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Supreme Court vide judgment dated August 17, 2021 observed that decree of foreclosure under TPA will not extinguish the Right of the mortgagor to exercise his Right of Redemption, more so, when he was not impleaded as a party in the suit. It was added that declining to stay execution will not operate as Res Judicata only because Section 11 Explanation VII CPC applies to execution as well.

A Division Bench of Justice Hemant Gupta and Justice AS Bopanna, while allowing the appeal & restoring the judgment of First Appellate Court, observed,

“Decree of foreclosure passed in the suit filed by the mortgagee will not extinguish the right of the mortgagor to redeem land, in view of the fact that he was not impleaded as a party in the suit though he has purchased part of the mortgaged property by virtue of registered sale deed.”

The appellant approached the Top Court against Bombay High Court judgment dated January 21, 2015 whereby a suit for redemption of mortgage was dismissed, setting aside judgment of the First appellate court.

Issue dealt by the Court

(i) Whether the plaintiff was a necessary party in a suit for foreclosure filed by the mortgagee after the purchase?

(ii) Whether the decree obtained in a suit for foreclosure operates as res judicata and the right of redemption stands extinguished by the decree of the Court?

(iii) Whether the plaintiff is entitle to redeem the share of the property purchased by him on the payment of the entire mortgage?

With respect to issue one, Court held in affirmative placing reliance on Govinddas v. Shrimati Shanti bai, (1973) 3 SCC 418. It was added that non – impleadment of appellant renders the decree of foreclosure non-est and void.

Considering the facts of the case, for issue (ii) Court observed that Right under Section 60 TPA – Right of redemption, does not stand extinguished by a decree which had to be passed in the presence of a necessary party. On observation of the High Court that dismissal of application seeking stay of execution would act as Res Judicata, the Top Court digressed stating that only because Section 11, Expl. VII of CPC applies to Stay Proceedings would not mean that dismissal of application would also attract Res-judicata.

Issue (iii) was further held in affirmative, observing that a purchaser from the mortgagor is entitled to redeem the share of land purchased by him but on payment of the entire mortgage amount.

Case Title: Narayan Deorao Javle v. Krishna