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Report No. 70

57.21. Mortgagor who has assigned his interest.-

Conversely, a mortgagor who has parted with his interest would not be competent to redeem, because in section 91, the expression "mortgagor" means a person who has got a subsisting title to the mortgaged property.1 There is an exception recognised in England to this limitation, where, after assignment of his rights, the mortgagor is sued by the mortgagee on his covenant.2 Of course, in such a case, the mortgagor so redeeming will have a right of action against the assignee for reimbursement in respect of the monetary obligation charged.

1. Apa v. Selan, (1889) Bombay Printed Judgments, p. 246; Ghose Law of Mortgage in India, (1902), p. 904.

2. Kinnard, (1888) 39 Chancery Division 636.

57.22. Section 60, first paragraph, proviso.-

The proviso to the first paragraph in section 60, in substance, provides that the right conferred by the section must not have been extinguished by act of the parties or by decree of a court. In so far as it contains a saving for act of the parties. It recognises the possibility, at least in some circumstances, of extinction of the right of redemption by agreement and without going to court. Of course, the act of parties must be some transaction subsequent to the mortgage.

In practice, most instances of such subsequent agreements are in the form of sale of the equity of redemption between the mortgagor and the mortgagee. In the absence of any factual element which would render such an agreement void or voidable under the general principles of the law of contract, such a sale would be valid, and there does not appear to be any special disability attaching to such a sale merely by virtue of the fact that the parties stand in the relationship of mortgagor and mortgagee.

57.23. Extinction of redemption.-

The right of redemption thus subsists until it is extinguished by act of parties or decree of Court. The "act of parties" must, of course, be subsequent to the mortgage as already stated.1

1. Para. 57.22, supra.

57.24. Decree.-

The "decree" of Court referred to is the (final) decree in a foreclosure suite1 under Order 34, rule 3, of the Code of Civil Procedure and the (final) decree in a redemption suit under Order 34, rule 8 of the Code. A decree for "possession" in favour of a mortgagee who is entitled to such possession under the terms of his mortgage does not extinguish the mortgagor's right to redeem.

Where a (final) decree is granted under Order 34, rule 3, sub-rule (2) or under Order 34, rule 8, sub-rule (3), "declaring that the mortgagor is debarred from all" rights to redeem the mortgaged property, the right to redeem is clearly extinguished. Until that decree is passed, however, the right to redeem is not lost even if the time fixed for payment has expired. Nor will the right be extinguished, where the decree for redemption or foreclosure omits to make such a declaration. And so long as such right exists, a suit for redemption would not be barred by res judicata.

1. Amendments made recently in the Code have slightly altered the scheme.

57.25 Second suit for redemption after decree.-

The sanctity of the statutory right of redemption is also seen in another proposition now well-established in procedural law, namely, that where the decree does not, in so many words bar redemption, a second suit for redemption may be filed even after the decree.1

In Raghunath Singh's case2 a decree for redemption had been passed in the following terms:

"It is ordered and decreed that the plaintiff is entitled to a decree for possession by redemption of mortgage in the following terms, namely, that he should pay Rs. 4,20,860 by the 15th November, 1897, that if he will pay the said sum he will get all costs and that in case of default, his case will stand dismissed."

No payment was made, but a fresh suit for redemption was instituted. It was held that the decree was not, in terms of the old sections 92 and 93 of the Act; that the right to redeem was a right conferred on the mortgagor by enactment, of which he can be deprived only by means and in manner enacted for that purpose and strictly complied with; that the above decree did not extinguish such right; and that a second suit for redemption was maintainable.

1. AIR 1934 PC 205 (207, 208).

2. Raghunath Singh's case, AIR 1934 PC 205 (207, 208).

57.26. Second suit for redemption after withdrawal.-

The strength afforded to the right of redemption by section 60 is adequate for overriding procedural bars to the institution of a fresh suit on technical grounds.

Fresh suit under C.P.C.-Under Order 23, rule 1, Code of Civil Procedure, 1908, where a suit is withdrawn without the permission of the court, a fresh suit on the same cause of action is barred. It was held by the Madras High Court.1 that where a suit for redemption is withdrawn without the leave of the court, a fresh suit for redemption with regard to the same mortgage cannot be brought and that Order 23, rule 1, Civil Procedure Code must be taken to override the provisions of this section in this matter.

But a Full Bench decision of the Bombay High Court, with reference to Order 22, rule 9, Code of Civil Procedure, held that the general terms of the rule cannot override the specific provisions of the section, and that so long as the relationship of mortgagor and mortgagee continues and so long as the mortgage has not been extinguished by the decree of the court or by the act of parties, the mortgagor is entitled to go to a court of law to enforce his right.2 The conflict was resolved by the decision of the Federal Court,3 which impliedly approved the Bombay High Court's view and reversed the Madras High Court's decision. The Federal Court held:

"If the right of redemption is not extinguished, provisions like Order 9, or Order 23, rule 1 will not debar the mortgagor from filing a second suit because, as in a partition suit, the cause of action in a redemption suit is a recurring one."

