NARAYAN DEORAO JAVLE (DECEASED) THROUGH LRS. versus KRISHNA & ORS. on 17 August 2021

[2021] 8 S.C.R. 481

NARAYAN DEORAO JAVLE (DECEASED) THROUGH LRS.v.

KRISHNA & ORS.

(Civil Appeal No. 4726 of 2021)

AUGUST 17, 2021

[HEMANT GUPTA AND A. S. BOPANNA, JJ.]

Transfer of Property Act, 1882: ss. 60, 59A – Redemption ofthe mortgaged property – Right of – On facts, non-payment of themortgage amount by the original mortgagors to the mortgagee –Suit for recovery of the mortgage amount by mortgagee againstoriginal mortgagors – Appellant had purchased a mortgagedproperty from original mortgagor, however, not impleaded as partyin the suit – Due to the non-payment of the mortgage amount,appellant’s right of redemption was foreclosed and after theexecution of the decree, mortgagee took possession of the propertyfrom the appellant – Appellant then filed suit against originalmortgagors and mortgagee seeking right of redemption of themortgaged property – Trial court dismissed the suit, however thefirst appellate court allowed the same – In appeal, the High Courtdismissed the suit for redemption of the mortgage land – On appeal,held: Equity of redemption is a right subsidiary to the right ofownership – Appellant was a necessary party in a suit for foreclosurefiled by the mortgagee after the purchase and was required to beimpleaded – Since the appellant was not impleaded as a party,appellant is not bound by the decree passed in the suit for foreclosure– More so, decree in a suit for foreclosure was a result of collusionbetween the original mortgagors and the mortgagee so as tofrustrate rights of a purchaser from the mortgagor – Thus, thedecree passed in the suit for foreclosure was void and non-est –Such decree of foreclosure would not extinguish the right of themortgagor to redeem land in view of the fact that he was notimpleaded as a party in the suit though he has purchased part ofthe mortgaged property by virtue of registered sale deed – Thus,the judgment of the High Court is set aside and that of the firstappellate court is restored.

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ARedemption – Equity of Redemption – Meaning of – Held:Equity of redemption means a right to redeem the property basedupon equitable principles – Right of redemption recognised underthe Act is a statutory and legal right which cannot be extinguished– Equity of redemption is a right which is subsidiary to the right ofownership.B

Allowing the appeal, the Court

HELD: 1.1 The plaintiff has purchased property videregistered sale deed on 18.05.1964, much before the filing of thesuit for foreclosure in the year 1965. The possession of the plaintiffCwas recorded in the revenue record after the purchase of theproperty, but still, the mortgagee chose not to implead thesubsequent purchaser. The original mortgagor who has mortgagedthe property had no subsisting title, interest or right in the propertyconveyed, therefore, the factum of compromise between themortgagor and the mortgagee is ineffective and not enforceableDagainst the purchaser i.e., the plaintiff. Once the plaintiff haspurchased property, the equity of redemption is part of the titleand as an owner, he could seek redemption of the suit land. [Para11][491-F-H; 492-A]

1.2 No provision of law shows that the subsequent purchaserEhas to give notice to the mortgagee signifying purchase of theproperty, by a mortgagor. The factum of purchase coupled withthe delivery of possession completes the title of the plaintiff overthe land in question. Therefore, the decree obtained in such asuit at the back of the purchaser is void. The plaintiff rightlyFclaimed that he was required to be impleaded, as he was anecessary party in a suit for foreclosure filed by the mortgageeafter the purchase of part of the mortgaged land. The possessionwas taken from the appellant consequent to the decree offoreclosure granted in favour of the mortgagee. The findingsrecorded by the trial court that the plaintiff has purchased theGproperty and not equity of redemption is clearly without any basis.In view of the fact that the possession was delivered and the factthat the parties are residents of the same village, there is‘constructive notice’ of purchase of land by the appellant. [Paras12, 13][492-A-B-C, D, E-F]H

1.3 In terms of Section 91 of the Act, the plaintiff havingstepped into the shoes of the mortgagor in respect of landpurchased by him, has a right to redeem the land mortgaged. Inaddition, the Order XXXIV Rule 1 of the Code provides that allpersons having an interest either in the mortgage- security or inthe right of redemption shall be joined as parties to any suitrelating to the mortgage including suit for foreclosure. The originalmortgagors i.e., defendant Nos. 1 and 2 denied the plaintiff’s rightto redeem the property though admitting they have borrowedRs.1,000/- from the plaintiff. It was pleaded that the plaintiff wasput in possession of the suit property for ten years and, therefore,plaintiff was required to resell the property to defendant Nos. 1and 2. But the said defendant has not supported such plea inevidence. The defendant Nos. 1 and 2 entered into compromisewith the mortgagee to pay the mortgage amount. The saidmortgage amount was not paid which led to passing of the finaldecree. Thus, it is a case of collusion between the originalmortgagors andthe mortgagee so as to defeat the right of theplaintiff. [Para 15][493-E-H; 494-A]

