INTRODUCTION.

The concept of mortgage has its foundation on the English Common Law principle ‘Once
a mortgage, always a mortgage’. The idea behind this principle is that in a transaction of
mortgage, the transferor (here Mortgagor) transfers one of all his interests in his
immovable property to the transferee (Mortgagee). The Mortgagor, even after
transferring one of his interests in the immovable property, retains some interests with
him. These remaining interests entitle him to redeem his immovable property after the
repayment of the debt for which his property was kept as a security.
The Mortgagor, generally, keeps his immovable property as a security, in the
urgent need of money. His intention is not to sell his property after taking the money
from the Mortgagee. This being, a fundamental consideration of equity, in England as
well as in India, the rule ‘once a mortgage always a mortgage’ has been recognized, in
the transactions of mortgage. There is plethora of cases that point to the acceptability of
this rule in India.

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TRANSACTION OF MORTGAGE.
Section 58 of the Transfer of Property Act, 1882 (hereinafter referred as ‘the Act’)
defines the contract of mortgage in following words:
58. "Mortgage", "mortgagor", "mortgagee", "mortgage-money" and "mortgage-deed"
defined —

(a) A mortgage is the transfer of an interest in specific immoveable 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.

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.

In the words of Mahmood J.1, “mortgage as understood in this country can not be defined
better than by the definition of adopted by the Legislature in Sec. 58 of the Transfer of
Property act.”
Dwelling upon the definition and the provision of mortgage, under this section,
following essentials of a mortgage transaction can be drawn:
1. Transfer of interest. A transaction of mortgage involves the transfer of an interest
from the mortgagor to the mortgagee. On this point this differs from sale because
in sale, on the contrary, there is complete transfer of all the interests in the
property. The mortgage is transfer of interest less than ownership.
2. Specific immovable property. The interest transferred is that of a specific
immovable property. The property, which has to be mortgaged, must be defined
specifically and not in general terms. The property must also be immovable
property.
3. Securing the payment of debt. The transaction involves the transfer of an interest
for the purpose of securing the payment of a debt, which is in the nature 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.
The debt in lieu of the mortgaged property constitutes the consideration of the
mortgage. The mortgagor may also execute the mortgage deed before he gets the
full amount from the mortgagor. Mere ground that the mortgagee did not advance

1
Gopal v. Parsotam, (1883) 5 All 121 (137) (FB).

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 the money on the date of execution of the deed does not render the transaction of
mortgage ineffective2.
The transaction of mortgage involves the right of the mortgagor to redeem his immovable
property, kept as a security by him. The intention is not to sell his property. It is mere an
urgency of money, that makes the Mortgagor keep his property as a security for the
repayment of his debt.

RIGHT OF REDEMPTION.
Section 60 of the Act lays down the provision of the redemption of the mortgaged
property in following words:
60. Right of mortgagor to redeem —

At any time after the principal 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 (a) to deliver
to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which
are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the
mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost the
mortgagor either to re-transfer the mortgaged property to him or to such third person as he may
direct, or to execute and (where the mortgage has been effected by a registered instrument) to have
registered an acknowledgement in writing that any right in derogation of his interest transferred to
the mortgagee has been extinguished:

Provided that the right conferred by this section has not been extinguished by act of the parties or
by decree of a court.

The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit
for redemption.

Nothing in this section shall be deemed to render invalid any provision to the effect that, if the
time fixed for payment of the principal money has been allowed to pass or no such time has been
fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such
money.

The right of redemption of the mortgaged property is one of several rights that are vested
in the mortgagor. Right to redeem is the right to recover something by making certain
payments. In case of the mortgage, mortgagor’s right to redeem is called his right to
recover or get back the property, after he repays the loan.
Dwelling upon the provision of section 60 of the Act, the subject matter of the
right of redemption can described as that right of the mortgagor, or of any third person

2
State of Kerala v. Cochin Chemical Refineries, AIR 1968 SC 67.

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directed by him, which entitles him to get back the possession of the mortgaged property
after the payment of the mortgaged money
However, if the above stated rights have been extinguished by the act of the
parties or by a decree of the court, they can not be exercised.
The right granted under this section is called the right of redemption and the suit
for its enforcement is called the suit of redemption. The mortgagee has the right to get a
reasonable notice before payment or tender of such money.
It is the most important right of the mortgagor, through which, the mortgagor after
paying-off the money becomes entitle to get back the property. At any time after the
mortgage- money has become due, the mortgagor has a right on the payment of the
mortgage-money to require the mortgagee to reconvey the mortgaged property to him.
This right of the mortgagor, through which he is entitled to get the property returned to
him, contemporaneously with the discharge of his obligation, is called the right of
redemption.

