NATIONAL LAW UNIVERSITY JODHPUR

(PAPER TOWARDS FULFILMENT OF MID-TERM PROJECT IN PROPERTY LAW)

RIGHTS OF MORTGAGOR WITH SPECIAL EMPHASIS ON THE RIGHT OF

REDEMPTION

Submitted by: Ritik Kanoujia (1812) & Prateek Singh (1739)

Roll No. (In Words): One Eight One Two & One Seven Three Nine

Semester: IV
 TABLE OF CONTENTS

INTRODUCTION.................................................................................................................... 3

TYPES OF MORTGAGE ....................................................................................................... 3

Simple Mortgage.................................................................................................................... 3

Mortgage by Conditional Sale ............................................................................................... 4

Usufructuary mortgage .......................................................................................................... 4

English Mortgage ................................................................................................................... 5

Mortgage by deposit of title deeds ......................................................................................... 5

Anomalous Mortgage............................................................................................................. 5

THE RIGHTS OF A MORTGAGOR UNDER A MORTGAGE......................................... 6

I. Right of mortgagor to redeem ......................................................................................... 6

II. Obligation to transfer to the third party instead of re-transference to mortgagor ....... 7

III. Rights to inspection and production of documents ..................................................... 8

IV. Rights to redeem separately or simultaneously ........................................................... 8

V. Right of Usufructuary Mortgagor to recover possession: Section 62 ......................... 9

VI. Accession to mortgaged property: Section 63........................................................... 10

VII. Improvements to mortgaged property ....................................................................... 11

VIII. Renewal of mortgaged lease .................................................................................. 12

IX. Mortgagor’s power to lease ....................................................................................... 13

X. Waste by mortgagor in possession ............................................................................ 14

RIGHT OF REDEMPTION: JUDICIAL INTERPRETATION ....................................... 15

CONCLUSION ...................................................................................................................... 19

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 RIGHTS OF MORTGAGOR WITH SPECIAL EMPHASIS ON THE RIGHT OF
REDEMPTION

INTRODUCTION

Mortgage is defined under Section 58(a) of the Transfer of Property Act, 1882 according to
which “a mortgage is the transfer of an interest in specific immovable property for the
purpose of securing the payment of money advanced or to be advanced by way of loan, an
existing or future debt, or the performance of an engagement which may give rise to a
pecuniary liability”. In other words, mortgage means the transfer of some interest in the
property while the legal ownership continues with the mortgagor.

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and
interest of which payment is secured for the time being are called the mortgage-money, and
the instrument (if any) by which the transfer is effected is called a mortgage-deed.

Where the principal money secured is one hundred rupees or upwards, a mortgage otherwise
than a mortgage by deposit by title deeds can be effected only by a registered instrument
signed by the mortgagor and attested by at least two witnesses. When the principal money
secured is less than one hundred rupees, the mortgage may be effected either by a registered
instrument signed by the mortgagor and attested as aforesaid, or (except in the case of a
simple mortgage) by delivery of the property.

TYPES OF MORTGAGE

SIMPLE MORTGAGE

Simple Mortgage is defined in Section 58(b) of the Transfer of Property Act, 1882 according
to which, without delivering possession of the mortgaged property, the mortgagor binds
himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in
the event of his failing to pay according to his contract, the mortgagee shall have a right to
cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may

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be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage
and the mortgagee a simple mortgagee.1

Section 48 of the Registration Act 1908 lays down that all mortgages which are put in writing
must be registered when the mortgage money exceeds Rs.100. In a Simple Mortgage, the
mortgagor binds himself personally liable for the debt and gives his consent that in the case
of default; the mortgagee can sell the mortgaged property through the intervention of the
court.

MORTGAGE BY CONDITIONAL SALE

Mortgage by conditional sale is defined under Section 58(c) of the Transfer of Property Act,
1882 according to which the mortgagor ostensibly sells the mortgaged property:2

i. on condition that on default of payment of the mortgage-money on a certain date the

sale shall become absolute, or
ii. on condition that on such payment being made the sale shall become void, or
iii. on condition that on such payment being made the buyer shall transfer the property to
the seller;

The transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by
conditional sale. It is subject to conditions that no such transaction shall be deemed to be a
mortgage unless the condition is embodied in the document which effects or purports to
effect the sale.