1.4 The Equity of redemption means a right to redeem theproperty based upon equitable principles. Right of redemptionrecognised under the Act is a statutory and legal right which cannotbe extinguished. The equity of redemption is a right which issubsidiary to the right of ownership. Such right is not over andabove the right of ownership purchased by the plaintiff. Theexpression equity of redemption is a convenient maxim but anowner, who has stepped into the shoes of the mortgagor, afterthe purchase from the mortgagor but before filing a suit forforeclosure is entitled toredeem the property in terms of Section60 of the Act. [Para 16, 19][494-A-C; 495-C-D]

Allokam Peddabbayya & Anr. v. Allahabad Bank & Ors.(2017) 8 SCC 272 : [2017] 8 SCR 121 – distinguished.

Dr. Govinddas & Anr. v. Shrimati Shantibai & Ors.(1973) 3 SCC 418; Achaldas Durgaji Oswal (Dead)through LRs v. Ramvilas Gangabisan Heda (Dead)through LRs & Ors. (2003) 3 SCC 614 : [2003] 1 SCR340; Thumbasawmy Mudelly v. Mohd. Hossain RowthenILR (1875) 1 Mad 1; Jamila Begum (Dead) through AB

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484SUPREME COURT REPORTS

ALegal Representatives v. Shami Mohd. (Dead) throughLegal Representatives & Anr. (2019) 2 SCC 727 : [2018]13 SCR 1253 – referred to.

2.1 The only effect of filing of an application for stay of theexecution would be that the appellant can be said to be aware ofBthe fact thatthere is a decree for foreclosure passed against himwhich has not been stayed by virtue of the order of the Court.There is no determination of the claim as is contemplated in termsof Order XXI Rule 97 or Rule 99 of the Code having force ofdecree. The declining of stay of execution will not operate as resjudicata only because Section 11 Explanation VII of the Code isCapplicable to the execution as well. [Para 22][496-C-D]

2.2 The findings recorded by the High Court that theappellant is bound by the decree passed in the suit for foreclosureis not tenable inter alia because the appellant was not impleadedas a party, though mandated under Section 91 of the Act and OrderDXXXIV Rule 1 of the Code. The mortgagee was aware of thetransaction of purchase as well as for the reason that the possessionof the appellant was recorded in the revenue record. Thesubsequent conduct of mortgagee who has taken possession fromthe appellant also corroborates the fact that the mortgagee wasEaware of the factum of sale and possession of the appellant butstill have chosen not to implead him as a necessary party. Stillfurther, it is apparent from the pleadings itself that the originalmortgagor had colluded with the mortgagee. Therefore, the rightconferred by Section 60 of the Act does not stand extinguishedby decree of the Court which is to be binding and had to be passedFin the presence of the necessary parties and should not becollusive. [Para 23][496-D-G]

2.3 The decree passed in the suit for foreclosure is a decreewhich is void and non-est. The decree is a result of collusionbetween defendants 1 & 2 and Defendant No. 3 so as to frustrateGrights of a purchaser from the mortgagor. [Para 27][498-F-G]

Samarendra Nath Sinha & Anr. v. Krishna Kumar NagAIR 1967 SC 1440 : [1967] SCR 18; Mrutunjay Pani H

NARAYAN DEORAO JAVLE (DECEASED) THROUGH LRS. v.KRISHNA & ORS.

& Anr. v. Narmada Bala Sasmal & Anr. AIR 1961 SC1353 : [1962] SCR 290 – referred to.

3.1 The appellant has a right to redeem land provided theright is not extinguished by decree of the Court. The decreepassed at the back of the transferee mortgagor prior to the filingof the suit for foreclosure cannot be said to be a valid decree.[Para 28][499-A-B]

3.2 The appellant has purchased the land for a sum ofRs.1,000/-. No part of the sale consideration was paid to theowners or was kept by the appellant for payment to the mortgagee.Thus, it was unequivocal sale of complete rights in the land.Section 60 of the Act provides that a person interested in a shareof the mortgaged property will not entitle him to redeem hisown share on payment of a proportionate part of the amountremaining due on mortgage. Therefore, conversely, a purchaserfrom the mortgagor is entitled to redeem the share of the landpurchased by him but on payment of the entire mortgage amount.Therefore, the decree of foreclosure passed in the suit filed bythe mortgagee will not extinguish the right of the mortgagor toredeem land in view of the fact that he was not impleaded as aparty in the suit though he has purchased part of the mortgagedproperty by virtue of registered sale deed. [Paras 29, 30][499-B-D, G]

