Right of redemption is the right which every mortgagor possess, which is created by virtue of the mortgage deed. This right is considered to be inalienable, and cannot be taken away from a mortgagor by means of any contract to the contrary. According to Black’s Law Dictionary, term “redemption” can be defined as the act of the vendor of property in buying it back again from the purchaser at the same or an enhanced price. “Right of Redemption” can be defined under the same dictionary as an agreement or paction, by which the vendor reserves to himself the power of taking back the thing sold by returning the price paid for it. This right finds place under Section 60 of the Transfer of Property Act, 1882 which makes mortgagor the owner of the property mortgaged, and makes him able get his property back from the mortgagee on paying the amount borrowed from him. Clog on a right means the insertion of any clause or any provision under the mortgaged deed which would alienate mortgagor of his property under certain circumstances. Under Indian legal system, such provisions would not be able to alienate a mortgagor of his “Right of Redemption”, and such provisions would be void ab initio. The reason for such clauses under the mortgage deed being void is quite interesting and reasonable. It would not be difficult to understand that a person mortgages his property when he is in need of money, and would not be in the same position as that of the mortgagee. Also, it would not be difficult to understand that mortgagee would try to misuse his position to exploit the mortgagor, and it is for this reason that such clause becomes obvious which would alienate a mortgagor of his property. It is highly possible that a person agrees to enter in a mortgage having clauses which extinguish his right of redemption, but it would not be necessary that the provisions have been accepted by him willingly. In need of money, a person would agree to the terms and conditions of the mortgagee even if he doesn’t want to do so. But, law doesn’t sit silent and in such cases it steps in the picture, and save the basic rights of a mortgagor. Law doesn’t allow any person to alienate a mortgagor of his “Right of redemption”. Such right would remain effective unless the property has been sold off or under any statutory provision. Even if mortgage has went to the court for the foreclosure of the property mortgaged, mortgagor can redeem his property by paying off the full amount in the court.
Time period is not the essence in case of right of redemption. One such case was decided by the court in Achaldas Durgaji Oswal v Gangabisan Heda (2003) 3 SCC 614 , where a suit was filed by the mortgagee for the foreclosure of the property, and another suit was filed by the mortgagor. Lower court asked mortgagor to pay off the amount within 3 months, but he was not able to do so. Instead, he paid off the amount after a period of 3 years and at that point of time his suit was rejected by the lower court on ground of exceeding the limitation period as decided by the court. Lower court’s decree was reversed by the High Court, which was upheld by the Supreme Court. It was held by the Supreme Court that “the right of redemption of mortgagor being a statutory right, the same can be taken away only in terms of the proviso appended to Section 60 of the Act which is extinguished either by a decree or by act of parties. Admittedly, in the instant case, no decree has been passed extinguishing the right of the mortgagor nor such right has come to an end by act of the parties.” Another view was taken by the Supreme Court in K.Vilasini and Ors v Edwin Periera CIVIL APPEAL NO. 5476 OF 2008, where a suit was filed by the mortgagor for the foreclosure but it was prayed by the mortgagor that he would pay the amount and required some time. The time was granted by the court with the consent of the mortgagee, but mortgagor was not able to pay the amount in the stipulated time. He later deposited the amount claimed to redeem his property. The same was decreed by the court and confirmed by the High Court. Supreme Court also decreed in favour of the mortgagor stating that mortgagee had himself allowed mortgagor to pay off the amount and also took part in the proceedings therein. In Hasthimal and Sons v. Tej Raj Sharama 2007 AIR SCW 6135 , where a pre-emption clause was introduced by the mortgagee stating that he would have a right to purchase the property if the same was intended by the mortgagor. In this case, Supreme Court relied on a judgment of House of Lords in Lewis v. Frank Love, Ltd, 1961 All. E.R. 446, where it was held by the court that “where one of the terms arranged between the mortgagor and the mortgagee was that the mortgagee should have a right to pre-emption in case the mortgagor wishes to transfer the property to a third party, such a condition operates as a clog on the right of redemption of the vendee from the mortgagor.