USUFRUCTUARY MORTGAGE

Usufructuary mortgage is defined under Section 58(d) of the Transfer of Property Act, 1882
according to which the mortgagor delivers possession or expressly or by implication binds
himself to deliver possession of the mortgaged property to the mortgagee, and authorises him
to retain such possession until payment of the mortgage-money, and to receive the rents and
profits accruing from the property or any part of such rents and profits and to appropriate the
same in lieu of interest or in payment of the mortgage-money, or partly in lieu of interest or

1
Section 58(b), Transfer of Property Act, 1882.
2
Section 58(c), Transfer of Property Act, 1882.

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partly in payment of the mortgage-money, the transaction is called a usufructuary mortgage
and the mortgagee a usufructuary mortgagee.3

ENGLISH MORTGAGE

English mortgage is defined under Section 58(e) of the Transfer of Property Act, 1882
according to which the mortgagor binds himself to repay the mortgage-money on a certain
date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a
proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as
agreed, the transaction is called an English mortgage.4

MORTGAGE BY DEPOSIT OF TITLE DEEDS

Mortgage by deposit of title-deeds is defined under Section 58(f) of the Transfer of Property
Act, 1882 according to which a person in any of the following towns, namely, the towns of
Calcutta, Madras, and Bombay, and in any other town which the State Government
concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a
creditor or his agent documents of title to immovable property, with intent to create a security
thereon, the transaction is called a mortgage by deposit of title-deeds.5

This notification is done by State Government concerned. If the branch is located in non-
notified place, the mortgagor can report to a branch in any notified centre for delivering the
title deeds. Unlike all other types of mortgages, Equitable Mortgage is not done in writing.
Section 48 of Registration Act makes the mortgages made in writing to be registered
mandatorily if the mortgage money exceeds Rs.100. But this clause is not applicable in the
case of Equitable Mortgage.

ANOMALOUS MORTGAGE

Anomalous mortgage is defined under Section 58(g) of the Transfer of Property Act, 1882
according to which a mortgage which is not a simple mortgage, a mortgage by conditional

3
Section 58(d), Transfer of Property Act, 1882.
4
Section 58(e), Transfer of Property Act, 1882.
5
Section 58(f), Transfer of Property Act, 1882.

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sale, a usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds
within the meaning of this section is called an anomalous mortgage.6

THE RIGHTS OF A MORTGAGOR UNDER A MORTGAGE

I. RIGHT OF MORTGAGOR TO REDEEM

The property mortgaged is only a security for the payment of the money lent. The mortgagor
is entitled to get back his property on payment of the principal and interest after the expiry of
the due date for the repayment of the mortgagee’s money. This right of the mortgagor is
called the Right of Redemption.7 Section 60 of the Transfer of Property Act reserves this
right. The right cannot be fettered by any condition which prevents redemption. The right
cannot be controlled by any contract to the contrary.8

Where a mortgagor is entitled to redemption, on the fulfillment of requisite conditions which

enable a retransfer, he may require the mortgagee to either, re-transfer the property to him or
instead of re-transferring the property, to assign the mortgage debt and transfer the mortgaged
property to such a third person as the mortgagor may direct. In such a case, the mortgagee
shall be bound to assign and transfer accordingly.

As per the provisions, at any time after the principal money has become due, and upon
payment at a proper time and place of the mortgage-money, the mortgagor has the following
rights:

1. Right to require the mortgagee to deliver to the mortgagor the mortgage-deed and all
documents relating to the mortgaged property which is in the possession of the
mortgagee.
2. The mortgagee has to deliver possession of mortgaged property to the mortgagor.
3. The cost of the mortgagor either to re-transfer the mortgaged property to him or to
such third person as he may direct.

