CENTRAL UNIVERSITY OF SOUTH BIHAR, GAYA

SCHOOL OF LAW AND GOVERNANCE

PROJECT TOPIC :- ONCE A MORTGAGE ALWAYS A MORTGAGE – EXPLANATION
WITH CASE LAWS

SUBMITTED TO:-
Dr. Pallavi Singh
Assistant Professor
School of Law & Governance
Central University of South Bihar, Gaya

SUBMITTED BY:-
Anand Kishor
Enrollment No. – CUSB2013125015
Section-A, B.A.LL.B.(Hons.)
Semester – 6th, Session- 2020-25
School of Law & Governance
Central University of South Bihar, Gaya

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 TABLE OF CONTENT
1. Preface……………………………………………………………..3
2. Acknowledgement…………………………………………………4
3. Introduction………………………………………………………..5
4. Right of Redemption……………………………………………….5
5. What exactly is a clog on redemption……………………………..6
6. Provisions under Transfer of Property Act……………………….6
7. Once a Mortgage always a Mortgage………………………………8
8. Historical Development of the Doctrine “Once a Mortgage always
a Mortgage”…………………………………………………………8
9. Case Laws…………………………………………………………..9
10.Conclusion…………………………………………………………10

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 PREFACE
As a part of the B.A.LL.B. Curriculum, I have prepared this project on the topic Once a
Mortgage always a Mortgage – Explanation with case laws. This project helped me to know
about Mortgage in detail and I also came to know about various aspects of it which are relevant
in the present scenario.
In this project I have included various concepts about this topic and have tried to represent them
in fine manner. Doing this project helped me to enhance my knowledge regarding the topic and
its implications of it in my field of study. I have tried to represent them in a manner and hope
that my work is satisfactory.

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 ACKNOWLEDGEMENT
I would like to express my sincere gratitude to my advisor Dr. Pallavi Singh Ma’am for the
continuous support in my studies and research, for her patience, motivation, enthusiasm and
immense knowledge. Her guidance helped me in all the time of research and writing of this
assignment. I could not have imagined having a better advisor and mentor for my study. I thank
Pallavi Ma’am for giving me the opportunity to research and prepare an assignment on Once
a Mortgage always a Mortgage – Explanation with case laws.
I had to take the help and guidance of some respected persons, who deserve my deepest
gratitude. As the completion of this assignment gave me much pleasure I would also like to
expand my gratitude to all those who directly and indirectly guided me in writing this
assignment.

Thanking You
Anand Kishor

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INTRODUCTION
As per Section 58 of the Transfer of Property Act, 1882, the mortgage is a conditional
conveyance of certain interests in immovable property as security for payment of the loan or
performance of a duty that may give rise to a pecuniary liability. In general-parlance, if a person
takes a loan, he grants some interest in his immovable property as security for repayment of
such loan to the lender, it is known as a mortgage of a property. The person raising funds
through keeping his/her property as security or lien is the mortgagor and the person in whose
favour the interest has been transferred is the mortgagee. It is to be noted that mortgagors are
irrefutably bestowed with the right of redemption i.e. they can get their property back by
repaying the loan, without any encumbrances, because the ownership still remains with the
mortgagor.

CONCEPT OF MORTGAGE VIS-A-VIS INDIAN LAW

The transfer of Property Act, of 1882 deals with the mortgage of immovable property in India.
This is an old concept that was present in most of the ancient societies of the world. The
mortgage basically deals with the transfer of an interest in immovable property to serve a loan
or the performance of an engagement. Hence, the mortgage merely creates an interest in the
immovable property and does not transfer the property to a third party. In this article, we will
deal with some of the major laws and regulations relating to mortgaged property in India. The
concept of Mortgage is contained under section Section 58 of the Transfer of Property Act,
1882. The terminologies like mortgage, mortgagor, and mortgagee have been defined and it
also deals with various types of mortgages.

