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UNDERSTANDING THE RIGHT OF REDEMPTION: ANALYSING SHANKAR SAKHARAM KENJALE(D) BY ... VS NARAYAN KRISHNA GADE
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ANALYSING SHANKAR SAKHARAM KENJALE(D) BY ... VS NARAYAN KRISHNA GADE
AUTHORED BY- SURYAANSH KISHAN RAZDAN[1]
AMITY LAW SCHOOL, NOIDA
AMITY UNIVERSITY, UP
·
Introduction:
Real estate law is indeed extensive,
but there are various concepts which form a major part of it, and the concept
of “Mortgage” is definitely one of them. Mortgage is a term which has become a
part of common human terminology. In the simplest of terms, Mortgage is the
transfer of an interest in some specific immovable property, where said
property is given asa security for a loan.
When someone puts up their immovable
property as mortgage they do it in order to secure a loan in return, and the
possession of the property remains with the creditor (the person who granted
the loan) and the person putting up their property as mortgage has various
rights, the most basic and integral right of them all is the Right of
Redemption or the right to redeem the mortgage i.e. to get back the property
once the amount of the loan is repaid.
In the following article, we will
first briefly discuss about the Concept of Mortgage and the Right of Redemption
in order to get a proper understanding and appreciation of the case analysis.
The case of Shankar
Sakharam Kenjale(D) By ... vs Narayan Krishna Gade[2]is an interesting case when it comes
to the concept of Mortgageas although it provided simple observations as to the
concept of mortgage,but the situation presented before the court required an
intensive interpretation of various provisions and the facts of the case.
Now, let us discuss in brief about
the concept of Mortgage.
·
About Mortgage:
Mortgage is defined under Section 58
of the Transfer of Property Act. The concept of Mortgage in India as stated
by Mahmood, J in the case of Gopal v. Parsotam[3]
“cannot be defined better than the definition adopted by the Legislature in
Section 58 of the Act.”
On that note, let us look at the
definition as under Section 58.
“—(a) A mortgage is the transfer of
an interest in specific immoveable property for the purpose of securing the
payment of money advanced or to be advanced by way of loan, an existing or
future debt, or the performance of an engagement which may give rise to a
pecuniary liability. The transferor is called a mortgagor, the transferee a
mortgagee; the principal money and interest of which payment is secured for the
time being arc called the mortgage-money, and the instrument (if any) by which
the transfer is effected is called a mortgage-deed.”[4]
The definition talks about the
Mortgagor and the Mortgagee, who are the Parties to a Mortgage. The Mortgagor,
as the definition puts is, is the Transferor, that is, he puts up the property
which acts as a security for the loan which is going to be advanced by the
Transferee or in this case, the Mortgagee.
The section then goes on to talk
about the various kinds of mortgages which are recognised under Indian Law.
·
The Right to Redeem:
A Mortgagor has the following rights:
1. Right of Redemption;
2. Right of transfer to a third party
instead of re-transference to himself;
3. Right to inspection and production of
documents;
4. Right to accession;
5. Right to grant a lease;
6. Right to reasonable waste.
Section 60[5] of
the Transfer of Property Act confers on the mortgagor the right of redemption
which is a statutory right.
The most important (and obvious)
right of the mortgagor is the right to redeem the Mortgage to pay off the
mortgage-money and get back the property. The mortgagor has the right to demand
that the mortgagee reconvey the mortgaged property to him upon payment or
tender of the mortgage money at any time after the principal amount has become
due. The right of redemption refers to the mortgagor's ability to receive his
property back immediately after his debt has been satisfied. The mortgagor has
the right to reclaim the mortgage deed or the mortgaged property in order to
exercise his ownership rights since he is an owner who has ceded some ownership
rights.
“The right of redemption recognised
under the Transfer of Property Act is thus a statutory and legal right which
cannot be extinguished by any agreement made at the time of mortgage as part of
the mortgage transaction.”[6]Any
clause included in the mortgage deed that would hinder or impede redemption
would be void. It is not possible to make a mortgage irredeemable and deem the
possibility of redemption as being void.
