Documente Academic
Documente Profesional
Documente Cultură
The Supreme Court observed that the doctrine of clog on the equity of redemption is a rule
of justice, equity and good conscience. It is a right of the mortgagor to get back the subject
of the mortgage and to hold and enjoy the same as he was entitled so to do before the
mortgage. If he is prevented from doing so or is prevented from redeeming the mortgage,
such prevention is bad in law. If he is so prevented, the equity of redemption is affected by
that, and has always been termed as a clog. Such a clog is inequitable. Under Section-60
of the TP Act, it is provided that, at any time after the principal money has become payable,
the mortgagor has a right to redeem.
Thus, once a mortgage is always a mortgage, unless it is foreclosed by order of the court.
Adversity of a person is not a boon for others. If a person in stringent financial conditions
had taken the loan and placed his properties as a security, the situation cannot be
exploited by the person who had advanced the loan.
Vernon v Bethell (1762) 28 ER 838 is an English property law case, where it was affirmed that
there could be no clog on the equity of redemption. In justifying this rule, Lord Henley LC made
the famous observation that,
“ ”
necessitous men are not, truly speaking, free men, but, to answer a present
exigency, will submit to any terms that the crafty may impose upon them.
The case stands for the principle that "once a mortgage, always a mortgage", meaning a
borrower cannot contract to give up his right to redeem title to his property once his debt is
discharged. It was a landmark decision in upholding some basic protection at common law for
debtors. It also had historic significance in the principle it laid out inspired the Second Bill of
Rights, proclaimed by the American President Franklin D. Roosevelt in his 1944 State of the
Union Address, to promote basic social and economic rights for all citizens.
Introduction
Conditions:
However, when mortgagor fails to redeem the property, the mortgagee does
not become the owner of the property, he has to file a suit for recovery of the
amount due. The limitation period for instituting a suit is 12 years. The final
decree in a suit for foreclosure on the failure of defendant to pay all amounts
due extinguishes the right of redemption which has to be specifically declared.
A mortgagee may hold two or more mortgages executed by the same
mortgagor. In respect of each of such mortgages, he may have a right to
obtain a decree of foreclosure. In case he sues to obtain such a decree on any
one of the mortgages, he will be bound to sue on all the mortgages in respect
of which the mortgage money has become due.
It follows that when a mortgagee makes a statement about his right to recover
the mortgage amount, such statement impliedly acknowledges the
corresponding right of redemption of the mortgagor. Further, a statement
admitting jural relationship, need not refer to or reiterate the rights and
obligations flowing there from. Where a party to the mortgage, by his
statement, admits the existence of the mortgage or his rights under the
mortgage, he admits all legal incidents of the mortgage including rights and
obligations of both parties that is mortgagee and mortgagor.
Simple mortgage: The mortgagee in such scenario does not get possession of
the mortgaged property and therefore cannot exercise right of foreclosure. The
remedy is either to proceed against the mortgagor personally or for sale of the
mortgaged property.
English mortgage: A mortgagor binds himself personally to pay the debt, and
there is an absolute transfer of mortgaged property in favour of mortgagee.
Therefore he does not have a right of foreclosure but a right to file a suit for
sale of the mortgaged property.
Mortgage by deposit of title deeds: As per Section 96, the mortgagee of title
deeds is on the same footing as a simple mortgagee, therefore remedy
available is sale of the mortgaged property.
Anomalous mortgage: The remedy depends on the terms contained in the
mortgage deed as anomalous mortgage is combination of two or more types
of mortgages.
Partial foreclosure:
Partial foreclosure is not a remedy under Section 67. The rule is that one of
the several mortgagees cannot foreclose or sell in respect of his share unless
several mortgagees have, with consent of the mortgagor, severed their
interests under the mortgage. The reason of this rule is to protect the
mortgagor from being harassed by a multiplicity of suits where the severance
of interest of the mortgagees has taken place without the consent of the
mortgagor. Accordingly all the co-mortgagees must join together and file one
suit in respect of the whole mortgage money.
Subrogation:
The person can enforce the security over the original debtor for
reimbursement. A person pays a mortgage to protect his/her own interest in
the property or because s/he is secondarily liable for the debt or for the
discharge of the lien. However, if the borrower used the proceeds of the loan
to discharge a prior encumbrance, it is not a sufficient reason to entitle the
lender to subrogation. There should be ample proof that the loan was made
for that purpose.
A co- mortgagor in possession, of excess share redeemed by him can enforce
his claim against non redeeming mortgagor by exercising rights if foreclosure
or sale as exercised by mortgagee under Section 67 of the Transfer of property
Act but that does not make him a mortgagee. The remedy of redemption,
foreclosure and sale available to such co-mortgagor are the rights as a
subrogee not as a mortgagee reincarnate but by way of rights akin to those
vesting in the mortgage.