"Once a mortgage, always a mortgage".

Introduction

The concept of mortgage has its foundation on the English common law principle once a mortgage always a mortgage. The idea behind this principle is that in a transaction of mortgage the mortgagor transfers one of all his interests in the immovable property to the mortgagee. The mortgagor even after transferring one of his interests retains some interests with him. These remaining interests entitle him to redeem his immovable property after the repayment of the debt for which property was kept as a security.

Transaction of mortgage

Section 58 of transfer of property act 1882 defines the mortgage in the following words_

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt or the performance of an engagement which may give rise to a pecuniary liability.

Dwelling upon the definition, the following essentials of a mortgage can be drawn_

Transfer of interest

Specific immovable property

Securing the payment of debt

Right of redemption

Section 60 of the act lays down the provision of the redemption of mortgaged property as the subject matter of the right of redemption can be described as that “right of the mortgagor or of any third person directed by him which entitles him to get back the possession of the mortgaged property after the payment of the mortgaged money”.

The right of redemption of the mortgaged property is one of several rights that are vested in the mortgagor. Right to redeem is the right to recover something by making certain payments. In case of mortgage, mortgagor’s right to redeem is called his right to recover or get back the property after he pays the loan. However, if the above stated rights have been extinguished by the act of the parties or by a decree of the court they cannot be exercised.

The right granted under this section is called the right of redemption and the suit for its enforcement is called the suit of redemption. The mortgagee has the right to get a reasonable notice before payment or tender of such money. The right of the mortgagor through which he is entitled to get the property returned to him contemporaneously with the discharge of his obligation is called the right of redemption.

 Position in the transfer of property act

Unlike England the act does not distinguish between the right to redeem and equity of redemption. On the following counts the mortgagor’s right to redeem can be justified as:

Transfer of an interest

 Residuary ownership

 Purpose is only securing the payment of debt, principles of equity, justice and conscience.

Equity of redemption

The right of redemption of the mortgagor u/s 60 is based on the equity of redemption under English law. The mortgagor’s right to redeem the mortgage by making payment even after the due date is knows as equity of redemption. The right of redemption continues although the mortgagor fails to pay the debt at the due date. Any provision inserted in the mortgage-deed which has the effect of preventing of impeding this right is void as a clog on redemption (Stanley v. wiled).

Clog on redemption

This view was substantiated by Lindley M.R. the supreme court considered the rule in (Muralilal v. Devkaran) where the clause incorporated in the mortgage-deed provided that the amount due under the mortgage should be paid within 15 years whereupon the property would be redeemed. Further it provided that in case payment was not made within that period mortgagee would become the owner of the property. It was held that, any stipulation contained in the mortgage-deed which unreasonably restrained the mortgagor’s equity of redemption can be ignored by the court subject to the general law of limitation prescribed in that behalf.

Long term of redemption

It is not necessarily true that a long term for redemption is always a clog on redemption. However if the length of the term is found to be oppressive redemption would be allowed before the expiry of that period. A period of 90 years for redemption has been held to be unreasonable and a clog on redemption (Fatch Mohd. V. Ram Dayal).

A period of 90 years for redemption has not been held to be a clog on redemption (Massa Singh v. Gopal Singh).

But a very long period for redemption like 99 years taken with other relevant factors such as inflation, high rise in price could create a presumption that it was a clog on the equity of redemption (Pomal Govindji v. Vraglal Purohit).

Once a mortgage, always a mortgage

This maxim implies that the mortgagor’s right of redemption would not be defeated by any agreement to the contrary, even if the mortgagor himself agreed to it. The maxim simply denied the validity of any stipulation in the mortgage deed which defeats the mortgagor’s right of redemption.

The underlying principle of this maxim was stated by Lord Henley in the case of (Vernon v. Bethel) that_

“This court as a conscience is very jealous of persons taking securities for a loan and converting such securities into purchases and therefore I take it to be an established rule, that a mortgagee can never provide at the time of making the loan for any event or condition on which the equity of redemption shall be discharged and the conveyance made absolute and there is great reason and justice in this rule for necessitous men or not will submit to any terms that the crafty may impose upon them.”

Conclusion

The equity of redemption has been well recognized in common law as well as in the Transfer of Property Act, 1882 which explicitly substantiate this principle. There may be various conditions whereby the stipulations in the mortgage-deed have turned to be the clog on the equity of redemption. The equity of redemption can be brought to an end either by the act of parties or by a decree of the court.