6
Section 58(g), Transfer of Property Act, 1882.
7
Mortgage, http://www.helplinelaw.com/real-estate-wills-probate-and-trust/MGDD/mortgage.html, Last
accessed at 10.14 hrs, IST on 2nd March, 2021.
8
Section 60, Transfer of Property Act, 1882.

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The right conferred by this section is called a right to redeem. A suit to enforce this is
referred to as a suit for redemption. The mortgagor can exercise the right before it is
extinguished by the act of the parties or by the operation of law.

The right can also be extinguished by a decree of the court. The mortgagor is not entitled to
redeem before the mortgage money is due i.e. before the time fixed for the payment of
mortgage money. The rights as conferred above may be enforced by the mortgagor or by any
encumbrances.

The rights are subject to the condition that the right conferred as above have not been
extinguished by the act of the parties or by decree of a court. The mortgage deed may provide
that the time fixed for payment of the principal money should be allowed to pass or in case no
such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment
or tender of such money.

II. OBLIGATION TO TRANSFER TO THE THIRD PARTY INSTEAD OF RE-

TRANSFERENCE TO MORTGAGOR

Section 60 A, Transfer of Property Act provides that where a mortgagor is entitled to

redemption, then on the fulfilment of any conditions on the fulfilment of which he would be
entitled to require a retransfer, he may require the mortgagee, instead of retransferring the
property, to assign the mortgage debt and transfer the mortgaged property to such third
person as the mortgagor may direct the mortgagee and the mortgagee shall be bound to assign
and transfer accordingly.9

Section 60A empowers a mortgagor to require the mortgagee to assign the mortgage to a
third person. The word ‘mortgagor’ is wide enough to include other persons entitled to
redemption. So, a puisne mortgagee or an assignee of part of the equity of redemption, may
redeem a prior mortgage and require the mortgagee to assign the mortgage-debt and transfer
the mortgaged-property to such third person as he may direct. 10

9
Section 60A, Transfer of Property Act, 1882.
10
Soli J. Sorabjee, Darashaw J Vakil’s Commentary on the Transfer of Property Act, 1882, p. 982.

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 III. RIGHTS TO INSPECTION AND PRODUCTION OF DOCUMENTS

This right has been mentioned under Section 68-B of the Transfer of Property Act, 1882. It
provides that so long as the right of the mortgagor to redeem subsists, the mortgagor shall be
entitled at his own cost and on payment of the mortgagee’s costs and expenses in this behalf,
to inspect and make copies or abstracts of or extracts from documents of title relating to the
mortgaged property which are in the custody or power of the mortgagee. The power can be
exercised only at reasonable times.

IV. RIGHTS TO REDEEM SEPARATELY OR SIMULTANEOUSLY

It is mentioned under Section 61 of the Transfer of the Property Act, 1882. Before 1881, the
right to redeem after due date was an equitable relief. It rested on the maxim ‘he who seeks
equity must do equity’.11 The mortgagor seeking to redeem one of the several mortgages was
put on terms that he should redeem all. And where the mortgagee held two mortgages, he
could consolidate both the mortgages and the mortgagor could not redeem one mortgage
without redeeming the other.

Under Section 61 of the Transfer of Property Act, 1882, a mortgagor who has executed two
or more mortgages in favour of the same mortgagee shall, in the absence of a contract to the
contrary, when the principal money of any two or more of the mortgages has become due, be
entitled to redeem any one such mortgage separately or any two or more of such mortgages
together.12

In JaduRai v. Ram BirichRai,13by each of two mortgages, a separate property was

mortgaged with possession. The second mortgage contained a clause to the effect that when
the whole of the mortgage-money due under that deed, together with the amount due under
the previous deed, was paid, then the mortgage shall be redeemable. It was held, that the
mortgagee was entitled to consolidate the two mortgages by the ‘contract to the contrary’.

In Aditya Prasad v. Ram RatanLal,14 a mortgagor under a usufructuary mortgage executed a

further document, and stipulated to pay up the debt including principal and interest, and

11
Supra note 10, p. 1062.
12
Section 61, Transfer of Property Act, 1882.
13
JaduRai v. Ram BirichRai, (1906) ILR 33 Cal 967.
14
Aditya Prasad v. Ram RatanLal, AIR 1930 PC 176.

