Rajai Singh v Randhir Singh (1925)

This is the case that supplies the second ingredient in the modern law of clogs: not the length of the term alone, but a long term coupled with interest that is not paid as it accrues but piles up until the distant date of redemption. That pairing is the reason the mortgagor could never in practice redeem, and it is the reason the later Supreme Court authority treats such a combination as presumptively a clog.

It is also valuable because of how carefully the Court refused to generalise. It declined to lay down any definition of what amounts to a clog, insisted that each case be looked at individually, and then set out in plain arithmetic why these documents were inequitable. That is exactly the method an examiner rewards.

On 20 April 1897 Randhir Singh, then an occupancy tenant of a holding, mortgaged it usufructuarily by two documents of the same date.

- Under the first he received Rs 200, and the mortgage was not to be redeemable for ninety-five years. - Under the second he received Rs 500, and the mortgage was not to be redeemable for ninety-six years.

To the second was added a stipulation that, because the usufructuary return was not sufficient to yield the proper amount of interest on the outstanding money, interest at four annas per cent per mensem was to be paid, together with the principal, at the expiration of the term. A similar provision appeared in the other deed.

The accumulated interest figures placed before the Court were not disputed: Rs 1,940 and Rs 485. So the position created on 20 April 1897 was that the mortgagor bound himself not to seek redemption for ninety-five and ninety-six years respectively, and to be ready at that distant date to find those interest sums in addition to the Rs 500 and Rs 200 principal.

There was evidence that Rs 700 was the full value of the property.

Randhir Singh sued for redemption. The mortgagees objected that the transaction was really a sale, and that because an occupancy tenant was forbidden by law to sell his holding the parties had deliberately cloaked the sale in mortgage form. Randhir Singh's case was that the documents were mortgages, that he could redeem disregarding the ninety-five and ninety-six year provisions, and — as appeared from his tender of Rs 200 and Rs 500 before suit — that he could disregard the accumulation of interest as well.

The Court found the cases cited to it falling broadly under two heads.

First, "there is a consensus of opinion amongst all the Courts in India that, if a period is fixed prior to the expiry of which redemption cannot be granted and that Stipulation is assented to redemption cannot be granted before that period has in fact expired" — and the cases so decided had involved very long periods indeed, in one instance 150 years.

Second, the line represented by Sarbdawan Singh v Bijai Singh, where the term was forty years, coupled with an extraordinary provision that unless the money were tendered on a particular day the mortgage would be irredeemable for a further forty years, and with an unjust and illegal stipulation that the mortgage should not be redeemed with borrowed money. From the Allahabad reports the Court took the proposition that "A Court of equity will not permit any device or contrivance designed or calculated to prevent or impede redemption, although it may be impossible to lay down any general rule as to what should not be regarded as an improper res-straint or fetter on the right of redemption."

The Court also observed candidly that if the case before it "were decided by English Law the plaintiff would have succeeded on the plain statement of the facts", citing the English treatment of such transactions.

The question was framed as one of practical frustration of redemption. The Court had to look at the whole circumstances and say "whether this agreement was drafted with the intention that redemption of this property should be practically frustrated, that is to say, made so difficult and so hedged about that there was no human likelihood of its ever being redeemed".

And it declined, expressly, to do more: "we do not propose to attempt, what no Court has hitherto ever attempted, to define what circumstances generally will be deemed to be a clog or fetter on the equity of redemption. Each of these cases has to be looked at individually."

1. The length of the term. The first striking matter was "the enormously long period within which Randhir Singh was unable to tender the money and regain possession of his property." It was a period "which was certainly to extend throughout the life of Randhir Singh and probably throughout the life of his son." A right that cannot be exercised within the lifetime of the man who holds it, or of his son, is a right in name only.

2. The design of the interest clause. Here the Court inferred purpose from drafting. It did not believe the stipulation was made because the mortgagee wanted interest in his hands — had that been the wish, "he would have stipulated for annual payment of interest so calculated as each year to reimburse him for his outlay". The Court believed instead that the clause was drafted "so that if anybody 95 or 96 years later came forward to redeem the property he would have met with a liability to produce a sum greater than the value of this property or any value it would ever be likely to reach."

The arithmetic proved it. If Rs 700 was the property's full value, anyone coming forward in 1922 would have to produce more than three times the 1897 value of the property.

Both features were fetters, and the transaction could not be upheld in its literal terms. The Court held that there were two fetters — "the length of time during which the redemption could be had, and the singular stipulation with regard to the payment of interest and the deferred date of such payment" — which made it "inequitable that this transaction should be upheld in its literal terms." It considered it "equitable and right that this suit should be decreed", so that Randhir Singh should have the opportunity of redeeming, agreeing in this with the Munsif, the lower appellate Court and the single Judge of the High Court. The appeal was dismissed with costs on the higher scale.

But redemption was not free of the bargain. On being asked to state the proper terms, the Court held that redemption should be had only on tendering the two sums of Rs 200 and Rs 500 with interest at the agreed rates — four annas per cent per mensem in one case and Rs 3 per cent per annum in the other — calculated down to the date of tender. The mortgagor's tender of bare principal was therefore not enough.

1. A term postponing redemption for ninety-five and ninety-six years, extending beyond the mortgagor's life and probably beyond his son's, taken together with a stipulation deferring all interest to the end of that term, is a clog on the equity of redemption. 2. The test is whether, looking at the whole circumstances, the agreement was so drafted that redemption was practically frustrated — made so difficult and hedged about that there was no human likelihood of its ever being exercised. 3. No general definition of a clog can be attempted; each case is to be looked at individually. 4. Relief from a clog does not relieve the mortgagor of the debt. Redemption is decreed on payment of principal with interest at the agreed rate to the date of tender.