Holding

The right of redemption was not extinguished by the earlier decrees because extinguishment requires a specific declaration under Order XXXIV, so the second suit is maintainable and the rule of Damdupat applies to mortgages.

Summary

Two mortgages were created in 1925 and 1928 over certain land. In a 1947 suit, the mortgagors obtained a preliminary decree for redemption and, after default, a final decree for sale, but the mortgagee never executed the sale and retained possession. In 1968 the mortgagor‑heirs filed a second suit for redemption against the mortgagee‑heirs; the trial court held that the right of redemption was still alive, applied the rule of Damdupat to compute interest, and passed a preliminary decree for redemption. The High Court affirmed this decree with a modification. The Supreme Court was asked (1) whether the earlier decrees extinguished the right of redemption under Section 60 of the Transfer of Property Act, (2) whether the rule of Damdupat applies to mortgage transactions, and (3) whether the second suit was maintainable. The Court held that extinguishment of redemption requires a specific declaration under Order XXXIV of the CPC, which was absent; therefore the right of redemption persisted and the second suit was maintainable, and the rule of Damdupat is applicable to mortgages. The appeal was dismissed, affirming the High Court’s order.

Issues considered

The earlier preliminary and final decrees extinguished the mortgagor's right of redemption under Section 60 of the Transfer of Property Act.
Whether the rule of Damdupat is applicable to mortgage transactions.
Whether the second suit for redemption is maintainable.
Whether the appellants qualify as protected tenants under the Bombay Tenancy and Agricultural Lands Act.

Legislation cited

Bombay Tenancy and Agricultural Lands Act
Code of Civil Procedures. Order XXXIV Rule 3, s. Order XXXIV Rule 5, s. Order XXXIV Rule 7, s. Order XXXIV Rule 8
Transfer of Property Acts. 60

Subjects

right of redemptionmortgageSection 60Code of Civil ProcedureOrder XXXIVrule of Damdupatmerger of mortgage debtprotected tenancysecond suit for redemptionextinguishment of redemption right

Judgment

>-- MHADAGONDA RAMGONDA PATIL & ORS.
A
v.
SHRIPAL.BALWANT RAINADE & ORS.

APRIL 22, 1988

[M.M. DUTT, K.N. SINGH AND M.H. KANIA, _JJ.) B
f- Code of Civil Procedure-Challenging right of mortgago; to
redeem mortgage-When right of redemption is extinguished-Under
). provisions of Order XXXIV of-Application of rule of Damdupat to
f mortgages~When.

\ c
A suit for redemption of two mortgages was filed in the Court of
+- Subordinate Judge by the respondents, the successors-in-interest of the
original mortgages. A preliminary decree for redemption was passed
with a declaration of the amount due from the mortgagors to the mort-
gagee. The mortgagors were directed to pay the amount within six
months to get the property redeemed, failing which the mortgagee D
could apply for a final decree for sale. On failure of the mortgagors to
make the payment, a final decree for sale was passed.

Although the final decree for sale of the mortgaged property had
been passed, the mortgagee did not execute the decree which became
->- time-barred. The mortgagee and after him his heirs and legal represen- E
tatives, however, continued to he in possession of the mortgaged
property.
The respondents filed a second suit for redemption of the mort-
gages in the Court of the Joint Civil Judge against the appellants-the
~. heirs and legal representatives of the original mortgagee. The Joint
F
Civil Judge came to the fmdings that notwithstanding the preliminary
decree or final decree passed in the previous suit, the mortgagors' right
of redemption was not extinguished and the respondents were entitled
to redeem the mortgages. The plea of protected tenancy of the appel-
lants was negatived by the Judge. The Joint Civil Judge held that the
respondents were entitled to redeem the mortgages on payment to the
G
appellants of a sum including Interest calculated by application of the

~- rule of Damdupat, and a preliminary decree for redemption was pas-
sed under Order XXXIV, rule .7 of the Code of Civil Procedure in
respect of both the mortgages, with directions regarding payment of the
amount and delivery of actual possession of the mortgaged property, etc
to the respondents as also for a final decree for foreclosure in case of H.
default of payment, etc.
689
690 SUPREME COURT REPORTS [1988] 3 S.C.R.

