DOCTRINE OF CLOG ON

EQUITY OF REDEMPTION

Submitted by

R.GOWTHAM

Reg. No. BA0150017

Under the Guidance of

Mr. S.MOHAMMED AZAAD

Assistant Professor

TAMIL NADU NATIONAL LAW SCHOOL

(A State University established by Act No. 9 of 2012)
Tiruchirappalli
Tamil Nadu 620 009
SEPTEMBER 2017
 DOCTRINE OF CLOG ON EQUITY OF REDEMPTION

OBJECTIVES

This research paper would be on the study of The Doctrine of Clog on Equity of
Redemption.
Therein the study would include the history, evolution and would also analyse the
provision and judicial precedents.
To conclude, the researcher would attempt to sketch the significance of the right of
equality of redemption mortgage transaction.

RESEARCH QUESTIONS:

What are all the conditions held by the Court as a condition or covenant acts as a clog
on redemption?
What are all the situations where this doctrine can be applied and what are all the
situations when it cant?
Has clog be determined absolutely and explained in any acts or approved legally? Is
yes, where?
Is right of redemption is applicable of the present situation in the society?

RESEARCH METHODOLOGY

The methodology used in this particular article were basically secondary data which were
collected from the internet, books, articles and blogs. These data collected was used to do a
study on the doctrine of clog on equity of redemption. This research paper would basically deal
with the doctrinal aspects of the issues mentioned above.

TENTATIVE CHAPTERISATION:

CHAPTER I:

This chapter will talk about the introduction and going to explain about the clog and the equity
of redemption briefly.

CHAPTER II:

To understand about the clog, it is important to know about the right of redemption. So this
chapter will try to explain about the right of redemption

CHAPTER III:

This chapter will try to explain about the history of the term called clog and when the term
called doctrine of clog did was coined and will try to explain it in brief and also talks about the
major cases which plays a major role in explaining this term.

CHAPTER IV:

This chapter will explain about the doctrine of clog on the equity of redemption and also gives
certain examples and also, mainly about the few situations where it was held by the Court that
the condition or covenant acts as a clog on redemption like covenants restricting the right of
redeem or imposing time limits or hampering the rights to redeem.

CHAPTER V:

This chapter ends it all by giving an explained conclusion about the doctrine and also my views
on this doctrine and certain suggestions.
DOCTRINE OF CLOG ON EQUITY OF REDEMPTION
INDEX

TABLE OF CONTENTS

S.NO CHAPTER

1 INTRODUCTION

2 ORIGINS OR DEFINITIONS OF CERTAIN TERMS

3 THE RIGHT TO REDEMPTION

4 SECTION 60 OF TOPA

5 THE DOCTRINE CLOG ON EQUITY OF REDEMPTION

6 CAUSES AND ILLUSTRATIONS FOR CLOG ON REDEMPTION

7 LONG TERM MORTGAGES

8 CONDITION OF SALE OF PROPERTY

9 SUBSEQUENT AGREEMENT TO POSTPONE REDEMPTION

10 COLLATERAL BENEFIT TO MORTGAGOR

11 CONCLUSION

12 BIBLIOGRAPHY
INTRODUCTION:

Before seeing what the clog is, we can see what is meant by redemption in a mortgage. In a
mortgage, the redemption is the repossessing of the property after paying the debts to the
mortagee. But there are certain limitations for this right of mortgagor by the fact that it come
to existence only when the mortagee decides his exercise his right of foreclosure of the
property. This way, the contact comes to an end only when the mortgage came to an end only
when the debtor exercise his right to redeem back his property after paying the debt or paying
off the loan.

An obligation that continues during the term of the mortgage and beyond, which renders the
property less available in the hands of its owner apart from the realization of the mortgage debt,
it is a clog on the equity of redemption1.

This may happen in rural areas where the people thinking the maxim once a mortgage always
a mortgage as a real issue, but it only means that there can no covenant that modifies the
character of the mortgage agreed between the parties that would stop the mortgagor to redeem
his property back on payment of the principal and respective interests. In Vaanam Movie, the
mortgagee tries to fool the mortgagor by saying that debtor hasnt pay off his debt, which can
be considered as an appropriate example for clog on equity of redemption.

Hence, to determine whether something would or would not qualify as a clog on the right of
redemption is something that cannot be determined absolutely. It has to be settled through a
careful perusal of the mortgage deed, the circumstances surrounding the parties entering into a
mortgage, the amount advanced and nature of the transaction.

