Smt. Gowramma and Anr. v. Shri Kalingappa (D) represented by LRs. and Ors.
Background
The appellants had mortgaged their land in 1980 and separately entered into an agreement to sell the same land in 1982; the buyer obtained a 1984 decree for specific performance which also directed the mortgagee to accept the mortgage money and return the property. Years later, the mortgagors sued for redemption of the mortgage, and while the trial court and first appellate court ruled in their favour, the Karnataka High Court reversed this and dismissed the suit, holding the mortgage had already been extinguished by the conduct of the parties.
Decision Breakdown
The Supreme Court examined Section 60 of the Transfer of Property Act, which allows a mortgagor to redeem a mortgage unless that right has already been extinguished "by act of the parties or by decree of the court." It found that the buyer (decree-holder) had paid the mortgage amount to the mortgagee's assignee and had been put in possession of the land pursuant to the earlier 1984 decree, which amounted to extinguishment of the mortgage by the parties' own conduct, even without a formal endorsement or registered acknowledgment. Agreeing fully with the High Court's reasoning, the Supreme Court held the subsequent redemption suit was not maintainable and dismissed the appeal, without costs.
Lesson Learnt
A mortgage can be treated as extinguished by the conduct and dealings of the parties themselves (such as payment of the mortgage amount and handing over possession under an earlier decree): a mortgagor cannot later claim a right to redeem if that right has already been given up through such conduct, even absent a formal written endorsement.