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Narayan Deorao Javle (Deceased) Through LRs v. Krishna

Civil Appeal · 2021 INSC 407Decided 17 Aug 2021
Civil Appeal No. 4726 of 2021
Justice Hemant Gupta · Justice A.S. Bopanna

Background

Land owners mortgaged their property in 1954 to secure a loan, then sold part of that mortgaged land to the appellant's predecessor in 1964, before the mortgagee later filed a foreclosure suit in 1965. Because the mortgagee never added the new buyer as a party to the foreclosure case, a foreclosure decree was passed in 1969 against only the original owners, and the buyer was later dispossessed of the land in execution of that decree in 1980. The buyer then sued in 1984 to redeem (reclaim) the mortgaged land by paying off the mortgage debt, but the High Court ultimately ruled against him, holding that the earlier foreclosure decree had already extinguished any right to redeem the property.

Decision Breakdown

The Supreme Court reversed the High Court and ruled in favour of the buyer's legal heirs. It held that because the buyer had purchased part of the mortgaged property and taken possession before the foreclosure suit was even filed, he was a "necessary party" under Section 91 of the Transfer of Property Act and Order XXXIV Rule 1 of the Civil Procedure Code, and the mortgagee's failure to implead him made the resulting foreclosure decree void and non-binding on him. The Court also rejected the High Court's view that the buyer's earlier (unsuccessful) application to stay execution of the decree barred him from seeking redemption later, clarifying that such an application does not have the binding effect of a decree. The appeal was allowed, the High Court's judgment set aside, and the buyer's heirs were given three months to deposit the mortgage amount and seek restoration of possession.

Lesson Learnt

Anyone who buys land that is already under mortgage steps into the shoes of the original owner and retains the statutory right to redeem the mortgage: a foreclosure case conducted without including that buyer as a party does not bind them, however old the decree may be.

Official source (sci.gov.in)View Judgment (PDF)

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