Case Summary
| Citation | Shivdev Singh v. Sucha Singh(2000) 4 SCC 326 : AIR 2000 SC 1935 |
| Keywords | sec 60 tpa |
| Facts | Claiming to be the owner of the disputed property being land measuring 23 canals 2 marlas situate in village Sansra, Tehsil Ajnala, Punjab, the respondent plaintiff field a suit for possesion by way of redemption against the appellants in the Court of Additional Senior Sub Judge, Ajnala. The suit was decreed by the trial Court with a direction for delivery of possession by way of redemption on paying depositing the mortgage money of Rs. 7,000/- minus the cost of the decree. The appeal filed by the appellants was dismissed by the First Appellate Court on 25th July, 1998 and second appeal was dismissed vide the judgment impunged in this appeal. |
| Issues | Whether the period of 99 years of mortgage is a clog on the equity of redemption? |
| Contentions | |
| Law Points | In the context of fast-changing circumstances and economic stability, long term for redemption makes a mortgage an illusory mortgage, though not decisive. It should prima facie be an indication as to how clogs on equity of redemption should be judged. It was further held that Section 60 of the Transfer of Property Act confers on the mortgagor the right of redemption which is a statutory right. The right of redemption is an incident of a subsisting mortgage and it subsists so long as the mortgage subsists. Whether or not in a particular transaction there is a clog on the equity of redemption, depends primarily upon the period of redemption, the circumstances under which the mortgage was created, the economic and financial position of the mortgagor, and his relationship vis-à-vis him and the mortgagee, the economic and social conditions in a particular country at a particular point of time, custom, if any, prevalent in the community or the society in which the transaction takes place. The mortgage was found to be in an advantageous position qua the mortgagor. |
| Judgement | The court held that the condition postponing the right of redemption for a period of 99 years for a meagre sum amounted to a clog; more so as the mortgagor was hard pressed. |
| Ratio Decidendi & Case Authority |
Full Case Details
R.P. SETHI, J. – 2. Claiming to be the owner of the disputed property being land measuring 23
kanals 2 marlas situate in Village Sansra, Tehsil Ajnala, Punjab, the respondent-plaintiff filed a suit
for possession by way of redemption against the appellants in the Court of Additional Senior SubJudge, Ajnala. The suit was decreed by the trial court with a direction for delivery of possession by
way of redemption on paying/depositing the mortgage money of Rs 7000 minus the cost of the decree.
3. It is contended on behalf of the appellants that the clause prescribing the period of mortgage did
not constitute a clog on the equity of redemption and that the suit filed before the expiry of the
stipulated time was premature in terms of Section 60 of the Transfer of Property Act. In support of
their contentions the appellants have relied upon the judgment of this Court in Ganga Dhar v.
Shankar Lal [AIR 1958 SC 770] and distinguished the judgment relied upon by the High Court in the
case of Pomal Kanji Govindji v. Vrajlal Karsandas Purohit [AIR 1989 SC 436].
4. In order to appreciate the rival contentions, it is necessary to take note of the facts of the case
which have given rise to the filing of the present appeal. The disputed property was owned by one
Prakash Singh who had mortgaged the same in favour of Smt Basant Kaur for a sum of Rs 7000 vide
mortgage deed dated 19-3-1968. The said Smt Basant Kaur died whereafter the appellants herein
stepped into her shoes qua the suit property and, according to the plaintiffs became mortgagees in
possession of the said land. The said Shri Prakash Singh, the original owner, sold the land measuring
19 kanals 2 marlas out of the mortgaged property in favour of the respondent Sucha Singh vide
registered sale deed dated 25-3-1987 for a valid consideration by which the mortgage money of
Rs 7000 was kept with the respondent-plaintiff as security (amanat) to be paid to the appellants. It
was further pleaded by the plaintiff that at the time of the original mortgage deed dated 19-3-1968 the
said Shri Prakash Singh was financially tight and allegedly taking undue advantage of his poor
financial condition and helplessness the appellants got incorporated a term in the mortgage deed, to
the effect that the mortgage was for a period of 99 years which constituted a clog on the equity of
redemption and that the appellants had been enjoying the usufructs of the mortgage for more than 20
years before the date of the filing of the suit. Despite the fact that the respondent-plaintiff had
purchased only 19 kanals 2 marlas out of the mortgaged land, he offered the whole of the mortgage
money to the appellant-defendants realising that partial redemption was not permissible. The
appellants were stated to have refused to deliver possession which necessitated the filing of the suit.
