IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No.2628 of 1982 (O&M) Date of decision:08.11.2011 Ram Kumar and others ...Appellants versus Mohinder and others. ....Respondents II. RSA No.1014 of 1983 & Cross Objection Nos.17-18-C of 1983 Devki Devi and others ...Appellants versus Romesh Lal (deceased) through LRs, and others. ....Respondents III. RSA Nos.1708 and 1709 of 1983 (O&M) Har Lal (deceased) through his LRs. ...Appellants versus Chiranji Lal and others ....Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. J.R. Mittal, Senior Advocate, with Mr. Kashmir Singh, Advocate, for the appellants in RSA No.1014 of 1983. Mr. Arun Palli, Senior Advocate, with Mr. Sunil Garg, Mr. Jai Bhagwan, and Mr. Sanjeev Arora, Advocates, for respondent No.1 (Romesh Lal) in RSA No.1014 of 1983. RSA No.2628 of 1982 (O&M) - 2 - Mr. Kanwaljit Singh, Senior Advocate, with Mr. Arun Sharma, Advocate, for the appellants in RSA Nos.1708 and 1709 of 1983. None for others. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? No. 2. To be referred to the reporters or not ? Yes. 3. Whether the judgment should be reported in the digest ? Yes. ---- K.Kannan, J. CM No.8109-C of 2011 in RSA No.2628 of 1982 Application for impleadment of legal representatives of respondent No.7 is allowed. Registry to carry out necessary amendment in the memo of parties. I. Common point of law – Issue of limitation for redemption of usufructuary mortgage 1. All the above cases evoke a common question of law, namely, the starting point for the limitation for institution of suit for redemption of use of a decree of mortgage. In some cases, the suits have been at the instance of mortgagees seeking for declaration that the property had become vested in them, since the mortgagors have not redeemed the mortgage within time. The issue would all be considered on a single approach of whether there is any bar for a mortgagor or a successor-in-interest to claim a redemption or recovery of possession to the property held by a mortgagee or a successor. With an express provision like Article 61 of the Limitation Act, 1963 that spells a period of limitation, the answer RSA No.2628 of 1982 (O&M) - 3 - would seem obvious that there does exist a period of limitation but the controversy surrounds on understanding the starting point of limitation. The question would rather be how to assess the starting point for computation for period of limitation for a suit for redemption of a usufructuary mortgage. The corollary to this question would be whether the continuation in possession by a mortgagee or a successor beyond a period of 30 years would foreclose the right of a mortgagor or the successor to redeem or recover possession of the property and vest the property in the mortgagee himself as a full owner. II. RSA 1708 and 1709 of 1983: Possession under usufructuary mortgage is an admitted fact, although the document of mortgage with full details of mortgage are not filed (Subsidiary issue 1) 2. In RSA Nos.1708 and 1709 of 1983, there are other incidental issues which could be disposed of immediately before undertaking the exercise on issue relating to limitation for redemption. There were two suits, one at the instance of the mortgagee's representative, seeking for a declaration that he has become the owner of the property by the failure of the mortgagor to redeem the property within 60 years under the law of Limitation Act of 1908 and other issue was at the instance of the representative of the mortgagor seeking for recovery of possession of property on an offer to pay the mortgage money. The mortgagor claimed in the said suit that he had also made the payment and acknowledged by RSA No.2628 of 1982 (O&M) - 4 - mortgagee through receipt dated 28.02.1979. The document of mortgage was not filed, but there is no dispute about the fact that there existed a mortgage and the same was recorded in the revenue entries. I am not, therefore, detaining the case for consideration of when the document of mortgage was executed. III. Redemption of Mortgages Suit 1913, not a bar to civil action for redemption (Subsidiary issue 2) 3. The learned senior counsel Mr. Kanwaljit Singh, appearing on behalf of the mortgagee contended that there is a specific procedure prescribed under the Redemption of Mortgages' Act of 1913 and the suit for redemption could not have been filed. I would discard this objection as not tenable in law, for, even as per the Preamble to the Act, it is stated that “An Act to provide a summary procedure for the redemption of certain mortgages of land in Punjab”. The Act merely provides for a summary procedure for adjudicating on the rights of the mortgagor and the mortgagee and the authority constituted under the Act can either take a decision in a summary fashion or if he is of the view that the case involves serious disputed question, he can refer the party to a Civil Court. Section 13 of the Act reads as follows: “Saving of suits to establish rights Sec13: Any party aggrieved by an order made under section 6,7, 8, 9, 10 or 11 of this Act may institute a suit to establish his rights in respect of the mortgage, but subject to the result of such suit, if any, the order shall RSA No.2628 of 1982 (O&M) - 5 - be conclusive. Notwithstanding anything