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1904 DIGILAW 58 (ALL)

Sheo Shanker v. Parma Mehton

1904-04-19

BURKIIT, STANLEY

body1904
JUDGMENT : Stanley, J. This appeal arises out of a suit for redemption, and the question raised in it involves the consideration of the subject of fettering, or as it is commonly called “clogging,” the equity of redemption of mortgaged properties. The plaintiffs predecessor-in-title gave a usufructuary mortgage, on Bhadon Badi 11th, Sambat 1917, of some property to Ram Saran, the father of the defendants Nos. 1 and 3, and placed him in possession as mortgagee. On offering to redeem this mortgage, the plaintiff was met by a demand for payment of not merely the mortgage debt but also of a sum of Rs. 382, which was secured by a bond executed in favour of the mortgagees by the mortgagor after the date of the mortgage, namely, on Asarh Sudi 7, Sambat 1922. This bond contains the following stipulation, viz.—”We agree to pay off the money with interest on Jeth Sudi 15, and if we fail to pay off the money with interest on the date fixed (Miti), we shall first pay off the amount and interest due under this bond and then pay the money with, respect to the field (that is, the land which is comprised in the usufructuary mortgage). The field shall not be redeemed until we have paid the money and interest due under this bond. 2. The court of first instance held that the plaintiff, in order to redeem, must pay off the amount due under this bond as also the amount due under the usufructuary mortgage, and gave a decree accordingly. 3. His decision was upheld on appeal by the learned District Judge. In coming to it reliance was placed on the decision in the case of Allu Khan v. Roshan Khan, (1881) I.L.R., 4 All., 85. From this decision the present appeal has been preferred. 4. We are unable to distinguish the facts of the present case from those in the case to which we have referred. But the case of Allu Khan v. Roshan Khan was decided before the passing of the Transfer of Property Act (No. IV of 1882), and there fore does not carry the weight which would otherwise be attached to it. We are unable to distinguish the facts of the present case from those in the case to which we have referred. But the case of Allu Khan v. Roshan Khan was decided before the passing of the Transfer of Property Act (No. IV of 1882), and there fore does not carry the weight which would otherwise be attached to it. Section 60 of the Transfer of Property Act enables a mortgagor at any time after the principal money has become payable, on payment or tender of the mortgage money to require the mortgagee to deliver the mortgage deed, if an)’, to him and, where a mortgagee is in possession of the mortgaged property, to deliver possession thereof to him, and at his cost either to retransfer the mortgaged property to him or as he may direct, or to execute and have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee, has been extinguished; and section 83 enables a mortgagor at any time after the principal money has become payable and before a suit for redemption has become barred to deposit in Court the money due on the mortgage and stop the payment of further interest. In view of this enactment it is difficult to see how the decisions of the lower courts can be supported. Before, however, the passing of the Act the rule prevailed which precludes the enforcement of any agreement between a mortgagor and mortgagee, the effect of which is to impose what is commonly called “a clog” upon the equity of redemption. We do not find any reference to this rule in the judgment of the learned Judges who decided the case of Allu Khan v. Roshan Khan, and we are disposed to think that it was not before their mind's. In that case the mortgagor gave to the mortgagee four successive bonds for the payment of money, in each of which it was stipulated that if the amount were not paid on the due date, it should take priority of the amount due under the mortgage, and redemption of the mortgage should not be claimed until it had been satisfied. The Court held that although the bonds did not create charges on the property, yet, inasmuch as it appeared from their terms that it was the intention of the parties that the equity of redemption should be postponed until the amount of the bonds had been paid, the representative of the mortgagor was not entitled to possession of the mortgaged property on payment merely of the mortgage money. DUTHOIT, J., in the course of his judgment observes as follows:— “It is not denied that the mortgages referred to in the supplemental bonds are those which the respondent is now seeking to redeem; and although the bonds are not scientifically drafted so as to charge the estate in so many words, their terms are such as to leave no doubt in my mind of its having been the intention of the contracting parties that the equity of redemption should be postponed till the money advanced under them had been repaid.” Now as it seems to us, the postponement of the exercise of the right of redemption is one of the clogs or fetters on redemption which are aimed at by the principle of equity to which we have referred. Yet no mention of the rule is made in the judgment. As we understand it, the rule forbids the enforcement of any stipulation which places a hindrance or stay in the way of the mortgagor in the exercise of his right to redeem. In a recent case in the courts in Ireland, Browne v. Ryan, [1901] 2 I.R., 653, the subject was