A Aggrieved by the judgment of the Joint Civil Judge, the appel-
lants preferred an appeal to the High Court. The High Court dismissed
the appeal with a modification. Aggrieved by the decision of High Court
appellants appealed to this Court for relief by Special leave.

The appellants challenged the rmdings of the High Court as to the
B maintainability of the second suit for redemption out of which this
appeal arose and the applicability of the rule ofDamdupat. -";.

Dismissing'the appeal, the Court,

HELD: Sec. 60 of the Transfer of Property Act confers a right of
redemption on the mortgagor. The right of redemption will be exting-
C uished (1) by the act of the parties or (2) by the decree of a Court. The
Court was concerued in this case with the question whether by the
'in'eliminary decri,,, or final decree passed in the earlier suit, the right of
tlie respondents io redeem the mortgages had been extinguished. The
decree referred 'to in the proviso to section 60 of the Transfer of
D Pri>pertj Act is a· final decree in a suit for foreclosure, as provided in
suh~rille \2) of Rule 3 of Order XXXIV and a final decree in a redemp-
tion suit as provided in Order XXXIV, Rule 8(3)(a) of the Code of Civil
Procedure. Sub-rule (2) of rule 3 inter alia provides that where payment
in accordance with Sub-rule (1) has not been m~de, the Court shall on
an application made hy- the plaintiff in this-behalf, pass a final decree
E declaring that the defendant and all persons claiming through or under
him are debarred from all right to redeem the mortgaged property
and also, if necessary, ordering the defendant to put the plaintiff in
possession of the_ property, Thus, in a rmal decree in a suit for fore-
closure on the failure of the defendant to pay all amounts due, the
extinguishment of the right of redemption has to be specifically
F declared. Again,. in a final decree in a suit for redemption of mortgage
by conditional sale or for redemption of an anomalous mortgage, the
extinguishment of the ·right .. of redemption has to be specifically
declared; as provided in clause (a) of sub-rule (3) of Rule 8 of Order
XXXIV of,the . Code• of Civil Procedure. These. are the two circum-
stances-(1) a final decree in a suit for foreclosure under Order XXXIV
C .Rule 3(2) and (2) a· final. decree in a suit for redemption under Order
XXXl:V, Role 8(3)(a) of the Code of Civil ·Procednre-when the right of
redemptionl!fextinguished~ [696A-G I . ;
·.,1!'·m·f~. 1 ",:1Jh-:.:: = •• ~". ~ ,-~

.,,, •'In this case; the. earlier suit was not a snit for foreclosure nor was
either:of the mortgages a mortgage by conditional sale or·an anomalous
H mortgage and, accordingly, there was no declaration in the rmat deeree
, . .. M_.R, ,PA,TIL. v., S.B. RAINADE . 691

)._ passed in the earlier suit for redemption .that the_ respondents _would be
A
debarred from ati rlgbt to rtcleein t~e-inoi1gaged property; In a suit for
redemption, a mortgage other than a mortgage by conditional sale or an
anomalous .mortgage, the mortgagor, ha~ a right of redemption even
after .the sale bas taken pl~~e pursu~nt to the.r~i dec;~e· but before !be
coniiJ;nation .of ~uc~ ~a'e.·)~.vJew.,of,lh; piovi_~ions-_of Order XXXIV,
the question of m~rger of mortgag~ebt in .the decretal deb_~, does not B .
f- arise at all. The decision' of th~ Pain~ High Court in Sheo Narain Sah v.
Mt. Deolochan XU<!r, _AIR 1948.Patna 208, ~eljed upon by the_ appel-
lants, is erroneous in so far as .\tJajd down the !Derge~ of the im1rtgage,-
. I debt in. tlie ~e.creia8~iit and th~ coii'sequent extiJlguishment of..the
f right of redemption of the mortgagor after the passing of the final
+\ decree in a suit for redemptio11. Tile_ right of ;redemption will stand
extinguished only under the circumstances mentioned in the proyiso to
section 60 of the Transfer of Property Act, that is, (1) by !be Act of
c
party of (2).by a decree of Court; _as aforementioned. The contention of
the appellants that as a f"ma(de~ree was passed in. the earlier· redemp-
tion suit, there was a merger- of the mortgage-deblin the decretal-
debt and as such the secoµd suit for redemption .\Vas barred, ,was with- D
out any substance. l696G-Ii;697A-Dl . ' ,• J .. '
" ., - ..