3.3 The judgment of the High Court is set aside and that ofthe First Appellate Court is restored. The appellant is given threemonths’ time to deposit the mortgage amount and when theamount is deposited, he would be entitled to seek restoration ofpossession which was taken from him in execution of a decree offoreclosure. [Para 31][499-H; 500-A]

Shivdev Singh & Anr. v. Sucha Singh & Anr. (2000) 4SCC 326 : [2000] 2 SCR 878; Bank of Poona v.Navrajasthan Cooperative Housing Society Ltd. AIR1968 BOM 106; Banamali Tripathy v. BiswanathPattanaik AIR 1984 Orissa 145 – referred to.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No.4726 ofD2021.

From the Judgment and Order dated 21.01.2015 of the High Courtof Judicature at Bombay bench at Nagpur in Second Appeal No.441 of1995.

Satyajit A. Desai, Satya Kam Sharma, Ms. Anagha S. Desai,EAdvs. for the Appellants.

Nitin Bhardwaj, Adv. for the Respondents.

The Judgment of the Court was delivered by HEMANT GUPTA, J.F

1. The plaintiff is in appeal aggrieved against the judgment of theHigh Court of Judicature at Bombay dated 21.1.2015 whereby the suitfor redemption of mortgage land was dismissed, setting aside the judgmentof the First Appellate Court and restoring that of the Trial Court.

G2. Brief facts leading to the present appeal are that defendantNos. 1 and 2 were owners of the land comprising in Survey Nos. 67/3and 65/1 in Village Veni, Taluka Lonar. The said defendants mortgagedthe land in favour of defendant No. 3 on 30.4.1954 (Ex.81) to secure asum of Rs.700/-. Defendant Nos. 1 and 2 sold the mortgaged landcomprising in Survey No. 67/3 admeasuring 1 acre 32 gunthas to theH

plaintiff vide registered sale deed for consideration of Rs.1000/-. Thus,the plaintiff stepped in the shoes of the mortgagor on account of the saletransaction.

3. The original mortgagee (defendant No. 3) filed a Regular CivilSuit No. 237 of 1965 for recovery of mortgage amount of Rs.700/- alongwith the interest accrued against the original mortgagors (defendant Nos.1 and 2). The plaintiff was not impleaded as a party in the said suit,though the sale in his favour was before the filing of the suit. A preliminarydecree was drawn based on a compromise whereby the defendant Nos.1 and 2 agreed to pay the mortgage amount on or before 27.3.1967.Since defendant Nos. 1 and 2 failed to pay the said amount, the preliminarydecree was converted into a final decree on 4.6.1969 which led toforeclosing the rights of the mortgagor to redeem the property. Inexecution of such decree, the mortgagee had taken possession from theplaintiff, the present appellant on 5.12.1980. It is thereafter the plaintifffiled Regular Civil Suit No. 7 of 1984 against the original mortgagors andthe mortgagee seeking redemption of the mortgaged property.

4. The Trial Court though dismissed the suit but returned a findingthat the suit is within the period of limitation as the statutory period ofredemption is of 30 years. The suit was filed on 23.1.1984 though theperiod of 30 years was to expire on 30.4.1984. It was also held that theplaintiff has purchased the property and not the equity of redemption. Itwas also held that the plaintiff filed an application before the ExecutingCourt for a stay on the execution of the decree. However, such an order(Ex.124) will not operate as res judicata as the application was only tostay the execution and the appeal against the said order was dismissed(Ex.90). In respect of Issue No. 7(A), the Court held that the partialredemption is permissible in view of the judgment of the High Courtreported as Bank of Poona v. Navrajasthan Cooperative HousingSociety Ltd.[1], since the plaintiff has not purchased the equity ofredemption, therefore, the plaintiff is not entitled to redeem part of theproperty though plaintiff was ready to pay the entire mortgage amount.Since the right of redemption and the right of foreclosure are coextensive,therefore, no sooner than a decree for foreclosure is passed, the right toredeem extinguishes.