5. Prakash Singh who was impleaded as Defendant 3 was proceeded ex parte. The appellants,
though admitted that the disputed land under mortgage was in their possession on the basis of a
mortgage for a sum of Rs 7000 since the year 1968, yet contended that the plaintiffs had no
right to get the suit land redeemed before the expiry of mortgage period of 99 years. The suit was
stated to be premature and liable to be dismissed.
6. On the basis of the pleadings of the parties, the trial court framed the following issues:
“1. Whether the disputed land is liable to be redeemed in favour of the plaintiff as
claimed through this suit? OPP
2. Whether the period of 99 years of mortgage is a clog on the equity of redemption? OPP
3. Whether the plaintiff has no locus standi to file this suit? OPD
4. Relief?”
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The trial court while deciding Issues 1 and 2 held:
“The clause in the mortgage deed providing for the mortgage of the land for a period of
99 years constitutes a clog on the equity of redemption and as such is illegal and void and the
same cannot be allowed to stand in the way of the plaintiff to get the suit land redeemed or
acquire its possession. The statutory right of redemption cannot be fettered by any condition
which impedes or prevents the redemption clause.”
7. The respondent-plaintiff was held to have proved that he was entitled to get the whole of the
disputed land redeemed by payment of the mortgage money of Rs. 7000.00 to the appellantdefendants. In view of positive findings on Issues 1 and 2 in favour of the plaintiffs, Issue 3 was
decided against the defendants and the suit decreed as noticed earlier. The appellate court also decided
on facts that the plaintiff after the purchase of the land, the subject-matter of the suit, had become
mortgagor and was entitled to redeem the same prior to the period of 99 years fixed in the mortgage
deed. The clog or fetter on redemption imposed in the mortgage deed was held to be void which did
not prevent the plaintiffs to seek redemption of the mortgaged property prior to the aforesaid period.
8. Section 60 of the Transfer of Property Act provides that at any time after the 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 to deliver the mortgage deed and all documents relating to
the mortgaged property and where the mortgagee is in possession of the mortgaged property, to
deliver possession thereof to the mortgagor. Such a right of the mortgagor is called, in English law,
the equity of redemption. The mortgagor being an owner who has parted with some rights of
ownership has a right to get back the mortgage deed or mortgaged property, in exercise of his right of
ownership. The right of redemption recognised under the Transfer of Property Act is thus a statutory
and legal right which cannot be extinguished by any agreement made at the time of mortgage as part
of the mortgage transaction.
9. This Court in Jayasingh Dnyanu Mhoprekar v. Krishna Babaji Patil [AIR 1985 SC 1646]
held:
“It is well settled that the right of redemption under a mortgage deed can come to an end
only in a manner known to law. Such extinguishment of 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 the 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
principle which is applicable to all mortgages, namely ‘Once a mortgage, always a
mortgage’.”
10. Any provision incorporated in the mortgage deed to prevent or hamper the redemption would
thus be void. A mortgage cannot be made irredeemable and the right of redemption not an (sic)
illusory. This Court in Ganga Dhar v. Shankar Lal [AIR 1968 SC 770] held:
“The rule against clogs on the equity of redemption is that, a mortgage shall always be
redeemable and a mortgagor’s right to redeem shall neither be taken away nor be limited by
any contract between the parties. The principle behind the rule was expressed by Lindley,
M.R. in Santley v. Wilde [(1899) 2 Ch 474] in these words:
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‘The principle is this: a mortgage is a conveyance of land or an assignment of chattels as a
security for the payment of a debt or the discharge of some other obligation for which it is
given. This is the idea of a mortgage: and the security is redeemable on the payment or
discharge of such debt or obligation, any provision to the contrary notwithstanding. That, in
my opinion, is the law. Any provision inserted to prevent redemption on payment or
performance of the debt or obligation for which the security was given is what is meant by a
clog or fetter on the equity of redemption and is therefore void. It follows from this, that ‘once
a mortgage always a mortgage.’