The appellants contended. that the._ ru1e,of Damdupat ·was appli-
cable only to~ simple ioan transactiori'and not~ transaction of mort-
+- gage. The Court could not app~eci~te this contention. 16980] . ,
E
JI. is. an equitable rule debarring· the creditor to recover at any
given time the .amount.of inter~st'\vhich is in excess of ..the, principal
amou'nt due. at ih~t tilne . .In every 'niortgage, there are two ~spects,
namely,'(1) loan. and (ij' t~a~fer of Interest in i~ovabie .property. As
mortgage is prlncipally ~ loan transaction there is ~o reason why the
rule of Damdupat, which is an equitable rule should not apply also to a F
mo".lgage. On the appl$~at!on 9f tlt_e ml~, o[ Damdupat, law \Vas not
correctly laid -downcin. Madhwas Sidhanta. Onahini Nidhi. v. Ve'lkata.
rama,;ju/u .. Naidu, ILR 26:-Mad~as .~621 :The de~isions in.Kunja Lal
.Banerji, v. Narsamba Debi,iLii"ii C~I.-826; Jeewa,;B~i;.. Mrnor4as
Lachm~nd~; .i:LRJS Boin: 199 and Bap~rao ~ •. An~nt-Kashinath, AIR
i.9~ jlla_gpu;)f9,, ~ightjy, held'.thatthe.rul~:of D~D.!dl'pat iS:~ppl!cable G
tom9~gages. J~9,8<;:-,E;~9'W:-<;i.L_~,, 1 ,,, ;iw"n-_ ·;(fl _fl(ll),r. n '\1 mu
.' ...._.,·;:.,_'"1:nt ·;·J1 . .r._t•1 .:: t:;drr1..-;tq·J(l, nc b:;11::i~;,-.) ·,;1t.•.~t . 1or11 '_if1rr::_,
_ (L ._, ,T!\I' Judgmei:it_~1ul clecr.~:of\11~ fflgh ,C~µrt 1w:~l'I! aff.\nn~d,~,{699G I
fft,,!JfHi . '\{.' .">)'11,, ~ .. ·,Ji1! rili"ti \}f-;1 ' .. ,.._j-1 'u.... !lhol 1:..i'' ·u' :.: :o /;i< \TE
Raghunath Singh v. Mt. Hansraj Kunwar, AIR 1934 P.C. 205
r.«;f!~~~~_.to. ·.. ~ ":'ti ·u 1~0itr. p113f" :-, ~ 1<;1 r1·.: . . t-: L.-Jiii ?.trr'.Ln•-,q~·..... 1 ·.Jf.: H
692 SUPREME COURT REPORTS [1988] 3 S.C.R. ~

Madhwa Sidhanta Onahini Nidhi v. Venkataramanjulu Naidu, ·
A
I.L.R. 26 Madras 662, disapproved.

Sheo Narain Sah v. Mt. Deolochan Kuer, A.I.R. 1948 Patna 208,
held erroneous on the question of merger of the mortgage-debt in
decretal debt and the consequent extinguishment of the right of
B redemption of mortgagor after the final decree. [697D I

Kunja Lal Banerji v. Narsamba Debi, I.L.R. 42 Cal. 826;
Jeewanbai v. Monordas Lachmondas, I.L.R. 35 Born. 199 and

~-
Baburao v. Anant Kashinath, A.I.R. 1946 Nagpur 210, approved.

