Limitation Does Not Run From Date of Mortgage in Usufructuary Mortgages: Supreme Court

The Supreme Court has held that in cases of usufructuary mortgage, the period of limitation does not commence from the date of creation of the mortgage. Instead, limitation begins only from the date on which the mortgage money is paid, tendered, or deposited by the mortgagor, in accordance with Section 52 of the Transfer of Property Act, 1882.

A Bench of Justices B V Nagarathna and R Mahadevan clarified that until such payment or tender takes place, the period of limitation under Section 61(a) of the Schedule to the Limitation Act does not start running. As a result, mere expiry of time prescribed under the Limitation Act cannot extinguish the mortgagor’s right of redemption in a usufructuary mortgage.

The Court further held that as long as the right of redemption subsists, the mortgagee cannot claim extinguishment of that right or seek declaration of absolute title or ownership over the mortgaged property.

A usufructuary mortgage is a form of mortgage in which the mortgagor transfers possession of the property to the mortgagee, who is entitled to enjoy the usufruct or income from the property in lieu of interest or towards repayment of the loan, until the mortgage amount is repaid.

The ruling was delivered in a long running land dispute relating to agricultural land measuring 114 Kanals and 4 Marlas situated in Village Tamkot, Tehsil Mansa, District Bathinda. The petitioners, Dalip Singh and others, were the mortgagees of the property, while the respondents were successors of the original mortgagors.

The property had been mortgaged by the ancestors of the respondents. In 1975, the respondents filed an application under Section 6 of the Redemption of Mortgages Act, 1913 seeking redemption of the mortgaged land. The Collector allowed the application on September 17, 1975, permitting redemption in favour of the respondents.

Aggrieved by the Collector’s order, the petitioners filed a civil suit in 1975 challenging the redemption. In September 1976, the Trial Court decreed the suit in favour of the petitioners, holding that the redemption application was barred by limitation and setting aside the Collector’s order. The first appeal filed by the respondents before the Additional District Judge, Bathinda was dismissed in 1980.

The respondents then approached the Punjab and Haryana High Court by way of a Regular Second Appeal. In 2001, the High Court allowed the appeal, holding that the right of redemption was not barred by limitation and that a fresh cause of action arose due to adjustments made towards the mortgage amount from the income generated by the land.

The petitioners challenged this decision before the Supreme Court. In 2009, the apex court remanded the matter to the High Court on the ground that substantial questions of law had not been framed. Upon remand, the High Court again allowed the appeal in 2010 after framing substantial questions of law, relying on earlier Supreme Court precedents on usufructuary mortgages.

The High Court held that where no time limit is fixed for redemption in a usufructuary mortgage, the right to redeem does not arise from the date of the mortgage but only when the mortgagor pays, tenders, or deposits the mortgage money. Consequently, the Collector’s order allowing redemption was restored and the civil suit filed by the mortgagees was dismissed.

Before the Supreme Court, the respondents relied on the judgment of a three judge bench in Singh Ram through legal representatives v. Sheo Ram and Others, which had settled the law on limitation in usufructuary mortgages. Accepting these submissions, the Supreme Court held that the High Court was correct in applying the settled legal position.

The Court affirmed that in usufructuary mortgages, the right of redemption is not lost merely due to passage of time and continues until the mortgage money is paid or tendered. Accordingly, the Supreme Court dismissed the appeal filed by the mortgagees, upheld the judgment of the High Court, and restored the order of redemption passed by the Collector. The interim stay granted earlier was also vacated.

Case Title: Dalip Singh (Dead) through Legal Representatives and Others v. Sawan Singh (Dead) through Legal Representatives and Others

Bench: Justices B V Nagarathna and R Mahadevan

Date: February 6, 2026