Pomal Kanji Govindji v.

Vrajlal
Karsandas Purohit
AIR 1989 SC 436 : (1989) 1 SCC 458
Brief Facts: The plaintiff had filed a suit alleging
that the deceased Karsandas was their father and
he died in the year 1956, he had mortgaged the
suit property to Kansara for 30,000 koris by a
registered mortgage deed dated 20-4-1943.
Kori is a currency in the Kutch area it was in use
till 1948. The kori was replaced by Indian rupee.
1 Rupee = 3 kori.
 The mortgage property consisted of two delis
in which there were residential houses, shops
etc.,
The mortgagees had inducted tenants in the
suit property and they were Defendants 4 to 9
in the original suit.
When the mortgage transaction took place,
the economic condition of the father of the
plaintiffs was weak, he was heavily indebted
to other persons.
 It was alleged and it was so held by the
learned judge and upheld by the appellate
judge that the mortgagees took advantage of
that situation and mortgage deed from him on
harsh and oppressive conditions.
They got incorporated long term of 99 years
for redemption of mortgage.
It is further stated though possession was to
be handed over to the mortgagees, they took
condition for interest on the part of principal
amount in the mortgage deed.
 Moreover, the mortgagees were given liberty to spend
any amount they liked for the improvement of the suit
property. They were also permitted to rebuild the
entire property.
Thus these terms and conditions, according to the
appellate judge, were incorporated in the mortgage
deed to ensure that the mortgagors were prevented
forever from redeeming the mortgage.
Thus these terms and conditions were unreasonable,
oppressive and harsh amounted to clog on equity of
redemption and as such was bad and the plaintiffs
were entitled to redeem the mortgage even before the
expiry of the term of mortgage.
 Defendants resisted the suit.
It was his claim for that the term of mortgage
was for 99 years, so the suit filed before the
expiry of that period was premature.
Defendants 4 to 9 resisted the suit on the
grounds that the plaintiffs were not entitled to
redeem the mortgage and even if they were
so entitled, they could not get actual physical
possession from the tenants who were
protected by the provisions of the relevant
Bombay Rent Act.
 Issues: 1. Whether the terms and conditions in the
mortgage deed 20-4-1943 amount to clog on equity of
redemption?
2. Whether the tenants are protected from the effect
of redemption decree by virtue of the provisions of
Bombay Rent Act?
Observations : According to this document, an
usufructuary mortgage was created on the suit
property for 20,000 koris and the possession was to be
delivered to the mortgagees.
Over and above that a further amount of 10,000 koris
was also paid to the mortgagor for which he had to pay
interest at the rate of half percent month.
 There was a condition in the mortgage deed that
the mortgagor should pay principal amount as
well as the interest at the time of redemption.
When the suit was filed in the year 1972, already
the total amount for 29 years would become
47,400 koris.
As per the Defendants the plaintiffs were not of
weak economic condition and also the grand
father of plaintiff was an advocate and his father
was the clerk of an advocate.
Subsequently the plaintiff has become a Civil
Judge.
If the conditions of the mortgage were onerous
and oppressive he would not have sat idle for 29
years.
 There was no dispute with the proposition of law
that the long term itself could not amount to clog
on equity of redemption, when the bargain
otherwise was reasonable one and the
mortgagee had not taken any undue or unfair
advantage.
But, if in a mortgage with long term of
redemption, there were other circumstances to
suggest that the bargain was unreasonable one
and the mortgagee had unfair advantage, then
certainly long term also will be clog on equity of
redemption.
It is a question to be adjudged in the light of the
surrounding circumstances.
 The respondents contention was that there was a
custom to take mortgagees for long term of 99
years and when the period was long, naturally
the mortgagee would be required to give full
authority to repair and reconstruct the
mortgaged property with a view to keep pace
with new demands of changing pattern, so the
condition permitting the mortgagee to
reconstruct the whole premises was natural
consequences of long term and that should not
be treated as clog on equity of redemption.
 Further the respondents claimed that the
prices of immovable properties increased so
the plaintiffs had come forward to file suits
after a lapse of long time.
