Case Note & Summary
The dispute concerned a mortgage dated August 1, 1899, created by Purshottamdas in favour of Dhanrupmal over a four-roomed shop in Ajmer. The mortgage was usufructuary for Rs. 6,300, with Rs. 5,750 left with the mortgagee to redeem a prior mortgage. The mortgage deed contained two critical clauses: first, that the mortgagor or his heirs would not be entitled to redeem the property for 85 years; second, that after expiry of 85 years, redemption must occur within six months, failing which the mortgagor would lose all claim and the deed would be deemed a sale deed. The mortgagee redeemed the prior mortgage and took possession of the shop, while possession of the other property was handed to the mortgagor. In 1939, Dhanrupmal assigned his mortgage rights to Motilal, whose sons represented his estate. The original mortgagor's son, Seth Ganga Dhar, filed a suit for redemption on January 2, 1947, before the 85-year period expired. The Sub-Judge, First Class, Ajmer, held that the 85-year postponement was invalid as a clog on the equity of redemption and passed a preliminary decree for redemption. On appeal, the Judicial Commissioner, Ajmer, distinguished the earlier decision, held the 85-year term was not a clog, allowed the appeal, and dismissed the suit. The appellant then appealed to the Supreme Court. The Supreme Court examined the rule against clogs on the equity of redemption under Section 60 of the Transfer of Property Act, 1882. It reiterated that a mortgage shall always be redeemable and that any contract taking away or limiting the right to redeem is void. However, the court emphasized that its power to relieve a mortgagor from a restrictive bargain is limited to cases where the bargain is unconscionable, i.e., imposed by taking advantage of the mortgagor's difficult and impecunious position. On the facts, the court found the bargain was fair and between parties dealing on equal footing; the mere length of the period (85 years) did not by itself indicate oppression. Therefore, the term postponing redemption was not a clog and was enforceable. The court held that the right to redeem had not accrued because the principal money had not become due, making the suit premature. Regarding the second clause, the court held that the provision that the mortgagor would lose the right to redeem if he failed to exercise it within six months after the 85-year period was clearly a clog on the equity of redemption and invalid. However, this invalidity did not affect the validity of the separate term fixing the 85-year period, as the two terms stood clearly apart. Consequently, the Supreme Court dismissed the appeal, confirming that the suit for redemption was premature and the 85-year term was valid, while the forfeiture clause was struck down as unenforceable.
Headnote
A) Transfer of Property - Mortgage Redemption - Clog on Equity of Redemption - Section 60 Transfer of Property Act, 1882 - The rule against clogs prevents any contract from taking away or limiting the mortgagor's right to redeem; however, the court's power to relieve a mortgagor from a bargain restricting redemption is limited to cases where the bargain is unconscionable, imposed by taking advantage of the mortgagor's difficult and impecunious position. In the present case, the mortgage deed stipulated that the property shall not be redeemable for 85 years, and the court found that the bargain was fair and between parties dealing on equal footing, so the mere length of the period did not make it a clog. Held that the 85-year term was valid and enforceable, and the suit for redemption filed before expiry was premature. B) Transfer of Property - Mortgage Redemption - Forfeiture Clause and Severability - Section 60 Transfer of Property Act, 1882 - The mortgage deed further provided that if the mortgagor failed to redeem within six months after the 85-year period, he would lose all claim and the deed would be deemed a sale deed. This clause plainly took away the right to redeem and was therefore a clog on the equity of redemption and invalid. Held that the invalidity of this forfeiture clause did not affect the separate term fixing the 85-year period, as the two clauses stood apart; the forfeiture clause was struck down but the period clause remained valid. C) Transfer of Property - Mortgage Redemption - Accrual of Right to Redeem - Section 60 Transfer of Property Act, 1882 - Under Section 60, the right to redeem arises only after the principal money has become due, and the due date depends on the contract between the parties. The parties agreed that the principal sum would become due after 85 years, so the right to redeem had not accrued at the time of suit. Held that the suit was premature because the mortgage money had not become due.
Issue of Consideration
Whether a covenant in a mortgage deed postponing redemption for 85 years is a clog on the equity of redemption under Section 60 of the Transfer of Property Act, 1882; whether a clause providing for loss of right to redeem if not exercised within six months after the 85-year period is valid and whether its invalidity affects the separate postponement clause; whether a suit for redemption filed before expiry of the 85-year period is premature.
Final Decision
The Supreme Court dismissed the appeal. It held that the term postponing redemption for 85 years was not a clog on the equity of redemption because the bargain was fair and between parties dealing on equal footing, and mere length of the period did not make it oppressive. The right to redeem had not accrued as the principal money was not due, making the suit premature. The clause providing that failure to redeem within six months would extinguish the mortgagor's right and convert the deed into a sale deed was held to be a clog and invalid, but this invalidity did not affect the separate 85-year term. The suit for redemption was dismissed as premature.
Law Points
- Legal points not extracted
- mortgage shall always be redeemable
- right of redemption cannot be taken away or limited by contract
- court can relieve from restricting bargain only if unconscionable
- mere length of postponement not oppressive
- forfeiture clause taking away right to redeem invalid but severable from period clause
- suit for redemption before due date premature
