# POMAL KANJI GOVINDJI & ORS v. VRAJLAL KARSANDAS PUROHIT & ORS

- **Citation:** [1988] Supp. 3 S.C.R. 826
- **Court:** Supreme Court of India
- **Decided:** 1988-11-04
- **Case number:** Civil Appeal No. 9993 of 1983
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/pomal-kanji-govindji-ors-v-vrajlal-karsandas-purohit-ors-10186
- **Pages:** 41

## Headnote

A
POMAL KANJI GOVINDJI & ORS.
v.
VRAJLAL KARSANDAS PUROHIT & ORS.
NOVEMBER 4, 1988
B
lSABYASACH1 MUKHARJI AND S.
RANGANATHAN, JJ.}
c
Transfer of Property Act, 1882/Sections 60 and 76-Whether long
le.rm mortgages are clog, on equity redeemable at the mortgagor's
instance before the stipulated period-Tenants inducted by mortgagee's
can be evicted on termination of mortgage.
Bombay Rents, Hotel and Lodging House Rates Control Act
1947, Lease created by mortgagee in possession of urban immovable
property-Tenancy whether entitled to statutory protection of Rent Act.
In the matter giving rise to the Special Leave Petition (Civil) No.
D
8219 of 1982 the plaintiffs filed a suit alleging that their father, who dies
in the year 1956, had mortgaged the suit property for 30,000 Koris by a
registered mortgage deed dated 20th April, 1943, executed in favour of
the power of attorney holder and manager of the defandants Nos. I and
2. The defendant No. 3 is the heir of the attorney who was also managing the properties of the defendants Nos. 1 and 2. The mortgage proE
perty consisted of two delis having residential houses, shops, etc. The
mortgagees had inducted tenants in the suit property being defandants
Nos. 4 to 9 in the original suit. When the mortgage transaction took
place the economic conditioin of the father of the plaintiffs was weak
and he was heavily indebted to others. Taking advantage of that situation, the mortgagees took mortgage deed from him on harsh and
F
oppressive conditions by getting incorporated a long term of 99 years
for redemption of mortgage. Though possession was to be handed over
to the mortgagees, they took condition for interest on the part of principal amount in the mortgage deed. Moreover, the mortgagees were given
liberty to spend any amount they liked· for the improvement ofthe suit
property and were also permitted to rebuild the entire property.
G
. H
A registered notice to the defendants Nos. 1 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 Nos. 4 to 9 who were the tenants Inducted by the
mortgagees .
P OMAL KANJJ v. V.K. PUROHIT
827
Defendant No. 1 resisted the suit alleging that the term ol the
mortgage was for 99 years, so the suit filed before the expiry of that
period was premature_. The defendant No. 3 resisted the suit by filing
the written statement. The defendants Nos. 4 to 9 resisted I.he suit on
the grounds that the plaintiffs were not entitled to redeem the mortgage
and even if they were so entitled, they could not get actual physical
possession from the tenants who were protected by the Bombay Rent
Act, because they were inducted by the mortgagees. The Court proceeded against defendants Nos. 2/1 to 2/7 (heirs of mortgagee-defendant No. 2) ex-parte, and a preliminary decree for redemption of mortgage was passed on 2nd April, 1974 by the Trial Court. But this ex·parte
·decree was set aside by the District Court in the appeals filed by the
heirs of defendant No. 2 on the ground that summons of the suit had not
been duly served upon them. Thereafter defendent No. 2/1 filed his
written statement alleging that the suit was bad for non-joinder of the
sisters of the plaintiffs as parties. Moreover, as per the terms and
conditions of the mortgage deed, there was usufructuary mortgage for
20,000 koris, and the remaining 10,,000 koris were advanced to the
mortgagor at monthly interest at the rate of 1/2 per cent. There was a
condition in the mortgage deed that the mortgagor would 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 10,000· kori for a period of 29 years, that the total mortgage
amount ~long. with interest would come to 47 ,400 koris equivalent to
Rs, 15800 and the Civil Judge had no jurisdiction to try such suit; that
the court fees was also not suffi

## Text

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A
POMAL KANJI GOVINDJI & ORS.
v.