POSITION IN THE TRANSFER OF PROPERTY ACT.

Unlike England, the Act does not distinguish between the right to redeem and equity of
redemption. In England, this right was evolved by the Chancery Courts and was known
as equity of redemption. On the following counts, the mortgagor’s right to redeem can be
justified:
1. Transfer of an interest. In a mortgage, the mortgagor transfers one of all his interests
in the immovable property. The mortgagor transfers only an interest in favour of
mortgagee and not the whole interest in the property.
2. Residuary ownership. After creating an interest in favour of mortgagee, the
mortgagor still has the remaining interest. The remaining interest is called the
residuary ownership of the mortgagor in the mortgage-property. It is the residuary
ownership, by virtue of which, the mortgagor has the right to redemption vested in
him.
3. Purpose is only securing the payment of debt. As per the provisions of the Transfer
of Property Act, in the transaction of mortgage, since there is a transfer of an interest
of the immovable property by the mortgagor for securing the loan, he is entitled to get

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 back that interest on the repayment of the loan. By making the payment of the loan
with its interest, the mortgagor becomes entitled to redeem, that is call back the
‘interest’ given to the mortgagee as security for repayment.
4. Principles of equity, justice and good conscience. Mortgagor neither intends nor
desires that the property should go absolutely to mortgagee. Therefore if the
mortgagee is unable to repay the debt on a fixed date and there is some delay, the law
must extend his right to redemption upto a reasonable time. Principles of equity,
justice and good conscience do not allow that a transaction which is of borrowing
nature should become an absolute conveyance, only on the ground that the debt was
not paid on the fixed date. It is therefore, an inherent right of every mortgagor, laid
down in sec. 60, irrespective of the kind of mortgage.

EQUITY OF REDEMPTION.
The right of redemption of the mortgagor under sec. 60 of the Transfer of Property Act is
based on the equity of redemption under English law.
In England, the mortgagor’s right of redemption was introduced by the Chancery
Courts, also known as the Courts of Equity. The mortgagor’s right to redeem the
mortgage by making payment, even after the due date is known as equity of redemption.
The Chancery Court introduced this right in order to do justice with cases on mortgage
decided under the common law.

Prior position at Common Law.

At common law, the mortgage was the transfer of legal estate (absolute interest), subject
to a condition. The condition was ‘non-payment of loan upto fixed date’, which if
fulfilled, the mortgaged property belonged absolutely to the mortgagee. Common law
treated the non-payment of debt upto a specified period as penalty for the mortgagor. The
common law gave no relief to the mortgagor, who failed to repay the debt upto the
specified period, even though he was ready to repay within few days after the specified
period. Thus, in default of the repayment the mortgagor lost all his rights in his
immovable property.

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 This situation was exploited by the money-lenders, by not accepting the money on
the due date. They knew that if somehow the loan with interest remained unpaid upto the
fixed date, they will become owner of the property in lieu of the small sum of money,
which the debtor took in his urgent need.

Role of Chancery Courts.

Soon the Chancery Courts realized that the main purpose of the mortgage is to keep the
property as a security to the money-lender for the repayment of money. Therefore, the
money-lender should not be given any legal right to hold on the property absolutely if the
mortgagor was ready to repay the debt within reasonable time after the expiry of the due
date. Thus, the right which was denied by the Common Law was given to the mortgagor
by the Courts of Equity. This right of the mortgagor to redeem even if he was in default
was known as equity of redemption.
Thus, this very principle evolved by the Chancery Courts went against the
common law. Equity started with the notion that stipulation as to time (fixed date for
repayment) should not be treated as penalty. The Courts even held it to be the essential
character of every mortgage. They provided further that it was an important right of the
mortgagor and it could not be denied in any manner, not even express agreement of the
parties themselves. Equity declared that ‘once a mortgage, always a mortgage’.

ONCE A MORTGAGE ALWAYS A MORTGAGE.

This maxim implies that the mortgagor’s right of redemption would not be defeated by
any agreement to the contrary, even if the mortgagor himself has agreed to it. The maxim
simply denied the validity of any stipulation in the mortgage deed, which defeats the
mortgagor’s right of redemption. In other word, a transaction, which at one time is
mortgage, could not cease to be so by having any stipulation in the mortgage deed
intended to defeat the mortgagor’s right of redemption.
The underlying principle of this maxim was stated by LORD HENLEY in
following words:
“This Court as a 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

6
 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 made absolute. And there is great reason and
justice in this rule for necessitous men are not, truly speaking, free men, but to
answer present exigency, will submit to any terms that the crafty may impose
upon them”3.

