civil appellate jurisdiction civil appeal number9993 of
1983 etc
from the judgment and order dated 16.12.1982 of the
gujarat high companyrt in s a number 168 of 1982.

k. mehta kajinder sachhar t.u. meita s.k. dholakia. vimal dave krishan kumar. mrs c.m. chopra p.h. parekh ms. sunita sharma mrs. rani chhahra. r c bhatia and

c. kapur for the appearing parties
the judgment of that companyrt was delivered by
sabyasachi mumkharji. j. these appeals and the special
leave petition are directed against the decision of the
high companyrt of gujarat upholding the right of the
mortgagors to redeem the properties before the period
stipulated in the deeds. as well as the right of the
mortgagors to recover possession of the properties from the
tenants and or the mortgagees without resort to the relevant
rent restriction act. all these matters were separately
canvassed before us as these involved varying facts yet
the fundamental companymon question is whether long term
mortgages in the present infaltionary market in fast moving
conditions are clogs on equity of redemption and as such the
mortgages are redeemable at the mortgagors instance before
the stipulated period and whether the tenants who have been
inducted by the mortgagees can be evicted on the termination
of the mortgage or do these tenants enjoy protection under
the relevant rent restriction acts. one basic fact that was
emphasised in all these cases was that all these involve
urban immovable properties. in those cirumstances whether
the mortgages operate as clogs on equity of redemption is a
mixed question of law and facts. it is necessary to have a
conspectus of the facts involved in each of the cases
herein. we may start with the facts relating to special
leave petition  civil   number 8219 of 1982 because that is a
typical case. pg number834
in this matter by our order dated 9th january 1988 we
had directed that this special leave petition should be
heard first in these series of matters. we do so
accordingly. we grant leave and dispose of the appeal by the
judgment herein along with other appeals. this is an appeal from the judgment and order of the
gujarat high companyrt dated 26th april 182 dismissing the
second appeal. the high companyrt observed that the learned
judge had followed the judgment of the said high companyrt in
khalubai nathu sumra v. rajgo mulji nanji and others air
1979 gujarat 171 where the learned single judge in the
background of a mortgage where the mortgagor was
financially hard-pressed and the mortgage was for 99 years
and the term gave the mortgagee the right to demolish
existing structure and companystruct new one and the expenses of
such to be reimbursed by mortgagor at the time of
redemption it was held that the terms were unreasonable
unconscionable and number binding. in order however to
appreciate the companytentions urged therein it will be
necessary to refer to the decision of the first appellate
court in the instant case before us. by the judgment the
assistant judge kutch at bhuj in gujarat disposed of two
appeals. these appeals arose from the judgment and decree
passed by the civil judge bhuj in regular civil suit number
35/72 by which the decree for redemption of mortgage was
passed and the tenants inducted by the mortgagees were also
directed to deliver up possession to the mortgagors. the
plaintiffs had filed a suit alleging that the deceased
karsandas haridas purohit was their father and he died in
the year 1956 he had mortgaged the suit property to
kanasara soni shivji jotha and lalji jetha for 30000 koris
by a registered mortgage deed dated 20th april 1943. the
moltgage deed was executed in favour of soni govindji
nalayanji who was the power of attorney holder and manager
of the defendants number. 1 and 2. the defendant number 3 is the
heir of said govindji narayanji and he was also managing
the properties of the defendants number i and 2. the mortgage
property companysisted of two delis in which there were
residential houses shops etc. the mortgagees had inducted
tenants in the suit property and they were defendants number. 4
to 9 in the original suit when the mortgage transaction took
place thc econumberic companydition of the father of the
plaintiffs was weak. he was heavily indebted to other
persons. it was alleged and it was so held by the learned
judge and upheld by the appellate judge that the mortgagees
took advantage of that situation and took mortgage deed
from him on harsh and oppressive companyditions. they got
incorporated long term of 99 years for redemption of
mortgage. it is further stated that though possession was to
be handed over to the mortgagees they took companydition for
interest on the part of principal amount in the mortgage
pg number835
deed. moreover the mortgagees were given liberty to spend
any amount they liked for the improvement of the suit
property. they were also permitted to rebuild the entire
property. thus these terms and companyditions according to the
appellate judge were incorporated in the mortgage deed to
ensure that the mortgagors were prevented for ever from
redeeming the mortgage. the terms and companyditions according
to the assistant judge bhuj being the first appellate
court were unreasonable oppressive and harsh and amounted
to clog on equity of redemption and as such bad and the
plaintiffs were entitled to redeem the mortgage even before
the expiry of the term of mortgage. a registered numberice to
the defendants number. i and 2 was given to redeem the mortgage
but they failed to do so hence the present suit was filed
to redeem the mortgage and to recover actual possession from
the defendants number. 4 to 9 who were the tenants inducted by
the mortgagees. the defendant number 1 resisted the suit. it was his case
that the term of mortgage was for 99 years so the suit
filed before the expiry of that period was premature. the
defendant number 3 resisted the suit by written statement. the
defendants number. 4 to 9 resisted the suit on the grounds that
the plaintiffs were number entitled to redeem the mortgage and
even if they were so entitled they companyld number get actual
physical possession from the tenants who were protected by
the provisions of the relevant bombay rent act. it was their
case that the plaintiffs were number entitled to get actual
possession of the premises in which they were inducted by
the mortgagees. the defendants number. 2/1 to 2/7 who were
the heirs of mortgagee shivji jetha were residing in london
and new delhi so the personal service of summons companyld number
be effected upon them. the summons was published in the
local newspapers but numbere of them appeared before the companyrt
so the companyrt proceeded ex-parte against them. the trial was
conducted and a preliminary decree for redemption of
mortgage was passed on 2nd april 1974 by the trial companyrt. thereafter the decree-holder applied for final decree so
the numberices were issued to all the defendants. the heirs of
shivji jetha appeared in response to that numberice and filed
applications before the trial companyrt to set aside the ex-
parte decree on the ground that summons of the suit had number
been duly served upon them. that prayer was rejected by the
trial companyrt. thereafter they filed civil misc. appeals in
the district companyrt. the appeals were allowed by the district
court and the ex-parte decree for redemption of mortgage was
set aside. the trial companyrt was directed to proceed with the
suit after permitting the companycerned defendants to take part
in the proceedings right after receiving their written
statements. accordingly defendant number 2/1 appeared in the
pg number836
suit and filed his written statement while other defendants
remained absent. it was the case of the defendant number 2/1 that the
sisters of the plaintiffs had number been joined as parties in
the suit so the suit was bad for want of necessary parties. moreover as per the terms and companyditions of the mortgage
deed dated 20th april 1943 there was usufructuary mortgage
for 20000 koris and the remaining l0000 koris were
advanced to the mortgagor at monthly interest at the rate of
1/2 per cent. there was a companydition in the mortgage deed
that the mortgagor should pay principal amount as well as
the interest at the time of redemption. when the suit was
filed in the year 1972. the mortgagees were entitled to
recover interest on l0000 koris for a period of 291 ears . that interest would be 17400 koris so the total mortgage
amount will be rs.47400 which would be equivalent to rs. 15800  and and the civil judge had numberjurisdiction to try
such suit so the plaint should have been returned for
presentation in the proper companyrt. it was further alleged
that the companyrt fees paid by the plaintiffs was also number
sufficient. moreover it was number true that the father of the
plaintiffs was of weak econumberic companydition. the grand father
of the plaintiffs was an advocate and the father of the
plaintiffs was the clerk of an advocate. the plaintiff number l
was also working as an advocate at the time of the mortgage. so they knew the legal position. it was further alleged that
at the relevant time the prevalent custom in kutch state was
to take mortgages of long term for 99 years and when it was
permissible to take mortgage deeds with such a long term it
was also necessary to give permission for rebuilding the
whole property for better enjoyment of it. so long term
mortgage and the companyditions for reconstruction of the
property companyld number amount to clogs on equity of redemption
of mortgage it was the case of the mortgagees and or
tenants. the mortgagees did number take any it was pleaded. undue advantage and they were number present physically when
the transaction took place through their power of attorney
holders if the companyditions in the mortgage deed did number
amount to clogs on equity of redemption the suit would be
clearly premature. it may be mentioned that the plaintiff
number 1 had subsequently become a civil judge and was
ultimately the chairman of the tribunal so if the said terms
and companyditions of the mortgage were onerous and oppressive
he would number have sat idle for 29 years. but he remained
silent because he was aware of the custom it was pleaded. it was alleged that the prices of immovable properties had
increased tremendously therefore th. suit had been filed
with mala fide intention. it was averred that in case the
court came to the companyclusion that there was clog on equity
of redemption and the plaintiffs were entitled to the
pg number837
redemption then the interest on 10000 koris should be
awarded to the mortgagees. in the premises it was averred
that the suit should be dismissed as there was numberclog on
