Transfer of Property Act (TPA)
Right of Redemption under Section 60 and the Mortgagor's Rights: Clogs, Partial Redemption, and Sections 60A to 66
A mortgage is a security, and a security must be redeemable. That single idea, expressed in the maxim once a mortgage, always a mortgage, runs through section 60 and everything after it. The right of redemption is not a term of the contract that the parties may drop; it is an incident of the transaction itself, and any stipulation that prevents or fetters it is void as a clog. Sections 60A to 66 then work out what else the mortgagor may ask for, and what he must not do while the security subsists.
Figure 1: The right of redemption, the clogs that cannot hold it down, and when it arises and ends
1. Section 60: The Right of Redemption
Section 60, TPA — the substance At any time after the principal money has become due, the mortgagor has a right, on payment or tender at a proper time and place of the mortgage money, to require the mortgagee: (a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in his possession or power; (b) where the mortgagee is in possession, to deliver possession of the property to the mortgagor; and (c) at the cost of the mortgagor either to re-transfer the property to him, or to execute and register an acknowledgment that the right transferred to the mortgagee has been extinguished. Proviso — the right conferred by the section has not been extinguished by the act of the parties or by the decree of a court. |
2. Equity of Redemption, and 'Once a Mortgage, Always a Mortgage'
- The equity of redemption is an interest in property. It is what remains in the mortgagor after the security is carved out, and it may be sold, mortgaged again, inherited and attached.
- The right is an incident of the mortgage, not of the contract. It arises because the transaction is a security, and the parties cannot agree it away at the time of the mortgage.
- Hence the maxim. A transaction that begins as a mortgage remains one, and cannot by any stipulation in the mortgage itself be converted into a sale on the happening of a default.
- But a later, separate and genuine transaction is different. A mortgagor may afterwards sell his equity of redemption — including to the mortgagee — provided the sale is a distinct transaction for value and not part of the original bargain.
3. Clogs on the Equity of Redemption
The stipulation | Why it is a clog |
|---|---|
That on default the property shall become the mortgagee's absolutely | It converts the security into a sale, and defeats the very right the mortgage carries |
That redemption may not be made after a fixed date | It puts an end to a right that must subsist so long as the mortgage does |
A long term with an oppressive bar on early redemption | The length of the term is not by itself objectionable; a term coupled with conditions that make redemption illusory is |
A condition that the mortgagee shall have an option to purchase | A right of pre-emption or purchase reserved in the mortgage fetters the mortgagor's recovery of his own property |
A collateral advantage continuing after redemption | It is objectionable so far as it survives the redemption and burdens the property returned |
The test The court asks whether the stipulation, in substance, prevents or fetters the right to redeem. Freedom of contract is not the answer, because the doctrine exists precisely to protect a borrower who was in no position to bargain. But the doctrine does not invalidate every hard term: a term that is merely a collateral advantage, ending with the redemption, may stand. |
4. When the Right Arises, and When It Ends
Position | |
|---|---|
When it arises | After the principal money has become due. A mortgagor cannot redeem before the date fixed, because the mortgagee is entitled to his interest for the agreed term; and correspondingly the mortgagee cannot enforce before that date |
Extinguished by the act of the parties | By a genuine and separate transaction, such as a sale of the equity of redemption to the mortgagee for value; not by a term of the mortgage itself |
Extinguished by the decree of a court | By a final decree for foreclosure, or on a sale in execution of a decree for sale |
Extinguished by limitation | A suit for redemption is governed by the period prescribed by the Limitation Act, running from the time the right to redeem accrues |
Until when may he redeem after a decree for sale? | Until the sale is complete — and where the sale is made by the mortgagee out of court under section 69, until the conveyance is executed and registered |
5. Partial Redemption and Section 61
- The general rule is against partial redemption. A mortgage is one and indivisible; a mortgagor cannot redeem part of the property by paying part of the money, and a person interested in a share cannot compel the mortgagee to accept a proportionate payment.
- The exception in section 60. Where the mortgagee has acquired, in whole or in part, the share of a mortgagor, the integrity of the mortgage is broken, and the other mortgagors may redeem their own shares on payment of a proportionate part.
- Section 61 — separate or simultaneous redemption. A mortgagor who has executed two or more mortgages in favour of the same mortgagee is entitled, in the absence of a contract to the contrary, to redeem any one of them separately, or all of them together. This abolishes the English doctrine of consolidation, under which the mortgagee could insist on being paid off on all of them together.
