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Doctrine of Clog on Redemption: Instances and Exceptions

The term mortgage plays a vital role in understanding the property law. Mortgage refers to transfer of interest vested in an immovable property for advancing a loan or for something which would give rise to pecuniary interest in future. The person who transfers the interest is known as mortgagor and the person to whom the interest is transferred is known as
mortgagee. The amount for which the property is mortgaged is known as the principal money or amount. In Transfer of Property Act,1882, different types of mortgages have been defined along with attached conditions.

As soon as the property is mortgaged, some of rights of the mortgagor are automatically reserved. One such important right is Right to redemption. Whenever a person mortgages his property as a security, he has the right to take it back when he pays back the amount along with interest. The property cannot be kept forever with the mortgagee because it will deprive the mortgagor of his right to Redemption. Section 60 states about the right and explains about the things which are to be returned to mortgagor on payment of money.

The mortgagor in any case cannot be deprived of his right. Any such condition that restricts the mortgagor from redeeming his property back from the mortgagee is known as Clog on Redemption. Such conditions are considered as void ab initio. There are some exceptions in which this clog is not invalid but, in most of the cases it is.

Section 60 Of Transfer Of Property Act, 1882

The title of this section reads as Right of Mortgagor to Redeem. This section incorporates the right to redemption in the property law. This right is a statutory right in India. This section mentions that the mortgagor on the payment of the principal money should be returned the property secured. In mortgage, the property is not absolutely transferred to the mortgagee and therefore it needs to be returned on the payment.

There are also certain documents which needs to be returned to the mortgagor such as the mortgage deed or any document related to the property. It is not fair to keep the property forever on the ground that the mortgagor did not pay the amount on time. This is against the principal of justice, equity and good conscience. There are two terms that are incorporated within the section. They are: 1) Clog on Redemption 2) Once a mortgage, always a mortgage. Both are interrelated to the section and are necessary to be understood.

Clog On Redemption

In India, the doctrine of Clog on redemption can be understood in relation to Section 60. This section states the right to redemption and along with it there are conditions attached to it. All the rights mentioned in the sections cannot be taken away by mere declaration by the mortgagee or by making a contract. Every act which stops the mortgagor from redeeming his property back refers to clog on redemption. Even the mortgagor cannot stipulate his right to redemption. There are some basic instances that result in clog. Such conditions are mentioned below.

Instances of Clog On redemption

There are many instances that creates a clog on redemption by the mortgagor. They are void ab initio. Such instances are as follows:
  1. Postponement by mortgagee as an advantage of his position:

    Mere postponement of the redemption does not amount to clog as it may be for the benefit of both mortgagor and mortgagee. Also. Sometimes the postpones may be because of some unavoidable reasons. In cases where it is found that the mortgagee is intentionally postponing the redemption and takin g due advantage of his position, it is a clog.

    In the case of Seth Ganga Dhar v. Shankar lal[1], it was held that the postponement of 85 was not a clog because of the conditions that existed at that time. In the case of Bhullan v. Bachcha,[2] it was held that in a usufructuary mortgage, the condition of redemption after 60 years on a particular was a clog.

    Therefore, the time period amounts to clog after taking in consideration some of the important conditions such as terms and conditions of mortgage, money advanced etc.
     
  2. Conditional Sale of property:

    Sale of property by the mortgagee in any condition is a clog. When the contract between the mortgagor and mortgagee shows that if mortgagor will not pay the amount on time, the mortgagee will be eligible for selling the property, such condition is considered as void. Right of redemption is an equitable right and thus cannot be taken way by selling the property in any condition.

    In case of Kanaram v. Kuttooly[3], it was held that the non-payment of money on due date did not allow the mortgagee to sell the property and any such condition contained in the contract as it amounts to clog.
     
  3. Restraint on other mortgage:

    In the mortgage, the mortgagor only transfers the interest and not the ownership in the property. The mortgagor holds a right of mortgaging the property for advancing another loan too. Any condition in the first mortgage deed if states that the mortgagor cannot mortgage the property subsequently is a clog.
     
