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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. L...I...T.......T.......T.......T.......T.......T.......T..J     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@@          JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ has  a  right,  on payment or tender, at a proper  time  and@@ JJJJJJJJJJJJJJJJJJ 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@@                    JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ "freedom  of  contract is permissible provided it  does  not@@ JJJJJJJJJJJJJJJJJJJJJJJJJ 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-Ã -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.