5. In appeal, the First Appellate Court held that the revenue recordshows that the plaintiff was in possession of the suit land after the sale1 AIR 1968 BOM 106

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Adeed was executed in his favour on 18.5.1964. The plaintiff is an attestingwitness to the mortgage deed (Ex.81) but that will only lead to an inferencethat the title of the plaintiff is subject to the rights of defendant No.3 asmortgagee in respect of land purchased by him. He is, thus, a mortgagorwithin the meaning of Section 59A of the Transfer of Property Act,1882[2]. Therefore, in terms of Section 60 of the Act, he had a right toBredeem the property provided it is not extinguished by the act of theparties or by decree of the Court. Examining as to whether the decreeof foreclosure has extinguished the right of redemption available to theplaintiff, for that reliance was placed upon the judgment of the learnedHigh Court in Bank of Pune wherein, the purchaser instituted a suit forCredemption which was decreed. The first appellate court relied uponBanamali Tripathy v. Biswanath Pattanaik[3]. It was further held thatsince the plaintiff has purchased the land before the institution of thesuit, therefore, the mortgagee ought to have made him a party in view ofthe provisions of Sections 59A and 91 of the Act. Therefore, the decreeof foreclosure was set aside by the High Court.D

6. The High Court held that the suit of the plaintiff for redemptionwas not maintainable. A preliminary decree was passed in the suit filedby the mortgagee for foreclosure based on a compromise in which theoriginal mortgagors were required to pay the amount by 27.3.1967. Sincethe amount was not paid, the final decree was drawn up on 4.11.1969.ESuch decree was not challenged and became final. Thus, Plaintiff cannotseek redemption of the mortgage.

7. Learned counsel for the appellant relies upon Sections 59A, 60and 91 of the Act to contend that the plaintiff was required to be impleadedas a party in the suit for foreclosure as also the provisions of OrderFXXXIV Rule 1 of the Code of Civil Procedure, 1908[4]. Such provisionsread as under:

“59-A. References to mortgagors and mortgagees to includepersons deriving title from them. —Unless otherwiseexpressly provided, references in this Chapter to mortgagors andGmortgagees shall be deemed to include references to personsderiving title from them respectively.

2 For short, the ‘Act’

3 AIR 1984 Orissa 145

H4 For short, ‘the Code’.

60. Right of mortgagor to redeem.-At any time after theprincipal money has become due, the mortgagor has a right, onpayment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver to the mortgagorthe mortgage-deed and all documents relating to the mortgagedproperty which are in the possession or power of the mortgagee,(b) where the mortgagee is in possession of the mortgagedproperty, to deliver possession thereof to the mortgagor, and (c)at the cost of the mortgagor either to re-transfer the mortgagedproperty to him or to such third person as he may direct, or toexecute and (where the mortgage has been effected by aregistered instrument) to have registered an acknowledgment inwriting that any right in derogation of his interest transferred tothe mortgagee has been extinguished:

Provided that the right conferred by this section has not beenextinguished by act of the parties or by decree of a Court.

The right conferred by this section is called a right to redeem anda suit to enforce it is called a suit for redemption.

Nothing in this section shall be deemed to render invalid anyprovision to the effect that, if the time fixed for payment of theprincipal money has been allowed to pass or no such time hasbeen fixed, the mortgagee shall be entitled to reasonable noticebefore payment or tender of such money.

Redemption of portion of mortgaged property. —Nothing inthis section shall entitle a person interested in a share only of themortgaged property to redeem his own share only, on payment ofa proportionate part of the amount remaining due on the mortgage,except only where a mortgagee, or, if there are more mortgageesthan one, all such mortgagees, has or have acquired, in whole orin part, the share of a mortgagor.

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91. Persons who may sue for redemption. —Besides themortgagor, any of the following persons may redeem, or institutea suit for redemption of, the mortgaged property, namely—

(a) any person (other than the mortgagee of the interest soughtto be redeemed) who has any interest in, or charge upon, the ABC

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Aproperty mortgaged or in or upon the right to redeem the same;(b) any surety for the payment of the mortgage-debt or any partthereof; or

(c) any creditor of the mortgagor who has in a suit for theadministration of his estate obtained a decree for sale of theBmortgaged property.”

Order XXXIV, Rule 1-

Parties to suits for foreclosure sale and redemption. - Subjectto the provisions of this Code, all persons having an interest eitherCin the mortgage-security or in the right of redemption shall bejoined as parties to any suit relating to the mortgage.

Explanation. -A puisne mortgagee may sue for foreclosure orfor sale without making the prior mortgagee a party to the suit;and a prior mortgage need not be joined in a suit to redeem aDsubsequent mortgage

8. It is argued that the extinguishment of the right of redemptioncontemplated by Section 60 of the Act is by decree of the Court. Suchdecree means a valid decree and not a decree passed against themortgagor who has lost the title in the part of the suit property after suitland was conveyed to the appellant on 18.5.1964. It is also argued thatEthe plaintiff was in possession, which is apparent from the revenue recordand the fact that the possession was taken from the plaintiff in theexecution of the decree for foreclosure. Since the plaintiff was inpossession on the strength of the sale executed in his favour beforefiling suit for foreclosure, the plaintiff was not only a proper but aFnecessary party as the impleaded defendant had lost the title in the suitproperty on the date of filing of the suit.

