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Cases and Materials Cited

S.N. Shukla, The Transfer of Property Act (23rd ed., 2001).


F.H. Lawson & Bernard Rudden, The Law of Property (Peter Birks
ed., 3rd ed., 2002).
Leonard A. Jones, A Treatise on the Law of Mortgages of Real
Property 1 (The Riverside Press, Cambridge 1894).
Posten v. Miller, 19 N.W. 540.
Sarojini Prabhu v. Papikutty Adiesian, AIR 2007 Ker 44.
Poonam Pradhan Saxena, Property Law 344 (2nd ed., 2011).
Parmeswaran Govindan v. Krishnan Bhaskaran, AIR 1992 SC
1135.
Mulla, The Transfer of Property Act, 1882 656 (Solil Paul ed.,
9th edition, 2000).
G.C.V. Subha Rao, Law of Transfer of Property Act 882 (4th ed.,
2006).
Murarilal v. Dev Karan, AIR 1965 SC 225.
Ambalal Jasraj v. Ambalal Badarwal, AIR 1957 Raj 321.
Poonam Pradhan Saxena, Property Law 348 (2nd ed., 2011).
Bhullan v. Bachcha, AIR 1931 All 380.
Pomal Kanji Govindji v. Vrajilal Karsandas Purohit, AIR 1989 SC
436.

Valdas and Ors. v. Bai Jivi and Ors, AIR 1973 Guj 93. Saleh Raj v.
Chandan Mal, AIR 1960 Raj 47, held that a term of 99 years was
not held as not oppressive and not amounting to clog.
Rocky Flora v. Parvarthy Ammal, AIR 1957 Ker 175. Hajee Fatma
Bee v. Prohlad Singh, AIR 1985 MP 1.
Poonam Pradhan Saxena, Property Law 359 (2nd ed., 2011).
Shankar Dhonddev v. Yeshwant Raghunath, AIR 1928 Bom 82.
Sanjiva Row, Transfer of Property Act 1095 (6th ed., 1999).
Sanjiva Row, Transfer of Property Act 879 (7th ed., 2011).
Rama Krishnayya v. Venkata Somayajulu, AIR 1934 Mad 31.

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Sunday Koer v. Sham Krishnen, ILR 34 Cal 150.
Sarfarz Singh v. Udwat Singh, AIR 1929 Oudh 30.
Sir Hari Singh Gour, The Transfer of Property Act, 1882 1248
(10th ed., 2002)
Bhimrao Nagojirao Patankar v. Sakharam Sabaji Kantak, AIR
1922 Bom 277.
Sanjiva Row, Transfer of Property Act 884 (7th ed., 2011).
Sir Hari Singh Gour, The Transfer of Property Act, 1882 1260
(10th ed)

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Introduction
Once a mortgage, always a mortgage
This maxim implies that the mortgagors right of redemption would
not be defeated by any agreement to the contrary, even if the
mortgagor himself agreed to it. The maxim simply denied the
validity of any stipulation in the mortgage deed which defeats the
mortgagors right of redemption.
The underlying principle of this maxim was stated by Lord Henley
in the case of (Vernon v. Bethel) that_
This court as a conscience is very jealous of persons taking
securities for a loan and converting such securities into purchases
and therefore I take it to be an established rule, that a mortgagee
can never provide at the time of making the loan for any event or
condition on which the equity of redemption shall be discharged
and the conveyance made absolute and there is great reason and
justice in this rule for necessitous men or not will submit to any
terms that the crafty may impose upon them.

Equity would mean in a laymans life as fairness. Back during the


middle Ages in England, there were certain grey areas where it
was observed that the Common Law was inadequate in its
abilities to deliver justice to the common person[S.N. Shukla, The
Transfer of Property Act 219 (23rd ed., 2001).]. This led to a
directive by the King to appoint Chancellors in special courts who
would go beyond the realm of the law to dole out justice and
fairness to the parties[Id.]. In Common Law, equity is used as a
means to sharpen the meticulousness of the law in order to
achieve justice[F.H. Lawson & Bernard Rudden, The Law of
Property 15 (Peter Birks ed., 3rd ed., 2002).]. Such courts were
called Courts of Equity.

Under a mortgage, two interests are generated by the owner of


the property. One is the interest of the creditor on the property,
which is limited and fixed and another, is the residuary interest left
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which can be quantified only by deducting the creditors interest
from the value of the security[Id. at 131]. The fundamental bargain
from this division of interests is the presence of a right to buy back
the property without any encumbrances by paying the loan[Id].
This right is called the equitable right to redeem. The first instance
of the presence of the right of redemption was found in Roman
law[2 Leonard A. Jones, A Treatise on the Law of Mortgages of
Real Property 1 (The Riverside Press, Cambridge 1894).]. It has
been rightfully said that Redemption is purely a creature of courts
of equity[ Posten v. Miller, 19 N.W. 540.].

