Rathnamma and Others vs V. Prahalada Rao

H. Billappa, J.—This appeal by the appellants -defendants is directed against the judgment and decree dated 22.4.2014 passed by the XIV Addl. City Civil Judge, Bengaluru, in O.S. No. 3461/2008.

By the impugned judgment and decree, the Trial Court has decreed the suit of the plaintiff in part and has declared that the plaintiff is the owner of the suit schedule property with equity of redemption. Further, the plaintiff is directed to deposit the mortgage amount before the Court within six months from the date of decree. Further, the defendants are directed to discharge the mortgage dated 22.9.1961 within two months from the date of deposit of mortgage amount by the plaintiff. The defendants are also directed to render accounts in respect of the suit schedule property to the plaintiff. It is also directed that the entries made in the revenue records in respect of the suit schedule property are not binding on the plaintiff.

Aggrieved by that, the appellants-defendants have filed this appeal.

The respondent is the plaintiff before the Trial Court. The parties will be referred to with reference to their rank in the original suit O.S. No. 3461/2008.

Briefly stated the facts are:

"The respondent-plaintiff filed suit in O.S. No. 3461/2008 for declaration that he is the owner of the suit schedule property with equity of redemption and account being taken for what is due to the defendants on the date of decree and directing the plaintiff to pay into the Court the amount so found due within six months. Further, directing the defendants to deliver documents and vacant possession of the suit schedule property to the plaintiff and to declare that the revenue entries in respect of the suit schedule property are not binding on the plaintiff and to grant such other reliefs."

The case of the respondent -plaintiff was that the agricultural land bearing Sy. No. 190/3 of Doddanekkundi village along with other properties belonged to late Shanbhog Lingappa, the adoptive father of the plaintiff. He was in possession and enjoyment of the land as absolute owner. Late Shanbhog Lingappa had no children. Therefore, through registered adoption deed dated 24.4.1939, the plaintiff was adopted by Shanbhog Lingappa. Under the adoption deed, Sri. Shanbhog Lingappa transferred all his properties including the suit schedule property to the plaintiff. After the death of Shanbhog Lingappa, the khatha of the property was transferred in the name of plaintiff and appropriate entries were made in the relevant registers. It is stated, taking advantage of the fact that the plaintiff was a minor and became owner of vast extent of properties, the natural father of the plaintiff and several others tried to interfere with the possession of the properties. Consequently, the plaintiff filed a suit against his guardians namely father Sri. Venkataramaiah and maternal uncle Sri. K. Narayana Rao and his wife Smt. Janakamma in whose name the schedule property was mutated and against various tenants cultivating the properties in O.S. No. 53/1957. The suit was decreed except item Nos. 8 and 9 of the suit schedule properties. In the appeal, the suit was decreed in respect of item Nos. 8 and 9 also. The suit schedule property in this case was shown as item No. 7 in O.S. No. 53/1957.

It is stated, the first defendant is the widow of late N.C. Munireddy and defendants 2 to 4 are the children of late N.C. Munireddy. The plaintiff who was prosecuting his studies borrowed Rs. 5,000/- from late N.C. Munireddy and as a security for repayment of the said amount, the suit schedule property was mortgaged with possession to N.C. Munireddy under registered mortgage deed dated 22.9.1961. The possession of the schedule property was delivered to N.C. Munireddy under the mortgage deed. As per the terms of the mortgage deed, Sri. N.C. Munireddy was entitled to enjoy the usufructs from the mortgaged property and no interest was payable on the amount borrowed by the plaintiff. Late N.C. Munireddy was to pay the taxes payable in respect of the mortgaged property. The mortgage created in favour of late N.C. Munireddy was redeemable only upon payment of Rs. 5,000/- borrowed and also the taxes paid by late N.C. Munireddy.

It is stated, late N.C. Munireddy took possession of the suit schedule property as a mortgagee under the mortgage deed. The name of late N.C. Munireddy was also entered in the mutation register as a mortgagee. Late N.C. Munireddy died few years back leaving behind his widow i.e., the first defendant and three sons who are defendants 2 to 4.