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thereafter to redeem the mortgage the mortgaged village, and agreed that he would not
redeem the mortgaged village without the payment of the second debt. It was held that, under
the subsequent deed, the parties intended that the original village should remain in the
possession of the mortgagee until the second debt was paid off, and also intended, that the
property should be security for the debt, and that the mortgagor, to be entitled to redeem must
pay off the subsequent debt.

V. RIGHT OF USUFRUCTUARY MORTGAGOR TO RECOVER POSSESSION:

SECTION 62

Under Section 62 of the Transfer of Property Act, In the case of a usufructuary mortgage, the
mortgagor has a right to recover possession of the property together with the mortgage-deed
and all documents relating to the mortgaged property which is in the possession or power of
the mortgagee.15

In the case of a usufructuary mortgage, if the nature of the transactions, by which the second
or subsequent loans have been granted, do not give any right to the lender to keep the
possession of the property over which the possession was given to him on the basis of the
first loan, the lender cannot retain the property as a security after he has received the amount
of the first debt, and if the security does not entitle the lender to retain possession, the mere
fact, that a charge was created on the property, which charge might allow the lender to bring
the property to sale subject to his own mortgage, does not prevents the mortgagor from
redeeming his usufructuary mortgage and from recovering possession.16

Section 62 declares the right of a usufructuary mortgagor to recover possession in certain

cases. Besides, this section applies only to usufructuary mortgages, pure and simple. Section
62 allows consolidation of mortgages only where there is a contract to that effect in the
mortgage-deed. Where a usufructuary mortgage is followed or preceded by a simple
mortgage, and there is no contract to the contrary, the mortgagor has the right, when the
mortgage debt is satisfied, to recover possession of the mortgaged property under this section
without redeeming the other mortgage.17 But where there is a covenant for consolidation, the
mortgagor cannot recover possession of the mortgaged property without redeeming all the

15
Section 62, Transfer of Property Act, 1882.
16
Lallu Singh v. Ram Nandan, ILR 152 All 281.
17
Gaya Din v. Har Karan Singh, AIR 1915 Oudh 23.

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mortgagees or charges.18 So, where additional possessory mortgages are created, the
mortgagor cannot get possession by redeeming the first usufructuary mortgage only.19

VI. ACCESSION TO MORTGAGED PROPERTY: SECTION 63

Under Section 63, where mortgage property in possession of the mortgagee has during the
continuance of the mortgage received any accession, the mortgagor upon redemption, shall,
in the absence of a contract to the contrary, be entitled as against the mortgagee to such
accession.

The section is based on the principle enunciated in the maxims accessioceditprincipale (the
increase follows the principal) and accessoriumnonducitsed sequitur suumprincipale (that
which is the accessory of incident does not lead but follows its principal).20 The principle is
well recognized that most acquisition by a mortgagor ensures for the benefit of the
mortgagee, increasing thereby the value of his security; and many acquisitions by the
mortgagee are, in like manner, treated as accretions to the mortgaged property, or
substitutions for it, and, therefore, subject to redemption. The renewal of a term obtained by
the mortgagee of the expired term, since it comes from the same root and subject to the same
equity, can never be impeached.21

The word ‘accession’ has not been defined in the Act. It refers to every accessory thing that
has been added to a principal thing from without and has been connected with it, whether by
an act of nature or by and the act of man, so that, in virtue of this connection, it is regarded as
part and parcel of the thing.22 The mortgagor is entitled to redeem the property mortgaged
together with any excess extent found also at the time of redemption so long as such excess
extent was found to be part of the mortgaged property and status of the mortgage as such
mortgagee.23