Section 60 of the Transfer of Property Act, 1882 provides the right


of redemption to the mortgagee. This right becomes alive only
after the principal money becomes[Sarojini Prabhu v. Papikutty
Adiesian, AIR 2007 Ker 44]. There are certain limitations to this
right by the fact that it exists only till the mortgagee decides to
exercise his right of foreclosure on the property[ Poonam Pradhan
Saxena, Property Law 344 (2nd ed., 2011).]. Thus, the contract of
mortgage between the parties ends, when the debtor exercises
his right to redeem through paying off the loan[Parmeswaran
Govindan v. Krishnan Bhaskaran, AIR 1992 SC 1135.].

This right provided by the Transfer of Property Act is a statutory


right which can only be done away by compliance to the
procedure established by law[Mulla, The Transfer of Property Act,
1882 656 (Solil Paul ed., 9th edition, 2000).]. It would henceforth
follow that any obstruction to this right would be declared as void
as a clog on the equity of redemption[Id].

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Clog on redemption

In Stanley v. Wilde[(1899) 2 Ch 474], Lindley M.R. gave one of the


founding explanations of the basis of this doctrine

The principle is this: a mortgage is a conveyance of land or an


assignment of chattels as a security for the payment of a debt or
the discharge of some other obligation for which it is given. This is
the idea of a mortgage: and the security is redeemable on the
payment or discharge of such debt or obligation, any provision to
the contrary notwithstanding. That, in my opinion, is the law. Any
provision inserted to prevent redemption on payment or
performance of the debt or obligation for which the security was
given is what is meant by a clog or fetter on the equity of
redemption and is therefore void. It follows from this, that once a
mortgage always a mortgage.

The maxim once a mortgage always a mortgage means that


there can no covenant that modifies the character of the mortgage
agreed between the parties that would stop the mortgagor to
redeem his property back on payment of the principal and
respective interests.

The basis of this doctrine lies in the exercise equity, justice and
good conscience and is extensive to areas where the act is not
applicable. On a realistic perusal of the workings of a mortgage, it
is observed in most of the cases that the mortgagor enters into
such an agreement because of some financial predicament. The
law recognizes the power of the dominant party to insert clauses
which will serve his personal interests by creating impediments on
the right to redeem the property. Such obstructions are henceforth
struck down by the courts to enable the mortgagee to redeem his

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property. In U. Nilan v. Kannayyan (Dead) Through Lrs.,
explaining the philosophy behind the doctrine, it was said that

Adversity of a person is not a boon for others. If a person in


stringent financial conditions had taken the loan and placed his
properties as security therefor, the situation cannot be exploited
by the person who had advanced the loan. The Court seeks to
protect the person affected by adverse circumstances from being
a victim of exploitation. It is this philosophy which is followed by
the Court in allowing that person to redeem his properties by
making the deposit under Order 34 Rule 5 C.P.C.

Leading cases
There are no fixed qualifying circumstances in determining what
would or would not amount to a clog. It has been something that
would have to be decided on the facts and circumstances of the
case. There are certain situations where it was held that the
covenant was a clog on the right.

Long Term Mortgages


Long term mortgages are common in cases of usufructuary
mortgages. A term of 95 years or 100 years would definitely
extend beyond ones lifetime and superficially seems like a clog.
Taking cognizance of the same, the Supreme Court has ruled that

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only by virtue of lengthy period, a mortgage would not amount to
a clog, there must exist a presence of undue advantage or fraud
to term it as a clog.

In Vadilal Chhaganlal v. Gokaldas Mansukh[, the mortgage


agreement provided that it would subsist for 99 years and the
mortgagee would be allowed to construct any structure on the
property without any limit on the cost. The Supreme Court
reasoned that it would be beyond the ability of the mortgagor to
repay the principal money along with the interests and the
construction expenses. It was held that both the conditions
amounted to a clog on the mortgagees right of redemption.

In Ramkhilawan Dilrakhan Ahwashi v. Mullo, the case of the


plaintiff was that a covenant for the payment of principal money
after 80 years and only in the month of Baisakh, was a clog. The
Trial Court dismissed the suit by calculating that the profits from
the mortgaged property was sufficient to pay the interests on the
principal. On appeal, the High Court upheld the lower courts
decision. However in Balbhaddar Prasad v. Dhanpat Dayal, the
property mortgaged for 50 years was worth 9000. The final
amount to be paid after deducting the profits from the property
was around two and a half lakhs. The Court held that such an
enormous fund had led the property to be irredeemable and the
terms of the contract were oppressive and unconscionable.

