The Extinguishment of the Right of Redemption in Indian Mortgage Law: A Scholarly Analysis
Introduction
The right of redemption is a cornerstone of mortgage law, embodying the principle of fairness and protecting the mortgagor's ultimate interest in the mortgaged property. In India, this right is statutorily recognized and zealously guarded by the judiciary. However, the right is not absolute and can be extinguished under specific circumstances. This article undertakes a comprehensive analysis of the legal principles governing the extinguishment of the right of redemption under Indian law. It delves into the statutory framework, primarily the Transfer of Property Act, 1882, and examines the jurisprudential landscape shaped by landmark pronouncements of the Supreme Court and various High Courts. The objective is to elucidate the recognized modes of extinguishment and the conditions under which such extinguishment is deemed valid, drawing heavily upon the provided reference materials.
The Right of Redemption: Nature and Significance in Indian Law
Statutory Basis: Section 60, Transfer of Property Act, 1882
The right of redemption is primarily codified in Section 60 of the Transfer of Property Act, 1882 (hereinafter "TPA"). This section provides 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 (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. This right conferred by Section 60 is termed the "right to redeem," and a suit to enforce it is a "suit for redemption."
The Supreme Court in L.K Trust v. Edc Limited And Others (2011 SCC 6 780) reiterated the enduring nature of this statutory right, emphasizing that it persists until lawfully extinguished. Similarly, the court in Harbans v. Om Prakash And Others (2006 SCC 1 129) described the right of redemption as a fundamental statutory right that cannot be overridden by oppressive contractual terms.
The Maxim: "Once a Mortgage, Always a Mortgage"
The right of redemption is underpinned by the equitable maxim, "once a mortgage, always a mortgage." This means that a transaction that is in its essence a mortgage cannot be converted into an absolute sale by any clause or stipulation in the mortgage deed itself. Any condition that acts as a "clog on the equity of redemption" is considered void. The Supreme Court in Shivdev Singh And Another v. Sucha Singh And Another (2000 SCC 4 326) reaffirmed this doctrine, holding that any restrictive clause impeding the right to redeem is void. The Court noted that the doctrine is rooted in the belief that the borrower should retain the inherent right to reclaim their property upon fulfilling the debt. This principle was also emphasized in Pomal Kanji Govindji And Others v. Vrajlal Karsandas Purohit And Others (1989 SCC 1 458), where oppressive long-term mortgage conditions were scrutinized as potential clogs.
As observed by the Punjab & Haryana High Court in Ram Kishan And Others v. Sheo Ram & Others (2007, citing leading commentators), the right to redeem is an incident of a subsisting mortgage and is co-extensive with the mortgage itself, subsisting until appropriately and effectively extinguished.
Modes of Extinguishment of the Right of Redemption
The proviso to Section 60 of the TPA explicitly states: "Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court." The Supreme Court in Parichhan Mistry (Dead) By Lrs. And Another v. Achhiabar Mistry And Others (1996) elaborated that "Such extinguishment of right can take place by contract between the parties or by a decree of the court or by a statutory provision which debars the mortgagors from redeeming the mortgage."
Extinguishment by Act of the Parties
Subsequent and Independent Transaction
The "act of the parties" referred to in the proviso to Section 60 TPA signifies a transaction that is subsequent to the mortgage and stands apart from the original mortgage agreement (Parichhan Mistry (Dead) By Lrs. And Another v. Achhiabar Mistry And Others, 1996; Ram Kishan And Ors. v. Sheo Ram And Ors., Punjab & Haryana High Court, 2007). This typically involves a fresh agreement between the mortgagor and the mortgagee, or an act by the mortgagor, that effectively terminates the mortgage relationship and the consequent right to redeem. Examples include a subsequent sale of the equity of redemption by the mortgagor to the mortgagee (Jalappa v. Narasimha Setty And Others, Andhra Pradesh High Court, 1961; Nagammal v. Valliammal, Madras High Court, 2007), or a release deed executed by the mortgagor in favour of the mortgagee.
