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PETITIONER: SETH GANGA DHAR

       Vs.

RESPONDENT: SHANKAR LAL & OTHERS

DATE OF JUDGMENT: 15/04/1958

BENCH:

ACT: Mortgage-Mortgagor’s right redeem-Instruntent providing that mortgage shall not be redeemable for eightyfive  years-Term, if a clog on the equity of redemption-Power of Court-Extent- Applicability-Transfer of Property Act, 1882 (4 of 1882), s. 60.

HEADNOTE: The rule against clogs on the equity of redemption  embodied in s. 60 of the Transfer of-Property Act empowers the  Court not  only  to relieve a mortgagor of a  bargain  whereby  in certain  circumstances his right to redeem the  mortgage  is wholly taken away, but also where that right is  restricted. The extent of this latter power is, however, limited by  the reason  that  gave rise to it,  namely,  the  unconscionable nature  of the bargain, which, to a court of  equity,  would afford sufficient ground for relieving the mortgagor of  his burden, and its exercise must, therefore, depend on  whether the   bargain,  in  the  facts  and  circumstances  of   any particular case, was one imposed on the mortgagor by  taking advantage  of his difficult and impecunious position at  the time when lie borrowed the money. Vermon  v. Bethell, (1762) 2 Eden 110; 28 E.  R. S38 and  D. and  C.  Kreglinger v. New Patagonia Meat and  Cold  Storage Company, Ltd., [1941] A.C. 25, relied on. Santley v. Wilde, (1913) L. R. 41 I. A. 84 and Mohammad Sher Khan v. Seth Swami Dayal, (1912) L.  R. 49 I. A. 60,  refer- red to. Consequently,  in a suit, for redemption where the  mortgage deed,  by two distinct and independent terms  provided  that (1) the mortgage shall not be redeemed for eightyfive  years and (2) that it could be redeemed only after that period and within  six months thereafter, failing which  the  mortgagor would cease to have any claim on the mortgaged property  and the  mortgage deed would be deemed to be a deed of  sale  in favour of the mortgagee, and it was clearly evident from the facts  and  circumstances of the case that the  bargain  was quite  fair  and one as between parties  dealing  with  each other on an equal footing : Held,  that  the term providing for a period  of  eightyfive years  was not a clog on the equity of redemption,  and  the mere  length  of the period could not by itself lead  to  an inference  that the bar. gain was in any way  oppressive  or unreasonable.  The term was enforceable in law and the  suit for  redemption, filed before the expiry of the period  was- premature. Held,  further,  that the term that on the  failure  of  the mortgagor  to  redeem  within the specified  period  of  six months, he

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65 510 would  lose his right to do so and the mortgage deed was  to be  deemed to be a deed of sale in favour of the  mortgagee, was  clearly a clog on the equity of redemption and as  such invalid  but its invalidity could not in any way affect  the validity of the other term as to the period of the mortgage, that stood clearly apart.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 150 of 1954. Appeal from the judgment and decree dated March 21, 1950, of the  Court of Judicial Commissioner at Ajmer in Civil  First Appeal  No.  13  of 1948, arising out of  the  judgment  and decree  dated March 30, 1948, of the Court of Sub-Judge  1st Class, Ajmer, in Civil Suit No. I of 1947. Tarachand Brijmohan Lal, for the appellant. S.   S. Deedwania and K. L. Mehta, for the respondents. 1958.  April 15.  The Judgment of the Court was delivered by SARKAR  J.-This  appeal  arises  out  of  a  suit  for   the redemption of a mortgage dated August 1, 1899.  The property mortgaged was a four-roomed shop with certain appurtenances, standing on a piece of land measuring 5 yards by 15 yards in Naya   Bazar,   Ajmere.   The  mortgage   was   created   by Purshottamdas  who  is  now  dead  and  was  in  favour   of Dhanrupmal,  a  respondent  in this  appeal.   The  mortgage instrument stated that the property had been  usufructuarily mortgaged  in lieu of Rs. 6,300 of which Rs. 5,750 had  been left  with the mortgagee to redeem a prior mortgage  on  the same  and  another  property.  It  also  provided  that   on redemption of the prior mortgage, the possession of the shop would   be  taken  over  and  retained  by  the   mortgagee, Dhanrupmal,  who  would  appropriate its  rent  in  lieu  of interest on the money advanced by him and the possession  of the  other property covered by the prior mortgage,  being  a share  in  a Kachery would be made over  to  the  mortgagor, Purshottamdas.  The provisions in the mortgage instrument on which the present dispute turns were in these terms:                      511 " I or my heirs will not be entitled to redeem the  property for  a period of 85 years.  After the expiry of 85 years  we shall  redeem it within a period of six months.  In case  we do not redeem within a period of six months, then after  the expiry  of  the stipulated period, 1, my  heirs,  and  legal representatives  shall  have  no claim  over  the  mortgaged property,  and the mortgagee shall have no claim to get  the mortgage money and the lagat (i. e., repairs) expenses  that may  be  due at the time of default.  In such e,  case  this very  deed will be deemed to be a sale deed.  There will  be no need of executing a fresh sale deed.  The expenses  spent in repairs and new constructions will be paid along with the mortgage  money  at  the time  of  redemption  according  to account produced by the mortgagee." The   mortgagee,  Dhanrupmal,  duly  redeemed  the   earlier mortgage  and,  went  into  possession  of  the  shop  while possession  of the Kacheri was delivered to  the  mortgagor. On April 12, 1939, Dhanrupmal assigned his rights under  the mortgage to Motilal who died later, and whose estate is  now represented  by his sons, who are the other  respondents  in this  appeal.   ’The estate of Purshottamdas,  the  original mortgagor, is now represented by his son, the appellant. On  January  2, 1947, the appellant filed the  suit  in  the Court  of  the Sub-Judge, Ajmere, against  the  respondents.

