Shri Shivdev
Singh & ANR Vs. Sh.Sucha Singh & ANR [2000] INSC 172 (31 March 2000)
S. Saghir
Ahmad & R.P. Sethi.SETHI,J.
L.I.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 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 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 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 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 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.
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