SC:Right of redemption not extinguished by re-grant in favour of mortgagee

The Hon’ble Supreme Court, on 17th April 2020, in the natter of Shankar Sakharam Kenjale (Died) Through His Legal Heirs v. Narayan Krishna Gade And Another observed that the right of redemption of a mortgagor is not extinguished by virtue of re-grant in favour of the mortgagee.

The Hon’ble Supreme Court observed that:

The right of redemption under a mortgage deed can come to an end or be extinguished only by a process known to law, i.e., either by way of a contract between the parties to such effect, by a merger, or by a statutory provision that debars the mortgagor from redeeming the mortgage. (Para 14)

A mortgagee who has entered into possession of the mortgaged property will have to give up such possession when a suit for redemption is filed, unless he is able to establish that the right of redemption has come to an end as per law. This emanates from the legal principle applicable to all mortgages – “Once a mortgage, always a mortgage”. (Para 14)

The right of redemption of a mortgagor is not extinguished by virtue of re-grant in favour of the mortgagee. (This inference is drawn on the basis of Para 17)

Section 90 of the Indian Trusts Act, 1882 casts a clear obligation on the mortgagee to hold any right acquired by him in the mortgaged property for the benefit of the mortgagor, as he is seen to be acting in a fiduciary capacity in respect of such transactions. (Para 17)

Therefore, the advantage derived by the mortgagee by way of the re-grant must be surrendered to the benefit of the mortgagor, subject to the payment of the expenses incurred by them in securing the re-grant. (This inference is drawn on the basis of Para 17)

Copy of judgement: Judgement_17-Apr-2020

-Adv. Tushar Kaushik

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