UNIT 10 - MORTGAGE (Section 58-60, 100)

Definition of Mortgage (Section 58 of the TPA)

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing:

●​ 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.

✅ Key elements:
●​ Transfer of interest (not ownership)
●​ In immovable property
●​ Security for a loan or performance

📌 Example: A takes a loan of ₹5 lakhs from B and transfers his house as security for repayment. This is a
mortgage. A is the mortgagor and B is the mortgagee.

Kinds of Mortgages (Section 58)

There are six types of mortgages under the TPA:

(a) Simple Mortgage – S.58(b)

●​ No delivery of possession
●​ Mortgagor binds himself personally to repay
●​ Mortgagee can get the property sold by court decree if there's default

✅ Example:​
A takes ₹1 lakh from B and executes a mortgage deed, agreeing that if he fails to repay, B can sell the house
through court. A keeps possession.

(b) Mortgage by Conditional Sale – S.58(c)

●​ Mortgagor ostensibly sells the property to mortgagee with a condition:

○​ Sale becomes absolute if default in repayment
○​ Becomes void if loan is repaid
○​ Or buyer must reconvey if loan is paid

✅ Example:​
A sells his land to B with a condition that if he repays ₹50,000 within 5 years, the land will be returned. This is a
mortgage by conditional sale.

(c) Usufructuary Mortgage – S.58(d)

●​ Mortgagor delivers possession

 ●​ Mortgagee enjoys income (rent, profits) in lieu of interest or principal
●​ No personal liability
●​ No time limit for repayment

✅ Example:​
A mortgages a shop to B. B collects rent from the shop's tenants as repayment. A has no liability to repay
personally.

(d) English Mortgage – S.58(e)

●​ Mortgagor binds himself to repay on a specific date

●​ Transfers property absolutely to mortgagee
●​ Subject to retransfer on payment

✅ Example:​
A mortgages his house to B with absolute transfer of title, but with a promise that B will reconvey it once the
loan is paid on a fixed date.

(e) Mortgage by Deposit of Title Deeds (Equitable Mortgage) – S.58(f)

●​ No written deed
●​ Title deeds deposited with intent to create security
●​ Only in specified towns (e.g., Mumbai, Chennai, Kolkata)

✅ Example:​
A hands over the title deeds of his flat in Mumbai to B as security for a loan. No document is executed.

(f) Anomalous Mortgage – S.58(g)

●​ Any mortgage not falling under the above types

●​ Can be a mix of two or more kinds

✅ Example:​
A gives possession of property and also agrees to repay the loan personally, creating a hybrid between
usufructuary and simple mortgage.

Mode of Execution of Mortgages

✅ Section 59 of the TPA governs this.

●​ For value of ₹100 or more, mortgage (except equitable) must be:
○​ By a registered instrument
○​ Signed by the mortgagor
○​ Attested by at least two witnesses
●​ Equitable Mortgage (S.58(f)):
○​ No need for registration
○​ Only deposit of title deeds with intent
Redemption and Foreclosure of Mortgages

Redemption (S.60)

●​ Right of mortgagor to reclaim property after repaying loan

●​ Exists even after due date until property is sold or foreclosed
●​ Cannot be taken away by contract (Equity of Redemption)

✅ Example:​
Even if A is late in repaying, until B gets a decree for foreclosure or sells the property, A can repay and reclaim
it.

🔒 Foreclosure (S.67)
●​ Right of mortgagee (in mortgage by conditional sale) to bar mortgagor from redeeming
●​ Requires court’s decree
●​ Not allowed in simple or usufructuary mortgages

✅ Example:​
If A doesn’t repay under a mortgage by conditional sale, B can go to court and obtain a decree declaring that A’s
right to redeem is gone.

Clog on the Equity of Redemption

“Once a mortgage, always a mortgage.”​

– Equity principle: Mortgagor must have the right to redeem unconditionally.

❌ A "clog" is a contractual term that unduly restricts redemption.

Such clauses are void.

✅ Examples of Clogs:
●​ Agreement that mortgagor can’t redeem before 100 years
●​ A clause saying property will automatically belong to mortgagee after default without recourse to court
●​ Excessive interest preventing redemption

📚 Case Law:
●​ Kreglinger v. New Patagonia Meat Co. (1914) – House of Lords held collateral advantages must not be
a clog.
●​ Narandas Karsondas v. S.A. Kamtam (1977) – SC reiterated the right of redemption is indivisible from
the mortgage.

