1. This appeal by special leave arises out of a redemption suit filed by therespondent Dev Karan against the appellant Murarilal. The mortgage sought to beredeemed was executed on the 19th March, 1919 for a sum of Rs. 6,500. Themortgaged property consisted of a shop which was delivered over in thepossession of the mortgagee after the execution of the mortgage deed. Themortgage deed had provided that the amount due under the mortgage should berepaid to the mortgagee within 15 years, whereupon the property would beredeemed. It had also stipulated that if the payment was not made within 15years, the mortgagee would become the owner of the property. The mortgagor wasMangal Ram who died and the respondent claims to be the heir and legalrepresentative of the said deceased mortgagor. In the plaint filed by therespondent, it was averred that the transaction was, in substance, a mortgageand the mortgagor's right to redeem was alive even though the stipulated periodof 15 years for the repayment of the loan had passed. On these allegations, therespondent claimed a decree for redemption of the suit mortgage on payment ofRs. 6,500. It appears that the original mortgagee Gangadhar had also diedbefore the institution of the suit, and so, the appellant Murarilal wasimpleaded as the defendant on the basis that he was the only heir and legalrepresentative of the deceased mortgagee Gangadhar.
2. The claim for redemption thus made by the respondent was resisted by theappellant on several grounds. It was alleged that after the expiry of thestipulated period of 15 years, the property had become the absolute property ofthe mortgagee and it was urged that the original transaction was, in substance,and in reality, not a mortgage but a sale. Several other pleas were also raisedby the appellant in resisting the respondent's claim, but it is unnecessary torefer to them. The learned trial Judge framed appropriate issues which arose onthe pleading of the parties. In substance, he held that the claim forredemption made long after the 15 years' period had expired could not besustained. Findings were made on other issues also and they were against therespondent. In the result, the respondent's suit was dismissed.
3. The respondent then took the matter in appeal before the Rajasthan HighCourt. He urged that the view taken by the trial Court that the stipulation asto the mortgagor's liability to re-pay the loan within 15 years did not bar hispresent suit for redemption, because the said stipulation amounted to a clog onthe equity of redemption and as such, could not affect the mortgagor's right toredeem, and he added that the transaction, in substance, was a mortgage and nota sale, and so, his right to redeem was alive and be effectively enforced bythe present suit. The High Court has upheld his first contention that therelevant provision as to the period within which the mortgage amount had to berepaid amounted to a clog on the equity of redemption and could not be pleadedas a bar to the present suit. But on the question about the character of the originaltransaction itself, the High Court appears to have been inclined to take theview that the relevant clause on which the plea about the bar was raised didnot really support the said plea, because it was by no means clear that evenafter the expiration of 15 years, the mortgagee was intended to be the absoluteowner of the property. On these findings, the decree passed by the trial Courtdismissing the respondent's suit has been reversed and the suit has beenremanded to the trial Court to be disposed of in accordance with law. It isagainst this order that the appellant has come to this Court by special leave.Pending the appeal before this Court, both the appellant and the respondenthave died, and their respective heirs have been brought on the record.
4. The first question which calls for our decision is whether the relevantclause on which the appellant relies makes the mortgagee the owner of theproperty at the end of the stipulated period of 15 years. The mortgageprovides, inter alia, that after the house which was the mortgage property wasdelivered over to the mortgagee, it was open to him either to live in it, or tolet it out to tenants. The mortgagee was further given liberty to spend up toRs. 35 for repairing the house and if more expenses were intended to beincurred, the said expenditure would be incurred through the mortgagor. On theexpenditure thus incurred the mortgagor was liable to pay interest at the rateof As. 0-6-0 per cent per month. Then the document proceeded to add that themortgagor would get the property redeemed on payment of the mortgage amount aswell as the cost of Patta which may have been incurred by the mortgagee and therepairing expenses within a period of 15 years. Then, occurs the relevantclause : 'After the expiry of the stipulated period of 15 years, this shopwould be deemed as an absolute transfer 'Mala Kalam' for this veryamount. Till the mortgage money is paid, I shall have no concern with theshop.' The High Court appears to have taken the view that the words'Mala Kalam' which occur at the end of the relevant clause do notnecessarily import the notion that the mortgage property would be the absoluteproperty of the mortgagee. According to the High Court, the said wordsliterally mean 'where there is no scope for having any say'. If thatis the meaning of the relevant words, it seems difficult to accept the viewthat the document did not intend to make the mortgagee the owner of theproperty at the end of 15 years if the debt due was not paid within that period.When the document says that there would be no scope for the mortgagor to sayanything, it necessarily means, in the context, that the mortgagor would, inthat case, have lost his title to the property, and that means the mortgageewould become the absolute owner of the property. Therefore, we feel nodifficulty in holding that if the terms of the document were to prevail, theappellant's contention that the present suit for redemption is barred, mustsucceed. It is common ground that the amount due under the mortgage deed wasnot paid by the mortgagor or his heir within the stipulated period and thatwould extinguish the title of the mortgagor and make the mortgagee to be theowner of the property.