It was also highlighted that plaintiff 1 was
serving as a Civil Judge and if he came to know
that the transaction was oppressive, he would
not have sat idle for such a long period.
Reference was made to the decision of this
Court in Seth Ganga Dhar v. Shankar Lal (AIR
1958 SC 770)
 The lending of money on mortgage or otherwise
was looked on with suspicion and the court was
on the alert to discover want of conscience in the
terms imposed by lenders.
A mortgage being a security for the debt, the
right of redemption continues although the
mortgagor fails to pay the debt at due date.
Any provision inserted to prevent, evade or
hamper redemption is void.
That is implied in the maxim once a mortgage
always a mortgage.
This quotation is taken from Mullas Transfer of
Property Act text book.
 The doctrine clog on the equity of redemption
is a rule of justice, equity and good conscience.
It must be adopted in each case to the reality of
the situation and the individuality of the
transaction.
We must 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 conditions of the parties.
Whether in the facts and circumstances of the
case the mortgage transaction amounted to clog
on the equity of redemption is a mixed question
of law and fact.
 In Vernon v. Bethell [(1762) 28 ER 838] observed that:
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
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 craft may impose upon them.
 The spiral and escalation of prices of the
immovable properties was not then there.
Today, perhaps, a different conspectus would be
required to consider the right to redeem the
property after considerable length of time
pegging the price to a small amount of money,
the value of which is fast changing.
The doctrine clog on the equity of redemption
is a rule of justice, equity and good conscience.
It must be adopted in each case to the reality of
the situation and the individuality of the
transaction.
 We must 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.
Therefore, in our opinion, in view of the evidence it is
not possible to hold that there was no clog on the
equity of redemption in these cases.
It has to be taken into consideration that whether
there was any onerous term has been incorporated in
the deed which placed such a burden on the mortgagor
as to make it impossible for him to redeem.
Freedom of contract is permissible provided it does not
lead to taking advantage of the oppressed or
depressed people.
The law must transform itself to the social awareness.
 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.
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--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 of the society in which the
transaction takes place.
 It has also to be borne in mind that long term for
redemption in respect of immovable properties was
prevalent at a time when things and the society were,
more or less, in a static condition.
We live in changing circumstances.
S.60 of the TPA conferred on the mortgagor the right of
redemption.
This is a statutory right.
The right of redemption is an incident of a subsisting
mortgage and it subsists so long as the mortgage
subsists.
In the context of fast changing circumstances and
economic stability, long term for redemption makes a
mortgage an illusory mortgage, though not decisive.
 Conclusion: In the facts and the circumstances
and in view of the long period for redemption,
the provision for interest @1/2 percent per
annum payable on the principal amount at the
end of the long period, the clause regarding
the repairs etc., and the mortgagors financial
condition, all these suggest that there was
clog on equity.
Hence the contentions advanced on behalf of
the respondents cannot be accepted therefore
they were rejected.
 Shivdev Singh v. Sucha Singh
(2000) 4 SCC 326 : AIR 2000 SC 1935
Brief Facts: The disputed property was owned by one
Prakash Singh who had mortgaged the same in favor of
Smt. Basant Kaur for a sum of Rs.7000 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 original owner sold the land measuring 19 kanals 2
marlas out of the mortgaged property in favor of the
respondent Sucha Singh vide registered sale deed dated 25-
3-1987 for a valid consideration by which the mortgage
money of Rs.7000 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
10-3-1968 the said owner 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 redemption
and that the appellants had been enjoying the
usufructus of the mortgage for more than 20
years before the date of 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
mortgage money to the appellant-defendants
realising that partial redemption was not
permissible.
The appellants were stated to have refused to
deliver possession which necessitated the filing of
the suit.
The owner of the property shri Prakash Singh
who was impleaded as Defendant 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.7000 since the year 1968, yet
contended that the plaintiffs had no right to
get the suit land redeemed before the expiry
of mortgage period of 99 years.
The suit was stated to be premature and liable
to be dismissed.
 Issues: 1. Whether the disputed land is liable
to be redeemed in favor of the Plaintiff as
claimed through this suit?
