C.P. Kandaswami Mudaliar and Another vs Palaniammal and Others

The first defendant is the appellant. The suit is one for redemption of a usufructuary mortgage dated 3-1-1922 and for partition and separate

possession of the plaintiff''s alleged half shore in the suit properties. The suit was resisted mainly by the appellant as the first defendant, contending

that the mortgage had been discharged by him on 30-6-1949, and that as there is no subsisting mortgage, there is no question of its redemption.

He also contended that he had become the absolute owner of the suit properties by virtue of his purchase on 30-6-1949 and that in any event, he

has perfected title to the suit properties by adverse possession.

The trial court held that the plaintiff is entitled to redeem the suit mortgage and, therefore, granted a preliminary decree for redemption, partition

and separate possession of the plaintiff''s half share. The said decision of the trial court has also been affirmed by the lower appellate court.

In this second appeal by the first defendant it is contended that the decree and judgment of the courts below granting redemption cannot be

sustained in law. The learned counsel for the appellant, however, did not challenge the findings of fact given by the courts below that the plaintiff

was entitled to a half share in the mortgage property and the plea based on a family arrangement by which the entire mortgaged property had

exclusively been allotted to his vendor had not been established. To appreciate the legal contention put forward by the learned counsel for the

appellant, it is necessary to set out a few facts.

The suit property originally belonged to the 2nd defendant, his brother Nachimuthu Pandaram and their mother Karunai Ammal who

usufructuarily mortgaged the same in favour of the 1st defendant on 3-1-1922 for a sum of Rs.100. Later, the 1st defendant purchased the interest

of Nachimuthu Pandaram from his heirs. The plaintiff has purchased the interest of the 2nd defendant in the mortgaged property. It was the case of

the first defendant that the mortgaged property absolutely belonged to Karunai Ammal, that after her death the suit property came to be allotted

exclusively to Nachimuthu Pandaram under a family arrangement, that the 2nd defendant was allotted some other properties in lieu of his interest in

the suit property that, therefore, the 2nd defendant had no right, title or interest in the suit property and that, therefore, the plaintiff could not have

acquired any interest from the 2nd defendant in relation to the suit property. As already stated, the courts below have found that the family

arrangement set up by the 1st defendant had not been established. The courts below have also found that Nachimuthu Pandaram and the 2nd

defendant became entitled to a half share each in the suit property. We have to find out whether the plaintiff who has been held to be entitled to a

half share in the suit property by virtue of the purchase of that share from the 2nd defendant can redeem the mortgage in favour of the first

defendant who had purchased the half share therein from Nachimthu Pandaram.

The learned counsel for the appellant contends before me that in view of the fact that the 1st defendant has purported to purchase the entirety of

the property from the heirs of Nachimuthu Pandaram, his possession has become adverse and that he is no longer in the position of a mortgagee

under Ex. B-1. He further contends that the sale by the heirs of Nachimuthu Pandaram was with a direction to discharge the mortgage, and

therefore, the mortgage should be deemed to have been discharged and as such no decree for redemption could be passed after the mortgage

debt is wiped out. It is also contended that even if a suit for redemption could be maintained, it could have been filed within 12 years from the date

of the sale by the heirs of Nachimuthu Pandaram under Ex.B-3 dated 30-6-1949 and that the suit in this case having been filed in 1964 it was

barred by time. The learned counsel has referred to the following decisions in support of his contention.

In M.K. Sheik Dawood Saheb Vs. Moideen Batcha Saheb and Others, , it has been held that where a usufructuary mortgagee in possession of

property purchased the property in lieu of the debt due from the mortgagor, a direction by the vendor to keep the property as absolute owner

amounts to delivery and, therefore, the vendee''s possession from the moment of sale is adverse to the vendor. In Subbarao v. Mattapalli Raju

1950 1 MLJ 752 = AIR 1950 FC 1, the Federal Court recognised the principle that the right of redemption being an incident of a subsisting

mortgage, would stand extinguished if it is found that the mortgage has been discharged. Badri Singh and Others Vs. Baldeo Singh and Others,

was also a similar case where the mortgages had purchased the property from the mortgagors and asserted adverse title and the court held that the

mortgagee could do so. But in the above three cases the entire mortgaged property had been purchased by the mortgagee and there was a merger

of the mortgagee''s interest with the rights of ownership. But in this case, as already stated, the mortgagee has purchased only a half share of the

mortgaged property and the plaintiff has acquired the equity of redemption in the other half. Therefore, the principle of the above decisions may not

apply to the facts of this case.

Ananthan v. Krishna Pillai AIR 1957 Trav-Co 145 has been referred to. In that case the question was whether the possession of the mortgagee

after the mortgage debt has been satisfied is adverse to the mortgagor. The court held that where there is a conscious act on the part of the

mortgagor of paying the mortgage amount, getting possession of part of the mortgage security, obtaining all the deeds back from the mortgagee

and executing a registered receipt, there will be clearly adverse possession if the mortgagor allows the mortgagee to continue to be in possession of

a portion of the mortgaged property. Kunjayamma Kartaiyayani Amma Vs. Kunchali Karthiyayani Madakkavil, Veedu and Others, also is a

similar case. In that case the mortgage amount got wiped off by adjustment against arrears of michavaram as agreed to between the parties. The

question was whether the mortgagee''s possession of the mortgaged property after the mortgage debt is wiped off was adverse to the mortgagor.