The planting of trees can come within the phrase ‘any accession’ in cases in which the
planting of trees necessary to preserve the property, e.g., to prevent erosion by water.24But,
normally, the planting of trees cannot be deemed to be an accession, or an improvement, of
18
Aditya Prasad v. Ram RatanLal, AIR 1930 PC 176.
19
GokulDhulabhai v. GokulMabhai, AIR 1961 Guj 129.
20
SheoPujan Prasad v. Bhagwati, AIR 1949 Pat 99.
21
Kishendatt Ram v. Mumtaz Ali Khan, ILR 5 Cal 198.
22
SheoPujan Prasad v. Bhagwati, AIR 1949 Pat 99.
23
D. ChellappanNadar v. SulochanaThankachi, (1996) 2 LW 313 (Mad).
24
Ajodhya v. Indra, AIR 1929 All 330.

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such a nature as to entitle the mortgagee to claim compensation from the mortgagor though
he has the right to take away the trees.25

In N. Chellayyan v. Pillai the Court held that when a mortgagee in possession of an udukoor
or undivided half share of a property obtained an assignment of an adjoining property
belonging to the Government on the strength of his possession of the former property under
Section 90 of the Indian Trusts Act he must hold that the latter property for the benefit not
merely of his mortgagor but of all persons interested in the former property including those
interested in the other half share—it is hardly a case of an accession to the mortgaged
property coming within Section 63 of the Transfer of Property Act .26

VII. IMPROVEMENTS TO MORTGAGED PROPERTY

Section 63A (1) of the Transfer of Property Act provides that where mortgaged property in
possession of the mortgagee has during the continuance of the mortgage, been improved, the
mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to
the improvement and the mortgagor shall save only in cases provided for in sub-section (2)
be liable to pay the cost thereof.

It is ordinary justice that the increase in the price of the property, due to improvements made
at the expense of the mortgage should not go into the pocket of the mortgagor, without his
reimbursing the mortgagee, whose money has been instrumental in raising the price of the
property.27

In Suraj Mal v. Chandra Bhan,28 repairs had to be done by the mortgagor, and the
mortgagee could effect the repairs only, if the mortgagor failed to do them and property was
destroyed for want of repairs, and the mortgagee sustained a loss in his income on that
account. The mortgagee spent some money on improvements, which were not shown to be
justified for the preservation of the mortgaged property, or to prevent the security from
becoming insufficient though the works were done were improvements, calculated to bring in
increased rent, yet not necessary. The mortgagee was held not entitled to the sum spent in
effecting the repairs.

25
RaghunandanRai v. Raghunandan, AIR 1921 All 353.
26
N. Chellayyan v. Pillai, AIR 1971 Ker 9 (10).
27
Ram Saran Das v. Bhagwan Singh, AIR 1928 Lah 160.
28
Suraj Mal v. Chandra Bhan AIR 1939 Lah 129.

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Where a mortgaged property in possession of the mortgagee has been improved during the
continuance of the mortgage, the mortgagor, upon redemption, will be entitled to the
improvement. The mortgagor will not be liable to pay the cost.

However, in these cases, a mortgagor will be liable to pay the cost as an addition to the
principal money with interest:29

1. If the improvement was made at the cost of the mortgagee.

2. If the improvement was necessary to preserve the property from destruction or
deterioration.
3. If it was necessary as the security was insufficient.
4. If it was made in compliance with the lawful order of any public servant or public
authority.
5. Profits accruing because of the improvements should be credited to the mortgagor.

VIII. RENEWAL OF MORTGAGED LEASE

Where the mortgaged property is a lease, and the mortgagee obtains a renewal of the lease,
the mortgagor, upon redemption, shall in absence of a contract by him have the benefit of the
new lease.

In Rake straw v. Brewer,30 a mortgage of a lease was renewed for an additional term as a
favor to a mortgagee; but the mortgagor was allowed to redeem on-the-ground that this
additional term came from the old root, and was of the same nature, subject to the same
equity of redemption.

In Baijnath Singh v. Harkishan,31 the same principle was applied to a mortgage of a jote,
though the mortgagee was forced tore new the lease and there was no collusion between him
and the landlord.