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The suit was contested by the sons of Motilal, the  assignee of  the mortgage, who are the only respondents appearing  in this  appeal and whom we shall hence, hereafter refer to  as the  respondents.  They said that the suit was premature  as under the mortgage contract there was no right of redemption for  eighty five years after the date of the mortgage,  that is  to  say, till August 1, 1984.   The  learned  Sub-Judge, purporting  to  follow a decision of  the  Judicial  Commis- sioner,  Ajmere, to whom he was subordinate, held  that  the provision  postponing  redemption for eightyfive  years  was invalid  as  it  amounted  to  a  clog  on  the  equity   of redemption.  He, therefore, passed a preliminary decree  for redemption.  On appeal, the learned Judicial  Conmmissioner, Ajmere, held, that the decision 512 which   the   Sub-Judge  had  purported   to   follow   was, distinguishable.  He examined a large number of cases on the subject  and  came to the conclusion that the  provision  in question  did  not  amount  to  a  clog  on  the  equity  of redemption.  He, therefore, allowed the appeal and dismissed the appellant’s suit.  From this decision the appeal to this Court arises. It is admitted that the case is governed by the Transfer  of Property  Act.  Under s. 60 of that Act, at any  time  after the  principal  money has become due, the  mortgagor  has  a right on payment or tender of the mortgage money to  require the mortgagee to reconvey the mortgage property to him.  The right conferred by this section has been called the right to redeem and the appellant sought to enforce this right by his suit.   Under  this  section, however,  that  right  can  be exercised only after the mortgage money has become due.   In Bakhtawai-  Begum v. HusainiKhanam (1), also the  same  view was expressed in these words: "  Ordinarily,  and in the absence of  a  special  condition entitling the mortgagor to redeem during the term for  which the  mortgage is created, the right of redemption  can  only arise on the expiration of the specified period.  " Now, in the present case the term of the mortgage is eighty- five  years  and  there is  no’  stipulation  entitling  the mortgagor to redeem during that term.  That term has not yet expired.  The respondents, therefore, contend that the  suit is premature and liable to be dismissed. The  appellant’s  answer  to this  contention  is  that  the covenant creating the long term of eightyfive years for  the mortgage, taken along with the provision that the  mortgagor must redeem within a period of six months thereafter or  not at  all  and the other terms of the mortgage  and  also  the circumstances of the case, is really a clog on the equity of redemption  and is therefore invalid.  He contends that,  in the result the mortgage money had been due all along and the suit was not premature. (1)  (1913) L.R. 41 I.A. 84, 89.                      513 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 (1) 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

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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 mortoage.  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 Khan v.  Seth Swami Dayal (2) : "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 (1) [1899] 2 Ch, 474. (2) (1921) L.R. 49 1,A. 60, 65. 514 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   no sufficient  reason  for withholding from the  words  of  the section their full force and effect.  " Under the section, once ’the right to redeem has. arisen  it cannot be taken away.  The mortgagor’s right to redeem  must be  deemed to continue even after the period of  six  months has  expired and the attempt to confine that right  to  that period  must  fail.   The term in  the  mortgage  instrument providing that the mortgage can be redeemed only within the six months and not thereafter must be held  period of to  be invalid and ignored.  The learned Judicial Commissioner took the  same  view  and this has not been  challenged  in  this appeal on behalf of the respondents. With  this term however this case is not really con  cerned. Learned  advocate for the appellant directed his  attack  on the  term in the instrument of mortgage that it will not  be redeemable  for eighty five years.  He contended  that  this term amounts to a clog on the equity of redemption.  We wish to  observe here that the learned advocate did  not  contend that  the invalidity, as we have earlier held, of  the  term taking  away  the  right to redeem the  mortgage  after  the period of six months makes the term fixing the period of the mortgage  at  eighty five years invalid.  This  latter  term stands  quite  apart.   It  only fixes  the  time  when  the principal  sum is to become due, that is, when the right  to redeem will accrue and has, therefore, nothing to do with  a term  which  provides  when that right will  be  lost.   The

