Case Note & Summary
The dispute arose from a suit for redemption of 2 bighas 3 kathas 6 dhurs of land covered by a usufructuary mortgage bond. The mortgagors filed the suit seeking redemption, while the mortgagees contended that the mortgagor had failed to pay rent, a rent decree was obtained by the landlord, the mortgagee paid the decretal amount, and therefore the right of redemption was extinguished. The trial court decreed the suit, rejecting the mortgagee's objection, and the lower appellate court affirmed. However, the Patna High Court in second appeal reversed and dismissed the suit, holding that the mortgagor's failure to pay rent and the mortgagee's payment of decretal dues extinguished the equity of redemption. The appellants, as mortgagors, challenged this finding before the Supreme Court. The Supreme Court examined the short question whether the right of redemption had been extinguished. It observed that a right of redemption can come to an end only in a manner known to law—by contract between parties, by a decree of court, or by a statutory provision. The expression "act of parties" refers to a subsequent transaction standing apart from the mortgage. A usufructuary mortgagee cannot unilaterally convert his position into that of an absolute owner. The mortgagee may purchase the entire equity of redemption, but he occupies a peculiar position, and any advantage gained by availing himself of that position is held for the benefit of the mortgagor. The Court relied on Sidhkamal Nayan v. Bira Nayak and Mritunjuoy Pani v. Naramanda Bala Sasmal. Applying these principles, the Court held that even if a rent decree is obtained and the mortgagee pays it off, the mortgage remains liable to be redeemed at the mortgagor's option. Purchase by the mortgagee at a court sale in execution of a decree on the personal covenant does not cause merger of rights or extinguishment of the mortgage. Consequently, the High Court committed a gross error of law. The Supreme Court set aside the impugned judgment of the High Court and affirmed the judgment and decree of the trial court as affirmed by the lower appellate court. The appeal was allowed, but in the circumstances, there was no order as to costs.
Headnote
A) Civil Law - Mortgage - Extinguishment of Right of Redemption - Not mentioned - The High Court held that mortgagor's failure to pay rent and mortgagee's payment of decretal dues extinguished equity of redemption; Supreme Court reversed, holding that right of redemption can be extinguished only by contract between parties, decree of court, or statutory provision, and extinguishment by act of parties requires a subsequent transaction observing legal formalities; Held that the right of redemption was not extinguished and the mortgagor was entitled to redeem. (Paras 1-2) B) Civil Law - Mortgage - Usufructuary Mortgagee's Unilateral Act and Court Sale Purchase - Not mentioned - A usufructuary mortgagee cannot by mere assertion or unilateral act convert his position into that of absolute owner; purchase by mortgagee at court sale in execution of a rent decree does not result in merger of rights or extinguishment of mortgage, and any advantage gained by mortgagee availing himself of his position is held for benefit of mortgagor; Court relied on Sidhkamal Nayan v. Bira Nayak and Mritunjuoy Pani v. Naramanda Bala Sasmal; Held that mortgage cannot be escaped and mortgage is redeemable at mortgagor's option. (Paras 1-2)
Issue of Consideration
Whether the High Court was right in concluding that the mortgagor's right of redemption got extinguished and the mortgagor had no right of redemption.
Final Decision
Appeal allowed; impugned judgment of Patna High Court set aside; judgment and decree of trial court as affirmed by lower appellate court affirmed; no order as to costs.
Law Points
- Right of redemption can be extinguished only by contract between parties
- decree of court
- or statutory provision
- extinguishment by act of parties requires subsequent transaction observing legal formalities
- usufructuary mortgagee cannot unilaterally convert position into absolute owner
- advantage gained by mortgagee availing himself of his position is held for benefit of mortgagor
- purchase by mortgagee at court sale in execution of rent decree does not merge rights or extinguish mortgage
