Redemption of Mortgage and Clog on redemption
Mortgage of Immovable Property in India
Meaning
A mortgage is the transfer of an interest in specific immovable property for securing repayment of money advanced, an existing or future debt, or performance of an obligation. The ownership remains with the mortgagor, but an interest (right in rem) is transferred to the mortgagee until repayment.
Essential Elements
Transfer of Interest: Only an interest, not ownership, is transferred.
Immovable Property: Includes land, buildings, and rights attached to land.
Purpose: To secure repayment of a loan or fulfillment of an obligation.
Parties:
Mortgagor → Owner who creates the mortgage.
Mortgagee → Person in whose favour mortgage is created.
Registration: Except for certain equitable mortgages, most mortgages must be registered.
Kinds of Mortgages
Simple Mortgage
Mortgagor personally binds himself to repay.
In case of default, mortgagee can sell the property through court.
Case Law: Narandas Karsondas v. S.A. Kamtam (1977) – Mortgagee cannot sell property privately unless expressly empowered by law or deed.
Mortgage by Conditional Sale
Ostensible sale subject to condition of retransfer upon repayment.
If default occurs, sale becomes absolute.
Case Law: Pandit Chunchun Jha v. Sheikh Ebadat Ali (1955) – The intention of parties determines whether it is a mortgage by conditional sale or an outright sale.
Usufructuary Mortgage
Possession is delivered to mortgagee.
Mortgagee retains rents and profits in lieu of interest or principal.
Case Law: K.K. Dewan v. District Judge, Chandigarh – Mortgagee can remain in possession until debt is fully satisfied.
English Mortgage
Mortgagor transfers property absolutely, with a covenant to repay on a certain date.
Property reconveyed upon repayment.
Case Law: Syndicate Bank v. Estate Officer – English mortgagee has power of sale without court’s intervention (if expressly provided).
Equitable Mortgage (Mortgage by Deposit of Title Deeds)
Created by depositing title deeds in notified towns with intent to secure debt.
Case Law: K.J. Nathan v. S.V. Maruthi Rao (1965) – Mere deposit of title deeds with intent to create security is sufficient; no writing required.
Anomalous Mortgage
Any mortgage not falling under above categories, often combinations.
Rights of Mortgagor
Right of Redemption (Article 60) – Mortgagor has right to redeem property by repaying dues.
Case Law: Kreglinger v. New Patagonia Meat Co. – Right of redemption is the essence of mortgage; cannot be taken away.
Right to possession (unless parted with in usufructuary mortgage).
Right to surplus proceeds after sale.
Rights of Mortgagee
Right to sell property (depending on type of mortgage).
Right to foreclosure (in mortgage by conditional sale).
Right to possession (usufructuary mortgage).
Right to sue for mortgage money.
Conclusion
Mortgage in India is a transfer of an interest, not ownership, over immovable property.
Judicial interpretations have shaped principles such as distinction between sale and mortgage, essence of right of redemption, and validity of equitable mortgages.
Important cases like Narandas Karsondas, Chunchun Jha, and K.J. Nathan ensure clarity on rights and obligations.
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