TaxTMI 
TaxTMI 
TaxTMI 
2003 (1) TMI 769
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.... limitation. FACTS: 3. 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 ....
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....ed 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. 6. 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 ....
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....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 o....
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....ced, 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. 14. 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 coextensive 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. 15. 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 redemp....
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....tgagor 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 appointe....
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....ee 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." 19. 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. 20. The statutory provisions, as noticed hereinbefore are required to be construe....
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...., 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. 24. 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 sa....
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....s. 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. 26. 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 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 plaintiffmortgagor firm all right to redeem the mortgaged property." 27. In Mancheri Puthusseri Ahmed and Ors. etc. v. Kuthivattam Estate Receiver. ....
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.... 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." 29. 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. 30. 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 during the proceedings in execution of a final decree for sale and are thus provisions con....
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....equential auction sale etc." 33. 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 mo....
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....ties 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." 35. 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. 36.In the aforementioned backdrop the decisions of this Court relied upon by Mr. Bobde are required to be considered. 37. In K. Parameswaran Pillai's case (supra) whereupon Mr. Bobde has placed strong reliance, a suit was filed by successors-in-inter....
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....n 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) 39. 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 barr....