2. Whether the period of 99 years of mortgage
is a clog on the equity of redemption?
3. Whether the plaintiff has no locus standi to
file this suit?
4. Relief?
 Observations: Issue 3 was decided against the
defendants 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.
 In regard to the issues 1 and 2 the Trial Court held
that:
The clause in the mortgage deed providing for the
mortgage of the land for a period of 99 years
constitute 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.
 S.60 of the TPA provides that any time after the money
has become due, the mortgagor has a right, on
payment or tender, at a proper time and place of the
mortgage-money to require the mortgagee to deliver
the mortgage deed and all the documents relating to
the mortgaged property and where the mortgagee is in
possession of the mortgaged property, to deliver
possession thereof the mortgagor.
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.
This right is a statutory and legal right which cannot be
extinguished by any agreement made at the time of
mortgage as part of the mortgage transaction.
 The rule against clogs on the equity of
redemption is that, a mortgage shall always be
redeemable and a mortgagors right to
redeem shall neither be taken away nor be
limited by any contract between the parties.
The courts will ignore any contract the effect
of which is to deprive the mortgagor of his
right to redeem the mortgage.
 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, court must take
cognizance 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.
 Conclusion: In this 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.
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 the suit on payment of
a meagre sum of Rs.7000 only to the mortgagor.
The findings of facts 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.
 Sagar Gagu Dhula v. Shah Laxmiben
Tejshi AIR 2001 Guj 329
Brief Facts: The mortgage deed was executed on 15th
December 1914.
However, before the expiry of the stipulated period of
99 years, the heirs of the mortgagor sought to redeem
the property by filing a suit on 5th February 1974.
The redemption was sought before the expiry of the
stipulated period on the specific averment and
contention that the period of 99 years before which
redemption could not be enforced was an oppressive
term and would in law amount to a clog on the equity
of redemption.
 It also requires to be noted that under the terms of the
mortgage, the mortgagee entered into possession of
the property, coupled with the right to reconstruct the
same or to make further construction.
The trial court, after considering the evidentiary
material on record, found that the relevant term in the
mortgage deed postponing the right of redemption to
the expiry of 99 years from the date of the mortgage is
oppressive qua the mortgagor and amounts to a clog
on the equity of redemption and therefore the clog
requires to be lifted.
The trial court, however, found that the suit was barred
by limitation.
 Issues: (1) Whether a condition in a mortgage
deed which is found by the Court to be a clog on
the equity of redemption is void ab-initio or
merely voidable at the instance of the suffering
party i.e. the mortgagor?
(2) When a mortgage deed stipulates a condition
that the mortgage is irredeemable for a period of
99 years or any such long period, whether the
starting point of the period of limitation
prescribed by Art.61(a) of the Limitation Act,
1963 for filing a suit for redemption would be the
date of execution of the mortgage deed or the
date of declaration by the court that such a
condition was a clog on the equity of
redemption?
(3) Whether a suit for a declaration that any
such condition is void or voidable (with or
without a prayer for redemption of mortgage)
filed after expiry of the period of 30 years
from the date of execution of the mortgage
deed would be time barred under Art.61(a) of
the Limitation Act, 1963?
Description of Period of Time from
the Suit limitation which period
begins to run
61. By a mortgagor- Thirty years When the right
to redeem or to
(a) To redeem or
recover
recover possession
of immovable possession
property mortgaged accrues.
 The findings of fact suggests that they were
oppressive to the mortgagor that it amounts
to a clog on the equity of redemption and the
same requires to be lifted.
The transaction of a mortgage pertains to
immovable property, it is also a contract
between the parties relating to such property.
It is a transaction in the nature of a contract.
 Normally Courts would bind each party and make
each of them responsible for the mutual rights
and obligations created by such a contract
voluntarily entered into by the parties.
However, the Courts have always refused to
recognize or enforce contracts which are
unconscionable, opposed to public policy,
immoral contracts, etc.,
A transaction of a mortgage has always been
recognized by courts under the principles once a
mortgage always a mortgage.
A mortgagors right to redeem the property has
been recognized as fundamental to the
transaction of a mortgage.