9. On the other hand, learned counsel for the respondent reliesupon an order passed by this Court in a judgment reported as AllokamPeddabbayya & Anr. v. Allahabad Bank & Ors.[5], to contend that aGpurchaser from a mortgagor has no better right than the mortgagorhimself. It is argued that the mortgagee was not served with a notice oftransfer of purchase on 18.5.1964, therefore, the mortgagee could notimplead the subsequent purchaser in the suit for foreclosure. The relianceis placed upon the following paras of the judgment, which read as under:

H5 (2017) 8 SCC 272

“9. The right to enforce a claim for equity of redemption is astatutory right under the Act. It necessarily presupposes theexistence of a mortgage. The right to redeem can standextinguished either by the act of the parties or by operation of thelaw in the form of a decree of the court under the proviso toSection 60 of the Act. The appellants being purchasers of theequity of redemption can have or claim no better rights underSection 91, than what their predecessor-in-interest had underSection 60 of the Act.

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13. The decree for foreclosure in OS No. 68 of 1987, and thesubsequent auction-sale followed by issuance of sale certificate,extinguished the right to redemption by reason of the proviso toSection 60. The plaintiffs having interest in the mortgaged propertythrough their predecessor-in-interest and in the right to redeemthe same were competent to do so under Section 91 of the Act,but subject to the limitation under the proviso to Section 60. Theirrights could not be any superior or separate from that of theirpredecessor-in-interest. If the right to redeem stood extinguishedby operation of the law under the proviso to Section 60 of the Actprior to the period of limitation, it cannot be contended that theright could nonetheless be enforced any time before the expiry oflimitation of 30 years. If there remained no subsisting mortgage, itis difficult to fathom what was to be redeemed.”

10. We have heard learned counsel for the parties. The issuesarising in the present appeal are examined hereinafter.

(i) Whether the plaintiff was a necessary party in a suit forforeclosure filed by the mortgagee after the purchase?

11. The plaintiff has purchased property vide registered sale deedon 18.5.1964, much before the filing of the suit for foreclosure in theyear 1965. The possession of the plaintiff was recorded in the revenuerecord after the purchase of the property, but still, the mortgagee chosenot to implead the subsequent purchaser. The original mortgagor whohas mortgaged the property had no subsisting title, interest or right in theproperty conveyed, therefore, the factum of compromise between themortgagor and the mortgagee is ineffective and not enforceable againstthe purchaser i.e., the plaintiff. Once the plaintiff has purchased property, A

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Athe equity of redemption is part of the title and as an owner, he couldseek redemption of the suit land.

12. The learned counsel for the mortgagee could not point out anyprovision of law that can prove that the subsequent purchaser has togive notice to the mortgagee signifying purchase of the property, by aBmortgagor. The factum of purchase coupled with the delivery ofpossession completes the title of the plaintiff over the land in question.Therefore, the decree obtained in such a suit is void.

13. The plaintiff rightly claimed that he was required to beimpleaded, as he was a necessary party in a suit for foreclosure filed byCthe mortgagee after the purchase of part of the mortgaged land. Theappellant also placed reliance on a judgment of this Court reported asDr. Govinddas & Anr. v. Shrimati Shantibai & Ors.[6], to contend thatthe mortgagee, the original mortgagor and the appellant are residents ofthe same village. Therefore, the factum of sale is deemed to be in thenotice of the mortgagee in addition to the delivery of possession by theDmortgagors supported by the revenue record and also the fact that thepossession was taken from the appellant. Therefore, non-impleadmentof the appellant renders the decree for foreclosure as non-est and void.It is also argued that it was a case of a simple mortgage without deliveryof possession. The possession was taken from the appellant consequentEto the decree of foreclosure granted in favour of the mortgagee. Thefindings recorded by the Trial Court that the plaintiff has purchased theproperty and not equity of redemption is clearly without any basis. Inview of the fact that the possession was delivered and the fact that theparties are residents of the same village, there is ‘constructive notice’ ofpurchase of land by the appellant.F

14. In Allokam Peddabbayya, the purchaser filed a suit forinjunction. The suit was dismissed. The appeal against the judgment anddecree of the trial court was also dismissed. It is thereafter, a suit forredemption of mortgage was filed impleading the bank as the defendant.The sale certificate was issued to the purchaser on 2.7.1997 after filingGof the suit for injunction and after the objections of the plaintiff in executionwere dismissed, so is the appeal against an order of dismissal of objectionswas dismissed. It was in these circumstances, this Court held as under:

“12. The sale certificate was issued to Defendant 2 on 2-7-1997followed by delivery of possession in Execution Petition No. 203of 1997. The objection of the plaintiffs in Execution Appeal No.996 of 1997 was also rejected. Only thereafter the plaintiffsinstituted OS No. 96 of 1999 for redemption of the mortgage underOrder 34 Rule 1 CPC contending that they were willing to depositthe mortgage dues and that the decree in OS No. 68 of 1987 wasnot binding on them because they had not been impleaded as partyin the same. In cross-examination, the plaintiffs acknowledgedhaving been informed by their lawyer at the time of purchase, ofthe mortgage created by deposit of title deeds, by Defendants 3and 4.