CIVIL APPELLATE WRISDICTION: Civil Appeal No. 750 I
c of1973. ~

From the Judgment and Order dated 22.9.1972 of the High
Court of Bombay in First Appeal No. 540 of 1969.

D T.S. Krishnamurthy Iyer, K. Rajendra Chowdhary and K.
Shivraj Chowdhary for the Appellants.

V.M. Tarkunde and Mrs. J. Wad for the Respondents.

The Judgment of the Court was delivered by
E
DUTT, J. This appeal by special leave is at the instance of the
defendants in a suit for redemption of two mortgages and is directed
against the judgment and decree of the Bombay High Court affirming
those of the Joint Civil Judge, Senior Division, Kolhapur, decreeing
~~. ~-
F '

t
On June 16, 1925, the predecessors-in-interest of the respon-
dents executed a possessory mortgage bond for Rs.5,000 in favour of
the predecessor-in-interest of the appellants. The mortgage bond con-
tained a recital that the mortgagee should appropriate the income of
the property consisting of some plots of land towards the sum of
G Rs.3,000 and was entitled to interest @9% per annum for the balance
sum of Rs.2,000. By a second mortgage bond, which was by way of a
simple mortgage executed on September 3, 1928, the mortgagors
mortgaged the same property to the same mortgagee to secure repay-
ment of a farther loan of Rs.2,000 with interest@9% per annum.

H The respondents filed a suit for redemption of the two mortgages
M.R. PATIL v. S.B. RAINADE IDUlT, J.I 693

in the court of the Subordinate Judge, First Class, Ichalakaranji, being A
Suit No. 3 of 1947. A preliminary decree for redemption was passed on
September 20, 1948 and it was declared that the amount of Rs.12, 125
and odd and a further amount of Rs.236 being the cost of the suit, were
due from the mortgagors to the mortgagee. The mortgagors were
directed to pay the amount within six months and on such payment to
j,..
get the property redeemed; failing which liberty was given to the B
· mortgagee to apply for a final decree for sale. As the mortgagors failed
to make payment within the specified period, on an application made
. ~ by the mortgagee, a final decree for sale was passed in the suit on
l March 21, 1952. The decretal dues, as declared in the final decree, were
Rs.12,361 and odd plus cost amounting to Rs.41 for which the mort-
~ gaged property or sufficient portion thereof was directed to be.sold. In C
r other words, a preliminary decree and a final decree in accordance
with the provision of Order XXXIV, Rules 7 and 8 were passed.

Although the final decree for sale of the mortgaged property was
passed, the mortgagee did not execute the final decree and allowed the
same to be time barred. The mortgagee and after him, his heirs and D
legal representatives, however, continued to be in possession of the
mortgaged property.

The respondents, who are the successors-in-interest of the origi-
nal mortgagors filed a second suit for redemption of the mortgages,
being Special Civil Suit No. 6 of 1968 in the Court of the Joint Civil E
Judge, Senior Division, Kolhapur, on January 9, 1968 against the
appellants, who are the heirs and legal representatives of the original
•
mortgagee. It was claimed by the respondents that in spite of the
passing of the final decree for sale in the earler suit, being Suit No. 3,
1947, the mortgage· still subsisted, and that they were entitled to
redeem the same and get possession of the mortgaged property. F
Accordingly, they prayed for a decree for redemption, accounts and
possession of the mortgaged property from the appellants.