 If the right to redeem the property is denied to
the mortgagor, the same would amount to
usurpation of the title by the mortgagee, which
would result in the transgression of the intention
of the mortgagor and would therefore tend to
frustrate the transaction etc.,
Therefore the Courts have struck down on the
basis of equity any covenants which are creating
the contractual barriers in order to redemption of
the property.
 The scope and ambit of Art.61(a) of the
Limitation Act, I must take note of the fact that
the period of limitation commences to run from
that point of time when the right to redeem or
to recover possession accrues.
The mortgagors wants to escape from 99 years
agreement period he has to satisfy the Court
through the appropriate and credible evidence
that there were oppressive clauses which
amounts to clog.
Then only the Court will struck down the
offending clause and thereby lifts the clog.
 Lifting of the clog can only be done by the
Judicial act of the Court which confers on the
mortgagor a right to redeem the property.
In our view, therefore the period of limitation
would commence only from the date of such
declaration.
On the other hand in case the contention of
the mortgagee is to be accepted then it has to
be examined the consequences and impact of
such finding.
 If such a view has to be accepted it would
amount to conferring upon the plaintiff a
retrospective cause of action which is neither
pleaded nor urged by the plaintiff and on the
basis of which no relief was sought by the
plaintiff.
The conferment of such a retrospective cause
of action is contrary to all jurisdictional
principles and even contrary to the principles
of interpretation of statutory intent.
 Another consequence of such view would be
that on the one hand, the court frees the
mortgagor from an oppressive covenant and
on the other hand dismisses the suit on the
ground of limitation.
Conclusion: In the light of the aforesaid
discussion. It was found that the contentions
raised by learned counsel for the mortgagee
are not well founded and cannot be sustained.
 Hence the right to redeem or to recover
possession would accrue to the mortgagor
within the meaning of Art.61(a) of the Limitation
Act only when the Court lifts the clog on the
equity of redemption.
Consequently, limitation would begin to run only
from that day, and therefore necessarily such a
suit could not be said to barred by limitation
(provided the suit prays both for lifting the clog
against the equity of redemption and also prays
for a decree of redemption of the mortgagee).
Accordingly this appeal fails and dismissed.
 S.81 Marshalling Securities
If the owner of two or more properties mortgages
them one person and then mortgages one or
more of the properties to another person,
the subsequent mortgagee is, in the absence of a
contract to the contrary,
entitled to have the prior mortgage-debt satisfied
out of the properties not mortgaged to him,
so far as the same will extend, but not so as to
prejudice the rights of the prior mortgagee or of
any other person who has for consideration
acquired an interest in any of the properties.
 Essential elements:
(1) The mortgagees may be two or more
persons but the mortgagor must be common
i.e., there must be a common debtor.
(2) The right cannot be exercised to the
prejudice of the prior mortgagee.
(3) The right cannot be exercised to the
prejudice of any other person having claim
over the property.
 No prejudice to other Encumbrancers: The right of
marshalling cannot be exercised so as to prejudice the
rights of any other person, who has for consideration,
acquired an interest in any of the properties. The case
is Barness v. Rector (1842) 1 Y&C Ch 401.
(i) A mortgages two properties X and Y to B.
(ii) A then mortgages X to C
(iii) A again mortgages Y to D
If C here insists that B should pay himself wholly out of Y,
there might be nothing left for D. Therefore, after the
sale the court will first satisfy Bs debts ratably and
then whatever left out of X sale then go to C in the
same way from Y to D.
 S.56 Marshalling by subsequent
purchaser
If the owner of two or more properties mortgages
them to one person and
then sells one more of the properties to another
person,
the buyer is, in the absence of the contrary, entitled
to have the mortgage-debt-satisfied out of the
property or properties not sold to him,
so far as the same will extend,
but not so as to prejudice the rights of the
mortgagee or persons claiming under him or of
any other person who has for consideration
acquired an interest in any of the properties.
