Mortgagor Has Right To Redeem Usufructuary Mortgage At Any Point Of Time: Supreme Court

The Supreme Court observed that once a usufructuary mortgage is created, the mortgagor has a right to redeem the mortgage at any point of time.

In this case, since the mortgage was not redeemed by the mortgagor within a period of 30 years, the plaintiff filed a suit for declaration that she had become the owner after the extinguishment of the mortgage rights and for permanent injunction. The suit was decreed by the trial Court which was affirmed by the First Appellate Court. In Second Appeal, the suit was dismissed by the High Court relying upon the judgment in Sampuran Singh Vs. Niranjan Kaur (1999) 2 SCC 679.

While dismissing the special leave petition filed by the plaintiff, the bench comprising Justices Hemant Gupta and V. Ramasubramanian observed thus:

"After the judgment was rendered by the Single Judge Bench, the Full Bench of the Punjab and Haryana High Court in 'Ram Kishan & Ors. Vs. Sheo Ram & Ors.' reported in AIR 2008 P&H 77 held that once a usufructuary mortgage is created, the mortgagor has a right to redeem the mortgage at any point of time on the principle that once a mortgage always a mortgage. Such judgment was affirmed by this Court in 'Singh Ram (Dead) Through Legal Representatives Vs. Sheo Ram & Ors.' reported in (2014) 9 SCC 185."

Section 58(d) of the Transfer of Property Act defines a Usufructuary mortgage as follows: Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same] in 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.

In Singh Ram (supra), the Supreme Court had made the following observations on usufructuary mortgage:

"...while in case of any other mortgage, right to redeem is covered under S.60, in case of usufructuary mortgage, right to recover possession is dealt with under S.62 and commences on payment of mortgage money out of the usufructs or partly out of the usufructs and partly on payment or deposit by the mortgagor. This distinction in a usufructuary mortgage and any other mortgage is clearly borne out from provisions of S.58, S.60 and S.62 of the TP Act read with Art.61 of the Schedule to the Limitation Act. Usufructuary mortgage cannot be treated at par with any other mortgage, as doing so will defeat the scheme of S.62 of the TP Act and the equity. This right of the usufructuary mortgagor is not only an equitable right, it has statutory recognition under S.62 of the TP Act. There is no principle of law on which this right can be defeated. Any contrary view, which does not take into account the special right of usufructuary mortgagor under S.62 of the TP Act, has to be held to be erroneous on this ground or has to be limited to a mortgage other than a usufructuary mortgage. Accordingly, we uphold the view taken by the Full Bench that in case of usufructuary mortgage, mere expiry of a period of 30 years from the date of creation of the mortgage does not extinguish the right of the mortgagor under S.62 of the TP Act".

Last year, in Ram Dattan (Dead) by LRs versus Devi Ram, the Supreme Court had followed this judgment to hold that there is no limitation period in case of a usufructuary mortgage.

Case details

Harminder Singh (D) vs Surjit Kaur (D) | 2022 LiveLaw (SC) 421 | CA 89 OF 2012 | 27 April 2022

Coram: Justices Hemant Gupta and V. Ramasubramanian 

Counsel: AOR Geetanjali Mohan

Headnotes

Transfer of Property Act, 1882 ; Section 62 - Usufructuary Mortgage - Once a usufructuary mortgage is created, the mortgagor has a right to redeem the mortgage at any point of time on the principle that once a mortgage always a mortgage. [Referred to Singh Ram (Dead) Through Legal Representatives Vs. Sheo Ram & Ors. (2014) 9 SCC 185]

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