Case: Allokam Peddabbayya  Vs. Allahabad Bank

2. Defendant Nos.3 and 4 created an equitable mortgage of their property at D.No.80 of Gorantala village, Guntur, measuring Ac4 cents (2000 sq.yds.) for a loan of Rs. 10,000/in favour of the Bank, Defendant No.1, by deposit of title deeds on 15.03.1979. The Bank instituted O.S. No. 68 of 1987 for recovery of the loan by sale of the mortgaged property. The property was auction sold on 05.09.1993. Defendant No.2 being the highest bidder at Rs., sale certificate was issued and he was put in possession on 02.07.1997 in Execution Petition No. 203 of 19973. The Plaintiffs were stated to have purchased the mortgaged property by different sale deeds dated 12.08.1985, 20.08.1985 and 30.09.1985. Asserting possession, they preferred O.S. No.165 of 1994, seeking permanent injunction restraining Defendant Nos. 2 to 4 only from interfering with their peaceful possession. The Suit and the Appeal A.S. No.67 of 1997, against the same were dismissed. Execution Appeal No.996 of 1997 preferred by the Plaintiffs in Execution Petition No. 203 of 1997 was also dismissed. The Plaintiffs thereafter preferred O.S. No.96 of 1999 for redemption of mortgage under Order XXXIV Rule 1 of the Code of Civil Procedure (hereinafter referred to as `the CPC), now impleading the Bank as Defendant also. The Suit was decreed on 27.02.2002, but reversed in appeal by the auction purchaser, Defendant No.2 holding that consequent to the auction sale and issuance of sale certificate along with possession delivered, Defendant Nos.3 and 4 were no more the owners of the property, and there stood no debt to be redeemed on the date of filing of the Suit. The Plaintiffs were thus not purchasers of the equity of redemption, dismissing the Suit. The High Court in Second Appeal held that the right to redemption in the Plaintiffs, by stepping into the shoes of the Mortgagor under Section 59A of the Transfer of Property Act, 1882 (hereinafter referred to as `the Act) stood extinguished in view of the final decree for foreclosure in O.S. No.68 of 1987 filed by the Bank, Defendant No.1, and the consequent sale certificate issued in favour of the auction purchaser, Defendant No.2.

Court's reasoning:
13. The Decree for foreclosure in O.S. 68 of 1987, and the subsequent auction sale followed by issuance of sale certificate, extinguished the right to redemption by reason of the proviso to Section 60. The Plaintiffs having interest in the mortgaged property through theirt and in the right to redeem the same were competent to do so under Section 91 of the Act, but subject to the limitation under the proviso to Section 60. Their rights could not be any superior or separate from that of their. If the right to redeem stood extinguished by operation of the law under the proviso to Section 60 of the Act prior to the period of limitation, it cannot be contended that the right could nonetheless be enforced anytime before the expiry of limitation of 30 years. If there remained no subsisting mortgage, it is difficult to fathom what was to be redeemed14. No challenge was laid out in O.S. No.96 of 1999, either to the auction sale or to set aside the sale certificate issued to Defendant No.2. The reliance upon Order XXXIV Rule 1, CPC is completely misconceived as under Rule 8 the right to redemption survived only till confirmation of the sale and not thereafter. The Suit was instituted only after issuance of the sale certificate and the question for redemption had become irrelevant15. The issues regarding maintainability of a second suit for redemption or clog on the equity of redemption are not relevant to the present controversy and need not be deliberated upon. Shivdev Singh (supra), therefore, has no relevance in the present context23. The aforesaid discussion leads to the conclusion that the Plaintiffs lost the right to sue for redemption of the mortgaged property by virtue of the proviso to Section 60 of the Act, no sooner that the mortgaged property was put to auction sale in a suit for foreclosure and sale certificate was issued in favour of Defendant No.2. There remained no property mortgaged to be redeemed. The right to redemption could not be claimed in the abstract.