The appellants contested the suit by filing written statement. It
was contended by them that as the mortgagors did not pay the decretal
dues under the decree passsed in the previous suit, their right of G
redemption had been extinguished. They denied the respondents'
claim for accounts. It was claimed by the appellants Nos. 3, 4 and 5
that their predecessors-in-title were tenants of the suit land from
before 1925 and, as such, they had become protected tenants under the
Bombay Tenancy and Agricultural Lands Act. Alternatively, it was
contended that even if the respondents were held to be entitled to H
694 ' SUPREME COURT REPORTS · [1988] 3 S.C.R. -~

redeem the mortgages, they were not entitled to ·obtain physical
A
possession of the mortgaged property, as the appellan'ts had become
protected tenants. . • • '
; .. «.
. · The learned Joint Civil Judge came to the findings that notwith~
standing the preliminary decree orthe final decree passed in the previ-
B ous suit, being Suit No: 3 of 1947, the mortgagors' right of redemption ~
remained alive and ·was not extinguished and that, accordingly, the
respondents were entitle(! to redeem the mortgages. ·The plea of pro-
tected tenancy, as.raised by· the appellants, was negatived· by the
learned Joint Civil Judge. On the above findings, the learned Joint \
Civil Judge ·held that the respondents were entitled to redeem the
mortgages on payment of a sum of Rs.13,551 and odd including
c interest.to the appellants: In arriving at the amount, he applied the j.
rule of Damdupat in calculating the interest on• the prineipal amount
up to the date of the suit. A usual preliminary decree for redemption
was passed by the learned Joint Civil Judge under Order XXXIV,
Rule 7-of the Code of Civil Procedure declaring the aforesaid amount
D as being due from the respondents to the appellants -under both the
mortgage bonds up· to the date of the suit and a period of six months
was granted to pay the aforesaid amount and costs of the -suit and
future interest on the aforesaid amount @ 6% per annum from the
date of the suit till realisation. It was further directed that on payment
of the amount in court,. the appellants would deliver actual possession
E of the mortgaged property to the respondents and that in default of
payment as aforesaid, liberty was given to the appellants to apply to
the court for a final decree for foreclosure.

Being aggrieved by the judgment and decree of the learnP.d Joint
Civil Judge, the appellants.preferred an appeal to the High Court. At ~
F the hearing of.the appeal, it was contended by the appellants that the
second· suit for. redemption was not maintainable; that the rule of
Damdupat was not applicable to mortgages and that the appellants had
become protected tenants by virtue of the Bombay Tenancy and
Agricultural Lands Act . It was held by the High Court that in spite of ~
the fact that in the earlier suit a preliminary decree and ·a final decree
G were passed and the mortgagors did not redeem the mortgages by
depositing the decretal dues, still. the right of redemption was.not
extinguished. As to the applicabilify of the rule of Damdupat to mort-
gages, the High Court took the view that the learned Joint Civil Judge
was justified in applying the rule· followirig certain decisions of the
Calcutta, Bombay .and Nagpur High COurts; which will be referred to
H. presently. Regarding the plea of the appellants that they had become
· M.R. PATIL V; S.B. RAINADE '{DUTT, J.J 695

protected tenants under the Bombay Tenancy and Agricultural Lands A
Act, it was held that as the ·plea was raised ·by the appellants Nos, '3i' 4·
and 5, the amount of land which happened to be in possession of ih£
said appellants Nos. 3, 4 and 5, would be referred to the Mamlatdar
and excepting· such land the. learned Joint• Civil •Judge was right in
decreeing delivery ofactual ·possession of the. rest·ohhe land in suit in
favour of the respondents. Subject to this modification, the High s··
Court affirmed the decree of the learned Joint Civil Judge and dismis-
sed the appeal with costs. Hence this appeal by speciaHeave.'

