Gulab Chand Sharma vs Saraswati Devi

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1976 Supreme(SC) 503

SUPREME COURT OF INDIA
Y.V. CHANDRACHUD AND A.C. GUPTA, JJ.
Gulab Chand Sharma, Appellant
Versus
Saraswati Devi and another, Respondents.
Civil Appeals Nos. 308 and 309 of 1973,
D/- 14-12-1976.
Advocates appeared
M/s. S. N. Andley and D. D. Chawla, Sr. Advocates (M/s C. L. Chaudhuri and Umma Dutta, Advocates with them) for Appellant; Mr. V. M. Tarkunde, Sr. Advocate (Mr. D. D. Sharma and Miss M. Tarkunde, Advocates with him) for No. 1 and M/s R. N. Sachthey and Girish Chandra, Advocates (for No. 2), for Respondents.
Clog of redemption

Headnote:
Suit for redemption of mortgage - Transferred of property - Whether condition in Clause 9 is a clog on equity of redemption - Whether notice of re-entry was subsequently withdrawn or whether waiver of such notice was possible in law so as to keep lease alive - Secretary Administration, issued a notice of re-entry to alleging that he had violated some of conditions of perpetual lease - It is not necessary to refer to terms of lease breach of which was alleged nor to enter on a consideration of questions raised in course of hearing of appeals as to whether notice of re-entry was subsequently withdrawn or whether waiver of such notice was possible in law so as to keep lease alive - These are matters outside scope of present appeals which turn on question whether Clause 9 of mortgage deed is a clog on mortgagors equity of redemption - Sometime in February called upon appellant to receive payment of sum and recovery mortgaged property and appellant having refused instituted a suit for redemption of mortgage against appellant on May in court of Senior Subordinate Judge - On July appellant filed his written statement in suit - In written statement appellant took up position that with notice of re-entry served - Clause 9 of mortgage deed became operative with result that appellant became absolute owner of property including lease-hold rights of plot and mortgage did not subsist – Held, Court do not think it can be seriously disputed that view taken by High Court was right condition of mortgage which seeks to take away right of redemption even before period of four years within which mortgagor was entitled to pay off mortgage debt had run out is obviously a clog on right of redemption - Counsel for appellant contended before us that Clause 9 was not really a term of mortgage transaction but an independent condition that was to come into operation on service of notice of re-entry on mortgagor - It was argued that notice of re-entry which was served on mortgagor divested him of his interest in property and in terms of Clause 9 mortgagee became owner of it - Court find it difficult to appreciate contention - Clause 9 provides that on mortgagor receiving notice of re-entry before expiry of period of four years from date of mortgage transfer hereby made shall be absolute in favor of mortgagee who will get restoration of property but all expenses shall be borne by mortgagor - What was transferred to mortgage was lessees interest that mortgagor had in land - Clause 9 implies that on service of notice of re-entry transfer of this interest will become absolute and mortgagee will be owner of leasehold property even if notice is served during subsistence of mortgage - Clause 9 therefore appears clearly to be a term of mortgage transaction - This was how appellant also construed Clause 9 in written statement filed by him in suit for redemption and in plaint of his suit for injunction - What counsel for appellant sought to contend was that on service of notice of re-entry on mortgagor leasehold itself disappeared - If this was so it is not clear of what property then mortgagee claimed ownership land belonged to Government and no condition contained in mortgage instrument whether it was part of mortgage transaction or independent of it could confer ownership of land on mortgagee - Besides this is a point not raised in trial court or in High Court and not considered by either of them - Appeal is dismissed

Judgment

GUPTA, J.:- These two appeals by certificate arise out of two suits, one a suit for redemption of mortagage instituted by the predecessor-in-interest of the first respondent, and the other a suit for injunction filed by the appellant. The relevant facts are these: On Oct. 20, 1936, the Secretary of State for India-in-Council through the Chief Commissioner, Delhi, executed a deed leasing out in 243 perpetuity a Plot of 0.445 acre of land in New Delhi, which later came to be known as 13, Keeling Road, in favour of two persons, Niranjan Das Sason and Hans Raj Senon. The deed provides inter alia that on breach by the lessees or any person claiming through them of any of the covenants of the lease, the lessor or any person duly authorised by him shall have right of re-entry upon the premises and thereupon the lease shall cease and stand determined. The lessees who constructed a one storeyed building on the plot sold their leasehold rights in the land with the building thereon to one Bakshi Mohan Lal Sason on March 21, 1949. Bakshi Mohan Lal Sason transferred the property to the appellant, Gulab Chand Sharma, by way of mortagage by conditional sale for Rs. 70,000/- on May 31, 1956. The mortagagor was given four years time from the date of execution of the mortagage deed to repay the sum. Clause 9 of the terms and conditions of the mortagage set out in the deeds reads as follows:

"In case the said mortagagor received a notice of re-entry from the Land and Development Officer or any other such authority for the breach of convenants of the lease dated 20th October, 1936, before the expiry of the said period of 4 years, the transfer hereby made shall become absolute in terms stated above in favour of the mortagagee who will get the restoration of the property but all the expenses shall be borne by the mortagagor. This clause will have effect notwithstanding the fact that the period of four years shall not have expired."

The only question for determination in these appeals is whether the condition in Clause 9 is a clog on the equity of redemption.

2. On October 23, 1958, the Secretary (Local Self Government), Delhi Administration, issued a notice of re-entry to Bakshi Mohan Lal Sason alleging that he had violated some of the conditions of the perpetual lease. It is not necessary to refer to the terms of the lease breach of which was alleged, nor to enter on a consideration of the questions raised in the course of the hearing of the appeals as to whether the notice of re-entry was subsequently withdrawn or whether waiver of such notice was possible in law so as to keep the lease alive. These are matters outside the scope of the present appeals which turn on the question whether Clause 9 of the mortagage deed is a clog on the mortagagors equity of redemption.

3. Sometime in February, 1959, Bakshi Mohan Lal Sason called upon the appellant to receive payment of the sum Rs. 70,000/- and reconvey the mortagaged property, and the appellant having refused Sason instituted a suit for redemption of the mortagage against the appellant on May 24, 1960, in the court of the Senior Subordinate Judge, Delhi. On July 27, 1960, the appellant filed his written statement in the suit. In the written statement the appellant took up the position that with the notice of re-entry served on Sason, Clause 9 of the mortagage deed became operative with the result that the appellant became the "absolute owner of the property including the lease-hold rights of the plot" and the mortagage did not subsist. Two days after Sason had filed a suit for redemption, the appellant filed a suit for injunction restraining Sason from alienating or dealing in any manner with the leasehold rights in the land and the building thereon. The appellant claimed that in view of Clause 9 of the mortagage deed he had become the absolute owner of the property. The appellant thus asserted the same right as plaintiff in his suit that he had pleaded as his defence in the suit for redemption.

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