Aapka Consultant Judgment Series- In this series, we are providing case analysis of Landmark Judgments of Hon’ble Supreme Court of India.
Seth Ganga Dhar Vs. Shankar Lal and Ors.
AIR1958SC770, [1959]1SCR509
Hon’ble Judges/Coram: A.K. Sarkar, J.L. Kapur and N.H. Bhagwati, JJ.
Date of Decision: 15.04.1958
FACTS:-
This appeal arises out of a suit for the redemption of a mortgage dated August 1, 1899. The mortgage was created by Purshottamdas who is now dead and was in favour of Dhanurpmal, a respondent in this appeal. The mortgage instrument stated that the property had been usufructuary 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 with a commercial mortgage refinancing service. It also provided that on redemption of the prior mortgage, the possession of the shop would be taken over and retained by the mortgagee, Dhanurpmal, 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 Kacheri, would be made over to the mortgagor, Purshottamdas. 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, Dhanurpmal 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. Applying for a short term loans for unemployed or payday cash advance is the easiest thing to do and so is qualifying for it. There are only 2 simple limitations on it, namely, that you should have never defaulted a previous payday loan and that you should have sufficient income.
On January 2, 1947, the appellant filed the suit in the Court of the Sub-Judge, Ajmere, against the respondents. The suit was contested by the sons of Motilal, the assignee of the mortgage, who are the only respondents appearing in this appeal, who shall be hereafter referred 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 Commissioner, Ajmere, to whom he was subordinate, held that the provision postponing redemption for eighty five 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 Commissioner, Ajmere, held, that the decision 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. The provisions in the mortgage instrument on which the present dispute turns were in these terms : “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, I, my heirs, and legal representatives shall have no claim over the mortgaged property…..”
ISSUE:-
Whether a term in mortgage instrument, in so far as it prevents the right to redeem from accruing for a time, a clog on the equity of redemption?
JUDGMENT:-
Under section 60 of Transfer of Property Act (hereinafter referred as “the 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, however, under this section that right can be exercised only after the mortgage money has become due. Under the section, once the right to redeem has arisen it 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 mortgage. In light of the above principle 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.
Now, with regards to the issue in present case, the court observes that the rule against clogs on the equity of redemption embodied in Section 60 of the 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 he borrowed the money.
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 eighty five 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, it was held that that the term providing for a period of eighty five 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 bargain 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.
Court further observed that the term that on the failure of the mortgagor to redeem within the specified period of six months, he 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.
HELD:-
The mere length of the period could not by itself lead to an inference that the bargain was in any way oppressive or unreasonable. Depending on the facts and circumstances of a case, the Court has not only the right to relieve a mortgagor of a bargain but also where the right to redeem is restricted.
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