[Mortgage] Suit for redemption can be filed within 30 years from the date fixed for redemption: SC

The SC on August 13, 2021 {KRISHNA GOPAL TIWARY & ANR. vs. UNION OF INDIA & ORS.} held that a distinction exists between a mortgage by way of conditional sale and a sale with condition to repurchase. It was held that in the former the debt subsists and a right to redeem remains with the debtor but in case of the latter, the transaction does not evidence an arrangement of lending and borrowing, thus, right to redeem is not reserved.

It was held by the Bench, comprising of  Justice HEMANT GUPTA & Justice A S BOPANNA that a reading of the document in the present case would show that the document was executed for the reason that the plaintiff has borrowed a sum of Rs.3,000/- for his household expenses and the defendant is bound to retransfer the land if the amount is paid within one year. It was held that the advance of loan and return thereof are part of the same document which creates a relationship of debtor and creditor. Thus, it would be covered by proviso in Section 58(c) of the Transfer of Property Act.

The SC also held that under Section 63(a) of the T.P. Act, the liability of mortgagor to pay for improvement will arise if the mortgagee had to incur the costs to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient or being made in compliance with the lawful order of any public servant or public authority. It was held that none of the eventualities arose in the present case compelling the mortgagor to pay for the improvements if any carried out by the mortgagee. 

It was held that since the possession was given to the mortgagee, he has enjoyed usufruct from the mortgage property which compensates not only of the user of the land but also improvements made by him. It was held that the improvements were to enjoy the usufruct of the property mortgaged.

The SC further held that argument that plaintiff has filed suit for redemption after 20 years of execution of the document is not tenable as the suit for redemption can be filed within 30 years from the date fixed for redemption. It was held that the period of 30 years would commence on 22.2.1969 and the suit was filed in the year 1989, which is within the period of limitation.

In view thereof, the order of the First Appellate Court accepting the appeal of the defendants and dismissing the suit for redemption and so as the order passed by the High Court were set aside and the suit was decreed by the SC. It was directed that the plaintiff may pay or deposit the mortgage amount within three months of the receipt of copy of the order. The appeal was allowed by the SC.