Parshad (since deceased) Through LRs & Ors v. Prem Parkash Mi
Case Details
RSA-1100-1995 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA-1100-1995 (O&M) Reserved on 13.11.2025 Date of decision: 18.11.2025 Uploaded on : 18.11.2025 ...Appellants Jyo1 Parshad (since deceased) Through LRs & Ors. Versus Prem Parkash Mi(cid:14)al (since deceased) Through LRs ...Respondents CORAM: HON'BLE MR. JUSTICE DEEPAK GUPTA Argued by: Mr. Aman Bansal, Advocate and Mr. Satnam Singh, Advocate for the appellants. Mr. Deepak Balyan, Advocate for the respondents. **** DEEPAK GUPTA, J. Defendants are before this Court in the present Regular Second Appeal against reversal, inasmuch as the suit for declara)on regarding the shop in dispute ûled by plain)û 3 Prem Prakash Mi(cid:14)al (respondent herein) was dismissed by the trial Court on 21.05.1993, but the appeal ûled by the said plain)û was accepted by the learned Addi)onal District Judge, Sonipat on 01.02.1995, whereby the suit was decreed. 2. To avoid confusion, par)es are referred to as per their status
Legal Reasoning
before the trial Court. With the assistance of learned counsel for both sides, the trial Court record has been perused. 3. The founda)onal facts are not in dispute. One Ramu Mal was the owner of the shop in ques)on, situated in Lajpat Rai Mandi (popularly known as Gur Mandi), Sonipat. He mortgaged this shop with possession in Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 1 of total 9 Pages RSA-1100-1995 (O&M) favour of the plain)û3Prem Prakash Mi(cid:14)al for considera)on of ¹18,000/- vide registered mortgage deed dated 20.03.1946 (Ex. P-1). ThereaDer, on 06.12.1967, Ramu Mal sold his equity of redemp)on in respect of the mort- gaged shop in favour of defendants Jyo) Prakash, Inder Sen and Raj Kumar, along with one Roshan Lal, by a registered sale deed (Ex. P-3). Roshan Lal, holding 1/4th share, subsequently sold his share to defendant No.4 3 Ma- hesh Kumar vide sale deed dated 5.1.1979 (Ex.P-4). In this manner, the de- fendants stepped into the shoes of the original owner and became owners3 mortgagors of the suit property. 4. Before purchasing the equity of redemp)on, these very de- fendants had already been inducted as tenants in the shop by the plain)û3 mortgagee and were in occupa)on as tenants at that )me. The plain)û9s case is that the defendants failed to get the property redeemed within the statutory period of 30 years and by lapse of )me, their right of redemp)on stood ex)nguished. Consequently, the plain)û claimed to have become owner in possession of the shop and sought a declara)on to that eûect. 5. In the wri(cid:14)en statement, neither the mortgage deed Ex. P-1 nor the sale deeds were disputed. The defendants, however, denied that they con)nued as tenants under the plain)û. Their speciûc plea was that, in terms of the mortgage deed, the en)re mortgage money of ¹18,000/- along with agreed interest had already been sa)sûed by adjustment out of the rent received by the plain)û over the years. They asserted that the rent received by the plain)û not only covered the agreed interest but also wiped out the principal, and in fact exceeded the total amount due,
Legal Reasoning
thereby ex)nguishing the mortgage. On that basis, it was contended that the plain)û had no remaining right in the suit property and that the suit de- served dismissal. Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 2 of total 9 Pages RSA-1100-1995 (O&M) 6. In rejoinder, the plain)û reiterated his stand and controverted the defendants9 plea of redemp)on by adjustment of rent. 7. The trial Court framed the necessary issues. On appraisal of the evidence led by the par)es, it held that the mortgage stood redeemed be- cause the rent received by the plain)û in excess of the s)pulated interest was liable to be adjusted towards the principal amount. It, thus, concluded that the mortgage had been sa)sûed by eÿux of )me and dismissed the suit on 21.05.1993. 