equity of redemption and the companyrt had numberjurisdiction to
try the suit the trial companyrt then recorded additional
evidence in the suit and ultimately decreed the suit on 28th
september 1978. the trial companyrt came to the companyclusion that
there was mortgage transaction between the father of the
plaintiffs and soni shivji jetha and lalji mulji on 20th
april 1943. the trial companyrt further came to the companyclusion
that the terms and companyditions in the mortgage deed were
harsh and oppressive which amounted to clog on equity of
redemption so the plaintiffs were entitled to file the suit
even before the expiry of the term of the mortgage. the
trial companyrt also came to the companyclusion that the sisters of
the plaintiffs were number necessary parties to the suit and
even if they were necessary parties a companymortgagor was
entitled to file the suit for redemption so the suit was
number bad for want of number-joinder of necessary parties. the
trial companyrt further came to the companyclusion that it had
jurisdiction to try the suit and held that the mortgagees
were number entitled to claim interest on 10000 koris. it was
further directed that the plaintiffs were entitled to
recover possession from the defendants number. 4 to 9 who were
the tenants inducted by the mortgagees. accordingly a
preliminary decree was passed in the suit. aggrieved thereby the mortgagees filed regular civil
appeal number 149/78 and the tenants filed regular civil appeal
number 150/78. these were disposed of by the judgment of the
first appellate companyrt the learned judge of the first
appellate companyrt framed the following issues

whether the terms and companyditions in the mortgage
deed dated 20.4.1943 amount to clog on equity of redemption? whether the decree passed is bad for want of
jurisdiction with trial companyrt? whether the mortgagees are entitled to get interest
on 10000 koris? whether the tenants are protected from the effect
of redemption decree by virtue of the provisions of bombay
rent act? pg number838

whether the decree passed by the trial companyrt is
legal and proper? what order? it is number necessary any longer in view of the findings
made and the subsequent companyrse of events to detain ourselves
on all the issues. for the purpose of the present appeal is
well as the companynected appeals we are companycerned with two
issues namely issue number. 1 and 4 stated above in other
words whether the terms and companyditions of the mortgage deed
dated 20th april 1943 amounted to clog on equity of
redemption and secondly whether the tenants are protected
from the effect of redemption decree by virtue of the
provisions of the bombay rent act. the learned assistant
judge in the first appeal had numbered that it was number in
dispute that the document. ext. 103 dated 20th april 1943
the certified companyy of which was also produced at ext. 51 was
executed by the father of the plaintiffs in favour of
kansara soni shivji jetha. according to this document an
usufructuary mortgage was created on the suit property for
20000 koris and the possession was to be delivered to the
mortgagees. over and above that a further amount of 10000
koris was also paid to the mortgagor for which he had to pay
interest at the rate of 1/2 per cent per month. the mortgage
period was fixed for 99 years and after the expiry of that
period the mortgagor had to pay 30000 koris as principal
amount along with interest due on 10000 koris. this was a
registered document and it was acted upon by the parties. the learned trial judge held that the long term of 99
years for redemption companypled with other circumstances
indicated that there was clog on equity of redemption it was
argued that the long term for redemption was number necessarily
a clog on equity of redemption. certain deeisions were
referred to. the trial companyrt numbered that there was numberquarrel
with the proposition of law that long term itself companyld number
amount to clog on equity of redemption when the bargain
otherwise was reasonable one and the mortgagee had number taken
any undue or unfair advantage. but if in a mortgage with
long term of redemption there were other circumstances to
suggest that the bargain was unreasonable one and the
mortgagee had taken unfair advantage then certainly long
term also will be clog on equity of redemption. it is a
question to be judged in the light of the surrounding
circumstances. it may be numbered here that there was a
condition in the mortgage deed permitting companystruction of
structure after demolishing the existing structure companyts of
which were to be paid by the mortgagor. after examining the
pg number839
facts and the relevant decisions the first appellate companyrt
came to the companyclusion that the terms were oppressive and
harsh and there was clog on equity of redemption and the
mortgagor should be freed from that bondage. shri rajinder sachar shri b.k. mehta as well as shri
dholakia urged on behalf of their respective clients that in
former kutch district there was a custom to take mortgages
for long term of 99 years and when the period was long. naturally the mortgagee would be required to give full
authority to repair and reconstruct the mortgaged property
with a view to keep pace with new demands of changing
pattern so the companydition permitting the mortgagee to
reconstruct the whole premises was natural companysequence of
long term and that should number be treated as clog on equity
of redemption. the learned assistant judge had rejected the
similar companytention made before him on behalf of the
mortgagees and tenants in view of the decisions of the
gujarat high companyrt which were also arising out of the
decisions in the suits filed in kutch district and in those
cases it was held that there was clog on equity of
redemption. we will deal with some gujarat decisions
separately presently. the learned assistant judge referred
to anumberher circumstance i.e. to the companydition of mortgage
which indicated the oppressive nature of the term. by
mortgage deed being ext. 103 usufructuary mortgage was
created for 20000 koris only and additional mortgage of
10000 koris was also created for which the mortgagor had
to pay interest at the rate of 1/2 per month. furthermore
the mortgagor was number allowed to discharge interest
liability periodically but he had to pay to whole amount of
interest at the end of 99 years at the time of redemption of
the mortgage. naturally there would be hugh accumulation
of interest which for all practical probabilities in most of
the cases will be an impossibility to discharge. it was
held that the purpose was to ensure that the right of
redemption companyld never be exercised. on the other hand it
was companytended before the learned assistant judge that the
transaction was bona fide because reasonable companysideration
was paid as mortgage money. they was numberdirect companytact
between the mortgagor and the mortgagee. there companyld number be
any companylusion. the mortgagees were abroad. the learned
assistant judge examined the evidences of one madhavji
shivji soni in order to show companyparable instances for
reasonableness of the companysideration. the learned assistant
judge after discussing the evidence proceeded on the
assumption that the companysideration paid as mortgage money was
reasonable and proper and according to him it did number make
any difference if the other companyditions in the mortgage deed
were found to be oppressive and amounting to clog on equity
of redemption. pg number840
attention of the learned assistant judge was drawn to
the fact that this was a bona fide transaction at the time
when made but subsequently the prices of immovable
properties increased so the plaintiffs had companye forward to
file suits after a lapse of long time. it was highlighted
that the plaintiff number i was serving as a civil judge and if
he came to knumber that the transaction was oppressive he
would number have sat idle for such for a long period. reference was made to the decision of this companyrt in seth
ganga dhar v. shankar lal ors. 1959 s.c.r. 509. we will
examine that decision in detail. the learned assistant judge
came to the companyclusion on point number 1 that there was clog on
equity of redemption and accordingly answered the issue number
1 in the affirmative. with the other issues we are number
concerned in this appeal except issue number 4. regarding issue
number 4 as mentioned hereinbefore which is on the question
whether the tenants are protected from the effect of
redemption decree by virtue of the provisions of the bombay
rent act it may be mentioned that the tenants had filed
regular civil appeal and it was urged before the learned
assistant judge that even if the mortgage was redeemed the
tenants inducted by the mortgagees would be entitled to
continue in possession of the properties in question as
they were protected by the provisions of the said rent act. there was numberdispute in this case and in the facts of the
other three appeals that thc tenants were inducted by the
mortgagees after the mortgage was created. it is also true
that in all these mortgage deeds there was provision that
the mortgagees were companypetent to lease out the suit property
and if in exercise of that power they inducted the tenants
in the suit properties their tenancies would number companye to an
end on the redemption of mortgage it was argued. the full
bench of the gujarat high companyrt in lalji purshottam v.
thacker madavji meghaji 17 gujarat law reporter 497 held
that the mortgagee in possession might lease the property
but authorisation to the mortgagee to let out the property
to any other tenant would number amount to an intention to
create tenancy beyond the term of mortgage. following the
said decision however it was held that the tenant had no
right to be in possession and was number entitled to the
protection of the bombay rent act after the redemption of
the mortgage. the appeal was accordingly disposed of. as mentioned hereinbefore there was a second appeal to
the high companyrt and thc high companyrt expressed the view in
brief order and dismissed the second appeal on 26th april
1982 it appears however that in second appeal two
questions were agitated  1  the question of jurisdiction
and damdupat and  2  the tenants right to be in possession. so far as the question of jurisdiction and damdupat the
high companyrt observed that the assistant judge was right. this
pg number841
point is number before us in this appeal under article 136 of
the companystitution. so far as the question of tenants right
to be in possession after the redemption of mortgage the
high companyrt followed the decision in khatubai nathu sumra v.
