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Dec  29- 2025

In Usufructuary Mortgage, Limitation for Redemption Runs from Date of Payment of Mortgage: Supreme Court

DALIP SINGH (D) THROUGH LRS V. SAWAN SINGH (D) THROUGH LRS

Introduction

In a significant ruling clarifying the law on usufructuary mortgages, the Supreme Court has reaffirmed that the right of redemption remains alive until the mortgage money is actually paid or adjusted, and limitation does not begin merely from the date of execution of the mortgage.

The judgment settles a recurring legal controversy where mortgagees attempt to defeat redemption claims by invoking limitation, especially in long-standing agricultural and rural mortgages. The Court decisively held that mere lapse of time does not convert a mortgagee into an owner in usufructuary mortgage arrangements.

Understanding Usufructuary Mortgage Under Indian Law

Under Section 58(d) of the Transfer of Property Act, 1882, a usufructuary mortgage is one where:

  • The mortgagor delivers possession of the property to the mortgagee;
  • The mortgagee is entitled to retain possession and enjoy the usufruct (rents and profits);
  • Such usufruct is applied in lieu of interest, or towards payment of the mortgage money, or both;
  • There is no personal liability of the mortgagor unless expressly agreed.

Crucially, in many usufructuary mortgages, no fixed time for redemption is stipulated, making the question of limitation central to disputes.

Core Legal Issue

The primary question before the Supreme Court was:

Does the limitation period for redemption of a usufructuary mortgage begin from the date of execution of the mortgage deed, or from the date when the mortgage money is paid or adjusted?

The mortgagees contended that since several decades had passed, the mortgagors’ right of redemption stood extinguished under the Limitation Act.

Statutory Framework: Limitation Act, 1963

The Court examined Section 61(a) of the Schedule to the Limitation Act, 1963, which governs suits for redemption of mortgages.

Unlike simple or English mortgages, usufructuary mortgages are treated distinctly because repayment is linked to enjoyment of usufruct rather than a fixed repayment date.

Supreme Court’s Findings

Rejecting the mortgagees’ plea, the Supreme Court categorically held that limitation does not begin from the date of mortgage in usufructuary mortgages.

The Bench of Justice B.V. Nagarathna and Justice R. Mahadevan observed that:

“When there is a usufructuary mortgage, the period of limitation does not run from the date of creation of the mortgage but from the date of payment of mortgage- either out of the usufructuary or partly out of the usufructuary or partly on payment of deposit by mortgager as provided under Section 52 of Transfer of Property Act, 1882. Till then the period of limitation would not start under Section 61 (a) of the Schedule to the Limitation Act. As such mere expiry of the period prescribed thereunder could not extinguish the mortgager’s right of redemption and thereby the right of mortgagee to seek declaration of title and ownership over the mortgage property stands untouched.”

The Court clarified that limitation is triggered only upon actual or deemed payment of mortgage money, not by the mere passage of years.       

Reliance on Binding Precedent

The Supreme Court relied heavily on its earlier three-judge Bench decision in:

SINGH RAM (DEAD) THROUGH LRS V. SHEO RAM & ORS. (2014) 9 SCC 185

Reiterating the ratio of the earlier ruling, the Court emphasized that:

  • In usufructuary mortgages with no fixed redemption period, the right of redemption is indefeasible;
  • The mortgagee cannot claim ownership merely by remaining in possession for a long time;
  • Limitation begins only after repayment or lawful adjustment of mortgage money.

Case Background

  • The dispute related to agricultural land in Punjab mortgaged on a usufructuary basis by the ancestors of the respondents.
  • The Collector permitted redemption of the property.
  • Mortgagees challenged the order, claiming:
    • The redemption application was barred by limitation; and
    • They had acquired ownership rights due to prolonged possession.
  • The Trial Court and First Appellate Court accepted the mortgagees’ arguments.
  • However, the Punjab and Haryana High Court reversed those findings, holding that redemption was not time-barred.

Supreme Court’s Final Decision

Upholding the High Court’s judgment, the Supreme Court ruled that:

  • The mortgagor’s right of redemption had not been extinguished;
  • The mortgagees could not defeat redemption by pleading limitation;
  • The suit seeking to nullify the Collector’s redemption order was legally untenable.

Accordingly, the appeal filed by the mortgagees was dismissed.

Legal Significance of the Judgment

This decision has far-reaching implications:

  1. Reaffirms the sanctity of the right of redemption, which is considered a statutory and equitable right.
  2. Prevents backdoor acquisition of ownership by mortgagees through prolonged possession.
  3. Brings clarity to agrarian and rural land disputes, where usufructuary mortgages are common.
  4. Strengthens consistency in judicial interpretation by aligning with established Supreme Court precedent.
  5. Protects vulnerable mortgagors from losing property merely due to lack of awareness or delay.

Conclusion

The Supreme Court’s ruling in DALIP SINGH V. SAWAN SINGH reinforces a foundational principle of mortgage law: “once a mortgage, always a mortgage.” In usufructuary mortgages, the clock of limitation does not tick against the mortgagor until the mortgage money is paid or adjusted in accordance with law.

By firmly rejecting attempts to convert possession into ownership through limitation, the judgment ensures fairness, legal certainty, and adherence to statutory intent particularly in long-standing property arrangements rooted in traditional landholding practices.