The mortgagor retains ownership of the property (except in English mortgage) and has extensive statutory rights, the most fundamental being the right of redemption (S.60) the absolute right to get the property back upon payment of the mortgage-money. This right is the essence of a mortgage and cannot be extinguished by contract.
Legal Framework
| Provision | Subject |
|---|---|
| S.60 | Right of redemption: absolute right to redeem at any time |
| S.60A | Obligation to transfer to third party at mortgagor's direction upon redemption |
| S.60B | Right to inspection and production of documents |
| S.61 | Right to redeem separately or simultaneously (multiple properties) |
| S.62 | Right of usufructuary mortgagor to recover possession |
| S.63 | Right to accession (improvements made by mortgagor during mortgage) |
| S.63A | Right of mortgagor to receive surplus sale proceeds |
| S.64 | Renewed lease: mortgagor's right to benefit |
| S.65A | Mortgagor's implied liability to maintain property |
Right of Redemption (S.60)
S.60 is the CORE provision. At any time after the mortgage-money becomes due, the mortgagor has a right to require the mortgagee to:
- Deliver possession (if in mortgagee's hands)
- Deliver documents of title (if with mortgagee)
- Transfer the mortgaged property back (in English mortgage)
- Re-convey / discharge the mortgage
The rule: "Once a mortgage, always a mortgage."
This means:
- No contract clause can extinguish the right to redeem
- No time-bar clause in the mortgage deed ("if not redeemed within 5 years, property becomes mine") is valid
- The right subsists until extinguished by: (a) decree of foreclosure, (b) sale by court, or (c) limitation (30 years for simple mortgage; 12 years from when right to redeem accrues)
Clog on Redemption (Void)
| Clog (void) | Valid Condition |
|---|---|
| "If not redeemed within 5 years, property belongs to mortgagee absolutely" | "Interest rate increases by 1% after 3 years" (reasonable escalation) |
| "Mortgagor shall never redeem" | "Redemption only after 5 years" (postponement, not extinction) |
| "On redemption, mortgagor must sell to mortgagee at below-market price" | "On redemption, mortgagor must pay all arrears of interest" |
| "Mortgagor grants perpetual lease to mortgagee's relative" (collateral advantage surviving redemption) | "Mortgagee entitled to bonus interest for first year" (reasonable additional consideration) |
Why: A clog defeats the very nature of a mortgage. If the right to redeem can be extinguished by contract, the mortgage is really a sale in disguise. Courts strike down clogs to protect borrowers (typically weaker parties) from lenders imposing unconscionable terms.
Illustrations
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Classic clog (void): Farmer mortgages land to moneylender. Deed says: "If the farmer does not repay within 3 years, the land shall become the absolute property of the moneylender." This is a clog on redemption attempting to extinguish the right by efflux of time. VOID. The farmer can redeem even after 10 years (subject to limitation). Apply Seth Ganga Dhar v. Shankar Lal (1958).
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Postponement (valid): Bank mortgage says: "Borrower may not redeem before completion of 5 years (lock-in period)." This is NOT a clog it merely postpones redemption without extinguishing it. The borrower can redeem after 5 years. Valid. But if the lock-in is unreasonable (say, 99 years), courts may treat it as effectively extinguishing redemption and strike it down.
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Collateral advantage surviving redemption (void): Lender mortgages a commercial property. Deed says: "Upon redemption, borrower shall give lender exclusive dealership rights for 20 years in the shop." This imposes a burden that survives AFTER redemption. Once property is redeemed, no mortgage condition should continue. This collateral advantage is a clog. Void.
Other Rights of Mortgagor
| Right | Provision | Content |
|---|---|---|
| Right to accession | S.63 | Improvements by mortgagor during mortgage belong to mortgagor |
| Right to surplus | S.63A | On sale, surplus above mortgage-money belongs to mortgagor |
| Right to inspection | S.60B | Inspect and obtain copies of documents in mortgagee's possession |
| Right to separate redemption | S.61 | If multiple properties mortgaged, can redeem one without others (unless indivisible) |
| Right to recover possession (usufructuary) | S.62 | Recover possession when debt is paid off (through rents or payment) |
Liabilities of Mortgagor
| Liability | Source | Content |
|---|---|---|
| Maintain the property | S.65A (implied) | Not commit waste; not diminish security value |
| Pay public charges (taxes) | Implied covenant | Property tax, cess, government dues |
| Not lease without consent (if deed restricts) | Contract | Lease without mortgagee's consent may be voidable |
| Personal liability (in simple/English) | S.58(a)/(d) | Personally bound to repay |
Recall Check
- What is the "once a mortgage, always a mortgage" rule and which section embodies it?
- What is a "clog on redemption" and why is it void?
- What are the ways in which the right of redemption can be lawfully extinguished?
Key Cases
Seth Ganga Dhar v. Shankar Lal (1958) Seth-Ganga-Dhar-v-Shankar-Lal-1958 Issue: Whether a clause in a mortgage deed providing that the property shall become the mortgagee's absolute property upon default is valid. Rule: Any provision in a mortgage deed that has the effect of extinguishing the mortgagor's right of redemption is a clog on redemption and void. "Once a mortgage, always a mortgage." Held: The clause making the property absolutely the mortgagee's upon default was a clog and void. The mortgagor retained the right to redeem.