Condition of Sale of Property


A covenant that a mortgaged property, if not redeemed within a
fixed time, would translate into a sale is a clog. However if there is
a separate agreement whereby the mortgagor executes a sale
deed in favor of the mortgagee as an independent transaction,
such sale deed is valid.

In Meharban Khan v. Makhna, the mortgage agreement provided


that the mortgagee was to be entitled to possession of the
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property for 19 years. There was a stipulation that if the
mortgagor paid off his debt, he would be allowed to redeem the
property only till a limited interest and the residual interest would
belong to the mortgagor. It was further envisaged that on failure of
the mortgagor to pay, the property would be deemed to be sold to
the mortgagee permanently. The Court ruled that both conditions
amounted to a clog. It was held that on payment of the full amount
due, the property would be reverted back without any
encumbrance.

This principle would also extend to cases where on default of


payment, the property would be deemed to have been foreclosed,
amounts to a clog. However parties are free to stipulate such a
condition subsequently after the mortgage agreement.

In Kuddi Lal v. Aisha Jehan Begam, the plaintiff-mortgagor was


allowed to redeem the property back by paying from her own
pockets and not through transferring the property. The Court held
that such a covenant was a clog on redemption since it restrained
alienation by the mortgagor.

Penalty in case of default


Payment of a penalty if there is default on behalf of the mortgagor
can reasonable but in certain situations it may be unreasonable
and penal. Certain situations where a penalty has been held to be
unreasonable are

1. On default, compound interest is stipulated even when the


original interest was very high.
2. On default, increased rate of interest would apply from the
time the agreement is made.

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By merely the virtue of there being a high interest does not lend
the condition to be a clog on redemption unless it could be shown
that there was undue influence in the dealing.

Collateral Benefit to Mortgagor


A mortgagor may avail of a collateral benefit either during
the subsistence of the mortgage, which is valid, or after
the redemption, which in some cases is not valid.
In Noakes & Co. v. Rice, a covenant in the mortgage
agreement stipulated that the mortgagee would buy all the
beer he would consume on his property from the
mortgagor who was a brewer. It was held that the tie was
valid during the subsistence of the mortgage but not
beyond redemption. The property must be delivered back
without any tie.
One of the famous cases on collateral benefit
was Kreglinger v. New Patagonia Meat and Cold Storage
Co. Ltd. In that case, the mortgage was of a term of 5
years with an option to the mortgagor to redeem the
property before completion of the term. The agreement
further stipulated that the mortgagor should sell
sheepskins exclusively to the mortgagee as long as both
parties agreed to a fixed price. The mortgagee paid the
mortgage before 5 years and filed a suit for declaring the
tie of exclusive selling to be declared as a clog on
redemption.

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The House of Lords held that the provision of exclusive
sale to lenders did not amount to a clog. It was reasoned
that the mortgagee is allowed to stipulate for a collateral
benefit beyond the period of redemption provided that the
stipulation is not
1. Unconscionable or unfair.
2. A penalty amounting to a clog on the right to redeem.
3. Contrary to the right of redemption.
Kreglingers case is important in recognizing the limits of
the doctrine by the terms of the contract unless they are
oppressive, unconscionable or unreasonably hard.The
freedom of the parties to contract is asserted by this case.
The rule enunciated in Kreglingers met with approval in re
Cuban Land and Development Co., where it was
stipulated that in the event of the winding up of the
company, the debenture-holders were entitled to a part of
the remaining profits. Such a provision was held not to be
a penalty clogging the right of redemption.
It has also been approved by Indian Courts. A provision
that allowed the mortgagee to remain in possession of the
mortgaged property through permanent tenancy was held
to be clog because the collateral benefit extended beyond
the period of redemption.

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Subsequent Agreement to postpone
redemption
A subsequent agreement which becomes an obstruction
to the mortgagee by creating a personal obligation is a
clog on his right to redemption. The reason is that unless
the agreement forms a charge on the property, the
mortgagee is not liable to pay any sum arising from his
personal obligation except the mortgage amount.
In Sheo Shankar v. Parma, the mortgagor had already
executed a usufructuary mortgage in favor of the
mortgagee. He further executed a simple mortgage in
order to borrow more money. A provision in the simple
mortgage provided that the mortgagor was stopped from
redeeming the property till the amount in the simple
mortgage was paid. It was held that such a provision was
void as a clog.
In Hari v. Vishnu, a loan of 1500 was advanced to the
plaintiff on mortgage by the defendant. The mortgage
deed provided that 5000 was still to be paid by the
plaintiff on a previous mortgage and stipulated that till both
the sums were paid, the plaintiff was not entitled to
redeem the property. The deed was stamped at a value on
6500. It was held that since both the transactions were
clubbed into one, the provision was not a clog