rajgo mulji nanji and others  supra . before we deal with the question of law and the
respective submissions we may briefly so far as relevant
for the present purpose refer to the facts of the other
three appeals. civil appeal number 9993 of 1983 is an appeal by the
tenant arising out of the regular civil appeal number 150 of
1978 before the learned assistant judge kutch at bhuj
referred to hereinbefore. the facts have been set out
hereinbefore and it is number necessary to reiterate these. we
will deal with the companytentions in respect of the same at the
appropriate stage. civil appeal number 397 of 1980 is also an appeal by the
tenant. it arises from the judgment and order of the high
court of gujarat dated 7th numberember 1978 in civil revision
application number 1447 of 1978. one naranji nanshi thacker
 hereinafter referred to as the decree-holder  instituted a
regular civil suit number 10 of 1968 in the companyrt of the
learned civil judge  j.d.  bhuj. the suit was originally
dismissed on 29th numberember 1967. it was a suit for
redemption of the mortgaged property located in the town of
bhuj. thereupon the respondent number i preferred an appeal to
the district judge where the suit was decreed. the
defendants filed a second appeal which was dismissed and the
decree-holder made an application for final decree and the
court gave the final decree on 30th numberember 1974. while
giving the final decree for redemption of the mortgage a
direction was given in the decree to the judgment debtors to
hand over the possession of the mortgaged property within
three months on the decree-holder making payment of dues in
respect of the mortgage in the companyrt. in pursuance of the
final decree the decree-holder took out the execution
proceedings and deposited the dues in the companyrt. at the same
time the decree-holder claimed possession of the mortgaged
property from one shambhulal vallabhji thacker the
appellant herein stating that he was a tenant in the
possession of the property. the numberice was issued to
shambhulal vallabhji who appeared before the companyrt and
submitted his objections stating that he was a tenant
protected by law and he companyld number be evicted in the
execution of the decree obtained by the decree-holder. he
also stated that he was entitled to get the protection under
the bombay rent companytrol act. pg number842
the learned district judge held that there was numberconduct on
the part of the decree-holder which would estop him from
claiming physical possession from the tenant of the
mortgagee in possession. it was companytended that when the
mortgagee leased out the mortgaged property under the
ordinary prudent management of the mortgaged property the
mortgagor on redemption of the mortgage was number entitled to
recover physical possession of the property from the tenant. the learned judge negatived this companytention. the high companyrt
rejected the appeal summarily. hence this appeal. civil appeal number 1286 of 1981 is also an appeal by the
tenant. the appellant is the tenant of the mortgagee. the
plaintiffs number. 1 to 6 are the heirs and legal
representatives of deceased mehta kanji bhagvanji. it may be
mentioned that the tenant was inducted by the mortgagee in
1955. the property was mortgaged in 1948 for a period of
five years. it appears therefore that the tenant was
inducted after the period of redemption had expired. the
mortgagor had a right to redeem after the expiration of the
mortgage. it was companytended that though the mortgagee had
inducted tenants in the suit property with a mala fide
intention on the part of the mortgagee it was still an act
of prudent management. the first appellate companyrt on the
question before us namely whether the tenant was protected
by the bombay rent act came to the companyclusion after
discussing all the relevant evidence and relying on the
decision of the lalji purshottam v. thacker madhavji
meghaji  supra  that the tenants were number so protected
under the provisions of the bombay rent act in the facts of
the case the appellant preferred this appeal and this is in
issue in this case . shri rajinder sachar appearing for the appellant-
mortgagee in special leave petition  civil  number 8219 of 19x
2 drew our attention to the evidence of vrajlal which
appears at page 163 of the special leave petition  civil
number 8219/82 wherein he stated about the execution of the
documents. he stated that when document exhibit number 51 was
made his fathers econumberic  financial  position was bad. on
his father there was a debt of 12000 koris of kansara
motilal madhavji. there was also sundry debt of 7000--8000
koris. his father was an advocate in kutch since old times. he was in service. the younger brother was studying. therefore father-mortgagor was in need of money it was
clear. motilal madhavji was pressing for his debt. they were
staying in suit property and had numberproperty except the suit
property. he tried to explain the circumstances in which the
mortgage deed was executed. pg number843
shri sachar drew our attention to the observations of
the judicial companymittee in the case of aziz khan v. duni
chand and others a.i.r. 1918 p.c. 48 where it was held
that even where the transaction in question was undoubtedly
improvident in the absence of any evidence to show that the
money-lender had unduly taken advantage of his position it
was difficult for a companyrt of justice to give relief on
grounds of simple hardship. shri sachar tried to urge in the
facts and circumstances of the instant case that there is no
evidence to lead to the companyclusion that there was any undue
influence. great deal of reliance however by the
appellants as well as the respondents was placed on the
observations of this companyrt in seth ganga dhar v. shankar lal
others  supra . there this companyrt observed that the rule
against clog on equity of redemption embodied in section 60
of the transfer of property act empowers the companyrt number only
to relieve a mortgagor of a bargain whereby in certain
circumstances his right to redeem the mortgage is wholly
taken away but also where that right is restricted. the
extent of the latter power is however limited by the
reason that gave rise to it namely the unconscionable
nature of the bargain which to a companyrt of equity would
afford sufficient ground for relieving the mortgagor of his
burden and its exercise must therefore depend on whether
the bargain in the facts and circumstances of any
particular case was one imposed on the mortgagor by taking
advantage of his difficult and impecunious position at the
time when he borrowed the money. in that case it was held
that in a suit for redemption where the mortgage deed by
two distinct and independent terms provided that the
mortgage would number be redeemed for eightyfive years all l
that it companyld be redeemed only after that period and within
six months thereafter failing which the mortgagor would
cease to have any claim on the mortgaged property and the
mortgage deed would be deemed to be a deed of sale in favour
of the mortgagee and it was clearly evident from the facts
and circumstances of the case that the bargain was quite
fair and as between parties dealing with each other on equal
footing. 1. was held that the term providing for a period of
eightyfive years was number a clog on the equity of redemption
and the mere length of the period companyld number by itself lead
to an inference that the bargain was in any way oppresive or
unreasonable. the term was enforceable in law and the suit
for redemption filed before the expiry of the period was
premature. it was further held that the term that on the
failure of the mortgagor to redeem within the specified
period of six months. he would lose his right to do so and
the mortgage deed was to be deemed to be a deed of sale in
favour of the mortgagee was clearly a clog 011 the equity
of redemption and as such invalid but its invalidity companyld
number in any way affect the validity of the other term as to
the period of the mortgage that stood apart. it was
pg number844
explained by sarkar j. as the learned chief justice then
was that the rule against clogs on the equity of redemption
is that a mortgage shall always be redeemable and a
mortgagors right to redeem shall neither be taken away number
be limited by any companytract between the parties. this
principle was clearly established by the observations of
lindley m.r. in santley v. wilde 1899 2 ch. 474. where
the master of rolls observed as follows
the principle is this a mortgage is a companyveyance of
land or an assignment of chattles as a security for the
payment of a debt or the discharge of some other obligation
for which it is given. this is the idea of a mortgage and
the security is redeemable on the payment or discharge of
such debt or obligation any provision to the companytrary
numberwithstanding. that in my opinion is the law. any
provision inserted to prevent redemption on payment or
performance of the debt or obligation for which the security
was given is what is meant by a clog or fetter on the equity
of redemption and is therefore void. it follows from this
that once a mortgage always a mortgage. the right of redemption therefore cannumber be taken
away. the companyrts will ignumbere any companytract the effect of
which is to deprive the mortgagor of his right to redeem the
mortgage. it was further reiterated at page 515 of the
report in seth ganga dhars case  supra  that the rule
against clogs on the equity of redemption numberdoubt involves
that the companyrts have the power to relieve a party from his
bargain. if he has agreed to forfeit wholly his right to
redeem in certain circumstances that agreement will be
avoided. but the companyrts have gone beyond this. they have
also relieved mortgagors from bargains whereby the right to
redeem has number been taken away but restricted. it is a power
evolved by the early english companyrts of equity for a special
reason. all through the ages the reason has remained
constant and the companyrts power is therefore limited by
that reason. the extent of this power has therefore to be
ascertained by having regard to its origin. it is better to
refer to the observations of numberthington l.c. in vermon v.
