1. This is an appeal arising out of a suit for redemption of a usufructuary mortgage dated 19th January 1898. The plaintiffs are the sons of one of the original mortgagors, and defendant 1 is a transferee from the original mortgagee, having purchased the mortgagee rights on 3rd May 1913. The defence was that the suit was premature. The learned Judge in the Court below has held that the suit is premature, and has dismissed it.
2. The mortgage deed itself is a peculiar document. The main point in the deed which has been discussed here on appeal is contained in Clause 4, which reads as follows:
Should we, the executants, or our heirs wish to get the property redeemed and pay the principal amount in a lump sum after 59 years on Jeth Sudi Puranmashi of the 60th year, then the property shall be redeemed. Should we the executants, or our heirs wish to get the property redeemed within 60 or after 60 years, then the property shall not be redeemed.
3. The meaning of this clause clearly is, and it is so admitted by both the appellants and the respondents, that the mortgagors could only redeem the property mortgaged on one day during the 60th year, and if they so failed to redeem the property on the particular day, their right of redemption should be for ever extinguished. It is argued on the part of the appellants that such a condition is void, being contrary to the whole principle of mortgages, in that it amounts to a clog on the equity of redemption. On the other hand, the respondents argue that Sections 60 and 62 (b), T. P. Act, which give the right of redemption, must be construed in accordance with the terms of those sections, and that the strict reading of those sections makes it clear that the doctrine of clog on the equity of redemption which applies in England, does not apply in India where the law of mortgage is regulated by statute.
4. There can be no doubt whatever that the condition referred to in Clause 4 of the deed does amount to as complete a clog on the equity as it is possible to imagine. One day 60 years hence the mortgagors, or rather their grandsons, might easily have forgotten the particular day. The mortgagee himself would probably make it convenient to be absent from his village, and generally the result of this term must be that to all intents and purposes the mortgage is irredeemable. If this case was considered in England, there would be no difficulty whatever in deciding it. In the words of Andrews, J. in Browne v. Ryan [1901] 2 Ir.R. 653, at p. 667, which were approved and adopted by Collins, M.R. in Jarrah Timber and Wood Paving Corporation, Ltd. v. Samuel [1903] 2 Ch. 1, p. 7, it was laid down that:
in every mortgage a condition is implied by law that the borrower has the right, on repayment of the mortgage debt and the payment or discharge of interest or other obligations upto date and costs, to get back his property free from every obligation arising out of the mortgage; and any agreement or stipulation forming part of the mortgage bargain which attempts to exclude, evade or hamper this right is void in so far as it would, if held good, have this effect.
5. The right to redeem, however, in England is always held to be subject to any reasonable postponement or condition for the benefit of the mortgagee. If we were administering the English law, there would be no difficulty in saying that this clause is a clog on the equity and is void, and that the appeal must, therefore succeed. There have been cases in this Court where the Court has interfered with the contract between the parties and have declared that a clog is void in India: See Sarbdawan Singh v. Bijai Singh [1914] 36 All. 551, and Rajai Singh v. Randhir Singh A.I.R. 1925 All. 643. The latter case especially is on all fours with the present case. In that case the mortgage was for 82 years and only one day, at the expiration of the term, was allowed for redemption. Two learned Judges of this Court held that that was a clog on the equity of redemption and was not enforceable. On the other hand several cases have been quoted to us showing that various Courts in Allahabad and elsewhere have held that periods varying from 20 years up to 150 years for repayment of money, were enforceable. But in none of those oases was the doctrine of a clog on the equity argued or discussed. We could, no doubt, follow the decision of this Court in A.I.R. 1925 All. 643. But it is to be noted that in cases, not "only decided in this Court, but in other Courts, there does not seem to have been either argued or discussed the question of the effect of Sections 60 and 62 T. P. Act. If the terms of this Act are clear and precise, it is obvious that no equitable doctrine can override the terms of the statute. It is necessary, therefore; to see if there is anything in the Transfer of Property Act which makes it impossible for us to use the equitable doctrine of a clog on 'the equity. Section 60 enacts that:
at any time after the principal money has become payable, the mortgagor has a right to require the mortgagee to deliver the mortgage deed and all documents to the mortgagor etc.
6. Section 62 (b) enacts that:
in the case of a usufructuary mortgage, the mortgagor has a right to recover possession of the property when the term, if any, prescribed for the payment of the mortgage money has expired.