VRAJLAL KARSANDAS PUROHIT & ORS.
NOVEMBER 4, 1988
B
lSABYASACH1 MUKHARJI AND S.
RANGANATHAN, JJ.}
c
Transfer of Property Act, 1882/Sections 60 and 76-Whether long
le.rm mortgages are clog, on equity redeemable at the mortgagor's
instance before the stipulated period-Tenants inducted by mortgagee's
can be evicted on termination of mortgage.
Bombay Rents, Hotel and Lodging House Rates Control Act
1947, Lease created by mortgagee in possession of urban immovable
property-Tenancy whether entitled to statutory protection of Rent Act.
In the matter giving rise to the Special Leave Petition (Civil) No.
D
8219 of 1982 the plaintiffs filed a suit alleging that their father, who dies
in the year 1956, had mortgaged the suit property for 30,000 Koris by a
registered mortgage deed dated 20th April, 1943, executed in favour of
the power of attorney holder and manager of the defandants Nos. I and
2. The defendant No. 3 is the heir of the attorney who was also managing the properties of the defendants Nos. 1 and 2. The mortgage proE
perty consisted of two delis having residential houses, shops, etc. The
mortgagees had inducted tenants in the suit property being defandants
Nos. 4 to 9 in the original suit. When the mortgage transaction took
place the economic conditioin of the father of the plaintiffs was weak
and he was heavily indebted to others. Taking advantage of that situation, the mortgagees took mortgage deed from him on harsh and
F
oppressive conditions by getting incorporated a long term of 99 years
for redemption of mortgage. Though possession was to be handed over
to the mortgagees, they took condition for interest on the part of principal amount in the mortgage deed. Moreover, the mortgagees were given
liberty to spend any amount they liked· for the improvement ofthe suit
property and were also permitted to rebuild the entire property.
G
. H
A registered notice to the defendants Nos. 1 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 Nos. 4 to 9 who were the tenants Inducted by the
mortgagees .
P OMAL KANJJ v. V.K. PUROHIT
827
Defendant No. 1 resisted the suit alleging that the term ol the
mortgage was for 99 years, so the suit filed before the expiry of that
period was premature_. The defendant No. 3 resisted the suit by filing
the written statement. The defendants Nos. 4 to 9 resisted I.he suit on
the grounds that the plaintiffs were not entitled to redeem the mortgage
and even if they were so entitled, they could not get actual physical
possession from the tenants who were protected by the Bombay Rent
Act, because they were inducted by the mortgagees. The Court proceeded against defendants Nos. 2/1 to 2/7 (heirs of mortgagee-defendant No. 2) ex-parte, and a preliminary decree for redemption of mortgage was passed on 2nd April, 1974 by the Trial Court. But this ex·parte
·decree was set aside by the District Court in the appeals filed by the
heirs of defendant No. 2 on the ground that summons of the suit had not
been duly served upon them. Thereafter defendent No. 2/1 filed his
written statement alleging that the suit was bad for non-joinder of the
sisters of the plaintiffs as parties. Moreover, as per the terms and
conditions of the mortgage deed, there was usufructuary mortgage for
20,000 koris, and the remaining 10,,000 koris were advanced to the
mortgagor at monthly interest at the rate of 1/2 per cent. There was a
condition in the mortgage deed that the mortgagor would 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 10,000· kori for a period of 29 years, that the total mortgage
amount ~long. with interest would come to 47 ,400 koris equivalent to
Rs, 15800 and the Civil Judge had no jurisdiction to try such suit; that
the court fees was also not sufficient; that it was not true that the father
of the plaintiffs was of weak economic condition. The grand father of
the plaintiffs was as Advocate and the father of the plaintiffs was the
clerk of an Advocate. The plaintiff No. 1 was also working as an Advocate at the time of the mortgage, so they knew the legal position; that at
the relevant time the prevalent custom in Kotch 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 these terms could not amount to clog on equity of redemption of
mortgage, the mortgagees did not take any undue advantage and they
were not eresent physica!y when the transaction took place through their
power of attorney holders. If the conditions of mortgage deed did not
amount to clogs on equity of redemption, the suit would be cleatly
. premature. The plaintiff No. 1 had subsequently ·became a·Civil Judge
and was ultimately the Chairman of the 'Tribunai so if the said terms
and conditions of the mortgage were onerous and oppressive, he .would
not have sat Idle for 29 years. But he remained ~llent bec11u.!e he. was
A
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c
D
E
F
G
H
A
B
"
828
SUPREME COURT REPORTS
[ 1988] Supp. 3 S.C.R.