, I
• ,·,. J'..1 ·· 1 ni
, ·"' • · ,. _· •(i · n
1 '•·ir,.·~ P·rrd;..;

In ;this appeal; the appellants have' challenged the·fihdings of the
High Court as to the maintainability oHhe· second suit for!redemptiofi:
1 1

\ out ·of which -this appeal arises and the applicability ·of the,ruJe. of
+ Damdupat. The finding and Oirection Of·the•High Court in' tespec(of' C
the plea of the• appellants tl\at• they had become protected 'tenants
under the Bombay Tenancy and Agricultural Lands Act have rioUjeen•
challenged before us.- ,. · ·H . r · · • n · ·,, · n ·. ,., · ·•.t
! .' l i , .o H, ·, ; ,,- -~•11_fq(P -i1"Jl '• ,,· , ·

· ' Mr. Krishnamurthy, learned Counsel appe:lring on behalf oftlie D
appellants, has urged that in·view ofthe factthat a prelimin'ary decree
and afina:l decree were passed.iIHhe earlier suit in accordance with' the;
proVisions of Order XXXIV, Rules 7 and 8 of the 'Code of Civil Pfoce"'
dure,.ihe present suit for.redemption of the selfsame mortgages, oufof,
which this appeal·arises, is not maintainable. IHs submitted by·him
that after' a preliminary and a final decree for ·redemption ate' passed in E
accordance with the provisions·ofOrder XXDCIV, Rules rj and B of th~'
Code of <i:ivil Procedure,. the• mortgage-debt merges in the decretal-.
debtr:and:·the right of •redemption· is extinguished. In' support of his·
contention, the learned Counsel has:placed·much reliance upon a deci-
sion ·ot,,the. Patna High Court in She.a Narain Sah v. Mt.· Deolothtin
Kuer,. AIR 1948 Patna 208. In:that case, the appellant had-purchased a· F
share in the· equity of redemption ·and ·one of the questions was whether
the right of partial redemption·aequired by the appellants would· sur'
vive under Order XXX:IV, Rule-5 of the Code of tivifi>'n:icedure until•
confirmation of•'the s'a:me- in the' 'execution proceedirigsµ In tMf ·con'
text, it was observed. that rtlie 1mortgage'debt had "merged ''in· ·the'
decretal-debt and after the passing of the final decree for sale neither. G'
the right of total redemption nor the right of .partial :redemption, con-
ferred on the· mortgagor by section 60 of-the Transfer' of ,pfoperty Act;
survived the final decree for·sale; •all that remained thereafter was a·
different right of.redemption conferred by· order XXXIV, Rule 5'. The
observation regarding·the merger .of the mortgage-debt in the decretaF
debt is, in'our opinion, to some extent obiter.• · ,,,,,,1 r H

•
696 SUPREME COURT REPORTS 11988] 3 S.C.R.

A Section 60 of the Transfer of Property Act confers a right of
redemption on the mortgagor. The proviso to section 60 reads as
follows:

"Provided that the right conferred by this section has not
been extinguished by the act of the parties or by decree of a
B Court."

It is thus manifestly clear that the right of redemption will be
extinguished (1) by the act of the parties or (2) by the decree of a
Court. We are not concerned with the question of extinguishment of \
the right of redemption by the act of the parties. The question is
C whether by the preliminary decree or final jecree passed in the earlier
suit, the right of the respondents to redeem the mortgages has been ;
extinguished. The decree that is referred to in the proviso to section 60
of the Transfer of Property Act is a final decree in a suit for foreclo-
sure, as provided in sub-rule (2) of Rule 3 of Order XXXIV and a final
decree in a redemption suit as provided in Order XXXIV, Rule 8(3)(a)
D of the Code of Civil Procedure. Sub-rule (2) of Rule 3, inter alia,
provides that where payment in accordance with sub-rule (1) has not
been made, the court shall, on an application made by the plaintiff in
this behalf, pass a final decree declaring that the defendant and all
persons claiming through or under him are debarred from all right to
redeem the mortgaged property and also, if necessary, ordering the
E defendant to put the plaintiff in possession of the property. Thus, in a
final decree in a suit for foreclosure, on the failure of the defendant to
pay all amounts due, the extinguishment of the right of redemption has
to be specifically declared. Again, "in a final decree in. a suit for
redemption of mortgage by conditional sale or for redemption of an
anomalous mortgage, the extinguishment of the right of redemption
F has td be specifically declared, as provided in clause (a) of sub-rule (3)
of Rule 8 of Order XXXIV of the Code of Civil Procedure. These are
the two circumstances- (1) a final decree in a suit for foreclosure
under Order XXXIV, Rule 3(2); and (2) a final decree in a suit for
redemption under Order XXXIV, Rule 8(3)(a) of the Code of Civil
Procedure-when the right of redemption is extinguished.
G
In the instant case, the earlier suit was not a suit for foreclosure
nor was either of the mortgages, a mortgage by conditional sale or an
anomalous mortgage and, accordingly, there was no declaration in the
final decree passed in the earlier suit for redemption that the respon-
dents would be debarred from all right to redeem the mortgaged pro-
H perty. Rule 5(1) of Order XXXIV expressly recognised the right of the

