PRITHI NATH SINGH & Ors. v. Suraj Ahir

RA.GHUBAR DAYAL, J.-We allowed Civil Ap- peal No. 533 of 1960 on May 4, 1962, by our judgment ~ealing with the facts of the case and giving the reasons f Jr the opinion expressed. It is not neces- . sary to repeat them. ---t · Suffice it to say that the appeal was allowed the reBpondents had lost their on the ground thfLt Raghubar Dayal J, 111# .l!riJJIJ Jf•lh Singh •• au ... ; ..Wr -- 304 SUPREME COURT REPORTS [1963] right to recover possession from the appellants on their estate vesting in the State of Bihar by virtue of ss. 3 and 4 of the Bihar Land Heforms Act, 1950 (Bihar Act XXX of 1950); hereinafter called the Act, and their having no subsisting right to recover It was also held possession from the appellants. that they could not get advantage of the prov1s1ons . of ol. (c) of sub-s. (1) of s. 6 of the Act as amended by the Bihar Land Reforms (Amendment) Aot, 1959 (Act XVI of 1959) as no mortgage snbsisted on the date of vesting, The amended ol.(c) read as follows : agricultural or horti "( c) lands used for cultural purposes forming the subject matter of a subsisting mortgage on the redemption of which the intermediary is entitled to recover khas possession thereof." It is contended for the re8pondents, who app lied for the review of our judgment, that our view tllat the mortgage was not subsisting on the date of vesting was wrong. The contention is that even though the respondents-mortgagors had paid up the mortgage money in 1943, the mortgage continued to subsist till the date of vesting as by that time the right of redemption given by s. 60 of the Trans fer of Property Act had not come to an end. That right, according to the respondents' contention, would not come to an end so long as the mortga gors' right to ask the mortgagees to perform any of the acts mentioned in s. 60 . continue8. In· sup port of the contention that the mortgage continues till the right of redemption comes to an end, reli ance is placed on the case reported as Thota Ohina Subba Rao v. Mattapalli Raju.( 1) We do not agree · with these contentions. Section 58 of the Transfer of Property Act interest transfer of an defines 'mortgage' to be a (I) [1949) F.C.R. •84, 498, 3 S.O.R. SUPREME COURT REPORTS 305 in specific immoveable property for the purpose of iiecuring the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. It also defines various varieties of mortgage and, in clause (d) defines 'usufructuary mortgage' thus: lflo!l Pr/thi N•lh 8in11 Y. Sutaj Ahir Ra,ljui•r Dc,111 • "Where the mortgagor delivers posses sion or expressly or by implication binds him self to deliver possession of the mortgaged property to the mortgagee, and authorizes 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 ~o appropriate the same in lieu of interest, or in payment of the mortgage money, or partly in lieu of inter· est or partly in payment of the mortgage :money, the transaction is called an usufruo tuary mortgage and the mortgagee an usufruc tuary mortgagee." When the mortgage money if! paid by the mort· gagor to the mortgagee, there does not remain any debt due from the mortgagor to the mortgagee, and therefore the mortgage can no longer continue after the mortgage money has been paid. The transfer of interest represented by the mortgage was for a certain purpose, and that was to secure payment of money advanced by way of loan. A security cannot exist after the loan had been paid up. If any interest in the property continues to vest in the mortgagee subsequent to the payment of the mortgage money to him, it would be an in· terest differ6nt from that of a mortgagee's interest. The mortgage as a transfer of an interest in immove able property for the purpose of securing pay· ment of money advanced by way of loan' must come to an end on the payment of tlJ.e mortgag@ ' Jnoney. I ' -~ 196• Rrithi Nath SingB v. Suraj Ahir . ROghubar Dayal J. · 306 SUPREME COURT REPORTS [1963] Further, the definition of usufructuary, mort· gage itself leads to the conclusion that the autho· rity given to the mortgagee to remain in possession of the mortgaged property ceases when the mort· gage money has been paid up. The . usufructuary mortgage, by the terms of its definition, authorises the mortgagee to retain possession only until pay ment of the mortgage money, and to appropriate the rents and profits collected by him in lieu of in terest or in payment of the mortgage money, or partly in lieu of interest or partly in lieu of pay. ment of the mortgage money. When the mortgage money bas been paid up, no question of appropria ting the rents and profits accruing from the proper· ty towards interest or mortgage money can arise. It is clear therefore that on the payment of mortgage money by the mortgagor to