5. But the question is whether such a stipulation can be allowed to bepleaded as a bar to the respondent's claim for redemption. Just as it is commonground that if the terms of the document were to prevail, the suit would bebarred, it is also common ground that if the doctrine that the clog on the equityof redemption cannot be enforced is to prevail in the present proceedings, therespondent's action for redemption must succeed. The fact that a stipulation ofthe kind with which we are concerned in the present case amounts to a clog onthe equity of redemption, is not and cannot be disputed. Therefore, the mainquestion which arises in the present appeal is : does the equitable doctrineensuring the mortgagor's equity of redemption in spite of a clog created onsuch equity by stipulations in the mortgage deed apply to the present case ?This question arises in this form, because the Transfer of Property Act did notapply to Alwar at the time when the mortgage was executed nor at the time whenthe 15 years' stipulated period expired.
6. Mr. Sarjoo Prasad for the appellant contends that the High Court was inerror in applying the equitable principle, because the said principle cannot beinvoked in cases where the Transfer of Property Act does not apply. In supportof this argument, he has very strongly relied on an early decision of the PrivyCouncil pronounced in 1870, in the case of Pattabhiramier v. Vencatarow Naickenand Narasimha Naicken (1890) 13 Moore I.A. 560. In that case, the PrivyCouncil was dealing with a Bye-bil-wuffa, or mortgage and conditional saleusufructuary executed in 1806 under which the mortgagees were put inpossession. The deed contained a condition that if the mortgagor failed toredeem within five years, the conditional sale was to be absolute. Themortgagor failed to redeem within the stipulated period, and the mortgagee,without foreclosing the mortgage, sold the mortgaged property. Thereafter, themortgagor's representative sued to redeem the mortgage under s. 8 of the MadrasRegulation XXXIV of 1802. The Privy Council held that the interest of themortgagee after the expiry of the stipulated period had become absolute. Indealing with this question, Lord Chelmsford who delivered the opinion of theBoard observed that the form of security with which the Board was concerned hadlong been common in India, and he added that the stipulations in such contractswere recognised and enforced according to their letter by the ancient Hindu lawas well as under Mohammedan law; and in support of this statement, referencewas made to certain passages from Colebrooke's Digest on Hindu Law andBaillie's introduction to his book on Mohammedan Law of Sale. If the ancientlaw of the country, observed Lord Chelmsford, has been modified by any laterrule, having the force of law, that rule must be founded either on positivelegislation, or on established practice; and since neither any specificstatutory provision had been cited before the Board, nor established practicein that behalf had been proved, the Privy Council upheld the mortgagee's plea thathe became the absolute owner of the property at the expiration of thestipulated period. While pronouncing this decision, Lord Chelmsford, however,took the precaution of adding that while the Board was allowing the appeal,'it must not be supposed that their Lordships design to disturb any ruleof property established by judicial decisions so as to form part of the Law ofthe Forum, wherever such may prevail, or to affect any title foundedthereon.' As we will presently point out, the appeal of Pattabhiramier waspending before the Privy Council for as many as 10 years. Meanwhile, IndianHigh Courts were enforcing the equitable principle that stipulations containedin mortgage-deeds which amounted to clog on the equity of redemption could notbe enforced. In other words, the jurisdiction which courts of equity exercisedin England by refusing to enforce clogs on the equity redemption, was beingexercised by High Courts in India.
