Your Right to Redemption is not Forever

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Issue

There was mortgaged property which was auctioned off to a few buyers. Can the mortgagor or the buyers of the mortgaged property claim redemption on that property now? Can he ask the court to dispel the buyer of his peaceful possession to take over the mortgage?

There was mortgaged property which was auctioned off to a few buyers. Can the mortgagor or the buyers of the mortgaged property claim redemption on that property now? Can he ask the court to dispel the buyer of his peaceful possession to take over the mortgage?

The judiciary has faced this question in the case of Allokam Peddabbayya vs Allahabad Bank, CIVIL APPEAL Nos. 2763-2764 of 2008. The Section under dispute is that of Section 60 of Transfer of Property Act:-

“At any time after the principal money has become 1[due], the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee to deliver the property ….”

“91. Persons who may sue for redemption

Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely,-

(a) any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same;”

Thus, to get back the property that one has mortgaged is essentially a statutory right. No doubt about that. But, nevertheless, it necessarily presupposes the existence of a mortgage. Where there is no mortgage property in existence, it is impossible to exercise the right to redemption. It is for this reason that the court held:-

The right to redeem can stand extinguished either by the act of the parties or by operation of the law in the form of a Decree of the Court under the proviso to Section 60 of the Act.

Facts

Under the facts of this case, the Bank had preferred a closure of the loans taken by the Appellants. When they were unable to do so, the Bank had preferred for an auction of the mortgaged property. The Plaintiffs were stated to have purchased the mortgaged property by different sale deeds dated 12.08.1985, 20.08.1985 and 30.09.1985. Their contention was that the purchaser stepped into the shoes of his predecessors-in-title, and therefore, had the same rights which his predecessor had in the title before the purchase.

The judgment of the court is unambiguous in these words:-

interest in the mortgaged property through their predecessor-in-interest and in the right to redeem the same was competent to do so under Section 91 of the Act, but subject to the limitation under the proviso to Section 60. Their rights could not be any superior or separate from that of their predecessor-in-interest. If the right to redeem stood extinguished by operation of the law under the proviso to Section 60 of the Act prior to the period elimination, it cannot be contended that the right could nonetheless be enforced anytime before the expiry of limitation of 30 years.

Thus, the court held that the possession of the property by the Defendants by way of the auction of Bank cannot be disturbed.

Learning Outcome

This was an important judgment that secured the rights of the innocent buyer over the property. The buyers shall not be disposed of as and when the mortgagors choose to take their right to redemption.

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