Where a trustee, or other person bound in a fiduciary character to protect the interests of
another person, gain for himself and advantage by availing himself of his character as trustee
or person in a fiduciary position, he must hold the advantage so gained for the benefit of the

29
Mortgage Money, Mortgagee and Mortgage Deed, http://articles.economictimes.indiatimes.com/2004-09-10
/news/27375547_1_mortgage-money-mortgagee-mortgage-deed.
30
Rake straw v. Brewer 2 P Wms 511.
31
Baijnath Singh v. Harkishan 6 Cal WN 372.

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person whose interest he is bound to protect.32 So, where a lease is renewable the renewal of
the lease by a person in the position of a trustee, an agent or a person standing in other
fiduciary relation, enures for the benefit of the persons beneficially interested in the lease.33
The principle may be extended to other suitable cases, e.g., to mortgagees of property who
gain, by availing themselves of their position as such, an advantage in derogation of the rights
of the other persons interested in the property, and stand in a quasi-fiduciary position, and
hold the advantage so gained for the benefit of the persons interested in the property.34

IX. MORTGAGOR’S POWER TO LEASE

Section 65A Transfer of Property Act deals with the power of the mortgagor to make leases
of mortgaged property which can bind the mortgagee. 35

The section applies only in the absence of a contract to the contrary. Under this section, the
validity of a lease granted by a mortgagor in possession is determined with reference to it and
the terms of the deed of mortgage, without regard to its effect on the mortgagee’s security.
The section, which expressly gives power to the mortgagor in possession to grant a lease
binding on the mortgagee (if it conforms in all respects to the terms of the section) does not
take away the old right of the mortgagor to grant a lease, which without the consent of the
mortgagee will not be binding on the mortgagee, but will be binding on the mortgagor. In
other words, a lease granted by the mortgagor, not in conformity with this section though it
will not bind the mortgagee, will yet bind the mortgagor. Such a lessee will, mortgagor be
entitled to redeem the mortgage.

In Iron Trades Employers’ Insurance Association v. Union of House and Land Investors,
Ltd.,36 the covenant in the deed provided that the mortgagor shall not exercise his leasing
powers without the previous written consent of the mortgagees. The question arose whether a
lease without such consent amounted to a breach of that covenant. The question was
answered in the negative. It was pointed out that the only effect of the covenant restricting the
statutory power of leasing was that the tenancy agreement was in no way binding upon the
mortgagee, but, as the mortgagors, besides their statutory power of granting leases binding on

32
Section 88, The Trusts Act, 1882.
33
Section 90, Illustration (a), The Trusts Act, 1882.
34
Section 90, The Trusts Act, 1882.
35
Section 65A, Transfer of Property Act, 1882.
36
Iron Trades Employers’ Insurance Association v. Union of House and Land Investors, Ltd, (1937) 1 All ER
481.

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the mortgages, had a common law power of granting leases, the lease was binding on the
lessee.

X. WASTE BY MORTGAGOR IN POSSESSION

Under Section 66 of the Transfer of Property Act, 1882 a mortgagor in possession of the
mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but
he must not commit any act, which is destructive or permanently injurious thereto, if the
security is insufficient or will be rendered insufficient by such act.

A mortgagor in possession is not liable to account for rent and profits received by him. He
can do all such acts, as are referable to, and consistent with, his qualified ownership, provided
they are not destructive or permanently injurious to the mortgaged property, and will not
render the security insufficient. He is not responsible for permissive waste, e.g., for omission
to repair or to prevent natural deterioration; but he must not be guilty of active waste, so
substantial, as will be destructive of, or permanently, injurious to the mortgaged property, or
will render the security insufficient, that is, below the standard fixed in the explanation.

