RIGHT TO REDEMPTION:

AN ANALYTICAL
APPROACH
TRANSFER OF PROPETY ACT 1882

AUTHOR:
ASTHA MITTAL

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INTRODUCTION:

A mortgage is referred to as a process of transferring of an interest in the particular immovable

property, solely for the purposes of securing payment of the money advanced. Section 581 of

the Transfer of Property Act 1882 defines the term mortgage. Under this definition the person

who transfers his property in exchange of the payment is called the mortgagor and the person

who transfers (transferee) the money in exchange of the temporary title is called the mortgagee.

In many legal scenarios it has often been noticed that mortgage is referred to in close context

with the concept of sale. The major difference between the two concepts lies in the fact that

their meanings in relation to the possession of the land transferred is quite different. In the case

of sale of a property, the sellers disown his rights over his property and transfers his absolute

right to the buyer under a valid consideration. Once the transfer is complete the seller loses his

title over the property. However, things are different when it comes to mortgage. Under

mortgage, the seller does not transfer his title to the buyer, rather the buyer only holds a

temporary possession of the land for some period of time and as soon as the seller (mortgagor)

pays the money due on the property he shall be obliged to have the possession back. Hence,

the right to possession of the property to the mortgagor is the principle issue under the concept

of mortgage, and is known as the right to redemption in legal terminology. The right to

redemption can be understood in the context that once the mortgagor has payed his debt on his

immovable property back to the mortgagee, he is entitled to get his property back which in any

ways is under temporary possession of the mortgagee and is only held by him as a security to

the money lent by him. Therefore, the question of redemption comes into play when the

mortgaged property is returned to the mortgagor on paying the debt. Section 60 of the Transfer

of Property Act, 18822 talks extensively about the concept of right to redemption. The essence

of the section lies in the fact that while explaining the concept of right to redemption, the statute

1
Transfer of Property Act, 1882, Section 58
2
Transfer of Property Act, 1882, Section 60

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highlights the issues pertaining under the legal scheme as well. Under section 60, the mortgagor

has the right to redeem his mortgage “any time” once the money has become due. On the

payment of the money the mortgagor has the right to possession of his property. Under the

prescribed law it is quite clear that right given to the mortgagor shall only be restricted when a

decree has been passed by the court, which prohibits the mortgagor to exercise his right to

redemption. The proviso of this section which talks about the restriction on the right to

redemption is generally the most debated aspect under the concept of Right to Redemption.

The right has till date been followed under the principles of “one a mortgage always a

mortgage”, the term was for the first time discussed under the case of Noakes v. Rice3, where

lord Devey, stated that “once a mortgage always a mortgage and nothing but a mortgage”

according to Lord Devey the right granted to the mortgagor to redeem his property shall not be

added by any extra activity that makes that property non-redeemable. In his opinion if at all

any obstruction is added by the counter party then that particular activity will be held null and

void. In my opinion there were two rationales behind his argument, first being the fact that a

person (mortgagor) is already in a vulnerable position which forces him to mortgage him his

own property in the hands of the other party and second, by adding the phrase “nothing but a

mortgage” to the already existing maxim, Lord Devey4 is trying to specify that there shall be

no clog on the right to redemption and the mortgagee shall not make any further demands which

shall result in preventing the mortgagor from getting back his mortgaged land. Looking at the

variety of issues under the right to redemption, the next issue in line is any act that obstructs

the right to redemption is a clog on that right to redemption. The meaning of the doctrine of

clog on redemption basically signifies that, whenever, through any act advanced by the

mortgagee or any other person which in turn puts a restriction on the right to redemption of the

3
Noakes and Co Ltd v Rice (1901) HL 17
4
Noakes and Co Ltd v Rice (1901) HL 17

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mortgagee is known as a clog on the right to redemption. This doctrine has been interpreted

differently under various jurisdictions. The aim of this paper would be to explain this doctrine

in totality through a subjective as well as legal interpretation. A huge amount of reliance would

be kept on its’s interpretation under the Indian law as well as the reading of various supreme

court judgements. Reference will also be taken from the United States case laws on the concept.

The issue in line which can also be termed as a “clog” is whether the right to redemption is

barred by any limitation period. Meaning that under the concept of right to redemption whether

any reliance is given to the time period, this aspect of the paper would be discussed through

case laws and legal interpretation of the act.

Therefore, the aim of this paper is to discuss all the relevant issues pertaining to right to

redemption. Since a brief introduction has already been formulated, answering the fact that

how is the concept understood under the Indian law and even worldwide. The main questions

that the paper will deal with will be pertaining to the clog on redemption, concerning that since

the concept of mortgage has developed with the idea that “once a mortgage always a mortgage”,

which means that the mortgagees shall always be mortgagee and shall never step into the shoes

of the owner of the land, hence, what are those instances where the rights of the mortgagor is

affected and he is unable to redeem his property. Following the main issue of the paper i.e. the

Clog on Redemption, the paper will deal with various sub issues containing the arguments

against the existence of the time period under right to redemption. Dealing with this part the

paper will refer to the Indian Limitation Act 1963 and other various case laws. The conclusion

of this paper would discuss whether the right to redemption is an absolute right or not.