the mortgagee the mortgage comes to an end and the right of the mortgagee to remain in possession also comes to an end. The relevant portion of s. 60 on which the respondents rely reads : "60. At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place of the mortgage-money, require the mortgagee to <leliver to the mort gagor the mortgage deed and all documents ·relating to the mortgaged property which are in the possession of power of the mortgagee where the mortgagee is in possession of the to deliver possession mortgaged property, thereof to the mortgagor, and at the cost of the mortgagor either to re-transfer the mort gaged property to him or to such third person I ·as he may direct, or to execute and (where the mortgage has been effected by a registered instrument to have registered an acknowledg ment in writing that any right in derogation of ' j- 3 S.0.R. SUPREME COURT REPORTS 307 his interest transferred to the mortgagee has been extinguished : Provided that the right conferred by this section has not been extinguished by the act of the parties or by decree of a Court. 1962 Prithi Nath Singh v. Suraj Ahfr /laghubar Dayal J. The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption. .x x x x :x: x It is to be noted that these provisions do not state when a mortgage ceases to be a mortgage. They simply describe the right of a mortgagor to redeem. Now, what is this right and, in what cir cumstances does it arise? The right arises on the principal money, payment of which is securPd. by the mortgage deed, becoming due. The right enti tles the mortgagor, on his paying or tendering to the mortgagee the mortgage money to ask him (i) to deliver to him the mortgage deed and other documents relating to the mortgaged property; (ii) to deliver possession to the mortgagor, if the mortgagee is in possession; and (iii) to re-transfer the mortgaged property in accordance with the desit'e of the mortgagor. If the mortgagee receives the money and does not perform any of the three acts required of him to be done, the question arises whether this non-compliance with the demands will make the mortgage continue. The provisions of the section do not say so and there appears no good reason why the mortgage should continue. If the mortgagee is not to perform these acts, the mortgagor is not to pay the amount. If, however, the mort gage money has been received by the mortgagee and thereafter he refuses to perform the acts he is bound to do, the mortgagor can enforce his right to get back the mor~gage document, the possession of the mortgaged property and the reconveyance of ·i•hi N•"' Sin,h •• -.,hukr v.,.1 J. Sur•J Alli• 308 SUPRmlE OOUHT REPORTS (1963) that property through Court, A new right to get his demands enforced through the Court thus arises as a result of the provisions of s. 60 of the Act . If the mortgage money has been paid and then the mortgagor goes to Court to enforce his demands, that would not be to enforce his right of redemp tion which was really his right to make demands on payment of the mortgage money. The right to demand the mortgagee to do certain things on payment of the mortgage. money is different from enforcing the demands subsequent. to the pay ment of the money. This is also clear from the decree for redemptiot). Order XXXIV, r. 7, C.P.C. provides for the preliminary decree in a redemption suit and the preliminary decree is to order that the account be taken of what was due to the defendant, viz., the mortgagee, at the date of the decree, for principal and interest on the mortgage and other matters. Rule 9 provides that if on such accounting, any sum be found due to the mortgagor, the decree would direct the mortgagee to pay such amount to the mortgagor. If the mortgage money due has been already paid by the mortgagor and has been accepted by the mortgagee in full dis charge of the mortgage deed, no occasion for such accounting arises and therefore any suit to ·enforce the return of the mortgage deed and to get back the possession of the mortgaged property cannot be a suit for redemption. What Thota Chin.a Subba Rao's Gase (1), refer red to by learned counsel for the respondents, lays down is simply this that the right of redemption continues so long as the mortgage is alive. The case does not deal with the circumstances in which the mortgage ceases to exist. The following observa tion support, by implication, the view taken by us: "The qocument passed in favour of the wife of the mortgagor can be described as a [19'9] P,C.R. tlM, ~. (1) \. 1- 110 Prithi N •Iii S"z Ii v. Surlj .. wr: 11.,,,. ... .,. 0.,.1 J. . -' > 3 S.C.R. SUPREME OOURT RE.PORTS 309 reward promiHed to her for bringing about the willingness of her husband to agree to lands to the mort convey the mortgaged gagees. 