7. However, before we refer to those decisions, it would be convenient to citeanother decision of the Privy Council pronounced in Thumbusawmy Moodelly v.Hossain Rowthen & Ors I.L.R. 1 Mad. 1. In that case, the Privy Councilheld that the contract of mortgage by conditional sale is a form of securityknown throughout India, and by the ancient law of India, it must be taken toprevail in every part of India, where it has not been modified by actuallegislation or established practice, and so, must be enforced according to itsletter. In this case, Sir James W. Colvile who delivered the opinion of theBoard, referred to the earlier decision of the Privy Council inPattabhiramier's case 1870) 13 M.I.A., noticed the trend of judicialpronouncements made by the High Courts in India while Pattabhiramier's case waspending before the Privy Council, and strongly reiterated the view that thesaid decisions of the High Courts were radically unsound. He referred to thefact that unfortunately, Pattabhiramier's case 'slept for nine years, andthat in the interval the Sudar Court, and afterwards the High Court whichsucceeded it, continued the course of decision which the former had given in1858'. Then he mentioned the relevant decisions of the Madras and BombayHigh Courts and expressed the opinion that in trying to enforce principles of equityin dealing with stipulations contained in mortgage documents, the High Courtswere really assuming the functions of Legislature. So, it is clear that thePrivy Council emphatically declared in 1875 that unless there is a legislativeenactment or established practice to the contrary, terms in the contract ofmortgage by conditional sale must be taken to prevail in every part of Indiaand must be strictly enforced according to their letter. Mr. Sarjoo Prasadnaturally relies on these decisions and contends that so far as the State ofAlwar is concerned, there is no legislative enactment to the contrary, nor isthere any established practice on which the equitable doctrine could be pleadedby the respondent in support of his case that though 15 years have elapsed, hisright to redeem still survives.
8. There are two other decisions of the Privy Council to which we may referat this stage. In Kader Moideen v. Nepean 25 I.A. 241, the Privy Council wasdealing with a case from Burma, and it observed that the Burmese Courts aredirected, in the absence of any statutory law applicable to accounts against amortgagee in possession, to follow the guidance of justice, equity, and goodconscience. Acting on this principle, the Privy Council accepted Mr. Haldane'scontention that there was no rule of abstract justice in taking the accounts ofa mortgagee in possession, and that the Indian rule, which was embodied in s.76 of the Transfer of Property Act, should, though the Act had not beenextended to Burma, be followed there in preference to the English practice. Itwould thus be seen that the equitable principle underlying the provisions of s.76 was extended to the case on the specific ground that the Burmese Courts hadbeen directed by the relevant statutory provision to follow the guidance ofjustice, equity and good conscience in the absence of any statutory lawapplicable to accounts against a mortgagee in possession. This decision,therefore, is in line with the two earlier decisions of the Privy Council.
9. Similarly, in Mehrban Khan v. Makhna 57 I.A. 168, where the PrivyCouncil was dealing with the provisions in a mortgage deed conferring on themortgagee upon redemption an interest in the mortgaged property, it was heldthat the said provisions amounted to a clog or fetter on the equity ofredemption and as such, were void not only against the mortgagor, but alsoagainst the purchaser of his interest, since they were inconsistent with thevery nature and essence of a mortgage. In this case, again, s. 28 of RegulationNo. VII which was applicable to the North-West Frontier Province, had expresslyprovided that in cases not otherwise specially provided for, the Judges shalldecide according to justice, equity and good conscience; and so, recourse tothe equitable doctrine was permissible because there was the statutory mandaterequiring the Judges to apply the said doctrine where there was no specificlegislative provision in relation to the matter with which they were dealing.
10. Though the position of the Privy Council decisions is thus clear andconsistent, the trend of the decisions of the High Courts in India continued toconform to the same pattern which was set up by the decision of the Madras HighCourt in the case of Venkata Reddi v. Parvati Ammal 1 Mad. H.C. Rep. 460 andadopted by the Bombay High Court in Ramji bin Tukaram v. Chinto Sakharam 1Bom. H.C. Rep. 199 (1864). The question was elaborately argued on severaloccasions before the said High Courts and the two earlier decisions of the PrivyCouncil in the case of Pattabhiramier (1870) 13 M.I.A. 560 as well as in thecase of Thumbusawmy Moodelly I.L.R. 1 Mad. 1. were cited and yet, the HighCourts have consistently adhered to the view that in dealing with mortgagetransactions which contain unfair, unjust or oppressive stipulationsunreasonably restricting the mortgagor's right to redeem, the Court would bejustified in refusing to enforce such stipulations and recognising theparamount character of the equity of redemption. In Bapuji Apaji v. SonavarajiMarvati I.L.R. 11 Bom. 231, Westropp, C.J., has elaborately considered therelevant aspects of this question. He referred to the two Privy Council'sdecisions and observed that the doctrine of Ramji v. Chinto [1 Bom. H.C. Rep.199 (1864)] had been uniformly followed in the Bombay Presidency in a multitudeof cases, and he saw no reason to depart from that decision. In expressing hisfirm adherence to the pattern of the law prescribed by the decision of theBombay High Court in Ramji v. Chinto, the learned Chief Justice elaboratelyconsidered all the precedents on the point, trend of authorities bearing on thequestion, the opinion of scholars, and held that he was inclined to take thelaw to be that which was settled in Ramji v. Chinto 1 Bom. H.C. Rep. 199 (1864) and gave effect to it. So far as the Bombay High Court is concerned,the practice consistently had been to follow the decision of Westropp, C.J.till the Transfer of Property Act was extended to Bombay.