7. It is argued on behalf of the respondents that, reading these two clauses together, the result is that in the case of a usufructuary mortgage, as in this case, the right to redeem by statute only arises when the term prescribed for in the deed has expired, and that the term in this deed is 59 years, and as it has not expired, there is not, and cannot be, any right to redeem. If these two sections of the Act did, indeed mean this, it would be clear that the doctrine of a clog on the equity could not possibly apply to India where there was a term fixed in the deed itself, however long that term .might happen to be. If, for instance, it was expressed in the deed that the property could only be redeemed after a thousand years, that term would have to be enforced. In my view, it is impossible to construe these two sections in the above manner. It is impossible to consider that the legislature in passing this Act could have meant to enact anything which would completely defeat the right to redeem; for it is clear that if redemption was postponed for the term of a thousand years, it would be equivalent to say that the mortgage was irredeemable. At any rate, before one could construe the sections in that manner, one would have to be satisfied that the legislature had expressed its intention in the clearest possible terms. In my opinion these two sections, when read with section 58 of the same act, make it reasonably clear that the word "term" in Section 62 (b) must be read to mean a reasonable term or a term which does not amount to a denial of the right to redeem. Section 58, which defines a mortgage, is as follows:
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.
8. The condition in this mortgage would mean that a document which is called, a mortgage could not possibly be a mortgage within the meaning of Section 58, because it provides, as I have already stated, that the property should never in effect be redeemed. Also, this particular deed could not be for -the purpose of securing ' the payment of money, when the terms of the deed itself made it impossible that that money should ever be paid. In my opinion therefore Sections 60 and 62, being read with the definition of Section 58, and it being possible to reconcile the three sections, come to this, that in the case of a usufructuary mortgage, the right to redeem the property arises when the term is one that is reasonable and enforceable in law; that is, is not void because it amounts to a clog on the equity. I would therefore allow the appeal.
Sulaiman, J.
9. I concur in the conclusion of my learned brother, but would like to add a few words. A mortgage is essentially a transaction of loan for the payment of which security is offered. This idea is embodied in its definition as contained in Section 58 (a), T. P. Act. If money is advanced by way of loan and a transfer of interest in immovable property is effected for the purpose of securing its payment, the essential idea is the repayment of the loan. This necessarily involves the right to redeem the property. The mortgagee, on the other hand, is entitled to sufficient security for the repayment of the loan. There can be no doubt that the Courts of equity in England have always given relief to a mortgagor where he attempted to contract out of his right to redeem and the bargain was found to be harsh and unconscionable. As pointed out by my learned brother, this case, if it arose in England would create no difficulty and the suit would not be thrown out as being premature. The Courts in England would not enforce any restriction or fetter on the right of redemption which amounts to a clog. The equity judges looked not at what was technically the form, but at what was really the substance of the transaction, and consistently refused to give effect to covenants which unreasonably delayed or defeated redemption as fetters or clogs which they treated as absolutely null and void.
10. The first question is whether in spite of the codification of the law, the doctrine of a clog on the equity of redemption is at all applicable in India. If the very essence of a mortgage is the repayment of the loan for which security has been offered, then the right to redeem must exist and the mortgagor cannot contract himself out of such a right. If such a contract were allowed, the transaction would cease to be a mortgage. There is plenty of authority that the Courts in India have applied the doctrine of clog on the equity of. redemption. I shall refer to some of the cases of this Court later.
11. If the Indian Courts, which are both Courts of law and of equity, have power to interfere and protect the right of a mortgagor to redeem in spite of an express contract which makes it nugatory, then the only question would be whether the present case is a fit one for such interference.
12. So far as the covenant for postponing the redemption for a long term is concerned, some difficulty is created by the language of Sections 60 and 62, T. P. Act. Under Section 60, a mortgagor is given the right to redeem 'at any time after the principal money has become payable." Under Section 62, in the case of a usufructuary mortgage where the mortgagee is authorized to pay himself from rants and profits the interest and the principal money, the mortgagor has a right to recover possession when the term (if any) prescribed for the payment of the mortgage money has expired.
13. Prima facie, it would appear that if the mortgage dead contains an express covenant that the money will not become payable before the expiry of a fixed period, howsoever long, or that the right to redeem will come into existence only after the expiry of that period, the mortgagor's right to claim possession before that term has expired would not be conferred on him by either of these two sections.
14. On the other hand, it seams that the term of the mortgage referred to in these sections must mean a term which is enforceable in a Court of law. If the combined effect of the long term and other covenants in the deed is to make it a clog which a Court can ignore and treat as being enforceable, it would not be the term contemplated by these sections. I am therefore not prepared to say that a mere unreasonably long period of the term by itself would necessarily be sufficient for an Indian Court to override the express contract. At the same time, I would not like to commit myself . that a long term, say of a 1,000 years, would not by itself suffice.
