The most important right of a mortgagor is the right of redemption. It arises from the very nature of the transaction. A mortgage is a security for a debt, so when the debt is paid, there is no longer any necessity for security and hence the property should be naturally freed from the burden of the security or encumbrance. According to S. 60, on payment of mortgage debt, the mortgagor is entitled.
1) To get back the mortgage deed and all the documents relating to the mortgaged property, which are in the possession or power of the mortgagee.
2) Where the mortgagee is in possession of the mortgaged property, to the delivery of possession thereof to the mortgagor.
3) At the cost of mortgagor, either to transfer the mortgaged property to him or to such third person, as he may direct. When the mortgage has been effected by a registered instrument the re-transferring of the mortgaged property will also be by registered document. This is the manner in which the right of redemption works in practice.
In English law, the right is called equity of redemption. Originally, in England, mortgages could be effected only in the form of a sale. If the money was paid in time, there was no remedy at common law, because the transaction was in the form of sale. The equity courts came to the assistance and this kind of transaction attracted their attention. Looking deeper into the nature of the transaction as loan on security began to allow redemption even after the time appointed for payment. The right therefore came to be called the equity of redemption. Lord Brownwell defined it thus:
“An equity of redemption is a right a not given by terms of the agreement between the parties to it, but contrary to them, to have back the securities given by a borrower to lender on payment of the principal and interest on a day after that appointed for payment, when by the terms of the agreement between the parties the securities were to be the absolute property of the creditor. This is now a legal right of the debtor” (Soft v. Marques of Northampton, 1982 A.CN )
In India, it is a statutory right in as much as it is a embodied in S. 60 of the Transfer of Property Act. The equity courts in India developed this right of redemption on two
- Once a mortgage always a mortgage’. It means that if the transaction is essentiala mortgage at inception, then whatever be its form it cannot change its character and it should not be allowed to do so. In Noakes & Cox Rice (1902 A.C. 24) Lord Davey explained the maxim” that a mortgage cannot be made irredeemable and that a provision to that effect is void”. This maxim itself seems to be derived on account of a conscious tendency on the part of equity to be more sympathetic towards the debtor than towards the creditor in a transaction of lending and borrowing.
- In a mortgage transaction time is not the essence: the right of redemption of a mortgagor is protected even against himself. The reason is obvious ; between the creditor and the debtor, the latter is, in a vast majority of cases, helpless and likely to be exploited. The omission of the expression to the contrary’ reverses most of the rights a contract on en under the Act. Sec. 60 laying down the mortgagor’s giver aht to redemption makes it impossible for the mortgagor io contract himself out of the right. That is how the right is nrotected against the mortgagor himself. Again any provision mortgage deed intended to prevent, evade or hamper odemption is void. It will be considered by courts as a ‘clog on the equity of redemption and as much ignored.
The Supreme Court in Mancheri Puthusseri Ahmed v. Kuthirvatom Estate Receiver ( 1996 6 S.CC 185), held that on depositof mortgagor amount and value of improvements by mortgagor under a decree of redemption, the mortgagee ceases to remain as such. The court observed that till actual delivery of possession in such a case the mortgagee -in- possession remains merely a judgment -debtor in illegal possession.
Doctrine of clog on redemption:
Any attempt between the mortgagor and the mortgagee which restricts or hampers the right of the mortgagor to redeem will be regarded as a long on redemption and as such will be ignored bỹ courts. This is based on the maxim ” once a mortgage, always a mortgage”. Subsequent to the mortgage the parties are free to alter the terms or conditions of redemption by independent contracts. What the law is anxious about, is that at the time of the mortgage when the mortgagor IS In need of money and helpless he should not be exploited
he name of the freedom of contract. Subsequent contracts Which prejudicially affect the right of redemption will not De regarded as clogs provided they are distinct from and ndependent of mortgage. It is not possible to lay down any hard and fast rule as to what should be regarded as clog on redemption. The court should take into account all consider de contract in question. If it is so unduly hard and unconscionable as to nullıty for all practical purnoes right of redemption, it is a clog. Simply because tho the ne terms of the redemption are a bit hard they should not not be regard as clogs. A person entering into a transaction voluntar
with his eyes open and under no undue influence cannot be relieved from the consequences of his conduct. For practical guidance, a few instances of clogs on redemption may noted.
- A condition providing that if the property is notredeemed within a certain period, say 30 years, less than that allowed by the law of limitation, the moto agor shall lose the property.
2. A condition providing that the property should not be redeemed for an unreasonably long period, say 1000 years, Even 20 years has been held to be unreasonably shall lose the property.
3. A condition prohibiting or restraining a mortgagor from his equity of redemption.
4. Any condition imposing penalty eg. enhancing the rate of interest from the date of the mortgage if redemption is not effected within a stated period. But stipulation for a higher rate of interest or even compound interest from the date of default is not considered a clog.
5.A condition that if the mortgage is not redeemed within a certain period, it shall not be redeemed for a specified subsequent period.
When we consider the length of term of redemption, the question ” whether a day less than mortgage period is a clog ?”. will arise, Supreme Court in Seth Gangadhar Shankarlal (1955 ) SCJ 1985 ) held that where the mortgage period was 85 years, mortgagor can redeem the prope only after the expiry of 85 years. In Lewis v. Frank Love Lid, (1961) All E.R 446) it as clearly laid down by the House of Lords that where one of the terms arranged between the mortgagor and the mortgagee ws that the mortgagee should have a right of 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. Relying on this decision the apex court in M/s. Hasthimal & Sons v. P. Tej Raj Sharma (AIR (2007) SC 2346) held that the provision in the agreement that the mortgagee will have a right of preemption in case of transfer of property, will operate as a clog on the right of redemption of the mortgagor. The Bombay High Court in Vasntrao v. Kishanrao Neb (AIR (2008) Bom. 42) held that the term in document that if amount was not repaid within five years document would be treated as sale deed would be clog on redemption.