In Faqira v. Jiwan Singh,37 the mortgagor granted a permanent lease of mortgaged property
without the consent of the mortgagee. The terms of the lease were onerous and rendered the
mortgage security insufficient. The mortgagee obtained a decree for sale and, in execution,
purchased the property. It was held, that the lease was not binding on the mortgagee. The
case arose under the Act before the introduction of Section 65-A. The contention of the lessee
was, that the mortgagor had a right to execute the lease in due course of management of the
property, and it could not be held that the security had become insufficient. On facts, it was
found, that the final decree was for a sum of Rs. 800 that, as a result of the lease, the income
of the property could never exceed Rs. 6 per annum, and there were onerous terms in the
lease, as a result of which the property could not fetch more than Rs. 300, for which it was
sold at auction. The contention was repelled and it was held, that the lease was detrimental to
the interests of the mortgagee. and the security was rendered insufficient, and the lease was,
therefore, not binding on the mortgagee.

37
Faqira v. Jiwan Singh, AIR 1947 All 240.

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 RIGHT OF REDEMPTION: JUDICIAL INTERPRETATION

The doctrine of the equity of redemption was developed in England as a Common Law
protection against unjust enrichment. According to the doctrine of equity in redemption,
when the mortgagor satisfies the mortgage obligation, he will be in the same position as he
was prior to executing the mortgage.38

The equity of redemption is often confused with the statutory right of redemption. These
two doctrines, however, do not grant a mortgagor identical protection. The equity of
redemption protects a mortgagor's right to redeem his property prior to foreclosure upon full
payment of the debt. The right of redemption protects the mortgagor after the foreclosure sale
has occurred by allowing him to repurchase the land at a reasonable price within a statutory
time limit.39 The two redemption doctrines were differentiated in Hummell v. Citizens'
Building and Loan Association40 when the court stated, "the right of redemption after the
sale on foreclosure is distinct from the equity of redemption after a breach of condition and
before the sale. The former commences only when the latter ends. One rests on the principles
of equity, the other on the terms of the statute."

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.

The mortgagor’s right of redemption is co-extensive with mortgagor’s right of foreclosure or

sale. When the mortgagor’s right to redeem accrues, the mortgagee has a right to enforce his
security.41

In the course of the seventeenth century, the court of chancery began to regularly grant relief
from these forfeitures, reasoning that the return of the outstanding indebtedness with interest

38
Kane, The Mortgagee's Option to Purchase Mortgaged Property, Financing Real Estate During the
Inflationary 80’s, p. 123 (B. Strum Ed. 1980).
39
Murphy v. Casselman, 24 N.D. 336, 139 N.W. 802, 803 (1913)
40
Hummell v. Citizens' Building and Loan Association, 296 P. 1014 (Ariz. 1931)
41
Seth Ganga Dhar v. SankarLal, AIR 1958 SC 770

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was adequate to compensate the mortgagee from delayed payment.42 The mortgagor, who had
defaulted, thereby losing all his legal rights in the land, was permitted to sue in equity for
redemption. Upon payment of the debt with interest, the chancellor would compel the
mortgagee to convey the land to the mortgagor.43 Thus an important new right, the equity of
redemption, was born.44

A mortgage being a security for the debt, the right of redemption continues, although the
mortgagor fails to pay the debt at the due date. Any provision inserted to prevent, evade, or
hamper redemption, is void. 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.

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.

In Shivdev Singh v. Sucha Singh45 the Supreme Court refused to interfere with the
finding of High Court holding that on the facts of the case, the mortgage deed providing a
deed of 99 years was a clog on the enquiry of redemption. Whether in a particular transaction
there is a clog on 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 society in which the transaction takes place, and the totality of the

42
William F Fratcher, Restraints on Alienation of Equitable Interests in Michigan Property, Michigan Law
Review, Vol. 51, Issue 4, 538, 541 (1953)
43
Turner, The Equity Of Redemption, pp. 17-42 (1931); Cambridge v. Evans, 1 Chan. Rep. 18, 21 Eng. Rep.
494 (1625); How v. Vigures,21 Eng. Rep. 499 (1628)
44
L. Willmott, Clogging the Equity ofRedemption, W. VA L.Q., Vol. 40 p. 31, 33 (1933); Coughlin, Clogging
RedemptionRights in Illinois, J. Marshall Law Quaterly, 11 (1938).
45
Shivdevsingh v. Sucha Singh, 2000 (4) SCC 326.