aware of the said custom. The prices of immovable properties had
Increased tremendously, therefore, the suit had been Died with ma/a fide
intention; that in case the Court comes to the conclusion that there was
a clog. on equity or redemption and the plaintiffs were entitled to the
redemption, then the interest on 10,000 koris should be awarded to the
mortgages; and that the suit should be dismissed as there was no clog on
equity of redemption and the Court had no jurisdiction to try the suit.
The other defendants remained absent.
The Trial Court while decreeing the suit came to the conclusion
that there was mortgage transaction between th.e father of the plaintiffs
and the mortgagees on 20th April, 1943, that the terms and conditions
C · in the mortgage deed being harsh and oppressive, 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; that the sisters of the
plaintiffs were not necessary parties to the suit and even if they were, a
co-mortgagor was entitled to file the suit for redemption so the suit was
not bad for want of non-joinder of necessary parties; that it had jurisD
diction to try the suit; that the mortgagees were not entitled to claim
interest on 10,000 koris and that the plaintiffs were entitled to recover.
possession from the defendants. Nos. 4 to 9 who were the tenants
inducted by the mortgagees.
The appeals filed by the mortgagees as well as the tenants were
E
dismissed by the first appellate Court holding that the terms and conditions of the mortgage deed were oppressive and harsh, there was clog on
equity of redemption and the mortgagor should be freed from that
bondage that the tenants had no right to be in possession and were not
entitled to the protection of the Bombay Rent Control Act after the
redemption of the mortgage. The High Court dismissed the second
F
appeal.
Civil Appeal No. 9993 of 1983. is an appeal by the tenaut. Civil
Appeal No. 397 of 1980 is also an appeal by the tenant. In this case the·
decree-holder instituted a regular suit for redemption of the mortgage
property. The suit was· dismissed. Thereupon the respondent No. l
Q. preferred an appeal to the District Judge where the suit was decreed.
The defendants filed a second appeal which was dismissed. The decreeholder made an application for final decree. The Court while giving the
final decree for redemption of the mortgage directed the judgmentdebtors to hand over the possession of the mortgage property within
three months on the decree-holder making payment of dues in respect of
.H . the mortgage in the court. In pursuance of the final decree the decree-
·l*
,
;;..~
:·,{·~·~=_,.,
l.
P OMAL KANJJ v. V.K. PUROHIT
829
holder took out the executiou proceedings and deposited the dues in the
A
Court and claimed possession of the mortgage property from the appellant. herein stating that he was a tenant in the possession of the property. Notice was issued to the tenant, who submitted Ms objection
stating that he was a tenant, not to be evicted in the execution of the
decree and that he was entitled to get the protection under the Bombay
Rent Control Act. The Disctrict Judge held that there was no conduct B
on the part of the decree-holder which would stop him from claiming
physical possession from the tenant of the mortgagee in possession. ·The
High Court rejected the appeal summarily.'Hence the appeal.
