Right Of Equity Of Redemption Of Mortgage Is Subsidiary To Right Of Ownership: Supreme Court

The Supreme Court observed that the right of equity of redemption is subsidiary to the right of ownership.

The expression equity of redemption is a convenient maxim but an owner, who has stepped into the shoes of the mortgagor, after the purchase from the mortgagor but before filing a suit for foreclosure is entitled to redeem the property in terms of Section 60 of the Transfer of Property Act, the bench of Justices Hemant Gupta and AS Bopanna observed.

In this case, the mortgagee filed a suit for recovery of mortgage amount against the mortgagors. This suit got decreed foreclosing the rights of the mortgagors to redeem the property. Thereafter, the plaintiff filed a suit against the original mortgagors and the mortgagee seeking redemption of the mortgaged property. He claimed that the mortgagors had sold him the mortgaged land and thus he had stepped in the shoes of the mortgagors on account of the sale transaction. The Trial Court dismissed the suit, but the First Appellate Court held that since the plaintiff has purchased the land before the institution of the suit, the mortgagee ought to have made him a party in view of the provisions of Sections 59A and 91 of the Transfer of Property Act. The High Court set aside this judgment of the Appellate Court.

One of the issues raised in appeal was whether the plaintiff was a necessary party in a suit for foreclosure filed by the mortgagee after the purchase? The court observed that the plaintiff rightly claimed that he was required to be impleaded, as he was a necessary party in a suit for foreclosure filed by the mortgagee after the purchase of part of the mortgaged land.

"19. The equity of redemption is a right which is subsidiary to the right of ownership. Such right is not over and above the right of ownership purchased by the plaintiff. The expression equity of redemption is a convenient maxim but an owner, who has stepped into the shoes of the mortgagor, after the purchase from the mortgagor but before filing a suit for foreclosure is entitled to redeem the property in terms of Section 60 of the Act.", the court observed.

The court added that the decree passed at the back of the transferee mortgagor prior to the filing of the suit for foreclosure cannot be said to be a valid decree.

"The decree of foreclosure passed in the suit filed by the mortgagee will not extinguish the right of the mortgagor to redeem land in view of the fact that he was not impleaded as a party in the suit though he has purchased part of the mortgaged property by virtue of registered sale deed.", the bench said while allowing the appeal.

Case: Narayan Deorao Javle (Deceased) Vs. Krishna ; CA 4726 OF 2021
Citation: LL 2021 SC 389
Coram: Justices Hemant Gupta and AS Bopanna

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