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Section 60 of the act lays down the provision of the
redemption of mortgaged property as the subject matter of
the right of redemption can be described as that right of the
mortgagor or of any third person directed by him which
entitles him to get back the possession of the mortgaged
property after the payment of the mortgaged money.
The right of redemption of the mortgaged property is one of
several rights that are vested in the mortgagor. Right to
redeem is the right to recover something by making certain
payments. In case of mortgage, mortgagors right to
redeem is called his right to recover or get back the property
after he pays the loan. However, if the above stated rights
have been extinguished by the act of the parties or by a
decree of the court they cannot be exercised.
The right granted under this section is called the right of
redemption and the suit for its enforcement is called the suit
of redemption. The mortgagee has the right to get a
reasonable notice before payment or tender of such money.
The right of the mortgagor through which he is entitled to
get the property returned to him contemporaneously with
the discharge of his obligation is called the right of
redemption.

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Conclusion

As we have seen, whether something would or would


qualify as clog on the right of redemption is something that
cannot be determined absolutely. It has to be settled
through a careful perusal of the of the mortgage deed, the
circumstances surrounding the parties entering into a
mortgage, the amount advanced and nature of the
transaction.
However the doctrine has not escaped without
controversy. Sir Fredrick Pollock has made his displeasure
known by terming this doctrine as an anachronism. He
believed that the doctrine cannot keep on assuming that
the mortgagor is a victimized party in the bargain.
According to him, in the modern age, both parties are at a
level playing field and giving a mortgagor a ground to
repudiate his obligations by portraying one of the clauses
of the contract as unconscionable, it works against public
policy as a whole.
Pollock isnt completely wrong in his analysis of the
doctrine. The doctrine was envisaged at a time when
feudal landlords would use their power over oppressed
peasants to enter into unfair agreements by virtue of their
necessity. But with the growth of commerce and passage
of time, such inequality has been more or less abolished.
Providing an excuse to one party to escape his obligations
is a bad precedent to set. However these criticisms have
not stopped the courts in India to apply this test. Where a
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major chunk of the population in India still works in the
agrarian sector and lives under below poverty line without
any formal banking systems, the doctrine still has some
prevalence in such situations. It is left at the discretion of
the judiciary to decide in which cases a prudent
application of this doctrine lies.
In the Law of Mortgage by Dr. Rashbehary Ghose at page
231-232 under the heading 'Once a mortgage, always a
mortgage' it is noticed: "In 1681 Lord Nottingham in the
leading case of Harris v. Harris-firmly laid down the
principle: 'Once a mortgage, always a mortgage'. This is a
doctrine to protect the mortgagor's right of redemption: It
renders all agreements in a mortgage for forfeiture of the
right to redeem and also incumbrances of or dealings with
the property by the mortgagee as against a mortgagor
coming to redeem. In 1902 the well-known maxim, 'once a
mortgage, always a mortgage, was supplemented by the
words 'and nothing but a mortgage' added by Lord Davey
in the leading case of Noakes v. Rice, in which the maxim
was explained to mean 'that a mortgage cannot be made
irredeemable and a provision to that effect is void'. The
maxim has been supplemented in the Indian context by
the words 'and therefore always redeemable', added by
Justice Sarkar of the Supreme Court in the case of Seth
Ganga Dhar v. Shankarlal. (See Achaldas Durgaji Oswal
(Dead) ... vs Ramvilas Gangabisan Heda (Dead); AIR
2003 SC 1017, 2003 (1) AWC 671 SC, 2003 (1) CTC 364)
It thus clear that the very conception of mortgage involves
three principles. First, there is the maxim: 'Once a
mortgage, always a mortgage'. That is to say, a mortgage

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is always redeemable and if a contrary provision is made,
it is invalid. And this is an exception to the aphorism,
modus et conventio vincunt legem (custom and agreement
overrule law). Secondly, the mortgagee cannot reserve to
himself any collateral advantage outside the mortgage
agreement. Thirdly, as a corollary from the first another
principle may be deduced, namely, 'once a mortgage,
always a mortgage, and nothing but a mortgage'. In other
words, any stipulation which prevents a mortgagor from
getting back the property mortgaged is void. That is, a
mortgage is always redeemable.

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Acknowledgements
Id like to thank my Transfer of Property teacher Prof.
M.C. Bijawat for his continued guidance and assistance
which helped immeasurably in the completion of this
project.

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