M. KARPAGAVINAYAGAM, J.:

1. Appellant Mayandi Thevar is the first defendant in O.S.No.474 of 1982 on the file of Sub Court, Madurai, instituted by the plaintiffs/first respondent and two others claiming the redemption of the mortgaged property. The plaintiffs having lost in the trial court filed an appeal in A.S.No.121 of 1984 before the learned single Judge of this Court. The said appeal, after hearing the parties, was allowed by setting aside the judgment and decree of the trial court and decreeing the suit filed by the plaintiffs. Having aggrieved over this, the appellant/first defendant has come forward with this L.P.A. before this Court.

2. The case of the plaintiffs is as follows: The first plaintiff mortgaged the suit property belonging to the plaintiffs on his behalf and on behalf of his two sons, the plaintiffs 2 and 3 on 17.11.1961 with one Periasamy Servai. From the said Periasamy Servai, on 28.9.1963 the appellant/first defendant got the mortgage made over to him. On 5.12.1963, the first plaintiff for himself and on behalf of other plaintiffs created a second mortgage in favour of the first defendant. He had again executed a mortgage third time on 13.4.1966 in favour of the first defendant. On 1.11.1969, the plaintiffs executed further mortgage for a period of 13 years. The period of mortgage expires on 1.11.1982. The plaintiffs have to pay Rs.41,000 to the first defendant towards the discharge of the mortgage.

3. In the meantime, the plaintiffs came to know that under a registered partition deed dated 6.12.1976 effected partition among the defendants 1 and 2 being brothers. So, the plaintiffs issued a notice on 21.9.1981 to both the defendants claiming the benefits under the Act 40 of 1979 and seeking for redemption of the mortgage and recovery of possession. The first defendant alone sent a reply notice dated 12.10.1981 stating that there is an agreement of sale between the parties and as such, from 1.11.1982, the date of expiry of the mortgage the plaintiffs ceased to have interest to redeem the mortgage by virtue of the sale agreement.

4. The allegation about the execution of agreement of sale is not correct. The plaintiffs having been advised that they cannot claim the benefits under the Act 40 of 1979, got ready the mortgage amount of Rs.41,000 and approached the defendants to pay the said sum. The defendants refused to receive. Hence, the plaintiffs filed the suit after depositing the said sum into court praying for the redemption by directing the defendants to return the original documents and to deliver possession of the suit property and also for future mesne profits.

5. The case of the defendants as contained in the written statement is as follows: The execution of the mortgage deed for a sum of Rs.41,000 and the expiry of the mortgage on 1.11.1982 are not denied. But, on 1.10.1975 the first plaintiff had executed an agreement of sale in favour of the first defendant and since then the first defendant is in possession and enjoyment of the property in that capacity. The sale price was fixed at Rs. 1,01,000. The first defendant has assured to pay Rs.60,000, the balance amount towards sale consideration on the expiry of the mortgage period and to have the sale deed registered. The first plaintiff agreed for the same and received Rs.2,000 on a promissory note. By virtue of the agreement of sale executed by the first plaintiff, the plaintiffs are not entitled to redeem the mortgage, as their right of redemption of mortgage has been lost.

6. During the course of trial, on behalf of the plaintiffs P.Ws.1 to 3 were examined through whom Exs.A-1 to A-21 were marked. On the side of the defendants, beside the first defendant as D.W.1 two other witnesses were examined as D.W.2 and D.W.3 and Exs.B-1 to B-14 were marked.

7. On consideration of the entire materials, the trial court dismissed the suit on 23.1.1984 holding that the first plaintiff had entered into an agreement of sale on 1.10.1975 with the first defendant and that therefore, the plaintiffs are not entitled to redeem the suit property.

8. Challenging the dismissal of the suit, the plaintiffs filed an appeal before the learned single Judge of this Court on 27.2.1984 in A.S.No.121 of 1984.

9. During the pendency of the above appeal, the first defendant, the appellant herein filed O.S.No.218 of 1985 on the file of Sub Court, Madurai, for specific performance against the plaintiffs, on the strength of agreement of sale dated 1.10.1975.