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14. No challenge was laid out in OS No. 96 of 1999, either to theauction-sale or to set aside the sale certificate issued to Defendant2. The reliance upon Order 34 Rule 1 CPC is completelymisconceived as under Rule 8 the right to redemption survivedonly till confirmation of the sale and not thereafter. The suit wasinstituted only after issuance of the sale certificate and the questionfor redemption had become irrelevant.”

In view of the said fact, the judgment referred to by the learnedcounsel for the respondent is not applicable to the facts of the presentcase.

15. Still further, in terms of Section 91 of the Act, the plaintiffhaving stepped into the shoes of the mortgagor in respect of landpurchased by him has a right to redeem the land mortgaged. In addition,the Order XXXIV Rule 1 of the Code provides that all persons havingan interest either in the mortgage-security or in the right of redemptionshall be joined as parties to any suit relating to the mortgage includingsuit for foreclosure. The original mortgagors i.e., defendant Nos. 1 and2 denied the plaintiff’s right to redeem the property though admittingthey have borrowed Rs.1,000/- from the plaintiff. It was pleaded thatthe plaintiff was put in possession of the suit property for ten years and,therefore, plaintiff was required to resell the property to defendant Nos.1 and 2. But the said defendant has not supported such plea in evidence.The defendant Nos. 1 and 2 entered into compromise with the mortgageeto pay the mortgage amount. The said mortgage amount was not paid AB

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Awhich led to passing of the final decree. Thus, it is a case of collusionbetween the original mortgagors and the mortgagee so as to defeat theright of the plaintiff.

16. The Equity of redemption means a right to redeem the propertybased upon equitable principles. This Court in a judgment reported asBShivdev Singh & Anr. v. Sucha Singh & Anr.[7], held that the right ofredemption recognised under the Act is a statutory and legal right whichcannot be extinguished. This Court held as under:

“8. …The right of redemption recognised under the Transfer ofProperty Act is thus a statutory and legal right which cannot beCextinguished by any agreement made at the time of mortgage aspart of the mortgage transaction.”

17. In Achaldas Durgaji Oswal (Dead) through LRs v.Ramvilas Gangabisan Heda (Dead) through LRs & Ors.[8], this Courtheld that the right of redemption is statutorily recognised right providedDunder Section 60 of the Act and after the judgment of Privy Council inThumbasawmy Mudelly v. Mohd. Hossain Rowthen[9], called uponthe legislature to make suitable amendments, this Court held as under:

“11. The doctrine of redemption of mortgaged property was notrecognised by the Indian Courts as the essence of the doctrine ofEequity of redemption was unknown to the ancient law of India.The Privy Council in Thumbuswami v. Hossain, (2 IA 241 : ILR(1875) 1 Mad 1) called upon the legislature to make a suitableamendment which was given a statutory recognition by reason ofSection 60 of the Transfer of Property Act…”

F18. In a recent judgment of this Court reported as Jamila Begum(Dead) though Legal Representatives v. Shami Mohd. (Dead)through Legal Representatives & Anr.[10], it was held that by virtue ofpurchase of the property, the purchaser has purchased the entire equityof redemption. This Court held as under:

“Whether decree for redemption of mortgage is correct?G

32. Section 60 of the Transfer of Property Act, 1882 provides thatat any time after the money becomes due, the mortgagor has a7 (2000) 4 SCC 3268 (2003) 3 SCC 6149 ILR (1875) 1 Mad 1H10 (2019) 2 SCC 727

right, on payment or tender, at a proper time and place, of themortgage-money to require the mortgagee to deliver the mortgagedeed and all documents relating to the mortgaged property, andwhere the mortgagee is in possession of the mortgaged property,to deliver possession thereof to the mortgagor. In ShivdevSingh v. Sucha Singh [Shivdev Singh v. Sucha Singh, (2000)4 SCC 326] , it was held as under: (SCC p. 330, para 8)

“8. … The right of redemption recognised under the Transferof Property Act is thus a statutory and legal right which cannotbe extinguished by any agreement made at the time ofmortgage as part of the mortgage transaction.”

