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CASE NO.:

Special Leave Petition (civil) 18251 of 1999

PETITIONER:

SHRI SHIVDEV SINGH & ANR.

Vs.

RESPONDENT:

SH.SUCHA SINGH & ANR.

DATE OF JUDGMENT: 31/03/2000

BENCH:

S. Saghir Ahmad & R.P. Sethi.

JUDGMENT:

SETHI,J.

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Leave granted.

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 filed a suit

for possession 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 impugned

in this appeal.

It is contended on behalf of the appellants that the

clause prescribing the period of mortgage did not

constitutes 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 vs.

Shankar Lal [AIR 1958 SC 770 = 1959 SCR 509] and

distinguished the judgment relied upon by the High Court in

the case of Pomal Kanji Govindji & ors.vs. Vrajlal

Karsandas Purohit & Ors. [AIR 1989 SC 436].

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.7,000/- 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 respondents Sucha Singh

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vide registered sale deed dated 25th March, 1987 for a valid

consideration by which the mortgage money of Rs.7,000/- 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

appellants-defendant realising that partial redemption was

not permissible. The appellants were stated to have refused

to deliver possession which necessitated the filing of the

suit. Prakash Singh who was impleaded as defendant No.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.7,000/- since the

year 1968, yet contended that the plaintiffs had no right to

get the suit land redeemed before the expirty of mortgage

period of 99 years. The suit was stated to be premature and

liable to be dismissed. 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?"

The Trial Court while deciding Issue Nos.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. This view stands fully fortified from

the relevant law laid down through an authority, 1992(1) All

India Land Laws Reporter (P&H) 524, Ajit Singh vs. Kakhbir

Singh and others. As such the argument advanced on behalf

of the defendants on this account must fail. The case of

the plaintiff could not be resisted on any other cogent

ground."

The plaintiff-respondent was held to have proved that he

was entitled to get whole of the disputed land redeemed by

payment of the mortgage money of Rs.7,000/- to the

appellants-defendants. In view of positive findings on

Issue Nos.1 and 2 in favour of the plaintiffs, issue No.3

was decided against the defendants and suit decreed as

noticed earlier. The appellate court also decided on facts

that the plaintiff after the purchase of the land, the

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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 of

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.

Section 60 of the Transfer of Property Act provides that

at any time after the money has become due, the mortgagor@@

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has a right, on payment or tender, at a proper time and@@

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place of the mortgagor-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. This Court in

Jayasingh Dnyanu Mhoprekar & Anr. vs. Krishna Babaji Patil

& Anr. [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 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 principle which is applicable to all mortgages, namely

"Once a mortgage, always a mortgage."

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 illusory. This Court in Ganga Dhar v.

Shankar Lal [AIR 1958 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(B) in these words:

"The principle is this: a mortgage is a conveyance of

land or an assignment of chattles 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

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of remption 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 court 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 S.60 of the Transfer of

Property Act. So it was said in Mohammad Sher Kahn v. Seth

Swami Dayal, 49 Ind App. 60 at p.65: (AIR 1922 PC 17 at

p.19)(C).

An anomalous mortgage enable a morgagee 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 S.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 on

sufficient reason for withholding from the words of the

section their full force and effect."

It was observed that the rule against clog on 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 judgments in Vernon v.

Bethell, (1762) 2 Eden 110 at 113; 28 ER 838 at p. 839

(D), G & C. Kreglinger v. New Patagonia Meat and Cold

Storage Company Ltd. (1914) AC 25 at pp. 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 mere 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

eightyfive 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

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in enquiring 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".

In Pomal Kanji Govindji & Ors. v. Vrajlal Karsandas

Purohit & Ors. [AIR 1989 SC 436] this Court held that@@

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"freedom of contract is permissible provided it does not@@

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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 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:

"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.

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

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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 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."

It was further held that Section 60 of the Transfer of

Property Act confers on the mortgagor 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 equity of redemption has to be moulded

in modern conditions. In this regard the Court held:

"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, law

must take congnisance 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."

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 meager sum of Rs.7,000/-

only to the mortgagor. The findings of the 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 but

without any order as to costs.