Report No. 70
Right to Recover Possession
Dealing still, with the right of the mortgagor, the Act deals in section 62 specially with the right of a usufructuary mortgagor to recover possession. The query that would naturally arise is-where was the need to have a special provision for the right of the usufructuary mortgagor, when section 60-the general section relating to "redemption"-already provides for re-transfer of possession by the mortgagee to the mortgagor consequential on redemption? For answering this query, it is necessary to draw attention to certain features of section 60.
60.2. Redemption-limitations, of.-
The right of redemption connotes the "right to pay" the mortgage-money and get back the property. Where the mortgagee is entitled to remain in possession till the mortgage-debt is wholly discharged from the rents and profits of the property, the mortgagor will not have the right to "pay" and clear off the encumbrance. He will have to allow that debt to be wiped out from the usufruct of the property alone. The mortgagor's right to get back the property after the debt has been cleared in this manner is not a right of "redemption". It is simply a right of recovering possession. Such a right is provided for in clause (a) of section 64.
Section 60 deals with a right of redemption, i.e., a right to require the mortgagee, on payment of the mortgage-money, to do the various acts referred to in that section. It applies to all mortgages generally. Section 62 is a special provision which is supplementary to the general provisions of section 60, and deals with usufructuary mortgages only. It provides for a right to recover possession from the usufructuary mortgagee in the two cases specified.
Although a suit for redemption of a usufructuary mortgage necessarily involves a prayer for possession and is, in substance, a suit for possession, a suit under section 62 is not necessarily a suit for redemption. For, in a case falling within clause (a) of section 62, the mortgagor is not entitled to pay the mortgage-money and claim back the property. He has to allow the mortgagee to continue in possession till the mortgage debt is paid off from the usufruct of the property itself. His suit for possession is, therefore, not one for "redemption".1
1. AIR 1957 Pat 452 (455);
AIR 1946 All 400 (402);
AIR 1930 Mad 160 (166).
60.3. Section 62.- This is what section 62 provides-
"62. In the case of a usufructuary mortgage, the mortgagor has a right to recover possession of the property together with the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee-
(a) where the mortgagee is authorised to pay himself the mortgage-money from the rents and profits of the property-when such money is paid;
(b) where the mortgagee is authorized to pay himself from such rents and profits or any part thereof a part only of the mortgage money-when the term (if any), prescribed for the payment of the mortgage money has expired and the mortgagor pays or tenders to the mortgagee the mortgage money or the balance thereof or deposits it in Court as hereinafter provided."
Clause (a) is concerned with the case where the entire mortgage money is to be paid out of the receipts. Clause (b) is concerned with the case where only a part of the mortgage money is to be so paid.
60.4. Position in England.-
In England, the position of a mortgagee who is to continue in possession till the satisfaction of the mortgage-money by reception of the rents and profits is that of a tenant by elegit, and as soon as the principal amount and interest are satisfied his estate ceases and the mortgagor may maintain an ejectment too. This corresponds1 broadly to the provision in clause (a) of a section 62. Where the right of the usufructuary mortgagee to possession is automatically determined by the terms of the contract, the mortgagor can maintain an action for ejectment against the mortgagee.
1. Paramsukh v. Yadav, AIR 1918 Nag 28 (29).
60.5. Termination of right to possession.-
The principle underlying section 63 is that on payment or realisation of the mortgage-money, the mortgage comes to an end and the right of the mortgagee to remain in possession also comes to an end.1 If, after the receipt of the mortgage-money, the mortgagee refuses to deliver back the possession and perform the acts he is bound to do, the noncompliance with the demand does not make the mortgage continue. But the mortgagor can enforce his sight to get back the possession and the mortgage deed and other documents relating to the mortgaged property, through Court.2
1. Pally v. Augusthy, AIR 1967 Ker 247 (248).
2. AIR 1963 SC 1041 (1044).
60.6. Section 62, clause (a).-
Clause (a) of section 63 applies to that form of usufructuary mortgage in which the creditor is let into possession on the understanding that he is to enjoy the usufruct till the whole of the mortgage-debt is liquidated. This form of mortgage resembles a vivum vadium, in which no provision for "redemption" is made and the mortgagee is entitled to remain in possession till the entire mortgage-debt is wiped off from the rents and profits of the property.
The words "when the money is paid" in clause (a) mean "when the money is paid from the rents and profits". They do not include a payment by the mortgagor. A suit, therefore, to recover possession of the property by the mortgagor before the debt is satisfied out of the rents and profits is premature and must be dismissed.
60.6A. Contractual term.-
Clause (a) does not say that a different rule is to be applied when, by the contract, a team of years is fixed. Where it is the intention of the parties, as expressed in the mortgage-deed, that the mortgagee is to take the rents and profits for a certain period, on the expiry of which the mortgage-money is to be deemed to be satisfied, then the mortgagor cannot, before the expiry of the period, recover possession of the mortgaged property. But the mere creation of a term is, by no means, conclusive on the point.
The term fixed must form the essence of the contract. Where it does not form the essence of the contract, the mortgagor is entitled to recover possession of the property as soon as the mortgage-debt is satisfied from the rents and profits, even before the expiry of the term.
60.7. Application of receipts.-
It may be noted that under section 76, the mortgagee in possession is bound to apply the receipts from the property towards the satisfaction of the mortgage-debt. Any sum, therefore, which the mortgagee retains in violation of the terms of the contract must be applied in reduction of the mortgage-money.
60.8. Section 62, clause (b).-
Where only a part of the mortgage- money is to be adjusted out of the receipts from the property, the position is slightly different. The remainder of the mortgage-money must obviously be paid in cash. If a (minimum) term is prescribed in the mortgage deed for the purpose, the mortgagor has the right, on expiry of the term, to pay the remainder, and claim back possession. If there is no minimum term fixed, the right can be exercised at any time during the subsistence of the mortgage. If a term is fixed but is invalid as being a clog on the right of the mortgagor,1 then also the position is the same.
There is nothing to prevent a term from being fixed in a usufructuary mortgage for the mortgagee's enjoyment, during which term the mortgage cannot be redeemed.2 That this is to, is clear from the words "when the term, if any, prescribed for the payment of the mortgage-money has expired" in clause (b) of section 62.
1. Section 60.
2. Abhoy Chara v. Harendra Chandra, AIR 1940 Cal 437 (438).
60.9. No change.- The above discussion does not disclose any need for amending section 62.