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WHAT IS CLOG ON RIGHT TO REDEMPTION? :

Before discussing the issues pertaining under the concept, it is important to highlight the aim

behind the doctrine gain its momentum across the world under property law disputes. The

doctrine was for the first time introduced in the Equity Courts under the English law5. Under

the equity courts it was observed that the mortgagees for a long time had clauses under their

mortgage deeds that forfeited the title of the property from the mortgagor and vested the

mortgagee with the possession of the property in the scenarios where the repayment of the debt

was even delayed by a single day. Therefore, in order to maintain the equity principle under

the law the English courts laid a lot of significance to the Doctrine of Clog on Redemption.

Talking about the India law where the right of redemption itself is a statutory right under article

60 of the Transfer of Property Act, 18826. In the earlier cases decided by the privy council of

India, the court tried to interpret the doctrine. In the case of Meharban Khan7, where the

mortgage deed had two major clauses which according to the court were a clog on the right to

redemption. The two clauses under the deed were, first, as the mortgagee was to have the

possession of the property for nineteen years, “at the end of that period, if the mortgagor paid

off that money, the property was to belong, as to a limited interest therein only, to the

mortgagor, and as to the major interest therein to the mortgagees”.8 The second clause under

the deed was that, if at all the mortgagor fails to pay the principle amount after the period of

nineteen years the property will permanently belong to the mortgagee. The court interpreted

both these clauses as a clog on the right presented to the mortgagor to redeem his property. The

court stated that, the provisions being a clog on the right to redemption are void. According to

the court such provisions when form a part of the actual contract shall be in sync with the law

5
Jeffrey L. Licht. The Clog on the Equity of Redemption and its Effects on Modern
Real Estate Finance, St. John’s Law Review. Retrieved from
https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=2076&context=lawreview
6
Transfer of Property Act, 1882, Section 60
7
Meharban Khan v. Makhna (1930) AIR PC 142 (Privy Council)
8
ibid

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and therefore, they will be held invalid. Hence, under this judgement it can be observed that

since the very beginning the courts have tried to invalidate those provisions which hamper the

rights of the mortgagor. The court while giving its judgement relied on the case of Stanley v.

Wilde9, many judgements till date rely on this case as it gives a proper justification on the right

given to the mortgagor. Under this judgement the court observed that, the idea behind a

mortgage is to transfer the property or land as a security for the payment of the debt. The

security on this pretext is redeemable, as in when the payment is done and the mortgagor is

discharged from his obligations. The court further stated that any provision which is inserted

in the mortgage deed to prevent the redemption on the payment will be considered as a clog on

the equity of redemption and will therefore stand void. In my opinion these issues arose under

this subject because somewhere the doctrine could not clear the jurisprudence behind the right

to redemption. In the case of U. Nilan v. Kannayyan10, the philosophy behind the right was

explained by the court. The court stated that, the conditions of the person taking the loan on

exchange of the security given has to be taken into consideration. If the person granting the

loan, introduces his own conditions in order to infringe the rights of the mortgagor to redeem

his property, the court is ought to protect the person and allow him to redeem his property.

i) CLOG ON THE RIGHT TO REDEMPTION IS VOID AB INITIO:

Under this sub-section, the paper will aim at discussing various case laws under

which the judicial understanding of the courts has somewhere made it clear that any

provisions in the mortgage deed which tries to infringe or put a clog on the right to

redemption would be void from the beginning of the inception of that particular

clause. Though, under various other case laws as well, the courts have tried not to

9
Santley v Wilde (1899) CH 474
10
U. Nilan vs Kannayyan (Dead) (1999) (Supreme Court)

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 give any conclusive answers and rather maintained the view that the right to

redemption might be infringed depending on the factual matrix of the cases present

before the court. In a supreme court judgement11, the court tried to establish a

principle where the statutory right of the mortgagor shall be taken away with respect

to the law in hand i.e. section 60 of the Transfer of Property act. In the case of

K.Vilasini12, the court stated that under section 60 the law gives two instances where

the right to redemption of the mortgagor might be curtailed, first, through the act of

the parties and second, through a decree by the court. The courts in Indian, in

general have laid down the principle that was laid down in the case of Stanley v.

