-S. Basavaraj, Advocate, Daksha Legal.
Section 60 of the Transfer of Property Act, 1882, (extracted below) confers the right of redemption on the mortgagor. This is a statutory right. The right of redemption is an incident of a subsisting mortgage and it subsists so long as the mortgage subsists. English law on this aspect is based on principles of equity. Indian law is based on justice, equity and good conscience.
Rule against clog on redemption simply connotes that anything which obstructs the right of the mortgagor to redeem his property is void. Such obstruction constitutes a clog on the right to redemption. The resultant principle i.e. ‘once a mortgage always a mortgage’ states that there can no covenant that modifies the character of the mortgage agreed between the parties that would stop the mortgagor to redeem his property back on payment of the principal and respective interests.
The right of redemption is a right which a mortgagor may seek to enforce, and not a ‘liability’ which he may be compelled to discharge.
It is a right of the mortgagor on redemption to get back the property. He is entitled 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 tolerate clog on redemption. However, each case has to be judged and decided in its own perspective. For example long term for redemption by itself, is not a clog on equity of redemption.
Whether or not in a particular transaction there is 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 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 co-related 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.
A mortgage is essentially and basically a conveyance in law or an assignment of property as a security for the payment of debt or for discharge of some other obligation for which it is given. The security must, therefore, be redeemable on the payment or discharge of such debt or obligation. Any provision to the contrary, notwithstanding, is a clog or fetter on the equity of redemption and, hence, bad and void. “Once a mortgage must always remain a mortgage”, and must not be transformed into a conveyance or deprivation of the right over the property.
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 mortage, though not decisive. It should prima facie be an indication as to how clogs on equity of redemption should be judged. Pomal Kanji Govindji v. Vrajlal Karsandas Purohit, (1989) 1 SCC 458
Denial of title: During the subsistence of the mortgage it is not open to the mortgagee to dispute the title of the mortgagor. A mortgagee who has been put in possession pursuant to the mortgage, cannot deny the relationship. For once a mortgage it is always a mortgage. In other words the application of the Rule would arise only when the title is disputed or doubted. The application of the Rule estoppel would arise even when there is some scope or doubt regarding title and when there is some dispute is raised as regards the title of the mortgagor. Assuming the mortgagee has succeeded in raising some doubt regarding the title then it is all the more necessary to apply the rule. In such a case the Rule would come into play and the estoppel would operate. Subramanian v. Karuppayee Ammal, 1997 SCC OnLine Mad 431: (1998) 1 CTC 79, at page 84 :
Adverse possession: A mortgagee cannot claim title to the property, by way of adverse possession. S.K. Rajendran v. K. Sakthivel, 2011 SCC OnLine Mad 688 : (2011) 2 MWN (Civil) 460, at page 463 :
Decree: Unless and until final decree for redemption or foreclosure is passed, right to redeem is not lost.Thus, right of redemption can be extinguished either by Act of the parties or by (decree) of a Court. The ‘decree of the Court’ used in Section 60 of the Transfer of Property Act, 1882 has reference to the decree passed in the suit for redemption or foreclosure extinguishing the right of redemption. Right to redeem is not extinguished in case the final decree for redemption or fore-closure omits to make such declaration. Rosamma v. B.V. Ramachandrappa, 2000 SCC OnLine Kar 297: (2000) 7 Kant LJ 307: (2001) 3 ICC 715: 2000 AIHC 4782, at page 315:
Limitation and consequences of creating excess interest by the mortgagee: A suit for redemption of mortgage could be filed within 60 years. But if the mortgagee had created an interest in excess of the right enjoyed by him, then to recover possession against the third party the suit had to be filed within 12 years of the transfer becoming known to the plaintiff. The rationale in cutting down the period of 60 years to 12 years is clear. The 60 years period is granted as a mortgagee always remains a mortgagee and thus the rights remain the same. However, when an interest in excess of the interest of the mortgagee is created then the third party is not claiming under the mortgagee. The position of such a person could not be worse than that of a rank trespasser who was in open and hostile possession. As the title of the rank trespasser would get perfected by adverse possession on expiry of 12 years so also the title of such transferee would get perfected after 12 years. The period of 12 years has to run from the date of knowledge by the plaintiff of such transfer. It is always for the party who lies the suit to show that the suit is within time. Thus in cases where the suit is filed beyond the period of 12 years, the plaintiff would have to aver and then prove that the suit is within 12 years of his/her knowledge. In the absence of any averment or proof, to show that the suit is within time, it is the plaintiff, who would fail. Whenever a document is registered the date of registration becomes the date of deemed knowledge. In other cases where a fact could be discovered by due dilience then deemed knowledge would be attributed to the plaintiff because a party cannot be allowed to extend period of limitation by merely claiming that he had no knowledge. – M.K. Shekarappa v. Shivagangamma, 2007 SCC OnLine Kar 179: ILR 2007 KAR 2473: (2007) 5 Kant LJ 93: (2007) 4 AIR Kant R 330: (2007) 4 ICC 308: 2007 AIHC 2530, at page 2484:
Section 60. 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 mortgagemoney, 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 a suit to enforce it is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed. the mortgagee shall be entitled to reasonable notice before payment or tender of such money.
Redemption of portion of mortgaged property.—Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgager.
Compiled by S. Basavaraj, Advocate, Daksha Legal
Daksha Legal 