6. The Mortgagor's Other Rights: Sections 60A to 66
Section | Right or liability | Substance |
|---|---|---|
60A | Right to require the mortgagee to assign | Instead of a re-transfer to himself, the mortgagor may require the mortgagee to assign the mortgage debt and transfer the property to a third person he directs — the provision that makes refinancing possible. The right does not apply to a mortgagee who is or has been in possession |
60B | Right to inspect and take copies | So long as his right of redemption subsists, the mortgagor may at reasonable times inspect and take copies or extracts of the documents of title in the mortgagee's custody, at his own cost |
62 | The usufructuary mortgagor's right to recover possession | Where the mortgage money is paid out of the rents and profits, or is otherwise paid, the mortgagor may recover possession of the property, together with the mortgage deed and the documents |
63 | Accession to mortgaged property | Where the mortgaged property receives an accession during the mortgage, the mortgagor is entitled to it on redemption; where the accession was acquired at the mortgagee's expense and is separable, the mortgagor must pay for it or the mortgagee may remove it |
63A | Improvements to mortgaged property | Improvements made by the mortgagee in possession belong to the mortgagor on redemption; he is not liable to pay for them unless they were made to preserve the property, or with his consent, or by the order of a public authority, or were necessary to prevent the security becoming insufficient |
64 | Renewal of a mortgaged lease | Where the mortgaged property is a lease and the mortgagee obtains a renewal, the mortgagor is entitled on redemption to the benefit of the new lease |
65 | Implied contracts by the mortgagor | The mortgagor is deemed to contract that the interest he professes to transfer subsists and that he has power to transfer it; to defend the title; to pay the public charges; where the property is a lease, that the rent is paid and the covenants performed; and where there is a prior mortgage, that he will pay the interest and discharge it when due |
65A | Power to lease | A mortgagor in lawful possession is entitled to make leases binding on the mortgagee, subject to the conditions the section imposes — leases at the best rent reasonably obtainable, reserving rent payable at the usual times, containing no premium, for terms limited by the section, and taking effect within six months |
66 | Waste by a mortgagor in possession | A mortgagor in possession must not commit any act destructive or permanently injurious to the property where the security is or would be rendered insufficient by that act |
7. Modes of Redemption
- By the act of the parties. The mortgagor pays or tenders the mortgage money and takes a re-conveyance or an acknowledgment; this is redemption out of court, and it is how most mortgages end.
- By a decree of the court. A suit for redemption results in a preliminary decree fixing the amount and the date for payment, and on payment a final decree for re-conveyance and delivery of possession.
- By deposit in court. The mortgagor may deposit the money in court to the account of the mortgagee, with the consequences the Act provides.
- And by payment out of the profits, in a usufructuary mortgage, after which the mortgagor recovers possession under section 62.
8. Landmark Cases
📖 Stanley v. Wilde, (1899) 2 Ch 474 Held: Lindley MR stated the principle: a mortgage is a conveyance of property as a security for the payment of a debt, and any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption, and is therefore void. The security is redeemable, and it follows that it cannot be made irredeemable. Ratio: The classical statement of the doctrine of clogs: a mortgage is always redeemable, and a provision preventing redemption is void. |
📖 Gangadhar v. Shankar Lal, AIR 1958 SC 770 Held: The Court applied the doctrine to a long-term mortgage, holding that the rule against clogs is a rule of justice, equity and good conscience. A term postponing redemption is not void merely because the term is long; what matters is whether the condition, in the circumstances in which it was imposed, operates as a fetter on the right to redeem. Ratio: Length alone does not make a clog; the question is whether the stipulation fetters the right in substance. |
📖 Pomal Kanji Govindji v. Vrajlal Karsandas Purohit, (1989) 1 SCC 458 Held: Long-term usufructuary mortgages with conditions postponing redemption were examined. The Court held that the doctrine of clogs is founded on the recognition that a borrower is not on equal terms with a lender, and that the court will look at all the circumstances — the length of the term, the relation of the parties, the adequacy of the consideration and the conduct of the mortgagee — in deciding whether the bargain is oppressive. Ratio: Whether a long postponement is a clog depends on the whole of the circumstances in which the bargain was struck. |
📖 Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247 Held: Where a mortgagee sells under a power of sale without the intervention of the court, the mortgagor's right of redemption is not extinguished by the contract for sale. The equity of redemption subsists until the sale is complete by a registered conveyance, and until then the mortgagor may redeem. Ratio: The right to redeem survives an agreement to sell by the mortgagee, and ends only when the conveyance is registered. |
9. Related Topics and Provisions
- Mortgage — Definition and Essentials, Section 58 — the transfer of an interest that leaves the equity of redemption
- Kinds of Mortgages under Section 58 — and how redemption works in each
- Sections 67 to 69, TPA — foreclosure, sale, and sale without the intervention of the court
- Sections 76 and 77, TPA — the liabilities of a mortgagee in possession
- Section 91, TPA — the persons entitled to redeem
- Section 98, TPA — anomalous mortgages, and rights fixed by contract and usage