Ramkhilawan vs Mullo

Chaturvedi, J.—The plaintiff''s suit for redemption of a mortgage has been dismissed by the trial Court, and this judgment has been upheld by the lower appellate Court. He, therefore, comes in second appeal to this Court. The mortgage-deed (Ex-P-1) is dated 20th February 1922. The plaintiff is the assignee of equity of redemption from the original mortgagors and he purchased the mortgaged property by a sale-deed dated 7th April 1947 (Ex. P-2). The defendants are mortgagees. The property mortgaged under this mortgage-deed was Khasra No. 198 and Khasra No 207. The latter (Khasra No. 207) has come to the mortgagors back in 1936 by some private agreement, and this is not the subject-matter of dispute. The right to redeem Khasra No. 198, area 51, 72 acres is contested. The consideration for the mortgage was Rs. 5000/- and it was stipulated that the profits of the properly mortgaged would go towards interest. The principal amount was payable after the expiry of a period of 80 years and it was further stipulated that money would be payable only in the month of Baisakh. The plaintiff contended that these two conditions constituted clog on the equity of redemption, and, therefore, he came for redemption of the mortgage after 34 years. Both the Courts below have expressed the view that the two conditions in the mortgage-deed do not constitute clog on the equity of redemption, and therefore, the suit has been dismissed.

The learned counsel on either side have cited many rulings, each supporting his view.

In my opinion, the second condition that money would be payable only in the month of Baisakh cannot be said to be a clog on the equity of redemption. I am supported in this view by a ruling of the Allahabad High Court, reported in Kirpal Singh Vs. Sheoambar Singh and Others in which there was a stipulation that there should be no redemption except in the month of Jeth. It was held in this case that such a provision was not a clog on the equity of redemption, in as much as the intention of the party obviously was to permit redemption at a time when the crops were not standing.

Regarding the first condition that money would be payable only after the expiry of 80 years, it may be mentioned at the outset that in India a long term, by itself, has never been regarded as a clog on the equity of redemption, entitling the mortgagor to redeem before the expiry of the period agreed upon. In Durga Charan Maji Vs. Poresh Bewa, there was a mortgage for 50 years and it was held that the money was payable after the expiry of that period. In Shubratan vs. Dhanpat Gadoriya 54 All. 1041 and in Akella Jagannadham and Others Vs. Venuthurupalli Narasimham and Others, the period was 60 years. In AIR 1925 11 (Nagpur) and in Hira vs. Sitaram ILR (1949) Nag. 12 , the period fixed was 75 years. In these cases contracts were held to be valid. Similarly, in Hasar Ali and Others Vs. Ajodhaya Sah and Others, the condition that money would be payable after 90 years was held to be valid. In Baldeo vs. Losai 4 Luc 203, the question for decision was whether a provision in a deed of usufructuary mortgage by which redemption was postponed for 99 years was a condition which could be avoided by the mortgagor. A Division Bench consisting of Sir Louis Stuart, C.J. and Wazir Hasan, J, laid down that ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which a mortgage is created, the right of redemption can only arise on the expiration of the specified period, but where it is shown on the merit that the effect of the condition postponing redemption for a specified term of years is to make the mortgage practically irredeemable, the court is justified in setting it aside. Applying this principle to the facts of that case their Lordships held that the terms of the mortgage being not unconscionable, there was noting else except the long term of 99 years in the deed of mortgage to which objection could be taken, the long term by itself did not constitute a clog on the equity of redemption and the mortgagee had a right to enforce the condition postponing redemption. In Abdulla vs. Saadulla Khan 15 I.C. 917, the period fixed was 150 years. The Judicial Commissioner (N.W. Frontier Province) held that the right to redeem did not mature before the expiry of the term fixed in the deed.

Now it will be proper to refer to those cases where the long term and other conditions in the mortgage-deed have been held to be unconscionable. The main principle is that the right of redemption is an essential and inseparable attribute of a mortgage security and that equity will relieve against any agreement purporting to defeat or restrict the light of redemption. In Balbhaddar Prasad vs. Dhanpat Dayal AIR 1924 Oudh 193, the property worth Rs. 9,000 was to be redeemed at the end of 50 years at the cost of 2 lacs and half. The mortgage was for 50 years and the net profits of the mortgaged property were Rs. 275 a year. The amount of interest on Rs. 6,000 at the rate of 12 per cent per mensem came to Rs. 720 a year. It was, therefore, calculated that the mortgagor was liable to pay Rs. 445 per year from his own pocket for 50 years. At the end of 50 years the mortgage money would swell to an enormous sum (445 x 50 x 12= 2,67,000). Such being the cumulative effect of the terms of the contract in this case Wazir Hasan, A.J.C. held that those terms were oppressive and unconscionable and that they would render the mortgage irredeemable.