11. In Madras, we find that same position. In Ramasami Sastrigal v.Samivappanayakan I.L.R. 4 Mad. 179, the majority view of the FullBench was that in the Madras Presidency, where contracts of mortgage by way ofconditional sale have been entered into subsequent to the year 1858, redemptionafter the expiry of the term limited by the contract must be allowed. The pointwith which we are dealing in the present appeal was elaborately argued beforethe Madras High Court; the opinion expressed emphatically by the Privy Councilwas cited, but Turner, C.J., with whose opinion Muttusami Ayyar, J., agreedmade a very significant observation after elaborately examining the merits ofthe question. 'For these reasons,' said the learned C.J., 'weconceive that we shall not be wanting in due respect for the distinguishedtribunal by whose decisions we are bound, if we follow the course they havepronounced there were strong reasons for adopting and apply the rulesintroduced, however erroneously, by judicial decisions in these provinces.'That view has prevailed in the Madras High Court ever since.
12. These decisions show that the High Courts in India conformed to the viewthat whether or not there is a statutory provision directing the Judges to giveeffect to the principles of justice, equity and good conscience, it is theirduty to enforce that principle where they are dealing with stipulationsintroduced in mortgage transactions which appear to them be unreasonable,oppresive or unjust.
13. It is true that according to the strict letter of the ancient Hindu Law,a stipulation that the mortgagor shall pay the amount advanced to him by themortgagee within a specified period, was intended to be enforced. The ancientHindu law texts use the word 'Adhi' to denote pledge of a movable ormortgage of immovable property. Nar. IV 124 divides Adhi into two sorts, viz.,one that is to be redeemed within a certain time fixed (by agreement at thetime of contracting the debt) or to be retained till the debt is paid off. Inregard to the first category of mortgages, if the money is not paid at the timefixed, the thing pledged or mortgaged would belong to the creditor (vide Yaj.II. 58 and as explained by Mitakshara) [Dr. Kane's History of Dharmasastra Vol.III. p. 428]. It also appears that if the mortgage is not redeemed even whenthe debt has grown to double of the principle by non-payment of the interestagreed upon, the mortgagor lost his title over the mortgaged property; so thatit must be conceded that under the strict letter of the Hindu law texts, if amortgage deed contains a stipulation for the repayment of the mortgage amountwithin a specified period, at the expiration of the said period the mortgagormay lose his title over the mortgaged property. The principle underlying thisprovision appears to be that Hindu law as enunciated by the ancient texts,attached considerable importance to a person keeping his promise. Through thatis so, we ought also to add that according to Sir R. B. Ghose, ordinarily, timewas not of the essence of the contract of mortgage in Hindu law [Ghose on 'TheLaw of Mortgage in India' Tagore Law Lectures 1875-6, 5th Ed. Vol. 1 p. 56.],and in support of this opinion the learned author quotes with approvalColebrooke's opinion.
14. Basing himself on this position of the Hindu law, Mr. Sarjoo Prasadcontends that we ought to assume that Hindu Law which was applicable to Alwarrecognised the importance of compelling the mortgagor to perform his promisethat he would repay the debt within a specified time and if he failed to do so,he would lose his title over the mortgaged property. He urged that the disputebetween the parties in the present appeal should be decided in the light ofthis position of the Hindu law as well as the principles enunciated by the PrivyCouncil in the cases of Pattabhiramier (1870) 13 M.I.A. 560 and ThumbusawmyMoodelly I.L.R. 1 Mad. 1.