Narandas Karsondas v. SA Kamtam (1977) Narandas-Karsondas-v-SA-Kamtam-1977 Issue: Whether the right of redemption is extinguished by mere lapse of time without a foreclosure decree or court sale. Rule: The right of redemption is extinguished only by: (a) act of parties (valid release), (b) decree of court (foreclosure/sale), or (c) bar of limitation (Article 61: 30 years for redemption). Mere passage of time without a positive act does not destroy it. Held: The mortgagor's right of redemption subsisted despite 40+ years of non-redemption because no foreclosure decree had been passed and limitation had not been pleaded or proved.
Distinctions
| Basis | Right of Redemption (S.60) | Equity of Redemption (English Law) |
|---|---|---|
| Source | Statute (S.60 TPA) | Court of Chancery (equitable doctrine) |
| Nature | Statutory right (cannot be contracted out) | Equitable interest in property |
| Extinguishment | Foreclosure decree / court sale / limitation | Foreclosure decree |
| Clog doctrine | Same (clogs void in both systems) | Same |
| Applicability | India | England |
| Basis | Mortgagor's Right to Redeem (S.60) | Mortgagee's Right to Foreclose (S.67) |
|---|---|---|
| Whose right | Mortgagor (borrower) | Mortgagee (lender) |
| Purpose | Get property back | Get ownership/sale of property |
| When available | After mortgage-money becomes due | After default |
| Effect | Mortgage extinguished; property free | Mortgage extinguished; property passes/sold |
| Priority | Redemption extinguishes foreclosure | Foreclosure extinguishes redemption |
| Court involvement | Suit for redemption | Suit for foreclosure/sale |
Flashcards
Q: What is the right of redemption under S.60? A: The absolute right of the mortgagor to require the mortgagee to reconvey/discharge the mortgage upon payment of mortgage-money, at any time after the money becomes due.
Q: What is the "once a mortgage, always a mortgage" rule? A: No contractual provision can extinguish the right of redemption. Any clause that does so is a "clog on redemption" and void.
Q: Name three ways the right of redemption can be lawfully extinguished. A: (1) Decree of foreclosure, (2) Court sale, (3) Bar of limitation (30 years under Art. 61).
Q: What is a "clog on redemption"? A: Any condition in a mortgage that has the effect of making redemption impossible or illusory (e.g., "if not redeemed in 5 years, property becomes mine"). Such conditions are void.
Q: Is a "lock-in period" (postponement of redemption) a clog? A: Not per se. A reasonable postponement (e.g., 5 years) is valid. But an unconscionably long postponement (99 years) may be struck down as effectively extinguishing the right.
Q: What is the mortgagor entitled to if the property is sold for more than the mortgage-money? A: The surplus. Under S.63A, any excess over the mortgage-money and costs belongs to the mortgagor.
Q: What is a "clog on equity of redemption"? A: Any condition in the mortgage that prevents, restricts, or fetters the mortgagor's right to redeem; such conditions are void.
Q: State the maxim relating to equity of redemption. A: "Once a mortgage, always a mortgage" (no transaction which is in substance a mortgage can be converted into a sale or absolute transfer).
Q: Can the mortgagor transfer/sell the equity of redemption? A: Yes. The mortgagor retains ownership (minus the mortgage interest) and can transfer the equity of redemption to a third party.
Exam Scenario
M mortgages his house to N for Rs. 10 lakhs in 2005. The mortgage deed contains a clause: "If M fails to repay within 10 years, the house shall become the absolute property of N without any further deed." In 2020, M tenders Rs. 10 lakhs plus interest to N and demands reconveyance. N refuses, relying on the clause. Advise M.
Approach: (1) The clause attempts to extinguish M's right of redemption upon efflux of 10 years. This is a classic CLOG on redemption. (2) Under S.60 and Seth Ganga Dhar (1958): "once a mortgage, always a mortgage." No clause can convert a mortgage into an absolute transfer upon default. (3) The clause is VOID. It is severed from the mortgage deed; the mortgage itself survives. (4) M's right of redemption subsists. M should file a suit for redemption. (5) Limitation: Under Art. 61, Limitation Act, the suit for redemption must be filed within 30 years from when the right to redeem accrues. Here, money became due in 2015 (10 years after 2005). M files in 2020 well within 30 years. (6) N must accept the money and reconvey. N's reliance on the void clause is untenable. Court will decree redemption.
Problem: In 2018, Harish mortgages his house to HDFC Bank (simple mortgage) for Rs.20 lakhs, repayable by 2023. The mortgage deed contains a clause: "If the mortgagor fails to repay by 2023, the house shall become the absolute property of the Bank." In 2024, Harish offers full repayment. The Bank refuses, claiming the house is now theirs under the clause. Advise Harish on
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(a) validity of the clause
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(b) his right to redeem
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(c) the Bank's available remedies.
Illustrations (from consolidated notes)
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Right to redeem: A mortgages house to B in 2020 for Rs.10 lakhs, repayable in 2025. In 2025, A offers Rs.10 lakhs + interest. B cannot refuse. Even if the mortgage deed says "non-redeemable" or "redeemable only after 50 years," A's right to redeem is protected under S.60.
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Clog on redemption (void): Mortgage deed states: "If mortgagor fails to repay by 2025, the property automatically becomes mortgagee's." This clause is void. Mortgagee must still approach court for foreclosure decree; automatic forfeiture is not allowed.