Important point
Once a person gets possession of property as mortgagee, he cannot by a unilateral act or declaration claim a title over the property by adverse possession against the mortgagor since in law his possession is that of the mortgagor but if the mortgagee is claiming to be an absolute owner of the property, his/her status as mortgagee comes to an end and his/her possession becomes adverse to the original owner.

Headnote:Civil Procedure Code, 1908—Order XXXIV—Limitation Act, 1963—Article 61—Mortgage—Purchaser of equity of redemption—Status of—Original owner mortgaged suit property by a usufructuary mortgage to defendant 1 to secure repayment of Rs. 400/- on a pro-note—Defendant 1 was put in possession of the property—Original owner sold 67 cents from the suit property to plaintiff by a registered sale deed with a recital in sale deed that defendant 1 was in possession of property as a mortgagee and plaintiff had thus purchased the equity of redemption from the original owner—Defendant 1 not having been repaid the amount of loan under pro-note, she instituted money suit—Auction sale in execution of money decree—Defendant 1 purchased the property and she took delivery of possession through Court on 18.1.1967—On 1.3.1980, plaintiff issued a notice to defendant 1 to hand over possession of 67 cents from the property to plaintiff—A prayer was made to declare auction sale invalid and to put plaintiff in possession of property—Whether suit filed by plaintiff for declaration of title and possession of property was maintainable—(No)—Plaintiff ought to have filed a suit for redemption of mortgage and not for declaration of title and possession of property—Status of defendant 1 came to an end with the purchase of property.
       Held : From the facts, it is clear and is not disputed before us that Annamalai was the original owner of the property who mortgaged it to defendant No. 1. Thus, Annamalai was mortgagor and Rukmani Ammal-defendant No. 1 was mortgagee. Since it was an usufructuary mortgage, defendant No. 1 was put in possession of the property as mortgagee. It was in June, 1962. It is also not in dispute that defendant No. 1 had advanced another loan on a different pro-note to Annamalai. Annamalai sold part of the property to the property plaintiff on August 13, 1964 when the property was in possession of defendant No. 1 as mortgagee. It has come on record that since the amount under separate pro-note was not repaid by Annamalai to defendant No. 1, the latter filed Small Cause Suit for recovery of money due and a decree was passed against Annamalai by a competent court. In execution proceedings, the suit property was sold by the Court in public auction and defendant No. 1, with the permission of the Court, purchased it on August 3, 1966. Auction was confirmed and sale certificate was issued in favour of defendant No. 1 on September 5, 1966. It is, therefore, clear that according to defendant No. 1, he became absolute owner of the property in view of purchase of property in Court auction by her as the sale was confirmed and sale certificate was issued. In our opinion, the learned counsel for defendant No. 1 is right in contending that when Annamalai sold sold part of the suit property to the plaintiff in 1964, the property was already mortgaged to defendant No. 1 who was in possession of the property. Defendant No. 1 is, therefore, right in submitting that the plaintiff ought to have filed a suit for redemption of mortgage and not for declaration of title and possession of property. The learned counsel for defendant No. 1 is also right in submitting that once the property was sold to defendant No. 1 who was mortgagee in possession, she could not be continued as mortgagee inasmuch as after the sale, she was claiming the property as an owner thereof. Her status as mortgagee came to an end with the purchase of property and in the eye of law, it could be said that she was claiming title over the property which was adverse to the owner of the property. (Para 12)
       As held by this Court in the cases referred to hereinabove, once the mortgagee is claiming to be an absolute owner of the property, his/her status as mortgagee comes to an end and his/her possession becomes adverse to the original owner. Even if such sale is voidable (and not void), it will not alter legal position and adverse title of the original mortgagee continues and if the period of twelve years expires, he/she becomes owner of the property by adverse possession. In the case on hand, the auction took place on August 3, 1966 and the sale was confirmed and sale certificate was issued in favour of defendant No. 1 on September 5, 1966. Admittedly, the suit was filed by the plaintiff on June 26, 1980, that is, after a period of twelve years. In the circumstances, in our opinion, the lower Appellate Court was right in dismissing the suit. It was barred under Article 61 of the Limitation Act, 1963. The lower Appellate Court, in our opinion was also right in observing that since the plaintiff was claiming through Annamalai (original owner), he ought to have filed a suit for redemption of mortgage and not for declaration and possession of the property. (Paras 17 and 18)
       In this case, the Small Cause Suit, decree passed therein and execution proceedings and auction sale did not relate to mortgage dues but an independent transaction and a separate pro-note and recovery of that amount. In such suit, plaintiff-Jagdesa was neither necessary nor proper party and non-joinder of Jagdesa was of no consequence. As in execution of money-decree in that suit, defendant No. 1 purchased the property with the leave of the Court, she became the owner of the property and plaintiff-Jagdesa had no right to raise an objection against the right of defendant No. 1. Regarding deemed discharge of debt under the Tamil Nadu Debt Relief Act, it may be stated that as held by us, after 1966, defendant No. 1 was not holding the property as mortgagee in possession. On auction-sale in her favour, she became the owner of the property or in any case, she was claiming to be in adverse possession of the suit property. As her possession after 1966 was not as mortgagee in possession, the provisions of the above Act were not applicable and neither Annamalai nor plaintiff could claim benefit of the said Act. On all the above grounds, in our opinion, the trial Court as well as the High Court were in error in passing decree in favour of the plaintiff. (Paras 20, 21 and 22)

