K.A. Swami, J.
1. The appellants are defendants 1 to 3. Respondents 1 to 5 are theplaintiffs Respondent No. 6 is the 4th defendant. In this Judgment,the parties will be referred to with reference to the positionassigned to them in the trial Court. Defendants 1 to 3 have preferredthis appeal against the Judgment and decree dated 31-10-1986 passed bythe Additional Civil Judge. Hubli in O.S.No. 146 of 1980
2. The trial Court apart from other findings has also recorded afinding that Clause 9 of the mortgage deed in so far it enables themortgagees to continue in possession as tenants even after theredemption of the mortgage is a clog on the right of redemption and assuch is not enforceable. The terms of the decree are as follows:
'1) The suit of the plaintiff is decreed as under. 2)Preliminary decree be drawn as follows:
(1) The plaintiffs are entitled to redeem the suit propertymortgaged by them under Ex.P. 1 to the defendant 1 to 3 in respect ofCTS Nos.3560/3.3600.3601 and 3561 and
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3562 (HDMC Nos.32/2, 32/3 and 32/4).
(2) Defendants 1 to 4 are directed to execute the registeredreconveyance deed in favour of the plaintiffs and defendants 1 to 4are directed to deliver the mortgage deed Ex.P. 1 after substitutingit by a certified copy in Court.
(3) Defendants 1 to 4 and 10 shall put plaintiffs in actualpossession of the property which are lying in their possession,failing which the plaintiffs are entitled to actual possession of theproperties by dispossessing defendants 1 to 4 and 10 from theirpossession.
(4) The plaintiffs are entitled to nominal possession of theproperty which are in possession of defendants 5 to 9 and 11.
(5) Plaintiffs are entitled to future mesne profits and a separateenquiry be held after the plaintiffs are put in possession of theproperty under Order 20 Rule 12 CPC;
(6) The plaintiffs are entitled to recover costs from thedefendants 1 to 4 only;
(7) Defendants 1 to 4 are entitled to recover Rs. 2,000/- towardsthe improvements made in the building on payment of Court fee on thisamount under Section 32(2) of the Karnataka Court Fees and SuitsValuation Act, on their W.S.'
3. Defendants 1 to 3 are the mortgagees. Plaintiffs 1 to 5 are themortgagors. The suit properties in question were mortgaged todefendants 1 to 3 by the, plaintiffs on 21st April, 1965 under aregistered deed of possessory mortgage marked as Ex.P. 1 for a sum ofRs. 25,000/-.
4. Sri V. Tarakaram, learned Counsel for defendants 1 to 3 hasadvanced one and the only contention. It is contended that as perClause 9 of the deed of mortgage even after redemption of mortgage themortgagees are entitled to continue in possession as tenants andtherefore the decree for possession passed by the trial Court pursuantto redemption of mortgage is illegal. The learned Counsel submits thatthe trial Court is not justified in holding that Clause 9 of the deedof mortgage amounts to clog on the right of redemption and it isunreasonable and unconscionable, therefore, it is void andunenforceable in law.
5. After the expiry of the period of 15 years, the plaintiffscalled upon the defendants 1 to 3 to receive the mortgage amount andredeem the mortgage and hand over possession of the mortgagedproperties Defendants 1 to 3 did not comply with it and gave a replydated 26-5-1980 as per Ex.P. 2 stating that as per the terms of Clause9 of the deed of mortgage they are entitled to be continued as tenantseven after the redemption of mortgage and as such they are to becontinued as tenants and they have no objection for redeeming themortgage.
6. In the light of the contentions urged, the point that arises forconsideration in this appeal is as to whether Clause 9 of the mortgagegives an unqualified right to the defendants 1 to 3 mortgagees tocontinue as tenants even after the redemption of mortgage. If sowhether such a term is a clog on the right of redemption and as suchis not enforceable?
7. Clause 9 of the mortgage deed reads thus:
'On repayment of Rs. 25,000/- the mortgagees at thecost of mortgagors shall redeliver the mortgaged properties to themortgagors of the first part free from encumbrances; and themortgagees of the second part shall be allowed to continue ifnecessary as tenants on reasonable rent after the expiry of 15years.'
(Underlining by us)
8. Sri. Tarakaram, learned Counsel for defendants 1 to 3 theappellants contends that Clause 9 cannot at all be regarded as a clogon the right of redemption as it only enables the mortgagees tocontinue as tenants of the mortgaged properties on payment ofreasonable rent on the expiry of the period of 15 years stipulated inthe mortgaged deed; that leasing of the properties is one of theaccepted and normal modes of enjoying and exercising the right ofownership, there is nothing wrong with Clause 9, as such, defendants 1to 3 - the appellants are entitled to continue in possession of themortgaged properties tenants even after redemption of themortgage.