Distinction between Mortgage and Charge (S.100)

Feature Mortgage Charge

 Definition Transfer of interest in property No transfer, just a security for
payment

Creation By act of parties (deed) or by law Mostly by operation of law or by

contract

Right of sale Mortgagee may have right to sell Charge-holder generally must go to
property court

Interest in Yes, mortgagee has legal interest No transfer of interest

property

Registration Required (except for equitable Usually not mandatory unless by

mortgage) agreement

✅ Example of Charge:​
A court awards maintenance to a wife and creates a charge on husband’s house. She cannot sell it directly, but
can apply for sale via court.

✅ Example of Mortgage:​
A mortgages his house to a bank. The bank can sell it under SARFAESI Act if there's a default (depending on
kind of mortgage).

🔚 Conclusion:
Understanding mortgages under the TPA is vital as they form the foundation of secured transactions involving
immovable property. The Act carefully balances the rights of both borrower and lender, ensuring:

●​ Security for the lender

●​ Redemption rights for the borrower
●​ And protection against unfair contract terms like clogs

CASE 1: Ganga Dhar v. Shankar Lal, 1958

Facts:

●​ On August 1, 1899, Purshottamdas (the mortgagor) executed a usufructuary mortgage in favor of

Dhanrupmal (the mortgagee) for Rs. 6,300.
●​ Rs. 5,750 out of this was left with the mortgagee to redeem a prior mortgage covering the same shop
and a share in another property (kacheri).
●​ The mortgage deed included a clause:​
“I or my heirs will not be entitled to redeem the property for a period of 85 years. After expiry of 85
years, we shall redeem within 6 months; else we shall have no claim, and this deed will be deemed to be
a sale deed.”
●​ Dhanrupmal redeemed the prior mortgage and took possession of the shop.
●​ The mortgage was later assigned to Motilal, whose sons became the respondents.
●​ In 1947, the mortgagor’s son (Ganga Dhar) filed a suit for redemption.
 ●​ The respondents claimed the suit was premature, as the 85-year non-redemption period would expire
only in 1984.

LEGAL ISSUES:

1.​ Whether the clause prohibiting redemption for 85 years was a “clog on the equity of redemption”?
2.​ Whether the suit for redemption filed in 1947 was premature in light of the contractual terms?
3.​ Whether the term providing for forfeiture of redemption rights after six months was valid?

COURT'S REASONING:

On the Validity of Six-Month Redemption Clause:

●​ The clause that failure to redeem within 6 months after 85 years would extinguish redemption rights
and convert the deed into a sale was declared invalid.
●​ Citing the maxim: “once a mortgage, always a mortgage”, the Court held that any clause taking away
the right to redeem is a clog and void.

Relevant Provisions and Case Laws:

●​ Section 60, Transfer of Property Act, 1882 – Right of mortgagor to redeem at any time after money
becomes due.
●​ Mohammad Sher Khan v. Seth Swami Dayal, 1922 – Once the right to redeem arises, it continues and
cannot be extinguished by a contract.
●​ Santley v. Wilde (1899) – Any provision making redemption impossible is a clog.

On the Validity of 85-Year Redemption Restriction:

●​ The Court held that this clause did not amount to a clog, as it did not extinguish but postponed the
right to redeem.
●​ Redemption arises only when the principal money is due, and here, that was contractually fixed at 85
years.

Relevant Case Laws:

●​ Bakhtawar Begum v. Husaini Khanam, 1914 – In absence of a clause allowing early redemption, right
arises only after mortgage term.
●​ G. & C. Kreglinger v. New Patagonia Meat Co. (1914) – Courts can interfere with unconscionable
contracts, but such interference must be based on unfair bargaining conditions.

Was the Term Unconscionable or Oppressive?

●​ The Court examined:

○​ No evidence of financial distress of mortgagor.
○​ Property was already mortgaged, so the new mortgage helped free another asset.
○​ Interest was to be recovered through rent – not excessive.
○​ Mortgagee had not taken unfair advantage.
 ●​ Hence, no unconscionable bargain or undue pressure was proved.

Supporting Precedents:

●​ Vernon v. Bethell (1762) 28 ER 838 – Equity courts prevent oppressive terms in mortgages.
●​ Kreglinger (supra) – Relief from contracts requires proof of oppression or hardship.

CONCLUSION:

●​ The 85-year term was upheld as not a clog.