Judgment

C.K. Thakker, J.—The present appeal is directed against the judgment and decree passed by the High Court of Madras in Second Appeal No. 1939 of 1986. By the said appeal, the High Court set aside the judgment and decree passed by the Subordinate Judge, Tindivanam in Appeal No.6 of 1983 which in turn set aside the judgment and decree passed by District Munsif, Tindivanam in Original Suit No.63 of 1983.

2. The appreciate the controversy raised in the present Appeal, factual background may be stated in brief:

The appellants herein were original defendants and respondent was the original plaintiff. One Annamalai was the absolute owner of the property bearing R.S. 81 situated at village Peravur in Taluka Tindivanam, admeasuring 1 acre and 52 cents (hereinafter referred to as the ‘suit property’). Annamalai mortgaged the said property by a usufructuary mortgage to defendant No.1 Rukmani Ammal by a document Ex. B-5 dated June 27, 1962 to secure repayment of Rs.400/- on a pro-note. Defendant No.1 was put in possession of the property. Annamalai had also taken another loan from Rukmani Ammal on another pro-note executed by him. On August 13, 1964, Annamalai sold 67 cents from the suit property to plaintiff-Jagdesa by a registered sale-deed Ex.A-1 for Rs.800/-. There was a recital in the sale-deed that the defendant No.1 was in possession of property as a mortgagee and the plaintiff had thus purchased the equity of redemption from Annamalai. Since the defendant No.1 was not repaid the amount of another loan under pro-note, she instituted a money suit being Small Cause Suit No. 176 of 1965 wherein a decree was passed. The suit-property was put up for sale in execution of money decree. The auction took place on August 3, 1966. The defendant No.1 purchased the property with the leave of the Court. Sale was confirmed on September 5, 1966 and sale certificate Ex.B-7 was issued in her favour, and she took delivery of possession through Court on January 18, 1967. The property was subsequently sold by Rukmani Ammal (Defendant No.1) to Krishna Gounder (Defendant No.2) on August 16, 1979 by a sale-deed, Ex.B-19.

3. On March, 1, 1980 the plaintiff issued a notice to defendant No.1 asking her to hand over possession of 67 cents from the property to the plaintiff but the defendant No.1 refused to do so. The plaintiff, therefore, filed a suit on June 6, 1980 for declaration of title and also for possession of property. It was alleged by the plaintiff that defendant No.1 was mortgagee in possession of the property and since the mortgage was usufructuary one and the defendant No.1 was in possession for a continuous period of ten years, the mortgage was deemed to be discharged under the Tamil Nadu Debt Relief Act, 1979 and defendant No.1 was bound to deliver possession of the property to the plaintiff. It was also alleged by the plaintiff that he was not aware of Small Cause Suit No.176 of 1965 by defendant No.1 nor the decree passed in the said suit and attachment and sale of property; that the Court auction was illegal and invalid as no notice was issued to the plaintiff before undertaking auction sale nor an opportunity was afforded to him. The auction, therefore, would not bind him as it was fraudulent. A prayer was accordingly made to declare auction sale invalid and to put plaintiff in possession of the property. According to the plaintiff, he purchased 0.67 cents out of 1 acre, 52 cents of the suit property and had become owner of that portion.

4. The suit was resisted by defendant No. 1, inter alia, contending that it was not maintainable inasmuch as the plaintiff ought to have instituted a suit for redemption of mortgage and not for declaration of title. It was also contended that a decree was passed in favour of defendant No. 1 in the previous suit and in execution of the said decree, the property was sold in public auction and after obtaining leave of the Court, the defendant No. 1 purchased the property and had become full and absolute ow

Click Here to Read the rest of this document

Judicial Analysis

SupremeToday

2005 Supreme(SC) 1458

Cases Referred (4)

Judicial Analysis