9.1. Clause 9 neither reserves the rent payable by defendants 1 to3 if they are to continue in possession of the mortgaged properties,as tenants even after redemption, nor specifies the period of lease.Thus, Clause 9 does not stipulate essential ingredients of a lease. Itis vague in this regard. However, it is not necessary to go into thisaspect of matter. We shall first examine Clause 9 on the basis that itgives an unqualified right to defendants 1 to 3 - mortgagees tocontinue in possession of the mortgaged properties as tenants evenafter redemption of the mortgage.
9.2. It has always been anxious to protect the right of redemption.It has always been the attempt not to recognise a condition in themortgage deed which has the effect of placing fetter on the right ofredemption. In this connection, it is very relevent to notice thewords 'in the absence of any contract to the contrary' which are foundin many of the Sections of the Transfer of Property Act (for short theT.P. Act) are not found in Section 60 of the T.P. Act. When thelegislature has enacted Section 60 of the T.P. Act in unqualifiedterms, the Courts have endeavoured and must endeavour to relieve themortgagors from a condition in the mortgage deed which fetters theirright of redemption by refusing to recognise and enforce it or bydeclaring it as void. Right of redemption is of the very nature, andessence of the mortgage. It is inherent in the mortgage. To put itaxiomatically 'Once a mortgage always a mortgage.' This maxim isfurther reinforced by Lord Davey in NOAKES v. RICE, 1902 AC 24 by adding to itthe words 'and nothing but a mortgage.' Of course, we are aware thatstill there are some decisions which have adopted the line ofreasoning that even though Section 60 of the T.P. Act is unqualifiedin its terms, but nothing prevents the parties to agree to thecontrary. Whether a particular term in the contract should be regardedas a clog on the right of redemption depends upon the terms of themortgage and the circumstances as they existed at the time of theexecution of the mortgage. No hard and fast rule can be laid down. Ifon taking into consideration the circumstances that existed at thetime of execution of the mortgage and all the terms of the mortgagedeed, the Court is able to come to the conclusion that a particularcovenant is undoubtedly hard and unconscionable and has the effect ofnullifying the right of redemption or restricts the exercise of rightof redemption in such manner as practically to deny it, such aconvenant can be regarded as a clog on the right of redemption and assuch it has to be ignored and the party has to be relieved from it. Asfar as the condition in a mortgage deed which enables the mortgagee tocontinue in possession of the mortgaged property even after redemptionas a permanent lessee is concerned it is a settled position in law inIndia that such a condition is invalid and unenforceable.
9.3. In GANGADHAR v. SHANKAR LAL AND ORS., : [1959]1SCR509 , the Supreme Courthas observed thus:
'The rule against clogs on the equity of redemption isthat, a mortgage shall always be redeemable and a mortgagor's right toredeem shall neither be taken away nor be limited by any contractbetween the parties.
xx xx xx xx xx xxThe right of redemption, therefore, cannot be taken away. TheCourts will ignore any contract the effect of which is to deprive themortgagors of his right of redemption of the mortgage.
xx xx xx xx xxThe rule against clogs on the equity of redemption no doubtinvolves that the Courts have the power to relieve a party from hisbargain. If he has agreed to forfeit wholly his right to redeem incertain circumstances, that agreement will be avoided. But the Courtshave gone beyond this. They have also relieved mortgagors frombargains whereby the right to redeem has not been taken away butrestricted.
The reason then justifying the Court's power to relieve a mortgagorfrom the effects of his bargain is its want of conscience. Putting itin more familiar language the Court's jurisdiction to relieve amortgagor from his bargain depends on whether it was obtained bytaking advantage of any difficulty or embarrassment that he might havebeen in when he borrowed the moneys on the mortgage. Was the mortgagoroppressed? Was he imposed upon? If he was, then he may be entitled torelief.'
