Mortgagor’s Right to Redeem Usufructuary Mortgage Not Time-Barred, Continues Until Decree of Sale

The High Court held that the mortgagor’s right to redeem a usufructuary mortgage is not time-barred and continues until a decree of sale is passed in foreclosure.

The Kerala High Court Single-Judge Bench of Justice Eswaran S. recently adjudicated a batch of second appeals and held that the mortgagor’s statutory right to redeem a usufructuary mortgage does not extinguish merely by assignment or lapse of time, but continues until it is validly extinguished by a decree or other legal act. The Court further held that a registered gift deed, if properly attested—including by a Registrar who affixes signature with the requisite animus—satisfies the requirements of Section 123 of the Transfer of Property Act, 1882.

The High Court, presided over by Justice Eswaran S., adjudicated second appeals arising from two connected civil suits—OS No. 441 of 2004 and OS No. 216 of 2004—relating to disputes over redemption of mortgage, partition, and injunction among siblings. OS No. 441 of 2004 had been filed by Vimala Bai and Ayyappan Sivanandan seeking redemption of a usufructuary mortgage and partition of family property, while OS No. 216 of 2004 was instituted by their sibling Ani, seeking an injunction to restrain them from entering the disputed property. The dispute centred around a property mortgaged in 1969 and partially gifted in 1976 to the second plaintiff, with the remainder retained by their father. In 1986, an attempt was made to redeem the mortgage through an assignment in favour of the first defendant, a minor at the time.

The trial court dismissed OS No. 441 of 2004 on the grounds that the gift deed (Ext. A3) was void under Section 123 of the Transfer of Property Act, and that the mortgage was time-barred as Ext. A4 did not amount to a valid acknowledgement. The court instead decreed OS No. 216 of 2004 in favour of Ani and upheld the counter-claim by the defendants, awarding them a 2/3rd share in the property. The first appellate court affirmed these findings, prompting the plaintiffs to approach the High Court in a second appeal.

The High Court reversed the findings of the courts below, holding that the right to redeem a mortgage under Article 61 of the Limitation Act accrues only when the mortgagor has a right to redeem, and this right had not been extinguished in law. It found that Ext. A4 constituted a valid acknowledgement of the mortgage liability, and that the statutory right of redemption could not be taken away merely by an assignment unless there was a valid legal extinguishment. The Court ruled that the plaintiffs’ suit was well within limitation and maintainable.

On the issue of the validity of the gift deed (Ext. A3), the High Court found that the trial court erred in holding the deed void due to a lack of proper attestation. The Court noted that one attesting witness had been examined and the Registrar (PW2) had also signed the deed with the required animus, satisfying the legal requirements under Section 123 of the Transfer of Property Act. Since the donor did not deny execution during his lifetime, and the gift deed was a registered instrument, the denial raised by the defendants was held inconsequential.

With respect to the counter-claim, the Court held that it was not maintainable under Order VIII Rule 6A CPC. The counter-claim pertained to an independent cause of action arising from a gift deed executed in 1976 and had no nexus to the cause of action in the original suit. The Court emphasised that the delay of nearly 30 years in raising the claim rendered it time-barred, and the courts below had failed to address this legal infirmity.

As for OS No. 216 of 2004, filed by Ani for injunction, the High Court held that the claim was untenable in view of the valid gift deed excluding his possession and the plaintiffs' legitimate right to redeem and partition the property. Therefore, the injunction could not be sustained.

In conclusion, the High Court allowed the second appeals, decreed OS No. 441 of 2004 in favour of the plaintiffs, permitted redemption of the mortgage on payment of ₹1,200, and granted a preliminary decree for 1/3rd share in the property. The counter-claim was dismissed as not maintainable, and OS No. 216 of 2004 stood dismissed. Costs were awarded in favour of the plaintiffs throughout the proceedings.

Mr. K. Rajesh Kannan, Mr. A. S. Shammy Raj, Mr. P. Shanes Methar, and Mr. G.S. Reghunath, Advocates, appeared for the Appellants.

Mr. B. Krishna Mani, Advocate, appeared for the Respondents.

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REEDLAW 2025 Ker 07009