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circumstances under which a mortgage is redemption either for payment of interest or any
other sum, the obligation of the mortgagee to construct or repair or maintain the mortgaged
property in cases of usufructuary mortgage, to manage as a matter of prudent magnetic; these
factors must be correlated to each other and viewed in a comprehensive conspectus in the
background of the facts and circumstances of each case, to determine whether there are clogs
on equity of redemption.46 A long term of redemption is not necessarily a clog; whether a
particular term of redemption operates as a clog is to be considered having regard to the
circumstances of the case.47

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
mortgagee 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.

In AchaldasDurgajiOswal v Gangabisan Head48, a suit was filed by the mortgagee for the
foreclosure of the property, and another suit was filed by the mortgagor. The 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 the 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 an 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 an act of the parties.

46
Gangadhar v. Shankar Lal, AIR 1958 SC 770
47
Ponmal Kanji Govindji& Others v. VrajlalKarsandasPurohit, AIR 1989 SC 436
48
AchaldasDurgajiOswal v Gangabisan Head (2003) 3 SCC 614.

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In K.Vilasini and Ors v Edwin Periera,49 the 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 favor of the mortgagor stating that mortgagee
had himself allowed the mortgagor to pay off the amount and also took part in the
proceedings therein.

In Hasthimal and Sons v. Tej Raj Sharama,50 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,51where 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 case of Parichhan Mistry v Acchiabar Mistry,52question 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 Gulab Chand Sharma v Saraswati Devi,53the issue pertained to a clause in the mortgage
deed was raised. In this case, there was a 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 favor of the mortgagor.

49
K.Vilasini and Ors v Edwin Periera, Decided on 29 th August, 2008.
50
Hasthimal and Sons v. Tej Raj Sharama2007 AIR SCW 6135
51
Lewis v. Frank Love, Ltd., 1961 All. E.R. 446,
52
Parichhan Mistry v Acchiabar Mistry AIR 1997 SC 456,
53
Gulab Chand Sharma v Saraswati Devi AIR 1977 SC 242

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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. The right of redemption can only be extinguished
in two ways viz. The act of the parties, or by a decree of a court. The act of the parties can be
understood in various ways. One can be the sale of the property by the mortgagee, but the
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 sell 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 the legal system. Reason being very simple, as in the absence of such provision
on any of the enacted statutes or laws in the legal system it would become easy for the
mortgagee to gain the advantage of his position.

The principle behind can be the responsibility of the state towards a society where every
breed of person stay, and a person who is at a higher position would try to take advantage of
that position. The 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 the 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

CONCLUSION

Events shape the law. Although the conventional mortgage operated effectively when the
nation’s financial climate was stable, in today’s inflationary economy it has been unable to
provide prospective homeowners with affordable financing while assuring lenders a hedge
against unanticipated inflation. Innovative mortgage instruments designed to accommodate
diverse financial requirements of borrowers and lenders are desperately needed to provide the
funds necessary to revitalize the housing industry. The shared appreciation mortgage offers
borrowers and lenders alike an opportunity to participate in the realization of the American
dream of home ownership.

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There is no question that mortgagors originally needed more protection than they received.
However, early decisions on clogging the equity of redemption were handed down under
circumstances markedly different from those of the present. Responsible, honest, and
skillfullenders provide certainty in modern mortgage transactions which were not present
when the majority of mortgage lenders were individuals rather than financial institutions.

The doctrine against clogging the equity of redemption evolved in the courts in response to
the litigated problems of the times. Like other rules proceeding from equitable principles,
where the reason for the rule ceases, the principle fails of application. Thus, as times change,
the rules must yield to the reality of present conditions.

As a result of today’s inflationary economy, many prospective buyers are prohibited from
purchasing homes. However, inflation, when harnessed by the shared appreciation mortgage,
can be a strong ally in assisting the American public to achieve homeownership.
Accordingly, absent precedent addressing today's novel issues, a borrower should not be
protected to the point that he or she can no longer afford to own a home and must continue
renting under the guise of consumer protection.

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