No Limitation for Redemption of Usufructuary Mortgage in India

No Limitation for Redemption of Usufructuary Mortgage in India

Introduction

The maxim “once a mortgage, always a mortgage” epitomises the equitable principle that a mortgagor’s right to redeem is indefeasible so long as the security subsists. Nowhere is this proposition more forcefully illustrated than in the context of a usufructuary mortgage under Indian law, where judicial authority overwhelmingly affirms that, unless the parties themselves stipulate a time-limit for redemption, the mortgagor may seek redemption ad infinitum. This article undertakes a critical examination of the doctrine, statutory framework and Indian jurisprudence—centred on the line of authority culminating in Panchanan Sharma v. Basudeo Prasad Jaganani (1995) and endorsed by the Supreme Court in Singh Ram v. Sheo Ram (2014)—to demonstrate that, in practical effect, there is no period of limitation for redemption of a usufructuary mortgage in India.

Conceptual and Statutory Framework

Definition and Incidents of Usufructuary Mortgage

Section 58(d) of the Transfer of Property Act, 1882 (“TPA”) defines a usufructuary mortgage as a transaction whereby the mortgagor delivers (or agrees to deliver) possession of the mortgaged property to the mortgagee and authorises the latter to appropriate the rents and profits in lieu of interest or in reduction of principal.[1] Crucially, the mortgagor incurs no personal liability to repay, and the mortgagee acquires no right to foreclosure or sale. Instead, the mortgagor may at any time redeem by paying the mortgage-money (Section 62 TPA).

Right of Redemption and Recovery of Possession

Section 60 TPA enshrines the mortgagor’s right to redeem at any time after the mortgage-money becomes due, whereas Section 62 specifically provides that a usufructuary mortgagor “has a right to recover possession” on payment or tender of the mortgage-money. Read conjunctively, these provisions confer a continuing, inalienable right that endures until it is effectively extinguished either by act of parties (e.g., release, merger) or by a decree of a competent court.[2]

Limitation Act, 1963

Article 61(a) of the Limitation Act prescribes a 30-year period for a suit by a mortgagor to redeem or recover possession; the crucial question, however, is the starting point. Article 61 fixes the commencement as the date “when the right to redeem or to recover possession accrues”. In the usufructuary context, courts have consistently held that the right “accrues” only when the mortgagor tenders or deposits the mortgage-money—hence, where no such tender is made, limitation never begins to run.[3]

Jurisprudential Development

Panchanan Sharma and the Supreme Court Dicta

In Panchanan Sharma v. Basudeo Prasad Jaganani (1995), the Supreme Court pronounced a seminal dictum: “If the deed gives time for redemption … limitation would run from the date fixed in the deed. Otherwise, there is no limitation for redemption of a usufructuary mortgage.”[4] The Court emphasised that the mortgagor “does not lose his title or right of redemption by lapse of time”. The proposition rests on two pillars: (a) Section 76(c) TPA obliges the mortgagee to discharge revenue obligations, reinforcing that possession remains derivative; and (b) equity’s abhorrence of clogging the equity of redemption.

Full-Bench Endorsement: Ram Kishan v. Sheo Ram (2007)

A Full Bench of the Punjab & Haryana High Court, answering a reference precisely on limitation for usufructuary redemption, held that the right to redeem “arises only on payment of the mortgage-money … therefore, the period of limitation does not commence till such payment”.[5] This position aligns with earlier Lahore authority (Lachhman Singh v. Natha Singh, 1940) and Patna authority (Jadubans Sahai, 1957).

Affirmation by the Supreme Court: Singh Ram v. Sheo Ram (2014)

When Ram Kishan reached the Supreme Court in Singh Ram, the apex Court endorsed the Full Bench analysis, reiterating that Article 61(a) “starts on payment” and that usufructuary mortgages remain perpetually redeemable absent a contractual date.[6]

Procedural Context: Order XXXIV Rule 8(3) CPC

In K. Parameswaran Pillai v. K. Sumathi (1993), the Supreme Court interpreted Order 34 Rule 8(3) CPC—which excludes the mortgagee’s right to seek foreclosure or sale in usufructuary cases—to mean that “the right of redemption to the mortgagor is not lost; it will be barred only on expiry of the period of limitation, which never commences until deposit is made”.[7]

Subsequent High Court Consensus

  • Ram Kumar v. Mohinder (P&H 2011) reaffirmed that limitation begins only upon tender, citing Ram Kishan and Panchanan Sharma.[8]
  • Mohan Lal v. Mohan Lal (Raj 2013) relied on Achaldas Durgaji Oswal (2003 SCC 614) to reiterate the dictum “once a mortgage always a mortgage”.[9]
  • Ajaib Singh (dead) v. Ved Prakash (P&H 2024) applied Singh Ram to dismiss mortgagees’ plea of adverse title.[10]

