Case: Prithi Nath Singh And Others Vs. Suraj Ahir And Others

2. Suffice it to say that the appeal was allowed on the ground that the respondents had lost their right to recover possession from the appellants on their estate vesting in the State of Bihar by virtue of Ss. 3 and 4 of the Bihar Land Reforms Act, 1950 (Bihar Act XXX of 1950), hereinafter called the Act, and their having no subsisting right to recover possession from the appellants. It was also held that they could not get advantage of the provisions of cl. (c) of sub s. (1) of S. 6 of the Act, as amended by the Bihar Land Reforms (Amendment) Act, 1959 (Act XVI of 1959) as no mortgage subsisted on the date of vesting. The amended cl. (c) reads as follows :(c) Lands used for agricultural or horticultural purposes forming the subject matter of a subsisting mortgage on the redemption of which the intermediary is entitled to recover khas possession

Court's reasoning:
When the mortgage money is paid by the mortgagor to the mortgagee, there does not remain any debt due from the mortgagor to the mortgagee, and therefore the mortgage can no longer continue after the mortgage money has been paid. The transfer of interest represented by the mortgage was for a certain purpose, and that was to secure payment of money advanced by way of loan. A security cannot exist after the loan had been paid up. If any interest in the property continues to vest in the mortgagee subsequent to the payment of the mortgage money to him, it would be an interest different from that of a mortgagees interest. The mortgage as a transfer of an interest in immovable property for the purpose of securing payment of money advanced by way of loan must come to an end on the payment of the mortgage money.5. Further, the definition of usufructuary mortgage itself leads to the conclusion that the authority given to the mortgagee to remain in possession of the mortgaged property ceases when the mortgage money has been paid up.The usufructuary mortgage, by the terms of its definition, authorises the mortgagee to retain possession only until payment of the mortgage money, and to appropriate the rents and profits collected by him in lieu of interest or in payment of the mortgage money, or partly in lieu of interest or partly in lieu of payment of the mortgage money. When the mortgage money has been paid up, no question of appropriating the rents and profits accruing from the property towards interest or mortgage money can arise.It is clear therefore that on the payment of the mortgage money by the mortgagor to the mortgagee the mortgage comes to an end and the right of the mortgagee to remain in possession also comes to anright entitles the mortgagor, on his paying or tendering to the mortgagee the mortgage money to ask him (i) to deliver to him the mortgage deed and other documents relating to the mortgaged property; (ii) to deliver possession to the mortgagor if the mortgagee is in possession; and (iii) to retransfer the mortgaged property in accordance with the desire of the mortgagor. If the mortgagee receives the money and does not perform any of the three acts required of him to be done, the question arises whether this non-compliance with the demands will make the mortgage continue. The provisions of the section do not say so and there appears no good reason why the mortgage should continue. If the mortgagee is not to perform these acts the mortgagor is not to pay the amount. If, however the mortgage money has been received by the mortgagee and thereafter he refuses to perform the acts he is bound to do, the mortgagor can enforce his right to get back the mortgage document, the possession of the mortgaged property and the reconveyance of that property through Court. A new right to get his demands enforced through the Court thus arises as a result of the provisions of S. 60 of the Act.8. If the mortgage money has been paid and then the mortgagor goes to Court to enforce his demands, that would not be to enforce his right to redemption which was really his right to make those demands on payment of the mortgage money. The right to demand the mortgagee to do certain things on payment of the mortgage money is different from enforcing the demands subsequent to the payment of the money.This is also clear from the decree for redemption. Order XXXIV, R. 7. C.P.C. provides for the preliminary decree in a redemption suit and the preliminary decree is to order that the account be taken of what was due to the defendant, viz., the mortgagee, at the date of decree for principal and interest on the mortgage and other matters. Rule 9 provides that if on such accounting, any sum be found due to mortgagor, the decree would direct the mortgagee to pay such amount to the mortgagor. If the mortgage money due has been already paid by the mortgagor and has been accepted by the mortgagee in full discharge of the mortgage deed, no occasion for such accounting arises and therefore any suit to enforce the return of the mortgage deed and to get back the possession of the mortgaged property cannot be a suit forWe therefore hold that the mortgage was not subsisting on the date of vesting, it having come to an end on payment of the mortgage money in 1943, and that the respondents cannot get the advantage of S. 6 (1) (c) of the Act.