M.R. SATWAJI RAO (D) BY L.RS. versus B. SHAMA RAO (DEAD) BY L.RS. & ORS.

Citation: [2008] 6 S.C.R. 90 · Decided: 09-04-2008 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed

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Judgment (excerpt)

[2008] 6 S.C.R. 90 
A 
M.R. SATWAJI RAO (D) BY L.RS. 
V. 
B. SHAMA RAO (DEAD) BY L.RS. & ORS. 
(Civil Appeal No. 319 of 2002) 
B 
APRIL 9, 2008. 
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.] 
Transfer of Property Act, 1882 - s. 58 (d) - Usufructuary 
mortgage -Mortgager remaining in possession of the 
c mortgaged land as a tenant on payment of rent - Failure to 
pay rent - Suit for recovery of money by mortgagee, decreed -
In execution of the decree, mortgaged land auctioned and 
purchased by the mortgagee - Suit by mortgager for 
redemption of mortgage - Dismissed by trial court - Decreed 
D by High Court - On appeal, held: Mortgagor entitled to redeem 
the mortgage - The suit by mortgagee since was not in terms 
\. 
of 0. XXXIV r. 14 CPC, purchase by him amounts to a mere 
trust for the mortgagor c Suit for redemption also barred by 
limitation - Trusts Act, 1882 - s. 90 - Code of Civil Procedure, 
E 1908 - 0. XXXIV r. 14 - Limitation Act, 1963 -Article 61. 
Predecessor of respondents-plaintiff executed a 
usufructory mortgage in favour of the appellants-
defendant No. 2 on 19-2-1948. Though possession of the 
land mortgaged was to be given to the mortgagee, but 
F the mortgagors remained in possession thereof as tenants 
of the mortgagee on a monthly rent. As the mortgagors 
~ 
failed to pay the rent, the mortgagees filed a suit for 
recovery of money. The suit was decreed. In execution of 
the decree, the mortgaged property was auctioned and 
G the same was purchased by the mortgagees. Mortgagors, 
after around three decades, filed suit for redemption of 
the mortgage. Trial court dismissed the suit. High Court, 
... 
in appeal, decreed the suit. Hence the present appeal. 
H 
90 
;. 
·' 
M.R. SATWAJI RAO (D) BY L.RS. v B. SHAMA RAO 
91 
(DEAD) BY L.RS. & ORS. 
Dismissing the appeal, the Court 
HELD: 1. Rule 14 of Order XXXIV CPC prohibits the 
mortgagee to bring the mortgaged property to sell 
otherwise than by instituting a suit for sale in enforcement 
A 
of the mortgage. Admittedly, the said suit by the 
mortgagee was not in terms of Rule 14 of Order XXXIV. 
B 
Therefore, bringing the mortgaged property for sale by 
the appellants in execution of the decree passed in the 
money suit and purchasing the same by the appellants in 
public auction is clearly barred under Order XXXIV Rule 
14 CPC. [Para 6] [99-D, E] 
. C 
2. The decree in favour of the appellant mortgagee 
was not an independent money decree· against 
respondents but merely for satisfaction of the rents 
accrued on the mortgaged property,. leased back to the 0 
respondents -mortgagors on 19.02.1948 itself up to 
· 12.12.1948 and thereafter which was secured by a second 
mortgage deed dated 12.12.1948 executed by the 
respondents in favour of the appellants towards arrears 
of rent for the period from 19.2.1948 to 12.1-2.1948. In these E 
circumstances, it is evident that the suit filed by the 
·mortgagees was very much for seeking satisfaction of 
claims arising under the suit property and the same was 
·not on a suit for sale instituted in enforcement of the · 
mortgage in question. [Para 6] [99-B, C, D, G, H, 100-A] . 
F 
3. Illustration (c) of Section 90 of Trusts Act is 
applicable to the case on hand .. The purchase by the 
mortgagee in the circumstances of the case amounts to 
a mere trust and either himself or his legal representatives 
cannot be allowed to exploit the adversity of the 
appellants. [Para 7] [100-C] 
· 
· G 
-*· 
Sachidanand Prasad vs. Babu Shea Prasad Singh 1966 
(1) SCR 158 - distinguished. 
Mritunjoy Pani and Aw. vs. Narmanda Bala Sasmal and H 
92 
SUPREME COURT REPORTS 
[2008] 6 S.C.R. 
A Anr. 1962 (1) SCR 290; Jayasingh Dnyanu Mhoprekar and 
Anr. vs. Krishna Babaji Patil and Anr. 1985 (4) SCC 162; 
Namdev Shripati Nale vs. Bapu Ganapati Jagtap and Anr. 
1997 (5) sec 185 - relied on. 
B 
4. Though the mortgagee purchased the mortgaged 
property pursuant to the decree in the money suit, in the 
absence of recourse to Rule 14 of Order XXXIV, the 
relationship of mortgagor and mortgagee continues to 
subsist even thereafter, and his purchase is only in trust 
for the mortgagor. In view of the same, the right to redeem 
c the mortgage is not extinguished and in the eye of law 
the purchase of the mortgaged property in pursuance of 
the decree for rent arrears must be deemed to have been 
made in trust for the mortgagor. In such circumstances, 
the High Court was right in granting preliminary decree 
D for redemption. [Para 13] 

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