19. The equity of redemption is a right which is subsidiary to theright of ownership. Such right is not over and above the right of ownershippurchased by the plaintiff. The expression equity of redemption is aconvenient maxim but an owner, who has stepped into the shoes of themortgagor, after the purchase from the mortgagor but before filing a suitfor foreclosure is entitled to redeem the property in terms of Section 60of the Act.

The second issue which needs to be addressed is,

(ii) Whether the decree obtained in a suit for foreclosureoperates as res judicata and the right of redemption standsextinguished by the decree of the Court?

20. The High Court has held that the decree for foreclosure willoperate as res judicata on account of the fact that the appellant filed anapplication for stay of the execution proceedings. The Executing Courthas dismissed such an application. Such dismissal of the application inexecution proceedings would operate as res judicata. It was also heldthat the appellant has lost right of redemption which is coextensive withthe right of foreclosure.

21. An application for stay of execution does not have any trappingof a decree as is contained in Order XXI Rules 101 & 103 of the Code.The said provision reads as under:

“101. Question to be determined.-All questions (including questionsrelating to right, title or interest in the property) arising betweenthe parties to a proceeding on an application under rule 97 or rule99 or their representatives, and relevant to the adjudication of the AB

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application, shall be determined by the Court dealing with theapplication, and not by a separate suit and for this purpose, theCourt shall, notwithstanding anything to the contrary contained inany other law for the time being in force, be deemed to havejurisdiction to decide such questions.

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103. Orders to be treated as decrees. – Where any applicationhas been adjudicated upon under rule 98 or rule 100, the ordermade thereon shall have the same force and be subject to thesame conditions as to an appeal or otherwise as if it were a decree.”

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22. The only effect of filing of an application for stay of theexecution would be that the appellant can be said to be aware of the factthat there is a decree for foreclosure passed against him which has notbeen stayed by virtue of the order of the Court. There is no determinationof the claim as is contemplated in terms of Order XXI Rule 97 or RuleD99 of the Code having force of decree. The declining of stay of executionwill not operate as res judicata only because Section 11 ExplanationVII of the Code is applicable to the execution as well.

23. Therefore, the findings recorded by the High Court that theappellant is bound by the decree passed in the suit for foreclosure is notEtenable inter alia because the appellant was not impleaded as a party,though mandated under Section 91 of the Act and Order XXXIV Rule 1of the Code. The mortgagee was aware of the transaction of purchasein view of the judgment of this Court in Dr. Govinddas as well as forthe reason that the possession of the appellant was recorded in therevenue record. The subsequent conduct of mortgagee who has takenFpossession from the appellant also corroborates the fact that themortgagee was aware of the factum of sale and possession of theappellant but still have chosen not to implead him as a necessary party.Still further, it is apparent from the pleadings itself that the originalmortgagor had colluded with the mortgagee. Therefore, the rightGconferred by Section 60 of the Act does not stand extinguished by decreeof the Court which is to be binding and had to be passed in the presenceof the necessary parties and should not be collusive.

24. The High Court has referred to the judgment reported asSamarendra Nath Sinha & Anr. v. Krishna Kumar Nag[11], to non-H11 AIR 1967 SC 1440

suit the appellant. However, in the aforesaid judgment, the mortgagorwas non-suited on the ground that he was a purchaser pending lis. In thesaid case, one Hazra was a purchaser from the original mortgagor buthe failed to make payment of the mortgage amount. The mortgagee-initiated proceedings for foreclosure on 17.7.1945 in which a preliminarydecree was passed on 23.12.1946. The respondent purchased part ofthe equity of redemption from his judgment-debtor, Hazra, after thepreliminary decree was passed. The Court found that the decree wasnot in the form of a foreclosure decree but of a mortgage decree forsale. The final decree was passed after notice to the mortgagors and thesaid Hazra. It was held as under:

“16. … Section 91 of the Transfer of Property Act provides thatbesides the mortgagor any person other than the mortgagee whohas any interest in or charge upon the property mortgaged or in orupon the right to redeem the same may redeem or institute a suitfor redemption of such mortgaged property. An executionpurchaser therefore of the whole or part of the equity ofredemption has the right to redeem the mortgaged property. Sucha right is based on the principle that he steps in the shoes of hispredecessor-in-title and has therefore the same rights which hispredecessor-in-title had before the purchase. Under Section 59-A of the Act also all persons who derive title from the mortgagorare included in the term “mortgagor” and therefore entitled toredeem………………………… It follows that the respondenthaving purchased from the said Hazra while the appeal by thesaid Hazra against the said preliminary decree was pending in theHigh Court, the doctrine of lis pendens must apply to his purchaseand as aforesaid he was bound by the result of that suit. In theview we have taken that the final foreclosure decree wascompetently passed by the trial court, his right to equity ofredemption was extinguished by that decree and he had thereforeno longer any right to redeem the said mortgage. His appeal againstthe said final decree was misconceived and the High Court wasin error in allowing it and in passing the said order of remanddirecting the trial court to reopen the question of redemption andto allow the respondent to participate in proceedings to amend thesaid preliminary decree.”