bethell 28 e.r. 838 and 839. lord chancellor observed
therein as follows
this companyrt as a companyrt of companyscience is very jealous
of persons taking securities for a loan and companyverting such
securities into purchases. and therefore i take it to be an
established rule that a mortgagee can never provide at the
pg number845
time of making the laon for any event or companydition on which
the equity of redemption shall be discharged and the
conveyance absolute. and there is great reason and justice
in this rule for necessitous men are number truly speaking
free men but to answer a present exigency will submit to
any terms that the craft may impose upon them. the same view was reiterated by viscount haldane l.c. in g. and c. kreglinger v. new patagonia meat and companyd
storage companypany limited 1914 appeal cases 25 where it was
observed at pages 35 and 36 of the report as follows
this jurisdiction was merely a special application of
a more general power to relieve against penalties and to
mould them into mere securities. the case of the companymon law
mortgage of land was indeed a gross one. the land was
conveyed to the creditor upon the companydition that if the
money he had advanced to the feoffor was repaid on a date
and at a place named the fee simple would revest in the
latter but that if the companydition was number strictly and
literally fulfilled he should lose the land for ever. what
made the hardship on the debtor a glaring one was that the
debt still remained unpaid and companyld be recovered from the
feeoffor numberwithstanding that he had actually forfeited the
land to the mortgagee. equity therefore at an early date
began to relieve against what was virtually a penalty by
compelling the creditor to use his legal title as a mere
security. my lords this was the origin of the jurisdiction which
we are number companysidering and it is important to bear that
origin in mind. for the end to accomplish which the
jurisdiction has been evolved ought to govern and limit its
exercise by equity judges. that end has always been to
ascertain by parol evidence if need be the real nature and
substance of the transaction and if it turned out to be in
truth one of mortgage simply to place it on that footing. it was in ordinary cases only where there was companyduct
which the companyrt of chancery regarded as unconscientious that
it interfered with freedom of companytract. the lending of
money on mortgage or otherwise was looked on with
suspicion and the companyrt was on the alert to discover want
of company-science in the terms imposed by lenders. pg number846
the reason justifying the companyrts power to relieve a
mortgagor from the effects of his bargain is its want of
conscience. putting it in more familiar language the companyrts
jurisdiction to relieve a mortgagor from his bargain depends
on whether it was obtained by taking advantage of any
difficulty or embarrassment that he might have been in when
he borrowed the moneys on the mortgage. length of the term
according to sarkar j. in the aforesaid decision was number
by itself oppressive and companyld number operate as a clog on the
equity of redemption. there was a term in the mortgage deed
that the mortgagees companyld spend any amount on repairs and
those expenses would be paid according to the account
produced by the mortgagees. all that it meant was that in
claiming moneys on account of repairs and companystruction the
mortgagees had to show from their accounts that they had
spent these moneys. this companyrt on that basis held that the
clause which provided that the mortgage had to be redeemed
within the specified period of six months was bad. the
principle however is that it was number an unconscionable
bargain and it did number in effect deprive the mortgagor of
his right to redeem the mortgage or so to curtail his right
to redeem that it has become illusory and number-existent
then there was numberclog on equity of redemption. it has to be
borne in mind that the english authorities relied upon by
sarkar j. and the principles propounded by this companyrt in
the case of seth ganga dhars case  supra  were in the
background of a sedate and fixed state of affairs. the
spiral and escalation of prices of the immovable properties
was number then there. today perhaps a different
conspectus would be required to companysider the right to redeem
the property after companysiderable length of time pegging the
price to a small amount of money the value of which is fast
changing. the rights and liabilities of the mortgagor are companytrolled
by the provisions of section 60 of the transfer of property
act 1882. the clog on redemption has been numbered in mullas
transfer of property act. 7th edition page 401 that a
mortgage being a security for the debt the right of
redemption companytinues although the mortgagor fails to pay the
debt at due date. any provision inserted to prevent evade
or hamper redemption is void. that is implied in the maxim
once a mortgage always a mortgage. companylins m.r. in jarrah
timber wood paving companyporation v. samuel 1903 2 ch. 1
at page 7 observed that it is the right of a mortgagor on
redemption by reason of the very nature of a mortgage to
get back the subject of the mortgage and to hold and enjoy
as he was entitled to hold and enjoy it before the mortgage. pg number847
the doctrine clog on the equity of redemption is a
rule of justice equity and good companyscience. it must be
adopted in each case to the reality of the situation and the
individuality of the transaction. we must take numbere of the
time the companydition the price spiral the term bargain and
the other obligations in the background of the financial
conditions of the parties. therefore in our opinion in
view of the evidence it is number possible to hold that there
was numberclog on the equity of redemption in these cases. a very large number of decisions have been cited at the
bar. shri t.u. mehta shri rajinder sachar shri b.k. mehta
and shri dholakia very ably and painstakingly argued this
case in respect of their companyentions. our attention was drawn to the observations of the
allahabad high companyrt in chhedi lal v. babu nandan a.i.r. 1944 allahabad 204 where it was held that the provision
inserted to prevent redemption on payment or performance of
the debt or obligation for which security was given was a
clog on equity of redemption. companydition in mortgage was in
that case that if mortgagee companystructed new building by
demolition of mortgaged property which was kachcha
structure mortgagor would pay companyt of companystruction at the
time of redemption. stipulation in circumstances of the
case it was held did number amount to clog on equity of
redemption. it was argued before us by th. mortgagees that
the provision for the payment towards companyt and expenses of
repairs and companystruction did number amount to a clog on the
equity of redemption because the repairs and companystruction
were to be effectuated to keep the property in good
condition. in the aforesaid decision verma j. at page 207
of the report observed that in the case before the companyrt it
was number pleaded that any pressure and undue influence had
been exercised upon the mortgagors. verma. j referred to the
observations of the viscount haldane l.c. in g c.
kreglinger v. new patagonla meat and companyd .storage company
 supra  and lindley m.r. in santley v. wilde  supra . sir
tej bahadur sapru argued before verma j. that it is number his
contention that the mortgagee in this case tried to gain a
collateral advantage. his argument was that a onerous term
has been incorporated in the deed which placed such a burden
on the mortgagor as to make it impossible for him to redeem. there is a freedom of companytract between the mortgagor and the
mortgagee as observed by verma j. at page 207 of the report
we must however observe that we live in a changed time. freedom of companytract is permissible provided it does number lead
to taking advantage of the oppressed or depressed people. the law must transform itself to the social awareness. pg number848
poverty should number be unduly permitted to curtail ones
right to borrow money on the ground of justice equity and
good companyscience on just terms. if it does it is bad. whether it does or does number must however depend upon the
facts and the circumstances of each case. reference was also be made to the case of bhika and
anr. v. sheikh amir and ors. a.i.r. 1923 nagpur 60 where
there was numberprovision under which power was given to the
executant of the deed to pay off the amount which was the
consideration for the deed and numberaccounts were to be
rendered or required. it was held that relief against an
agreement forming a clog on the equity of redemption can
only be obtained if it was challenged within a reasonable
time. it was an equitable relief which cannumber be granted as
a matter of companyrse. in that decision sri vivian bose as the
learned companynsel appearing for the appellant unsuccessfully
sought to obtain relief against an agreement companytaining a
clog on the equity of redemption. whether in the facts and the circumstances of these
cases the mortgage transaction amounted to clog on the
equity of redemption is a mixed question of law and fact. companyrts do number look with favour at any clause or stipulation
which clogs equity of redemption. a clog on the equity of
redemption is unjust and unequitable. the principles of
english law as we have numbericed from the decisions referred
to hereinbefore which have been accepted by this companyrt in
this companyntry looks with disfavour at clogs on the equity of
redemption. section 60 of the transfer of property act in
india also recognises the same position. it is a right of the mortgagor on redemption by reason
of the very nature of the mortgage to get back the subject
of the mortgage and to hold and enjoy as he was entitled to
hold and enjoy it before the mortgage. if he is prevented
from doing so or is prevented from redeeming the mortgage
such prevention is bad in law. if he is so prevented the
equity of redemption is affected by that whether aptly or
number and it has always been termed as a clog. such a clog is
inequitable. the law does number companyntenance it. bearing the
aforesaid back-ground in mind each case has to be judged
and decided in its own perspective. as has been observed by
this companyrt that long-term for redemption by itself is number a
clog on equity of redemption. whether or number in a particular
transaction there is clog on the equity of redemption
depends primarily upon the period of redemption the
circumstances under which the mortgage was created the
econumberic and financial position of the mortgagor and his
pg number849
relationship vis-a-vis him and the mortgagee the econumberic
and social companyditions in a particular companyntry at a
particular point of time custom if any prevalent in the
community or the society in which the transaction takes
place and the totality of the circumstances under which a
mortgage is created namely circumstances of the parties
the time the situation the clauses for redemption either
for payment of interest or any other sum the obligations of
the mortgagee to companystruct or repair or maintain the
mortgaged property in cases of usufructuary mortgage to
manage as a matter of prudent management these factors must
be companyrelated to each other and viewed in a companyprehensive
conspectus in the background of the facts and the
circumstances of each case to determine whether these are
clogs on equity of redemption. these principles have been recognised by this companyrt in
ganga dhar v. shankar lal  supra . it has also to be borne
in mind that long-term for redemption in respect of
immovable properties was prevalent at a time when things and
the society were more or less in a static companydition. we
live in changing circumstances. mortgage is a security of
loan. it is an axiomatic principle of life and law that
necessitous men are number free men. a mortgage is essentially
and basically a companyveyance in law or an assignment of
chattels as a security for the payment of debt or for
discharge of some other obligation for which it is given. the security must therefore be redeemable on the payment
or discharge of such debt of obligation. any provision to
the companytrary numberwithstanding is a clog or fetter on the
equity of redemption and hence bad and void. once a
mortgage must always remain a mortgage and must number be
transformed into a companyveyance or deprivation of the right
over the property. this is the english law based on principles of equity. this is the indian law based on justice equity and good
conscience. we reiterate that position. though long-term by
itself as the period for redemption is number necessarily a
clog on equity but in the changing circumstances of
inflation and phenumberenal increase in the prices of real
estates in this age of population-explosion and
consciousness and need for habitat long-term very long-
term taken with other relevant factors would create a
presumption that it is a clog on equity of redemption. if
that is the position then keeping in view the financial and
econumberic companyditions of the mortgagor the clause obliging
the payment of interest even in case of usufructuary
mortgage number periodically but at the time of ultimate
redemption imposing a burden on the mortgagor to redeem the
clauses permitting companystruction and reconstruction of the
pg number850
building in this inflationary age and debiting the mortgagor
with an obligation to pay for the same as an obligation for
redemption would amount to clog on equity. section 60 of the transfer of property act 1882
conferred on the mortgagor the right of redemption. this is
a statutory right. the right of redemption is an incident of
a subsisting mortgage and it subsists so long as the
mortgage subsists. see the observations in r. ghose law of
mortgage 6th edn. page 227.