●​ The 6-month forfeiture clause was invalid, but not decisive in this case.
●​ Since 85 years had not expired, the right to redeem had not yet accrued.
●​ Therefore, the suit was premature and was dismissed.

FINAL RULING: Appeal dismissed with costs.​

The mortgage was valid for 85 years, and the right to redeem had not yet arisen under Section 60 TPA.

CASE 2: Pomal Kanji Govindji v. Vrajlal Karsandas Purohit, 1989

Facts:

●​ In 1943, the plaintiffs' father mortgaged urban property to Soni Shivji Jetha and Lalji Jetha for 30,000
koris, split as:
○​ 20,000 koris as a usufructuary mortgage
○​ 10,000 koris with interest at 0.5% per month, repayable only at the time of redemption
●​ The mortgage was for a term of 99 years, and allowed the mortgagees to:
○​ Demolish and reconstruct the property at their discretion.
○​ Recover expenses for repairs and new construction from the mortgagor at the time of
redemption.
●​ Tenants (Defendants 4–9) were inducted by the mortgagees.
●​ In 1972, the mortgagor’s heirs filed a suit for redemption and recovery of possession from the tenants,
alleging:
○​ The mortgage was obtained under economic distress
○​ The long term and conditions were oppressive and unconscionable
○​ Therefore, there was a clog on the equity of redemption

LEGAL ISSUES:

1.​ Whether the 99-year term and other mortgage conditions constituted a clog on the equity of
redemption?
2.​ Whether the mortgagors could recover possession from tenants inducted by the mortgagees despite
the protection of the Rent Control Act?

REASONING OF THE COURT:

On Clog on Equity of Redemption:

 ●​ The Court reiterated the principle:​
“Once a mortgage, always a mortgage” — it must always remain redeemable, and any clause
hindering this is void.
●​ Referring to:
○​ Seth Ganga Dhar v. Shankar Lal, AIR 1958 SC 770
○​ Vernon v. Bethell (1762) 28 ER 838
○​ G. & C. Kreglinger v. New Patagonia Meat Co., (1914) AC 23
●​ The Court held:
○​ A long term alone (e.g., 99 years) does not automatically amount to a clog.
○​ However, if the long term is coupled with oppressive conditions (e.g., delayed interest
repayment, rebuild clauses), the cumulative effect may prevent redemption, making it a clog.
●​ In this case:
○​ Redemption allowed only after 99 years
○​ Interest on 10,000 koris compounded without periodic payment
○​ Clause requiring mortgagor to bear cost of reconstruction by mortgagee
○​ Mortgagor's financial hardship at time of execution
●​ All of these were held to be harsh, unreasonable, and unconscionable, amounting to a clog.

Modern Interpretation:

●​ The Court stressed that the doctrine must evolve with economic realities:​
“We live in changing circumstances… long term for redemption in the context of modern inflation and
property prices may itself raise a presumption of clog.”
●​ The Court also emphasized that poverty and distress must not allow the stronger party to impose
onerous terms under the guise of contractual freedom.

ON RECOVERY OF POSSESSION FROM TENANTS:

●​ The tenants claimed protection under the Bombay Rent Act.

●​ The Court ruled:
○​ Tenants inducted by a mortgagee in possession (usufructuary mortgagee) do not have
independent rights against the mortgagor after redemption.
○​ After redemption, possession must revert to the mortgagor, and tenants must vacate.

LEGAL PROVISIONS AND CASE LAWS:

Transfer of Property Act, 1882, Section 60: Mortgagor’s statutory right of redemption

●​ This right cannot be taken away or fettered by contract

Key Case Laws Cited:

1.​ Seth Ganga Dhar v. Shankar Lal, AIR 1958 SC 770

○​ Long period alone ≠ clog, unless oppressive
○​ Right to redeem always continues
2.​ Vernon v. Bethell (1762) 28 ER 838
 ○​ “Necessitous men are not free men”; court must protect them
3.​ G. & C. Kreglinger v. New Patagonia Meat Co., (1914) AC 23
○​ Mortgage = security; any clause making redemption illusory is void
4.​ Jarrah Timber & Wood Paving Corp. v. Samuel, (1903) 2 Ch 1
○​ Mortgage must always allow for recovery of the mortgaged property
5.​ Chhedi Lal v. Babu Nandan, AIR 1944 All 204
○​ Rebuild and repayment clause ≠ clog if not burdensome
6.​ Rajai Singh v. Randhir Singh, AIR 1925 All 643
○​ Redemption delayed + interest payable at end = clog
7.​ Maganlal Chhotalal v. Bhalchandra Chhaganlal, (1974) 15 Guj LR 193
○​ Totality of clauses must be seen to assess clog