·
Case Analysis:
The case of ofShankar Sakharam
Kenjale(D) By ... vs Narayan Krishna Gade is a case which strengthens the
position of the Mortgagor while enhancing the ambit of his Right to Redeem. The
judgement does not put forth the principles in a twisted manner which need to
be construed later on, but it analyses the facts of the case in great depth and
presents us with a judgement which presents us with an example as to how much
judicial thought goes into it when it comes to framing judgements over cases
which have been going on since decades.
The following judgement is from an
appeal before the Supreme Court. The appeal arises out of the judgement of the
Bombay High Court where it set aside the findings of the trial court and the
appellate trial court and directed the Trial Court to draw a preliminary decree
of redemption of mortgage in favour of the Respondents herein.
o Facts:
The disputed land in the following
case was Paraganawatan property/Inam land and Smt. Laxmibai who was the
watandar of the suit land had inducted one Mr. Ramchandra (Respondent) as a
permanent Mirashi tenant of the land. Such tenancy was hereditary in nature.
(Note: The High Court
of Bombay in the case of Shrimantibai Ramu Nargude&Anr.Vs.Bhimrao
Appa Nargude&Ors.[7]
elucidated upon the meaning of Mirashi Tenant. The court stated that the term “Mirashi
Tenant is a permanent tenant - He can assign his right to tenancy - Hence,
he can also bequeath the same by a Will.”[8]
The court also stated that this definition falls under the meaning and
provisions of a “Permanent Tenant” as prescribed under the Bombay Tenancy and
Agricultural Lands Act (1948)[9]”
In 1947, Mr. Ramchandra executed a mortgage
deed in favour of one Shankar Sakharam Kenjale (hereinafter mortgagee or
appellant) mortgaging the suit land for an amount of Rs. 900. Per the terms of
this deed, a period of ten years was envisaged for the repayment of the
mortgage money and the mortgagee was placed in possession of the suit land.[10]
As stated, the deed was for a period
of 10 years, but during this period, the Bombay Paragana and Kulkarni Watans
(Abolition) Act, 1950[11]
(hereinafter the Abolition Act) came into forceand under this Act,
“Paragana and Kulkarni watans were abolished”[12]
and watan lands were resumed to the Government and the disputed land being
one of them, was also resumed to the government.But the act was not
discriminatory to the prior holders (or in this case, the Watandars) of the
Lands which have now been resumed to the Government. It had provisions in its
text which allowed the previous Watandars to once again attain the ownership of
the land in their name upon the payment of “the requisite occupancy price
within prescribed period.”[13]
But, as might be obvious, the
Respondents in this case did not apply for the same. However, a Government
Resolution was passed during this period which allowed any person who was in
Possession of the lands in question which had been resumed to the Government
can apply for seeking re-grant for the same. Similarly, the Appellant, who at
time was the Mortgagee of the Land, paid the required amount and obtained
re-grant of the suit land in his favour in the year 1960.
o Timeline of
Hearings:
1. The Mortgagor viewed said regrant
sought and granted to the Mortgagee as wrong as the land was still under a
period of Mortgage while all the abovementioned events transpired. The
Mortgagor had even requested the Mortgagee to accept the Mortgage money and return
the land to him in exercise of the Mortgagor’s Right to Redeem, but as might be
evident, the Mortgagee did not comply.
2. In response to the same, the
Respondents (Mortgagor) in the present case filed a suit for Redemption of
Mortgage Property before the Civil Judge, Vaduj in 1978 against the Mortgagee.
3. The court held, that since the
Mortgagor did not apply for a regrant the land resumed to the Government as per
the provisions of the Abolition Act and this meant that the relationship
between the Mortgagor and the Mortgagee came to an end and that the act of the
Mortgagee to have the land be made up to his name is justified, even though he
is not the original owner (or watandar) of the land.
4. The Appellate Trial Court reiterated
the point of the Trial Court that in light of the facts, the right of the
Mortgagor to Redeem the property is deemed to havebeen extinguished.[14]
5. The aggrieved Mortgagors then
approached the Bombay High Court. The High Court set aside the judgements of
the previous 2 courts and decreed a suit for Redemption.