It is stated, the plaintiff intending to redeem the mortgage, approached the defendants to accept repayment of Rs. 5,000/- borrowed and also to inform him the total amount of taxes paid so that payment of the said amount also could be made and mortgage could be redeemed. Though the plaintiff approached the defendants number of times with a request to accept the payment and allow the mortgage to be redeemed, the defendants did not respond to the request of the plaintiff. Therefore, legal notice dated 11.2.2008 was sent to the defendants calling upon them to accept a sum of Rs. 5,000/- borrowed by the plaintiff and to intimate him about the taxes paid in respect of the suit schedule property and to receive the amount and redeem the mortgage. The defendants replied the notice on 25.2.2008 denying the mortgage itself and claiming absolute ownership over the suit schedule property. Therefore, the plaintiff has prayed for declaration that he is the absolute owner of the suit schedule property with equity of redemption and for other reliefs.

The appellants i.e., the defendants 1 to 4 have filed their written statement contending that Sri. N.C. Munireddy was the husband of the first defendant and father of the defendants 2 to 4. The family of late N.C. Munireddy owned several properties. The properties were divided amongst the family members in the year 1972 under the registered partition deed. In the said partition, N.C. Munireddy acquired 21 guntas of land towards his share in the suit schedule property. The remaining extent of 25 guntas of land was allotted to the share of N.C. Krishnareddy. The said N.C. Krishnareddy passed away unmarried. After his death, his properties were again partitioned under partition deed dated 7.1.2004. In the said partition, 25 guntas of land in Sy. No. 190/3 was allotted to the children of N.C. Munireddy i.e., the defendants 2 to 4. Therefore, the defendants became the absolute owners of 25 guntas of land in Sy. No. 190/3. The plaintiff has no right in the suit schedule property. It is denied that the plaintiff was the owner of Sy. No. 190/3 and he had mortgaged the property to Sri. N.C. Munireddy under a registered mortgage deed dated 22.9.1961. It is contended that even assuming that it is true, the plaintiff has lost all his rights in Sy. No. 190/3. As no time was fixed for redemption of the mortgage, the mortgage becomes redeemable on the date the mortgage deed was executed. The suit filed for redemption after 47 years is barred by time. The plaintiff is debarred from seeking redemption after 47 years.

It is stated, the mortgagor can deposit the money due under the mortgage only within the time prescribed by law of limitation. Once the right to deposit the money has passed, the mortgagor loses his right to seek redemption and he would be absolutely debarred from seeking declaration that he continues to be the owner or for redemption of the mortgaged property. The suit is filed because the property is now within the jurisdiction of Bruhat Bengaluru Mahanagara Palike and it has become very valuable. It is stated, as the mortgage was not redeemed within the prescribed period, the right of the plaintiff stands extinguished. He is debarred from seeking redemption and the title vests with the mortgagee. The suit property is family property and the defendants are allottees. The revenue entries have been changed in the name of the defendants. They are enjoying the property as absolute owners.

It is stated, the defendants have put up construction in the suit schedule property and let out some portion to the tenants. The tenants are in possession of their respective portion and they are not made parties. The plaintiff is not entitled for the reliefs claimed. Therefore, the defendants have prayed to dismiss the suit.

The Trial Court has framed the following issues:

"1. Whether the plaintiff proves that he is entitled for redemption of suit property?

Whether the plaintiff proves that he is entitled for seeking accounts from the defendants?

Whether the plaintiff proves that he is entitled for possession of the suit property?

Whether the plaintiff is entitled for direction to the defendants to transfer the property to the plaintiff?

Whether the suit is barred by law of limitation ?

Whether the defendants prove that they have become owners of the suit schedule property?

Whether the plaintiff is entitled for the relief sought for?

What order or decree ?

Addl. Issue

Whether the defendant proves that the suit is bad for non-joinder of necessary parties?"

On appreciation of the evidence on record, the Trial Court has answered issue Nos. 1 to 4 and 7 in the affirmative; issue Nos. 5, 6 and additional issue No. 1 in the negative and consequently, has decreed the suit declaring that the plaintiff is the owner of the suit schedule property with equity of redemption and directing the plaintiff to deposit the mortgaged amount within six months. Further, directing the defendants to discharge the mortgage dated 22.9.1961 within two months from the date of deposit of the mortgage amount by the plaintiff. The defendants are directed to render accounts in respect of the suit schedule property to the plaintiff. It is also directed that the entries made in the revenue records in respect of the suit schedule property are not binding on the plaintiff.

Aggrieved by that, the appellants -defendants have filed this appeal.