The right of redemption, therefore, cannot be taken away. The courts will ignore any
contract the effect of which is to deprive the mortgagor of his right to redeem the mortgage.
One thing, therefore, is clear, namely, that the term in the mortgage contract, that on the
failure of the mortgagor to redeem the mortgage within the specified period of six months the
mortgagor will have no claim over the mortgaged property, and the mortgage deed will be
deemed to be a deed of sale in favour of the mortgagee, cannot be sustained. It plainly takes
away altogether, the mortgagor’s right to redeem the mortgage after the specified period. This
is not permissible, for ‘once a mortgage always a mortgage’ and therefore always redeemable.
The same result also follows from Section 60 of the Transfer of Property Act. So it was said
in Mohd. Sher Kahn v. Seth Swami Dayal [AIR 1992 PC 17at p.19].
An anomalous mortgage enabling a mortgagee after a lapse of time and in the absence of
redemption to enter and take the rents in satisfaction of the interest would be perfectly valid if
it did not also hinder an existing right to redeem. But it is this that the present mortgage
undoubtedly purports to effect. It is expressly stated to be for five years, and after that period
the principal money became payable. This, under Section 60 of the Transfer of Property Act,
is the event on which the mortgagor had a right on payment of the mortgage money to
redeem.
The section is unqualified in its terms, and contains no saving provision as other sections
do in favour of contracts to the contrary. Their Lordships therefore see no sufficient reason for
withholding from the words of the section their full force and effect.”
It was observed that the rule against a clog on the equity of redemption empowered the courts to
relieve a party from his bargain. If a person has agreed to forfeit wholly his right to redeem in certain
circumstances, that agreement will be avoided. After referring to the judgments in Vernon v. Bethell
[(1762) 2 Eden 110, 113] and G. & C. Kreglinger v. New Patagonia Meat and Cold Storage Co. Ltd
[1914 AC 25,.35 & 36], this Court held:
“The reason then justifying the court’s power to relieve a mortgagor from the effects of
his bargain is its want of conscience. Putting it in more familiar language the court’s
jurisdiction to relieve a mortgagor from his bargain depends on whether it was obtained by
taking advantage of any difficulty or embarrassment that he might have been in when he
borrowed the moneys on the mortgage. Was the mortgagor oppressed? Was he imposed
upon? If he was, then he may be entitled to relief.
We then have to see if there was anything unconscionable in the agreement that the
mortgage would not be redeemed for eighty-five years. Is it oppressive? Was he forced to
agree to it because of his difficulties? Now this question is essentially one of fact and has to
be decided on the circumstances of each case. It would be wholly unprofitable in enquiring
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into this question to examine the large number of reported cases on the subject, for each turns
on its own facts.”
The Court further held that the length of term by itself would not lead to the conclusion that it was
an oppressive term. Restricting their findings on the facts of the case, the Court observed:
“It is not necessary for us to go so far as to say that the length of the term of the mortgage
can never by itself show that the bargain was oppressive. We do not desire to say anything on
that question in this case. We think it enough to say that we have nothing here to show that
the length of the term was in any way disadvantageous to the mortgagor.”
11. In Pomal Kanji Govindji v. Vrajlal Karsandas Purohit [AIR 1989 SC 436] this Court held
that:
“Freedom of contract is permissible provided it does not lead to taking advantage of the
oppressed or depressed people. The law must transform itself to the social awareness.
Poverty should not be unduly permitted to curtail one’s right to borrow money on the ground
of justice, equity and good conscience on just terms. If it does, it is bad. Whether it does or
does not, must, however, depend upon the facts and the circumstances of each case.”
