Back
2020 Supreme(P&H) 1013
IN THE HIGH COURT OF PUNJAB AND HARYANA
Anil Kshetarpal, J.
Bimla Devi And Others - Appellant
Versus
Parvesh Kumar - Respondent
Regular Second Appeal No. 3569 of 2012
Decided On : 21-05-2020
C.B. Goel, Advocate, Sanjiv Gupta, Advocate, Shivendra Swaroop, Advocate
The main legal point established is that mortgage terms unfairly curtailing the right to redeem the property may be deemed unenforceable under the doctrine of clog on the equity of redemption and Section 23 of the Contract Act, 1872.
Headnote:
Mortgagee - Mortgage Redemption - Bengal Land (Redemption and Foreclosure) Regulation, 1806 - Section 58 of the Transfer of Property Act, 1882 - Section 23 of the Contract Act, 1872
Fact of the Case:
The plaintiff, a mortgagee, filed a suit to declare ownership of the mortgaged property and obtain possession. The defendants, mortgagors, contested, claiming repayment of the mortgage money and challenging the validity of the mortgage terms.
Finding of the Court:
The Court found that the mortgage terms unfairly curtailed the mortgagors' right to redeem the property within a period of two years, contrary to the principles of justice, equity, and good conscience. The Court held that the mortgagors were entitled to apply for redemption within the time prescribed by law.
Issues: The key issue was whether the mortgage terms amounted to a clog on the equity of redemption and whether the plaintiff was entitled to a decree of ownership and possession of the property.
Ratio Decidendi: The Court applied the doctrine of clog on the equity of redemption, considering the unreasonably short duration for redemption provided in the mortgage terms. It also invoked Section 23 of the Contract Act, 1872, to declare the mortgage terms as unfair and unenforceable.
Final Decision: The appeal was allowed, and the judgments and decrees passed by both the Courts below were set aside. The plaintiff was not granted a decree of ownership and possession, and the mortgagors were held entitled to apply for redemption within the prescribed time.
JUDGMENT
Anil Kshetarpal, J. - The defendants have filed the regular second appeal against the judgements passed by both the Courts below while decreeing the suit filed by the plaintiff declaring him to be the owner of the mortgaged suit property and hence, entitled to decree for possession thereof. It will be noted here that the plaintiff/respondent is a mortgagee, whereas the defendants/appellants are mortgagors. In other words, the mortgagee has been declared to be the owner of the mortgaged property and consequently, held entitled to possession thereof.
2. In the considered view of this Court, the following question of law arises for determination:
"Whether on expiry of period of one year from the date of service of notice of the application under Regulation 8 of the Bengal Land (Redemption and Foreclosure) Regulation, 1806 (hereinafter referred to as "the 1806 Regulation"), the mortgagor is left with no right, title or interest in the property mortgaged by conditional sale even if the Court, in subsequent proceedings, comes to a conclusion that the terms of the mortgage amounted to clog/impediment in the right to redeem the mortgaged property by the mortgagor?"
3. In a nutshell, the facts of the case are that a shop-cumresidential building, constructed on a plot measuring 92.5 square yards having two floors, was mortgaged by registered mortgage deed dated 17.07.2003 for a sum of Rs. 3,50,000/-. The defendant/mortgagors agreed to repay the mortgaged money along with interest at the rate of 2% per month upto 17.07.2005 and get the property redeemed. In case, the mortgagors failed to redeem by paying the mortgaged money with interest upto 16.07.2005 i.e. within two years, the mortgagee would become owner of the property mortgaged.
4. The plaintiff/respondent (mortgagee), while claiming that the amount of mortgage along with interest has not been paid within the stipulated time, filed a petition dated 16.09.2006 under Section 8 of the 1806 Regulation to foreclose the mortgage and declare that the conditional sale has become absolute. Notice of the petition was issued to the appellant/mortgagors. On 10.11.2006, the following order was passed:
| "Present: | Petitioner in person. |
| Shri Virender Kumar, counsel for the respondents. | |
| Service is complete. Now the petition is adjourned to 9.12.2006. | |
| Sd/-District Judge, Sonipat | |
| Thereafter, on the next date of hearing, the file was consigned to record room while passing the following order dated 09.12.2006:- | |
| "Present: | Shri A.K.Jain, Adv. With the petitioner. |
| Shri Yudhvir Singh Adv. has appeared for the respondents. He has been informed about the petition. Now this file be consigned to the records. | |
| Announced in open court Sd/-District Judge, Sonipat Dated: 9.12.2006" | |
|
| |
5. The plaintiff/respondent, after lapse of one year from the date of the order passed by the Court on 09.12.2006, filed the present suit as noticed above.
6. The defendant/appellants contested the suit and pleaded that the mortgaged money has been repaid along with interest at the rate of 2% per month. It was further pleaded that defendant No.1 is a widow. The said shop/house is the only property of the answering defendants have. It is their only mean to earn daily bread for the family. The wife of defendant No.2 is running the shop on the ground floor whereas the defendants are residing on the first floor thereof.
7. The parties led their evidence. The mortgage deed was produced on file as Ex.P1. It is stipulated in the mortgage deed that if within two years i.e. by 16.07.2005 total amount along with interest @ 2% per month is not paid by the mortgagors in order to redeem the mortgaged property, then the shop would be considered t