Civil Appeal No. 1286 of 1981 is also an appeal by the tenant. The
appellant is the tenant of the mortgagee inducted in 1955. The property c
was mortgaged in 1948 for a period of five years. It appears 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.
The first appellate court came to the conclusion that the tenants were
not protected under the provision of the Bombay Rent Control Act. The
appellant preferred this appeal in this Court.
D
On behalf of the appellants it was contended that in the fomner
Kutch District there was a custom to mortgage for a long terni of 99
years ·and when the period was long, naturally the mortgagee would .he
required to give full authority to repair and reconstruct the mortgaged
property with a view to keep pace with new demands of changing patE
tern, so the condition should not be treated as clog on equity of redemp-
.,
lion; (2) that there is no evidence to lead to the conclusion that there was
any undue influence; (3) that the provision for the payment towards
cost and expenses of repairs and c11nstruction did not amount to a clog
on the equity of redemption; (4) that on the evidence and the facts the
transactions did not amount to clog on the equity of redemption; (5) that F
in Civil Appeal No. 9993 of 1982 the plaintiffs were not entitled to
recover possession from the appellants, who are tenants in the mortgage
properties, since their rights are protected under the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947 as the said Act
applies to the area of Kutch in the Bombay State. Therefore, no decree
for eviction could be passed against them except in accordance. with the
G
provisions of the said Act; (6) that the Trial Court did not make any
finding as to when the tenants were inducted, either before or after the
rent restriction Act was made applicable to the area of Kutch and (7)
that the High Court has erred in not following the said legal position
entrenched by a line of decisions of this Court with the rights of a
tenant inducted by a mortgagee with possession would enure beyond
H
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830
SUPREME COURT REPORTS
[ 1988] Supp. 3 S.C.R.
the period of redemption of the mortg~ge if his rights are enlarged by
subsequent tenancy legislation in force in the are~ in which the property
is situated.
Dismissing the Appeals,
B
HELD: I. The Court will ignore any contract the effect of which
('
is to deprive the mortgagor of his right to redeem the mortgage. [844E] .
2. The rights and liabilities of the mortgagor are controlled by the
provisions of section 60 of the Transfer of Property Act, 1882. [846F)
3. Any provision inserted to prevent, evade or hamper redemption is void. [846G J
4. The doctrine "clog on the equity of redemption" is a rule
of justice, equity and good conscience. It must be adopted in each
case to the reality of the situation and the individuality of the
D· transaction. [847 A)
5. Freedom of contract is permissible provided it does not lead to
taking advantage of the oppressed or depressed people. The law must
transform itself to the social awareness. Poverty should not be unduly
permitted to curtail one's right to borrow money on the ground of
E
justice, ·equity and good conscience on just terms. If it does, it is bad.
Whether it does or does not, however, depends upon the facts and the
circumstances of each case. [847H; 848A]
6. Whether in the facts and the circumstances of these cases, the
morgage transaction amounted to clog on the equity of redemption, is a
p
mixed question of law and fact. [848D I
I
7. Courts do not look with favour at any cl~use or stip11lation
which clogs equity of redemption. A clog on the equity of redemption is
unjust and . unequltable. The principles of English law, as we have
nQticed from the decisions referred to hereinbefore which have been
G
accepted by this Court in this country, 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. T848D-E]
8. It is a right of the mortgagor on redemption, by reason of the
very nature of the mortgage, to get b~ck the subject of the mortgage and
H
to hold and enjoy as he was entitled to hold and enjoyit before .the
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P OMAL KANJI v. V.K. PUROHIT
831
mortgage. If he is prevented from doing so or is prevented from reA
deeming the mortgage, such prevention is bad in law. If he is so prevented, the equity of redemption is affected by that whether aptly or
not, and it has always been termed as a clog. Such a clot is inequitable.