The doctrine “clog on the equity of redemption” was held to be a rule of justice, equity and good
conscience. It must be adopted to the reality of situation and the individuality of transaction. The court
should take note of the time, the condition, the price spiral, the term bargain and the other obligations
in the background of the financial conditions of the parties. After referring to various judgments of the
High Courts in the country this Court held:
“26. Whether in the facts and the circumstances of these cases, the mortgage transaction
amounted to clog on the equity of redemption, is a mixed question of law and fact. Courts do
not look with favour at any clause or stipulation which clogs equity of redemption. A clog on
the equity of redemption is unjust and unequitable. The principles of English law, as we have
noticed from the decision referred to hereinbefore which have been accepted by this Court in
this country, look with disfavour at clogs on the equity of redemption. Section 60 of the
Transfer of Property Act, in India, also recognises the same position.
27. It is a right of the mortgagor on redemption, by reason of the very nature of the
mortgage, to get back the subject of the mortgage and to hold and enjoy as he was entitled to
hold and enjoy it before the mortgage. If he is prevented from doing so or is prevented from
redeeming the mortgage, such prevention is bad in law. If he is so prevented, the equity of
redemption is affected by that whether aptly or not, and it has always been termed as a clog.
Such a clog is inequitable. The law does not countenance it. Bearing the aforesaid background
in mind, each case has to be judged and decided in its own perspective. As has been observed
by this Court that long term for redemption by itself, is not a clog on equity of redemption.
Whether or not in a particular transaction there is a clog on the equity of redemption, depends
primarily upon the period of redemption, the circumstances under which the mortgage was
created, the economic and financial position of the mortgagor, and his relationship vis-à-vis
him and the mortgagee, the economic and social conditions in a particular country at a
particular point of time, custom, if any, prevalent in the community or the society in which
the transaction takes place, and the totality of the circumstances under which a mortgage is
created, namely, circumstances of the parties, the time, the situation, the clauses for
redemption either for payment of interest or any other sum, the obligations of the mortgagee
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to construct or repair or maintain the mortgaged property in cases of usufructuary mortgage to
manage as a matter of prudent management, these factors must be correlated to each other and
viewed in a comprehensive conspectus in the background of the facts and the circumstances
of each case, to determine whether these are clogs on equity of redemption.”
12. It was further held that Section 60 of the Transfer of Property Act confers on the mortgagor
the right of redemption which is a statutory right. The right of redemption is an incident of a
subsisting mortgage and it subsists so long as the mortgage subsists. Whether in a particular case there
is any clog on the equity of redemption, has to be decided in view of the background of a particular
case. The doctrine of clog on the equity of redemption has to be moulded in modern conditions. In
this regard the Court held:
“31. It is a settled law in England and in India that a mortgage cannot be made altogether
irredeemable or redemption made illusory. The law must respond and be responsive to the felt
and discernible compulsions of circumstances that would be equitable, fair and just, and
unless there is anything to the contrary in the statute, court must take cognisance of that fact
and act accordingly. In the context of fast-changing circumstances and economic stability,
long term for redemption makes a mortgage an illusory mortgage, though not decisive. It
should prima facie be an indication as to how clogs on equity of redemption should be
judged.”
13. In the present case all the courts below on facts held that the mortgage deed being for a period
of 99 years was a clog on the equity of redemption. Such findings were returned keeping in view the
facts and circumstances of the case and the financial position under which the mortgagor Shri Prakash
Singh was placed at the time of execution of the mortgage deed on 19-3-1968. The appellants were
found to be in an advantageous position qua the mortgagor. They were also found to be deriving the
usufructs of the mortgaged land for a period of over 26 years at the time of filing of the suit on
payment of a meagre sum of Rs 7000 only to the mortgagor. The findings of facts returned by the
courts below do not require any interference particularly when the learned counsel appearing for the
appellants has not contended that such findings were perverse or uncalled for or against the evidence.
There is no merit in this appeal which is accordingly dismissed.
