Prithi Nath Singh & Ors Vs. Suraj
Ahir & Ors  INSC 202 (4 May 1962)
04/05/1962 DAYAL, RAGHUBAR
DAYAL, RAGHUBAR GUPTA, K.C. DAS
CITATION: 1963 AIR 1041 1963 SCR Supl. (3)
CITATOR INFO :
RF 1992 SC1135 (3)
Land Reforms--Vesting of land in the
Government--Mortagage money paid--Whether mortgage subsists until
vesting--Failure of mortgagee to perform his duties after receipt of mortgage
money--Right created in favour of mortgagor, if a right of redemption--Transfer
of Property Act, 1882 (IV of 1882), ss. 58, 60--Code of Civil Procedure, 1908
(Act 5 of 1908), O.XXXIV, r. 7--Bihar Land Reforms Act, 1950 (Bihar XXX of
1950), ss. 3, 4--Bihar Land Reforms Act, 1950 as amended by Bihar Land Reforms
(Amendment) Act, 1959 (XVI of 1959), s.6 (1) (c).
The present petitioners were respondents in
C. A. No. 533/60 and the present respondents were the appellants in that
appeal. The appeal was allowed by this Court on the ground that the respondents
had lost their right to recover possession from the appellants on their estate
vesting in the State of Bihar by virtue of ss. 3, 4 of the Bihar Land Reforms
'Act, 1950, and their having no subsisting right to recover, possession from
the appellants. It was further held that they could not take advantage of the
provisions of s 6 (1) (c) of that Act as amended by Bihar Land Reforms
(Amendment) Act, 1959 (Act XIV of 1959), as no mortgage subsisted on that date.
In the present petition for review it is contended that the view that the
mortgage was not subsisting on the date of vesting is wrong because even though
the respondent mortgagors had paid up the mortgage money the mortgage continued
to subsist till the date of vesting as by that time the right of redumption
given by s. 60 of Transfer of Property had not come to an end. Reliance was
placed by them, for this proposition, on Thota China Subba Rao v. Mattapalli
Raju,  F.C.R. 484.
Held, that when the mortgage money is paid by
the mortgagor 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 is paid, The definition of usufructory mortgage itself
leads to the conclusion that the authority given to the mortgagee to remain in
possession of the mortgaged property ceases when the mortgage money has been
paid up. If the mortgage money has been received by the mortgagee and there aftre
he refuses to perform the acts be is bound to do, the mortagagor can 303
enforce his rights to get back the mortgage documents, the possession the
mortgaged property and the reconveyance of that property through court. This
new right is not the same as his right of redemption.
The case relied on by the petitioners, does
not deal with the circumstances under which the mortgage ceased to exist.
What it lays down is simply that the right of
redemption continues so long as the mortgage is alive.
Thota China Subba Rao v. Mattapalli Raju,
 F.C.R. 484, explained.
There can be ` nothing for enforcing a
mortgage when the money has been paid up and therefore the right to redeem
ceases on payment of mortgage money.
Samar Ali v. Karim-ul-lah I.L.R. 8 All. 402,
Muhammad Mahmud Ali v. Kalyan Das, I.L.R. 18 All. 189, Balkrishna v.
Rangnath, I.L.R. 1950 Nag. 618 and Ram Prasad
v. Bishambhar Singh, L.I.R. 1946 All. 400, approved.
CIVIL APPELLATE JURISDICTION : Review
Petition No. 26 of 1962.
Petition for Review of this Court's Judgment
and order dated May 4, 1962, in C. A. No. 533 of 1960.
N. C. Chatterjee, Udaya Pratap Singh, Anil
Kumar, R.K, Garg, D. P. Singh, S.C. Aggarwal and M.K. Ramamurthi, for the
B. K. Saran, S. K. Mehta and K. L. Mehta for
1962. December 10. The judgment of the Court
was delivered by RAGHUBAR DAYAL, J.-We allowed Civil Appeal No. 533 of 1960 on
May 4, 1962, by our judgment dealing with the facts of the, case and giving the
reasons for the opinion expressed.
It is not necessary to repeat them.
Suffice it to say that the appeal was allowed
on the ground that the respondents bad lost their 304 right to recover
possession from the appellants on their estate vesting in the State of Bihar by
virtue of se. 3 and 4 of the Bihar Land Reforms Act, 1950 (Bihar Act XXX of
1950), hereinafter called the Act, and their having no subsisting right to
recover possession from the appellants.
It was also hold that they could not get
advantage of the provisions of cl. (c) of sub-s. (1) of s. 6 of the Act as
amended by the Bihar Land Reforms (Amendment) Act, 1959 (Act XVI of 1959) as no
mortgage subsisted on the date of vesting. The amended cl.(c) read a,% follows
"(c) lands used for agricultural or
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
respondents, who applied for the review of our judgment, that our view that 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 Transfer 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 mortgagors' right to ask the mortgagees to
perform any of the acts mentioned in s. 60 continues. In sup. port of the
contention that the mortgage continues till the right of redemption comes to an
end, reliance is placed on the case reported as Thota China Subba Rao v.