1. Mattapalli Raju v. Raghavayya, AIR 1945 Mad 225 (223).

2. Rajaram v. Ramchandra, AIR 1948 Born 226 (227, 228) (FB).

3. Subba Rao v. Raju, AIR 1950 FC 1 (7).

57.27. Operation of law.-

Section 60 does not refer to extinguishment by operation of law. Nevertheless, the extinguishment of the equity of redemption may take place by operation of law, where the mortgagee acquires the equity of redemption by inheritance or by adverse possession, or the mortgagor acquires the mortgagee's right by inheritance. A revenue sale for the arrears of Government revenue may also extinguish the right of redemption.

A mortgagee may-

(a) obtain a decree on his mortgage and, at the sale in execution thereof, purchase the property with the leave of the court;

(b) obtain a decree on a money claim unconnected with the mortgage, and, at the sale in execution of such decree, purchase the mortgaged property with the leave of the Court;

(c) purchase without the leave of the Court the mortgaged property where it has been brought to sale in execution of a decree for money obtained by a third party against the mortgagor.

In case (a),1 the position of the mortgagee is the same as that of a stranger purchaser, so that he gets an irredeemable title and the equity of redemption is extinguishment by the purchase.2

In case (b) also, the mortgagee will get an irredeemable title to the property.3-5

In case (c), where the mortgagee purchases the mortgaged property at a court sale in execution of his own decree, but without the leave of the court, the sale is not "void", but is only "voidable", and may be "set aside" on an application under Order 21, rule 72, sub-rule (3), of the Code of Civil Procedure. The mortgagee will be regarded only as a trustee for the mortgagor in such cases and the right of redemption will not be extinguished. A sale in contravention of Order 34, rule 14 of the Civil Procedure Code is also not void, but is only a voidable one, and the position of the mortgagee purchaser at such a sale until confirmation of the sale is, similarly, that of a trustee for the mortgagor.

1. Mahabir Pershad v. Mcnaghten, 1889 ILR 16 Cal 682 (692): 16 Ind App 107 (PC).

2. AIR 1961 SC 1353 (1356); AIR 1965 Ker 132 (134).

3. AIR 1961 SC 1353 (1356); AIR 1965 Ker 132 (134).

4. (1955) 2 Mad LJ 132 (134).

5. 1904 ILR 32 Cal 296 (316) (PC).

57.28. Obligation to transfer.-

There is one minor point concerning section 60, which should be noted at this stage. Amongst the obligations imposed by the section on the mortgagee is the obligation to transfer the mortgaged property. Since every mortgage does not, so far as the form thereof goes, transfer the mortgaged property to the mortgagee it is not clear why a re-conveyance should be demanded of the mortgagee in the case of every mortgage. Chose has observed1 that the intention of the legislature in this regard might have been expressed with greater precision.

We find force in this comment by Chose and do not see any reason why in the case of a mortgage, which itself was not expressed as a conveyance, there should be any right to a formal re-conveyance of property. Accordingly, we recommend that in section 60, first paragraph, before the words "(c) at the cost of the mortgagor", the words "Where the mortgagor has transferred the mortgaged property to the mortgagee", should be added

1. Ghose Law of Mortgage in India, (1902), p. 281.

57.29. Accretions to mortgaged property.-

The mortgagor has the right to redeem, not only all accretions to the mortgaged property, but also many things which may have been substituted in its place. Thus, to take the stock illustration of a flock of sheep. If all the sheep die, and are replaced by their young, the mortgagor would be entitled to redeem the latter.

Where a mortgage comprised two policies of insurance on the life of the mortgagor, which the mortgagee was empowered but not bound to keep on foot, and the mortgagee at the instance of a purchaser of the equity of redemption accepted a new policy in place of the old policies which were dropped, and the sale of the equity of redemption was afterwards set aside, it was held that the mortgagor was entitled to redeem the substituted policy as it formed a part of the equity of redemption.1

As the Lord Chancellor, Lord Westburn, points out, whatever was done by the purchaser must be taken as having been done for and on behalf of the real owner of the equity of redemption, and the new policy became, therefore, impressed with a trust for his benefit. To say that, because the mortgagee was not bound to keep up the original policy, the mortgagor was not entitled to redeem, is to take, in the words of Lord Westburn "too narrow a view of the rights of the mortgagor who is entitled to claim the benefit of whatever has been done with respect to the equity of redemption'.

1. Nesbitt v. Berridge, (1864) 2 Jur NS 53.

57.30. Section 60, fourth paragraph-Reasonable notice.-

The fourth paragraph of section 60 provides that "nothing in this section shall be deemed to render invalid any provision to the effect that if the time fixed for the payment of the principal money has been allowed to pass or, if no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money."

The general rule in England is that a mortgagor must, after default, give six months' notice to the mortgagee of his intention to redeem or pay six months' interest in lieu of notice-except where the mortgagee has taken possession of the mortgaged property, and except in the case of an equitable mortgage by deposit of title deeds.1 This requirement of notice seems to have originated in the theory of equity that since the mortgagor has, after default, lost his estate, equity will give him relief, only if he himself acts equitably. Equity insists upon notice in order that the mortgagee may seek another place for investing the money.2-3

1. Cheshire Modern Law of Real Property, (1970), p. 647.

2. Cornwell Property Investment Company v. Western and Tovrey, (1934) 103 LJ Chancery 168 (171): 1933 All ER Reprint 440.

3. Fisher & Lightwood Law of Mortgage, (1969), p. 474.

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