•
M.R. PATIL v. S.B. RAINADE [DUTT, J.[ 697

mortgagor to redeem the mortgage at any time before the confirma-
A
tion of a sale made in pursuance of a final decree passed in a suit for
sale. Similarly, Rule 8(1) of Order XXXIV permits the mortgagor to
redeem the mortgaged property before the confirmation of the sale
held in pursuance of a final decree in a redemption suit, unless such
final decree debars the mortgagor from all right to redeem the mort-
' gaged property which, as noticed earlier, is provided for in sub-rule B
t· (3 )(a) of Rule 8 of Order XXXIV relating to a mortgage .by conditional
sale or an anomalous mortgage. Thus, the provisions of Order XXXIV

-f have laid down in clear terms the circumstances when the right of
redemption of the mortgagor would stand extinguished. It is also clear
that in a suit for redemption, a mortgage other than a mortgage by
conditional sale or an anomalous mortgage, the mortgagor has a right
+ of redemption even after the sale has taken place pursuant to the final
decree, but before the confirmation of su.ch sale. In view of these
c

provisions, the question of merger of mortgage-debt in the decretal,
debt does not at all arise. We are, therefore, of the view that the
decision in Shea Narain's case (supra), in so far as it lays down the
merger of the mortgage-debt in the decretal-debt and the consequent D
extinguishment of the right of redemption of the mortgagor after the
passing of the final decree in a suit for redemption, is erroneous.

In this connection, we may refer to a decision of the Privy
Council in Raghunath Singh v. Mt. Hansraj Kun war, AIR 1934 PC 205
where it has been held by their Lordships that the right to redeem is a E
right conferred upon the mortgagor by enactment, of which he can
only be deprived by means and in manner enacted for that purpose,
and strictly complied with. It is manifestly clear from the said observa-
tion that the right of redemption will stand extinguished only under the
circumstances as mentioned in the proviso to section 60 of the Transfer
of Property Act, that is to say, (1) by the act of party or (2) by a decree F
of Court. We have already discussed above the circumstances when by
a decree of Court the right of redemption is extinguished.

The Federal Court had also occasion to consider whether a
second suit for redemption was barred. Kania, C.J. speaking for the
Court observed as follows: G

"The right of redemption is an instance of a subsisting
mortgage and it subsists so long as the mortgage itself sub-
sists. As held by the Privy Council in Raghunath Singh's
case, 61IA362 the right of redemption can be extinguished
as provided in S. 60, T.P. Act, and when it is alleged to H
698 SUPREME COURT REPORTS [1988) 3 S.C.R.
{
have been extinguished by a decree, the decree should run
A
strictly in accordance with the form prescribed for the
purpose. Unless the equity of redemption is so extin-
guished, a second suit for redemption by the mortgagor, if
filed within the period of limitation, is not therefore
barred."
B
.
....'
Therefore, the contention made· on behalf of the appellants that
as a final decree was passed in the earlier redemption suit, there was a
merger of the mortgage-debt in the decretal-debt and, as such, the
second suit for redemption is barred, is without any substance and is
rejected. )
-
c We may now consider the second question as to whether the rule :j.
of Damdupat is applicable to a mortgage transaction. Admittedly, it is
an equitable rule debarring the creditor to recover at any given time
the amount of interest which is in excess of the principal amount due at
that time. It is urged by the learned Counsel appearing on behalf of the
D appellants that the rule is applicable only to a simple loan transaction
and not to a transaction of mortgage. We are unable to appreciate this
contention. In every mortgage there are two aspects, namely (i) loan
and (2) transfer of interest in immovable property. As mortgage is
principally a loan transaction, we do not find any reason why the rule .
of Damdupat which is an equitable rule should not apply also to ~-
E mortgage.