8. In appeal, the First Appellate Court reversed these ûndings. It took the view that there was no clause in the mortgage deed authorising automa)c adjustment of rent received in excess of interest towards the principal, and further held that by lapse of 30 years, the defendants9 right of redemp)on stood ex)nguished under Ar)cle 61 of Limita)on Act, thereby conferring ownership upon the mortgagee. It accordingly decreed the suit vide judgment dated 01.02.1995. 9.1 Assailing this reversal, learned counsel for the appellants3de- fendants contends that the suit itself was misconceived and mala ûde, as the plain)û knew that by the )me of the defendants9 purchase in Decem- ber 1967, no amount under the mortgage remained due. It is pointed out that aDer the purchase in 1967, the plain)û never issued any demand no- )ce either for rent or for mortgage money, to the defendants or even earlier to the original owner, which according to the appellants, shows the conduct of the plain)û trea)ng the mortgage as fully sa)sûed. Stress is laid on the terms of the mortgage deed to argue that the only right conferred on the plain)û3mortgagee, in case of default, was to recover the mortgage amount by auc)on of the shop, or other property of the mortgagor, and that he never exercised this right, obviously because nothing was outstand- ing. Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 3 of total 9 Pages RSA-1100-1995 (O&M) 9.2 It is further contended, with reference to Sec)on 76 of the Transfer of Property Act, that a mortgagee in possession is bound to main- tain full and accurate accounts of sums received and spent in rela)on to the mortgaged property. The plain)û, it is argued, failed to place any such ac- counts on record, and in the circumstances, an adverse inference must fol- low that no amount remained due and the mortgage stood worked out. 9.3 Learned counsel for the appellants has me)culously referred to the oral and documentary evidence, including the mortgage deed and the sale deeds, to demonstrate the quantum of rent received by the plain)û from 1946 to 1967, which, according to him, far exceeded the total of prin- cipal and agreed interest. 10. On the other hand, learned counsel for the respondent3 plain)û supports the reasoning adopted by the First Appellate Court and submits that there is no jus)ûca)on for interference with the impugned de- cree. He reiterates that, in the absence of a speciûc contractual provision for adjustment of rent towards principal, the mortgage cannot be treated as redeemed, and further argues that the defendants9 right to redeem stood ex)nguished by lapse of )me. 11. This Court has considered the rival submissions and re-ex- amined the en)re record. 12. The dispute essen)ally turns on the true construc)on of the mortgage deed dated 20.03.1946 (Ex. P-1) and the legal consequences of the long course of dealings between the par)es. 13. It is admi(cid:14)ed that the mortgage amount was ¹18,000/- and that the mortgage was with possession. The mortgage deed, originally in Urdu, stands translated into Hindi on the record. A conjoint reading of its terms shows: Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 4 of total 9 Pages RSA-1100-1995 (O&M) (cid:1) The mortgagor Ramu Mal undertook to pay interest on ¹18,000/- at the rate of 6 Annas per cent per month for a period of 5 years, aDer which he would be en)tled to redeem the property. (cid:1) It was agreed that interest payable was to be adjusted out of rent, and any remaining interest was to be paid annually; failing that, the en)re interest could be paid at the )me of redemp)on. (cid:1) In case of viola)on of these terms, the mortgagee was given a right to have the mortgaged shop sold by auc)on and, if there remained any deû- ciency even thereaDer, to recover the balance by sale of other property of the mortgagor, to which the mortgagor expressly consented. (cid:1) The mortgagor was also liable for necessary repairs and taxes, the cost of repairs, if incurred by the mortgagee, being adjustable. 