15. There are no doubt several cases of the other High Courts, in which it has been laid down that the mere length of the term for redemption does not amount to a clog on the equity of redemption. In some of those cases it was assumed that if there had been a clog on the redemption, the Court might have interfered. On the other hand, the Chief Court of Oudh following previous cases has held in Fateh Mohammad v. Ram Dayal Singh A.I.R. 1927 Oudh 224, that a long term of years may itself amount to a clog. I consider it unnecessary to refer to cases of the other High Courts. I would however briefly refer to the cases of this Court which have been cited before us, and which relate to mortgages executed after the passing of the Transfer of Property Act.
16. In Ram Prasad v. Jagrup [1912] 15 I.C. 880, it was held that a covenant in a mortgage deed fixing 58 years for the mortgagor to redeem the mortgaged property was not, in the absence of fraud or duress, hard and unconscionable. But even in that case it was conceded that if a covenant were harsh or unconscionable, the Court might refuse to enforce it.
17. In the case of Rambaran Singh v. Ramker Singh [1911] 10 I.C. 243, a single Judge of this Court held that where in a usufructuary mortgage there was a stipulation that the mortgagor could redeem on the expiry of 13 years and that if he failed to do so, the mortgage would hold good for another period of 13 years, and the mortgagor did not redeem at the expiry of the first 13 years but brought a suit to redeem about a year after the expiry of the first term of years, the suit was premature. In view of the pronouncement of their Lordships of the Privy Council in the case of Bakhtawar Begam v. Husaini Khanum A.I.R. 1914 P.C. 36, the soundness of this decision may now be doubted. Where the first term fixed, for payment has expired and the right to redeem has accrued, the statutory right of redemption under Section 60 cannot be destroyed by any covenant to the contrary entered in the deed.
18. In the case of Sarbdawan Singh v. Bijai Singh a mortgage was made for 40 years and a provision was inserted in the deed fixing a particular day on which it was to be redeemed, failing which ,the mortgage was to be redeemed for another term of 40 years. The learned Judges held that the provision was designed to make redemption very difficult, if not impossible, and should not be enforced. On p. 929 they pointed out that to give a man one day only in 80 years on which he may redeem is to make difficulties for him far greater than are to be found in some of the earlier cases referred to. They also pointed out that it was impossible to lay down a hard and fast rule as to what should or what should not be regarded as an improper restraint or fetter on the right of redemption. In that particular case they considered the covenant to be a clog on the redemption. No doubt the decision in that case can now be supported also on the ground mentioned by their Lordships of the Privy Council in the case quoted above inasmuch as a suit had been brought after the expiry of the first term of 40 years; but there is at the same time the fact that the learned Judges did not proceed to decide that case on that basis but applied the doctrine of a clog on the equity of redemption.
19. In the case of Ram Ganesh v. Rup Narain A.I.R. 1925 All. 34 it was held that where the term of a mortgage was 82 years and even at the end of that term only one day was allowed for redemption and unless the money was paid on that particular day, the mortgage was to become a sale, and it was further covenated that the mortgagor, who did not redeem the mortgage, cannot borrow money, the thing amounted to a clog on the equity of redemption, and was not enforceable. The learned Judges relied mainly on the Allahabad case quoted just above. But there too the covenant postponing the redemption, although expressly entered in the deed of mortgage, was not enforced, and the redemption was allowed in spite of it. This case cannot be explained on the ground mentioned in the Privy Council case quoted above.
20. In the case of Narsingh Prasad Singh v. Rupan Singh A.I.R. 1929 All. 388 a Bench of this Court remarked that where in the case of a mortgage containing a stipulation that if the mortgage was not redeemed by a fixed date it was not to be redeemed for another period of 20 years, and the mortgagor failed to redeem the mortgage on the fixed date but urged that the stipulation extending the period of redemption to another term of 20 years amounted to a clog on the equity of redemption, the plaintiff had not placed sufficient material before the Court to warrant a conclusion that the postponement of redemption for another 20 years must be regarded as an improper restraint or fetter on the right of redemption. Apparently the attention of the learned Judges was not drawn to the Privy Council case of Bakhtawar Begam v. Husaini Khanam which might well have been applied. But even in that case the learned Judges assumed that the Court would have the power to interfere if a case of an improper restraint or fetter on the right of redemption were made out. They also remarked:
No hard and fast rule can be laid down as to what condition entered in a mortgage deed amounts to such a contract which requires a Court of equity to give relief when it finds that it had made the redemption of a mortgage difficult, or when it has made the calculation of the mortgage money uncertain.
21. In the case of Ram Sarup v. Nageshwar Tewari A.I.R. 1930 All. 441 there was a mortgage called bibilwafa miadi under which the right to redeem was postponed for 45 years, and in case of default the mortgage was to become an absolute sale. The suit to redeem it was brought before the expiry of the fixed period. The learned Judges-considered that the period of 45 years was a period fixed not only for foreclosure but also for redemption, and accordingly the mortgagor did not acquire the right to redeem until that period had expired. The question whether under the circumstances of that case the covenant amounted to a clog on the redemption was not argued at all.