The law does not countenance it. [848F-G]
9. Whether or not in a particular transaction there is a clog on B
the equity or redemption, depends primarily upon the period of
redemption, the circumstances under which the mortgage was created,
the economic and financial position of the mortgagor, and his relationship vis-a-vis him and the mortgagee, the economic and social condition
in a particular country at a particular point of time, customs if any,
prevalent in the community or the society in which the transaction takes C
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 obligation of the mortgagee to construct or repair or maintain
the mortgaged property in cases of usul'ructuary mortgage to manage
as a matter of prudent management, these factors must be co-related to D
each other and viewed in a comprehensive conspectus in the background of the facts and the circumstances of each case, to determine
whether these are clogs on equity of redemption. [848H; 849A-C]
10. A mortgage is essentially and basically a conveyance in law or
an assignment of chattels as a 'security for the payment of debt or for E
discharge or some other obligation for which'it is given. The security
must, therefore, be redeemable on the payment or discharge of such
debt or obligation. Any provision to the contrary, notwithstanding, is a
clog or fetter on the equity of redemption and, hence, bad and void.
"Once a mortgage must always remain a '1tortgage", and must not be
transformed into a conveyance or deprivation of the right over the F
property. l849D-E]
11. The law must respond and be responsive to the felt and discernible compulsions of circumstances that would be-equitable, fair and
just, and unless there is anything to the contrary in the Statute, law
must take cognisance of that faot and act accordingly. In the context G
of fast changing circumstances and economic stability, long-term for
redemption makes a mortgage an illusory mortgage, though not
decisive. [850D-EJ
12. Even apart from section 76(a) of the Transfer of Property Act
if the words of the mortgage deed clearly and indubitably express an
H
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832
SUPREME COURT REPORTS
[ 1988] Supp. 3 S.C.R.
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
conferred by the mortgage deed would be binding on the mortgagor. If
the words of the mortgiige deed do not 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 possession to induct a tenant would not create a
tenancy binding on the mortgagor after the redemption of the
mortgage. [857E-GJ
13. In the instant cases the tenancy rights did not come to be
enlarged by the Tenancy Legislation after the tenant was put into
C possession by the mortgagee and the tenancy created in favour of the
tenants by the mortgagor did not have the concurrence of the mort.
gagor so as to claim tenancy rights even after redemption of the
mortgage. [866C]
Khatubai Nathu Sumra v. Rajgo Mulji Nanji and Ors., A.I.R.
D
1979 Gujarat 171; Lalji Purshottam v. Thacker Madhavji Meghaji, 17
Gujarat Law Reporter 497; Magan/al Chhotalal Chhatrappati and Ors.
v. Bhalchandra Chhaganlal Sha/, 15 Gujarat Law Reporter 193; Soni
Motiben v • .M/s. Hirata/ Lakhasmhi, 22' Gujarat Law Reporter 473;
Vadilal Chaganlal So.ni and Others v. Gokaldas Mansukh and Other,
A.I.R. 1953 Bombay 408; Sarjug Mahto and Others v. Smt. Devruo
E
Devi and Others, A.I.R. 1963 Patna 114; Kunibiharilal v. Pandit Prag
Narayan, A.I.R. 1922 Oudh 283; S. V. Venkatara!'la Reddiar v. Abdul
Ghani Rowther & Ors., A.I.R. 1980 Mad. 276 and Devkinandan and
Another etc. v. Roshan Lal and Others, A.I.R. 1985 Rajasthan 11,
approved.
f
Santley v. Wilde, (1989] 2 Ch. 474; Vermon v. Betheli, 28 E.R.
838 and 839; G. and C. Kreglinger v. New Patagonia Meat and Cold ·
Storage Company Ltd., (1914] Appeal Cases 25; All India Film Corpo- ·
ration v. Raja Gyan Nath, [1969] 3 SCC 79; Sacha/ma/ Paras ram v ..
Ratnabai, [1973] 3 SCC 198 and Om Prakash Garg v. Ganga Sahai &
Ors., [1987] 3 sec 553, relied on.
