Case name: Seth Ganga Dhar vs Shankar Lal & Others
Citation: AIR 1958 SC 770
Date of Judgement: 15.04.1958
Relevant Case: Mohammad Sher Khan v. Seth Swami Dayal
Bench:
- Hon’ble Justice A.K. Sarkar
- Hon’ble Justice J.L. Kapur
- Hon’ble Justice N.H. Bhagwati
- Hon’ble Justice JJ
Facts:
1. The mortgage was created by Appellant in favour of Dhanurpmal, a Respondent in this appeal. The mortgage instrument stated that the property had been usufructuary mortgaged in lieu of Rs. 6,300 of which Rs. 5,750 had been left with the mortgagee to redeem a prior mortgage on the same.
2. It was provided that on redemption of the prior mortgage, the possession of the shop would be taken over and retained by the mortgagee. The mortgagee, duly redeemed the earlier mortgage and, went into possession of the shop.
3. The provisions of mortgage deed states that Appellant will not be entitled to redeem the property for a period of 85 years. After the expiry of 85 years he or his heirs shall redeem it within a period of six months. In case they do not redeem within a period of six months, then after the expiry of the stipulated period, they shall have no claim over the mortgaged property.
4. The Appellants filed the suit in the Court stating that term in mortgage instrument becomes clog on their right of redemption.
Issue involved:
- Whether a term in mortgage instrument prevents the right to redeem?
Obiter Dicta:
1. The above mentioned case relied on Section 60 of Transfer of Property Act which specifies that, “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 mortgage property to him. The right conferred by this section has been called the right to redeem and, that right can be exercised only after the mortgage money has become due. Under the section, once the right to redeem has arisen it cannot be taken away.”
2. “In light of the above principle, the term in the mortgage contract, that on the failure of the mortgagor to redeem the mortgage within the specified period of six months the mortgagor will have no claim over the mortgaged property, and the mortgage deed will be deemed to be a deed of sale in favour of the mortgagee, cannot be sustained. It plainly takes away altogether, the mortgagor’s right to redeem the mortgage after the specified period.”
Rationale:
“It was held that that the term providing for a period of eighty five years and the mere length of the period could not by itself lead to a clog to redemption. The term was enforceable in law and the suit for redemption, filed before the expiry of the period was premature.
Court further observed that the term that on the failure of the mortgagor to redeem within the specified period of six months, he would lose his right to do so and the mortgage deed was to be deemed to be a deed of sale in favour of the mortgagee, was clearly a clog on the equity of redemption and as such invalid.
The court through their judgement specified that mortgagors from bargains whereby the right to redeem has not been taken away but restricted.”
Judgement:
The court come to the conclusion that the suit was premature and must fail.
In the result, they dismissed this appeal with costs.
Conclusion:
The Appellants mortgage their shop to Respondent through a mortgage deed in which a clause was given specifying that Appellant will not be entitled to redeem the property for a period of 85 years. After the expiry of 85 years he or his heirs shall redeem it within a period of six months. In case they do not redeem within a period of six months, then after the expiry of the stipulated period, they shall have no claim over the mortgaged property.
The Appellants filed a case against Respondent referring Section 60 of transfer of property act, stating a term in mortgage instrument, leads to a clog to redemption. The court disallowed the appeal and states that the mere length of the period could not by itself lead to a clog to redemption and the right to redeem has not been taken away but restricted.
Drafted By: Param Mansinghka
Edited By: Tanvi Mahajan, Publisher, Law Insider
Published On: February 18, 2022 at 22:30 IST