Right of Redemption
Ownership of immovable property is associated with a bundle of rights. Upon a mortgage, a
mortgagor generate two interests,

1. The interest of the creditor/lender on the property (limited, fixed, and

temporary)
2. Residuary interest qua the interest that remains with the mortgagor (can be
estimated through deducting the interest transferred to the mortgagee)
The mortgagor can retain the former division of interest by paying off the borrowed principal
money with interest. Per contra, the status quo is that since mortgagors borrow money out of
some financial predicaments, lenders often ostensibly purported to take advantage of it by
persuading mortgagors to sign agreements that transcends mere mortgage qua intends to turn a
mortgage deed into a sale deed. Such covenants are of nature that deliberately seizes the
mortgagor’s right of redemption conferred by Section 60 of Transfer of Property Act, 1882. It
is pertinent to note that the mortgagor’s right to redeem is a statutory right; thereby, the parties
are no way competent to withhold such an absolute right through any agreement. To address
the bone of contention and to reinforce the mortgagor’s right to buy back the mortgaged

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property, the principle ‘once a mortgage always a mortgage,’ was laid down in the case of
Harris v. Harris.1

Construing the right to redemption as a right of equity, any impediment to this right is void,
and it constitutes a clog on the equality of redemption. Thus, covenants that modify the
character of the mortgage would not defeat the mortgagor’s right of redemption, even he
himself agrees to it.

Basis of right to redemption = Mortgagor’s ownership in the mortgaged property

What exactly is a clog on redemption?

Let us suppose that a clause in a mortgage deed debars the mortgagor from getting back his
property on default in repayment of the loan within a stipulated deadline i.e. if the mortgagor
is not able to repay the loan within 5 years of the execution of the sale deed. Then, he is left
with no option but to sell his property to the mortgagee. This condition/stipulation would be a
clog on the equity of redemption, such clog is inequitable and hence, void.

Similarly, in the case of Murari Lal v. Devkaran,2 a condition was imposed by the mortgage
deed that the mortgaged money must be paid within 15 years; otherwise, the mortgagee would
become the owner of the property. It was held that the condition is void as it is unreasonable
and implies impediment to the mortgagor’s right to redemption.

Provisions under Transfer of Property Act,

Transfer of Property Act, 1882 is a key piece of legislation elaborating on mortgaged property.
In simple terms, a Mortgage is transferring interest of immovable property for securing a loan
or for a performance of an engagement. This is a pecuniary liability in a form of debt. Section
58(a) of the Act defines the term mortgage. The Section is read as, “A mortgage is the transfer
of an interest in specific immovable 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 person who takes loan under a mortgage, i.e. transfers the interest in his immovable
property, is called mortgagor. The person in The whose favor, the property is mortgaged i.e.
who advances loan, is called mortgagee.
Mortgage as defined in this section is the transfer of an interest in some immovable property.
It is not transfer of all the interests but only of some interest in the property. The purpose of
this transfer of interest is to give security for the repayment of loans. Therefore, where a person

1
(1681) 1 Vern 33
2
AIR (1965) SC 225.

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mortgages his property, the legal effect is that there is a transfer of an ‘interest’ of that property
in consideration of money advanced to him by the money-lender.

RIGHT OF REDEMPTION: The mortgage is effected only for giving security for repayment
of the loan. Mortgagor neither intends nor desires that property should go absolutely to
mortgagee. Therefore, if the mortgagor could not repay the loan within the prescribed date and
there is some delay, he is entitled to exercise the right of redemption up to a reasonable time.
The law has extended this right under Section 60 dealing with the right of redemption. This
right enables the mortgagor to recover or get back the property after making payment of the
loan. The mortgage is basically the transfer of the interest of the immovable property if the loan
has been paid, the interest so transferred must revert back to the mortgagor. After making the
payment of the loan with its interest the mortgagor becomes entitled to redeem i.e. call back
the ‘interest’ given to the mortgagee as security for repayment. It would be unfair and unjust
and also against the very object of the transaction of mortgage that mortgagor’s right of
ownership is lost merely due to non-payment of loan within the specified period.
EQUITY OF REDEMPTION: In England, the Chancery Courts introduced the right of
redemption to mortgagors. Chancery Courts were the Courts of Equity. Therefore, the
mortgagor’s right to redeem the mortgage by making payments even after the due date is known
as the equity of redemption. The English Equity Courts held that mortgagors’ right of
redemption is very important and thus it was made an essential characteristic of every
mortgage. The Courts of Equity provided further that it was such an important right of the
mortgagor that it could not be denied to him in any manner, not even by express agreement of
the parties themselves. Equity declared that ‘once a mortgage always a mortgage. The
doctrine of equity of redemption is expressed in this maxim and it implies that the mortgagor
would not lose his right of redemption by any agreement of which he himself had agreed. The
maxim ‘once a mortgage always a mortgage’ simply means that a transaction which at one time
is mortgage could not cease to be so by having any stipulation in the mortgage deed calculated
to prevent the right of redemption. This maxim is also interpreted as ‘That a mortgage cannot
be made irredeemable and that a provision to that effect is void.’ This maxim was first evolved
in the year 1681 in the case of Harris v. Harris, Lord Nottingham stated that ‘once a mortgage,
always a mortgage’ meaning that all agreements in a mortgage for forfeiture of the mortgagor’s
right to redeem are void.