.
G
~
Seth Ganga Dhar v. Shankar Lal & Ors., [1959] S.C.R. 509 and
Jadavji Purshottam v. Dhami Navnitbhai .(1.maratlal & Ors., [1987] 4
sec 223, diStinguished,
Aziz Khan v. Duni Chand. and Others, A.I.R. 1918 l!..C. 48;
. H Jartah Timber & Wood Paving Corporation v. Samuel, l1903l 2 Cit. 1;
••
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POMAL KANJI v. V.K. PUROHIT [MUKHARJl, J:]
833
Chhedi Lal v. Babu Nandan, AIR 1944 Allahabad 204; Bhika and Anr.
v. Sheikh Amir and Ors., A.I.R. 1923 Nagpur 60; Mahabir Gope v.
Harbans Narain Singh, [1952] SCR 775; Hariher Prasad Singh v. Must.
of Munshi Nath Prasad, [1956] S.C.R. l; Asa Ram v. Mst. Ram Kali,
[1958] SCR 986; Dahya Lal v. Rasul Mohammed Abdul Rahim, [1963]
3 SCR l; Madan Lal v. Bedri Narain and Others, [1987] 3 S.C.C. 460;
Mu/la's Transfer of Property Act, 7th Edition, pages 401and402; Rashbehary Ghose's 'Law of Mortgage' 6th Edition, pages 227 and 228;
[Jala/'s Rent Act, 4!h Edi!· P~!le 814 referr~d to,
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9993
of 1983-etc.
From the Judgmetll anct Order dated 16.12. 1982 of the Gujarat
High Court in S.J\. No. 168 of 1982.
B.K. Mehta, Rajinder Sachhar, T.U. Mehta, S.K. Dholakia,
Vimal Dave, Krishan j(umar, Mrs. C.M. Chopra, P.H. Parekh,
A
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!
Ms. Sunita Sharma, Mrs. Rani Chhabra, R.C. Bhatia and P.C. Kapur
D
}'
for the appearing parties.
The Judgment of the Court was delivered by
SABYASACHl MUKHARJI, J, These appeals and the special
leave petition are directed against the decision of the High Court of
E
Gujarat, upholding the right ·of the mortgagors to redeem the properties before the period stipμlated in the deeds, as well as the right of the
mortgagors lo recover possession of the properties from the tenants
and/or the mortgagees without resprt to the releyant Rent Restriction
Act. All these niat\ers were separately canvassed before us as these
involved varying facts, yet the fundanien(al common yuestion is,
fl
whether long term mortgages in the present inflationary 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
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Acts, One basic fact that was emphasised in all these cases was that all
these involve urban immovable properties. In those circumstances,
whether the mortgages op0rnte as clogs on equity of redemption is '1
mixed qμestion pf law anct facts. It is necessary to have a conspectus of
the facts involved in each of the cases herein. We may start with tl1e
faq~ relating to Special Leave Petition (Civil) No. 8219 of 1982 H
!Jernufie !hM is a !ypic~I case.
A
834
SUPREME COURT REPORTS
[ 1988) Slllpp. 3 S.C.R.
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
B
High Court, dated 26th April, 1982 dismissing the second appeal. The
High Court observed that the learned Judge had followed the judgment of the said High Court in Khatubai 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
0
terms gave the mortgagee the right to demolish existing structure and
construct 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 not binding. In order, however, to
appreciate the contentions urged therein, it will be necessary to refer
to the decision of the first Appellate Court, in the instant case before
J) 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 No. 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 all~ging
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that the deceased Karsandas Haridas Purohit was their father and he
Clied in the year 1956, he had mortgaged the suit property to Kansara
Soni Shivji Jetha and Lalji Jetha for 30,000 Koris by a registered
mortgage deed dated 20th April, 1943. The mortgage deed w~s
executed in favour of Soni Govindji Narayanji who was the power of
attorney holder and manager of the defendants Nos. 1 and 2. The
JI
defendant No. 3'is the heir of said Govindji Narayanji and he was also
managing the properties of the defendants Nos. 1 and 2. The mortgage
property consisted of two delis in which there were residential houses,
shops etc. The mortgagees had inducted tenants in the suit property
and they were defendants Nos. 4 to 9 in the original suit. When the
mortgage transaction took place, the economic condition of the father
q 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 conditions.