ORIGINS OR DEFINITIONS OF CERTAIN TERMS2:

EQUITY: Equity mean fairness. Back in the middle Ages, in England, there were certain grey
areas where it was observed that the Common Law was inadequate to deliver justice to the
common person there in the region. This led to a directive by the King to appoint Chancellors
in special courts who would go beyond the realm of the law to dole out justice and fairness to

1
S.N. Shukla, The Transfer of Property Act 219 (23rd ed., 2001).
2
A K R Kiralfy, Historical Introduction to English Law, (Delhi: Universal Law Publications, 4th edition, 1999)
the parties. Such courts were called Courts of Equity3.

Thus, in Common Law, equity is used as a means to sharpen the meticulousness of the law in
order to achieve justice.

REDEMPTION: As mentioned in the introduction part, redemption is nothing but the

repossessing of the property after paying the debts to the mortagee4.

CLOG: An obligation that continues during the term of the mortgage and beyond, which
renders the property less available in the hands of its owner apart from the realization of the
mortgage debt, it is a clog on the equity of redemption.

THE RIGHT TO REDEMPTION5:

In a Mortgage, the mortgagor is the proprietor who had separated with a few privileges of
possession and the mortagee is the person who have the property till the installment of the
obligation and the privilege of redemption is correct which he practices by goodness of his
residuary proprietorship to continue what he has separated with.

Such a privilege of the mortgagor is known as the value of redemption. The mortgagor, who
has separated with a few privileges of proprietorship has a privilege of possession and has a
privilege to get back the mortgage deed or mortgaged property, in exercise of his entitlement
to proprietorship. The privilege of redemption perceived under the TP Act is in this manner a
statutory and legitimate right which can't be stifled by any assention set aside a few minutes of
mortgage as a major aspect of the mortgage thought. This privilege is known as the privilege
to recover, and a suit to uphold it, is known as the suit for redemption. Along these lines, the
extent of a suit for redemption is fundamentally to implement the privilege to make an
installment of the mortgage-cash. A claim to recover a mortgage really does not join to the
land, in spite of the fact that the announcement go in the suit may eventually influence
ownership which additionally an enthusiasm for arrive.

3
F.H. Lawson & Bernard Rudden, The Law of Property 15 (Peter Birks ed., 3 rded., 2002).
4
Sir Hari Singh Gour, The Transfer of Property Act, 1882 1248 (10 th ed., 2002).
5
Bruce Wayman , The Clog on the Equity of Redemption , Vol.21 HARVARD LAW REVIEW, 459-475 (1908).
The privilege to redemption is a statutory right which can't be shackled by any condition which
hinders or counteracts redemption. Usually, and without an uncommon condition qualifying
the mortgagor for reclaim amid the term for which the mortgage is made, the privilege of
redemption can just emerge on the lapse of the particular time frame.

This privilege of the mortgagor is known as the impartial ideal to reclaim. The privilege of
redemption to the mortgagor is given under Section 60 of the Transfer of Property Act, 1882.
This privilege ends up noticeably alive simply after the primary cash winds up noticeably paid.

This privilege gave by the Transfer of Property Act is a statutory right which must be done
away by consistence to the methodology built up by law. It would from now on take after that
any impediment to this privilege would be announced as void as a stop up on the value of
redemption.

The privilege to reclaim the mortgage is an extremely profitable appropriate to controlled by

the mortgagor. Such a privilege to recover the mortgage can be practiced before it is
dispossessed, or the bequest is sold, subsequently where in exercise of its entitlement to offer
the property of defaulting indebted person, money related companies (mortgagee),
acknowledged the offer of planned buyer yet no deal deed was executed between the two, the
privilege of the mortgagor to reclaim the property isn't lost. The fair right of redemption is
subject to the mortgagor giving the mortgagee sensible notice of his expectation to reclaim,
and on his family playing out his commitments under the mortgage.

The privilege to recover takes after the enthusiasm of the mortgagor, and can be excercised by
him and furthermore by those taking the entire of his advantage, regardless of whether by task
entomb vivos, or by devolution on death.
SECTION 60 OF TOPA6:

According to S. 607, at any time after the principal money becomes due, the mortgagor has a right of
redemption from the mortgagee, the documents of the property which the mortgagee has as well the
property if the mortgagee is the possessor of such property, as in the case of Sarvjni Prabhu v. Papi
kutty Adiesian 8.

