Rule
The central right of the mortgagor is the right of redemption (S.60). Once the principal money is due, he can pay or tender it and require the mortgagee to return the deeds, give back possession and retransfer the property or sign an acknowledgment that the mortgage is discharged.
The rule behind it is once a mortgage, always a mortgage: a transaction that is a mortgage cannot be turned into a sale by a term of the deed. A term that blocks or destroys redemption is a clog on redemption and is void.
A mortgage is only security. If the lender could keep the property by a clause in the deed, the mortgage would be a disguised sale, and needy borrowers would lose land worth far more than the debt.
| Provision | What it says |
|---|---|
| S.60 | Right to redeem once the principal is due, until ended by act of parties or court decree |
| S.60A | Right to have the property transferred to a third person instead of back to himself |
| S.60B | Right to inspect and get copies of title documents with the mortgagee |
| S.61 | Right to redeem separately or together several mortgages to the same mortgagee |
| S.62 | Usufructuary mortgagor's right to recover possession |
| S.63, S.63A | Accessions and improvements: benefit goes to the mortgagor on redemption |
| S.65 | Implied promises by the mortgagor (title, defending title, public charges) |
| S.65A, S.66 | Power to lease, and liability for waste |
Requirements
What the mortgagor must show to redeem under S.60:
| # | Requirement | What to check |
|---|---|---|
| 1 | The principal money has become due | Before the due date he cannot force redemption, unless the deed allows |
| 2 | He pays or tenders the mortgage-money | Principal, interest and costs at the proper time and place |
| 3 | The right has not been ended by act of parties | For example a release, or a completed sale by the mortgagee under a valid power |
| 4 | The right has not been ended by a court decree | Final decree for foreclosure or sale |
| 5 | The suit is within time | 30 years from when the right to redeem accrues (Art. 61, Limitation Act) |
The mortgagee cannot take the property just because the due date passes. Even after default he needs a foreclosure or sale decree, or a completed sale under a valid power of sale.
Clog on redemption
| Void clog | Valid term |
|---|---|
| "If not repaid in 5 years, the property becomes the mortgagee's" | "Interest rises by 1% after 3 years" |
| "The mortgagor shall never redeem" | A reasonable period before which redemption is not allowed |
| An option for the mortgagee to buy the property at a low price | A term that arrears of interest must be paid on redemption |
| A benefit to the mortgagee that continues after redemption | A reasonable extra payment while the mortgage lasts |
- A long term is not a clog by itself. It becomes one when it is unfair and oppressive, judged on all the facts (Pomal Kanji Govindji, 1989).
Other rights and liabilities
| Right or liability | Section | Content |
|---|---|---|
| Transfer to a third person | S.60A | Instead of retransfer, he can ask that the property go to someone he names |
| Inspection | S.60B | Inspect and copy title documents held by the mortgagee, at his own cost |
| Redeem separately or together | S.61 | Unless the contract says otherwise |
| Recover possession | S.62 | Usufructuary mortgagor, once the debt is paid from rents or by payment |
| Accessions | S.63 | On redemption, he gets accessions to the property |
| Improvements by mortgagee | S.63A | He takes them on redemption, paying for them only in the cases the section allows |
| Implied promises | S.65 | Title, power to transfer, defending title, paying public charges and prior encumbrance interest |
| Power to lease | S.65A | Mortgagor in possession may make leases within the limits of the section |
| Waste | S.66 | Mortgagor in possession must not do anything that makes the security insufficient |
| Personal liability | S.58(b), S.58(e), S.68 | In simple and English mortgages he is personally bound to repay |
Illustrations
1. Forfeiture clause
- Facts: A farmer mortgages land to a lender. The deed says that if he does not repay within 3 years, the land becomes the lender's absolutely.
- Result: The clause is a void clog. The farmer can still redeem.
- Why: The right to redeem cannot be destroyed by a term of the deed (S.60).
2. Reasonable lock-in
- Facts: A bank mortgage says the borrower may not redeem before 5 years.
- Result: Valid. The borrower can redeem after 5 years.
- Why: It postpones redemption for a fair period but does not destroy it.
3. Benefit after redemption
- Facts: The deed says that after redemption the borrower must give the lender a 20-year dealership in his shop.
- Result: The term is a clog and void.
- Why: The mortgage ends on redemption, so the property must come back free of the mortgagee's extra advantage.
4. Transfer to a third person
- Facts: Ravi wants to sell his mortgaged house to Sita. He pays off the mortgagee and asks him to transfer the house straight to Sita.
- Result: The mortgagee must do so (S.60A).
- Why: The right to redeem includes the right to direct the transfer to another person.