Mattapalli Roju.(1) We do not agree with these contentions.
Section 58 of the Transfer of Property Act
defines 'mortgage' to be a transfer of an interest (1)  F.C.R. 484, 498.
305 in specific immoveable property for the
purpose of securing 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:
"Where the mortgagor delivers possession
or expressly or by implication binds himself to deliver possession of the
mortgaged property to the mortgagee, and authorizes him to retain such
possession until payment of the mortgagemoney, and to receive the rents and
profits accruing from the property or any part of such rents and profits and to
appropriate the same in lieu of interest, or in payment of the mortgage money,
or partly in lieu of interest or partly in payment of the mortgage money, the
transaction is called an usufructuary mortgage and the mortgagee an
usufructuary mortgagee." When the mortgage money is paid by the mortgager
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 interest different
from that of a mortgagee's interest. The mortgage as a transfer of an interest
in immoveable property for the purpose of securing payment of money advanced by
way of loan' must come to an end on the payment of the mortgage money# 306
Further, the definition of usufructuary mortgage itself leads to the conclusion
that the authority given to the mortgagee to remain in possession of the
mortgaged property ceases when the mortgage money has been paid up. The
usufructuary mortgage, by the terms of its definition, authorises the mortgagee
to retain possession only until payment of the mortgage money, and. to
appropriate the rents and profits collected by him in lieu of interest or in
payment of the mortgage money, or partly in lieu of interest or partly in lieu
of payment of the mortgage money. When the mortgage money has been paid up, no
question of appropriating the rents and profits accruing from the property
towards interest or mortgage money can arise. It is clear therefore that on the
payment of the 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, to require the mortgagee to deliver to the
mortgagor 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 mortgaged property,, to deliver possession
thereof to the mortgagor, and at the cost of the mortgagor either to
re-transfer the mortgaged property to him or to such third person as he may direct,.
or to execute and (where the mortgage has been effected by a registered
instrument to have registered an acknowledgment in writing that any right in
derogation of 307 his interest transferred to the mortgagee has been
Provided that the right conferred by this
section has not been extinguished by the act of the parties or by decree of a
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 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 circumstances does it arise? The right arises oh the principal money, payment
of which is secured by the mortgage deed, becoming due. The right entitles 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 desire 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 mortgage 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 mortgage document, the possession of the mortgaged
property and the reconveyance of 308 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 redemption which was really his right to make those
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 payment of the money. This is also clear from the
decree for redemption. 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 discharge 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
What Thota China Subba Rao's Case (1),
referred 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 observation support, by implication, the view taken by us:
"The document passed in favour of the
wife of the' mortgagor can be described as a (1)  F.C.R. 484, 498.
309 reward promised to her for bringing about
the willingness of her husband to agree to convey the mortgaged lands to the
mortgagees. That 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 a n 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.
100 mentioned therein. This was only an
agreement to convey the lands after three months, and, if at ail the question
of extinction of the equity of redemption could arise on the conveyance being
executed but not before." There are other oases also which throw a light
on this question And 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,
the charge would have been redeemed as soon as 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 was
"It cannot be disputed that the right of
redemption pre-supposes the existence of a mortgage on certain property which
at the (1) (1886) I.L.R. 8 All. 402, 405.
(2) (1895) I.L.R. 18 All. 189,192.
310 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 redemption can be exercised in respect of such property
only as is subject to a mortgage capable of enforcement." There can be
nothing for enforcing a mortgage when the money has been paid up and therefore
the right to redeem ceases on payment of the mortgage 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 Transfer of Property 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 in cash.
In that event nothing is necessary beyond the
payment." In Ram Prasad v. Bishambhar Singh (2) the question formulated
for determination was whether the suit being a suit to recover possession of
the mortgaged property after the mortgage money had been paid off was a suit
against the mortgagee to 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 redeem and to (1) I.L.R. 1950 Nag. 618, 621. (2) A.I.R. 1946. All.
311 have that redemption carried out by the
process of the various declarations and orders of the Court by which it effects
redemption. In other words. s. 60 contemplates a cage 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 contrast to s. 60. Section 62 says that in the case of a
usufructuary mortgage the mortgagor has a right to 'recover possession' 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 :redemption at all. At
the moment when the, rents and profits of the mortgaged property sufficed to
discharge the principal secured by th e mortgage, the mortgage came to an end
and the correlative right arose in the mortgagor "to recover 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 property 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. and that the respondents cannot get the advantage of s.
6(1)(c) of the Act.
We therefore dismiss the review petition. In
the circumstances of the case, there will be no order as to costs.