Section 60– It confers the Right of Redemption and the suit by which this right can be enforced
is Suit for Redemption. Unlike common law, since the right to redemption and equity of
redemption are indistinguishable under the Transfer of Property Act, this Section is the one
catchall provision that dealt with the rights of the mortgagor on redemption. The mortgagee
must reconvey the title to the mortgagor upon the satisfaction of the debt. In a nutshell,

• This right comes into play only when the mortgage money becomes due.
• Upon the payment of the mortgage money, the mortgagee has to return all the
documents related to the mortgaged property and the possession as well.
• The Mortgaged property can be delivered to any third party as directed by the
mortgagor.

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 • No additional clause in the mortgage deed can preclude the mortgagor from
redeeming his property.
• Such a clause constitutes a clog on the equity of redemption.
• Exception: This Section itself puts a restriction that the mortgagor’s right to
redemption is exercisable unless and until it is extinguished by the parties
conduct or court’s decree.
• Thereon, the only relief available to the mortgagee is to file a suit for foreclosure
before a competent court.

In the case of Allokam Peddabbaya & Ors v. Allahabad Bank & Ors3, Apex court elucidated
that at which instant the right of the mortgagor to redeem the property can be extinguished. It
was held that the extinguishment of the right to redemption takes place with the confirmation
of the sale of mortgaged property appertaining to the execution of the foreclosure decree.
Section 91- This provision lists individuals empowered to redeem the mortgaged property or
sue for redemption other than the mortgagor. They are,

• Any person who has an interest in the property other than mortgagee,
• Any surety for the payment of mortgaged debt,
• Any creditor of the mortgagor who has obtained a decree for sale of the
mortgaged property.

Once a Mortgage always a Mortgage

The doctrine of equity of redemption is expressed in this maxim and it is an exception to the
principle, ‘the agreement of the parties overrides the law.’ Reiteratively, the maxim,
established in 1681 by Lord Nottingham in the case of Harris v. Harris is basically to safeguard
the mortgagor’s right to redemption. In the case of Noakes & Co v. Rice4, the maxim was
interpreted by Lord Davey as ‘That a mortgage cannot be made irredeemable and that a
provision to that effect is void’. Therefore, one of the manifestations of this maxim is that the
clog on the equity of redemption is void. No matter whether the provision that makes a
mortgage irredeemable is there in the mortgage deed itself or any collateral but connected
transaction outside the mortgage contract, it is void to the extent to which it prevents the
mortgagor from getting his whole of the property back on repayment of the mortgaged money.

Sometimes, such provision may have been disguisedly inserted in the mortgage deed, like in
the case of Samuel v. Jarrah Timber and wood paving corporation5. Wherein, a Timber
Company borrowed money on the security of its debenture stock and granted the lender with
an option to buy its stocks within the next twelve months upon the non-payment of the loan.
Within the stipulated time, the lender wanted to exercise the granted option, before the
company gave notice of its intention to repay the loan amount. It was held by the House of
Lords that the option itself is void as it debars the mortgagor from redeeming his property back
upon the repayment of the principal amount along with the interest and costs.

