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2026 Supreme(Online)(Mad) 46606
IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. Kumaresh Babu, J
Omana George – Appellant
Versus
Southern Auto & General Finance Pvt., Ltd. – Respondent
A.S. No. 26 of 2017
For the Appellants/Petitioners: Ravikumar Paul
For the Respondents: No Appearance
A court cannot grant a redemption decree based on a presumption of potential corporate liquidation to override the statutory limitation period when the mortgage debt has clearly become unenforceable due to the efflux of time.
Headnote:The dispute concerns a mortgage created in 1987 via deposit of title deeds. After decades, with the mortgagee company untraceable, the appellants sought a declaration that the debt was time-barred and prayed for the return of title deeds. The trial court, anticipating potential liquidation, imposed a condition of depositing the principal amount with interest for redemption. The court determined that the mortgage transaction significantly predates the suit filing, far exceeding the limitation period for recovery, and absent evidence of winding-up proceedings, the trial court's presumption was legally flawed. The issue before the appellate court was whether the lower court erred in granting a redemption decree for a time-barred debt based on assumptions of liquidation. The ratio decidendi holds that courts cannot premise relief on hypothetical scenarios of corporate winding-up proceedings to override the statutory limitation period. Ex-parte status does not imply pending insolvency or liquidation that would invoke limitation exclusion under statutory provisions. The appeal suit is allowed, the trial court's preliminary decree is set aside, and the suit is decreed as prayed for.
| Table of Content |
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| 1. summary of trial court findings regarding mortgage limitation and conditional redemption. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. appellants contend that the trial court's presumption of liquidation was arbitrary. (Para 9 , 10) |
| 3. appellate court rules that time-barred mortgages are unenforceable without evidence of pending liquidation. (Para 11 , 12 , 13 , 14 , 15 , 16) |
JUDGMENT
The present First Appeal has been filed to set aside the judgement and decree dated 20.11.2015, passed by the learned Principal District Judge, Kancheepuram, in O.S.No.10 of 2014.
2. The case of the Plaintiffs is that, the 1st plaintiff who was owner of the Schedule- A property by the virtue of the registered Sale Deed dated 21.11.1985 and was running a business in the name and style of “M/S.Samaritans Granites”, had borrowed a sum of Rs.1,75,000/- from the defendant company for developing her business, pursuant to which a Deed of Mortgage by the Deposit of Title Deeds, details of which set out in the Schedule-B, was executed on 04.03.1987 and registered as Document No.962 of 1987 at SRO Pallavaram. Thereafter the 1st plaintiff executed a Power of Attorney in favour of one Mr.V.K.Rajan, with respect to the Suit Schedule- A property. The said Power Agent of the 1st plaintiff inturn executed two separate Sale Deeds on 09/10/2006 and 04/06/2006 in favour of the 2nd and 3rd plaintiffs, who inturn sold the property to the 4th Plaintiff, under the Sale Deed dated 12/06/2007.
3. When the first plaintiff was the owner, she made all efforts to discharge the debt and recover the original title deeds of the suit property. Even after the subsequent purchases, the other plaintiffs also made efforts to retrieve the documents, but their attempts proved to be futile as the defendant could not be traced. It is the case of the plaintiffs that the mortgage amount due to the defendant company has become time-barred. Hence, the plaintiffs instituted the present suit seeking a declaration, that the mortgage deed dated 04.03.1987, created by deposit of title deeds, more fully described in Schedule B with respect to the immovable property described under Schedule-A, has become unenforceable by efflux of time, and for a consequential injunction directing the defendant to return the original title deeds to the Plaintiffs. On the other hand the Sole Defendant remained ex parte despite the substituted service being effected as per the orders of the Court.
4. Upon Considering the pleadings made by the Plaintiff’s side, the learned Trial Court determined single point for Consideration before them, viz., “Whether the Plaintiff is entitled to the relief prayed for ?”
5. The plaintiffs’ side examined the 4th Plaintiff as PW1 and had marked as Ex.A1 to Ex.A7 as the evidence of the Plaintiffs’ side.
6. The learned Trial Judge, after hearing the arguments on behalf of the plaintiffs and upon perusing the oral and documentary evidence on record, noted that although the plaintiffs were ready and willing to discharge the mortgage debt, the defendant company could not be traced. It was further observed that the plaintiffs had not produced any document or any to the admissible evidence to establish that the defendant company was no longer in existence, nor had they taken out any summons to the Registrar of Companies to determine the status of the defendant company. In this context, the learned Trial Court placed reliance upon the provisions of the Section 15(3) of the Limitation Act, wherein it stipulates that in computing the period of limitation with respect to the proceedings of the company, the time during which proceedings are pending before a liquidator or an Official Liquidator in the course of winding up of a company is liable to be excluded.
7. However, in the present case, as the status of the defendant company remained uncertain and the possibility of liquidation proceedings could not be ruled out, the learned Trial Court held that it would not be appropriate to order