The Allahabad High Court in Ram Singh v. Baij Nath (1918 SCC ONLINE ALL 199) clarified that a mere admission by a mortgagor or an understanding between him and the mortgagee that the mortgagee has become the owner cannot extinguish the mortgage or destroy the right of redemption. The act must be independent of the mortgage transaction itself.
Formalities and Requirements
When the extinguishment is by an act of parties, such act "must take the shape and observe the formalities which the law prescribes" (Parichhan Mistry (Dead) By Lrs. And Another v. Achhiabar Mistry And Others, 1996). If the act involves the transfer of the equity of redemption, which is an interest in immovable property, the provisions of Section 54 of the TPA regarding registered instruments (for properties valued at Rs. 100 or more) would be applicable. Mere acquiescence by the mortgagor in a sale by the mortgagee (e.g., under the State Financial Corporations Act) may not suffice as an "act of parties" to extinguish the right of redemption, especially if the mortgagor was not a party to the sale agreement and the conditions of the agreement were not met by the purchaser (T.P.Textiles Waste Pvt.Ltd., New Delhi and another v. State of U.P.And Others, Allahabad High Court, 2008). However, an agreement of sale of the mortgaged property by the mortgagor to the mortgagee could result in extinguishment if the pre-conditions of Section 53-A of the TPA are fulfilled (as discussed in T.P.Textiles, referencing Hamzabi and Ors. v. Syed Karimuddin and Ors. (2001)1 S.C.C. 414).
Extinguishment by Decree of a Court
Foreclosure Decrees and Decrees in Redemption Suits
The right of redemption can be extinguished by a decree of a competent court. This typically occurs through a final decree in a suit for foreclosure (in mortgages where foreclosure is a remedy, e.g., mortgage by conditional sale) or a final decree in a suit for redemption that explicitly debars the mortgagor from all right to redeem. The Supreme Court in Mhadagonda Ramgonda Patil And Others v. Shripal Balwant Rainade And Others (1988 SCC 3 298) emphasized that the right of redemption remains intact unless explicitly extinguished by a court decree under specified circumstances, such as those laid out in Order XXXIV of the Code of Civil Procedure, 1908. A final decree in a foreclosure suit or a redemption suit that specifically declares the extinguishment of redemption rights suffices to bar future redemption actions (Mhadagonda Ramgonda Patil, 1988).
The Federal Court in Thota China Subha Rao v. Mattapalli Raju (1950 AIR FC 1) held that after the enactment of Section 60 of the TPA, the equity of redemption is not extinguished by a mere dismissal of a redemption suit for default of the plaintiff's appearance. The decree must specifically extinguish the right as per law (See also Tulajappa And Another v. Subhas And Others, Karnataka High Court, 2002, preferring the Bombay High Court view that dismissal of a suit under Order IX Rule 8 CPC does not extinguish the right of redemption).
Necessity of Finality and Explicit Declaration
For a decree to extinguish the right of redemption, it must be a final decree that clearly and unequivocally terminates this right. In Raghunath Singh v. Mt. Hansraj Kunwar (Privy Council, 1934), cited in Mhadagonda Ramgonda Patil and Thota China Subha Rao, it was affirmed that the right of redemption is conferred by statute and can only be extinguished as per legislative provisions. A decree that merely dismissed a redemption suit upon failure to pay, without explicitly debarring the right to redeem, was held not to extinguish it.
The Madras High Court in Karuppanan Servai v. Daivasigamania Pillai (1953 SCC ONLINE MAD 234) noted that the decree of court contemplated in Section 60 TPA is typically the final decree in a mortgage action foreclosing the mortgagor of his right to redeem.
Role of Sale and Conveyance
In cases where the mortgage is enforced through sale by court, the right of redemption is generally extinguished upon the confirmation of sale and issuance of a sale certificate, followed by a registered conveyance deed where required. The Supreme Court in Narandas Karsondas v. S.A Kamtam And Another (1977 SCC 3 247) held that in India, a mere contract for sale by the mortgagee (even under a power of sale under Section 69 TPA) does not extinguish the mortgagor's right of redemption. The right subsists until the sale is completed by a registered instrument as per Section 54 of the TPA. This principle was reaffirmed in L.K Trust v. Edc Limited And Others (2011 SCC 6 780), where the Court held that no concluded contract of sale had been established, and thus the right of redemption remained intact. The Court in Allokam Peddabbayya And Another v. Allahabad Bank And Others (2017) observed, citing B. Arvind Kumar, that the right of redemption could be extinguished once a sale deed was executed in favour of an auction-purchaser, especially if the mortgagor had not obtained any interim order staying the sale.