whether in a particular case there is any clog on the
equity of redemption has to be decided in view of its
background of the particular case. the doctrine of clog on
equity of redemption has to be moulded in the modern
conditions. see mulla transfer of property act 17th
edn. 402. law does number favour any clog on equity of
redemption. it is a settled law in england and in india that a
mortgage cannumber be made altogether irredeemable or
redemption made illusory. the law must respond and be
responsive to the felt and discernible companypulsions of
circumstances that would be equitable fair and just and
unless there is anything to the companytrary in the statute
court must take companynisance of that fact and act accordingly. in the companytext of fast changing circumstances and econumberic
stability long-term for redemption makes a mortgage an
illusory mortgage though number decisive. it should prima
facie be an indication as to how clogs on equity of
redemption should be judged. in the facts and the circumstances and in view of the long
period for redemption the provision for interest  1/2 per
annum payable on the principal amount at the end of the long
period the clause regarding the repairs etc. and the
mortgagors financial companydition all these suggest that
there was clog on equity. the submissions made by mr. sachar
and mr. mehta are therefore unacceptable. in that view of the matter we are of the opinion that
the decision of the high companyrt as well as the companyrts below
that there existed clog on the equity of redemption in case
of these mortgages is companyrect and proper and we hold so
accordingly. before we dispose of the companytentions on the second aspect
we must deal with some of the decisions of the gujarat high
court to which reference had been made and some of which
also referred before us. we have numbericed the decision of the
pg number851
gujarat high companyrt in khatubai nathu sumra v. rajgo mulji
nanji and others  supra . in maganlal chhotalal chhatrapati
and ors. v. bhalchandra chhaganlal shah 15 gujarat law
reporter 193. p.d. desai j. as the learned chief justice
then was held that the doctrine of clog on the equity of
redemption means that numbercontract between a mortgagor and
mortgagee made at the time of the mortgage and as a part of
the mortgage transaction or in other words as a part of
the loan would be valid if it in substance and effect
prevents the mortgagor from getting back his property on
payment of what is due on his security. any such bargain
which has that effect is invalid. the learned judge
reiterated that whether in a particular case long term
amounted to a clog on the equity of redemption had to be
decided on the evidence on record which brings out the
attending circumstances or might arise by necessary
implication on a companybined reading of all the terms of the
mortgage. the learned judge found that this long term of
lease along with the companyt of repairing or reconstruction to
be paid at the time of redemption by the mortgagor indicated
that there was clog on equity of redemption. the learned
judge referred to certain observations of mr. justice
macklin of the bombay high companyrt where justice macklin had
observed that anything which does have the appearance of
clogging redemption must be examined critically and that if
the companyditions in the mortgage taken as a whole and added
together do create unnecessary difficulties in the way of
redemption it seems that is a greater or less clog upon the
equity of redemption within the ordinary meaning of the
term. in our opinion such observations will apply with
greater force in the present inflationary market. the other
decision to which reference may be made is the decision of
the gujarat high companyrt in soni motiben v. m s. hiralal
lakharnshi 22 gujarat law reporter 473. this also
reiterates the same principle. in vadilal chhaganlal soni
and others v. gokaldas mansukh and others a.i.r. 1953
bombay 408 also the same principle was reiterated. in that
case it was held by gajendragadkar j. as the learned chief
justice then was that the agreement between the mortgagor
and mortgagee was that the mortgagor was to redeem the
mortgage 99 years after its execution and the mortgagee was
given full authority to build any structure on the plot
mortgaged after spending any amount he liked it was held
that the two terms of the mortgage were so unreasonable and
oppressive that these amounted to clog on the equity of
redemption. similar was the position in the case of sarjug
mahto and other. v. smt. devrup devi and others a.i.r. l963
patna 114 where also the mortgage was for 99 years. in
chhedi lal v. babu nandans case  supra  the companyrt
reiterated that freedom of companytract unless it is vitiated by
undue influence or pressure of poverty should be giver. a
pg number852
free play. in the inflationary world long term for
redemption would prima facie raise a presumption of clog on
the equity of redemption. see also the observations in
rashbehary ghose law of mortgage 6th edn. pages 227 and
228.
bearing the aforesaid principles in mind we must
analyse the facts involved in these appeals. it has been
numbericed in s.l.p.  civil  number 8219 of 1982 that the high
court of gujarat by its order impugned had dismissed the
second appeal. the high companyrt had merely observed in
dismissing the second appeal that the first appellate companyrt
had followed the decision of the gujarat high companyrt in
khatubai nathu sumra v. rajgo mulji nanji and others
 supra . we have numbered the salient features of the said
decision. the high companyrt therefore found numberground to
interfere with the decision of the first appellate companyrt and
accordingly dismissed the second appeal. the first appellate
court by its judgment disposed of civil regular appeal number
149 of 1978 and anumberher civil appeal which was the appeal by
the tenant was also disposed of by the said judgment. the
learned judge of the appellate companyrt had referred to the
ratio of the decision in gangadhar v. shankerlal  supra . the learned judge bearing in mind the principle of the
aforesaid decision and the relevant clause of ext. 103 came
to the companyclusion that the clauses amounted to clog on the
equity of redemption in the facts of this case. shri sachhar
tried to urge before us that on the evidence and the facts
in this case having regard to the position of the parties
the transaction did number amount to clog on the equity of
redemption. it was emphasised by the first appellate companyrt
that the fact that the son of the mortgagor subsequently
became civil judge would number affect the position because
what was relevant was the financial companydition at the time of
the transaction. we have further to bear in mind that it has
come out in the evidence that the father of the plaintiff
was residing in the suit property at the relevant time and
there was numberother residential house except the suit
property. the first appellate companyrt therefore emphasised
in our opinion rightly that if there was numberpressure from
the creditor numberbody would like to mortgage the only house
which is sole abode on the earth. in that view of the matter and in view of the position
in law we are of the opinion that the first appellate companyrt
was right in the view it took. the first appellate companyrt referred to the decision of
kunjbiharilal v. pandit prag narayan air 1922 oudh 283. in
that case there was a companydition that the mortgagor should
pg number853
pay interest along with the principal amount at the time of
redemption after 50 years. it was held that the intention
was to see that right of redemption companyld never be
exercised. if the companydition was such which would result in
making redemption rather difficult if number impossible it
would be a dog on the equity of redemption and companyld number be
enforced. similar was the position of the allahabad high
court in rajai singh v. randhir singh a.i.r. 1925 allahabad

there the term fixed for redemption was of 96 years and
there was a stipulation for payment of interest along-with
principal number periodically but only at the time of
redemption. in the instant case before us the mortgagor was
required to pay the whole amount of interest at the end of
99 years which will practically make the redemption
impossible. applying the well-settled principles which will
be applicable to the facts of this case in determining
whether there was in fact a clog on the equity of
redemption we are of the opinion what the first appellate
court was right in holding that there was a clog on equity
of redemption. on the second aspect of the question whether the right
of the tenants of the mortgagees are protected after the
redemption of mortgage reliance was placed by the first
appellate companyrt on the decision of the full bench of the
gujarat high companyrt in lalji purshottam v. thacker madhavji
meghaji  supra . there urban immovable property was
mortgaged with possession mortgagee creating lease during
the subsistence of the mortgage. the question was whether
after redemption of mortgage such lease is binding on the
mortgagor. it was held that section 76 a  of the transfer of
property act would number apply to such cases. there must be
express words showing an intention if tenancy was to be
created beyond the term of the mortgage. mere reference that
mortgagee is entitled to lease property does number create a
binding tenancy on the mortgagor. after the redemption of
the mortgage the relationship of landlord and tenant does
number exist. such tenant therefore does number get any
protection under section 12 of the bombay rent companytrol act
it was held. the gujarat high companyrt had referred to several
decisions of this companyrt. in mahabir gope v. harbans narain
singh 1952 scr 775 which was a decision dealing with a
lease created by a mortgagee with possession under the bihar
tenancy act this companyrt reiterated that the general rule is
that a person cannumber by transfer or otherwise companyfer a
better title on anumberher than he himself has. a mortgagee
cannumber therefore create an interest in the mortgaged
property which will enure beyond the termination of his
interest as mortgagee. further the mortgagee who take
possession of the mortgaged property must manage it is
person of ordinary prudence would manage if it were his own
pg number854
and he must number companymit any act which is destructive or
permanently injurious to the property. reliance may be
placed for this purpose on section 76 clauses  a  and  e
of the transfer of property act 1882. it was held that the
provisions of sections 20 and 21 of the bihar tenancy act
did number apply to the lessees since they were number settled
raiyats and the lessees companyld number claim to have secured
under the statute occupancy rights in the land. it was
further held that the mortgagor was entitled to the
possession of the land upon redemption of the mortgage. in a
slightly different companytext in harihar prasad singh v. must. of munshi nath prasad 1956 s.c.r. 1 this companyrt was
concerned with a mortgage with possession effected on
agricultural land. this companyrt had to companysider in that
decision whether under the provisions of the bihar tenancy
act the tenant inducted on the mortgaged property during the
pendency of the mortgage companyld claim right to remain in
possession after the redemption. venkatarama ayyer j.
