RSA No. 49 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 1. RSA No. 49 of 2007(O&M) Kulwant Singh and others ....Appellants VERSUS Gurbaksh Singh and others ....Respondents 2. RSA No. 4101 of 2006(O&M) Kulwant Singh and others ....Appellants VERSUS Gurbaksh Singh and others ....Respondents 3. RSA No. 4257 of 2006(O&M) Kulwant Singh and others ....Appellants VERSUS Gurbaksh Singh and others ....Respondents 4. RSA No. 351 of 2007(O&M) Gurbaksh Singh and others ....Appellants VERSUS Kulwant Singh and others ....Respondents 5. RSA No. 735 of 2007(O&M) Gurbans Singh and others ....Appellants VERSUS Kulwant Singh and others ....Respondents RSA No. 49 of 2007 2 6. RSA No. 741 of 2007(O&M) Balwinder Singh and others ....Appellants VERSUS Kulwant Singh and others ....Respondents Decided on : 23-04-2009 CORAM:- HON'BLE MR. JUSTICE MAHESH GROVER Present:- Mr. N.D.Achint, Advocate for the appellants in RSA Nos.49 of 2007 4101 of 2006 and 4257 of 2006 and for the respondents in the other appeals Mr. C.B.Goel, Advocate for the appellants in RSA Nos. 351 of 2007, 735 of 2007 and 741 of 2007 and for the respondents in the other appeals MAHESH GROVER, J This order will dispose of six regular second appeals bearing nos. 49 of 2007, 4101 of 2006, 4257 of 2006, 351 of 2007, 735 of 2007 and 741 of 2007. RSA nos. 49 of2007, 4101 of 2006 and 4257 of 2006 are plaintiffs' second appeals directed against the judgments of the learned Trial Court dated 17.10.2003 and that of the learned First Appellate Court dated 13.10.2006 whereas RSA nos. 351 of 2007, 735 of 2007 and 741 of 2007 are defendants' second appeals directed against the judgments of the learned Trial Court dated 17.10.2003 and that of the learned First Appellate Court dated 13.10.2006. The plaintiffs-appellants filed a suit praying for a decree for declaration to the effect that they have become owners of the suit land which has been described in the plaint. It was pleaded that originally this land was owned and possessed by Sh.Kura s/o Norang and Sh.Nehala s/o RSA No. 49 of 2007 3 Albela. Both these persons have mortgaged this land in dispute with possession with Sh.Nagina Singh for a sum of Rs .115/- on 31.3.1879. The land however remained in the possession of the mortgagors but with their status as tenants. Thereafter they sold the land in question with all encumbrances subject to the mortgage to Sh.Partap Singh with a condition that he shall get the mortgage redeemed and till he does not do so he would remain non-occupancy tenant under the mortgagees and would be liable to pay batai to the mortgagees. Kura and Nehala both died and it was pleaded that they died before they sold the land and therefore they ceased to have any interest in the land originally mortgaged by them sold to Sh.Partap Singh subject to redemption of mortgage wherein Partap Singh remained non-occupancy tenant and continued to pay batai to the predecessor in interest of the plaintiffs-appellants. Partap Singh also died and none of his legal heirs got property redeemed. It was pleaded that Partap Singh was predecessor in interest of the present respondents and further that since the land was not redeemed within the stipulated period, the plaintiffs-appellants have become the owners of the suit land. The defendants contested the suit and filed a joint written statement and also a counter claim. In the written statement they admitted that the suit land was earlier owned and possessed by Kura and Nehala but claimed that they have sold the land in dispute to them for a valuable consideration and after the sale they are the owners in possession of the same and that the appellants and their predecessor in interest were neither the mortgagees and nor they have possession of the property in question. It was further pleaded that in the event of the plaintiffs-appellants being able to prove that the land in dispute was under mortgage then in that eventuality RSA No. 49 of 2007 4 their right to redemption does not come to an end as the plaintiffs-appellants and their predecessor in interest never remained in possession of the suit land for a statutory period provided by law prior to 1963 and therefore the claim of the plaintiffs was not maintainable. It was denied that Partap Singh had ever remained tenant under the plaintiffs and he had paid batai to them. It was further pleaded that the revenue entries which show the column of possession in favour of the appellants is result of collusion. In the counter claim they pleaded that in the event of the plaintiffs succeeding in proving that the land in dispute was actually mortgaged for a sum of Rs.115/- in that eventuality they may be permitted to deposit the amount to redeem the mortgage. Both the