The learned counsel for the appellants/defendants contended that the impugned judgment and decree cannot be sustained in law. He also submitted that the Trial Court has failed to consider the evidence on record in proper perspective. Further he submitted that the transaction does not amount to usufructuary mortgage. The plaintiff has not paid the mortgage money or tendered or deposited into the Court. Therefore, there is no compliance of section 62 of the Transfer of Property Act. Therefore, the plaintiff had no cause of action for the suit. Unless the mortgagor pays the amount or tenders it or deposits into the Court, he has no right to recover possession. Mortgage money is neither paid nor tendered nor deposited into the Court. Therefore, the suit itself was not maintainable. Under section 62 of the Transfer of Property Act, unless the mortgage money is paid or deposited or tendered, possession cannot be recovered. In the present case, the plaintiff has neither paid nor deposited nor tendered the mortgaged money and therefore, there was no cause of action for the suit and the suit itself was not maintainable. Further he submitted that the rate of interest is not mentioned in the mortgage deed. Therefore, Ex. P6 does not come under section 58(d) of the Transfer of Property Act. At the most, it may be an anomalous mortgage and therefore, the Trial Court was not justified in decreeing the suit. The defendants are entitled for improvement under section 51 of the T.P. Act. It was also contended that the suit was barred by limitation. The judgment of the Hon''ble Supreme Court reported in Singh Ram Vs. Sheo Ram, is not applicable to the facts of the present case. He, therefore, submitted that the impugned judgment and decree cannot be sustained in law.

As against this, the learned counsel for the respondent submitted that the impugned judgment and decree does not call for interference. Further he submitted that the Trial Court on proper consideration of the material on record has rightly decreed the suit and therefore, the impugned judgment and decree does not call for interference. He also submitted that there is no whisper in the written statement regarding the nature of mortgage. The recitals of Ex. P6 clearly show that a sum of Rs. 5,000/- was borrowed and possession was delivered to the mortgagee with a condition that the usufructs of the mortgaged property shall be enjoyed by the mortgagee towards interest payable. It is clear, the transaction is a usufructuary mortgage. Further he submitted that Ex. P10 legal notice clearly shows that the amount was tendered. The defendants were called upon to receive the amount and inform the plaintiff as to the amount paid towards tax and redeem the mortgage. The response of the defendants was denial of the mortgage transaction itself and claiming ownership to the suit schedule property. Further he submitted that in the written statement the defendants have admitted that late N.C. Munireddy the mortgagee was entitled to enjoy usufructs from the mortgaged property i.e., the suit schedule property and took possession as mortgagee. It is clear, the defendants have admitted that the mortgage was a usufructuary mortgage. Therefore, the appellants cannot now contend that the mortgage is not usufructuary mortgage and it is, at the most, an anomalous mortgage. He also submitted that nature of mortgage was never in dispute. Further he submitted that the contents of Ex. P6 clearly show that the mortgage is a usufructuary mortgage under Section 58(d) of the T.P. Act. He also submitted that the requirement of section 62 of Transfer of Property Act has been fulfilled. The mortgagee was put in possession of the property with an understanding that the usufructs of the mortgaged property shall be enjoyed by the mortgagee towards interest payable. Thereafter, the plaintiff has requested the defendants personally and also through legal notice to receive the amount and inform him about the tax paid and redeem the mortgage. The defendants have declined to receive the amount and redeem the mortgage. It satisfies the requirement of section 62 of the Transfer of Property Act. Further he submitted that section 51 of Transfer of Property Act is not applicable to the present case. Inviting my attention to section 72 of the Transfer of Property Act, the learned counsel for the respondent submitted that the mortgagee can spend money only for the purpose mentioned in section 72 and not to improve the property. Therefore, the defendants cannot contend that they have improved the property and they are entitled for it.

Placing reliance on the decision of the Punjab & Haryana High Court reported in Ram Kishan and Others Vs. Sheo Ram and Others, , the learned counsel for the respondent submitted that the special right of usufructuary mortgagor under section 62 of the Transfer of Property Act to recover possession commences in the manner specified therein i.e., when mortgage money is paid or tendered or deposited into the Court. Until then, the limitation does not start for the purpose of Article 61 of the Limitation Act. In case of usufructuary mortgage, the mortgagee is not entitled to file a suit for declaration that he has become the owner merely on the completion of 30 years from the date of the mortgage. He, therefore, submitted that the impugned judgment and decree does not call for interference.