Theoretical Underpinnings

Equity of Redemption and Public Policy

Equity regards a mortgage as a mere security and treats any provision purporting to nullify redemption as a clog, ipso facto void (Santley v. Wilde, 1899). Indian courts have integrated this doctrine within Section 60 TPA.[11] Because usufructuary possession is granted in lieu of interest, to allow the mortgagee to appropriate profits plus acquire title via limitation would unjustly enrich the mortgagee contrary to public policy.

Co-extensiveness of Rights: Foreclosure and Redemption

The Full Bench in Ram Kishan lucidly held that the right of foreclosure—although generally co-extensive with redemption—does not arise for a usufructuary mortgagee so long as he continues to enjoy possession and fruits. Hence, to trigger limitation for foreclosure or redemption, there must be cessation of such enjoyment.[12]

Policy Considerations

(a) Protection of Agrarian Borrowers: Usufructuary mortgages are common among impecunious agriculturists who mortgage land against modest loans. Endless redeemability prevents exploitative displacement.
(b) Certainty v. Fairness: Critics argue that endless rights undermine certainty of titles. Yet Parliament has not amended Section 62 or Article 61 to impose a hard stop, signalling legislative acquiescence to the judicial stance.

Counter-Arguments and Divergent Authority

Isolated decisions—e.g., Sampuran Singh (SC 1998) and State of Punjab v. Ram Rakha (SC 1997)—were once cited to contend that limitation runs from the mortgage date. However, Ram Kishan distinguished these cases for having involved acknowledgement clauses or different mortgage types, and the Supreme Court in Harbans v. Om Prakash (2006) dismissed reliance on Ram Rakha as incorrect.[13]

Critical Appraisal

The contemporary position, while grounded in equity, raises practical concerns: a mortgagee in possession for several generations may face sudden redemption claims. Nonetheless, courts mitigate hardship by adjusting accounts of rents and profits (Section 76 TPA) and awarding equitable set-off. Moreover, since Article 61’s 30-year period begins upon tender, mortgagees can compel mortgagors to act by calling in the loan or by seeking a declaration of discharge if the debt is in fact satisfied through prolonged enjoyment—a remedy recognised in Thamma Venkata Subbamma v. Thamma Rattamma (1987) where the Court construed a transaction as renunciation rather than gift to preserve family equities.[14]

Conclusion

Indian law unequivocally safeguards the mortgagor’s right to redeem a usufructuary mortgage without temporal fetter, save where the parties expressly fix a date for redemption. Sections 60 and 62 TPA, read with Article 61(a) of the Limitation Act, the CPC scheme under Order XXXIV, and a formidable body of Supreme Court and High Court authority, converge on the principle that limitation commences only upon payment or tender of the mortgage-money. Consequently, in practical and doctrinal terms, there is no limitation for redemption of a usufructuary mortgage. The doctrine not only accords with equitable traditions but also aligns with socio-economic imperatives of debtor protection in India’s agrarian milieu. Unless Parliament intervenes, the maxim “once a mortgage, always a mortgage” remains the lodestar guiding Indian courts.

Footnotes

  1. Transfer of Property Act, 1882, s. 58(d).
  2. K. Parameswaran Pillai v. K. Sumathi, (1993) 2 SCC 86.
  3. Singh Ram v. Sheo Ram, (2014) 9 SCC 185.
  4. Panchanan Sharma v. Basudeo Prasad Jaganani, 1995 Supp (2) SCC 574.
  5. Ram Kishan v. Sheo Ram, ILR (2008) 1 P&H 719 (FB).
  6. Singh Ram v. Sheo Ram, supra note 3.
  7. K. Parameswaran Pillai, supra note 2.
  8. Ram Kumar v. Mohinder, 2011 (9) RCR (Civ) 128.
  9. Mohan Lal v. Mohan Lal, 2013 (4) RLW 2959 (Raj).
  10. Ajaib Singh (Decd.) v. Ved Prakash, 2024 (3) PLR 245.
  11. Santley v. Wilde, [1899] 2 Ch 474 (CA).
  12. Ram Kishan, supra note 5, at para 42.
  13. Harbans v. Om Prakash, (2006) 1 SCC 129.
  14. Thamma Venkata Subbamma v. Thamma Rattamma, (1987) 3 SCC 294.