parties went to trial on the following issues:- 1. Whether the plaintiffs are owner in possession of the suit land as alleged? OPP. 2. Whether the land in dispute remained in possession with mortgagor as tenant under mortgage as alleged?OPP. 3. Whether the mortgagor sold the land in dispute to Sh. Partap Singh son of Amar Singh, as alleged?OPP. 4. Whether Partap Singh remain non-occupancy tenant and paying the batai to the predecessor of the plaintiffs as alleged?OPP. 5. Whether the defendants are owner in possession of the suit property as alleged in the counter claim?OPD. 6. Whether the plaintiffs have locus standi to file the present suit?OPD. 7. Whether the suit is time barred?OPD. RSA No. 49 of 2007 5 8. Whether the plaintiffs have no cause of action to file the present suit?OPD. 9. Whether the defendants are entitled to special costs?OPD. 10.Relief. Learned Trial Court came to the conclusion that the suit of the plaintiffs deserves to be decreed while the counter claim was dismissed. While returning the findings under issues nos. 1 to 5 learned Trial Court concluded that the mortgage in favour of the appellants as well as the tenancy of the respondents over the suit property had been proved by the relevant documents on record. In appeal before the learned First Appellate Court findings were partially reversed and the learned First Appellate Court concluded that the findings on issue no. 6 and 8 that the mortgage was established and the right of the respondents to redeem the mortgage could not be extinguished by the efflux of time and therefore further held that the appellants cannot be held to be owners of the suit property. But at the same time it went on to hold that since the appellants did not file any appeal against the counter claim having been dismissed by the learned Trial Court which was dismissed for want of proper Court fee, the findings under that issue necessarily had to be affirmed. It also went on to hold that the respondents were tenants under the mortgagees. This has resulted in the filing of the three separate appeals by the plaintiffs and three separate appeals by the defendants who had also filed counter claim. It was contended by the learned counsel for the plaintiffs- appellants that the findings of the learned First Appellate Court regarding the right of the respondents to redeem the mortgage being alive and not RSA No. 49 of 2007 6 extinguished due to efflux of time is erroneous. It is pleaded that the mortgage was created in the year 1879 but the possession continued to be with the respondents and there were no terms which were proved before the Courts below regarding the terms of the mortgage. Accordingly, the findings which have been returned are based on no material and consequently deserved to be set aside. It was further pleaded that the respondents did not file any appeal regarding the counter claim having been dismissed and therefore these findings have also become final. In this eventuality it was prayed that the only option left is to grant decree in favour of the appellants. On the other hand learned counsel for the respondents pleaded that the findings regarding the mortgage being in existence and there being no time limit prescribed for its redemption was perfectly in accordance with law which has recently been laid by Full Bench of this Court in 'Ram Kishan and others V. Sheo Ram and others' 2008(1) PLR 1. It was thus contended that the findings of the learned First Appellate Court could not be faulted with. However, it was pleaded that the learned First Appellate Court in so far as the affirmation of the finding on issue no. 5 are concerned are clearly erroneous as even if the appeal or counter claim had not been preferred by him yet the Court was required to answer the suit of the plaintiffs in which he had pleaded that the mortgage was with possession for a sum of Rs.115/- and this being usufructuary mortgage could be redeemed at any time and could not be extinguished with the efflux of time. It was pleaded that if this finding was to be returned on the basis of the existing law then the question of his filing the counter claim or the subsequent appeal after the dismissal of the counter claim was meaningless. RSA No. 49 of 2007 7 I have heard learned counsel for the parties and have perused the impugned judgments. The plaintiffs themselves in the plaint have stated that the original owners Kura and Nehala had created a mortgage in favour of their predecessor in interest with possession for Rs.115/- on 31.3.1879 and that the respondents thereafter came in as tenants under the mortgagees whereafter the land was sold to one Partap Singh alongwith encumbrances with the condition that he would get the