Right of mortgagor to redeem - At any time after the principal money has become due,
the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-
money, to require the mortgagee

(a) to deliver to the mortgagor the mortgage-deed and all documents relating to the
mortgaged property which are in the possession or power of the mortgagee,

(b) where the mortgagee is in possession of the mortgaged property, to deliver possession
thereof to the mortgagor, and

(c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to
such third person as he may direct, or to execute and (where the mortgage has been effected
by a registered instrument) to have registered an acknowledgement in writing that any right
in derogation of his interest transferred to the mortgagee has been extinguished: Provided
that the right conferred by this section has not been extinguished by act of the parties or by
decree of a Court. The right conferred by this section is called a right to redeem and a suit
to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render
invalid any provision to the effect that, if the time fixed for payment of the principal money
has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to
reasonable notice before payment or tender of such money. Redemption of portion of
mortgaged property.Nothing in this section shall entitle a person interested in a share
only of the mortgaged property to redeem his own share only, on payment of a proportionate
part of the amount remaining due on the mortgage, except only where a mortgagee, or, if
there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or
in part, the share of a mortgagor.

According to sec. 60(3) of TOPA, the mortgaged property can be either re-transfer to him or

6
Transfer of Property Act, 1882
7
Transfer of property Act, 1882
8
AIR 2007 Ker 44
any third person, as he directs. It also mentioned that the the mortgagee have to register an
acknowledgement in writing that any right in derogation of his interest transferred to the
mortgagee has been extinguished. This right cannot be extinguished except by the act of parties or
by a decree of a court.

It is well stated that the right of the mortgagor to deal with the mortgaged property as well as the
limitation to which it is subject depends upon the nature of this ownership which is not absolute, but
qualified by reason of the right of the mortgagee to recover his money out of the proceedings.

THE DOCTRINE CLOG ON EQUITY OF REDEMPTION:

A mortgage means transferring the interest in an immovable property to a third party as security
for the loan that the party has advanced. A mortgage implies moving the enthusiasm for a
steady property to an outsider as security for the credit that the gathering has progressed. The
security is redeemable by the transferor when he pays back the credit or releases his
commitment. In the event that any demonstration is done, or any arrangement is there which
discourages the privilege of redemption on installment of the obligation or execution of the
commitment, at that point it goes about as a chain or obstruct on the value of redemption and
will be held as void. This is plainly clarified on account of Stanley v Wilde.

It is settled law in India by statute that a mortgage can't be made out and out irredeemable, not
can the privilege of redemption be made fanciful. The test propose by Pollock has, be that as it
may, been for the most part connected in deciding if conditions which specifically or in a
roundabout way shackle or breaking point the privilege to reclaim, damage the convention.

Seth Ganga Dhar v. Shankar Lal :

For this situation, J Sarkar clarified the premise of the privilege of the court to intercede
accordingly:

'The reason at that point defending the court's energy to diminish a mortgagor from the impact
of his deal is its need of inner voice. Placing it in a more well-known dialect, the court's ward
to alleviate a mortgagor frame his deal relies upon whether it was achieved by exploiting any
trouble or shame that he may have been in when he acquired the cash on the mortgage. Was
the mortgagor mistreated? Is it true that he was forced upon? On the off chance that he was, at
that point he might be qualified for help.
The tenet does not make a difference if the exchange isn't in its embodiment a mortgage. In
this way, where the exchange gives a choice to buy property, the sole thought being the credit
of an entirety of cash secured on the property amid the duration of the choice, the exchange is
the size of a choice, the thought being the utilization of the cash free of premium. Along these
lines, in this conditions, the obstruct can't be considered, as there was the assent of both the
gatherings.

This principle likewise applies to an exchange by which were not then to an exchange by which
the mortgagor exchanged his value of redemption to the transferee in light of a credit; a proviso
in the said exchange by which the transferee had a choice to buy, was held void.

The tenet of stop up on the value of redemption is a manage of equity, value, and great inner
voice. This has been reaffirmed by the Supreme Court in Murarilal v. Dev Karan. For this
situation, the Supreme Court has held that, it is a settled law in England and in India that a
mortgage can't be made inside and out irredeemable, or redemption made deceptive. The law
must react, and be receptive to the felt, and perceptible impulses of conditions that would be
evenhanded, reasonable and only; unless there is anything despite what might be expected in
the statute. Law must take cognisance of that reality, and act likewise. With regards to quick
changing conditions and monetary dependability, a long haul for redemption makes a fanciful
mortgage, however not definitive. It should by all appearances be a sign regarding how obstruct
on value of redemption ought to be judged.

