SUPREME COURT: IN USUFRUCTUARY MORTGAGES, REDEMPTION LIMITATION STARTS FROM DATE OF MORTGAGE MONEY PAYMENT:

In a significant ruling on property law, the Supreme Court of India has clarified that in usufructuary mortgages, the limitation period for the mortgagor to redeem the property does not start running from the date the mortgage is executed. Instead, it commences only when the mortgage debt is fully paid or adjusted, either through the profits (usufruct) derived from the property, partly through such profits, or by direct payment or deposit by the mortgagor as provided under the Transfer of Property Act, 1882.

A bench comprising Justices B.V. Nagarathna and R. Mahadevan dismissed an appeal by mortgagees who sought to block a redemption claim by invoking limitation and asserting ownership over the mortgaged property through passage of time. The Court emphasised that the mere expiry of the statutory limitation period under the Limitation Act cannot extinguish the mortgagor's inherent right of redemption in a usufructuary mortgage. Consequently, a mortgagee cannot acquire title or ownership of the property solely on the grounds of lapse of time.

The bench drew upon Section 61(a) of the Schedule to the Limitation Act, which governs the right to redeem or recover possession in usufructuary mortgages. It reiterated that the clock for limitation begins only upon actual repayment or adjustment of the mortgage amount. Until that point, the mortgagor's right remains intact, and the mortgagee cannot claim declaratory relief for ownership based on delay alone.

The dispute originated from agricultural land in Punjab that had been placed under a usufructuary mortgage by the ancestors of the respondents (mortgagors' successors). The mortgagees challenged a Collector's order permitting redemption, arguing that the application was time-barred and that prolonged possession had vested ownership in them. Lower courts initially sided with the mortgagees, but the Punjab and Haryana High Court overturned those decisions. It held that the right of redemption in such mortgages is not subject to extinguishment by limitation in the manner claimed, and accordingly restored the Collector's order allowing redemption.

Upholding the High Court's verdict, the Supreme Court placed strong reliance on its earlier three-judge bench precedent in Singh Ram (Dead) through LRs v. Sheo Ram & Ors. (2014). That ruling had established that in usufructuary mortgages without a fixed redemption period, limitation does not run from the date of creation of the mortgage. Rather, it starts only when the mortgage money is repaid—whether fully or partly from the property's usufruct, or through payment or deposit by the mortgagor under relevant provisions of the Transfer of Property Act. Until such repayment or adjustment occurs, the limitation period remains suspended, preserving the mortgagor's right to redeem. The Court stressed that this principle prevents the mortgagee from gaining ownership merely through the passage of the prescribed limitation period.

Applying these settled principles to the facts of the case, the bench found no merit in the mortgagees' suit aimed at defeating the redemption order. The Court accepted the respondents' arguments, dismissed the appeal, and affirmed the High Court's judgment, thereby allowing the mortgagors' successors to redeem the property. This decision reinforces long-standing jurisprudence on usufructuary mortgages, protecting the mortgagor's equitable right of redemption while clarifying that possession by the mortgagee, no matter how prolonged, does not automatically confer ownership absent actual repayment of the debt.