mortgage redeemed and till that he will remain as non-occupancy tenant and would continue to pay batai to them. The fulcrum of the controversy therefore is the mortgage which was pleaded by the appellants themselves to be one with the possession, it may be a different matter altogether if a certain arrangement is created by the mortgagor and mortgagee subsequent thereto to suit their interest but that will not change the original status of the mortgagor and the mortgage. It was the specific case pleaded by the appellants themselves that such a mortgage had been created and therefore, he cannot now set up a plea that the mortgage was not usufructuary mortgage and that there was no material on record to depict the terms of the mortgage. In this view of the matter, the observations of the Full Bench in Ram Kishan's case (supra) become relevant and operational to the facts of the case. The Full Bench has observed as under:- “31. After considering the aforesaid judgments, we respectfully agree that the view ofthe Full Bench of this Court in Lachhman Singh's case (supra) and that of Patna High Court in Jadubans Sahai's case (supra). The provisions of Section 60, 62 and 67 of the Transfer of Property Act are not RSA No. 49 of 2007 8 applicable within the jurisdiction of this Court. Therefore, these provisions are required to be interpreted keeping in view the principles of equity and good conscious. Since the mortgage is essentially and basically a conveyance in law or an assignment of chattels as a security for the payment of debt or for discharge of some other obligation for which it is given, the security must, therefore, be redeemable, on the payment or discharge of such debt or obligation. That is the view of the Hon'ble Supreme Court in Pomal Kanji Govindji's case (supra) wherein it has also been held that poverty should not be unduly permitted to curtail one's right to borrow money. Since at one point of time the mortgagor for one or the other reason mortgaged his property to avail financial assistance on account of necessities of life, the mortgagor's right cannot be permitted to be defeated only on account of passage of time. The interpretation sought to be raised by the mortgagees is to defeat the right of mortgagor and is wholly inequitable and unjust. The mortgagee remains in possession of the mortgaged property; enjoys the usufruct thereof and, therefore, not to lose anything by returning the security on receipt of mortgage debt. Section 60 of the Act is general in nature applicable to all kinds of mortgagees including usufructuary mortgage which is evident from clause (b) of Section 60 of the Act, where the mortgagee in possession of the mortgaged property is required to deliver possession to the mortgagor. But Section 62 of the Act is a special provision dealing only with the rights of RSA No. 49 of 2007 9 usufructuary mortgagor. In terms of clause (a) of Section 62 of the Act. The suit is for possession after the mortgage comes to an end by self redeeming process as the mortgagee is authorised to pay himself the mortgage money from the rents and profits of the property. The mortgagee has to look to the rents and profits only to repay himself and when his entire charge is so liquidated he must re-deliver possession of the mortgaged property to the mortgagor. However, in terms of clause (b) of Section 62 of the Act, the right of the mortgagor will arise only after rents and profits derived by the mortgagee out of the usufruct of the mortgaged property are adjusted towards the interest or the principal and on mortgagor paying the balance in the manner prescribed. In such mortgages, rents and profits are to be set off against interest and the mortgagee is entitled to retain possession until such time as the mortgagor chooses to redeem on payment of the principal sum secured. Such right for possession will accrue after the mortgage money is paid off. 32. The limitation of 30 years under Article 61(a) begins to run "when the right to redeem or the possession accrues". The right to redemption or recover possession accrues to the mortgagor on payment of sum secured in case of usufructuary mortgage, where rents and profits are to be set off against interest on the mortgage debt, on payment or tender to the mortgagee, the mortgage money or balance thereof or deposit in the court. The right to seek foreclosure is co- RSA No. 49 of 2007 10 extensive with the right to seek redemption. Since right to seek redemption accrue only on payment of the mortgage money or the balance thereof after adjustment of rents and profits from the interest thereof, therefore, right of foreclosure will not accrue to the mortgagee till such time the mortgagee remains in possession of the mortgaged security and is appropriating usufruct of the mortgaged land towards the interest on the mortgaged debt. Thus, the period of redemption or possession would not start till such time usufruct of the land and the profits are being adjusted towards interest on the mortgage amount. In view of the said interpretation, the principle that once a mortgage, always a mortgage and, therefore, always redeemable would be applicable. 