The Supreme Court has clarified that in cases of usufructuary mortgage, the limitation period does not begin from the date of mortgage creation. Instead, it starts only from the date when the mortgage amount is paid or adjusted, reaffirming the mortgagor’s continuing right of redemption.
New Delhi: The Supreme Court of India has once again clearly explained the law relating to usufructuary mortgages and the limitation period for redemption of mortgaged property.
The Court held that in cases of usufructuary mortgage, the limitation period does not start from the date when the mortgage was created, but only from the date when the mortgage amount is actually paid or adjusted, as provided under the Transfer of Property Act, 1882.
The Apex Court was dealing with a dispute related to the redemption of a mortgaged property, where the key issue was whether the right of redemption was barred by limitation.
A Division Bench comprising Justice B.V. Nagarathna and Justice R. Mahadevan settled the issue by relying on earlier Supreme Court judgments.
During the hearing, the Bench noted an important precedent and observed,
“However, during the course of submissions, the judgment in Singh Ram (supra) referred to above, by a three judge Bench of this Court reported in (2014) 9 SCC 185 has been brought to our notice. On a perusal of the said judgment, it is noted that when there is a usufructuary mortgage, the period of limitation does not run from the date of creation of the mortgage but from the date of payment of mortgage- either out of the usufructuary or partly out of the usufructuary or partly on payment of deposit by mortgager as provided under Section 52 of Transfer of Property Act, 1882.”
Senior Advocate S. Murlidhar appeared for the appellant, while Advocate-on-Record Prem Malhotra represented the respondent.
The case arose from a long-standing dispute over a property that had been mortgaged. The petitioners, who were the original plaintiffs, were the mortgagees of the property.
The property had been mortgaged by the ancestors of the respondents, who were the original defendants. A civil suit was earlier filed by the petitioners challenging an order passed by the Collector.
The respondents had filed an application under Section 6 of the Redemption of Mortgage Act, 1913, seeking redemption of the property. The Collector allowed the redemption application in favour of the respondents.
Aggrieved by this order, the petitioners filed a civil suit, and the Trial Court set aside the Collector’s decision. The first appeal filed by the respondents was also dismissed.
However, the matter reached the Punjab and Haryana High Court through a Regular Second Appeal. The High Court allowed the appeal and held that the respondents’ right to redeem the mortgage was not barred by limitation.
The High Court further held that a fresh cause of action for redemption had arisen because the loan amount was being adjusted from the income generated from the land. On this basis, the matter was remanded and the Collector’s order allowing redemption was restored.
While doing so, the High Court relied on earlier Supreme Court judgments, including Ram Kishan and Others v. Sheo Ram and Others (2008).
The High Court held that in the case of a usufructuary mortgage where no time limit is fixed for redemption, the right to redeem does not arise from the date of mortgage but only from the date when the mortgagor pays, tenders, or deposits the mortgage amount.
Unhappy with this decision, the petitioners approached the Supreme Court.
The Supreme Court carefully examined the reasoning of the High Court and noted that it had correctly relied on the judgment in Singh Ram (Dead) through legal representatives v. Sheo Ram and Others.
The Bench reaffirmed the settled legal position that in cases of usufructuary mortgage, the limitation period begins only after the mortgage amount is paid or adjusted as per law.
The Bench clarified that till such payment is made, the limitation period under the Limitation Act does not start. It observed that,
“As such mere expiry of the period prescribed thereunder could not extinguish the mortgager’s right of redemption and thereby the right of mortgagee to seek declaration of title and ownership over the mortgage property stands untouched.”
The Court also accepted the argument of the respondents that if the law laid down in Singh Ram (Supra) is applied to the present case, then the suit filed by the appellants could not survive.
Accordingly, the Supreme Court dismissed the appeal and upheld the judgment passed by the Punjab and Haryana High Court, thereby reaffirming that the right of redemption in a usufructuary mortgage is a continuing right and does not get extinguished merely due to passage of time.
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On behalf of the appellant, the legal team included Senior Advocate S. Murlidhar, AOR B. Sunita Rao, and Advocates Anurag, Varun Popli, Shailender Popli.
The respondents were represented by AOR Prem Malhotra, Advocates Pardeep Gupta, Parinav Gupta, Mansi Gupta, Rakshit Rathi, Harshvardhan Lodhi, AOR Vipin Gupta, and AOR Bipin Bihari Singh.
Case Title:
Dalip Singh (D) v. Sawan Singh (D)
Neutral Citation: 2025 INSC 1498.
Read Judgment:
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