14. On a plain calcula)on, the interest at the agreed rate of 6 An- nas per cent per month on the mortgage amount of ¹18,000/- for a period for ûve years, works out to about ¹4,050/- [6/16 (anna) x 1/100 (percent) x 18,000/- (mortgage amount) x 12 (months) x 5 (years)]. In the absence of any evidence of expenses on repairs etc., the maximum amount the plain)û3 mortgagee could lawfully claim under the deed is the principal ¹18,000/- plus interest of ¹4,050/-, totalling ¹22,050/-. 15. The plain)û3PW-1 himself deposed that at the )me of mort- gage in 1946, the shop was already let out to M/s Shri Chand Sulekh Chand at ¹200/- per month (¹2,400/- per annum) and that this tenant remained in possession )ll 1950, aDer which the defendants came in as tenants in 1950, and con)nued to pay rent )ll their purchase in 1967, whereaDer no rent was paid. 16. Defendant Inder Sen (DW-1) gave a detailed statement regard- ing rent received by the plain)û from 1946 to 1967. According to him: Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 5 of total 9 Pages RSA-1100-1995 (O&M) (cid:1) (cid:1) (cid:1) (cid:1) From 20.03.1946 to 14.05.1950 (about 50 months), the plain)û received rent @ ¹200/- per month, totalling ¹10,000/-. From 15.05.1950 to 14.11.1955 (5½ years), the plain)û received rent @ ¹2,500/- per annum from the defendants as tenants, totalling ¹13,650/-. From 15.11.1955 to 14.11.1957 (2 years), rent was ¹1,900/- per annum, totalling ¹3,800/-. From 15.11.1957 to 14.11.1967 (10 years), rent was ¹1,950/- per annum, totalling ¹19,500/-. 17. On this basis, the total rent received by the plain)û up to 06.12.1967 (the date of the defendants9 purchase) comes to ¹47,050/-, i.e. more than double the amount of ¹22,050/- legi)mately recoverable under the mortgage. 18. The central argument of the plain)û that rent in excess of in- terest could not be adjusted towards principal, merely because the mort- gage deed does not expressly so provide, cannot be accepted in the facts of the present case. A mortgagee in possession is not en)tled, either in equity or under law, to appropriate unlimited income from the mortgaged prop- erty without accoun)ng or adjustment, so as to enrich himself far beyond the principal and agreed interest. To permit him to do so would amount to unjust enrichment and would oûend the very nature of a mortgage transac- )on, which is a security for a debt and not a device for proûteering. 19. Even if Ex. P-1 does not speciûcally recite that <surplus rent= shall be adjusted towards principal, the plain)û could never claim more than the amount due to him under the contract. Once the total beneût drawn by him from the mortgaged property, in the shape of rent, substan- )ally exceeded that amount, equity necessarily treats the debt as sa)sûed. The trial Court was, therefore, right in holding that the mortgage stood Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 6 of total 9 Pages RSA-1100-1995 (O&M) worked out and redeemed by the long course of dealings between the par)es. 20. It is signiûcant to note that at the end of the ini)al period of ûve years i.e., aDer 20th March, 1951, the plain)û had a clear contractual right, under the mortgage deed, to get the mortgaged shop sold by auc)on and even to proceed against other proper)es of the mortgagor, if any deû- ciency remained. He never exercised this right. On the contrary, he con)n- ued for many years thereaDer to receive rent without raising any demand or grievance about outstanding mortgage money, and even when the mort- gagor sold the equity of redemp)on in 1967, the plain)û did not protest or assert that any amount remained unpaid. 21. At this stage, reference can be made to Sec)on 67 of the Transfer of Property Act, 1882, which confers upon a mortgagee, in the ab- sence of a contract to the contrary, a right to ûle a suit for foreclosure or sale, where mortgage money has become due and remains unpaid. 