M/S NEW KENILWORTH HOTELS (P) LTD. versus ASHOKA INDUSTRIES LTD. AND ORS.

Citation: [1994] SUPP. 4 S.C.R. 427 · Decided: 17-10-1994 · Supreme Court of India · Bench: K. RAMASWAMY, N. VENKATACHALA · Disposal: Dismissed
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Judgment (excerpt)

MIS NEW KENILWORTH HOTELS (P) LTD. 
v. 
ASHOKA INDUSTRIES LTD. AND ORS. 
OCTOBER 17, 1994 
[K. RAMASWAMY AND N. VENKATACHALA, JJ.] 
State Financial Corporation Act-Section 29/Transfer of Propelty Act, 
1882-Section 61>-Scope of Right of redemption u/s 6o-Mortgage other than 
A 
B 
a mortgage by conditional sale or an anomalous mortgag~Sale pursuant to 
final decree not confirmed-Mortgagor entitled to exercise right u/s 60-No C 
question of merger of mortgage debt in decretal debt-Limited right of Finan-
cial Corporation u/s 29 to act as an owner to bring properties of defaulter to 
sal~orporation not to act in derogation of right u/s 60ofT.P. Act 
The appellant filed writ petition in the High Conrt seeking for an 
order to recall the judgment rendered by the High Court in another writ D 
petition dated 16.9.91 and also to direct impleading of the appellant as a 
party to that writ petition and to hear it aftresh in accordance with law. 
That writ petition was dismissed under the inpugned order holding that 
the appellant was not a necessary party to the writ petition and ·the 
contesting respondent had a statutory right of redemption n/s 60 of the E 
Transfer of Property Act. 
The appellant had offered bid by tenders offering to purchase the 
hotel constructed by the mortgagor and taken over by the Orissa State 
Financial Corporation bnt its offer had not become final by virtne of the 
order of the High Court. The High Court by its order had given option to 
the mortgagor to exercise the right of redemption n/s 60 of the T.P. Act-
In furtherance thereof the mortgagor had filed a suit and that suit was 
still pending. 
F 
This appeal had been filed against the judgment of the High Court. G 
The appellant contended that under Settion. 29 of the State Financial 
Corporation Act, while taking over the property, the Corporation shall act 
in derogation of the right as a mortagee n/s 60 ofthe Transfer of Property 
Act. Therefore, under the proviso to Section 60 when the Orlssa State 
Financial Corporation had entered into an agreement with the appellant, H 
427 
428 
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R. 
A 
it had acted in derogation of the mortgage and since the appellant bad 
already offered bis bid by tender though bis bid was not accepted pursuant 
to the order of the Court, he had an interest in the bid. It was also 
contended that the appellant was a licensee to run the Hotel as entered 
into with the Corporation and as such it was a necessary party, and 
B therefore, be had a right to be heard, before the High Court, directing the 
mortgagor to work out the right u/s 60 of the T.P. Act. 
Dismissing the appeal, this Court 
HELD 1.1. It is settled law that in the suit for redemption unless it 
C is a conditional sale or anomalous mortgage so long as the sale is not 
confirmed., the debtor has a right to deposit the entire sale money including 
the sale expenses and poundage fee and the Court is under the statutory 
duty to accept the payment and direct redemption of the mortgage. There-
fore, it was not open lo the appellant to contend that under the proviso to 
Section 60 of the Transfer of Property Act, the Corporation has acted in 
D derogation of its right as a mortgagee but acted as an owuer u/s 29 of the 
State Finantial Corporation Act. Though u/s 29 of the Act, the Corporation 
acts as an owuer in putting the property to sale, it does not act in 
derogation of the right of the Corporation as a mortgagee and lhllt of 
mortgagor. The limited right given to the Corporation u/s 29 is to act as · 
E 
an owuer to bring the properties of the defaulter to sale. The fiction of law 
u/s 29 does not have the effect of wiping out the statutory right of redemp-
tion u/s 60 of the T.P. Act. Therefore, the right of the mortgagee still 
subsists and thereby the mortgagor is entitled to exercise the right u/s 60 
of the T.P. Act. [430-H, 431-A-C) 
F 
Magan/al v. Mis Jaiswal Industries & Ors., [1989) 4 SCC 344, relied 
on. 
1.2. It is only an interim arrangement made pending sale of the 
property. Therefore, the licensee does not have any right other than that 
G to be in possession as licensee pending the dispute between the mortgagor 
and the mortgagee, Accordingly, the appellant is not a necessary party to 
be heard before the order was passed by the High Court directing the 
mortgagor to excerclse the right of redemption under Section 60 of the T.P. 
Act. (431-D-E) 
H 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
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