10. After hearing the parties, the learned single Judge concluded that even assuming that there is existence of agreement of sale dated 1.10.1975, though it was disputed by the plaintiffs, the said agreement would not disentitle the plaintiffs to redeem the suit property, since the right of redemption exists till the property is sold by way of execution of the sale deed. On this finding, the learned single Judge allowed the appeal and decreed the suit.

11. The said decree and judgment of the learned single Judge are under appeal before this Court in this L.P.A.

12. When this appeal in L.P.A.No.218 of 1996 came up for admission before the First Division Bench, by the order dated 2.1.1997, it admitted the appeal and stayed the decree. However, it did not grant stay of the proceedings in the suit for specific performance filed by the appellant herein in O.S.No.218 of 1985 on the file of Sub Court, Madurai and instead, directed the trial court to dispose of the said suit within three months.

13. It is now seen from the counter affidavit filed by the respondents that the said suit for specific performance in O.S.No.218 of 1985 on the file of Sub Court, Madurai, was dismissed on 30.6.1997.

14. Mr.T.R.Rajagopal, the learned senior counsel representing Mrs.P.Bagyalakshmi, the counsel appearing for the appellant, would put forth the following contentions:

By virtue of the sale agreement dated 1.10.1975, the mortgage debt has already been wiped out by adjustment between the parties. As the mortgage is no longer in existence, the right of redemption has been lost. The proviso to Sec.60 of Transfer of Property Act, 1882 (hereinafter referred to as the Act) would enable the parties to extinguish the mortgage by adjustment effected by way of conclusion of the sale agreement. Therefore, the suit for redemption is not maintainable as the plaintiffs have lost their right of redemption as seen from the agreement to sell and the subsequent arrangement agreed to between the parties. Having not disturbed the finding of the trial court that the sale agreement was true and correct, the learned single Judge ought not to have held that the suit is maintainable despite the sale agreement. As envisaged by Sec.60 of the Act, it is clear from the proviso to the said section that the right covered by the section would be extinguished by the act of parties. In the present case, the agreement of sale executed by the plaintiffs in favour of the first defendant being an act of the parties would definitely make the plaintiffs incompetent to file of the suit for redemption.

15. In support of the above submissions, the learned senior counsel has cited several authorities which we shall see later.

16. By way of reply, Mr.Chandramouli, the learned senior counsel appearing for the plaintiffs/respondents, in support and justification of the judgment and decree under appeal, would strenuously contend as follows:

Even if the agreement of sale put forward by the counsel for the appellant is true, though not admitted, the plaintiffs right to redeem the property cannot be said to have been lost by them, by virtue of proviso to Sec.60 of the Act, as the property was not said to be sold by way of sale deed.

He would also cite several decisions, which we shall consider at the appropriate stage.

17. We have given our meticulous consideration to the submissions made by the respective parties.

18. The learned single Judge in the judgment under appeal without going to the validity of the sale agreement would come to a definite conclusion that the mere execution of the agreement of sale by itself would not deprive the mortgagor of his right of redemption and that the equity of redemption cannot be extinguished by mere contract for sale.

19. The main thrust of the argument by the learned senior counsel for the appellant is that the right of redemption under proviso to Sec.60 has been extinguished by the act of parties, namely, the execution of the agreement of sale. According to him, the learned single Judge has not considered this aspect as the result of which a serious illegality has been committed by the suit being decreed in favour of the plaintiffs.

20. The alleged agreement of sale is dated 1.10.1975. The recital in the said agreement would make it clear that the mortgage expires on 1.11.1982 and it is agreed that the balance of sale consideration of Rs.58,000 shall be received after the expiry of mortgage period on 1.11.1982, at the time of execution of the sale deed.

21. Admittedly, the notice was issue by the plaintiffs calling upon the defendants to return the documents and have over the property, on 21.9.1981. The suit was filed in O.S.No.474 of 1982 by the plaintiffs on 21.12.1982. Therefore, till the filing of the suit there was no sale deed executed nor the alleged sale consideration was fully paid to the plaintiffs.

