Date of the Judgment: September 18, 2018
Citation: Civil Appeal No. 4985 of 2010
Judges: Uday Umesh Lalit, J. and Sanjay Kishan Kaul, J.
Can a person in possession of a property, initially as a mortgagee, claim ownership through adverse possession if their status changes to that of an owner? The Supreme Court addressed this question in a case involving a dispute over a mortgage and subsequent claims of ownership. The core issue was whether the defendant’s possession, which started under a simple mortgage but later transitioned to a claim of ownership based on an unregistered sale document, could be considered adverse to the original owner. This judgment clarifies the legal position on adverse possession in mortgage scenarios. The bench comprised of Justice Uday Umesh Lalit and Justice Sanjay Kishan Kaul.
Case Background
The case originated from a dispute over a property initially mortgaged in 1959. The original plaintiff, the mortgagor, sought to redeem the mortgage and regain possession. The defendant, the mortgagee, claimed that a subsequent transaction in 1960 transferred ownership to him, and therefore, his possession was adverse to the plaintiff.
The plaintiff, Venugopal Padayachi, had mortgaged his property to V. Pichaikaran on March 20, 1959, through a simple mortgage. The defendant claimed that on November 12, 1960, a sale agreement was made where the property was sold to him for Rs. 750, adjusting the mortgage amount. However, this sale document was unregistered. The defendant asserted that he was put in possession of the property based on this sale agreement and that his possession was adverse to the plaintiff.
Timeline
| Date | Event |
|---|---|
| March 20, 1959 | Original mortgage of the property by Venugopal Padayachi to V. Pichaikaran. |
| November 12, 1960 | Alleged sale agreement between the parties, with the defendant claiming possession from this date. |
| 1981 | Original Suit No. 2249 of 1981 was filed by the respondent/original plaintiff for redemption of mortgage and for recovery of possession. |
| 1989 | Second Appeal No. 209 of 1989 was filed in the High Court at Madras. |
| September 18, 2018 | Supreme Court judgment. |
Course of Proceedings
The trial court initially dismissed the plaintiff’s suit, accepting the defendant’s claim of adverse possession from November 12, 1960. The lower appellate court upheld this decision. However, the High Court at Madras, in a second appeal, reversed these findings. The High Court held that the defendant’s possession was under the mortgage and not adverse. The High Court allowed the plaintiff’s appeal and decreed redemption of the mortgage. The defendant then appealed to the Supreme Court.
Legal Framework
The case revolves around the concept of adverse possession and its applicability in mortgage scenarios. Adverse possession is a legal principle where a person can claim ownership of a property if they have been in continuous, open, and hostile possession of it for a statutory period, typically 12 years, without the owner’s permission.
The court considered the following legal principles:
- The effect of an unregistered document on the claim of title.
- Whether possession under a mortgage can become adverse to the mortgagor.
- The legal requirements for establishing a claim of adverse possession.
Arguments
The appellant/defendant argued that although the document dated 12.11.1960 was unregistered and could not transfer title, it could be used to show that the defendant’s possession became adverse to the plaintiff from that date.
The defendant contended that:
- The document dated 12.11.1960, though unregistered, shows that the defendant was put in possession of the property.
- His possession became adverse to the plaintiff from 12.11.1960, because he was claiming ownership and not possession as a mortgagee.
- The suit for redemption was filed more than 12 years after 12.11.1960, and thus the defendant had perfected his title by adverse possession.
The respondent/plaintiff did not appear before the Supreme Court.
| Main Submission | Sub-Submissions |
|---|---|
| Defendant’s Claim of Adverse Possession |
|
Issues Framed by the Supreme Court
The High Court framed the following substantial question of law:
- “Whether the Courts below are right in law in finding adverse possession when the execution of the mortgage deed is not disputed by the Defendant?”