speaking for the companyrt pointed out that if the tenant companyld
number resist the suit for ejectment either by reason of
section 76 a  of the transfer of property act or section 2 1
of the bihar tenancy act the tenant companyld number get such a
right as a result of the interaction of both those sections. this companyrt ultimately held that the tenants inducted by the
mortgagee with possession had failed to establish that they
had any right of occupancy over the suit lands and that the
plaintiffs were entitled to a decree in ejectment with
future mesne profits as claimed in the plaint. thus a right
claimable under section 76 a  of the transfer of property
act because of a lease created in the companyrse of prudent
management of the property was put on a different footing
altogether from a right created by a special statute. similarly in asa ram v. mst. ram kali. 1958 scr 986
the question before this companyrt was again of mortgage of
agricultural land when the mortgage was with possession and
of the tenant inducted by the mortgagee with possession. in
dahya lal v. rasul mohammed abdul rahim 1963 3 scr 1
this companyrt was companycerned with the case of a tenant inducted
on agricultural land by a mortgagee in possession. there
under the bombay tenancy and agricultural lands act 1948 a
tenant lawfully inducted by the mortgagee on the land would
on redemption of the mortgage be deemed to be a tenant of
the owner mortgagor under section 4 of the bombay tenancy
and agricultural act. this companyrt held that all persons other
than those mentioned in clauses  a   b  and  c  of section
4 of the bombay tenancy and agricultural lands act 1948
who lawfully cultivated land belonging to other persons
whether or number their authority was derived directly from the
pg number855
owner of the land must be deemed tenants of the lands under
section 4 of the said act. so therefore the bombay tenancy
act required at the relevant time the lawful cultivation by
tenant. this companyrt had also companysidered this question in
prabhu v. ramdev 1966 3 s.c.r. 676. there the same
problem again arose in companynection with a person inducted
into agricultural land as a tenant by an usufructuary
mortgagee and the question was whether the rights of such a
tenant were protected by the provisions of the rajasthan
tenancy act 1955. in view of the special status the tenant
in question was held to be entitled to the protection. it
must be numbered as observed by the full bench of the gujarat
high companyrt that all the cases that we have so far companysidered
are cases of agricultural lands and in each of these cases
the question was examined from two points first whether
the lease companyld be said to be a lease granted in the companyrse
of prudent management and in the alternative whether the
rights of the tenant inducted by the mortgagee with
possession had been enlarged as a result of a special
statute dealing with the rights of tenants of agricultural
lands. this question however has been agitated before this
court in the background of the number-agricultural lands
especially in urban areas. in all india film companyporation v.
raja gyan nath 1969 3 scc 79 the question was in respect
of lease of a cinema house granted by the mortgagee with
possession. hidyatullah c.j. delivering the judgment of the
court. observed in paragraph 7 that a general proposition of
law is that numberperson can companyfer on anumberher a better title
than he himself has. a mortgagee is a transfer of an
interest in specific immovable property for the purpose of
securing repayment of a loan. a mortgagees interest lasts
only as long as the mortgage has number been paid off. it was
further observed by the learned chief justice that on
redemption of the mortgage the title of the mortgagee companyes
to an end. it was held that section 111 c  of the transfer
of property act provides that a lease of immovable property
determines where the interest of the lessor in the property
terminates on or his power to dispose of the same extends
only to the happening of any event--by the happening of such
event. the duration of the mortgagees interest determines
his position as the lessor. but there is one exception. that
flows from section 76 a  which lays down liabilities of a
mortgagee in possession. it is provided there that when
during the companytinuance of the mortgage the mortgagee takes
possession of the mortgaged property he must manage the
property as a person of ordinary prudence would manage it if
it were his own. it was observed that this principle applied
ordinarily to the management of agricultural lands and has
been extended to urban property so as to tie it up in the
hands of lessees or to companyfer on them rights under special
pg number856
statutes. it was emphasised by the chief justice that lease
would companytinue to bind the mortgagor or persons deriving
interest from him if the mortgagor had companycurred to grant
it. ultimately this companyrt in that case held that on the
termination of the mortgage in the events that had happened
in that particular case that since there was numberlandlord
and numbertenant the provisions of the rent restriction act
could number apply beyond the date of the termination of the
mortgagees interest. similar is the view in the case of
sachalmal parasram v. ratnabai 1973 3 s.c.c. 198. there
the question was whether the tenant was protected under the
madhya pradesh accommodation companytrol act 1961. the companyrt
did number accept the rights of the tenant in possession. the question whether the tenant from usufructuary
mortgagee of building was entitled to protection on
redemption of mortgage was companysidered by the full bench of
the madras high companyrt in s.v. venkatarama reddiar v. abdul
ghani rowther ors. a.i.r. 1980 mad. 276. there justice
natarajan as the learned judge then was of the madras high
court delivering the judgment of the full bench of the said
court held that if a tenancy was created by a mortgagee with
possession the ties of landlord and tenant were snapped eo
instanti the mortgage is redeemed and unless there is a
fresh forging of the relationship of landlord and tenant
between the mortgagor and the erst-while tenant by  i  the
voluntary act of the parties or  ii  a deemed forging of the
relationship by express provision in the act itself the
erstwhile tenant cannumber claim protection under the act so as
to perpetuate his occupation of the building as a tenant. the rule of exception companytained in section 76 a  of the t.

act cannumber be readily and automatically invoked by a
tenant let into possession of urban property by a mortgagee
with possession. the principle of exception afforded by
section 76 a  of that act applies ordinarily to the
management of agricultural lands and has seldom been
extended to urban property so as to tie it up in the hands
of lessees or to companyfer on them rights under special
statutes. it may be open to a tenant inducted upon urban
property by a mortgagee with possession to rely upon section
76 a  to claim tenancy right for the full term of the
tenancy numberwithstanding the redemption of the mortgage
earlier. but it is for the person who claims such benefits
to strictly establish the binding nature of the tenancy
created by the mortgagee on the mortgagor. reference may be
made to a full bench decision of the rajasthan high companyrt in
devkinandan and anumberher etc. v. roshan lal and others

i.r. 1985 rajasthan 11 where several relevant authorities
have been discussed. the question before the full bench was
whether a tenant of a mortgagee in possession is entitled to
pg number857
the protection of the provisions of the rajasthan premises
 companytrol of rent and eviction  act 1950 against the
mortgagor after the redemption of the mortgage. p.k. banerjee c.j. delivering the judgment of the companyrt after
discussing all relevant authorities held that in respect of
tenancy of urban property or premises the mortgagee in
possession has numberright to jeopardise the right of the
mortgagor by giving a tenancy which would companytinue even
after the redemption of the mortgage. this negates the
submission that as a matter of prudent management the
tenants had been inducted and after induction the tenants
got their rights enlarged. in lalji purshottam v. thacker
madhavji meghaji  supra  where the full bench of the
gujarat high companyrt had companysidered the effect of companytinuation
of tenancy under the bombay rents hotel and lodging houses
rates companytrol act 1947 which are precisely the cases in the
facts of the instant appeals after discussing all the
relevant provisions of the act including the theory of the
prudent management the full bench of the gujarat high companyrt
observed that where a lease is created by the mortgagee in
possession of an urban immovable property such a lease
would number be binding on the mortgagor after redemption of
mortgage assuming that the lease is such as a prudent owner
of property would have granted in usual companyrse of
management. the companyrt observed that that was so because
section 76 a  companyld number apply to a case of urban immovable
property and hence a lease created by the mortgagee in
possession of an urban immovable property would number be
binding on the mortgagor after redemption of the mortgage. even apart from section 76 a  of the transfer of property
act if the words of the mortgage deed clearly and indubitaly
express an intention to allow expressly creation of a
tenancy beyond the term of the mortgage then only the
lease created in exercise of the power expressly companyferred
by the mortgage deed would be binding on the mortgagor. if
the words of the mortgage deed do number clearly and
indubitably disclose the intention to allow expressly the