In spite of the fact that the Transfer of property Act does not have any significant bearing to
Sikkim, the courts ought to apply the standard contained in s.60 and strike down a stop up on
the privilege of redemption.

The term in the mortgage deed that the land is irredeemable for a long time is a stop up on the
value of redemption. In Shivdev Singh v Sucha Singh , the incomparable court declined to
meddle with the finding of the High Court holding that on the realities of the case, the mortgage
deed giving a time of 99 years was a stop up on value of redemption. Regardless of whether in
a specific exchange there is a stop up on the value of redemption, depends principally upon the
time of redemption, the conditions under which the mortgage was made, the monetary and
budgetary position of the mortgagor and his relationship opposite him and the mortgagee, the
financial and social condition in a specific purpose of time, traditions, if any pervasive in the
group or the general public in which the exchange happens, and the totality of the conditions
of the gatherings, the time, the circumstance, the provisos for redemption either for installment
of intrigue or some other entirety, the commitment of the mortgage, to oversee as an issue of
judicious administration; there factors must be associated to each other and saw in a far
reaching whether there are obstructs on value of redemption. A long haul of redemption isn't
really an obstruct; regardless of whether a specific redemption works as a stop up is to be
considered having respect to the conditions of the case. The choice concerning what adds up
to an obstruct on the value of redemption is an issue of certainty for each situation.

CAUSES AND ILLUSTRATIONS FOR CLOG ON REDEMPTION9:

LONG TERM MORTGAGES: Though, the below mentioned cause is either true or
false, this were mentioned as the cause for the clog in the redemption by the mortgagee
and the cause is nothing but long term mortgage. Long term mortgages are common
in cases of usufructuary mortgages. Every long term mortgage agreement cannot be
said to be a clog on the right of redemption of the mortgagor. But if a mortgage is for
say 100 years, itll go beyond the life of the mortgagor and seem like a clog on the right
to redemption, at least superficially. The Court also of the same opinion, but has made
the stand clear by saying that only by the virtue of a long mortgage period, the mortgage
wouldnt be considered as a clog. There should be a condition which gives an undue
advantage to the opposite party for the mortgage to be considered as a clog.

Vadilal chhaganlal v. Gokaldas mansukh10: In this case, the mortgage agreement

provided that it would subsist for 99 years and the mortgagee would be allowed to
construct any structure on the property without any limit on the cost. The Supreme
Court reasoned that it would be beyond the ability of the mortgagor to repay the
principal money along with the interests and the construction expenses. It was held that
both the conditions amounted to a clog on the mortgagees right of redemption.

CONDITION OF SALE OF PROPERTY11:

A agreement that a mortgaged property, if not redeemed within a fixed period, would
convert into a sale is a clog. However if there is a separate agreement whereby the

9
F.H. Lawson & Bernard Rudden, The Law of Property 15 (Peter Birks ed., 3 rded., 2002).
10
AIR 1953 Bom 408
11
Mulla, The Transfer of Property Act, 1882 656 (solil paul ed., 9 th edition, 2000).
 mortgagor executes a sale deed in favor of the mortgagee as an independent transaction,
such sale deed is valid.
Kuddi lal v. Aisha jehan begam: The plaintiff-mortgagor was allowed to redeem the
property back by paying from her own pockets and not through transferring the
property. The Court held that such a covenant was a clog on redemption since it
restrained alienation by the mortgagor.
SUBSEQUENT AGREEMENT TO POSTPONE REDEMPTION12
A subsequent agreement which becomes an obstruction to the mortgagee by creating a
personal obligation is a clog on his right to redemption. The reason is that unless the
agreement forms a charge on the property, the mortgagee is not liable to pay any sum
arising from his personal obligation except the mortgage amount.
Sheo Shankar v. Parma: The mortgagor had already executed a usufructuary
mortgage in favor of the mortgagee. He further executed a simple mortgage in order to
borrow more money. A provision in the simple mortgage provided that the mortgagor
was stopped from redeeming the property till the amount in the simple mortgage was
paid. It was held that such a provision was void as a clog.
COLLATERAL BENEFIT TO MORTGAGOR
A mortgagor may avail of a collateral benefit either during the subsistence of the
mortgage, which is valid, or after the redemption, which in some cases is not valid13.
Noakes & Co. v. Rice14: A covenant in the mortgage agreement stipulated that the
mortgagee would buy all the beer he would consume on his property from the
mortgagor who was a brewer. It was held that the tie was valid during the subsistence
of the mortgage but not beyond redemption. The property must be delivered back
without any tie.
Kreglinger v. New Patagonia Meat and Cold Storage Co. Ltd.15: In this case, the
mortgage was of a term of 5 years with an option to the mortgagor to redeem the
property before completion of the term. The agreement further stipulated that the

12
Sir Hari Singh Gour, The Transfer of Property Act, 1882 1248 (10 th ed., 2002).

13
Row, supra note 34, at 883.

14
1902 AC 24.