22. No other case of this Court has been cited before us.
23. It follows that so far as this Court is concerned there is authority for the view that if it is established that a certain covenant in the mortgage deed amounts to a clog on the equity of redemption, such a, covenant would not be enforced. No hard and fast rule can be laid down as to when a covenant amounts to a clog on the equity of redemption. The Court has to take into account all the circumstances as they then existed and all the terms of the mortgage deed and then consider whether the covenant in dispute is so unduly hard and unconscionable as to nullify for all practical purposes the right of redemption, or the exercise of the right of redemption is restricted in such an unreasonable manner as practically to deny it. If the fetters or clogs placed on the redemption are hard and unreasonably oppressive, the intervention of the Court may be called for.
24. Examining the facts of the present case we find that ample security was offered by the mortgagor for the advance. The mortgagee was put in possession of the property and was to appropriate the profits in lieu of interest. Para. 4 provided:
Should we, the executants, or our heirs wish to get the property redeemed and pay the principal amount in a lump sum after 59 years on Jeth Sudi Puranmashi of the 60th year, then the property shall be redeemed. Should we, the executants, or our heirs, wish to get the property redeemed within 60 or after 60 years, then the property shall not be redeemed.
25. The idea that the redemption was to take place just on that one day after the expiry of 60 years after which the transfer would become absolute, and that there would be no right to redeem the property before the expiry of that period or after the expiry of that period, is also contained in other clauses of the deed.
26. The learned advocate for the mortgagees tries to split up the covenant into three parts, the one, prohibiting redemption within the period of 60 years; the second, allowing redemption on one particular day in the 60th year; and the third, prohibiting redemption after that date; and argues that the last may be ignored and the first upheld. No doubt in view of the pronouncement of their Lordships of the Privy Council the last prohibition after the money has once become payable would be illegal and invalid, but this follows by operation of law. So far as the intention of the parties can be gathered from the deed, the one idea was that the redemption would be only on one day. This was one covenant restricting and limiting the right of redemption in a most unreasonable manner. The properties mortgaged consisted of several sugar-cane pressing mills and wells as well as fixed rate tenancies. In the deed Rs. 2,530 were left in the hands of the mortgagee for payment of a decree of one Matadin Sahu which was in execution, and for the payment of which part of the mortgaged property had been advertised for sale. The mortgage deed was executed on 19th January 1898. The mortgagee did not deposit the decretal amount and the property was sold by auction on 20th January 1898, and the deed was presented for registration by (the mortgagor on 21st January 1898. 1931 A/49 & 50
27. It is a fact that the mortgagee did not pay off this part of the mortgage money and the property was sold and purchased by his son-in-law. The mortgagor did not himself put the mortgagee in possession of a part of the mortgaged property which was purchased by the mortgagee's son-in-law. Assuming in favour of the mortgagee that this purchase was not made benami in the name of his son-in-law, there can be no doubt that there was a breach of covenant on the part of both the mortgagor and the mortgagee. On the one hand the mortgagor failed to put the mortgagee in possession of the entire mortgaged property, and on the other hand the mortgagee has not parted with the money which he contracted to pay towards the decree. The Court below has thought that because the mortgage deed was not presented for registration till one day after the sale, the mortgagee could not have paid the amount. On the other hand, it may well be said that he might have paid the amount and saved the property for sale, and in case the mortgagor refused to get the deed registered he could have got compulsory registration.
28. The covenant quoted above is, in my opinion, one covenant by which the parties agreed that there would be redemption on only one specified day and on no other day whatsoever, and that day was to arrive after the lapse of 60 years. By the time that day arrived the parties to the deed may themselves have died and their heirs may not remember the date exactly; it may be that on the day in question it may not be easy to discover all the heirs and representatives of the original mortgagee; it may also be that they may not be available in the village so that the money may be paid to them; there may also be difficulty in depositing the amount in Court to the credit of the heirs of the mortgagee when they were not to be discovered easily, and, lastly, the sugar-cane pressing-mills, which were part of the mortgaged property, might become useless by wear and tear. If the mortgagor's heirs failed to deposit the amount on that particular day, it was the intention of the parties that the right to redeem would be lost for ever. It seems to me that if ever there was a case where redemption was made most difficult, if not altogether impossible, it was this case. I am also inclined to think that there was a breach of contract on the part of both the parties which would enable the Court to avoid the covenant. Having regard to all the circumstances, I agree that the present suit should not be held to be premature and that the plaintiffs should be allowed to redeem the property on condition of their depositing the entire amount which may be found due to the mortgagees.