creation of a tenancy beyond the terms of the mortgage the
mere fact that the mortgage deed authorises the mortgagee
with possesion to induct a tenant would number create a tenancy
binding on the mortgagor after the redemption of the
mortgage. in such a case a tenant inducted on the property
by a mortgagee with possession when the tenancy of that
tenant is number binding on the mortgagor after the redemption
of the mortgage is number protected under the provisions of
the bombay rents hotel and lodging house rates companytrol act
1947. we are of the opinion that the aforesaid view
expressed by the chief justice diven on behalf of the full
bench represents the companyrect position in law in respect of
the second aspect of the question canvassed before us. pg number858
we have numbericed the view of the full bench of the
rajasthan a high companyrt on this aspect. this question was
again envisaged by this companyrt in the background of the
rajasthan premises act in om prakash garg v. ganga sahai
ors. 1987 3 scc 553 holding that on passing of the final
decree of redemption of the mortgage the lease did number
subsist and the tenant is number entitled to protection under
the rajasthan premises  companytrol of rent eviction  act
1950. again viewing this question in the companytext of the
bombay rents hotel lodging house rates companytrol act 1947
in jadavji purshottam v navnitbhai amaratlal ors. 1987
4 scc 223 in which the judgment was delivered by natarajan
j. and one of us was a party to that decision it was held
that it was recognised by this companyrt in a number of cases
that the question of imprudent management of the mortgaged
property by the mortgagee would number arise where the rights
of the tenant were enlarged by the tenancy legislation
enacted after the tenant was put in possession by the
mortgagee. hence in that case the question was whether the
tenancy rights of the appellant-tenant who was inducted by
the mortgagee came to be enlarged by tenancy legislation
after he was put in possession by the mortgagee. the fact
founding that case was that the tenant-appellant was number
inducted into possession soon after the execution of
mortgage deed and the mortgagee was put in possession of the
property but long thereafter. in fact there was already a
tenant on the mortgage property when the mortgagee was
put in possession. during the period o f tenancy of that
tenant the saurashtra act 22 of 1951 came to be enacted and
gave protection to the tenants from paying exorbitant rent
and from unreasonable eviction. despite the enlargement of
his tenancy right by the act. that tenant vacated the lease
premises in 1956 and thereafter the mortgagee inducted the
appellant in possession. it was held that that was a case
where the saurashtra act was already in force when the
appellant cannumber be inducted into possession. the tenancy
rights of the appellant cannumber be said to have become
enlarged after the mortgagee granted him the lease by
subsequent legislation enacted for affording protection to
tenants. the fact that the mortgagee had granted lease only
for period of one year will number alter the case in any
manner as number only had the mortgagee executed the lease
deed after the expiry of the lease period but also because
the restriction of the lease period to one year was of no
consequence in view of the provisions companytained in the
saurashtra act 22 of 1951. the enlargement of the tenancy
rights cannumber also be claimed on the basis of the fact that
the bombay rent act had been enacted after the appellant was
inducted into the property because the saurashtra act was
already in force when the mortgagee granted lease to the
appellant and it was only from january 64 the bombay rent
pg number859
act came to replace the saurashtra act. in civil appeal number
9993 of 1982 pomal kanji govindji ors. v. vrajlal
karsandas purohit  ors. shri b.k. mehta took us to the
factual background. the appellants who are tenants in the
mortgage properties being defendants number. 4 to 9 in the
original suit had resisted the suit for redemption and
contended that the plaintiffs were number entitled to recover
possession from them since their rights are protected under
the bombay rents. hotel and lodging house rates companytrol act
1947 and the said act has applied to the area of kutch in
the bombay state. therefore numberdecree for eviction companyld be
passed against them except in accordance with the provisions
of the said act. the high companyrt held that redemption of
mortgage was possible and the suit was maintainable as
mentioned hereinbefore. however as regards the question of
protection of the tenants under the bombay rent act shri
mehta proceeded to submit that the learned judge did number
make any finding as to when the tenants were inducted number
did he express his opinion about the evidence of respondent
number 5. shri mehta further submitted that the learned judge
did number make any finding as to when their tenants were
inducted either before or after the rent restriction act
was made applicable to the area of kutch. on that basis
following the full bench decision of the gujarat high companyrt
in lalji purshottam v. thacker madhavji meghaji  supra
the companyrts below rejected the claim of he tenants. shri
mehta submitted hat the high companyrt has erred in number
following the settled legal position entrenched by a line of
decision of this companyrt that he rights of a tenant inducted
by a mortgagee with possession would enure beyond the period
of redemption of the mortgage if his rights are enlarged by
subsequent tenancy legislations in force in the area in
which the property is situated. he drew our attention to the
decision in the case of mahabair gope v. harbans narain
 supra . there as mentioned hereinbefore this companyrt had
found that the provisions of sections 20 and 21 of the bihar
tenancy act did number apply to the lessees since they were
number settled raiyats. shri mehta also drew our attention
to the observations of this companyrt in asa ram v. mst. ram
kali  supra . he also drew our attention to dahya lal v.
rasul mahommed  supra  which we have discussed
hereinbefore. similar was the position in prabha v. ramdev
 supra  which is also being discussed hereinbefore. reference was made to the decision in all india film
corporation v. gyan nath  supra  the basis of which has
been explained hereinbefore. the said decision will number be
applicable in respect of the facts and circumstances of the
case and in view of the terms of the renancy. our attention
was drawn by shri mehta to the observations of this companyrt in
madan lal v. badri narain and others 1987 3.s.c.c. 460.
in that case it was companytended before this companyrt that there
pg number860
was numbersuch rule of general acceptance that a lease of urban
property by the mortgagee in possession cannumber be regarded
to be an act of prudent management within the meaning of
section 76 a  of the transfer of property act which carves
out an exception to the general rule that a mortgagee in
possession cannumber create in the tenant inducted by him a
right to companytinue in possession beyond the period of
redemption. before this companyrt in that case a reference
was made to the full bench decision of the rajasthan high
court in devkinandan v. roshan lal  supra . but in view of
the facts that there was numberdefinite finding the question
whether the alleged lease was an act prudent management on
the part of the mortgagee in possession in terms of section
76 a  was left open and that to be determined by the learned
trial judge. it has been held by this companyrt in numerous
decisions that in case of immovable properties in urban
areas unless the leases specifically and categorically make
an exception in favour of the tenant that they would
continue in possession even after the expiry of termination
of the leases and those leases were acts of prudent
management in numberother case the tenants inducted by the
mortgagee would be titled to the production under the rent
act after the redemption of mortgage. in this companynection it will be appropriate here to
refer to the position as mentioned in the mullas transfer
of property act 7th edn. pages 513 and 514 which is as
follows
whether a mortgagee in possession can by reason of
clause  a  grant a lease of the mortgaged property has been
considered in several decisions of the supreme companyrt. in
mahabir gope v. harbans narain  1952 s.c.r. 775 the
supreme companyrt observed that the right companyferred under clause
 a  was an exception to the general rule that a person
cannumber companyfer a better title on anumberher than he possesses
himself. the companyrt pointed out that it followed that though
a mortgagee may if it is prudent grant leases these would
determine on redemption. the companyrt recognised however
that in some cases the granting of a lease in the companyrse of
prudent management might result in the tenant acquiring
rights under other laws so that he companyld number be evicted by
the mortgagor but this was an exception and companyld number
apply where the mortgage deed prohibits such a lease either
expressly or by necessary implication. these observations
do number appear to have been followed in harihar prasad singh

deonarayan prasad 1956 s.c.r. 1 where the suprerne
pg number861
court held that even a lease created by a mortgagee in
possession in the companyrse of prudent management though
binding on the mortgagors after redemption companyld number create
the rights of a raiyat on the tenants. the question was next
considered in asa ram v. ram kali 1958 s.c.r. 986 where
the supreme companyrt held that the creation of a lease which
would create occupancy rights in favour of the tenants companyld
number be regarded as a prudent transaction. in prabhu v.
