ANSWER SHEET

Ans. 2. INTRODUCTION

The right to recover and redeem money is a right of mortgagor under section 60 of the Transfer of
the property act. The mortgagor has a right, on payment or tender, at a proper time and place, of the
mortgage-money, to require the mortgagee to deliver to the mortgagor the mortgage-deed and all
documents, possession or re transfer the property relating to the mortgaged property which are in the
possession or power of the mortgagee. However, under section 67 the mortgagee has right of
foreclose and sell which gives rise to the contraction and sale and redemption of property or estate so
transferred.

Contradiction under Right of Redemption & Right of Foreclosure

The most important right of the mortgagor is the right to redeem the mortgage i.e., to pay off the
mortgage-money and get back the property. At any time after the principal money has become due,
the mortgagor has a right on payment or tender of the mortgage-money to require the mortgagee to
reconvey the mortgaged property to him. The right has been recognised as the principle of equity in
England, which was therein created by the Courts of Equity and is also known as equity of
redemption. In India, there is no distinction between equity of redemption and right to redeem. The
mortgagor being an owner who has parted with some rights of ownership has a right to get back the
mortgage deed or mortgaged property, in exercise of his right of ownership.

The court in Urmila v Sohan Lal held that the mortgagee could not become the owner by efflux of
time and therefore no limitation could be applied, therefore the property shall not to vest in the
mortgagee. The application for redemption filed by the mortgagor had to be allowed. The Supreme
court in has held that the right of redemption is a statutory right which cannot be fettered by any
condition which impedes or prevents redemption. Any such condition is held to be void. The
Supreme Court has held in Java Singh Dnyanu Mhoprekar v Krishna Balaji Patil that the right of
redemption under a mortgage deed can come to an end only in a manner known to law. Such
extinguishment of the right can take place by a contract between the parties, by a merger or by a
statutory provision debarring the mortgagor from redeeming the mortgage. When a suit for
redemption is filed the mortgagee in possession of property will have to deliver the possession to the
mortgagor unless he can show that the right of redemption has come to an end or that a suit is liable

1|Page
to be dismissed on some other valid ground. Therefore, a mortgagee cannot acquire any right except
what is given by the mortgage deed or if he has pre-existing rights.

Clog on redemption to be applicable

The right of redemption continues although the mortgagor fails to pay the debt at the due date. Any
provision which is inserted to prevent or impede this right is void as a clog on redemption. The
Supreme court in Murarilal v Devkaran held that if a mortgage deed contained a stipulation which
unreasonably restrained the mortgagor's equity of redemption, the courts were empowered to ignore
that stipulation and therefore no time period could be affixed to the right of mortgagor in redeeming
the property.

The Supreme Court further held in Purohit K Govind Ji v Vraj Lal K Purohi that though a long-
term as a period of redemption is not in itself necessarily a clog on equity of redemption but in the
changing circumstances of inflation and phenomenal increase in the prices of real estates would
create a presumption that it is clog on equity of redemption.

Extinguishment of right can be contractual in nature

The court in Shakeena v Bank of India has held that the mortgagor's right to redeem the mortgage
was not extinguished until there is completion of sale by secured creditor by registration of sale deed.
However, under the mortgagee right there are express statutory provisions to sale the property under
section 67 of the act.

Postponement of Redemption by Subsequent Agreement

A subsequent agreement having the effect of postponing redemption may either be an agreement
which creates a personal obligation. Each case has to be decided on its facts because no hard and fast
rule can be laid down as to whether the agreement operates as a further charge or not. Therefore the
mortgagor has right to postpone to redeem the estate by subsequent agreement but the said condition
doesn’t bar the right of mortgagee under Section 67 and 69 to institute the decree of sale in the court
of law.

Right to foreclose or sell by the mortgagee

According to section 67 of the Transfer of Property act, at any time after the mortgage money has
become due and before a decree has been made for the redemption of mortgaged property or the
mortgage money has been paid or deposited, the mortgagee has a right to obtain from the court a

2|Page
decree that the mortgagor shall be absolutely debarred of his right to redeem the property or a decree
that the property be sold.

The supreme court has clarified in the case of Ramesh Kumar v Yashpal Batra that the difference
between right of redemption and the right to foreclosure is that right of redemption is an absolute
right whereas right to foreclose is not. The mortgagor cannot limit his right of redemption but the
right to foreclose can be made subject to the contract between the parties to mortgage. Howvevr it is
pertinent to note that the mortgagee cannot foreclose without exhausting his remedies for recovering
the money because in order to sell the property a mortgagee has to file a recovery of debt under
SARFAESI Act which therefore upholds the right of mortgagor in redeeming the estate so
transferred and therefore courts have taken a liberal view in allowing the mortgagor to redeem his
property within a reasonable amount of time even after the expiry of time period mention in the
mortgage deed.

Analysis of Contradiction of right to sale and extinguishment of the right

However, it is pertinent to note that there is contradiction to above rule under section 69 of the
Transfer of property act, the mortgagee has a right to sell without the intervention of the court. When
the mortgage-money is not repaid by the mortgagor, he becomes entitled to sell the property to
recover his debt. The Court in Bhupinder Singh Sodhi v UOI has held that the power of sale may
either be exercised by all or in the way expressed in the mortgage-deed and therefore the contractual
right under mortgage deed shall supersede a statutory right provided under section 60 of the Transfer
of Property act. However, the courts in recognizing the equity principle has held that even under
section 69 and 67 it is open for mortgagor to apply for injunction for sale of such property by
invoking his statutory right under section 60 of the act in the case of Jarup Teja and Co v
Peerbhoy Adamj.

The Bombay High Court in Jagjivan v Shridhar that the mortgagor is entitled to redeem before
under section 60 of the act before the mortgagee initiates the proposal of sale , if so has been has
been mentioned under the deed.

The right of mortgagor has been recognized a valid right to redeem and therefore a sale by the
mortgagee could be treated a clog on redemption as per section 60 of the act.

Conclusion

Therefore, the mortgagor's right of redemption and the mortgagee's right of foreclosure are
coextensive. Depending upon the terms of the mortgage, when the mortgagor's right to redeem

3|Page
accrues, the mortgagee gets the right to enforce his security. However, this rule may be limited by
reasonable terms in the mortgage-deed but the courts have taken a contradictory approach in
interpreting the above-mentioned sections for sale and redemption vis a vis section 60 and 67 of the
ACT.

Ans. 4

4|Page
5|Page
6|Page