15
1914 AC 25.
 mortgagor should sell sheepskins exclusively to the mortgagee as long as both parties
agreed to a fixed price. The mortgagee paid the mortgage before 5 years and filed a suit
for declaring the tie of exclusive selling to be declared as a clog on redemption.
The House of Lords held that the provision of exclusive sale to lenders did not amount
to a clog. It was reasoned that the mortgagee is allowed to stipulate for a collateral
benefit beyond the period of redemption provided that the stipulation is not
unconscionable or unfair.

CONCLUSION:

As we have seen,we cannot determine absolutely which could be considered as whether

something would qualify as clog on the right of redemption. It has to be settled through a careful
perusal of the of the mortgage deed, the circumstances surrounding the parties entering into a
mortgage, the amount advanced and nature of the transaction.

However the doctrine has not escaped without controversy. Sir Fredrick Pollock has made his
disapproval of this doctrine by calling this doctrine as an anachronism. He believed that the
doctrine cannot keep on assuming that the mortgagor is a victimized party in the bargain.
According to him, in the modern age, both parties are at a level playing field and giving a
mortgagor a ground to repudiate his obligations by portraying one of the clauses of the contract
as unconscionable, it works against public policy as a whole.

Pollock isnt completely wrong in his analysis of the doctrine. But with the growth of
commerce and passage of time, such inequality has been more or less abolished. Providing an
excuse to one party to escape his obligations is a bad precedent to set. However these criticisms
have not stopped the courts in India to apply this test. Where a major chunk of the population
in India still works in the agrarian sector and lives under below poverty line without any formal
banking systems, the doctrine still has some prevalence in such situations. It is left at the
discretion of the judiciary to decide in which cases a prudent application of this doctrine lies

BIBLIOGRAPHY:

ARTICLES AND BOOKS REFERRED:

1. S.N. Shukla, The Transfer of Property Act 219 (23rd ed., 2001).
2. F.H. Lawson & Bernard Rudden, The Law of Property 15 (Peter Birks ed., 3rded.,
2002).
 3. Mulla, The Transfer of Property Act, 1882 656 (Solil Paul ed., 9th edition, 2000).
4. Sir Hari Singh Gour, The Transfer of Property Act, 1882 1248 (10th ed., 2002)
5. Wyman, Bruce. "Clog on the Equity of Redemption." Harv. L. Rev. 21 (1907)

WEBSITES REFERRED:

1. https://www.lawctopus.com/academike/doctrine-of-clog-on-redemption
2. https://www.ipleaders.in/doctrine-clog-redemption
3. http://advocateji.com/what-is-meant-by-clog-on-redemption

CASES REFERRED:

1. Shivdev Singh v. Sucha Singh (2000) 4 SCC 326, Para 8, AIR 2000 SC 1935
2. Vora Aminbai Ibrahim v. Vora teherali Mohamed Ali AIR 1998 Guj 31
3. Mohammad Sher Khab v Seth Swami Dayal (1922) ILR 44 All 185
4. Seth Ganga Dhar v. Shamkar Lal (1959) SCR 509
5. Sarvjni Prabhu v. Papi kutty Adiesian, AIR 2007 Ker 44
6. Santley v wilde, 1899
7. Seth Ganga Dhar v. Shankar Lal, AIR 1958 SC 770
8. Murarilal v. Dev Karan, (1964) 8 SCR 239
9. Pomal Kanji Govindji v. Vrajlal Karsandas Purohit AIR 1989 SC 436, P. 448
10. Shivdev Singh v Sucha Singh, (2000)4 SCC 326
11. Vadilal chhaganlal v. Gokaldas mansukh, AIR 1953 Bom 408
12. Ramkhilawan dilrakhan ahwashi v. Mullo AIR 1957 MP 200
13. Balbhaddar prasad v. Dhanpat dayal, AIR 1924 OUDH 193
14. Meharban khan v. Makhna, AIR 1930 PC 142