The court held that the suit for redemption will not lie but a suit for possession alone is maintainable as there is no subsisting mortgage on the date

of the suit and that the suit, if treated as one for possession, was barred by time under Art. 144 of the Limitation Act. The principle laid down in the

above case cannot be applied here as there was no agreement to scale down the debt and it is only by operation of law the debt is scaled down.

The usufructuary mortgage in favour of the 1st defendant being dated 3-1-1922, its redemption will get barred only after the lapse of 12 years

from the date when a court u/s 19-A of the Madras Act IV of 1938 declares that the mortgage debt had been completely scaled down u/s 9-A of

that Act as a result of the mortgagee having been in possession of the mortgaged property for 30 years. In this case the suit has been filed on 4-6-

1964 for declaration that the debt had been wiped out and for redemption in consequence of such declaration. Hence it will be within the period of

12 years from the date when the debt has been declared to have been wiped off as per the said Section 9-A.

Keshab Lal Goswami Vs. Bhola Nath Gangoadhya and Others, was a case where a part of the mortgaged property was sold by the mortgagor

to the mortgagee in possession and from the consideration received the whole mortgage was satisfied. The mortgagee, however, continued to be in

possession of the remaining part of the property even after the satisfaction of the mortgage debt. It was held by the court that the possession of the

mortgagee after the mortgage was satisfied was adverse to the mortgagor. But in that case the sale of the part of the mortgaged property was by

the mortgagor. In the case on hand the purchase was a portion of the equity of redemption from the representatives in interest of one of the co-

mortgagors and not the entirety of the equity of redemption. Therefore, that decision cannot obviously apply. Soni Lalji Jetha and Others Vs. Soni

Kalidas Devchand and Others, was a case where a mortgagee in possession purchased the mortgaged property from the mortgagor. The question

was whether if the sale transaction is voidable, possession of the mortgagee would become adverse from the date of his purchase. The Supreme

Court observed--

It is a well settled proposition that a mortgagor can sell the mortgaged property to his mortgagee and thus put the mortgagee''s estate to an end

and thereafter all the right, title and interest in the property would vest in the mortgagee. Such a sale would be valid and binding as between them

and henceforth the character of possession as a mortgagee would be converted into possession as an absolute owner. Even if such a sale is held to

be voidable and not binding on a subsequent purchaser, the character of possession based on assertion of absolute ownership by the mortgagee

does not alter, and if that possession continues throughout the statutory period it ripens into a title to the property.

Here again the entire mortgaged property had been sold by the mortgagor to the mortgagee, and,. therefore, the mortgagee''s possession

subsequent to his purchase was held to have become adverse to the mortgagor and that is not the case here. In Prithi Nath Singh and Others Vs.

Suraj Ahir and Others, , the mortgage money has been paid by the mortgagor to the mortgagee, but the mortgagee continued in possession of the

mortgaged property. The Supreme Court expressed the view that when the mortgage money has been paid up the right to redeem ceases and that

a suit for redemption cannot be maintained. But that was a case where the mortgagor by his conscious act paid the mortgage money but did not

take steps to recover the mortgaged property from the mortgage even though he has become entitled to possession of the property as a result of

the extinction of the mortgage. It was, therefore, held that the mortgagor''s right was only to sue for possession and not for redemption. But in the

case on hand there has been no payment by the plaintiff who has become entitled to a half share in the equity of redemption and he seeks a

declaration from the court that the mortgage debt has been wiped out by operation of Section 9-A of Madras Act IV of 1938 and it is only after

such a declaration is given by the court the mortgage debt gets wiped out but not before. As has been pointed out by the Supreme Court in

Mritunjoy Pani and Another Vs. Narmanda Bala Sasmal and Another, , the governing principle is once a mortgage always a mortgage till the

mortgage is terminated by the act of the parties themselves, by merger, or by order of the court. Admittedly the mortgage has not been

extinguished by act of parties. There has also been no merger of the plaintiff''s entire interest in the mortgaged property and there is also no order

of court putting an end to the mortgage before the filing of the suit. It has been clearly laid down in Lilachand Tuljaram Gujar and Others Vs.

Mallappa Tukaram Borgavi and Others, that where the mortgagee came into possession of the property pursuant to the usufructuary mortgage, his

possession had a lawful origin and a mere assertion of an adverse title cannot affect the subsisting equity of redemption of the mortgagors or

operate to shorten the period of limitation prescribed for a suit for redemption.

On a due consideration of the matter, I am of the view that the 1st defendant cannot by a mere assertion of title own or by a unilateral act on his

own part convert his possession of moiety of the property as a mortgagee into that of an absolute owner, which he can do so only if he had

purchased the entire equity of redemption from the mortgagor. If there has been a sale of the entire mortgaged property by the mortgagors to the

mortgagee thus putting an end to the mortgage, even if the sale has been held to be invalid subsequently, the mortgagee''s possession subsequent to

the date of the said sale would become adverse, for by the conscious act of parties the mortgage would have been put an end to. Therefore, the

contention of the learned counsel for the appellant that the plaintiff cannot maintain a suit for redemption and that even if it could be maintained it is

barred by limitation cannot be accepted. I therefore agree with the view taken by the courts below and dismiss the second appeal. There will,

however, be no order as to costs. No leave.

Appeal dismissed.