2006 Supreme(SC) 238

2006(3) Supreme 245
SUPREME COURT OF INDIA
(From Madras High Court)
Arijit Pasayat and R.V. Raveendran, JJ.
Prabhakaran & Ors.—Appellants
versus
M. Azhagiripillai (Dead) by Lrs. & Ors.—Respondents
Civil Appeal No. 840 of 2000
Decided on 20-3-2006
Counsel for the Parties :
For the Appellants : P. Krishnamoorthy, Sr. Advocate, R. Nedumaran, Rajiv Rufus, Advocates.
For the Respondents : K. Ramamoorthy, Sr. Advocate, K.B. Sounder Rajan, N.L. Ganapathi, Sudershan Rajan and P. Narasimhan, Advocates.

IMPORTANT POINT
An acknowledgment under Section 18 of the Limitation Act, can be by a mortgagee also, and such acknowledgement will extend the limitation for a suit against the mortgagee in respect of the property or right claimed against him.

Headnote:(i) Transfer of Property Act, 1882—Section 58(d)—Limitation Act, 1963—Article 61(a), Section 18—Suit by a mortgagor to redeem or recover possession of immovable property mortgaged—Period of limitation for filing the suit is 30 years—Usufructuary mortgage—Mortgagor has to file a suit for redemption within 30 years from the date of the mortgage—Effect of acknowledgment u/s. 18 of the Limitation Act—Computation of period of limitation.

       Held : An usufructuary mortgage is a transfer by the owner (mortgagor) of an interest in an immovable property for securing the amount advanced/to be advanced by the creditor (mortgagee), under which possession of the property is delivered to the mortgagee with authority to retain such possession and enjoy the rents and profits therefrom, until the debt is paid (vide Section 58(d) of the Transfer of Property Act, 1882, for short ‘T.P. Act’). The owner mortgagor, who continues to hold the bundle of rights constituting ownership, minus the right to possession, has the right to recover possession of the mortgaged property by paying the mortgage debt. The said right to recover possession (along with the right to receive back the documents relating to the mortgaged property and the right to obtain a deed of reconveyance/retransfer of the mortgaged property) is known as the right of redemption of the mortgagor and is statutorily recognized in section 60 of T.P. Act. Such right of redemption can be extinguished during the subsistence of the mortgage only by the act of parties or by decree of a court. (Para 10)

       Article 148 of the Limitation Act, 1908 (referred to as ‘old Act’) provided a limitation of 60 years for a suit against a mortgagee, to redeem or to recover possession of immovable property mortgaged. The corresponding provision in the Limitation Act, 1963 (‘new Act’ or ‘Limitation Act’ for short), is Article 61(a) which provides that the period of limitation for a suit by a mortgagor to redeem or recover possession of the immovable property mortgaged is 30 years. The period of limitation begins to run when the right to redeem or to recover possession accrues. In the case of a usufructuary mortgage which does not fix any date for repayment of the mortgage money, but merely stipulates that the mortgagee is entitled to be in possession till redemption, the right to redeem would accrue immediately on execution of the mortgage deed and the mortgagor has to file a suit for redemption within 30 years from the date of the mortgage. Section 27 of the Limitation Act provides that “at the determination of the period hereby limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished”. This would mean that on the expiry of the period of limitation prescribed under the Act, the mortgagor would lose his right to redeem and the mortgagee would become entitled to continue in possession as the full owner.(Para 11)

       To summarise, a statement (in writing and signed) by a mortgagee can be construed as an ‘acknowledgement’ under Section 18 of the Limitation Act, if it fulfils the following requirements:

       (i)The acknowledgement of liability must relate to a subsisting mortgage.

       (ii)The acknowledgement need not be in a document addressed to the mortgagor (person entitled to the property or right). But it should be made by the mortgagee (the person under liability).

       (iii)The words used in the acknowledgement must indicate the existence of jural relationship between the parties and it must appear that the statement is made by the mortgagee with the intention of admitting the jural relationship with the mortgagor.

       (Such intention of admitting the jural relationship need not be in express terms, but can be inferred or implied from the nature of admission and the words used, though oral evidence as to the meaning and intent of such words is excluded.)

       (iv)Where the statement by the mortgagee in the subsequent document (say, deed of assignment) merely refers to the mortgage in his favour which is being assigned, without the intention of admitting the jural relationship with the mortgagor, it will not be considered to be an ‘acknowledgement’.

