A #mortgage is a #transfer of one’s interest in immovable #property as a #security for a #loan. A person lent money with or without security. The essential feature of a mortgage is that it is a conveyance of legal interest in a property, with a provision for #redemption i.e., upon repayment of loan, the conveyance shall become void. The provisions related to mortgage are contained in Sections 58 to 61 of the Transfer of Property Act, 1882 (#TPA).
The most important, fundamental and basic right possessed by the mortgagor is the right to redeem the mortgage. This right is not merely a contractual right, it is a legal/statutory right given to the mortgagor by Section 60, of TPA. This section allows the mortgagor to #redeem his property without any impediment.
Meaning of redemption: The property
mortgaged is only a security for the payment of the money lent; the mortgagor
is entitled to get back his property on payment of the principal and interest
after the expiry of the due date for the repayment of the mortgagee money. This
right of the mortgagor is called the right of redemption. It involves two
things:-
- Re-transfer
of the interest which had been originally transferred to the mortgagee, and - Delivery
of the possession.
Right
of redemption is a statutory right of a mortgagor. Hence, it may be
extinguished the way it has been provided under Section 60, TPA. Accordingly, a
mortgage can be extinguished either by act of the parties or by a decree of a
court.
Recently, a two Judge Bench of #SupremeCourt of India, passed a Judgment dated 17.04.2020, inCivil Appeal 4594 of 2010 titled as Shankar Sakharam Kenjale (Died) through LRs v Narayan Krishna Gade and another holding that the principle of right to redeem a mortgage can be extinguished only by a process known to law.
The brief facts of the case, pertains
to an inam/watan land which was
governed by the Bombay Hereditary Offices Act, 1874.The original watandar put one Ramchandra as a
permanent tenant of the land in 1947, who mortgaged the land for the period of
10 years, to the Appellants herein. During the said period, the Bombay Paragana
and Kulkarni Watans (Abolition) Act, 1950 was passed, which abolished all watans and resumed the land to the
Government (Abolition Act). The said
Act, empowered the holder of the watan
to seek re-grant of the land upon payment of the requisite occupancy price. The
original watandar did not apply for
re-grant on the ground that he was in possession of the land, and he got the
re-grant eventually. The Mortgagor filed a suit for redemption of mortgage and
recovery of possession of the land upon receipt of the mortgage money. In
result, the Trial Court dismissed the suit, holding that the Mortgagor’s right
to redemption was extinguished by the Abolition Act. Thereafter,first appeal
against the said order of the Trial Court was dismissed and in second appeal
before the High Court was allowed. The High Court hold that the Mortgagor’s
right to redemption was not lost.
Consequently, the instant appeal before the Supreme Court was filed against the judgment dated 08.06.2009 passed by the High Court of Judicature at Bombay in Second Appeal No. 439 of 1987 (Impugned Judgment). Vide the Impugned Judgment, the High Court set aside the findings of the Trial Court and the First Appellate Court and directed the Trial Court to draw a preliminary decree of redemption of mortgage in favour of the Respondents herein.
The Bench of
Supreme Court dismissed the said appeal, upholding the reasoning of the
High Court. Following the principle that the right to redemption can be lost
only by way of process of law, the Apex Court relied on the precedents covering
the same issue namely Jayasingh Dnyanu Mhoprekar and Another v.
Krishna Babaji Patil and Another, [(1985) 4 SCC 162] and Namdev
Shripati Nale v. Bapu Ganapati Jagtap and Another, (1997) 5 SCC 185.
The Court observed
that the right of redemption is invaluable in the sense that it cannot be
denied to the mortgagor even though he may by express contract abandon his
right to redeem the property. It also observed that equity insists upon the
principle that a mortgage is intended merely to afford security to the lender
and thus an agreement which prevents redemption is void. The right of
redemption cannot be taken away.
The Judgment emanates from the
legal principle applicable to all kind of mortgages that “Once a mortgage always a mortgage’’. A mortgagor’s right to redeem the property, and
the subject of the mortgage, has been recognized as fundamental to the
transaction of a mortgage. If the right to redeem the property is denied to the
mortgagor, the same would amount to appropriation of the title by the
mortgagee.This would result in the infringement of the right of the mortgagor
and would, therefore, tend to frustrate the transaction.
In view of the above the Court
held, that the denial of a right to redeem the property, or delaying the
exercise of this right to redeem for an extensive period, or creating other
contractual barriers against the exercise of the right to redeem, cannot be acceptable
in equity or in law. Accordingly, the instant appeal was dismissed.
Lakshmi Vishwakarma
Associate
The Indian Lawyer
Edited by
Sushila Ram Varma
Chief Consultant
The Indian Lawyer