in this section a mortgagee against whom an ex-parte order under section 7 has been made or a petitioner, whose petition has been dismissed in default under section 6 may apply to the Collector to have such order or dismissal set aside, such order or dismissal on such terms as to costs or otherwise as he may deem fit; provided that the order or dismissal shall not be set aside unless notice of the application has been served on the opposite party.” The scheme of the Act is very clear that a Civil Court's jurisdiction is not excluded in any way. In Chanan Singh Versus Gurjit Singh- 2005 (1) PLR 373, this court has held that even a rejection of a petition for redemption by the Collector under the 1913 Act will not bar a suit for redemption of mortgage in a civil suit. The objection regarding the maintainability of the suit for redemption ought to, therefore, fail and give way for an adjudication on the core controversy. IV. Issue of fact regarding of validity of mortgage receipt – trial Court’s finding restored (Subsidiary issue 3) 4. It is also contended that the mortgage receipt relied on by the mortgagor was a fabrication and in any event it required registration and an unregistered receipt purporting to extinguish a mortgage could not be acted on by the Court. The trial Court had found that the mortgage receipt was not genuine and by the very look of it, it showed that the recitals had been deliberately spaced out unevenly to fill up the entire gap from the top of the page to the RSA No.2628 of 1982 (O&M) - 6 - place where the signature was found in the document. The trial Court had also taken note of the fact that there had been a previous litigation where both the mortgagor and the mortgagee had some common interest and while conducting the case, he had left some blank signed papers which had been fraudulently used by the mortgagor to make it appear as though that mortgagee had acknowledged the execution of the mortgage. The trial Court also took special notice of the fact that the mortgage receipt had been pasted with the thick sheet at the back to prevent any minute appraisal of a later pasting of the revenue stamp or to conceal any blotting of ink arising on account of user of an old paper. The trial Court also took note of the fact that the revenue stamp itself had been affixed somewhere at the middle of the page and there were writings above and beneath the revenue stamp. There was simply no possibility for someone to make the recitals of the receipt by fixing the revenue stamp on the middle of the page and securing the signature at the foot of the page. All the physical features noted by the trial Court discredited the document. Although purely factual, I am setting this out only to observe that the Appellate Court had been perverse in its approach in setting aside these findings to hold that the mortgage receipt was genuine. I reverse the finding to set the record straight. In the view that I ultimately take on the legal issue, the validity of receipt itself may not have any bearing. RSA No.2628 of 1982 (O&M) - 7 - V. Inadmissibility of unregistered mortgage receipt (Subsidiary issue 4) 5. Same way, the issue of whether a registration receipt could be relied on in view of the provision under Section 17 of the Registration Act will be of little interest to us, in the context of the core controversy. It is broached all the same to meet the contentions of the counsel for the counsel for the appellant. Section 17(2) contains exceptions to the compulsory registration of instruments set out in section 17 (1) of the Registration Act. In regard to receipts of mortgage money, the exception is stated as under: (xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage- money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; The effect is that only an endorsement that the document of mortgage itself bears will be excepted from registration. A receipt that purports to extinguish the mortgage itself cannot be brought through an unregistered receipt. The unregistered receipt filed by the mortgagor purporting to contain the signature of the mortgagee cannot extinguish the mortgage even if the receipt is true. Both as an issue relating to genuineness as well as on the issue relating to the registrability of the document, the mortgagor could not have used the document for claiming an extended period of limitation, assuming that but for the acknowledgment receipt, the suit would be RSA No.2628 of 1982 (O&M) - 8 - barred by limitation. The questions of law raised in RSA Nos.1708 and 1709 of 1983 as regards the genuineness of the receipt and the admissibility of an unregistered acknowledgment are answered accordingly. VI. The core issue in a usufructuary mortgage suit for redemption –Starting point of limitation – The Full Bench decision shows the way 6. The issue relating to the period of limitation is the same in all the cases. The point is squarely answered by the Full Bench of this Court in Ram Kishan Versus Sheo Ram, ILR (2008) 1 P&H 719. The reference to the Full Bench was on the following aspects: (1) Whether the right to seek redemption would arise on the date of mortgage itself in case of usufructuary mortgage when no time limit is fixed to seek redemption ? (2) Whether there is any