PANCHANAN SHARMA versus BASUDEO PRASAD JAGANANI AND ORS.

Citation: [1995] 2 S.C.R. 942 · Decided: 22-03-1995 · Supreme Court of India · Bench: K. RAMASWAMY, S. SAGHIR AHMAD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
PANCHANAN SHARMA 
v. 
BASUDEO PRASAD JAGANANI AND ORS. 
MARCH 22, 1995 . 
B 
[K. RAMASWAMY ANDS. SAGHIR AHMAD, JJ.) 
Transfer of Property Ac~ 1882: 
Sections 58(d), 76 and 79-{fsufructuary mortgage-Mortgagee to pay 
C land revenue-Default in payment by mortgagee-Property sold in auction for 
recovering the arrears-Suit filed · by mortgagor for redemp-
tion-Held:Mortgagor does not lose his right of redemption by lapse of time. 
The father of the appellant - Plaintiff bypothecated certain property 
by usufructuary mortgage on 10.7.1911 for a sum of Rs. 261. One of the 
D terms was that the mortgagee should pay the land revenue. There was 
default in payment and for recovery thereof the property was brought to 
sale. One of the respondents 'R' purchased the property. 
t\ppellant filed a suit for redemption of the mortgage property. The 
E trial Court decreed the suit. But the appellate Court dismissed the suit on 
the finding that the appellant had lost bis title since the property was sold 
to 'R' at the auction sale, and therefore the appellant was not entitled to 
redeem the property. The second appeal was dismissed. Hence this appeal. 
Allowing the appeal, this Court 
F 
HELD: 1. By operation of s.76(c) of the Transfer of Property Act, the 
mortgagee is enjoined to pay land revenue to the Government and for the 
default committed by the mortgagee, when the property was sold, the 
mortgagor had not lost bis right of redemption by the conduct and actions 
of the mortgagee. If the deed gives time for redemption or adjustment of 
G the rent or profits and liabilities in terms of the contract read with .the 
relevant provisions· of the Act stood discharged, the limitation for redemp· 
tion would run from the ~te fixed in the mortgage deed. Otherwise, there 
is no limitation for redemption of usufructuary mortgage. The usufruc· 
tuary mortgagor does not lose his title to the property or right to redemp· 
H tion by lapse of time. (945-D-E] 
942 
_f
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P.SHARMAv. B.P.JAGANANI 
943 
2. By operation of the last para of s.76, the mortgagor is entitled to A 
the accounting of the loss occasioned to it. At best the auction-purchaser, 
on redemption, would look to the mortgagee who had committed default 
in terms of the mortgage and the court would give suitable direction in 
that behalf. The possession of the purchaser must be . on behalf of the 
mortgagee and becomes liable to accounting etc. Instead, the court held B 
that the mortgagor lost his title due to misfeasance committed by the 
mortgagee and the property was sold on account thereof to the third 
parties. The High Court has committed grave error of law in dismissing 
the appeal in limine. The first appellate court also committed same error 
1" 
of law in reversing the decree of the trial court without appreciating the 
~ 
correct legal position. (945-F·G] · 
c 
3.1 It is stated that the appellant had already deposited the sum of· 
Rs. 261. Therefore, the trial c~urt is directed to verify whether the said 
amount has been deposited or not. If the amount is deposited, there shall 
be a decree redeeming the mortgage. In case, the amount was not deposited D 
or proved to have been deposited, three months' time shall be given for 
deposit and on its deposit the mortgagee shall deposit within one month 
thereafter the mortgage deed and title deeds with the court. Then the court 
shall pass final decree. (946-A·B] 
3.2 There shall be a money decree against the first defendant· E 
mortgagee to the extent of sale price paid by the auction purchaser. [946-C] 
3.3 The auction:.purchaser is entitled to recover the amount of the 
money paid in the auction sale from the first respondent. (946-C] 
,...,.-1 
F 
3.4 The sale certificate does not bind the appellant and, therefore, 
the mortgage does not stand extinguished by reason of the sale. It is 
j.. 
inoperative as against the appellant. [946·D] 
3.5 There shall lte a direction for delivery of the possession of the 
G 
property by the first defendant or 11th defendant or any person in posses· 
sion, to the appellant within a period of three months from the date of the 
receipt of the judgment or passing the final decree.· [946-E] 
3.6 The mortgagee shall account for profits or benefits received by 
him in terms of usufructuary mortgage. (946-F] 
H 
944 
SUPREME COURT REPORTS 
(1995) 2 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION : Civi! Appeal No. 1046 of 
1979. 
From the Judgment and Order 17.7.78 of the Patna High Court in
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