Limitation To Redeem Usufructuary Mortgage Runs From Payment Of Mortgage Money, Not Date Of Mortgage Deed: Allahabad High Court
The Allahabad High Court has held that limitation for a suit to redeem usufructuary mortgage or recover possession begins to run only when the mortgagor pays or tenders the mortgage money and not from the date on which the mortgage deed is executed.A usufructuary mortgage is one where the mortgagor hands over possession to the mortgagee, who keeps the rents and profits in lieu of interest...
The Allahabad High Court has held that limitation for a suit to redeem usufructuary mortgage or recover possession begins to run only when the mortgagor pays or tenders the mortgage money and not from the date on which the mortgage deed is executed.
A usufructuary mortgage is one where the mortgagor hands over possession to the mortgagee, who keeps the rents and profits in lieu of interest or towards the principal, until the debt is repaid.
Justice Manish Kumar Nigam held,
“…the limitation will start only after payment or tender of payment by the mortgagor to the mortgagee of the amount due in case of usufructuary mortgage and not otherwise.”
In 1978, Jagdish Prasad Johri mortgaged a house at Mohalla Kunwapur, Bareilly, to Ram Prakash and others to secure a debt of Rs. 15,000. Possession was handed to the mortgagees, and the rent of the house was to be adjusted towards interest on the sum advanced. The deed fixed the period of the mortgage at four years.
After Johri's death on October 26, 2015, his heirs, the plaintiffs, tendered Rs. 15,000 by bank pay order along with a notice dated December 30, 2015, calling on the mortgagees to cancel the deed and hand back possession. The mortgagees declined. Consequently, the heirs filed a suit for redemption and possession on March 03, 2016.
The mortgagees, defendants, moved an application under Order VII Rule 11 CPC to reject the plaint on grounds that the suit was time-barred as the deed's four-year term had expired in 1982, the thirty-year limitation under Article 61 had run out in 2012. Accordingly, the suit filed in 2016 was beyond time.
The Civil Court rejected that application, and the District Court dismissed the mortgagees' revision. The mortgagees then approached the High Court under Article 227 of the Constitution.
The mortgagees argued that a mortgagor's right to redeem accrues on the date of the mortgage itself where no time is fixed, that limitation therefore ran from execution of the deed, and that expiry of the period barred not only the remedy but also the right to possession under Section 27 of the Limitation Act.
The mortgagors submitted that the deed was a usufructuary mortgage in which the rent was to be set off against interest. Therefore, under Section 62 of the Transfer of Property Act limitation began only when they tendered the principal, here on December 30, 2015.
The Court noted that under Section 62 of the Transfer of Property Act, 1882, where the mortgagee is to pay himself out of those rents and profits, the mortgagor's right to recover possession arises only when the mortgage money is paid. It observed that Article 61 of the Limitation Act, 1963 allows thirty years for such a suit, running from the date the right to redeem or recover possession accrues.
The Court observed that in Singh Ram (D) Thr. L.Rs. v. Sheo Ram, the Larger Bench of the Supreme Court held that the earlier decisions had overlooked the usufructuary mortgagor's special right under Section 62 to recover possession which commences only when the mortgage money is paid out of rents and profits, or is otherwise tendered or deposited. It held that until then, limitation under Article 61 does not begin to run.
The Court held that the right of redemption is a statutory right that can be taken away only under the proviso to Section 60 of the Transfer of Property Act, i.e., by a decree or by act of the parties.
“Thus, right of redemption of a mortgagor being a statutory right, the same can be taken away only in terms of the proviso to Section 60 of the Transfer of Property Act which is extinguished either by a decree or by act of the parties.”
On the mortgagees' reliance on the four-year term in the deed, the Court held that the term at most meant the mortgagor could not have sued for redemption during those four years, and did not set limitation running on its expiry.
“Whether the said restriction would amount to the clog on the rights of the mortgagor, I am not inclined to consider the same but it cannot be said that the limitation will start running after expiry of the aforesaid four years period.”
Since the mortgagors first tendered the principal on December 30, 2015 and filed the suit on December 03, 2016, the Court held the suit was within limitation and that the courts below had committed no error in refusing to reject the plaint.
Accordingly, the petition was dismissed.
Case Title: Shri Ram Prakash and 3 others v. Smt. Asha Johri and 3 others 2026 LiveLaw (AB) 448
Case Citation: 2026 LiveLaw (AB) 448
Counsel for Petitioner :- Kiran Kumar Arora
Counsel for Respondent :- Ajay Singh, Bhanu Bhushan Jauhari, Rishi Bhushan Jauhari