'fhat can in no event be considered as extinguishing the equity of redemption. The mortgagor was not even a party to that document. The second document executed by the mortgagor is an agreement to convey the lands after three months, There is however no document or evidence to show that the mortgagees agreed to accept these lands in full satisfaction of their claims or promised to pay the sum of Rs. lllO mentioned therein. This was only an agreement to convey the lands after three months, and, if at all the · question of extinction of the equity of redemption could arise on the conveyance being executed but not before." ·- There are other cases also which throw ·a light on this question a.nd go against the contention of the respondents. In Samar Ali v. Karim-ul-lah (1) it was said: «Now, as I have said, the contract of mortgage in the present case being subject to the provisions of the Regulation, tbe charge would have been redeemed as soon a.s the principal mortgage money with twelve percent interest had been realised by the mortgagee from the profits of the property." In Muhammed Mahmud Ali v. Kalyan Das (2 ) it wa.s said: "It cannot be disputed that the right of redemption pre-supposes the existence of a mortgage on certain property which at the (I) ( 1886) I.L.R. 8 All. 402, 405. (2) ( 1895) I.L.R. 18 All. 189,192· frithf' Noi,h Singh •• B ~ghub'a-;i)'ayal J · Sura; Ahir 310 SUPREME COURT REPORTS [l9ti3J time of redemption is security for the money due to the mortgagee. It therefore follows that the only property which a second or other subsequent mortgagee may redeem is the property on which the first mortgagee is. entitled to enforce his security. From the very necessity of things the right of redemp· tion can be exercised in respect of such pro perty only as is subject to a.mortgage capable of enforcement." There can be nothing for enforcing & mqrtgage when the money has ,been paid up .and therefore the right to redeem ceases on payment of the mort- .gage money. ' In Balakrishna v.Rangnath (1) it was said: "Now the right to redeem can only be extinguished by act of parties or by a decree of a Court. (See the proviso to section 60 of the Trausfer of Proper~y Act). But when it is by act of parties the Act must take the shape and observe the formalities which the law prescribes. One method is by payment cash. is necessary beyond the payment." In that event nothing In Ram Prasad v. Bishambhar Singh \2 question formulated for determination was whether the suit being a suit to recover possessipn of the mortgaged property after the.mortgage money had been paid off was a suit •against the mortgagee redeem' or 'to recover possession of immovable property mortgaged'. Braund J., said: ) \., "Now, it is quite obvious that that section (s. 60 of the Transfer of Property Act) can only refer to a case in which a mortgagor under a subsisting mortgage approaches the Court to establish his right .to red, eem and to (I) l,L.R.1950 Nag. 618, 621. (2) A.I.R. 19C6.All. 400,402. Pritl1i Nath Singh v. Suraj Ahir Roghubar 1'aJal J. 3 S.C.R. SUPREME COURT REPORTS 311 have that redemption carried out by the pro cess of the various declarations and orders of the Court by which it effects redemption. In other words. s. tiO contemplates a case in which the mortgage is still subsisting and the mortgagor goes to the Court to obtain the return of his property on repayment of what is still due. · Section 62, on the other hand, is in marked contract to s. 60. Section 62 says that in the case of a usufructuary mortgage the mortgagor has a right to 'recover posses sion' of the property when (In a case in which the mortgagee is authorised to pay himself the mortgage money out of the rents and profits of the property} the principal money: is paid off. As we see it, that is not a case of J,'edemption at all. At the moment when the rents and profits of the mortgaged property sufficed to discharge the principal secured by the mortgage, the mortgage came to , an end aµd the correlative right arose in the mortgagor •to reqover possession of the property'. The framers.of the Transfer of Property Act have clearly recognised the distinction between the . procedure which follows a mortgagor's desire to redeem a subsisting mortgage and the procedure which follows the arising of a usufructuary mortgagor's right.to get his pro perty back after the principal has been paid off." We therefore hold that the mortgage was not subsisting on the date of vesting, it having come to an end on payment of the mortgage money in 1943. 11ind that the respondents cannot get the advantage of s. 6(l)(c) of the Act. We therefore dismiss the review petition. In the cir<;iumstances of the case, there will be no order 81! .~O CQ/3~,B. Petition dismissed.