In Harbans v. Om Prakash AIR 2006 SC 686, Supreme Court referred Mulla’s The Transfer of Property Act, 9th Ed, where it is stated that “The right of redemption is an incident of a subsisting mortgage and subsist as long as the mortgage itself subsists. It can be extinguished as provided in the section and when it is alleged to be extinguished by a decree, the decree should run strictly in accordance with the forum prescribed for the purpose. Dismissal of an earlier suit for redemption whether as abated or as withdrawn or in default would not be barred the mortgagor from filing a second suit for redemption so long as the mortgage subsists and the right of redemption is not extinguished by the efflux of time or decree of the court in the prescribed form.”Consequently, the suit was decreed in favour of the mortgagor. Similar view was taken by the Supreme Court in Pomal Kanji Govindji v Vrajlal Karsandas Purohit AIR 1989 SC 436. Further it was held by the Supreme Court in Shivdev Singh v Sucha Singh air 2000 SC 1935, that a provision incorporated in the mortgage deed to prevent or hamper the redemption would be void, and that the right provided by section 60 of the Transfer of Property Act, 1882 is a statutory right and clog on this right should be determined depending on the facts and circumstances of each case. In case of Parichhan Mistry v Acchiabar Mistry AIR 1997 SC 456, question as to how can right of redemption can come to an end was resolved and it was stated by the Supreme Court that “It is true that a right of redemption under a mortgage deed can come to an end, but only in the manner known to law. Such extinguishment of right can take place by contract between the parties or by a decree of the court or by a statutory provision which debars the mortgagors from redeeming the mortgage.”
In the case of Madhagonda Ramgonda Patil v Shripal Balwant Rainade AIR 1988 SC 1200, mortgagee obtained a decree for the sale of the mortgaged property but he was not able to sale the property, and his heirs and legal representatives were in the possession of the mortgaged property. A suit for redemption was filed by the mortgagors and it was decreed in their favour by the court stating that mortgage deed still existed between mortgage and the mortgagee. In Jayasingh Dnyanu Mhoprekar v Krishna Babaji Patil AIR 1985 SC 1646, it was held by the Supreme Court that “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 principle which is applicable to all mortgages, namely “Once a mortgage, always a mortgage”
But, it is also interesting to note that a co-mortgager cannot file a suit for redemption of his part of the mortgaged property. Mortgagee would not be liable to return a part of the mortgager property to one of the co-mortgagors. The same was held by the Supreme Court in case of Chhaganlal Keshavlal Mehta v Patel Narandas Haribhai AIR 1982 SC 121, where it was held by the Supreme Court that “a perusal of Section 60 indicates that a co-mortgagor cannot be permitted to redeem his own share of the mortgaged property only on payment of proportionate part of the amount remaining due. In other words the integrity of the mortgage cannot be broken. Another problem which can arise for a mortgagor while claiming his property back is when the property is purchased by the mortgagor himself and become assignee of the property mortgaged. This problem was resolved by the Supreme Court in case of C.V. Raghavachar v Lakshminarasamma AIR 1981 SC 160, where it was held by the Supreme that when mortgagee himself becomes the assignee of the property mortgaged, and problem arises as to whether he should be considered as mortgagee or assignee. It such condition, his position as a mortgagee would get preference and also the right to redeem would remain in existence. Another issue relating to clog on right to redemption was raised in the case of Gulab Chand Sharma v Saraswati Devi AIR 1977 SC 242, where an issue pertaining to a clause in the mortgage deed was raised. In this case, there was clause which was supposed to make mortgagee the owner of the mortgaged property absolutely on mortgagor receiving the notice of re-entry from the Land and Development Officer or any other such authority. But, this clause was termed by the Supreme Court as a clog on the equity of redemption and was decreed accordingly in favour of the mortgagor.
From above cases, it would be easy to understand some of the few situations showing that right to redeem is an inalienable right and it would not be possible for a mortgagee to take away this right from a mortgagor so easily. Right of redemption can only be extinguished in two ways viz. Act of the parties, or by a decree of a court. Act of the parties can be understood in various ways. One can be the sale of the property by the mortgagee, but sale would not be complete unless the money is paid by the purchased and hence the right to redeem would exist unless the amount agreed the mortgagee and the purchaser are paid off. Moreover, a mortgagee may lose his right over the mortgaged property if he doesn’t take any remedial steps in a reasonable time and his right to sale the mortgaged property becomes invalid because of his inability to file a suit for the foreclosure of the property within the limitation period. But, it is also the necessary to understand the need of this right to remain present under legal system. Reason being very simple, as in the absence of such provision on any of the enacted statues or laws in the legal system it would become easy for mortgagee to gain advantage of his position. The principle behind can the responsibility of the state towards society where every breed of person stay, and a person who is at a higher position would try to take advantage of that position. Reason for having the provisions relating to mortgages is also the same. It was generally a tradition in ancient time to take the possession of the property by the money lender and if debtor was not able to pay the amount, then money lender would get the ownership of the property. Usually, the price of the property kept as a security was much higher than that of the money borrowed.
“Justice may be blind, but she has very sophisticated listening devices.” - Edgar Argo
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