 Ingredients
(1) If the owner of two or more properties,
(2) mortgages them to one person and sells
one or more of the properties to another
person,
(3) the buyer is entitled to have the mortgage-
debt satisfied out of the property or
properties not sold to him (subject to the
contrary contract) so far as the same will
extend
 (4) But this will not prejudice the rights of-
(a) The mortgagee, or
(b) Persons claiming under him, or
(c) Of any other person,
Who has for consideration acquired an
interest in any of the properties.
 S.91 Persons who may sue for redemption:
Besides the mortgagor, any of the following
persons may redeem, or institute a suit for
redemption of, the mortgaged property,
namely:-
(a) Any person (other than the mortgagee of the
interest sought to be redeemed) who has any
interest in, or charge upon, the property
mortgaged or in or upon the right to redeem
the same;
 (b) Any surety for the payment of the
mortgage-debt or any part thereof; or
(c) Any creditor of the mortgagor who has in a
suit for the administration of his estate
obtained a decree for sale of the mortgaged
property.
 S.92 Subrogation:
Any of the persons referred to in S.91 (other
than the mortgagor) and any co-mortgagor
shall, on redeeming property subject to the
mortgage, have, so far as regards redemption,
foreclosure or sale of such property, the same
rights as the mortgagee whose mortgage he
redeems may have against the mortgagor or
any other mortgagee.
The right conferred by this section is called the right
of subrogation, and a person acquiring the same
is said to be subrogated to the rights of
mortgagee whose mortgage he redeems.
A person who has advanced to a mortgagor money
with which the mortgage has been redeemed
shall be subrogated to the rights of the
mortgagee whose mortgage has been redeemed,
if the mortgagor has by a registered instrument
agreed that such persons shall be subrogated.
Nothing in this section shall be deemed to confer a
right of subrogation on any person unless the
mortgage in respect of which the right is claimed
has been redeemed in full.
 Ingredients:
(i) Any other person other than the mortgagor
referred to in S.91, and any co-mortgagor,
(ii) On redeeming the mortgaged property,
(iii) Shall have the same rights as the mortgagee
whose mortgage he redeems may have against
the mortgagor or any other mortgagee,
(iv) The rights are regarding redemption,
foreclosure or sale of such mortgaged property,
(v) This right is known as the right of subrogation
and a person acquiring the same is said to be
subrogated to the rights of the mortgagee whose
mortgage he redeems.
 S.100 Charge
(1) Where immovable property of one person is
made security for the payment of money to
some other person by-
(i) act of parties, or
(ii) operation of law
(2) The transaction does not amount to a
mortgage,
(3) The latter person is said to have a charge on
such property.
(4) All the provisions of a simple mortgage apply
to such a charge.
(5) This section is not applicable to the charge of
a trustee on the trust property expenses
properly incurred in the execution of his trust.
(6) No charge can be enforced against any
property in the hands of a person to whom
such property has been transferred for
consideration and without notice of the
charge.
 Difference between mortgage and charge
1. A mortgage is a security for the 1. A charge is security for the
amount of a debt. payment of money which may or
may not be a debt.
2. A mortgage may be security for 2. In the case of charge it is not so.
the performance of an
engagement giving rise to a
pecuniary liability.
3. A mortgage involves transfer of 3. There is no transfer of interest in
an interest in some specific a charge in favor of a charge-
immovable property. holder but he can satisfy his claim
out of a particular property .
4. A mortgage can be created only 4. A charge can be created either by
by the act of parties the act of the parties or by
operation of law.
5. A mortgage gives rise to a right in 5. A charge is available only against
rem. those particular persons who are
affected by the notice of the
charge.
6.A mortgagee can follow his
security into whatsoever
hands it may go, even he may
follow a bona fide purchaser
for value.
7. A mortgage can be enforced
by foreclosure suit for money
and sale.
8. Every mortgage is a charge.
9. A simple mortgage can be
enforced within 12 years
whereas other types of
mortgages can be enforced
within 30 years.
6.A charge-holder cannot
follow his security.
7. A charge can be enforced
only by sale of property
through the court.
8. A charge is a much wider
term than mortgage. Every
mortgage is a charge but every
charge is not a mortgage.
9. A charge can be enforced
within 12 years.