It has, however, been held in Madhwa Sighanta Onahini Nidhi v.
Venkataramanjulu Naidu, ILR 26 Madras 662 that the rule of
Damdupat is inapplicable to cases of mortgage governed by the Trans-
fer of Property Act. The principal reason for the decision is that in
F section 2 of the Transfer of Property Act, before it was amended by
the Amending Act 20 of 1929, it was provided "and nothing in the
second chapter of this Act shall be deemed to affect any rule of Hindu
law." It was inferred that as the rules of Hindu law were saved only
with regard to transfer of property as contained in the Second
Chapter, it was not saved with regard to the mortgages of immovable
G property and charges as contained in Chapter IV of the Transfer of
Property Act.

A contrary view was expressed by the Bombay High Court in
Jeewanbai v. Monordas Lachmondas, ILR 35 Born. 199. In that case,
it has been held that it is not proper to infer that because it has been
H ~xpressly enacted that nothing in Chapter II of the Transfer of
M.R. PATIL v. S.B. RAINADE [DUTI, !.I 699

Property Act shall be deemed to affect any rule of Hindu law, the
Legislature has deprived a Hindu mortgagor Of the protection afforded
to him by the rule of Damdupat.
1 ..
The Calcutta High Court in Kunja Lal Banerji v. Narasamba
Debi, ILR 42 Cal. .826 has refused to follow the decision in Madhwa
Sidhanta's case (supra), clearly pointing out that in that High Court B
the uniform rule has been to disallow as between Hindus' interest
larger that the amount of principal in making up a mortgage account.

-f In Bapurao v. Anant Kashinath, AIR 1946 Nagpur 210, a
Divisio_n Bench of the Nagpur High Court has held that the rule of
' Damdupat- is applicable to a mortgage, and that it does not in any way
affect the provisions of the Transfer of Property Act inasmuch as it c
merely prevents recovery of interest on the Joan in excess of the
principal.

Admittedly, the rule of Damdupat was never applicable to
Madras. It has been already noticed that in Madhwa Sidhanta's case D
(supra), the principal reason to hold that the rule was inapplicable to
mortgages governed by the Transfer of Property Act was that in view
of section 2 of the Transfer of Property Act, before it was amended by
Act 20 of 1929, the rules of Hindu law were not saved with regard to
mortgages of immovable properties and charges as contained in Chap-
ter IV.of the Act. By the Amending Act 20 of 1929, section 2 has been E
amended and after such amendment it reads "and nothing in the

- second chapter of this Act ·shall be deemed to affect any rule of
Muhammadan law." The inference that was drawn in Madhwa
Sidhanta's case (supra), from the provision of sectioin 2 about the
non-applicability of the rules of Hindu law including the rule of
Damdupat to mortgages cannot now be drawn from the amended pro- F
vision with regard to any rule of Hindu law. Moreover, we are of the
view that the law was not correctly laid down in Madhwa Sidhanta's
case (supra), and the Calcutta,. Bombay and Nagpur High Courts have
rightly held in the decisions mentioned above that the rule of
Dall!dupat is applicable to mortgages. No other point has been urged
on behalf of the appellants. G
,...,
I

For the reasons aforesaid, the judgment and decree of the High
Court are affirmed and this appeal is dismissed with costs quantified at
Rs.3,000.

S.L. Appeal dismissed. H