2008 (4) TMI 737 - SC - Indian Laws

Summary

Issues Involved:

1. Applicability of Order XXXIV Rule 14 CPC.
2. Relationship of mortgagor and mortgagee post-auction sale.
3. Application of Section 90 of the Indian Trusts Act.
4. Right of redemption and limitation period.

Summary:

1. Applicability of Order XXXIV Rule 14 CPC:

The appellants contended that the money decree obtained in O.S. No. 120/51-52 was independent and not connected with the mortgage claim, thus Order XXXIV Rule 14 CPC was not applicable. However, the High Court found that the decree was for satisfaction of claims arising under the mortgage, making Order XXXIV Rule 14 CPC applicable. The Supreme Court agreed, stating that bringing the mortgaged property for sale in execution of the decree was barred under Order XXXIV Rule 14 CPC.

2. Relationship of Mortgagor and Mortgagee Post-Auction Sale:

The appellants argued that the relationship of mortgagor and mortgagee ceased after the auction sale. The Supreme Court, however, held that the relationship continued to subsist, and the purchase by the mortgagee was in trust for the mortgagor. The principle "once a mortgage, always a mortgage" was upheld, meaning the right to redeem was not extinguished.

3. Application of Section 90 of the Indian Trusts Act:

The Court applied Section 90 of the Indian Trusts Act, stating that the mortgagee gained an advantage by availing himself of his position, which must be held in trust for the mortgagor. The purchase by the mortgagee in the auction sale was deemed to be in trust for the mortgagor, preventing the mortgagee from exploiting the situation.

4. Right of Redemption and Limitation Period:

The Supreme Court confirmed that the right to redeem the mortgage was not extinguished and the suit for redemption was filed within the prescribed limitation period of 30 years as per Article 61 of the Limitation Act, 1963. The High Court's decision to grant a preliminary decree for redemption was upheld.

Conclusion:

The appeal was dismissed, affirming the High Court's judgment granting the preliminary decree for redemption, with no order as to costs.