The Bombay High Court in Abraham Ezra Issac Mansoor v. Abdul Latiff Usman (1943 SCC ONLINE BOM 62) distinguished the Indian position from English law, stating that a contract of sale by the mortgagee does not, by itself, extinguish the right of redemption in India as it does not create an interest in the property for the purchaser until a conveyance.
However, the Madras High Court in R. Narayana Rao v. Meenaskhi Velu And Others (1973) took a view that where a purchaser in a sale by mortgagee (under Section 69 TPA) paid the full purchase money, which was appropriated towards the debt and the balance distributed, the mortgage itself no longer subsisted, and this situation, brought about by the parties, had the effect of extinguishing the mortgagor's right to redemption, even without a registered conveyance in that specific factual context. This view suggests that the specific facts and conduct of parties demonstrating full discharge of the mortgage can be crucial.
Extinguishment by Statutory Provision
As mentioned in Parichhan Mistry (1996), the right of redemption can also be extinguished by a statutory provision that debars the mortgagor from redeeming the mortgage. This implies that a specific statute, other than the TPA, could create conditions under which the right of redemption is lost. For instance, provisions under special enactments governing debt recovery or land reforms might, in certain circumstances, lead to the extinguishment of this right, provided the statutory conditions are strictly met.
Judicial Scrutiny of Extinguishment Claims
Sanctity of Redemption v. Valid Extinguishment
The judiciary consistently upholds the sanctity of the right of redemption. In Shivdev Singh And Another v. Sucha Singh And Another (2000), the Supreme Court struck down a 99-year mortgage term as a clog, emphasizing that redemption is an inherent right. Similarly, in Pomal Kanji Govindji And Others v. Vrajlal Karsandas Purohit And Others (1989), the Court held that long-term mortgages coupled with oppressive conditions could constitute a clog. In Harbans v. Om Prakash And Others (2006), the Court reaffirmed that the right of redemption is a fundamental statutory right under Section 60 TPA, which cannot be overridden by unilateral or oppressive contractual terms. These cases underscore that while the right can be extinguished, it must be done through legally recognized and fair means, not through devices that effectively deny the right from the outset or make it illusory.
Interpreting "Act of the Parties"
Courts have been meticulous in interpreting what constitutes a valid "act of the parties" capable of extinguishing the right of redemption. As established in Parichhan Mistry (1996), such an act must be subsequent to the mortgage and observe prescribed legal formalities. A mere assertion by a usufructuary mortgagee of absolute ownership, or a unilateral act, is insufficient (Ram Kishan And Ors. v. Sheo Ram And Ors., P&H HC, 2007, citing Parichhan Mistry). The transaction must clearly indicate an intention to terminate the mortgage relationship, such as an outright sale of the equity of redemption to the mortgagee (Jalappa v. Narasimha Setty, AP HC, 1961; Nagammal v. Valliammal, Madras HC, 2007) or a distinct, subsequent contract for sale (Ram Singh v. Baij Nath, All HC, 1918). The Allahabad High Court in T.P.Textiles Waste Pvt.Ltd. (2008) held that mere acquiescence of the mortgagor in a sale process initiated by a financial corporation, without being a party to the sale agreement, would not extinguish the right of redemption, especially if the purchaser did not comply with the terms of the sale.
The case of Abraham Ezra Issac Mansoor (Bom HC, 1943) clarified that when a mortgagee exercises a power of sale, they do so under a superior claim against the mortgagor, not as an agent. The act of entering into a contract of sale by the mortgagee alone is not an "act of the parties" (mortgagor and mortgagee jointly) that extinguishes redemption under Section 60 TPA.