22. According to the recital in the agreement of sale, the mortgage agreed to give the balance sale consideration after the expiry of mortgage period, that is, on 1.11.1982, at the time of execution of sale deed.

23. Incidentally, we may point out that the first defendant did not take steps to pay the balance of sale consideration either by sending the amount to the plaintiffs to execute the sale deed or by filing the suit for specific performance and depositing the said-sum into court till the date of filing of the present suit, that is, on 21.12.1982.

24. Moreover, even during the course of trial of this suit no such steps were taken by the first defendant. Curiously the first defendant chose to file the suit for specific performance on the strength of the agreement of sale dated 1.10.1975 only after the dismissal of the present suit, that too, subsequent to the filing of the appeal by the plaintiffs in A.S.No. 121 of 1984 dated 27.2.1984. It is quite obvious from this at the alleged agreement of sale has not been acted upon in terms of the recital in the agreement of sale dated 1.10.1975.

25. It is also to be noticed that the earlier mortgage deeds have been executed by the first plaintiff on his behalf and on behalf of the minor sons, the plaintiffs 2 and 3. The agreement of sale would show that this document was signed by the first plaintiff alone on 1.10.1975 and during that period the other plaintiffs became major.

26. In the light of the above facts, we have to see whether the agreement of sale dated 1.10.1975 would be construed to be the act of parties by which the right of redemption is lost.

27. Before dealing with this question, let us at the outset refer to the relevant provisions of the Transfer of Property Act, to have a clear picture about the legal position, with reference to the right of redemption.

28. Sec.60 of the Act is as follows:

Right of mortgagor to redeem:At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee, (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished: Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a court.

The right conferred by this section is called a right to redeem and suit to enforce it is called a suit for redemption

It is clear from the reading of this section that this right cannot be extinguished unless by the act of the parties or by the decree of the court.

29. In this context, Sec.54 of the Act would be quite relevant, which is as follows:

Sale defined: Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised

Contract of sale:A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.

It does not, of itself, create any interest in or charge on such property.

From this, it is obvious that an agreement of sale does not by itself create any interest in, or charge on such property.

30. Moreover, as indicated by the learned single Judge, the combined effect of Sec.54 of the Transfer of Property Act and Sec. 17 of the Indian Registration Act is that a contract for sale in respect of immovable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption.

31. When the similar question was raised in the decision in Abraham Ezra Issac Mansoor v. Abdul Latif Usman A.I.R. 1944 Bom. 156, [LQ/BomHC/1943/154] a Division Bench of the Bombay High Court would observe that mere agreement of sale would not attract the proviso of Sec.60 of the Transfer of Property Act under the garb of act of the parties. The relevant observations are these:

The question, therefore, is that when there is a contract of sale entered into by a mortgagee in the purported exercise of the power, whether the equity of redemption is extinguished, as mentioned in Sec.60, Transfer of Property Act. Now, the equity of redemption can be extinguished by the Act of the parties or by a decree of the court. There is no question of a decree of the court in this matter, and, therefore, the appellant must rely on the words by the act of the parties. to support his contention. In the present case the only act relied upon is the contract of sale. I am unable to consider that act as the act of the parties . It is an act of the mortgage alone. Secondly, that act, i.e., entering into the contract of sale by itself, does not extinguish the right of redemption. A contract of sale, as defined by Sec.54, Transfer of Property Act, does not create any interest in the property in the purchaser.It is only on execution of the conveyance that the ownership passes from one party to another. The previous documents do not transfer any interest in the property. It may also be noted that if the extinguishment of the right to redeem is by a document, the same still require registration under Sec. 17, Registration Act. I do not know how, without a transfer of the mortgagors interest by a written registered instrument or by operation of law or by adverse possession, the right could be extinguished.

32. The above decision would apply, in our view, in all fours to the present case. When the Apex Court in the decision in Narandas karsondas v. S.A.Kantam Narandas karsondas v. S.A.Kantam Narandas karsondas v. S.A.Kantam A.I.R. 1977 S.C. 774: 1977 1 A.P.L.J.S.C. 18: 1977 3 S.C.C. 247: (1977)2 S.C.R. 341 had to deal with this aspect, it had an occasion to consider the above decision of Bombay Division Bench and endorsed the said view as correct law.

