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Mortgaged Property - Inalienable “Right of Redemption” of a Mortgagor
Right of redemption is the right which every mortgagor possess, which is created by virtue of the mortgage deed. This right is considered to be inalienable, and cannot be taken away from a mortgagor by means of any contract to the contrary. According to Black’s Law Dictionary, term “redemption” can be defined as the act of the vendor of property in buying it back again from the purchaser at the same or an enhanced price. “Right of Redemption” can be defined under the same dictionary as an agreement or paction, by which the vendor reserves to himself the power of taking back the thing sold by returning the price paid for it. This right finds place under Section 60 of the Transfer of Property Act, 1882 which makes mortgagor the owner of the property mortgaged, and makes him able get his property back from the mortgagee on paying the amount borrowed from him. Clog on a right means the insertion of any clause or any provision under the mortgaged deed which would alienate mortgagor of his property under certain circumstances. Under Indian legal system, such provisions would not be able to alienate a mortgagor of his “Right of Redemption”, and such provisions would be void ab initio. The reason for such clauses under the mortgage deed being void is quite interesting and reasonable. It would not be difficult to understand that a person mortgages his property when he is in need of money, and would not be in the same position as that of the mortgagee. Also, it would not be difficult to understand that mortgagee would try to misuse his position to exploit the mortgagor, and it is for this reason that such clause becomes obvious which would alienate a mortgagor of his property. It is highly possible that a person agrees to enter in a mortgage having clauses which extinguish his right of redemption, but it would not be necessary that the provisions have been accepted by him willingly. In need of money, a person would agree to the terms and conditions of the mortgagee even if he doesn’t want to do so. But, law doesn’t sit silent and in such cases it steps in the picture, and save the basic rights of a mortgagor. Law doesn’t allow any person to alienate a mortgagor of his “Right of redemption”. Such right would remain effective unless the property has been sold off or under any statutory provision. Even if mortgage has went to the court for the foreclosure of the property mortgaged, mortgagor can redeem his property by paying off the full amount in the court.
Time period is not the essence in case of right of redemption. One such case was decided by the court in Achaldas Durgaji Oswal v Gangabisan Heda (2003) 3 SCC 614 , where a suit was filed by the mortgagee for the foreclosure of the property, and another suit was filed by the mortgagor. Lower court asked mortgagor to pay off the amount within 3 months, but he was not able to do so. Instead, he paid off the amount after a period of 3 years and at that point of time his suit was rejected by the lower court on ground of exceeding the limitation period as decided by the court. Lower court’s decree was reversed by the High Court, which was upheld by the Supreme Court. It was held by the Supreme Court that “the right of redemption of mortgagor being a statutory right, the same can be taken away only in terms of the proviso appended to Section 60 of the Act which is extinguished either by a decree or by act of parties. Admittedly, in the instant case, no decree has been passed extinguishing the right of the mortgagor nor such right has come to an end by act of the parties.” Another view was taken by the Supreme Court in K.Vilasini and Ors v Edwin Periera CIVIL APPEAL NO. 5476 OF 2008,where a suit was filed by the mortgagor for the foreclosure but it was prayed by the mortgagor that he would pay the amount and required some time. The time was granted by the court with the consent of the mortgagee, but mortgagor was not able to pay the amount in the stipulated time. He later deposited the amount claimed to redeem his property. The same was decreed by the court and confirmed by the High Court. Supreme Court also decreed in favour of the mortgagor stating that mortgagee had himself allowed mortgagor to pay off the amount and also took part in the proceedings therein. In Hasthimal and Sons v. Tej Raj Sharama 2007 AIR SCW 6135 ,where a pre-emption clause was introduced by the mortgagee stating that he would have a right to purchase the property if the same was intended by the mortgagor. In this case, Supreme Court relied on a judgment of House of Lords in Lewis v. Frank Love, Ltd, 1961 All. E.R. 446, where it was held by the court that “where one of the terms arranged between the mortgagor and the mortgagee was that the mortgagee should have a right to pre-emption in case the mortgagor wishes to transfer the property to a third party, such a condition operates as a clog on the right of redemption of the vendee from the mortgagor.
In Harbans v. Om Prakash AIR 2006 SC 686, Supreme Court referred Mulla’s The Transfer of Property Act, 9th Ed, where it is stated that “The right of redemption is an incident of a subsisting mortgage and subsist as long as the mortgage itself subsists. It can be extinguished as provided in the section and when it is alleged to be extinguished by a decree, the decree should run strictly in accordance with the forum prescribed for the purpose. Dismissal of an earlier suit for redemption whether as abated or as withdrawn or in default would not be barred the mortgagor from filing a second suit for redemption so long as the mortgage subsists and the right of redemption is not extinguished by the efflux of time or decree of the court in the prescribed form.”Consequently, the suit was decreed in favour of the mortgagor. Similar view was taken by the Supreme Court in Pomal Kanji Govindji v Vrajlal Karsandas Purohit AIR 1989 SC 436.Further it was held by the Supreme Court in Shivdev Singh v Sucha Singh air 2000 SC 1935, that a provision incorporated in the mortgage deed to prevent or hamper the redemption would be void, and that the right provided by section 60 of the Transfer of Property Act, 1882 is a statutory right and clog on this right should be determined depending on the facts and circumstances of each case. Full Article