time limit in the case of a usufructuary mortgagor to get his property redeemed ? The Full Bench answered thus, after considering several decisions of this court and other High Courts, besides, inevitably the decisions of the Supreme Court: 1. The right to seek foreclosure is co-extensive with the right to seek redemption. Since right to seek redemption accrues 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 RSA No.2628 of 1982 (O&M) - 9 - 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. (see para 44) 2. The mortgage cannot be extinguished by any unilateral act of the mortgagee. Since the mortgage cannot be unilaterally terminated, therefore, the declaration claimed (by a mortgagee that the mortgage cannot be redeemed and the property has stood vested as an owner by the mortgagee) is nothing but a suit for foreclosure. 7. At a more fundamental level, the Full Bench observed that the provision of the Transfer of Property Act section 58(d) itself is not applicable and the rules of equity and good conscience alone will prevail. The Court said, “The Transfer of Property Act, 1882 (for short ‘the Act’) is as such not applicable to the States of Punjab and Haryana. Sections 54, 107 and 123 of the Act were extended to the then State of Punjab with effect from 1st April, 1955 and to the Pepsu area of the State of Punjab with effect from 15th May, 1957. Section 59 was extended to whole of Punjab with effect from 10th June, 1968. Section 58(g) of the Act, has been extended to district headquarters in the State of Punjab,—vide RSA No.2628 of 1982 (O&M) - 10 - notification dated 28th August, 1975; to all the block headquarters,—vide notification dated 23rd June, 1979; Mandi Gobindgarh in District Fatehgarh Sahib and Mohali in Ropar,—vide notification dated 28th May, 2001. The provisions of Sections 59 and 58(f) have been extended to the State of Haryana with effect from 5th August, 1967 and 10th May, 1972, respectively. Section 58 of the Act was extended to the area of Chandigarh with immediate effect,—vide notification dated 18th December, 1982. The provisions of Section 118 of the Act were extended to urban area of the State of Punjab, —vide notification dated 10th August, 1989. “The facts remains that the provisions of Section 58(d) of the Act and other provisions in respect of usufructuary mortgage have not been made applicable to the areas falling within the jurisdiction of this Court, though such mortgages are required to be made by way of registered document in the State of Punjab with effect from 10th June, 1968 and from 5th August, 1967 in the State of Haryana. It is also equally well settled that if the provisions of the Act are not applicable to the area, the principles of justice, equity and good conscience are to be applied while determining the rights of the parties.” 8. As an issue fully covered by the Full Bench, all the suits for redemption could have been disposed off without much ado, by merely citing the above FB ruling. It will seem presumptuous to add an extra word to it. I do not mean to detract from the fabric of the judgment and would try to only amplify it with reference to certain RSA No.2628 of 1982 (O&M) - 11 - other important provisions, since it is claimed by the counsel arguing for the parties that the issue awaits adjudication of a larger Bench of the Supreme Court and on that score, the cases were getting adjourned from time to time. All the cases dealt with now have been identified by the administrative wing of the High Court as among the oldest cases on file and directed before this court for expeditious disposal. I have attempted a further textual elucidation, drawing further strength from the pronouncement of the Full Bench. VII. To ask the right question – when does the right to redeem accrue? Cryptic answer: when the principal money becomes due (a) Limitation Act provision 9. Assuming that the relevant provisions of the Transfer of Property Act is applicable, the answer has to be still the same. The theoretical justification obtains through the relevant provisions of the Limitation Act, Transfer of Property Act and the Civil Procedure Code. Article 61 of the Limitation Act spells out the limitation for redemption and recovery of possession of mortgage property thus: PART V.-SUITS RELATING TO IMMOVABLE PROPERTY 61. By a mortgagor- (a) to redeem or recover possession of immovable property mortgaged Thirty years When the right to redeem or to recover possession accrues. (b) ....... (c) .......” If the starting point of limitation is expressed to be the date of execution of the deed of mortgage, then there is hardly any difficulty RSA No.2628 of 1982 (O&M) - 12 - in finding that in all the above cases the suits for redemption or recovery of possession have come about more than 30 years from the date of execution of the mortgage. On the other hand, the starting point of limitation is “when the right to redeem or recovery of possession accrues”. (b) Transfer of Property provision 10. Section 60 of the Transfer of Property Act reads as under:- 60. Right of mortgagor to redeem.