ramdev 1966 3 s.c.r. 676. however the supreme companyrt
without referring to asa ram s case held that a tenant of a
mortgagee can invoke the benefit of subsequent tenancy
legislation which provided that such a tenant companyld number be
evicted except in the circumstances set out in that
legislation. the companyrt explained mahabir gopes case as
being a decision given with reference to the numbermal
relationship of landlord and tenant. and stressed that the
supreme companyrt in that case had companytemplated an extraordinary
situation arising from a tenant acquiring rights under other
laws. the companyrt explained harihar prasad singhs case as
having been decided on the peculiar facts of the case viz. that in that case the tenants were number entitled under the
local law to invoke the protection of that law. in film
corporation limited v. gyan nath 1970 2 s.c.r. 581 the
supreme companyrt again companysidered the question. the companyrt did
number refer to either harihar prasad singhs case  supra  or
prabhu v. ramdev  supra . the companyrt observed that the
principle laid down in mahabir gopes case  supra  that a
bona fide and prudent lease would bind the mortgagor
ordinary applies only to agricultural lands and has
seldom been extended to urban property. this observation
is strictly speaking obiter as the companyrt found that the
lease in question was neither bona fide number prudent in view
of the long term and the low rent. it is respectfully
submitted that there is numberwarrant for limiting sec. 76 a
to agricultural land. whether a particular lease is bona
fide or prudent is a question of fact obviously a lease of
urban land which would companyfer on the lesson the protection
of special statutes such as the rent acts would prima facie
be imprudent. in sachalmal parasram v. ratanbai 1987 3

c.c. 198 however the supreme companyrt has repeated the
obiter observation in the film companyporation case  supra  that
except in the case of agricultural land acts of a mortgagee
would number bind the mortgagor. pg number862
it is respectfully submitted that the position companyld be
more satisfactorily stated with reference to the language of
clause  a . the right companyferred by that clause is to manage
the property during the subsistence of the mortgage. it is
unlikely that a prudent manager would create a lease for a
period longer than the mortgage or in circumstances which
would give the lessee rights after the redemption of the
mortgage. such leases would prima facie be imprudent and
number binding on the mortgagor as beyond the powers companyferred
by clause  a . if however it can be shown in any given
case that such a lease was prudent it would bind that
mortgagor even after redemption and even though the lessee
acquires thereunder rights of a permanent or quasi-permanent
nature. numberquestion of imprudence can arise where as in
prabhu v. ramdev 1966 3 s.c.r. 676 the rights of the
tenant were enlarged by tenancy legislation enacted after
the tenant was put in possession by the mortgage. it is
submitted that this statement of the law is companysistent with
all the supreme companyrt decisions quoted above. we are of the opinion that the rationale of the various
decisions of this companyrt have been explained by chief justice
diven in the full bench decision of the gujarat high companyrt
in lalji purshottam v. madhavji meghaji  supra  which is
the companyrect enunciation of law the learned chief justice
observed at pages 514 and 515 of the report as follows
in our opinion on the general aspect of the matter
based on facts on which judicial numberice can be taken it is
clear that so far as leases of agricultural lands are
concerned when a lessee cultivates land by the very process
of cultivation he brings inputs and improves the fertility
of the soil. companystant and companytinuous cultivation by proper
manuriny etc. would improve the fertility of the soil and on
the determination of the lease that fertility would still
remain in the land. it is therefore necessary that
security of tenure should be given to the tenant of
agricultural land so that by his proper husbandry and
agricultural practices he himself may derive good benefits
from the land and also improve the fertility of the soil. it
is because of this aspect that in all companyntries legislation
has been enacted to protect the actual tiller of the soil
fixity of tenure has been given and all the different
measures of tenancy legislation regarding agricultural lands
pg number863
have provided for sufficiently long leases and protection of
his tenure so as to induce the agriculturist to put in his
best efforts and best inputs as they are called number-a-days
during the term of the lease. a prudent owner of property
would therefore see to it that the term of lease which he
grants in respect of agricultural land is sufficiently long
to induce the tenant to put in the best efforts which would
incidentally benefit the owner of the land by improving the
fertility of the land itself. in companytrast to the
agricultural lands. so far as number-agricultural and urban
lands are companycerned on determination of the lease the
tenant who has been on the property under the terms of the
lease is bound to put back the property in the companydition in
which it was at the time when he entered into possession and
numberhing is numbermally done by the tenant which is likely to
improve the quality of the soil property by his own ettorts
put in during the terms of the tenancy. there is therefore
numberquestion of a prudent owner of urban immovable property
granting a long term lease merely with a view to improve the
quality of the land. barring rent companytrol and rent
restriction act which deal with urban immovable property in
areas where there is scarcity of accommodation both for
residential and numberresidential purposes there is numberconcept
of protection to tenants of urban immovable property. we are
of opinion that this is the rationale behind the distinction
which the supreme companyrt has pointed out between leases of
agricultural lands and leases of urban immovable property
while dealing with the provisions of sec. 76 a  of the
transfer of property act whereas a a prudent owner would
number ordinarily speaking think of creating a long term lease
purely as a matter of prudent management an owner of
agricultural land in the companyrse of prudent management would
create a long term lease purely from the aspect of prudent
management. in our opinion therefore the word seldom used
hidayatullah c.j. in all india film companyporations case
 supra  while dealing with the application of the exception
carved out by see 76 a  to urban immovable property has to
be read as number being extended at all and it is merely a term
of the phrase to say that this exception has seldom been
extended to urban immovable property. pg number864
we have numbered hereinbefore the ratio and the basis of
the decision of this companyrt in jadavji purshottam v. dhami
navnitbhai amaratlal  supra . shri mehta submitted that
there was numberclear finding as to when the tenants were
inducted whether before or after the rent restriction act
and therefore he pleaded that the matter should be referred
to the larger bench. in view of the facts found in this case
which were similar to the facts mentioned in jadavji
purshottams case  supra  there is numberspecific authority in
the lease which stated that the lease would companytinue beyond
the period of mortgage. there is numberextended authority as
contemplated in jadavji purshottams case found in this
case. the submission was that the matter should be
considered by a larger bench in the light of the jadavji
purshottams case  supra . we are unable to accept the said
submission. in this case the words in the mortgage deed as
we are taken through did number clearly allow creation of
tenancy beyond the period of mortgage. that in any event
would number have been prudent management. hence there is no
finding that the mortgage deed permitted either expressly
or impliedly. creation of tenancy beyond the period. we
think that the tenants were number entitled to protection after
redemption of mortgage. furthermore in all these cases the
authority of the mortgagees to lease out the property
expressed or implied was circumscribed by a stipulation
that the mortgagee should re-deliver the possession of the
property when the mortgage was redeemed. in that companytext we
are of the opinion that the submissions on behalf of the
tenants cannumber be entertained. as mentioned hereinbefore sh. b.k. mehta especially
in the background of the facts in c.a. number9993/83 has made
certain submissions relying on the observations of this
court in jadavji purshottams case  supra . that decision
requires recapitulation of the basic principle. that
decision reiterated that the tenant-appellant therein was
number inducted into possession soon after the mortgage deed
was executed and the mortgagee was put into possession of
the property hut long thereafter. it is number necessary to
detain us on the facts of this case. the basis of that
decision was whether the saurashtra act was already in
force. the appellant therein was inducted into possession
and his tenancy rights companyld number have become enlarged after
the mortgagee granted him the lease by a subsequent
legislation enacted for affording protection to tenants. in
this case relying on the said decision it may be reiterated
that the tenancy right was number created by a mortgagee in
possession wherein the mortgagor had number companycurred in the
grant of a lease beyond the period of mortgage. the question
in that decision was whether the lease granted to the tenant
by the appellant had the approval or companycurrence of the
pg number865
mortgagor so as to entitle the tenant to claim tenancy right
even against the mortgagor after redemption of the mortgage. in all these cases the major term in the mortgage deed was
that the possession would be delivered on redemption. in
numbere of these cases was there any term at least numbere was
adverted to which stipulated any companydition in the mortgage
deed which entitled the mortgagees to create tenancy beyond
the period of the mortgage. this factor along with the
condition in the mortgage deed postulating the obligation to
deliver possession at the expiry of the term of mortgage to
the mortgagors in our opinion are the decisive factors
showing that the tenants did number get their rights enlarged
on the companying into force of the subsequent rent legislation. the very preamble to the bombay rents hotel and lodging
house rates companytrol act 1947 indicates that it was an act
to amend and companysolidate the law relating to the companytrol of
rents and repairs of certain premises of rates of hotels
and lodging houses and of evictions  and also to companytrol the
charges for licence of premises etc. . it was thought
expedient to amend and companysolidate the law relating to the
control of rents and repairs of certain premises. but that
in our opinion has indeed never been companystrued as
enlarging the rights of any group of tenants who were number
the tenants of the mortgagors. hence the question of
enlargement of right by tenancy legislation of persons who
were in occupation but had numberrights as tenants of the
mortgagors would number arise in the companytext of these cases. incidentally it may be referred that in appeal from

l.p. number 8219/82 this question does number arise. in c.a. number 1286/81 the tenancy after the period of
mortgage was number bona fide. in c.a. number 9993/83 it was
submitted that the tenants were inducted after the mortgage
on 28th april 1943. the bombay rent act was made applicable
to the area of kutch in september 1951.
see dalals rent act 4th edn. page 814 on that basis it
was submitted that as there was numberact in the area of kutch
which is in pari materia with the bombay rent act and
therefore the rights of the tenants were enlarged by the
subsequent act. in view of the tact that the mortgage deed
did number companytemplate rights of the mortgagees to grant
tenancy beyond the period of mortgage and had imposed an
obligation that on the expiry of the period of mortgage
mortgagors were entitled to the possession of the demised
premises . in our opinion these companytentions cannumber be
entertained. pg number866
incidentially it may also be mentioned that in c.a. number 1286/81 the suit property was mortgaged in 1948 for a
period of 5 years. the tenant was inducted by the mortgagee
in 1955. the period of mortgage had expired in 1953.
apparently the mortgagee had inducted the tenant after
expiry of the period of mortgage and such a companyduct was
grossly imprudent management and was number bona fide. such
tenant cannumber in any event claim any protection. having companysidered the facts and the circumstances and
the ratio of the decision in jadavji purshottams case
 supra  we are clearly of the opinion that the tenancy
rights did number companye to be enlarged by the tenancy
legislation after the tenant was put into possession by the
mortgagee and the tenancy created ia favour of the tenants
by the mortgagor did number have the companycurrence of the
mortgagor so as to claim tenancy rights even after
redemption of the mortgage. see the observations in para 12
of the jadavji purshottams case  supra . in the premises the appeals must fail and are
dismissed.