Redemption is the act of buying back the property after tendering the amount due to the creditor. In a transaction of mortgage, the mortgagor has the right to redeem his property after paying off the debt amount. The right of redemption is statutory and inalienable, meaning thereby, that it cannot be taken away by the provisions of the contract. Section 60 of the Transfer of Property Act, 1882 (hereinafter, 'TPA') confers the right of redemption on the mortgagee. It lays down that after the principal money becomes due, the mortgagor can tender the money and require the mortgagee to deliver the possession of the property or the deed/documents to him. The proviso to section 60 puts a restriction on the exercise of this right. It can only be exercised till the time it is not extinguished by the act of the parties or by decree of a court.
The Hon'ble Supreme Court of India recently pronounced a judgment on the extinguishment of this right of redemption in Allokam Peddabbayya & Ors. v. Allahabad Bank & Ors.1 it was laid down categorically that right to redemption exists only till the time sale of the mortgaged property has been confirmed. Once the sale is confirmed, the right to redeem is lost within the meaning of the proviso.
The facts of the case were that the mortgagor had created an equitable mortgage of their property in favour of the Allahabad Bank by deposit of title deeds in 1979. The bank had instituted proceedings for sale of the mortgaged property and it was sold to the Respondents. The Respondents executed the decree and were put in possession in 1997. Meanwhile, the original mortgagor had sold the property to the Appellants in 1985. Before the execution of the decree, the Appellant brought suit asserting their possession and seeking permanent injunction restraining defendant from interfering with their peaceful possession of the property. They did not ask for redeeming the property or to set aside the sale. It was after execution in 1997 that they brought a suit under Order XXXIV Rule 1 of the Code of Civil Procedure (hereinafter referred to as 'the CPC').
It was contended that the Appellants had purchased the property and by virtue of Order XXXIV Rule 1, CPC, they were necessarily to be impleaded as party defendants before institution of the suit for foreclosure by the Bank or sale of the mortgaged property. Because the same was not done, the decree was not binding on them and did not affect their right to redemption. They also relied on section 91 of TPA which gives right to persons other than the mortgagor to redeem the mortgaged property.
The Supreme Court recognized the interest of the Appellants in
the mortgaged property as per section 91 and held them to be
competent to bring a suit for redemption. However, in light of the
facts of the case, the court denied the right of redemption to the
Appellants. It held that the conduct of the Plaintiffs amounted to
a waiver of their right. The court concluded that the Appellants
preferred a suit seeking permanent injunction against any
interference by the auctionpurchaser. All the facts regarding
mortgage, foreclosure suit, and consequent sale were disclosed by
the Respondents. Despite this, they did not take any steps for
redeeming the property or setting aside the sale. Action for
redemption was taken after the sale was confirmed in favour of the
Respondents, when the right to redeem had become irrelevant. In
words of the court
"The right to enforce a claim for equity of redemption is a statutory right under the Act. It necessarily presupposes the existence of a mortgage. 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."
Thus, the law emerges to be that actions to redeem property and to claim it back should be such that a clear intention is evinced to protect the property. Court does not entertain claims of those who appear to be sleeping on their rights and approach it at their own sweet will.2
With respect to the query that whether the right to redemption gets extinguished on passing of decree or its execution, the court relied on following paragraph in L.K. Trust v. EDC Ltd.3:
"...What is held by this Court is that, in India it is only on execution of the conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished but the conferment of power to sell the mortgaged property without intervention of the court, in a mortgage deed, in itself, will not deprive the mortgagor of his right of redemption..."
Furthermore, for availing right of redemption after decree for sale of mortgaged property has been passed, it is not enough that a suit for redemption is filed, it is necessary that objection is raised against the decree or sale certificate.4 It has been observed as follows in Embassy Hotels Pvt. Ltd. vs. Gajaraj & Co. & ors.5:
"15....In such circumstances, in our considered view, the only option was to directly challenge the court auction of the suit property and the issuance of sale certificate...it is not possible to accept the contention on behalf of the plaintiff that the first defendant being a mortgagor will continue to have a right of redemption although the sale of mortgaged property to a third party through a court auction became final."
Therefore, based on the aforesaid discussion it becomes clear that the right to redemption is not an absolute right. It is extinguishable in terms of section 60 of the TPA. As pointed out in the aforesaid judgment, the right gets extinguished if the sale is confirmed. The mortgagor can still redeem before the confirmation of the sale, but once it is confirmed and he raises no objection to the validity of the sale, the right to redeem gets extinguished. The courts provide no relief to the person who has been sleeping on his right before and did not claim the same even after being provided opportunity. Nevertheless, it is an important right and given utmost superiority by the courts. It is based on the principle 'once a mortgage, always a mortgage' and imbibes that a person is not deprived of his property if he is willing to make good his dues. The right to redemption is an incident of a subsisting mortgage and is inseparable from it such that the right is coextensive with the mortgage itself.
2 Rukmini Amma & Ors. v. Rajeswary (2013) 9 SCC 121.
3 (2011) 6 SCC 780.
4 Rukmini Amma, supra note 2; Mrutunjay Pani & Anr. v. Naramada Bala Sasmal & Anr., AIR 1961 SC 1353.
5 (2015) 14 SCC 316.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.