputably, despite expiry of the time for deposit of mongaged B
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 C
preliminary decree on or before the date fixed by the Coun, the mongageedefendant shall be entitled to apply for a final decree under clause c(ii) of
rule 7 of Order XXXIV. In a case of a mongage by conditional sale or
anomalous mortgage, the mortgagee can pray for passing of a final decree
debaring the mongagor from claiming his right to redeem the properly. In a
case of a usufructuary mongage, however, the mongagee is not entitled to D
apply for a final decree. The right of mongagee 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 propeny
in the case of a mongage by a conditional sale or of an anomalous mongage E
the terms whereof provide for foreclosure only and not for sale. In the case
of the mongage other than usufructuary mongage, the mongagee can tile an
application to pass a final decree that the mongaged propeny or a sufficient
pan thereof be sold, and the proceeds thereof be paid into Coun 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 F
(I) of Rule 8 shows that only a mongagor can apply to the Coun 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 (I) of Rule 8 the mongagor can request the Coun
to order the mongagee to put him in possession of the propenies which were G
the subject matter of the mongage. The amount determined by the Coun
which the mongagor is liable to pay to the mongagee 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 H
354
SUPREME COURT REPORTS
[2003] I S.C.R.
A 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.
B
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. Ghant Ahmad and Ors., AIR (1922) Oudh 33 held
that Article 181 of the old Limitation Act will have no application. Similar
C view has been taken in Ramaiah v. Veeraiah ILR (1983) I Kamataka 114.
However, same High Courts have taken a view that the period of limitation
provided for under Article 137 .1.starts from the date of deposit. See
Subramaniam Chettiai' 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
D in (1998) 2 Kar L.J. 290 K. Kunjamma and Ors. v. Bhageerathy Amma
Gomathy Ammo 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. Dau/ta Kuer reported in AIR (1953) All 503, Rudrappa v.
Puttalakshamma reported in AIR 1954 Mysore 118 and Mohomed Azim v.
E Md. Sultan reported in AIR (1946) Pat 99.
F
G
A learned Single Judge of the Allahabad High Court in Yashpal Singh
v. Ved Prakash, (1998) 2 Civil 2 L.J. 356: (1988) AU 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 that a preliminary decree in a suit for redemption
of an usufructuary mortgage under clause ( c )(i) or rule 7( I) 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
H Receiver, [1996] 6 sec 185 it was observed:-
)r
A.O. OSWAL (DEAD) v. R.G. HEDA (DEAD) [S.B. SINHA,/.]
355
" ...... .It is now well settled that despite the decree for redemption A
which might have been passed by a competent court and which might
have become final till the mortgage amount is deposited by th.e
mortgagor the relationship of mortgagor and mortgagee does not collie
to an end. Conversely once the amount is deposited by the mortgagor
decree-holder even during the execution proceedings the relationship B
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 Ba/want Rainde
and Ors., [1988] 3 SCR 689 AIR= AIR (1988) SC 1200, this Court negatived C
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
secon,d !!9i/:.f~r redemption was barred would not be sustainable, in the
followi~g terms:-
" 12. In the instant case, the earlier suit was niit'a1suit for foreclosure D
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 E
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 F
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. G
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.