Requirements for Extinguishment by Court Decree
The Supreme Court's decision in Narandas Karsondas v. S.A Kamtam And Another (1977) is pivotal. It established that the right of redemption is not extinguished merely by the mortgagee exercising a power of sale and entering into a contract with a third-party purchaser. The sale must be completed through a registered instrument as required by Section 54 TPA for the right to be extinguished. This was reiterated in L.K Trust v. Edc Limited And Others (2011). In Mhadagonda Ramgonda Patil And Others v. Shripal Balwant Rainade And Others (1988), the Court held that the right of redemption persists unless a final decree explicitly declares its extinguishment, adhering to Order XXXIV CPC. The mere passing of a preliminary or even a final decree that does not contain such an explicit declaration does not automatically extinguish the right. The Federal Court in Thota China Subha Rao (1949) and the Madras High Court in Karuppanan Servai (1953) also emphasized the need for a specific decree (like a final foreclosure decree) to extinguish the right. The Supreme Court in Allokam Peddabbayya (2017) confirmed that execution of a sale deed in favour of an auction-purchaser pursuant to a court decree could extinguish the right.
The Role of Estoppel and Subsequent Acquisition of Interest (Jumma Masjid)
The case of Jumma Masjid, Mercara v. Kodimaniandra Deviah And Others (1962 AIR SC 847) primarily deals with Section 43 of the TPA, concerning the transfer of property by a person who erroneously represents that he is authorised to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. While not directly a mode of extinguishing the right of redemption of a mortgage, its principles can be relevant in scenarios where a mortgagor, having only an equity of redemption, purports to make an absolute transfer. If such a mortgagor subsequently redeems the mortgage and acquires full title, Section 43 may operate to perfect the earlier transfer, thereby precluding the mortgagor from asserting rights over the property against the transferee. In such a complex scenario, the "act of the party" (the initial transfer) combined with subsequent events (redemption and acquisition of full title) could lead to a situation where the original mortgagor cannot exercise beneficial ownership post-redemption, effectively losing the property to the transferee due to estoppel. However, this is distinct from the direct extinguishment of the right to redeem *against the mortgagee* as envisaged by the proviso to Section 60 TPA.
Special Considerations in Usufructuary Mortgages
In usufructuary mortgages, where possession is delivered to the mortgagee who appropriates rents and profits, the right of redemption holds particular significance. The Supreme Court in GURNAM SINGH v. JAGJIT SINGH (2023), referencing Singh Ram (Dead) Through Legal Representatives v. Sheo Ram and Others (2014 (9) SCC 185), held that no time limit is fixed for a usufructuary mortgagor to seek redemption and recovery of possession. The right to seek redemption accrues not from the date of mortgage but from the date of payment of mortgage money out of usufructs or otherwise, as per Section 62 TPA. Mere expiry of a limitation period under Article 61 of the Limitation Act would not extinguish the right of redemption until the mortgage money is paid off. The Punjab & Haryana High Court in Ram Kumar And Others v. Mohinder And Others S (2011) also noted that in a usufructuary mortgage, there can be neither a direction for sale of property nor a decree for foreclosure of mortgage, and the right to redeem or recover possession cannot be lost unless the court orders that the right of redemption is barred through a proper procedure.
The Punjab & Haryana High Court in Ram Kishan And Ors. v. Sheo Ram And Ors. (2007) highlighted that a usufructuary mortgagee cannot by mere assertion or unilateral act convert his position into that of an absolute owner. This reinforces that extinguishment requires a more definitive act or decree.
Conclusion
The right of redemption is a statutorily protected and judicially cherished right in Indian mortgage law, embodying the equitable principle that a mortgage is merely a security and not a conveyance of absolute ownership. While this right is robust, it is not perpetual and can be extinguished by (i) an act of the parties subsequent to the mortgage, involving due formalities; (ii) a decree of a competent court explicitly terminating the right, typically through foreclosure or a sale completed by registered conveyance; or (iii) a specific statutory provision. The Indian judiciary has consistently adopted a protective stance towards mortgagors, ensuring that any claimed extinguishment of the right of redemption is scrutinized rigorously and upheld only when it occurs through clear, unequivocal, and legally sanctioned means. The emphasis remains on due process, formal acts, and the true intent of the parties, ensuring that the fundamental right to redeem is not easily defeated by procedural lapses or oppressive designs.