I have carefully considered the submissions made by the learned counsel for the parties.

The points that arise for my consideration are:

"(1) Whether the transaction under Ex. P6 is a usufructuary mortgage?

(2) Whether the requirement of section 62 of the Transfer of Property Act is complied with?

(3) Whether the suit was barred by limitation and the impugned judgment and decree calls for interference?"

Regarding Point No. 1:

"It is relevant to note, the plaintiff contends that the suit schedule property was mortgaged in favour of late N.C. Munireddy borrowing a sum of Rs. 5,000/- with an understanding that the usufructs of the mortgaged property shall be enjoyed by the mortgagee towards interest payable. The defendants have denied the plaint averments. But, there is no specific plea that the transaction is not a usufructuary mortgage. On the other hand, at para 12 of the written statement, it is stated as follows:

"12. The averments made in para 11 of the plaint that N.C. Munireddy the mortgagee was entitled to enjoy the usufructs from the mortgaged schedule property is true. Sri N.C. Munireddy was entitled to enjoy the suit property and also paid tax due to the schedule property. The averments that the mortgage became redeemable on the payment of Rs. 5,000/- and the taxes paid is not completely correct."

At para 13 of the written statement it is stated as follows:

"13. The averments made in para 12 of the plaint that Sri N.C. Munireddy took possession as a Mortgagee is true. The further assertions that his name was entered in the revenue records as a Mortgagee is not admitted and is incorrect."

It is clear, in the averments made at paras 12 and 13 of the written statement it is admitted that late N.C. Munireddy was entitled to enjoy the usufructs of the mortgaged property i.e., the suit schedule property and took possession as a mortgagee. To find out the real nature of the transaction, it is appropriate to refer to the recitals of Ex. P6. It is stated in Ex. P6, the possession of the schedule property was delivered to the mortgagee on the date of the mortgage itself. Usufructs of the mortgaged property shall be enjoyed by the mortgagee towards interest payable on the mortgage amount. The mortgagee shall pay the taxes till the mortgage is redeemed. After the mortgagor pays Rs. 5,000/- and the taxes paid by the mortgagee, the suit schedule property shall be redeemed in favour of the mortgagor. From the recitals of Ex. P6, it is clear, a sum of Rs. 5,000/- was borrowed and possession of the property was delivered to the mortgagee with an understanding that the usufructs of the mortgaged property shall be enjoyed by the mortgagee towards interest payable on the mortgage amount.

Section 58(d) of the Transfer of Property Act provides as follows;

"Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage-money, or partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee."

In the present case, the mortgagor has delivered possession of the mortgaged property to the mortgagee. The mortgagee has retained possession. The recitals of Ex. P6 show that there was an understanding that the usufructs of the mortgaged property shall be enjoyed by the mortgagee towards interest payable on the mortgage amount. Therefore, the mortgage is usufructuary mortgage. It cannot be said that the transaction does not come under Section 58(d) of the T.P. Act. The evidence on record and recitals of Ex. P6 clearly show that the transaction is a usufructuary mortgage. Accordingly, point No. 1 is answered holding that the transaction under Ex. P6 is a usufructuary mortgage.

Regarding Point No. 2:

"It was contended by the learned counsel for the appellants that the requirement of section 62 of the T.P. Act is not complied with. Neither money is paid nor tendered nor deposited into the Court. Unless money is paid or tendered or deposited into the court, the plaintiff cannot claim redemption. It is difficult to accept this contention. The plaintiff has issued legal notice dated 11.2.2008 as per Ex. P10. In the legal notice, it is stated that the defendants are called upon to receive money from the plaintiff i.e., Rs. 5,000/- and the entire property tax paid by the defendants within one week from the date of receipt of notice and to execute and register appropriate document discharging the mortgage created and also to place the plaintiff in vacant possession of the suit schedule property. In response to this, the defendants have issued reply as per Ex. P15 contending that the averments in the notice are false and based on assumptions and presumptions. The defendants are the sole and absolute owners and they are in continuous possession of the property and they cannot comply with the demand made in the legal notice. It is clear, the defendants have declined to comply with the demand made in the legal notice. The defendants have claimed that they are the owners of the suit schedule property. It is clear, the defendants have declined to receive the amount and redeem the mortgage. Therefore, the defendants cannot contend that there is no tender or deposit or payment of the mortgage money. The plaintiff has pleaded that he approached the defendants personally and requested them to accept the amount and redeem the mortgage. Thereafter, legal notice dated 11.2.2008 has been issued. From the contents of Ex. P10 and reply Ex. P15 and the evidence on record, it is clear, the plaintiff has requested the defendants to receive the amount and redeem the mortgage. The defendants have declined to receive the amount and redeem the mortgage. Therefore, it cannot be contended that there was no tender or deposit of the mortgage money. The contention of the defendants that there was no compliance of section 62 of the Transfer of Property Act cannot be accepted and accordingly, it is rejected. Point No. 2 answered accordingly holding that the requirement of section 62 of the T.P. Act has been complied with."