They got incorporated long term of 99 years for redemption of mortgage. It is further stated that though possession was to be handed over
Ill to the mortgagees, they took condition for interest on the part of
POMAL KANJI v. V.K. PUROHIT [MUKHARJI, J.)
835
principal amount in the mortgage 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 conditions, according to t\l.e
Appellate Judge, were incorporated in the mortgage deed to ensure
that the mortgagors were prevented for ever from redeeming the mortgage. The terms and conditions, according to the Assistant Judge,
Bhuj, being the fiFst 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 notice to the
defendants Nos. 1 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 Nos. 4 to 9
who were the tenants inducted by the mortgagees.
A
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The defendant No. 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 No. 3 resisted the suit by
D
written statement. The defendants Nos. 4 to 9 resisted the suit on the
grounds that the plaintiffs were not entitled to redeem the mortgage
and even if they were so entitled, they could not 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 not entitled to get actual possession of the premises in which they
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were inducted by the mortgagees. The defendants Nos. 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 could not be effected
upon them. The summons was published in tne local newspapers but
none of them appeared before the Court so the Court proceeded exparte against them. The trial was conducted and a preliminary decree
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for redemption of mortgage was passed on 2nd April, 1974 by the Trial
Court. Thereafter, the decree-holder applied for final decree so the
notices were issued to all the defendants. The heirs of Shivji Jetha
appeared in response to that notice and filed applications before the
Trial Court to set aside the ex-parte decree on the ground that summons of the suit had not been duly served upon them. That prayer was G
rejected by the Trial Court. Thereafter, they filed Civil Misc. Appeals
in the District Court. The appeals were allowed by the District Court
and the ex-parte decree for redemption of mortgage was set aside. The
Trial Court was directed to proceed with the suit after permitting the
concerned defendants to take part in the proceedings right after
receiving their written statements. Accordingly defendant No. 2/1
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SUPREME COURT REPORTS
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appeared in the suit and filed his wntten statement while the other
defendants remained absent.
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It was the case of the defendant No. 211 that the sisters of the
plaintiffs had not been joined as parties in the suit, so the suit was bad
for want of necessary parties. Moreover, as per the terms and conditions of the mortgage deed dated 20th April, 1943, there was
usufructuary mortgage for 20,000 koris and the remaining 10,000 koris
were advanced to the mortgagor at monthly interest at the rate of l/2
per cen't'.'rhere was a condition in the mortgage -deed ihat the mart-
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gagor should pay principal amount as well as the interest at the time of
redemptiqn. )Vhen the suit was filed in the year l972, the mortgagees
;ve~re" entitled to recover interest on 10,000 foris for a ·period of 29
years.' That iμterest would be 17,400 koris so the total mortgage
amount wijl by Rs.47400 which would be equivalent to Rs, 15,800 and
and the Civil Judge had no jurisdiction to try such suit so the plaint
should have been returned for presentation in the proper court. It was
further alleged that the court fees paid by the plaintiffs ;,,,as also not
sufficient. Moreover, it was not true that the father of the plaintiffs
wai of weak economic condition. The grand father of the plaintiffs was
aq Advocate and the father of the plaintiffs was the clerk of an Advoc;ate. The plaintiff No. I was also working as an Advocate at the time
of \he mortgage, so they knew the legal position. It was forther alleged
that at the relevant time the prevalent custom in Kutch State was to
take mortgages of long term for 99 years and wh~n it was permissible
to lake mortgage deeds with such a long term, it was also nece~sary to
give permission for rebuilding the whole property, for better enjoyment of it.' So long term mortgage and the conditions for reconstruction of the property could not amount to clogs on equity of redemption
of ~ortgage, it was the case of the mortgagees and/or tenants. The
mortgagees did not take any, it was pleaded, undue advantage and
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they were 11ot present physically when the transaction took place
t~{pugh their p0wer of a\torney. holders. If the conditions in the mortgage deed did not amount to clogs on equity of redemption, the suit
v.;oulct be clearly premat~re. It may be mentioned that the plaintiff No.
