GAUTAM JAYASURYAROLL NO: 339

GROUP IX

Doctrine of clog and fetters

What are clogs on redemption?

Objective: To do away with any undue advantage by creditor.

Any stipulation forming a part of the mortgage transaction and inconsistent with this position is a clog on redemption. Any condition which makes redemption difficult to enforce.

Doesn’t apply where they subsequently vary the terms upon which the mortgage may be redeemed.

E.g. An arrangement after the mortgage execution, whereby mortgage money was paid off.

Let’s reason out !

A mortgage is the security for the repayment of the debt, kept till the loan is paid back. Entitled to get property free from every kind of disadvantage and encumbrance.

Right to redeem continues till: (No sale until)1. Debt is paid back or2. Court order to sell o forfeit itContracts or part of contract that are repugnant to the

mortgagor ‘s contractual or equitable right to redeem cannot be enforced.

Principle held in Murarilal v. Devkaran AIR 1965 SC 225 – A clog offends the maxim “Once a mortgage always a mortgage”.

15 years limit for the right- SC held it to be an unreasonable restriction.

Conditions of a Clog to redemption

Period of redemptionClauses in mortgageObligation of partiesCircumstances under which mortgage was created.Economic and financial condition of the mortgagorRelationship between mortgagor and mortgagee.Economic and social conditions of a particular

countryCustomsContemporaneous documents

The effect of clog

Purohit K Govind Ji v. Vjraj Lal K Purohit AIR 1989 SC 36 -Long term as a period for redemption is not by itself a clog on equity. Clauses obliging

1. Payment of interest at the time of ultimate reduction imposing a lender on the mortgagor to redeem.

2. Permitting construction and reconstruction of the building and imposing to pay for the same.

3. Once redeemed, any interest created by the mortgagee must disappear.

Gulab Chand v. Saraswati Devi AIR 1977 Sc 242 - Clause 9 of the deed (deprived mortgagor of his rights even while the mortgage was subsisting) held to be a clog on redemption.

Banwarilal v. Puran Chand AIR 1985 P&H 189-One year time limit. A civil suit for a grant of declaration that condition to mortgage is a

clog cannot be barred by Article 61(a) of the Limitation Act, 1963.

Long term redemption

Generally, time is not a factor as long the deed protects the right of the mortgagee.

Fateh Mohd. V. Ram Dayal 2 Luck 588 – 200 years limit-Length found oppressive-redemption is granted.

Massa Singh v. Gopal Singh AIR 1983 P & H 437 – Proof: Mortgagee taking advantage of nay difficulty or embarrassment in creating mortgage.

Suit for foreclosure: A condition converting mortgage into sale is invalid. But under section 67 of the TOPA, 1882 grants a right to the mortgagee to obtain a decree which allows the property to be sold. Not to applicable on usufructuary mortgagee.

A clog on equity

Changing circumstances of inflation, increase in real estate prices, population explosion and consciousness: Factors which create a presumption.

Restraint on alienation: Mortgagor cannot alienated the property even for paying off the mortgage. Raising a loan on the security of the mortgaged property is inequitable and incapable of enforcement.

Collateral benefit: It is not valid if is (Kreglinger’s case)1. Unfair or unconscionable2. A clog to equity of redemption3. Repugnant to contractual right to redeem Bradley’s case: Sharer in the company-promising the broker, sale

of company’s tea as the mortgage in turn for a loan-mortgage was repaid-breach of agreement-House of lords –not binding as being a clog on the equity of redemption.

Restoration of property, stipulation in favour of mortgagee comes to an end on payment of debts, coll. benefit need not affect the mort. Property.

Points of clashes

Right to redeem and equity of redemptionDelay in payment is not a bar to redeem the

property.No legal objection to mortgagee’s demand for

the lease of the security. Mortgagee entitled to sell for the realisation

of the debt provided a decree is obtained.

Conclusion

Mortgage is an exception to the maxim: “Agreement of the parties override the law”

Any collateral advantage out side the contract is not allowed

“Once a mortgage , always a mortgage and nothing but a mortgage”

Co existence of right of foreclosure and right to redeem