In Usufructary Mortgage, Limitation Period For Redemption Runs From Date Of Payment Of Mortgage : Supreme Court

The Supreme Court has held that in cases of usufructuary mortgages, the period of limitation for redemption does not begin from the date of creation of the mortgage but only from the date on which the mortgage money is actually paid or adjusted in accordance with law.

Dismissing an appeal filed by mortgagees seeking to defeat a redemption claim on the ground of limitation, the Court clarified that mere expiry of the limitation period prescribed under the Limitation Act cannot extinguish the mortgagor's right of redemption in a usufructuary mortgage. Consequently, the mortgagee cannot claim title or ownership over the mortgaged property solely on the basis of lapse of time.

A Bench of Justice BV Nagarathna and Justice R Mahadevan held that under Section 61(a) of the Schedule to the Limitation Act, limitation in usufructuary mortgages does not commence from the date of mortgage. Instead, it begins only from the date of payment of the mortgage money, whether such payment is made out of the usufruct, partly out of the usufruct, or by deposit or payment by the mortgagor as contemplated under the Transfer of Property Act, 1882.

Case Background

The case arose from a dispute over agricultural land in Punjab that had been mortgaged on a usufructuary basis by the ancestors of the respondents. The mortgagees challenged an order of the Collector allowing redemption of the property, contending that the application for redemption was barred by limitation and that they had acquired ownership rights over time.

While the trial court and the first appellate court accepted the mortgagees' plea, the Punjab and Haryana High Court reversed those findings, holding that the right of redemption in a usufructuary mortgage was not time-barred. The High Court restored the Collector's order permitting redemption.

Supreme Court's Findings

Upholding the High Court's decision, the Supreme Court relied on its earlier three-judge Bench ruling in Singh Ram (Dead) through LRs v. Sheo Ram & Ors. (2014) 9 SCC 185. The Court reiterated that in usufructuary mortgages where no specific period for redemption is fixed, the mortgagor's right continues until the mortgage money is repaid or adjusted.

Referring to the precedent, the Court observed :

"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. Till then the period of limitation would not start under Section 61 (a) of the Schedule to the Limitation Act. 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."

Applying this principle to the present case, the Court held that the mortgagees' suit seeking to nullify the redemption order was untenable. Accepting the submissions of the respondents, the Court dismissed the appeal and affirmed the High Court judgment.

Case : Dalip Singh (D) through LRs v. Sawan Singh (D) through LRs

Citation : 2025 LiveLaw (SC) 1252

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