Wilde13, where the court declared any such provision which debarred the mortgagor

from his right to redeem his property as void ab initio. Under the Indian judiciary

there have been variety of cases wherein the courts have interpreted this clog to be

void ab initio and on the same hand in vases where the “clog” is supposed to be for

a short period of time, the courts have accepted that clog considering the intentions

of the party o introduce that short term clog. In the case of Kripal v. Sheoamber14,

the plaintiffs introduced a clause in their mortgage deed that, the right to redeem

the property shall not be used by the mortgagor in the period of “jeth”, this was

taken by the court as a short-term clog and therefore the court did not question the

mortgage deed in this regard. The court observed that the intention of the mortgagee

is seek that the redemption of the land happens at that point in time when the crop

is not standing on the land. In the case of Lewis v. Frank15, a pre-emption clause in

a mortgage deed was considered to be a clog on the right to redemption. Therefore,

11
K. Vilasini v. Edwin Periera (2008) SCC 349 (Supreme Court)
12
ibid
13
Santley v Wilde (1899) CH 474
14
Kripal v. Sheoamber (1929) Allahabad 1830 (High Court)
15
Lewis v Frank Love Ltd (1961) CH 261

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 in my opinion following from the above cases mentioned, any clog on the right to

redemption has been considered by the court as void, besides if at all the court feels

it is valid enough for the judiciary to go into the intention of the parties and allow a

short-term clog as valid. Apart from that, the primary purpose of the judiciary is to

hold any clog as void ab initio as it’s intents to follow the English principles on

right to redemption that says “once a mortgage, always a mortgage”. But if we speak

of the right to redemption been curtailed by court, the supreme court answered this

question in a rather diplomatic way in the case of Parichhan Mistry v Acchiabar

Mistry, the supreme court stated that the right to redemption shall be extinguished

only in the “manner known to law”16 or through a decree passed by the court. Hence,

it is quite clear that in the scenarios where any illegal provision is held in the

mortgage deed the court shall declare those provisions as a clog on the right to

redeem and shall be considered as void, but the cases the question of the right being

extinguished all together, the court might seek legal backup and rely on the facts of

the case.

ii) Is Right to redemption barred by time-period?

This question under this subject revolves around a lot of dilemma. Where on one

hand the Limitation act of 1963, through various provisions tries to restrict the right

to redemption on the mortgagor by putting a time period in which the mortgagor

shall be allowed to redeem his property. If we follow the contours of the Limitation

Act then the law prescribed under the Transfer of Property act seems quite

redundant. Where on one hand the act clearly specifies that a mortgagor shall have

16
Parichhan Mistry v. Acchiabar Mistry (1996) Patna 899 (High Court)

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 the liberty to redeem his property whenever the principle amount is due. Therefore,

the legislative intent is not clear to the readers on this regard. Under the Limitation

Act, 1963; section 61 (a), “states that to redeem or recover

possession of immovable property mortgaged; Thirty years. When the right to

redeem or to recover possession accrues”17. Here, the law is trying to put a cap of

30 years for the mortgagor to redeem his property. Under the limitation act there

are other provisions as well that are trying to convey such restrictions. Under section

27 of the act18, the right to possession of the property shall be extinguished after the

determined period, which is 30 years. Therefore, the legislative intent seems quite

clear in this respect that, through the abovementioned sections the law is clearly

restricting the powers or rights of the mortgagor to redeem his property as soon as

the time period of 30 years passes. Therefore, the issues that arise out of this

discussion is the fact that how is the law under the Transfer of Property Act it is

allowing the mortgagor to redeem whenever he may and why is any sort of

restriction on the right to redeem is termed as a clog under the law. In the case of

Prabhakaran v. Azhagiri19, the court did appreciate the fact that the right to

redemption will extinguish after the period expires as in prescribed under the

limitation act. According to the court it is the duty of the mortgagor to file a suit for

redemption within the stipulated period of 30 years and if the mortgagor surpasses

this time frame then under section 27 of the limitation act would apply and the right

to possession of the property shall be extinguished and the mortgagee will have the

ownership of the mortgaged land.

17
Limitation Act, 1963, Section 61
18
Limitation Act, 1963, Section 27
19
Prabhakaran & Ors vs M. Azhagiri Pillai (Dead) (2006) (Supreme Court)

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DOES THE MORTGAGEE HAS ANY RIGHTS UNDER THE TRANSFER OF

PROPERTY ACT,1882?

Under the transfer of property act, the mortgagee has the right to foreclosure as specified under

Section 67 of the act20. Section 67 lays down some vital conditions that have to followed in

order for the mortgagee to obtain his right to Foreclosure. Under the section, the right to

foreclosure or sale becomes active when the mortgage money that has to be paid by the

mortgagor becomes due to the mortgagee. Under the circumstances where the mortgage money

has not been deposited and a decree has not been passed by the court for the redemption of the

property, the mortgagor under this scenario, becomes totally debarred from his right to

redemption and a decree regarding such extinguishment of the right to redemption shall be

passed by the court. Such a suit in the legal sense is called the suit of foreclosure. Therefore, in

a way the right to foreclosure which is given to the mortgagee is a counter law to the right to

redemption law. However, in this regard the mortgagee will not become the owner of the

property. The mortgagee is obliged to file a suit for reimbursement of the amount that is due

on the mortgage. As specified by the supreme court in the case of Mhadagonda Ramgonda

Patil21, that it shall be specially declared by a competent court that the right of redemption has

been extinguished when the mortgagor has failed to pay the amount due on the mortgage.