  4. Collateral benefits in case of usufructuary mortgage to mortgagee:

    In the case of usufructuary mortgage, the mortgagee has the right of taking the rents of that property, these are not illegal. If above all such benefits, the mortgagee takes advantage of the needy condition of mortgagor and enjoys collateral benefits, it is a clog.

in the case of Krelinger v. New Pantagonia Meat & Cold Storage Co. Ltd.[4], certain conditions were explained related to collateral benefits of mortgagee which result in clog, they are: if the benefit is unfair, if it is in a condition that clogs the redemption or it is inconsistent with right to redeem.

All such conditions amount to clog and cannot be enforced in a mortgage as the right to redemption is related to equity and every mortgagor has the right to redeem the property back after the payment of amount.

Exceptions to Clog on Redemption:

Every rule has an exception to it, so even the right to Redemption has some limitations, even though it can’t be extinguished but it may be restricted.

The major exceptions on Clog on Redemption

  1. The right of redemption cannot be finished in mortgage deed of the agreement but after it can be finished by submission of the right of redemption or by sale or by any method by the free transaction.
  2. The right can be finished by the decree of court. the mortgagor only has the right to get such decree the right of redemption can be awaited till exercising after the degree for forfeiture of the right of redemption can be passed by the court.
  3. If the right of redemption and interest of mortgage vested in one person then the right is finished.
  4. If the mortgaged property is vested in-state or if the mortgaged property acquisition by the government the right.
  5. If the mortgagee himself acquires a share in the mortgaged property, the indivisibility of the mortgage is broken, and sharer in the remaining or integrity property is then entitled to redeem his share.

Case Laws on Exceptions to Clog on Redemption
  1. Narandas Karsondas vs S.A. Kamtam & Anr[5]

    It is only on execution of the conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a Mortgage Deed by itself will not deprive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale. The mortgagor's right to redeem will survive until there has been completion of sale by the mortgagee by a registered deed.
     
  2. L.K. Trust Vs EDC Ltd. and Others Respondent[6]

    The mortgagor under Indian law is the owner who had parted with some rights of ownership and the right of redemption is the right which he exercises by virtue of his residuary ownership to resume what he has parted with. In India this right of redemption, however, is statutory one. A right of redemption is an incident of a subsisting mortgage and subsists so long as the mortgage itself subsists. The judicial trend indicates that dismissal of an earlier suit for redemption whether as abated or as withdrawn or in default would not debar the mortgagor from filing a second suit for redemption so long as the mortgage subsists. This right cannot be extinguished except by the act of parties or by decree of a court.
     
  3. Jaya Singh D. Mhoprekar and Anr.v. Krishna Balaji Patil and Anr.[7]

    The right of redemption under a mortgage deed can come to an end only in a manner known to law. Such extinguishment of the right can take place by contract between the parties, by a merger or by statutory provision which debars the mortgager from redeeming the mortgage. The mortgagor’s right of redemption is exercised by the payment or tender to the mortgagee at the proper time and at the proper place of the mortgage money. When it is extinguished by the act of parties, the act must take the shape and observe the formalities which the law prescribes. A mortgage being a security for the debt, the right of redemption continues although the mortgagor fails to pay the debt at the due date. Any provision inserted to prevent, evade or hamper redemption is void.
     

Conclusion
The doctrine of clog on redemption is necessary to be existed because it is the sole way to protect the rights of the mortgagor. In the absence of this doctrine, it would be very easy to alienate the mortgagors right of redemption. This doctrine imposes restrictions and works on the principle of justice, equity and good conscience. The exceptions that exist are logical and legal in which no rights of any party are harmed. Hence, this doctrine safeguards the rights and imposes duties on mortgagee towards mortgagor.

End-Notes:
  1. AIR 2000 SC 770
  2. AIR 1945 All. 380.
  3. (1898) 21 Mad. 110
  4. (1914) AC 25
  5. 1977 AIR 774, 1977 SCR (2) 341
  6. AIR 2011 SC 2060
  7. (1985) 4 SCC 162,

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