In Bhullan vs. Bachcha Kunbi 53 All. 580, there was a usufructuary mortgage wherein it was stipulated that redemption could be made only on Jeth Sudi Puranmashi day in the sixtieth year. The main term contained in clause & read as follows: "Should we, the executants, or our heirs wish to get the property redeemed and pay the principal amount in a lump sum after fifty-nine years on Jeth Sudi Puranmashi of the sixtieth year, then the property shall be redeemed. Should we, the executants, or our heirs wish to get the property redeemed within sixty or after sixty years, then the property shall not be redeemed" Sulaiman, J. (as he then was) agreeing with Young, J. observed that no hard and fast rule can be laid down as to when a covenant amounts to a clog on the equity of redemption, and that the Court has to take into account all the circumstances as they then existed and all the terms of the mortgage-deed end then consider whether the covenant in dispute is so unduly hard and unconscionable as to nullify for all practical purposes the right of redemption, or the exercise of the right of redemption is restricted in such an unreasonable manner as practically to deny it. His Lordship added.--"If the fetters or clogs placed on the redemption are hard and unreasonably oppressive, the intervention of the Court may be called for." Applying this principle to the facts of the case his Lordship observed that redemption was to take place just on that one day after the expiry of 60 years, after which the transfer would become absolute and that there would be no right to redeem the property before the expiry of that period or after the expiry of that period and that that was the principal idea contained in the mortgage-deed, But considering that by the time that day arrived, the parties to the deed may themselves have died and their heirs may not remember the date exactly; that it may not be easy to discover all the heirs and representatives of the original mortgagee; that there may be difficulty in depositing the amount in Court to the credit of the heirs of the mortgagee; and that the sugarcane pressing mills, which were part of the mortgaged property, might become useless by wear and tear by that time. All these circumstances showed, in his Lordship''s opinion, that it was a case where redemption was made most difficult, if not altogether impossible. Having regard to all the circumstances the Division Bench held that the suit for redemption after 29 years was a proper one, and the plaintiffs were allowed to redeem the property on condition of their depositing the entire amount which may be found due to the mortgagees.

In AIR 1933 460 (Oudh) , it was provided that no redemption could take place within 55 years. Then, there were certain covenants in the mortgage-deed, which were as follows; the mortgagee was entitled to appropriate the income after paying the Government demand; and he was given the power to make improvements and appropriate the profits accruing there form. It was further covenanted that at the time of redemption the mortgagor would be liable to pay the mortgagee the amount of money spent on the improvements with interest at 6 per cent per annum; the mortgagor was further to be liable at the time of redemption to pay to the mortgagee all the arrears of rent and Taqavi, also Interest thereon at the rate of 6 per cent per annum; the mortgagee was entitled to take dry wood and to appropriate the sear income without any liability to account for the profits arising therefrom; the mortgagee was given the right to plant groves and trees, settle tenants, sink wells and construct embankments, and the mortgagor was laid under an obligation to pay the costs thereof at the time of redemption; the mortgagor was also laid under the liability to pay all costs of litigation. A division Bench consisting of Wazir Hasan, C.J. and Smith, J. held that the cumulative effect of all these covenants was to extinguish the equity of redemption at the end of 55 years. Their Lordships in the end quoted an extract from the observations of Lord Macnaughten in the case of Bradley vs. Carritt (1903) A.C. 253 --"You cannot impose on the equity of redemption a fetter operating indirectly when you cannot impose a fetter which operates directly."

In Vadilal Chhaganlal Soni and Others Vs. Gokaldas Mansukh and Others, the agreement between the mortgagor and mortgagee was that the mortgagor was to redeem the mortgage 99 years after its execution and the mortgagee was given full authority to build any structure on the plot mortgaged after spending any amount he liked. A Division Bench (Gajendragadkar and Vyas, (JJ.) held that the two terms of the mortgage were so unreasonable and oppressive that they amounted to a clog on the enquiry of redemption. It was observed that under the mortgage the mortgagee was given full liberty to spend any amount he liked for building a structure on the Wada or open space which had been mortgaged to him. The mortgagor came from a poor family, and if the mortgagee were to exercise his option, he would easily make it impossible for the mortgagor to redeem his property. It was added that no restrictions had been placed as to the nature of the structure which the mortgagee should raise and as to the amount which he should spend on raising such a structure. The option given to the mortgagee in this respect was held to be wholly unreasonable and that it conferred upon the mortgagee an advantage to which he could not legitimately be entitled.

In AIR 1930 142 (Privy Council) under the terms of the mortgage-deed the mortgagee was entitled to a possession for 19 years. At the end of that period if the mortgagor paid off the mortgage money, the property was to belong, as to a limited interest therein only to the mortgagor, as to the major interest therein, to the mortgagee. There was another condition that if the mortgagor failed to pay off the mortgage money at the end of 19 years, the property was to belong to the mortgagee absolutely. After the expiration of the stipulated period, the assignee of the mortgagor brought a redemption suit, It was held by their Lordships of the Judicial Committee that the provisions of the mortgage-deed conferring on the mortgagee on redemption, an interest in the property would constitute a clog or fetter upon the equity of redemption and that those provisions were void and could have no more binding force against the assignee of the mortgagor than they had against the mortgagor himself.

It would be manifest that the facts of the second set of cases, viz., Balbhaddar Prasad vs. Dhanpat Dayal AIR 1924 Oudh 193 (supra), Bhullan vs. Bachcha Kunbi 53 All. 580 (supra), Har Dayal Singh vs. Raja Ram Singh AIR 1933 Oadh 460 (supra), Vadilal Chhaganlal Soni and Others Vs. Gokaldas Mansukh and Others, and AIR 1930 142 (Privy Council) are very much different from the fact of the present case where besides the long term and the condition that money would be payable only in the month of Baisakh, there is no other condition imposed in the mortgage-deed. Consequently, in my opinion, the principle enunciated in the first set of cases would fully apply to the present case. There is a definite finding by the Courts below that profits from the mortgaged property are just sufficient to cover the interest on the principal. The contract In the mortgage-deed in the present case cannot be taken to be unreasonable, oppressive or unconscionable, and there is also no condition in the deed that after full payment of principal, interest and costs, the mortgagee would continue to receive for a definite or indefinite period a share of the rents and profits of the mortgaged property; and, thus, the principle enunciated in Khan Bahadur vs. Mukhna (cit. sup.) will also not be attracted. I, therefore, think that the view expressed by the Courts below that the conditions in the mortgage-deed do not constitute clog on the equity of redemption is sound.

I, would, therefore, dismiss the appeal with costs.