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invalidity of one does not make the other also invalid. The term providing that the right to redeem will arise after eightyfive years does not, of course, take 515 away the mortgagor’s right to redeem and is not,  therefore, in that sense, a clog on the equity of redemption.  It does, however  prevent  accrual  of the right to  redeem  for  the period mentioned.  Is it then, in so far as it prevents  the right to redeem from accruing for a time, a clog ? As we have already said, the right to redeem does not  arise till  the principal money becomes due.  When  the  principal sum  is to become due must of course depend on the  contract between  the parties.  In the present case the parties  have agreed that the right to redeem will arise eightyfive  years after  the  date  of  the mortgage,  that  is  to  say,  the principal  money will then become due.  The  appellant  says that  he  should be relieved from this bargain that  he  has made.  This is the contention that has to be examined. The rule against clogs on the equity of redemption no  doubt involves  that the Courts have the power to relieve a  party from his bar ’gain.  If he has agreed to forfeit wholly  his right  to  redeem in certain circumstances,  that  agreement will  be  avoided.  But the Courts have  gone  beyond  this. They have also relieved mortgagors from bargains whereby the right to redeem has not been taken away but restricted.  The question  is  the term now under consideration such  that  a Court  will exercise its power to grant relief against it  ? That  depends  on the extent of this power.  It is  a  power evolved in the early English Courts of Equity for a  special reason.   All  through  the ages  the  reason  has  remained constant and the Court’s power is therefore limited by  that reason.   The  extent of this power has,  therefore,  to  be ascertained  by  having regard to its origin.   It  will  be enough for this purpose to refer to two authorities on  this question. In  a  very  early case, namely, Vermon v. Bethell  Earl  of Northington L. C. said, "  This court, as a court of conscience, is very jealous  of persons  taking securities for a loan, and  converting  such securities into purchases.  And therefore I take it to be an established rule, that a mortgagee can never provide at  the time of making the (1)  (1762) 2 Eden 110, 113; 28 E.R. 838,839. 516 loan  for  any  event or condition on which  the  equity  of redemption shall be discharged, and the conveyance absolute. And  there  is great reason and justice in  this  rule,  for necessitous  men are not, truly speaking, free men, but,  to answer a present exigency, will submit to any terms that the crafty may impose upon them.  " In comparatively recent times Viscount Haldane L. C.repeated the same view when he said in G. and C. Kreglinger  v.   New Patagonia  Meat  and  Cold Storage Company  Ltd.  (1):  This jurisdiction  was  merely a special application  of  a  more general power to relieve against penalties and to could them into  mere securities.  The case of the common law  mortgage of  land was indeed a gross one.  The land was  conveyed  to the  creditor  upon the condition that if the money  he  had advanced to the feoffor was repaid on a date and at a  place named,  the fee simple would revest in the latter, but  that if the condition was not strictly and literally fulfilled he should lose the land forever.  What made the hardship on the debtor a glaring one was that the debt still remained unpaid and could be recovered from the feoffor notwithstanding that he  had  actually  forfeited  the  land  to  the  mortgagee.

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Equity, therefore, at an early date began to relieve against what was virtually a penalty by compelling the creditor to use his legal title as a mere security. My  Lords, this was the origin of the jurisdiction which  we are now considering, and it is important to bear that origin in  mind.  For the end to accomplish which the  jurisdiction has  been evolved ought to govern and limit its exercise  by equity  judges.  That end has always been to  ascertain,  by patrol evidence if need be, the real nature and substance of the transaction, and if it turned out to be in truth one  of mortgage  simply, to place it on that footing.  It  was,  in ordinary cases, only where there was conduct which the Court of  Chancery regarded as unconscientious that it  interfered with freedom of contract.  The lending of money, on mortgage or otherwise, was looked                      517 on  with  suspicion,  and  the court was  on  the  alert  to discover  want  of  conscience  in  the  terms  imposed   by lenders." 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 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 in enquiring into this question to examine the large  number of reported cases on the subject, for each turns on its  own facts. First then, does the length of the term-and in this case  it is  long  enough being eightyfive years-itself lead  to  the conclusion that it was an oppressive term ?  In our view, it does not do so.  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  dis-advantagous to  the mortgagor.  It is quite conceivable that it  was  to his  advantage.   The suit for redemption was  brought  over forty-seven years after the date of the mortgage.  It  seems to  us impossible that if the term was oppressive, that  was not  realised  much earlier and the suit  brought  within  a short   time   of  the  mortgage.   The   learned   Judicial Commissioner felt that the respondents’ contention that  the suit  had been brought as the price of landed  property  had gone up after the war, was 66 518 justified.  We are not prepared to say that he was wrong  in this  view.  We cannot also ignore, as appears from a  large number  of  reported decisions, that it is not  uncommon  in various parts of India to have long term mortgages.  Then we find that the property was subject to a prior mortgage.   We are  not  aware what the term-of that mortgage was’  But  we find  that mortgage included another property  which  became freed  from  it as a result of the mortgage in  suit.   This