33.The argument that after the expiry of period of limitation to sue for foreclosure, the mortgagees have a right to seek declaration in respect of their title over the suit property is not correct. From the aforesaid discussion, it is apparent that the mortgage cannot be extinguished by any unilateral act of the mortgagee. Since the mortgage cannot be unilaterally terminated, therefore, the declaration claimed is nothing but a suit for foreclosure. It is equally well settled that it is not title of the suit, which determines the nature of the suit. The nature of the suit is required to be determined by reading all the averments in the plaint. Such declaration cannot be claimed by an usufructuary mortgagee. Thus, we prefer to follow the dictum of law laid down by the larger Bench in Seth Ganga RSA No. 49 of 2007 11 Dhar's case (supra) as well as judgments of Hon'ble Supreme Court in Jayasingh Dnyanu Mhoprekar's case(supra), Pomal Kanji Govindji's case (supra), Panchanan Sharma's case (supra) and Harbans's case (supra), in preference to the judgments relied upon by the mortgagees in Prabhakaran's case (supra) and Sampuran Singh's case (supra). 34. Therefore, we answer the questions framed to hold that in case of usufructuary mortgage, where no time limit is fixed to seek redemption, the right to seek redemption would not arise on the date of mortgage but will arise on the date when the mortgagor pays or tenders to the mortgagee or deposits in Court, the mortgage money or the balance thereof. Thus, it is held that once a mortgage always a mortgage and is always redeemable.” Therefore, there is little hesitation to hold that the findings recorded by the learned First Appellate Court on this aspect of the matter that the rights of the mortgagors to redeem the mortgage could not be extinguished by the efflux of time cannot be faulted with. In so far as the contention of the learned counsel for the appellants regarding the non filing of the appeal against the dismissal of the counter claim is concerned this is to be noticed that the entire controversy centres around the mortgage deed which was created by the original owners of the land in favour of the predecessor in interest of the plaintiffs-appellants. Once it is held that the respondents were within their rights to redeem the mortgage and time factor would not be impediment in the way of the redemption then the filing or non-filing of the counter claim with the similar prayer would be RSA No. 49 of 2007 12 meaningless as in any eventuality if the Court had come to the conclusion which has been arrived at by this Court in the foregoing paragraphs then also prayer which could have been granted in the circumstances of the case could have been the dismissal of the suit by observing that the right of the respondents could not be extinguished by efflux of time and that they would be very well within their rights to redeem the property. For this very reason, the contention of the learned counsel for the plaintiffs-appellants is repelled. The contention of the learned counsel for the appellants in RSA Nos. 351 of 2007, 735 of 2007 and 741 of 2007 that their status as a tenant has been wrongly determined, is also erroneous as there is no material on record to the contrary. But since it was an arrangement between the mortgagor and the mortgagee, their rights flowing from the mortgage shall not be affected. For the reasons stated above, appeals bearing nos.49 of2007, 4101 of 2006 and 4257 of 2006 being devoid of any merit are hereby dismissed. In RSA Nos.351 of 2007, 735 of 2007 and 741 of 2007 the question of law which arises for the consideration of this Court is “Whether the right of a mortgagor to redeem the usufructuary mortgage can be extinguished with the efflux of time.” Since the matter has been answered conclusively by the Full Bench decision in Ram Kishan's case (supra), I hold that the right of the mortgagor to redeem the usufructuary mortgage cannot be extinguished by the efflux of time. Therefore, the appeals bearing nos. 351 of 2007, 735 of 2007 and 741 of 2007 are disposed of with the aforesaid observations holding that the appellants in these appeals RSA No. 49 of 2007 13 shall have a right to redeem the mortgage. April 23, 2009 (Mahesh Grover) rekha Judge