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Historical Development of the Doctrine “Once A Mortgage
Always A Mortgage”
This doctrine “Once A Mortgage Always A Mortgage” is the outcome of combined notions
viz. Equity, Justice, and Good Consciences. In layman’s terms, equity is equivalent to fairness
and egalitarianism. Back then, the major lacuna in the justice delivery system was emerging in
England. To cope with such an inadequacy, the Chancellors were appointed by the king in

3
2017 SCC OnLine SC 671.
4
1902 AC 24.
5
[1904] AC 323.
special courts to outreach the sphere of the law to dole out justice and fairness to common
people. Court under the control of Lord Chancellor was named the Court of Chancery qua
Court of Equity, which was developed to provide remedies that are not available in the Court
of Common Law.

The mortgage law was developed almost completely in the Court of Equity. It is pertinent to
note that the equity of redemption principle was found in England mortgage law originated
under roman civil law.

The basis of the maxim was explicated by Lindley M R in the case of Stanley v. Wilde3as ‘Any
provision inserted to prevent redemption on payment or performance of the debt or obligation
for which the security was given is what is meant by a clog or fetter on the equity of redemption
and is therefore void. It follows from this, that ‘once a mortgage always a mortgage.’

The maxim ‘once a mortgage always a mortgage,’ is the connotation of the fact that the
mortgagee will always remain as mortgagee and can never become an owner. All acts he
commits in order to exalt himself as an owner are perceived to be a clog on redemption.

Pursuant to equity of redemption, a clog on redemption is void; in the Indian context, its
philosophy was explained by the Supreme Court in the case of U. Nilan v. Kannayyan (Dead)
Through Lrs4as, Adversity of a person is not a boon for others. If a person in stringent financial
conditions had taken the loan and placed his properties as security therefore, the situation
cannot be exploited by the person who had advanced the loan. The Court seeks to protect the
person affected by adverse circumstances from being a victim of exploitation. It is this
philosophy which is followed by the Court in allowing that person to redeem his properties by
making the deposit under Order 34 Rule 5 C.P.C.

3
(1899) 2 Ch 474
4
(1999) 8 SCC 511.

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CASE LAWS

Clog on redemption affects the right of redemption, by that way it is against the rationale of
this maxim. Indian courts have never failed to affirm this maxim by nullifying the doctrine of
clog on redemption. Though there are no defined circumstances, which were firmly established
to determine whether or not the condition in question will amount to a clog, it has been decided
by construing the facts and circumstances of every single case. Some of the notable cases are
as follows,

Long Term Mortgage: Vadilal Chhaganlal v. Gokaldas Mansukh5

This case is of a mortgage of 99 years, where the mortgagee was allowed to construct any
structure on the property at any expense. It was observed by the Apex court that repayment of
the principal money along with interest and the cost of construction make the mortgage
practically impossible as it is something beyond the ability of the mortgagor. Thus, it is quite
clear that the mortgagee had taken advantage of a helpless mortgagor to sign that agreement,
hence, the conditions were held clog on redemption. The same was held in the cases like Fateh
Mohd. v. Ram Dayal6, Massa Singh v. Gopal Singh, Ganga Dhar Lal v. Shankar Lal10, so
on.

Condition of the sale in default: Kuddi Lal v. Aisha Jehan Begam7,

In this case, the mortgagor was allowed to redeem his property not through transferring the
property but only paying out of her own pockets. It was held as a clog on redemption since it
restraint alienation by the mortgagor.

CONCLUSION

In conclusion, the maxim ‘once a mortgage always a mortgage’ provides that the true nature of
the mortgage can never be changed. The mortgage and the right of redemption are inseparable
i.e. the right of redemption can never be limited or closed as it will always remain in the
mortgage deed. Any clause/ condition/ stipulation is included in the mortgage deed by the
mortgagee, which is unreasonable and against public policy, as it put absolute restraint on the
mortgagor’s right to redemption is void.

5
AIR 1953 Bom 408.
6
AIR 1927 Oudh 224 (E).
10
AIR 1958 SC 770
7
AIR 1927 Oudh 199

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