1987 Supreme(Kar) 340
Karnataka High Court
Laxmanrao Krishnaji Kulkarni - Appellant
Versus
Balakrishna Yellappa Ghodake - Respondent
Decided On : 11-04-87
The judgment established the principle that clauses in a mortgage deed that operate as a clog on the right of redemption are void and unenforceable, emphasizing the importance of protecting the right of redemption.
Headnote:
Mortgage - Right of Redemption - Section 60 of the Transfer of Property Act - [CLAUSE 9 OF MORTGAGE DEED] - [Section 60 of the Transfer of Property Act] - The court discussed the validity of clause 9 of the mortgage deed, which allowed the mortgagees to continue as tenants even after the redemption of the mortgage. The court held that such a clause operates as a clog on the right of redemption and is void and unenforceable. The judgment emphasized the importance of protecting the right of redemption and highlighted the unenforceability of conditions that restrict or nullify the right of redemption.
Fact of the Case:
The plaintiffs sought redemption of a mortgage, but the defendants, who were mortgagees, claimed the right to continue in possession as tenants even after redemption. The trial court decreed in favor of the plaintiffs, and the defendants appealed against the judgment.
Finding of the Court:
The court found that clause 9 of the mortgage deed, enabling the mortgagees to continue as tenants after redemption, operated as a clog on the right of redemption and was void and unenforceable.
Issues: The main issue was whether clause 9 of the mortgage deed, allowing the mortgagees to continue as tenants after redemption, was enforceable and whether it constituted a clog on the right of redemption.
Ratio Decidendi: The court emphasized the importance of protecting the right of redemption and held that conditions in a mortgage deed that nullify or restrict the right of redemption are unenforceable. It highlighted the unenforceability of clauses that enable mortgagees to continue in possession as tenants after redemption.
Final Decision: The appeal was dismissed, and the trial court's decree in favor of the plaintiffs was upheld.
( 1 ) THE appellants are defendants 1 to 3. Respondents 1 to 5 are the plaintiffs Respondent no. 6 is the 4th defendant. In this judgment, the parties will be referred to with reference to the position assigned to them in the trial Court. Defendants 1 to 3 have preferred this appeal against the judgment and decree dated 31-10-1986 passed by the additional Civil Judge, Hubli in O. S. No. 146 of 1980.
( 2 ) THE trial Court apart from other findings has also recorded a finding that clause 9 of the mortgage deed in so far it enables the mortgagees to continue in possession as tenants even after the redemption of the mortgage is a clog on the right of redemption and as such is not enforceable. The terms of the decree are as follows:"1) The suit of the plaintiff is decreed as under. 2) Preliminary decree be drawn as follows: (1) The plaintiffs are entitled to redeem the suit property mortgaged by them under Exp. l to the defendants 1 to 3 in respect of CTS Nos. 3560/336003601a and 3561 and 3562 (HDMC Nos. 32/1, 32/2,32/3, and 32/4) (2) Defendants 1 to 4 are directed to execute the registered reconveyance deed in favour of the plaintiffs and defendants 1 to 4 are directed to deliver the mortgage deed Ex. P. 1 after substituting it by a certified copy in Court. (3) Defendants 1 to 4 and 10 shall put plaintiffs in actual possession of the property which are lying in their possession, failing which the plaintiffs are entitled to actual possession of the properties by dispossessing defendants 1 to 4 and 10 from their possession. (4) The plaintiffs are entitled to nominal possession of the property which are in possession of defendants 5 to 9 and 11. (5) Plaintiffs are entitled to future mesne profits and a separate enquiry be held after the plaintiffs are put in posession of the property under 0. 20 R. 12 CPC; (6) The plaintiffs are entitled to recover costs from the defendants 1 to 4 only, (7) Defendants 1 to 4 are entitled to recover Rs. 2000/- towards the improvements made in the building on payment of court fee on this amount under Section 32 (2) of the Karnataka Court Fees and suits Valuation Act, on their W. S. "
( 3 ) DEFENDANTS 1 to 3 are the mortgagees. Plaintiffs 1 to 5 are the mortgagors. The suit properties in question were mortgaged to defendants 1 to 3 by the plaintiffs on 21st april, 1965 under a registered deed of possessory mortgage marked as Ex. P. 1 for a sum of Rs. 25,000/ -.
( 4 ) SRI V. Tarakaram, learned Counsel for defendants 1 to 3 has advanced one and the only contention. It is contended that as per clause 9 of the deed of mortgage even after redemption of mortgage the mortgagees are entitled to continue in possession as tenants and therefore the decree for possession passed by the trial Court pursuant to redemption of mortgage is illegal. The learned counsel submits that the trial Court is not justified in holding that clause 9 of the deed of mortgage amounts to clog on the right of redemption and it is unreasonable and unconscionable, therefore, it is void and unenforceable in law.
( 5 ) AFTER the expiry of the period of 15 years, the plaintiffs called upon the defendants 1 to 3 to receive the mortgage amount and redeem the mortgage and hand over possession of the mortgaged properties, defendants 1 to 3 did not comply with it and gave a reply dated 26-5-1980 as per Ex. P. 2 stating that as per the terms of clause 9 of the deed of mortgage they are entitled to be continued as tenants even after the redemption of mortgage and as such they are to be continued as tenants and they have no objection for redeeming the mortgage.
( 6 ) IN the light of the contentions urged, the point that arises for consideration in this appeal is as to whether clause 9 of the mortgage gives an unqualified right to the defendants 1 to 3 mortgagees to continue as tenants even after the redemption of mortgage. If so whether such a term is a clog on the right of redemption and as such is not enforceable?
( 7 ) CLAUSE 9 of the mo