Similar view was taken by the supreme court in Shankar Sakharam22 case, by elaborating on

the principle of “once a mortgage, always a mortgage”, the court stated further that the right to

redemption given to the mortgagor may only come to end through the process of law. It will

be the duty of the mortgagee to first establish that the right of redemption has ended when the

20
Transfer of Property Act, 1882, Section 67
21
Mhadagonda Ramgonda Patil & Ors v. Shripal Balwant Rainade & Ors (1988) AIR 1200 (Supreme Court)
22
Shankar Sakharam Kenjale v. Narayan Krishna Gade (2010) CIVIL APPEAL NO. 4594 (Supreme Court)

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mortgagor is unable to pay the mortgage amount when due. Therefore, the courts have clarified

the law as per the general understanding of the subject. The paper in this regard has tried to

read the law in a way which is inferring that despite the presence of the suit of foreclosure

given to the mortgagee, the mortgagor can still not be devoid from his right to redemption. If

we critically analyse the two laws in hand, which is section 6023 which talks about the right to

redemption and reads in its introductory part that “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”24, here under this section the phrase “at any time”

simply signifies that whenever the amount is due on the mortgage, the mortgage shall revive

his property and exercise his right to redemption. However, under section 6725 of the Transfer

of Property act, which says that “In the absence of a contract to the contrary, the mortgagee

has, at any time after the mortgage-money has become due to him……. is called a suit for

foreclosure”. Here the section emphasises on the presence of a contract which would enable

the mortgagee to exercise his right to foreclosure, but if we read both the sections then under

section 60, the law is silent on the presence of any contract and rather is keeps the law open

ended on the terms that the mortgagor has the right to redeem his property anytime after the

principle amount is due. so, in my opinion even if there is a contract which prohibits the right

of the mortgagor to redeem his property, when the law itself is silent on the existence of any

such contract, then the right of redemption given to the mortgagor cannot be affected in that

regard.

23
Transfer of Property Act, 1882, Section 60
24
ibid
25
Transfer of Property Act, 1882, Section 67

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CONCLUSION:

The paper started with an aim to figure the main question of the research that was, whether the

right to redemption is an absolute right or not. Through the course of this paper we looked into

various issues under the subject, starting from understanding the clog on redemption itself,

through various judicial decisions it was explained as to how exactly does the court reads the

definition of the clog on redemption. In the first half of the paper it was observed that the courts

in India are more interested in following the English law on mortgage which believes that “once

a mortgage, always a mortgage”, despite the fact that because of the existence of the Limitation

Act, which puts a restriction on the right to redemption of the mortgagor by putting a limit on

the number of years a mortgagor can enjoy the right to redeem. Hence, in my opinion, despite

the fact that the Indian law has a legislation in hand which in a way is also giving a right to the

mortgagee, the courts should follow its own law and decide the cases depending on the factual

scenario in hand. The second ambiguity that the paper noticed was that the judicial decisions

so far have negated the law in hand and decided cases depending on its own understanding of

the subject or either by simply following the English jurisprudence on the subject matter. Under

the Indian judiciary there have been cases where the courts have even negated the exceptions

given under section 60 of the Transfer of Property Act. Under section 60, the proviso talks

about how the right to redemption could be extinguished through a decree by the court or the

acts of the concerned parties. In the case of Achaldas Durgaji26, where the court gave a chance

to the mortgagor to pay the debt within three months after a suit for foreclosure were siled by

the mortgagee. On failing to pay the debt in three months, instead he paid it after three years.

The lower courts initially declined the suit as the mortgagor surpassed the limitation period.

The supreme court on the other way rounds reserved the decree passed by the lower courts and

26
Achaldas Durgaji Oswal (Dead) v. Ramvilas Gangabisan Heda (Dead) (2003) CIVIL APPEAL NO. 288
(Supreme Court)

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stated that the right to redemption being a legal right cannot be taken away in any case possible.

Hence, the courts continue to give this right to the mortgagor and prefer to interpret the law in

its own way. Therefore, in my opinion right to redemption is not an absolute right as the law

in India provides reasonable amount of restrictions on the right to redemption, despite that the

courts till date have preferred to follow the English law maxim of “once a mortgage, always a

mortgage”27.

27
Noakes and Co Ltd v Rice (1901) HL 17

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