CLOG ON REDEMPTION.
The right of redemption continues although the mortgagor fails to pay the debt at the due
date. Any provision inserted in the mortgage-deed which has the effect of preventing or
impeding this right is void as a clog on redemption. This view was substantiated by
LINDLEY M. R. in Stanley v. Wilde4.
The Supreme Court considered this rule in Murarilal v. Devkaran5, where the
clause incorporated in the mortgage deed provided that the amount due under the
mortgage should be paid within 15 years whereupon the property would be redeemed.
Further it provided that in case payment was not made within that period, mortgagee
would become the owner of the property. The Supreme Court affirming the decision of
the Rajasthan High Court, held that any stipulation contained in the mortgage deed,
which unreasonably restrained the mortgagor’s equity of redemption can be ignored by
the courtsubject to the general law of limitation prescribed in that behalf.

a) Long Term for Redemption. It is not necessarily true that a long term for
redemption is always a clog on redemption. However, if the length of the term is
found to be oppressive, redemption would be allowed before the expiry of that
period. A period of 90 years for redemption has been held to be unreasonable and
a clog on redemption6. A period of 90 years for redemption has not been held to
be a clog on redemption7.

3
Vernon v. Bethell, (1762) 1 Eden 113; available in R. K. Sinha’s The Transfer of Property Act, 9 th ed., p.
289.
4
(1899) 2 Ch 474.
5
AIR 1965 SC 225.
6
Fateh Mohd. v. Ram Dayal, 2 Luck 588.
7
Massa Singh v. Gopal Singh, AIR 1983 P&H 437.

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 b) Condition of Sale in Default. A condition in the deed that has the effect of
converting a mortgage into a sale is invalid as a clog on redemption. such
condition converts a mortgage into a sale. Equity disfavours a mortgage to be
converted into a sale. It is therefore void. In Gulab Chand Sharma v. Saraswati
Devi8, there was a mortgage by conditional sale. The mortgagor was given a time
of four years for repayment of the debt. The mortgage property was on lease. The
deed contained a stipulation that in case the mortgagee receives any notice from
any public authority for breach of covenants of lease within four years term, the
mortgagee shall become owner of the property. The apex court held this
stipulation to be a clog on mortgagor’s right of redemption and therefore not to be
enforced.
But after the execution of the deed, the parties agree to the sale of the
property that does not amount to be a clog on the redemption.

c) Condition Postponing Redemption in Default on a Certain Date. The condition

or stipulation that postpones the mortgagor’s right of redemption in case of
default of payment on a certain date, is regarded a clog on redemption as it bars or
restricts the redemption. In Mohd. Sher Khan v. Seth Swami Dayal9, the mortgage
was for a term of five years. A stipulation in deed said that if the mortgagor failed
to pay the money, the mortgagee was entitled to take possession of the property
for next 12 years, during which the mortgage could not be redeemed. The Privy
Council held the stipulation to be a clog on redemption for it hindered the right of
redemption.
d) Restraint on Alienation. A condition, which restraints the mortgagor from
transferring mortgage-property is a clog. In a mortgage, the mortgagor only
transfers an interest in the property and still has residuary ownership. Hs has
every right to transfer the property by sale, gift etc and can even, effect another
mortgage.

8
AIR (1977) SC 242.
9
AIR (1922) PC 17.

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 e) Collateral benefits to Mortgagee. Collateral benefits to mortgagee are not
necessarily clog on the redemption. In order to establish that the collateral
benefits are clog on the redemption it is necessary that:
a. The collateral benefits given to the mortgagee are unfair and
unconscionable, and
b. The collateral benefits to mortgagee are part of the transaction of
mortgage and not an independent benefit.
In Kreglinger v. New Patagonia Meat & Cold Storage Company Ltd.10, there was
an agreement dated 24 August 1910, whereby a firm of wool brokers agreed to
lend to a company carrying on the business of meat preservers a sum of £10,000
at 6 per cent. The deed further provided that if the interest was punctually paid the
loan was not to be called in until 30 September 1915, but the company, might pay
off at any time on giving one calendar month's notice. The loan was secured by a
floating charge on the undertaking of the company. The agreement provided that
for a period of five years from the date thereof the company should not sell
sheepskins to any person other than the lenders so long as the latter were willing
to buy at the best price offered by any other person and that the company should
pay to the lenders a commission on all sheepskins sold by the company to any
other person. The loan having been paid off by the company in January 1913, in
accordance with the agreement, the lenders claimed to exercise their option of
pre-emption notwithstanding the payment off of the loan. The House of Lords
held the stipulation for the option of pre-emption formed no part of the mortgage
transaction, but was a collateral contract entered into as a condition of the
company obtaining the loan. It was not a clog on the equity of redemption or
repugnant to the right to redeem and the lenders were entitled to an injunction
restraining the company from selling sheepskins to any person other than the
lenders in breach of the agreement.

f) Penalty in Case of Default. An agreement which amounts to penalty in case of

non-payment of debt is a clog on redemption.