6. According to the High Court's
justification, the mortgagee would not have been in possession of the suit land
and would not have been able to acquire the re-grant order in his favor if it
weren't for the mortgage. The benefit acquired by the mortgagee as a result of
this re-grant must go to the Mirashi renter since it was predicated on the
underlying mortgagor-mortgagee relationship.
It was against
abovementioned judgement of the Hight Court that the appeal was brought before
the Supreme Court.
o Issue
Brought Before the Supreme Court:
The issue before the Court was
“Whether the permanent Mirashi tenantmortgagors (Respondents) right of
redemption ceased to exist by virtue of the resumption of the suit land under
the Abolition Act and its subsequent re-grant in favour of the mortgagee
(Appellants)?”[15]
·
Judgement of the Supreme Court:
The Supreme Court taking note of the
various provisions and case laws cited by both the sides presented its
judgement, completely blocking the Legal Loophole which the Mortgagee thought
that he had exploited in this scenario.
The following section will elucidate
upon the important points which have been elucidated upon and pointed out by
the Supreme Court.
The Court stated that the Mortgagee
contended that once the Abolition Act came into force and all the events
regarding the regrant of land took place, the position of the Mortgagee as the
Mirashi Tenant came to end and so did the Mortgagor-Mortgagee relationship
between the 2 parties.
The Mortgagor however, citing case
laws and taking support especially of Section 90 of the Indian Trusts Act[16](Advantage
Gained by Qualified Owner) contended the contrary that although the land
resumed to the Government, the position of the Mortgagor as the Mirashi Tenant
of the Land continued to survive and in turn so did his position as the
Mortgagor to the Appellant in the instant case.
The court pointed out that “it is not
disputed that Ramchandra was a permanent Mirashi tenant of the watandar of the
suit land. Admittedly, such lease was subsisting as on 25.01.1951, i.e., the
day on which the Abolition Act came into force.”[17]
As the mortgagee had sought regrant
of the land in his name by construing the basic essence of the Abolition Act,
the court took notice of certain provisions of the Act in order to establish
the position of the Mortgagor.
The court focused on Section 8 of the
Abolition Act which talked about the application of the Bombay Tenancy and
Agricultural Lands Act, 1948[18]. The
Section made it clear that the tenancy of Ramchandra (Mortgagee) was well
protected under the Bombay Tenancy Act as the tenancy created in favour of the
Mirashi tenant subsisted as on the day on which the Abolition Act came into
force. The following observation aligned with the general principle of
primacy of tenancy laws over other legislations which forms the crux of
Section 8 of the Abolition Act. “Thus, it is amply clear that the rights of
permanent tenants over watan lands were intended to subsist even after the
coming into force of the Abolition Act.”[19]
Now the interpretation of the
provisions made it clear that the rights of the Mortgagor over the suit
property were still subsisting but the Appellants claimed that it was through a
Government Resolution (which the court had taken into consideration in previous
cases as well) they were eligible to apply for re-grant of the land as the
Mortgagee was the one who was in possession of the land at that point of time
and therefore, the regrant of land in his name has been made justly.
The court stated that the regrant
made in the name of the Mortgagee is not the question here, as on the basis of
the Government Resolution it is nothing to question. The central question
here is that even though the regrant has been made in the name of the
Mortgagee, how does it affect the rights of the Mortgagor as the Mirashi Tenant
Mortgagor.
The Court reiterated their point that
even after coming of the Abolition Act the rights of the Mortgagor continue to
subsist and so does the Mortgage and hence the relationship of
Mortgagor-Mortgagee between the two parties.
In order to solidify their point, the
court went on to emphasise upon the essence of the Right of Redemption as under
Section 60 of the Transfer of Property Act by stating that “right of
redemption under a mortgage deed can come to an end or be extinguished only by
a process known to law, i.e., either by way of a contract between the parties
to such effect, by a merger, or by a statutory provision that debars the
mortgagor from redeeming the mortgage. In other words, a mortgagee who has
entered into possession of the mortgaged property will have to give up such
possession when a suit for redemption is filed, unless he is able to establish
that the right of redemption has come to an end as per law.”[20]
The following perspective of the
court emanates from the Legal Principle “Once a mortgage, always a
mortgage.”
