Sarjug Mahto v Devrup Devi (1962)

Read this case against the cases in which a ninety-nine year term was struck down. Here a ninety-nine year usufructuary mortgage was upheld and the redemption suit dismissed as premature. The reason is the whole doctrine in miniature: the Court found no oppressive term in the bond and no collateral advantage to the mortgagee beyond the security itself, and a long term standing alone does not make a clog.

The case is also a careful survey of the Indian authorities on long terms. It collects the decisions upholding terms of sixty, ninety and ninety-nine years and the decisions striking down terms that were accompanied by something more, and it explains exactly what that further element has been in each instance. For a student, that contrast is the usable part of the judgment.

Girdhari Mahto executed the usufructuary mortgage bond in suit on 28 August 1939 over a certain area of land, in favour of the defendants first party, for a sum of Rs 211 only. The bond was taken in the name of Ramfula Kuer, and the mortgagees were put in possession. The term of the bond was ninety-nine years, so that the due date for redemption fell in 1435 Fasli.

On 8 November 1949 the mortgagor sold the mortgaged land, with other lands, to the plaintiffs, on the allegation that the term of the mortgage was only nine years. The plaintiffs deposited the mortgage dues of Rs 211 under s. 83 to the credit of the mortgagees, who objected, and the suit for redemption followed.

The plaintiffs alleged that the period of ninety-nine years had been entered in the bond without the mortgagor's knowledge, in collusion with the scribe and witnesses, and that so long a period was a clog on the equity of redemption. The mortgagor supported them. The mortgagees asserted that the term was genuinely ninety-nine years, that the recitals had been read out and explained before execution, and — in the alternative — that the bond was really a sale deed, executed in that form because there was then no custom of executing a sale deed without the landlord's consent.

The Munsif found there had been no fraud or collusion, that the term was ninety-nine years, and that the document was a mortgage bond and not a sale deed. He nevertheless dismissed the suit: there being no oppressive or onerous term in the bond, the long period could not be a clog, and the deposit was premature.

The Additional Subordinate Judge on appeal agreed with every finding of fact, but allowed the appeal on a different ground: because the mortgagees had claimed to be vendees, the ninety-nine year term amounted to a clog. A decree for redemption was passed, and the mortgagees appealed to the High Court.

1. The amendment of s. 60. The Court traced the substitution of the word "due" for "payable" by the amending Act of 1929. Before the amendment, the right of redemption arose when the principal money became payable, and the courts had divided on whether redemption could be sought before the expiry of the period fixed. One view treated the period as fixed for the mortgagor's convenience; the other, taken in the majority of cases, held that where the deed specified a period the right to redeem accrued only on its expiry, save under a special contract to the contrary. The amendment was made to set that conflict at rest, and — the judgment adds — the legislature "did not intend to alter the law but only declared the law that existed".

2. Redemption is statutory. Because the section is not prefaced by words such as "in the absence of a contract to the contrary", the judgment reasons: "The right of redemption is therefore, a statutory right which cannot be fettered by any condition which impedes or prevents redemption and any such condition is void as a clog on the equity of redemption."

3. The doctrine applies in India. The Court relied on Mehrban Khan v Makhana, where the deed gave the mortgagees possession for nineteen years and, on payment at the end of that period, left the mortgagor only a limited interest and the mortgagees the major interest, with the property apparently passing to the mortgagees absolutely on failure to pay. That case came from a province where s. 60 did not apply, yet the Judicial Committee applied the doctrine, citing Lord Hobhouse's observation in Waghela Rajsanji that a direction to decide by equity and good conscience generally meant the rules of English law where applicable to Indian society. Their Lordships observed: "The terms of Section 60 of the Transfer of Property Act are an indication that the rules of English law relating to a mortgagor's right to redeem are applicable to Indian society and circumstances. There is no indication to the contrary."

4. The governing principle. From Noakes & Co Ltd v Rice, per Lord Davey: "the 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." In other words, a mortgagee may not stipulate for a collateral advantage unfair to the mortgagor, nor impose terms that fetter the right to redeem.

It was conceded at the bar that "a long term in a mortgage bond as the due date for redemption is not by itself a clog on the equity of redemption." The argument therefore had to rest on the mortgagees' conduct — their claim to be purchasers.

The High Court rejected it. Of the first appellate court's reasoning it said flatly: "There is no material on the record to justify these observations." The mortgagees had indeed pleaded that the bond was really a sale deed, but they had also pleaded, in the alternative, that the contents were read and explained and the ninety-nine year term inserted with consent, and that if the document were treated as a bharna the deposit was premature. Had that alternative plea been absent, there would have been force in saying that the mortgagees were not acting, and not willing to act, according to the contract. Their plea about rent, and their plea of limitation — which was not pressed at the hearing — were likewise parts of the same alternative case.

The conclusion: "In my opinion, neither the conduct of the mortgagee nor the contents of the bond in suit justifies an inference that the term of ninetynine years was inserted with the object of preventing the mortgagor or his successor-in-interest from exercising his right of redemption on or after the due date."

And on the terms of the bond itself: "In the present case, there is nothing to indicate that there was a stipulation for a collateral advantage to the mortgagee; nor is there any term in the bond in suit which would act as a fetter on the right of the mortgagor to redeem." The mere fact that redemption fell due after ninety-nine years "does not by itself indicate any collateral advantage to the mortgagees or any disadvantage to the mortgagor." Nor was it alleged that the usufruct would have satisfied the dues in nine years, or in any period much shorter than ninety-nine.

The Court distinguished the two decisions pressed for the mortgagor. In the Calcutta case the mortgagee had pressed the plea of limitation and had not taken the plea that the deed entitled him to fifty years' possession — the opposite of the present record. And in the Bombay case of a ninety-nine year term there had been a very small advance of Rs 176, a mortgagee who owned neighbouring property and thereby gained a collateral advantage, and a clause giving him full liberty to spend any amount he liked on building; none of those reasons applied here.

The appeal was allowed and the decree of the trial court restored. The suit for redemption, instituted long before the expiry of the agreed ninety-nine years, was premature and was dismissed. The mortgagees were given costs throughout.

The principle drawn from the authorities is stated in one line worth memorising: "a long period for redemption is not by itself a clog on the equity of redemption though in certain and other circumstances it may amount to the same."

1. A ninety-nine year term is not per se a clog. Where there is no fraud or undue influence, no collateral advantage to the mortgagee and no term fettering redemption, the mortgagor must wait for the due date. 2. Section 60 confers a statutory right not prefaced by any saving for a contract to the contrary, and any condition impeding or preventing redemption is void — but the condition must be found, not inferred from length alone. 3. A mortgagee's plea that the transaction was really a sale does not by itself let the mortgagor redeem early, where that plea is taken in the alternative to a plea affirming the mortgage and its term. 4. The vice in the cases going the other way has been a collateral advantage or an added fetter — an extension of the term on default, interest accumulating to the end, or an unlimited liberty to build.