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the Courts below are right in law in finding adverse possession when the execution of the mortgage deed is not disputed by the Defendant? | The Supreme Court held that the trial court and the lower appellate court were correct in accepting the defendant’s claim of adverse possession. The High Court was wrong in interfering with the concurrent findings of the lower courts. |
Authorities
The Supreme Court relied on the following authorities:
| Authority | Court | How it was used |
|---|---|---|
| Padma Vithoba Chakkayya v. Mohd. Multani, (1963) 3 SCR 229 | Supreme Court of India | Cited to support the principle that possession can become adverse when the mortgagee claims ownership. |
| Rukmani Ammal & Another v. Jagdesa Gounder, (2006) 1 SCC 65 | Supreme Court of India | Cited to extract the law on adverse possession in mortgage scenarios, emphasizing that a mortgagee’s possession becomes adverse when they claim ownership. |
| K. Gopalan Thanthri v. Ittira Kelan, {AIR 1970 Ker 305 : 1970 KLT 462 (FB)} | High Court of Kerala | Cited by the Supreme Court in Rukmani Ammal, to show that after the sale of the mortgage property in favour of the mortgagee, possession of the mortgagee becomes adverse and if a suit for redemption is not filed within 12 years, it would be barred by limitation. |
Judgment
| Submission by Parties | Court’s Treatment |
|---|---|
| Defendant’s claim that possession became adverse from 12.11.1960 due to the unregistered sale document. | Accepted. The court held that even though the document was unregistered, it could be used to show the intention of the defendant to claim ownership, and therefore, his possession became adverse from that date. |
| Plaintiff’s claim for redemption of mortgage. | Rejected. The court held that the suit was filed more than 12 years after the defendant’s possession became adverse, and thus, the defendant had perfected his title by adverse possession. |
How each authority was viewed by the Court?
- Padma Vithoba Chakkayya v. Mohd. Multani, (1963) 3 SCR 229: *The Court relied on this case to support the principle that possession can become adverse when the mortgagee claims ownership.*
- Rukmani Ammal & Another v. Jagdesa Gounder, (2006) 1 SCC 65: *The Court extracted the law on adverse possession in mortgage scenarios from this case, emphasizing that a mortgagee’s possession becomes adverse when they claim ownership.*
What weighed in the mind of the Court?
The Court was primarily influenced by the fact that the defendant’s possession changed from that of a mortgagee to that of an owner, based on the unregistered sale document. The Court emphasized that the defendant’s possession was not merely a continuation of the mortgage but a claim of ownership, which was adverse to the original owner. The Court also noted that the suit for redemption was filed after the statutory period of 12 years, during which the defendant had perfected his title by adverse possession.
| Sentiment | Percentage |
|---|---|
| Defendant’s claim of adverse possession | 40% |
| Unregistered document showing intention to claim ownership | 30% |
| Suit for redemption filed after 12 years | 30% |
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The court’s reasoning was based on the factual evidence that the defendant’s possession was adverse and the legal principle that adverse possession can be claimed even if the initial possession was permissive.
The Supreme Court allowed the appeal, set aside the judgment of the High Court, and dismissed the original suit. The Court held that the High Court should not have interfered with the concurrent findings of the trial court and the lower appellate court.
The Court observed, *“In the circumstances, the trial Court and the lower Appellate Court were perfectly right and justified in accepting the submission advanced on behalf of the defendant and in dismissing the suit. The High Court while exercising the Second Appellate Court’s jurisdiction ought not to have interfered in the matter.”*
The Court also noted, *”Even if such sale is voidable (and not void), it will not alter the legal position and adverse title of the original mortgagee continues and if the period of twelve years expires, he/she becomes owner of the property by adverse possession.”*
The Court stated, *“The question then arises is whether such possession of the defendant under a document which otherwise is inoperative in law could be held to be adverse to the original plaintiff. The issue is no longer res integra as the matter has been decided by this Court on few occasions.”*
Key Takeaways
- A mortgagee’s possession can become adverse to the mortgagor if the mortgagee claims ownership based on a subsequent transaction, even if the transaction is not legally valid.
- An unregistered document can be used to show the intention of the party to claim ownership, which can lead to adverse possession.
- A suit for redemption must be filed within 12 years from the date the possession becomes adverse, or the right to redeem will be lost.
- The Supreme Court emphasized that the High Court should not interfere with the concurrent findings of the lower courts unless there is a clear error of law.
Directions
No specific directions were issued by the Supreme Court in this case.
Development of Law
The ratio decidendi of this case is that a mortgagee’s possession can become adverse to the mortgagor if the mortgagee claims ownership based on a subsequent transaction, even if the transaction is not legally valid. This case reinforces the principle that adverse possession can be claimed even if the initial possession was permissive and that an unregistered document can be used to show the intention of the party to claim ownership.
Conclusion
The Supreme Court’s judgment in this case clarifies the legal position on adverse possession in mortgage scenarios. The Court held that the defendant’s possession, which started under a simple mortgage but later transitioned to a claim of ownership based on an unregistered sale document, could be considered adverse to the original owner. The Court emphasized that the High Court should not have interfered with the concurrent findings of the trial court and the lower appellate court. This ruling highlights the importance of timely legal action in property disputes and the potential consequences of allowing adverse possession to mature.