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A25. Thus, we find that the High Court has misread the judgmentof this Court in Samarendra Nath Sinha. It is not a case of transferfrom mortgage prior to the decree of foreclosure but a case of purchaserpending lis.

26. Another judgment referred to by the High Court is MrutunjayBPani & Anr. v. Narmada Bala Sasmal & Anr.[12] It was an appeal filedby the mortgagee who claimed to have purchased the equity ofredemption. The argument of the appellant was that the mortgagee hasfailed to pay rent which was the responsibility of the mortgagor in termsof the mortgage deed. For the default of payment of arrears of rent, theproperty was put to sale and was purchased by the mortgagee.CTherefore, the remedy of the mortgagor is to seek setting aside of sale.It was held as under:

“7. The legal position may be stated thus: (1) The governingprinciple is “once a mortgage always a mortgage” till the mortgageis terminated by the act of the parties themselves, by merger orDby order of the court. (2) Where a mortgagee purchases the equityof redemption in execution of his mortgage decree with the leaveof court or in execution of a mortgage or money decree obtainedby a third party, the equity of redemption may be extinguished;and, in that event, the mortgagor cannot sue for redemption withoutEgetting the sale set aside. (3) Where a mortgagor purchases themortgaged property by reason of a default committed by him themortgage is not extinguished and the relationship of mortgagorand mortgagee continues to subsist even thereafter, for his purchaseof the equity of redemption is only in trust for the mortgagor.”

FThe said judgment does not advance the case of the mortgagee.27. Thus, the decree passed in the suit for foreclosure is a decreewhich is void and non-est. The decree is a result of collusion betweendefendants 1 & 2 and Defendant No. 3 so as to frustrate rights of apurchaser from the mortgagor.G(iii) Whether the plaintiff is entitled to redeem the share of theproperty purchased by him on the payment of the entire mortgageamount?

28. This Court in Shivdev Singh; Achaldas Durgaji Oswal andJamila Begum has held that right to redemption is not an equitablerelief, it is a statutory right. Therefore, the appellant has a right to redeemland provided the right is not extinguished by decree of the Court. Asdiscussed above, the decree passed at the back of the transfereemortgagor prior to the filing of the suit for foreclosure cannot be said tobe a valid decree.

29. The appellant has purchased the land measuring 1 acre 32gunthas comprising in Survey No. 67/3 for a sum of Rs.1,000/-. No partof the sale consideration was paid to the owners or was kept by theappellant for payment to the mortgagee. Thus, it was unequivocal saleof complete rights in the land comprising in Survey No. 67/3. Section 60of the Act provides that a person interested in a share of the mortgagedproperty will not entitle him to redeem his own share on payment of aproportionate part of the amount remaining due on mortgage. Therefore,conversely, a purchaser from the mortgagor is entitled to redeem theshare of the land purchased by him but on payment of the entire mortgageamount. The First Appellate Court has returned such finding in favour ofthe appellant in Point No. 3 wherein it was held as under:

“POINT NO. 3:- The answer to this point is a decision in Bank ofBank of Poona v. Navrajasthan Cooperative Housing SocietyLtd., reported in 1967 Mh.L.J. 774 (AIR 1968 Bom 106), in whichthe Plaintiff had purchased a portion of the mortgaged propertyand it was held that he had a right to redeem only a portion whichhe had purchased by making payment of the proportionatemortgage amount. Second part of Section 60 cannot be madeapplicable to the present case, as only in respect of the propertypurchased by the Plaintiff a right to redeem is inexistence, whilein respect of the other part, of which Defendant Nos.1 & 2 arethe owners, right to redeem is extinguished, therefore even if thePlaintiff redeems the suit land it will not be a redemption in part.”

30. Therefore, the decree of foreclosure passed in the suit filedby the mortgagee will not extinguish the right of the mortgagor to redeemland in view of the fact that he was not impleaded as a party in the suitthough he has purchased part of the mortgaged property by virtue ofregistered sale deed.

31. Consequently, the appeal is allowed. The judgment of the HighCourt is set aside and that of the First Appellate Court is restored. The AB

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Aappellant is given three months’ time to deposit the mortgage amountand when the amount is deposited, he shall be entitled to seek restorationof possession which was taken from him in execution of a decree offoreclosure. The Executing Court shall ensure that the delivery ofpossession be given to the appellant in an expeditious manner.

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Nidhi Jain

Appeal allowed.

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