— At any time after the principal money has become due, (empahasis supplied) the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage- money, to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) 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 his interest transferred to the mortgagee has been extinguished: Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court. The right conferred by this section is called a right RSA No.2628 of 1982 (O&M) - 13 - to redeem and a suit to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. Redemption of portion of mortgaged property.— Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor. 11. The Section is clear that the mortgagee in possession cannot apply for a suit for a foreclosure, so long as he continues of possession of the property and enjoys the fruits of the property towards interest. Section 60 is positive in its content and declares the right of mortgagor to redeem at any time after the principal money has become due. This can happen when (i) the mortgagor offers the money due and seeks for redemption and (ii) when the mortgagee demands the repayment of the principal lent. As far as the mortgagor is concerned, all that the mortgagor is required to do is to make a tender at a proper time and place the principal amount due and require the mortgagee to deliver to the mortgagor the mortgage deed and all the documents relating to the mortgage property. On the part RSA No.2628 of 1982 (O&M) - 14 - of the mortgagee, he could make a similar demand on the mortgagor to pay up the principal and resume possession from him. It is the demand by either of the party, whoever makes it earlier will be the starting point to determine when the right to redeem or recover possession accrues. (c) CPC Provisions 12. Order 34 Rule 7 of the Civil Procedure Code prescribes a procedure for passing of a preliminary decree in a redemption suit and Rule8 prescribe procedure for passing of a final decree in a redemption suit. There have been several decisions of the Hon'ble Supreme Court considering the effect of failure of a mortgagor to make the payment within the time prescribed under the preliminary decree. In such cases, the Court has dealt with issue of the nature of right of a mortgagor to redeem the mortgagor and has invariably referred to a fundamental precept borrowed from English jurisprudence that once a mortgage is always a mortgage and any default for adhering to the direction for payment within a prescribed period cannot still take away the right of the mortgagor so long as there is no decree debarring the plaintiff from all right to redeem the mortgage property. In Achaldas Durgaji Oswal Versus Ramvilas Gangabisan Heda, (2003) 3 SCC 614 , at page 622 : “It is thus evident that the very conception of mortgage involves three principles. First, there is the maxim: ‘once a mortgage, always a mortgage’. That is to say, a RSA No.2628 of 1982 (O&M) - 15 - mortgage is always redeemable and if a contrary provision is made, it is invalid. And this is an exception to the aphorism, modus et conventio vincunt legem (custom and agreement overrule law). Secondly, the mortgagee cannot reserve to himself any collateral advantage outside the mortgage agreement. Thirdly, as a corollary from the first another principle may be deduced, namely, ‘once a mortgage, always a mortgage, and nothing but a mortgage’. In other words, any stipulation which prevents a mortgagor from getting back the property mortgaged is void. That is, a mortgage is always redeemable.” The Supreme Court also quoted in the same judgment the following: 13. In the Law of Mortgage by Dr Rashbehary Ghose at pp. 231-32 under the heading “Once a mortgage, always a mortgage”, it is noticed: “In 1681 Lord Nottingham in the leading case of Howard v. Harris firmly laid down the principle: ‘Once a mortgage, always a mortgage’. This is a doctrine to protect the mortgagor's right of redemption: it renders all agreements in a mortgage for forfeiture of the right to redeem and also encumbrances of or dealings with the property by the mortgagee as against a mortgagor coming to redeem. In 1902 the well-known maxim, ‘once a mortgage, always a mortgage’, was supplemented by the words ‘and nothing but a mortgage’ added by Lord Davey in the leading case of Noakes v. Rice in which the maxim was explained to mean ‘that a mortgage cannot be made irredeemable and a provision to that effect is void’. The maxim has been supplemented in the Indian context by the words RSA No.2628 of 1982 (O&M) - 16 - ‘and therefore always redeemable’, added by Justice Sarkar of the Supreme Court in the case of Seth Ganga Dhar v. Shankar Lal.” 13. In the context of final decree in a mortgage suit, O.34.Rule 8 states as follows: 8. Final decree in redemption suit.— (1) Where, before a final decree debarring the plaintiff from all right to redeem the mortgaged property has been passed or before the confirmation of a sale held in pursuance of a final decree passed under sub-rule (3) of this rule, the plaintiff makes payment into Court of all amounts due from him under sub-rule (1) of Rule 7, the Court shall, on application made by the plaintiff in this behalf, pass a final decree, or, if such decree has been passed, an order— (a) ordering the defendant to deliver up the documents referred to in the preliminary decree, and, if necessary,— (b) ordering him to re-transfer at the cost of the plaintiff the mortgaged property as