33. While comparing the contract of sale between English Law and Indian law, the Apex Court would hold in the above decision that in England, sale is effected by the contract of sale, and in India an agreement for sale is not a sale or transfer of interest. While explaining the term act of parties, the Supreme Court in the above decision would observe as follows:

The right of redemption which is embodied in Sec.60 of the Transfer of Property Act is available to the mortgagor unless it has been extinguished by the act of parties.In India it is only on execution of the conveyance and registration of transfer of the mortgagors interest by registered instrument that the mortgagors right of redemption will be extinguished. The mortgagors right to redeem will survive until there has been completion of sale by the mort-gagee by a registered deed. Therefore, until the sale is complete by registration the mortgagor does not lose right of redemption.

34. These decisions answer to the question which has been raised in this case. It is thus clear that mere execution of the agreement for sale, which not confer any interest in, or the charge on, the property, would not be said to be the act of the parties to extinguish the right as enjoined in the proviso to Sec.60 of the Act.

35. Mr.T.R.Rajagopal, the learned senior counsel, would cite the judgment of the Division Bench rendered in K.Narayana v. Meenakshi K.Narayana v. Meenakshi K.Narayana v. Meenakshi 1978 1 MLJ. 407: A.I.R. 1974 Mad: 158, in which it is held as follows:

On the facts of this case, we are of the view that the mortgagors right to redemption had been extinguished, because, after the purchaser had paid the full purchase money and the same had been appropriated towards the debt and the balance distributed, the mortgage itself no longer subsisted.That the right to redemption is ex- tinguished only when the sale is completed by a registered instrument is not correct.

In the first place the said decision governs the facts of that case, and in our view it has no application to the facts of the case on hand. Further the Apex Court in Narandas Karsondas v. S.A.Kantam and another Narandas Karsondas v. S.A.Kantam and another Narandas Karsondas v. S.A.Kantam and another A.I.R. 1977 S.C. 774 has endorsed the view of the Division Bench decision of the Bombay High Court in Abraham Ezra Issac Mansoor v. Abdul Latif Usman A.I.R. 1944 Bom. 156 [LQ/BomHC/1943/154] In this view, the case of K.Narayana v. Meenakshi K.Narayana v. Meenakshi K.Narayana v. Meenakshi 1978 1 MLJ. 407: A.I.R. 1974Mad. 158, of this Court does not help the appellant, and the said decision cannot be taken as an authority on the point that arises for consideration before us in this appeal.

36. Mr.T.R.Rajagopal, learned senior counsel, would cite another decision in Prithi Nath Singh v. Suraj Ahir A.I.R. 1963 S.C 1041: 1963 3 S.C.R. 302, wherein it is held thus:

If the mortgage money due has bene already paid by the mortgagor and has been accepted by the mortgagee in full discharge of the mortgage debt, no occasion for such accounting arises and therefore any suit to enforce the return of the mortgage deed and to get back the possession of the mortgaged property cannot be a suit for redemption.

On the strength of this observation, the learned senior counsel would strenuously submit that the plaintiffs having executed the agreement of sale would, at the most, file a suit for return of the mortgage deeds and to get back the possession of the mortgaged property. Here again, the decision rendered, in our opinion, was having regard to the facts of that case. On the basis of the said decision, it is not, possible to agree with the learned senior counsel for the appellant, when there are direct authorities of the Apex Court on the point.

37. . The question raised in this case is whether by the act of parties, the right of redemption is extinguished or not. When it is by the act of parties, it should be considered that the said act must take the shape and observe the formalities which the law prescribes.

38. In this context, the observation of the Supreme Court made in Parichhan Mistry v. Achhiabar Mistry Parichhan Mistry v. Achhiabar Mistry Parichhan Mistry v. Achhiabar Mistry 1996 5S.C.C 526is quite relevant which is as follows:

It is true that a right of redemption under a mortgage deed can come to an end, but only in a manner known of law. The mortgagors right of redemption is exercised by the payment or tender to the mortgagee at the proper time and at the proper place, of the mortgage money. When it is extinguished by the act of the parties the act must take the shape and observe the formalities which the law prescribes.