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would  show that the mortgagee under this mortgage  Was  not putting any pressure on the mortgagor.  That conclusion also receives support from the fact that the mortgage money under the  present mortgage was more than that under  the  earlier mortgage but the mortgagee in the present case was satisfied with  a smaller security.  Again, no complaint is made  that the  interest charged, which was to be measured by the  rent of the property, was in any manner high.  All these, to  our mind,  indicate that the mortgagee had not taken any  unfair advantage  of  his  position as the  lender,  nor  that  the mortgagor was under any financial embarrassment. It  is  said that the mortgage instrument  itself  indicates that  the bargain is hard, for, while the  mortgagor  cannot redeem  for  eighty-five  years, the mortgagee  is  free  to demand  payment  of  his dues at any  time  he  likes’  This contention is plainly fallacious. ; There is nothing in  the mortgage  instrument permitting the mortgagee to demand  any money, and it is well settled that the mortgagee’s right  to enforce the mortgage and the mortgagor’s right to redeem are co-extensive. Then it is said that under the deed the mortgagee can  spend any  amount  on  repairs to the  mortgage  property  and  in putting up new constructions there- and the mortgagor  could only  redeem  after paying the expenses for these.   We  are unable  to  agree that such is the effect  of  the  mortgage instrument.   We  cannot  lose sight of the  fact  that  the mortgaged  shop and the area of the land on which  it  stood were very small.  It was not possible to spend a large.  sum on  repairs  or  construction  there.   Furthermore,  having agreed to 85 years as the term of the mortgage, the  parties must 519 have  imagined  that  during this long  period  repairs  and constructions  would  become  necessary.  It  is  only  such necessary repairs as are contemplated by the instrument  and we do not consider that it is hard on the mortgagor to  have to pay for such repairs and construction when he redeems the property   and   gets  the  benefit  of  the   repairs   and construction.  Neither do we think that there is anything in the  contention  that under the document the  mortgagor  was bound  to  accept  whatever was  shown  in  the  mortgagee’s account  as  having  been  spent on  the  repairs  and  con- struction.   That  is not, in our view, the  effect  of  the relevant clause which reads, " The expenses spent in repairs and  new constructions will be paid...... according  to  the account  produced by the mortgagee.  " All that it means  is that   in  claiming  moneys  on  account  of   repairs   and construction  the  mortgagee  will have  to  show  from  his account  that  he  spent  these  moneys.   It  is  really  a safeguard for the mortgagor.  It was also said that all  the terms in the deed were for the benefit of the mortgagee  and that  showed  that the bargain was a hard one.   We  do  not think  that  all  the  terms were for  the  benefit  of  the mortgagee, or that what there was in the instrument was  for his  benefit and indicated that the mortgagee had  forced  a hard bargain on the mortgagor.  We have earlier said how the bargain  appears to us to have been fair and one as  between parties dealing with each other on equal footing. We  have  no  evidence in this  case  of  the  circumstances existing  at  the date of the mortgage as to  the  pecuniary condition of the mortgagor or as to anything else from which we  may come to the conclusion that the mortgagee had  taken advantage of the difficulties of the mortgagor and imposed a hard  bargain  on him. It was said that the  fact  that  the property was subject to a prior mortgage at the date of  the

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mortgage  in suit indicates the impecunious position of  the mortgagor.   We  are unable to agree with  this  contention. Every debtor is not necessarily impecunious.  The  mortgagor certainly derived this advantage from that mortgage that  he was  able to free from the earlier mortgage the kacheri  and he has been in enjoyment of it ever since. 520 That,  to  our  mind, indicates that the  bargain  had  been freely  made, There was nothing else to which our  attention was  directed  as showing that the bargain  was  hard.   We, therefore,  think that the bargain was a reasonable one  and the  eighty-five  years  term  of  the  mortgage  should  be enforced.  We then come to the conclusion that the suit  was premature and’ must fail. In the result we dismiss this appeal with costs. Appeal     dismissed.