Point No. 3:

"The defendants contend that the suit was barred by limitation. The impugned judgment and decree cannot be sustained in law."

Article 61 of the Limitation Act provides as follows:

In Ram Kishan and Others Vs. Sheo Ram and Others, , the Hon''ble Punjab & Haryana High Court has held as follows:

"34. Therefore, we answer the questions framed to hold that in case of usufructuary mortgage, where no time limit is fixed to seek redemption, the right to seek redemption would not arise on the date of mortgage but will arise on the date when the mortgagor pays or tenders to the mortgagee or deposits in Court, the mortgage money or the balance thereof. Thus, it is held that once a mortgage always a mortgage and is always redeemable."

The Hon''ble Supreme Court in Singh Ram Vs. Sheo Ram, has observed as follows:

"22. We, thus, hold that special right of usufructuary mortgagor under Section 62 of the T.P. Act to recover possession commences in the manner specified therein i.e. when mortgage money is paid out of rents and profits or partly out of rents and profits and partly by payment or deposit by the mortgagor. Until then, limitation does not start for the purposes of Article 61 of the Schedule to the Limitation Act. A usufructuary mortgagee is not entitled to file a suit for declaration that he had become an owner merely on the expiry of 30 years from the date of the mortgage. We answer the question accordingly.

On this conclusion the view taken by the Punjab and Haryana High Court will stand affirmed and contrary view taken by the Himachal Pradesh High Court in Bhandaru Ram v. Sukh Ram will stand overruled. The appeals are dismissed."

In the present case, the mortgage is a usufructuary mortgage. The plaintiff has asked the defendants to receive the amount and redeem the mortgage. The defendants have declined to receive the amount and redeem the mortgage. As the mortgage is a usufructuary mortgage and no time limit is fixed to seek redemption, the right to seek redemption arises not on the date of mortgage but on the date when the mortgagor pays or tenders to the mortgagee or deposits into the Court the mortgage money. In the present case, the plaintiff has approached the defendants and requested to accept the mortgage money and redeem the mortgage. Thereafter, legal notice dated 11.2.2008 has been issued calling upon the defendants to receive the mortgage money and redeem the mortgage. The defendants have declined to receive the mortgage money and redeem the mortgage. Therefore, it cannot be contended that there is no tender or deposit or payment of the mortgage money. The limitation starts when the defendants have declined to receive the amount and redeem the mortgage. The suit is filed on 29.5.2008. Therefore, the suit is well within time. The decisions reported in Ram Kishan and Others Vs. Sheo Ram and Others, and Singh Ram Vs. Sheo Ram, are squarely applicable to the facts of the present case. Therefore, there is no merit in the contention that the suit was barred by limitation.

In so far as improvement is concerned, I find considerable force in the submission of the learned counsel for the respondent-plaintiff that mortgagee can spend money only for the purpose mentioned in Section 72 of he T.P. Act. Section 51 of the T.P. Act is not applicable to the present case. The terms of mortgage does not provide for any improvement. Therefore, the contention of the appellants/defendants that they are entitled for improvement cannot be accepted and accordingly, it is rejected.

The Trial Court on proper consideration of the material on record has rightly held that the plaintiff is the owner of the suit schedule property and he is entitled for redemption. There is no valid reason to interfere with the findings recorded by the Trial Court. Therefore, the impugned judgment and decree does not call for interference.

Accordingly, the appeal is dismissed.

In the circumstances of the case, no order as to costs.

I.A. Nos. 1 and 2 of 2015 do not survive for consideration and accordingly, they are disposed of.