well considered. ANDREWS, J., in delivering a dissentient judgment in the Queen's Bench Division (which was upheld in appeal in a new trial motion) observes:— “It is the right of a mortgagor on redemption, by reason of the very nature of the mortgage, to get back the subject of the mortgage (in the present case the mortgaged lands), to hold and enjoy as he was entitled to hold and enjoy it before the mortgage. If he is prevented from doing so, that which he is entitled to on redemption is prevented, and to constitute such prevention, it is not necessary that the subject of the mortgage should be directly charged with whatever causes the prevention. If he is prevented from doing so, that which he is entitled to on redemption is prevented, and to constitute such prevention, it is not necessary that the subject of the mortgage should be directly charged with whatever causes the prevention. If he be so prevented, in fact, the equity of redemption is affected by what, whether very aptly or not, has been always termed a clog.” On appeal, WALKER, L.J., thus states at page 673 the principle governing the subject:— ”As I understand the principle, it is that where a transaction appears or has been declared to be mortgage, the Courts of Equity regard the instrument only as a security for the re-payment of the principal, interest and costs, named and secured, and the mortgagor is entitled to get back his property as free as when he gave it on payment of principal, interest and costs, and provisions inconsistent with that right cannot be enforced. The equitable rule “once a mortgage always a mortgage” and that the mortgagee cannot impose any “clog or fetter on the equity of redemption are merely concise statements of the same rule.” In the latter case of Noakes and Co. Ld. v. Rice, L.R., [1902] A.C. 24 the subject was also dealt with, and the case of Browne v. Ryan was referred to. LORD DAVY, in the course of his judgment, says “There are three doctrines of the Courts of Equity in this country which have been referred to in the” course of the argument in this case.” The first doctrine to which I would refer is expressed in the maxim “once a mortgage always a mortgage.” The second is “that the mortgagee shall not reserve to himself any collateral advantage outside the mortgage contract, and the third is that a provision or stipulation which will have the effect of clogging or fettering the equity of redemption is void.” Dealing, later on, with the third of these doctrines, he observes. The third doctrine to which I have referred is really a corollary from the first, and might be expressed in this form: once a mortgage always a mortgage and nothing but a mortgage. The meaning of that is that a mortgagee shall not make any stipulation which will prevent a mortgagor who has paid principal, interest, and costs, from getting back his mortgaged property in the condition in which he parted with it.” 5. The meaning of that is that a mortgagee shall not make any stipulation which will prevent a mortgagor who has paid principal, interest, and costs, from getting back his mortgaged property in the condition in which he parted with it.” 5. In the case before us, the mortgage security contained a provision that the field (i.e., the mortgaged property) shall be redeemed on payment of the principal amount in a lump sum in any Jeth. So far as regards the security itself no fetter on redemption is imposed. The latter bond, however, contains a stipulation that the mortgaged property shall not be redeemed until the principal money and interest due under that bond, had been paid. It appears to us clear that such a stipulation is a fetter or clog on redemption. It places in the way of the mortgagor a bar to the exercise of the right of redemption which the law gives him and therefore offends against the rule which we have stated. 6. Mr. O'Conor, on behalf of the respondents, contended that the later bond created a charge upon the mortgaged property in respect of the money secured by it, and that therefore the plaintiff could not complain if he was obliged to pay the amount of that charge along with the mortgage debt. We are unable to agree with him, being clearly of opinion that later bond does not create any charge whatever upon the property but is simply a money bond. Therefore it is unnecessary to consider what the effect would have been if a charge had been imposed on the property in respect of the latter debt. Having regard to the provisions of the Transfer of Property Act and especially the section empowering mortgagors to redeem, to which we have referred it appears to us that the ruling in Allu Khan v. Roshan Khan cannot now properly be followed and that the lower courts were wrong in allowing it to guide them. 7. For the foregoing reasons, therefore, we allow this appeal, and modify the decrees of the lower courts by the exclusion from the amount payable for redemption, the money secured by the bond of Asarh Sudi 7, Sambat 1922, as also the cost of the appeal to the lower appellate court. 7. For the foregoing reasons, therefore, we allow this appeal, and modify the decrees of the lower courts by the exclusion from the amount payable for redemption, the money secured by the bond of Asarh Sudi 7, Sambat 1922, as also the cost of the appeal to the lower appellate court. The respondents must pay to the appellants the costs of this appeal, and also the cost of the appeal to the lower appellate court. We extend the time for payment to 20th of next July.