As stated in the beginning, the
court did not give an ambiguous judgement but it reiterated certain basic
principles very clearly and the 2 passages from the judgement stated above
show the same.
The Court held:
a) As none of the conditions which
result in the end of the Right of Redemption are beingfulfilled in the present
suit, the Mortgage Deed is still subsisting and as for the regrant made in the
name of the Mortgagee, the court stated that such regrant couldn’t have been
made if it wasn’t for the position of the Appellant as the “Possessory
Mortgagee”.
b) It is obvious that if it was the
Mortgagor who was the one who applied for the regrant then he would have been
granted the same as his rights as a Mirashi Tenant continued to subsist even
after the coming of the Abolition Act.
c) Therefore, the re-grant to
theAppellants based on actual possession as mortgagee cannot be divorced from
theexistence of the underlying mortgagor-mortgagee relationship between the
parties.
·
Concluding Remarks:
As has been stated multiple times in
the following paper, the Right to Redemption is the most basic right of the
Mortgagor when it comes to the Mortgaged property. It is the point where the
most basic rights and duties of the Mortgagor and Mortgagee coincide i.e. the
Mortgagor’s right to get his property back upon payment of the Mortgage Money
and his duty to repay said Mortgage Money to the Mortgagee; the Right of the
Mortgagee to receive his money loaned to the Mortgagor and his Duty to return
all items related to the Immovable Property mortgaged back to the Mortgagee
upon repayment of the loaned amount.
The present suit did present certain
scenarios where it seemed that the Right to Redemption had been extinguished
and based on said analysis the Trial Court and Appellate Trial Court dismissed
the Suit for Redemption.
But as time passed and the suit was
brought before the High Court (which overturned the judgement of the Trial
Court and the Appellate Trial Court) and then eventually the Supreme Court
(which upheld the High Court Judgement) the basic essence of the Right to
Redemption came to be embodied in the legal principle “Once a Mortgage, Always
a Mortgage.”
The appellant thought that he had
found a loophole in regards to the provisions on the basis of the Abolition Act
and certain Government Resolutions and was thus eligible to officially earn the
possession of the land as the true owner of it as in his opinion, the Mortgage
came to an end.
But as clarified by the Court, a “right
of redemption under a mortgage deed can come to an end or be extinguished only
by a process known to law.” This did include Statutory provisions, but the
statutory provisions on the basis of which the Appellant Claimed the regrant
and the end of the Mortgage did not debar the Mortgagor from exercising his
right.
The following case law went on for
decades but after much deliberation, the Judgement presented made it clear that
the Right to Redemption is truly the most basic of rights of the Mortgagor and
no loophole can be brought up as a ground to prevent the Mortgagor from
exercising said right unless it complies with the conditions which have been
discussed above.
[1]Law
Student, B.A. LL.B(Hons), 5th Year, Amity Law School, Noida, Amity
University Noida (U.P.).
[3] Second Appeal Nos.
1152 and 509 of 1881
[4]The Transfer of
Property Act, 1882 (Act No. 4 of 1882), s.58
[5] The Transfer of
Property Act, 1882 (Act No. 4 of 1882), s.60
[6] Narayan Deorao Javle
(D) through LRS. Vs. Krishna, CIVIL APPEAL NO. 4726 OF 2021
[10]CIVIL APPEAL NO. 4594
OF 2010
[11]The Maharashtra
Paragana and Kulkarni Watans (Abolition) Act, 1950(Act No. 60 of 1950)
[12]CIVIL APPEAL NO. 4594
OF 2010
[13]CIVIL APPEAL NO. 4594
OF 2010
[14]CIVIL APPEAL NO. 4594
OF 2010
[15]CIVIL APPEAL NO. 4594
OF 2010
[16]The
Indian Trusts Act, 1882 (Act No. 2 of 1882)
[17]CIVIL APPEAL NO. 4594
OF 2010
[19]CIVIL APPEAL NO. 4594
OF 2010
Article Information
UNDERSTANDING THE RIGHT OF REDEMPTION: ANALYSING SHANKAR SAKHARAM KENJALE(D) BY ... VS NARAYAN KRISHNA GADE
Authors: SURYAANSH KISHAN RAZDAN
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/10/04
- Issue 7
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
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