10
(1914) AC 25.

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CASES ON EQUITY OF REDEMPTION.

In Seth Gangadhar v. Shankar Lal and Ors11, it was admitted that the transaction was that
of a mortgage and Section 60 of the Transfer of Property Act was applicable. The Court
held that therein the term of mortgage was 85 years and there existed no stipulation
entitling the mortgagor to redeem during that term which had not expired. The document
in question was held by this Court to be containing a stipulation creating a clog on the
equity of redemption which was found to be illegal.

In Pomal Kanji Govindji and Ors. v. Vrajlal Karsandas Purohit and Ors.12, the Court
held that whether a clause used in a transaction of mortgage amounted to clog on the
equity of redemption is a mixed question of law and fact. In that case, there existed a
provision for payment of interest at the rate of half per cent per annum payable on the
principal amount at the end of the long period which led the Court to conclude that there
was a clog on equity of redemption. Furthermore, in that case, materials were brought on
record to show that the transaction was entered into by way of security for the loan
obtained.

In Shivdev Singh and Anr. v. Sucha Singh and Anr.13, the Court was dealing with a case of
anomalous mortgage. Therein the mortgage was to remain operative for a period of 99
years. It was in that situation, this Court opined that the original owner having been in
great financial difficulty, the mortgagees took advantage of the said fact and incorporated
a 99 year's term which constituted a clog on the equity of redemption.

11
1959 SCR 509.
12
MANU/SC/0372/1988.
13
MANU/SC/0230/2000.

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In M.R. Satwaji Rao (D) by L.Rs. vs. B. Shama Rao (Dead) by L.Rs. and Ors. 14, the facts
were that on 19.2.1948, the plaintiffs’ predecessor executed a usufructuary mortgage in
favour of the respondents for a sum of Rs. 10,000. The terms of the said mortgage deed
were that the mortgagee shall remain in possession of the mortgaged property without
paying rent and that the mortgage amount of Rs. 10,000 shall carry no interest. The
period of redemption was five years from the date of mortgage. However, the mortgagors
continued in possession of the mortgaged property as tenants of the mortgagee on a
monthly rent of Rs. 97.50. As the mortgagors failed to pay the rent, on 19.5.1952, the
mortgagee filed suit before the Ist Munsif, Bangalore for arrears of rent. The said suit
was decreed. In pursuance of the said decree, the property was put on auction sale by the
executing Court. Mortgagee being the highest bidder purchased the schedule property in
court auction. Sale was confirmed. The mortgagors neither objected for the sale nor
confirmed the sale or take any steps to set aside the sale over three decades.
On 18.2.1983, the plaintiffs/respondents (mortgagors), after nearly three decades,
filed a suit before Addl. City Civil Judge, Bangalore for a decree of redemption of the
mortgage of the suit schedule property sold in public auction as long back as on
11.9.1952. The Civil Judge, after considering both oral and documentary evidence,
dismissed the suit with costs on 31.7.1990. Aggrieved by the said order, the plaintiffs
filed an appeal before the High Court. The High Court allowed the appeal decreeing the
suit for redemption. Against the impugned judgment of the High Court, the defendants
filed the present appeal by way of special leave before the Supreme Court. The apex
court upheld the decision of the High Court.

CONCLUSION.
14
MANU/SC/7478/2008.

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The equity of redemption has been well recognized in Common Law as well as in the
Indian statutes. The provisions of the Transfer of Property Act, 1882, explicitly
substantiate this principle. In the Indian scenario, various conditions have been discussed,
whereby the stipulations in the mortgage deed have turned to be the clog on the equity of
redemption.
The equity of redemption can be brought to an end either by the act of parties or
by a decree of the court.

BIBLIOGRAPHY.

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• Text books.
1. Sarathi, Vepa P., Law of Transfer of Property, 5th ed., 2005, Eastern Book
Company, Lucknow.
2. Saxena, Poonam Pradhan, Property Law, 2006, Lexis Nexis Butterworths, New
Delhi
3. Sinha R.K., The Transfer of Property Act, 4th edition 1999, Central Law Agency.
4. Singh, Dr. Avtar, Textbook On The Transfer Of Property Act, 2008, Universal Law
Publishing Co.
• Statues.
1. The Transfer of Property Act, 1882.

• Internet sources.
1. www.manupatra.com

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