       There is no difficulty in holding a statement to be an ‘acknowledgement’ under section 18, where the mortgagee makes a direct admission that he is liable to deliver back possession to the mortgagor or that the mortgagor has the right to redeem the property from the mortgage. But when there is no direct admission, but an acknowledgement is to be implied from an admission of jural relationship, we have noticed some confusion in the decisions rendered, as to what is an “admission of jural relationship”. The term ‘jural’ means ‘legal’ or ‘pertaining to rights and obligations’. ‘Jural relationship between parties’ means legal relationship between parties with reference to their rights and obligations. In a mortgage, both the mortgagor and the mortgagee, have certain rights and obligations against each other. The rights obligations of a mortgagor or a mortgagee co-exist, like the two sides of a coin. The mortgagor’s right of redemption is co-extensive with the mortgagee’s right of sale or foreclosure (where such right is recognized in law). Any statement by either, admitting the jural relationship with the other, will extend the limitation for a suit by that other, against the person acknowledging. It follows that when a mortgagee makes a statement about his right to recover the mortgage amount, such statement impliedly acknowledges the corresponding right of redemption of the mortgagor. Further, a statement admitting jural relationship, need not refer to or reiterate the rights and obligations flowing therefrom. Where a party to the mortgage, by his statement, admits the existence of the mortgage or his rights under the mortgage, he admits all legal incidents of the mortgage including rights and obligations of both parties, that is mortgagee and mortgagor.(Paras 17 & 18)

       (ii) Transfer of Property Act, 1882 —Section 58(d)—Limitation Act, 1963 —Article 61(a), Section 18—Usufructuary mortgage—Suit for redemption—Limitation period—Mortgagor obtained a loan of Rs. 300/- and mortgaged his property in favour of mortgagee under a usufructuary mortgage—Mortgagee assigned the said mortgage in favour of ‘SI’ on 12.2.1954 by receiving Rs. 300/- from the assignee—Assignee died leaving him surviving his widow and son, defendants 1 and 2—Mortgagor filed a suit on 16.11.1981 for redemption of mortgage dated 7.9.1935 —Plaintiffs contended that mortgage debt stood discharged by Section 9 of the Tamil Nadu Debt Relief Act—Whether plaintiffs are entitled to a decree for redemption—(Yes)—Tamil Nadu Debt Relief Act.

       Held : While dealing with the first question, we have held that the period of limitation for the suit for redemption had to be reckoned from 12.2.1954 and not from 7.9.1935. Therefore, when the Debt Relief Act, came into force on 15.7.1978, the mortgage was very much subsisting. Section 9 of the Debt Relief Act contains special provisions in respect of mortgages. Sub-section (1) of section 9 provides that the provisions of the said section applies to all mortgages executed at any time before 14.7.1978 and by virtue of which the mortgagee is in possession of the property mortgaged to him. Sub-section (5) of section 9 provides that where the mortgagee has been in possession of the mortgaged property for an aggregate period of 10 years or more, then, the mortgage debt shall be deemed to have been wholly discharged with effect from expiry of the period of ten years or where such period expired before 14.7.1978, with effect from 14.7.1978. The said provision applies as the mortgage transaction does not fall under any of the exceptions enumerated in section 4 of the said Act. As the mortgagee and his successors were in possession of the mortgaged property ever since 7.9.1935, that is, for more than 10 years as on the date when the Act came into force, the said mortgage debt stood wholly discharged with effect from 14.7.1978. As the mortgage stood discharged on 14.7.1978, the plaintiffs will be entitled to a final decree for redemption without the need to undergo the formality of a preliminary decree and taking of an account of the amount due under the mortgage.(Paras 27 and 28)

       In view of the above, this appeal is allowed as follows :—

       a)The judgment of the High Court is set aside and the suit is decreed, holding that the plaintiffs are entitled to a decree for redemption in regard to the suit property. Final decree shall be drawn accordingly.

       b)The prayer for rendition of accounts is rejected.

       c)The schedule to the decree containing the description of the mortgaged property shall be amended so as to bring it in conformity with the schedule to the mortgage deed dated 7.9.1935.

       d)Appellants/plaintiffs will be entitled to costs throughout. (Para 31)