39. In Jayasingh v. Krishna A.I.R. 1985 S.C. 1646, the Apex Court would hold as follows:

The right of redemption under a mortgage deed can come to an end only in a manner known to law. Such extinguishment of the right can take place by a contract between the parties, by a merger or by a statutory provision which debars the mortgagor from redeeming the mortgage. A mortgagee who has entered into possession of the mortgaged property under a mortgage will have to give up possession of the property when a suit for redemption is filed unless he is able to show that the right of redemption has come to an end or that the suit is liable to be dismissed on some other valid ground. This flows from the legal principal which is applicable to all mortgagees, namely, once a mortgage, always a mortgage.

40. While dealing with the similar circumstance, it is held by the Federal Court in the decision in Subba Rao v. Raju A.I.R. 1950 F.C. 1, which was cited by the learned senior counsel for the respondents, that the agreement for sale would not extinguish the equity of redemption. The relevant observation is as follows:

The document passed in favour of the wife of the mortgagor can be described as a reward promised to her for bringing about the willingness of her husband to agree to convey the mortgaged lands to the mortgagees. That can in no event be considered as extinguishing the equity of redemption. The mortgagor was not even a party to that document. The second document executed by the mortgagor is an agreement to convey the lands after three months. There is however no document or evidence to show that the mortgagees agreed to accept these lands in full satisfaction of their claims or promised to pay the sum of Rs.100 mentioned therein. This was only an agreement to convey the lands after three months, and, if at all, the question of extinction of the equity of redemption could arise on the conveyance being executed but not before.

41. The facts of the present case are also more or less similar to that of the above case. Here also, admittedly, the plaintiffs 2 and 3 are not the parties to the agreement of sale. Moreover, this document of agreement of sale does not convey or transfer the ownership to the first defendant, the appellant herein.

42. The learned senior counsel for the respondents also cited a decision in Mohamed Ali v. Abdul Salam Saheb 1982 1 MLJ. 425 [LQ/MadHC/1981/25] . In thesaid decision, the Apex Courts judgment reported in Narandas Karsondas v. S.A.Kantam Narandas Karsondas v. S.A.Kantam Narandas Karsondas v. S.A.Kantam A.I.R. 1977 S.C. 774: (1997)1 A.P.L.J. (S.C.) 18: (1997)3 S.C.C. 247: (1977)2 S.C.R. 341 has been considered and referred the relevant observation of the Supreme Court in the following words:

As may be seen from the facts stated above, the right of redemption could subsist only in a case where the conveyance was not completed by execution of the sale deed and registration of the same in pursuance of the auction. The ratio of the judgment in my opinion, is that only on such completion by execution and registration, the mortgage could be said to have been extinguished or discharged and so long as the mortgage is not extinguished, the right of redemption is always available to the mortgagor.

43. Mr.T.R.Rajagopal, the learned senior counsel, cited another judgment rendered in V.Paily v. K.Augusthy V.Paily v. K.Augusthy V.Paily v. K.Augusthy A.I.R. 1967 Ker. 247, [LQ/KerHC/1966/365] in support of his submission. The said decision was considered by the learned single Judge to distinguish the same by observing that in the said case the Full Bench of Kerala High Court upheld the proviso to Sec.60 of the Act under which the right of mortgagor comes to an end by a decree of the court and that in the case on hand, there is no decree relied upon by the defendants. Therefore, this case also would not be any use to the appellant.

44. It is, therefore, clear that the respondents/plaintiffs have made out a case for claiming the right of redemption on the basis of which the learned single Judge has passed a decree in favour of the plaintiffs by granting the reliefs sought for by giving valid reasons. As there is no infirmity whatsoever in the finding of the learned single Judge, we are constrained to reject this appeal by confirming the impugned judgment and decree.

45. In the result, this L.P.A. is dismissed. No order as to costs. Consequently, C.M.P.Nos. 17664 of 1996 and 15102 of 1997 stand dismissed.