22. In the present case, far from there being non-payment, the material on record demonstrates that the plain)û has already recovered an amount more than what was due. In such a situa)on, the founda)on for ex- ercise of the rights under Sec)on 67 does not exist. More importantly, Ex. P-1 itself restricts the plain)û9s remedy to sale of the shop in ques)on and other property of the mortgagor in default. It does not confer upon him any right of foreclosure so as to unilaterally ex)nguish the mortgagor9s right of redemp)on. 23. Case may be examined from another angle. It is admi(cid:14)ed that the mortgage was an usufructuary mortgage within the meaning of Sec)on 58 (d) of the Transfer of Property Act (in short 8TPA9). The law places clear obliga)ons upon a mortgagee in possession under Sec)on 76 TPA, espe- cially the duty to maintain <full and accurate accounts= and apply rents and Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 7 of total 9 Pages RSA-1100-1995 (O&M) proûts in reduc)on of interest and, when appropriate, towards the prin- cipal. When a mortgagee fails to produce proper accounts, the Court must presume that the mortgagee has appropriated the rents and proûts to- wards the mortgage money. A mortgagee in possession cannot enrich him- self indeûnitely through usufruct. 24. In the present case, the plain)û produced no accounts at all for the period 1946 to 1967. The defendants, however, led detailed evidence of rent received by him, which is ¹47,050/-, whereas the total amount due under the contract, namely the principal of ¹18,000/- and interest for ûve years amoun)ng to ¹4,050/-, totalling ¹22,050/-, was less than half of that. The plain)û nowhere showed that he incurred any expenditure on repairs or taxes, which could have legally augmented the mortgage dues. 25. Even if the mortgage deed does not expressly authorize adjust- ment of surplus rent towards principal, equity and statutory obliga)ons im- posed under Sec)on 76 TPA prevent a mortgagee from retaining proûts far in excess of the amount due. The mortgagee cannot enrich himself indeûn- itely and is bound to account for all receipts. Where usufruct appropriated by the mortgagee ex)nguishes the mortgage debt, redemp)on is inferred by conduct. 26. Thus, both statutory principles and equitable doctrines con- verge in one direc)on i.e., the mortgage stood fully redeemed through con- duct and accoun)ng long before the ins)tu)on of the suit. The First Appel- late Court commi(cid:14)ed error in ignoring the du)es of a mortgagee under Sec- )on 76, misapplying limita)on, and overlooking the doctrine of unjust en- richment. 27. The First Appellate Court has erred in holding that by mere ex- piry of 30 years, the defendants9 right of redemp)on stood ex)nguished and the mortgagee became owner. Ar)cle 61 of the Limita)on Act pre- Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 8 of total 9 Pages RSA-1100-1995 (O&M) scribes the period within which a suit for redemp)on is to be ûled. It does not, by itself, convert a mortgagee into an owner in the absence of appro- priate proceedings. Limita)on bars the remedy, not the right, and certainly does not operate to confer )tle on the mortgagee by way of automa)c for- feiture, par)cularly where the debt is already sa)sûed. 28. The reliance placed by the plain)û on the plea that the right of redemp)on is barred by )me is, therefore, wholly misconceived in the facts of this case, where the mortgage has in substance been redeemed by ad- justment of rent over a long span of years. 29.
Decision
In view of the above discussion, this Court is of the considered opinion that the First Appellate Court misdirected itself both on facts and in law. It ignored the clear evidence of excess rent received, misread the terms of the mortgage deed and misapplied limita)on principles, while the trial Court had correctly appreciated the real nature of the transac)on and its working. 30. Consequently, the judgment and decree passed by the First Ap- pellate Court on 01.02.1995 cannot be sustained and are hereby set aside. The judgment of the trial Court dated 21.05.1993 dismissing the plain)û9s suit is restored. 31. The present Regular Second Appeal is accordingly allowed, and the suit of the plain)û3respondent stands dismissed, with costs through- out. 18.11.2025 Yogesh (DEEPAK GUPTA) JUDGE Whether speaking/reasoned: Whether reportable: Yes Yes Sarita Rani 2025.11.18 16:19 I attest to the accuracy of this document/order Page N: 9 of total 9 Pages