Key Cases
Seth Ganga Dhar v Shankar Lal, AIR 1958 SC 770
- Facts: A usufructuary mortgage said it could not be redeemed for 85 years. It also said that if the mortgagor did not redeem within six months after the 85 years, he would lose the right and the deed would be treated as a sale. The mortgagor sued to redeem before the 85 years ended.
- Held: The 85-year term was not a clog. The bargain was fair and made between parties on an equal footing, so the suit was premature. The six-month forfeiture term was a clog and void, but it did not affect the separate 85-year term.
- Principle: A long term is not a clog by itself. A term that takes away the right to redeem is void (S.60).
Narandas Karsondas v SA Kamtam, (1977) 3 SCC 247
- Facts: The mortgagee agreed to sell the property under his power of sale. The mortgagor then sued to redeem.
- Held: A mere agreement to sell by the mortgagee does not end the right of redemption. It ends only when the sale is completed by a registered deed.
- Principle: The right lasts until it is ended by a completed act of the parties or a decree.
Pomal Kanji Govindji v Vrajlal Karsandas Purohit, (1989) 1 SCC 458
- Facts: A long-term mortgage was challenged as a clog on redemption.
- Held: Length of term alone does not make a clog. The court looks at whether the terms are oppressive or unconscionable on all the facts.
- Principle: A clog is a matter of substance and fairness, not of years alone.
Distinctions
| Basis | Mortgagor's right to redeem (S.60) | Mortgagee's right to foreclose or sell (S.67) |
|---|---|---|
| Whose right | Mortgagor | Mortgagee |
| When | After the principal is due | After the money is due and unpaid |
| Effect | Mortgage ends, property comes back free | Right to redeem ends on final decree |
| Suit | Suit for redemption | Suit for foreclosure or sale |
| Basis | Right of redemption | Equity of redemption |
|---|---|---|
| Meaning | Right to get the property back on payment | The mortgagor's whole remaining interest in the property |
| Source | S.60 | Equity, now reflected in the TPA |
| Transferable | It goes with the property | Yes, it can be sold or mortgaged again |
Exam Scenario
In 2018 Harish takes a Rs.20 lakh loan from a bank on a simple mortgage of his house, repayable by 2023. The deed says that if he fails to repay by 2023, the house becomes the bank's absolute property. In 2024 Harish offers full repayment. The bank refuses. Advise Harish.
Approach
- Met: The principal money became due in 2023.
- Met: Harish has tendered the full amount.
- Not met (for the bank): The forfeiture clause is a clog on redemption and void (Seth Ganga Dhar, 1958).
- Met: No release, completed sale or decree has ended the right.
- Met: He is well within 30 years (Art. 61, Limitation Act).
Conclusion: Harish's right to redeem subsists. The clause is void and is ignored. The rest of the mortgage stands.
Remedy: Harish should sue for redemption. The bank must accept payment and return the deeds. Had Harish not paid, the bank's remedy would be a suit for sale (S.67) and a personal claim (S.68), not forfeiture.
Recall Check
- When does the right of redemption arise, and how can it end?
- What is a clog on redemption? Give two examples.
- What does S.60A add to the right of redemption?
- What is the limitation period for a suit for redemption?
Flashcards
What is the right of redemption under S.60?
The mortgagor's right, once the principal is due, to pay or tender the mortgage-money and require the mortgagee to return the deeds, give back possession and retransfer the property or acknowledge discharge.
What is the "once a mortgage, always a mortgage" rule?
No contract term can turn a mortgage into a sale or destroy the right of redemption. Such a term is a clog on redemption and void.
Name three ways the right of redemption can be lawfully extinguished.
(1) Act of the parties, such as a release or a sale completed by the mortgagee under a valid power, (2) a final decree for foreclosure or sale, (3) the 30-year bar under Art. 61, Limitation Act.
What is a "clog on redemption"?
Any term in a mortgage that makes redemption impossible or illusory, for example "if not redeemed in 5 years, the property becomes mine". Such terms are void.
Is a "lock-in period" (postponement of redemption) a clog?
Not by itself. A reasonable postponement is valid. An oppressive or unconscionable one may be struck down (Pomal Kanji Govindji, 1989).
What is the mortgagor entitled to if the property is sold for more than the mortgage-money?
The surplus. After the mortgage-money, interest and costs are paid, the balance goes to the mortgagor (for example S.69(4) for a sale under a power of sale).
What is a "clog on equity of redemption"?
Any term in the mortgage that prevents, restricts or fetters the mortgagor's right to redeem. Such terms are void.
State the maxim relating to equity of redemption.
Once a mortgage, always a mortgage: a transaction that is in substance a mortgage cannot be turned into a sale or absolute transfer.
Can the mortgagor transfer/sell the equity of redemption?
Yes. He keeps ownership subject to the mortgage and can sell or mortgage the equity of redemption to another person.