No Limitation Period In Case Of A Usufructuary Mortgage : Supreme Court

The Supreme Court has observed that there is no limitation period in case of a usufructuary mortgage.

A bench comprising Justices Hemant Gupta and V Ramasubramanian was dealing with an appeal filed by a mortgagee, who claimed ownership of the mortgaged property on the ground that 45 years had elapsed after the mortgage.

The Supreme Court noted that the  Full Bench of Punjab and Haryana High Court, in "Ram Kishan & Ors. Vs. Sheo Ram & Ors.", has held that there is no limitation period in case of usufructuary mortgage. "Once a mortgage always a mortgage" was the principle applied.

The said decision of the P&H High Court was upheld by the Supreme Court in "Singh Ram (D) Through LRS Vs. Sheo Ram & Ors." reported in (2014) 9 SCC 185.

In that judgment, the Supreme Court had observed that "in a usufructuary mortgage, right to recover possession continues till the money is paid from the rents and profits or where it is partly paid out of rents and profits when the balance is paid by the mortgagor or deposited in Court as provided under S.62 of the Transfer of Property Act".

In Singh Ram, the Supreme Court made the following observations :

"...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".

"We, thus, hold that special right of usufructuary mortgagor under S.62 of the TP Act to recover possession commences in the manner specified therein, i.e., when mortgage money is paid out of rents and profits or partly out of rents and profits and partly by payment or deposit by mortgagor. Until then, limitation does not start for purposes of Art.61 of the Schedule to the Limitation Act. A usufructuary mortgagee is not entitled to file a suit for declaration that he had become an owner merely on the expiry of 30 years from the date of the mortgage. We answer the question accordingly".

In the light of this settled position, the bench dismissed the appeals in the instant case.

Case Title : Ram Dattan (Dead) by LRs versus Devi Ram and others

Citation : LL 2021 SC 562

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