10. On examining the terms of the mortgage deed, we find that allthe terms are in favour of the mortgagees. The mortgagors are made toeffect repairs immediately to the mortgaged properties to suit thebusiness requirements of the mortgagees and in case they fail toeffect repairs the mortgagees were at liberty to get it repaired andto recover the costs of such repairs from the mortgagors. Themortgagors were required to pay all the taxes of the mortgagedproperties. The mortgagors were also made to fix rolling shutter tothe shop, doors, stone slabs flooring and partition wall in the groundfloor within a fortnight in addition to the repairs, failing which themortgagees were given liberty to get it done and recover the costsfrom the mortgagors. The mortgagors were not entitled to claim anyrent to the mortgaged properties given into the possession of themortgagees and the mortgage money had to carry no interest. FromClause 7 of the mortgage deed, it is clear that the mortgagedproperties were subject of earlier mortgage. Thus, from the aforesaidterms of the mortgage deed it is clear that the mortgagees have triedto take advantage of the situation in which the mortgagors were placedat the time when they borrowed the money on the mortgage and imposedthe terms in the deed which were wholly to the benefit of themortgagees. This becomes further clear when we consider the extent ofthe properties mortgaged. The Schedule to the deed of mortgagedescribes the mortgaged properties as follows:
SCHEDULE OF PROPERTIES:
All that building with ground floor and two storeyed above,together with right of way, privy and easement of right appurtenant tothe properties mortgaged with possession, situated on Azad Road(Station Road) Hubli, District Dharwad in the jurisdiction of theSub-Registrar, Hubli Taluk, bearing C.T.S. No. 3560/3, 3600, 3601
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Ward I, and measuring 183 Square Yards and as all properties aretogether forming one whole and complete building, bounded by:
To East - Municipal Road; To West - The property belongingto one Srimati Divalibai;To North - Property of Balannavar Sullad; To South - Property ofBalannavar Sullad. Thus a vast extent of valuable properties situated in an importantcommercial city like Hubli were mortgaged for a sum of Rs. 25,000/-only for a period of 15 years in the year 1965. Clause 9 read in thebackground of the other terms of the mortgage and the extent of themortgaged properties in so far it enables the mortgagees to continueas tenants even after the redemption of the mortgage, isunconscionable and it is undoubtedly a clog on the right ofredemption. It comes in the way of the mortgagors to secure possessionof the mortgaged properties even after redemption. The mortgagedproperties are situated in Hubli City and are governed by theKarnataka Rent Control Act. Mortgagees become the tenants on theredemption of the mortgage, the mortgagors will not be able to securepossession of the mortgaged properties except in accordance with theprovisions of the Karnataka Rent Control Act. The mortgagors may ormay not be able to secure possession under the provisions of theKarnataka Rent Control Act as they would be required to make out acase for possession as per the provisions of the said Act. Thus,Clause 9, if read as enabling the mortgagees to continue in possessionof the mortgaged properties as tenants even after the redemption ofthe mortgage it is undoubtedly a clog on the right of redemptionbecause it nullifies the right of redemption, inasmuch as, it deprivesthe mortgagors of their right to redeem the mortgage and securepossession of the mortgaged properties, and thereby it renders theright of redemption illusory and enables the mortgagees to remain inpossession of the mortgaged properties beyond the period of, andafter, the redemption of the mortgage.
11. In GOVIND RAM AND ANR. v. RAJPHUL SINGH AND ORS., ; whileconsidering the similar terms in the mortgage deed, it has been heldthus:
'.......A long term provided in the mortgage deed, forredemption may not necessarily be a clog on equity of redemption but acollateral advantage, which goes beyond the period of redemption, is aclog and such a condition is invalid. A condition that afterredemption the mortgagee should continue in possession as a permanenttenant has been held to be invalid in India. After coming into forceof legislation providing security of tenancies in urban as well asrural areas, the agreement to retain property as tenants by themortgagees after redemption is equally cumbersome and onerous. In caseof commercial premises, the rent legislation in the State of Haryanaprovides that it cannot be got vacated even for personal requirements.The chances of vacation of such premises become very bleak and thecondition in mortgage deed to retain possession as a tenant afterredemption is harsh and burdensome and amounts to a clog on equity ofredemption. Such a clause cannot be enforced after the property hasbeen redeemed. In my view, the decision of the learned AdditionalDistrict Judge is correct on this issue and I affirm thesame.'
We are in agreement with the aforesaid view expressed in GovindRam's case, . Accordingly, the contentions urged on behalf ofdefendants 1 to 3 (appellants) are liable to be rejected and the sameare rejected. Accordingly, the point raised for determination isanswered as follows:
Even if it is regarded that Clause 9 enables the mortgagees(defendants 1 to 3) to remain in possession of the mortgagedproperties (suit properties) as tenants even-after redemption of themortgage, it operates as a clog on the right of redemption and as suchit is void and unenforceable.
12. No other contention is urged.
13. In the view we take it is not necessary to consider whetherClause 9 gives an unqualified right to the mortgagees (defendants 1 to3) to continue in possession of the mortgaged properties as tenantseven after redemption of the mortgage.
14. For the reasons stated above, we do not see any ground tointerfere with the decree passed by the trial Court. Accordingly, theappeal fails and the same is dismissed.