✅ FINAL HOLDING:
The Supreme Court upheld the Gujarat High Court and lower courts' ruling that:

●​ The mortgage deed contained a clog on equity of redemption

●​ The mortgagors could redeem the property before expiry of 99 years
●​ They were also entitled to recover possession from tenants inducted by the mortgagees

✅ CONCLUSION:
●​ The case is a landmark on the doctrine of clog on redemption.
●​ It modernizes the doctrine to account for inflation, urban property values, and inequality in
bargaining power.
●​ It asserts that contractual freedom is subordinate to justice, equity, and good conscience when
oppression is involved.

Case 3: Shivdev Singh v. Sucha Singh, (2000)

Facts:​
Prakash Singh owned 23 kanals 2 marlas in Village Sansra, Punjab. He, in 1968, mortgaged land to Smt. Basant
Kaur for ₹7,000 (99 years). After Basant Kaur’s death, appellants inherited mortgagee rights. In 1987, Prakash
Singh sold 19 kanals 2 marlas to Sucha Singh, giving him the right to redeem the mortgage.

Legal Issues

1 Whether the land was liable to be redeemed by plaintiff?

2 Whether the 99-year term constituted a clog on equity of redemption?

3 Whether plaintiff had locus standi to sue?

Legal Provisions Involved

 ●​ Section 60, Transfer of Property Act, 1882: Provides mortgagor’s statutory right to redeem the
mortgaged property at any time after the debt is due.

Reasoning of the Court

Point Explanation

Clog on Equity of The Court held that a 99-year period in the mortgage deed was unreasonable
Redemption and unconscionable, amounting to a clog on redemption, especially due to the
mortgagor's financial distress at the time.

Right to Under Section 60, the right to redemption is statutory and cannot be fettered by
Redemption contract. The clause imposing a 99-year restriction was void.

Plaintiff’s Locus As a purchaser of the equity of redemption (19 kanals 2 marlas), Sucha Singh
Standi had the right to redeem the whole mortgage upon tender of full amount (₹7000),
as partial redemption is not allowed.

Economic Reality The Court took note of the fact that appellants enjoyed possession and benefits for
over 26 years for just ₹7000, which was disproportionate and oppressive,
reinforcing the finding of a clog.

Important Precedents Relied Upon

Case Name Citation Principle Established

Ganga Dhar v. Shankar AIR 1958 Rule against clog on equity of redemption: “Once a
Lal SC 770 mortgage, always a mortgage.”

Jayasingh Dnyanu AIR 1985 Right to redemption cannot be extinguished unless

Mhoprekar v. Krishna SC 1646 by law or valid merger
Babaji Patil

Pomal Kanji Govindji v. AIR 1989 Courts should consider poverty, bargaining power,
Vrajlal Karsandas SC 436 and fairness in mortgage terms; long-term mortgage
Purohit can amount to clog if oppressive

Santley v. Wilde (UK (1899) 2 Ch Defined “clog” as any provision preventing

case) 474 redemption on payment of debt

Vernon v. Bethell (1762) 2 Equity abhors a clog on redemption

Eden 110

Kreglinger v. New [1914] AC Equity allows setting aside of unconscionable terms

Patagonia Meat Co. 25 in mortgage contracts

Final Judgment and Outcome

 Court’s Finding The mortgage term of 99 years was declared a clog on the equity of
redemption and hence void.

Redemption Yes – Respondent entitled to redeem the full property by depositing

Allowed? ₹7000

Appeal Status Dismissed – No interference warranted as lower courts’ findings were

upheld

Ratio Decidendi Statutory right of redemption cannot be nullified by unreasonable

mortgage terms; equity, justice, and good conscience prevail over
harsh contractual clauses.

Key Doctrines Applied

●​ Doctrine of Clog on Equity of Redemption - “Once a mortgage, always a mortgage”

●​ Equity protects redemption rights regardless of mortgage terms
●​ Unconscionable bargains can be avoided by courts

Conclusion

In Shivdev Singh v. Sucha Singh, the Supreme Court reaffirmed the principle that the right of redemption is
inviolable and any oppressive or unconscionable term, such as a 99-year mortgage period in this case, is
void as it constitutes a clog on the equity of redemption. The decision upholds equity, justice, and statutory
rights under the Transfer of Property Act, 1882.