15. In dealing with this arguments, it would be relevant to observe thattraditionally, courts in India have been consistently enforcing the principlesof equity which prevent the enforcement of stipulations in mortgage deeds whichunreasonably restrain or restrict the mortgagor's right to redeem. We may, inthis connection, refer to some of the statutes which were in force in India.The old Bengal Regulation III of 1793 by s. 21 directed the Judges of theDistrict and City Courts in cases where no specific rule existed to actaccording to justice, equity and good conscience. Similar provision occurs ins. 17 of the Madras Regulation II of 1802. The Bengal Civil Courts Act, 1887,and the Madras Civil Courts Act, 1873, contain similar provisions in Sections 37 and16 respectively. Likewise, in regard to Courts in the Mufassal of Bombay,Bombay Regulation IV of 1827 by s. 26 provides that the law to be observed inthe trial of suits shall be Acts of Parliament and Regulations of Governmentapplicable to the case; in the absence of such Acts and Regulations, the usageof the country in which the suit arose; if none such appears, the law of thedefendant, and in the absence of specific law and usage, equity and goodconscience. In fact, in Namdeo Lokman Lodhi v. Narmadabai [(1953) S.C.R. 1009],this Court has emphatically observed that it is axiomatic that the courts mustapply the principles of justice, equity and good conscience to transactionswhich come before them for determination even though the statutory provisionsof the Transfer of Property Act are not made applicable to these transactions.These observations, in substance, represent the same traditional judicialapproach in dealing with oppressive, unjust and unreasonable restrictionsimposed by the mortgagees on needy mortgagors when mortgage documents areexecuted.
16. There is one other circumstance to which we ought to refer. We do notknow what the true position of the Hindu law was in the State of Alwar at therelevant time. In fact, we do not know what the provisions of the Contract Actwere in the State of Alwar. Even so, we think it would be reasonable to assumethat civil courts established in the State of Alwar were like civil courts allover the country, required to administer justice and equity where there was nospecific statutory provision to deal with the question raised before them.Whether or not the Hindu law which prevailed in Alwar was similar to thatprescribed by ancient Hindu Sanskrit texts, is a point on which no material isproduced before us. It may well be that just as in Bombay and Madras,notwithstanding the ancient provisions of Hindu Law which seem to entitle themortgagee to insist upon the performance of a stipulation as to time withinwhich the mortgage debt has to be paid, the High Courts had consistentlyrefused to enforce such stipulations, the Courts in the State of Alwar also mayhave adopted the same approach. In the absence of any material on the record onthe point, we are reluctant to accept Mr. Sarjoo Prasad's argument that thedoctrine of equity and justice should be treated as irrelevant in dealing withthe present dispute.
17. In this connection, it is material to refer to the recent decisionspronounced by the Rajasthan High Court in which this position has been upheldeither because it was conceded, or because the High Court took the view thatthe principles of equity were enforceable in dealing with mortgage transactionsin Rajasthan. In Amba Lal v. Amba Lal I.L.R. 1957 Raj. 964., the RajasthanHigh Court held that s. 60 and its proviso contained a general principle of lawapplicable to mortgages in this country, which should be applicable even inthose places where the Transfer of Property Act may not be in force as such,but where its principles may be in force. The property in question which wasthe subject-matter of the mortgage was situated in the State of Udaipur.
18. Similarly, in the case of Seleh Raj v. Chandan Mal I.L.R. 1960 Raj.88., the Rajasthan High Court held that the principle underlying s. 60 maywell be regarded to be a salutary one and in accordance with the principles ofequity, justice and good conscience. Accordingly it took the view that thoughthe Transfer of Property Act may not be in force in the territory in question,it would not be unreasonable to decide a case in accordance with the principlesunderlying the said section. The property with which the Court was concerned inthis case was situated in the State of Jodhpur.
19. The same principle has been applied in Himachal Pradesh (vide Nainu v.Kishan Singh) .
20. Thus, it is clear that the equitable principle of justice, equity andgood conscience has been consistently applied by Civil Courts in dealing withmortgages in a substantial part of Rajasthan and that lends support to thecontention of the respondent that it was recognised even in Alwar that if amortgage deed contains a stipulation which unreasonably restrains or restrictsthe mortgagor's equity of redemption, courts were empowered to ignore thatstipulation and enforce the mortgagor's right to redeem, subject, of course, tothe general law of limitation prescribed in that behalf. We are, therefore,satisfied that no case has been made out by the appellant to justify ourinterference with the conclusion of the Rajasthan High Court that the relevantstipulation on which the appellant relies ought to be enforced even though itcreates a clog on the equity of redemption.
21. In the result, the appeal fails and is dismissed with costs.
22. Appeal dismissed.