l had subsequently become a Civil Judge and was ultimately the
Chairman of the Tribunal so if the said terms and conditions of the
mortgage were onerous and oppressive, he would not 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, the suit had been filed with
ma/a fide intention. It was averred that in case the Court came ·ta the
conclusion that there was clog on equity of redemption and the
POMAL KANJI v. V.K. PUROHIT [MUKHARJI, J.l
837
plaintiffs were entitled to the redemption, then the interest on 10,000
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koris should be awarded to the mortgagees. In the premises, it was
averred that the suit should be dismissed as there was no clog on equity
of redemption and the court had no jurisdiction to try the suit. The
Trial Court then recorded. additional evidence in the suit and ultimately decreed the suit on 28th September, 1978. The Trial Court
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came to the conclusion that there was mortgage transaction between
the father of the plaintiffs and Soni Shivji Jetha and Lalji Mulji on 20th
April, 194:t The Trial Court further came to the conclusion that the
terms and conditions 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 Court also came to the conclusion that the sisters C
of the plaintiffs were not necessary parties to the suit and even if they
were necessary parties, a co-mortgagor was entitled to file the suit for
redemption, so the suit was not bad for want of non-joinder of necessary parties. The Trial Court further came to the conclusion that it had
jurisdiction to try the suit and held that the mortgagees were not D
entitled to claim interest on 10,000 koris. It was further directed that
the plaintiffs were entitled to recover possession from the defendants
Nos. 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 E
No. 149/78 and the tenants filed Regular Civil Appeal No. 150/78.
These were disposed of by the judgment of the first Appellate Court.
The "learned Judge of the first Appellate Court framed the following
issues:
"(1) Whether the terms and conditions in the mortgage p
deed dated 20.4.1943 amount to clog on equity of
redemption?
(2) Whether the decree passed is bad for want of jurisdiction with trial court?
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(3) Whether the mortgagees are entitled to get interest on
10,000 koris?
(4) Whether the tenants are protected from the effect of
redemption decree by virtue of the provisions of Bombay
Rent Act?
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(5) Whether the decree passed by the trial court is legal
and proper?
(6) What order?"
It is not necessary any longer in view of the findings made and
the subseqoent course of events to detain ourselves on all the issues.
For the purpose of the present appeal is well as the connected appeals
we are concerned with two issues, namely, Issue Nos. 1 and 4 stated
above, in other words, whether the terms and conditions 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 noted
that it was not in dispute that the document, Ext. 103 dated 20th April,
1943, the certified copy of which was also produced at Ext. 51 was
executed by the father of the plaintiffs in favour of Kansara Soni Shivji
J etha. According to this document, an usufructuary mortgage was
created on the suit property for 20,000 koris and the possession was to
be delivered to the mortgagees. Over and above that a further amount
of 10,000 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 30,000 koris as principal amount along with interest due on
10,000 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 coupled with other circumstances, indicated that there was
clog on equity of redemption. It was argued that the long term for
redemption was not necessarily a clog on equity of redemption.
Certain decisions were referred to. The Trial Court noted that there
was no quarrel with the proposition of law that long term itself could
not amount to clog on equity of redemption, when the bargain
otherwise was reasonable one and the mortgagee had not 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 noted here that there was a condition in
the mortgage deed permitting construction of structure after demolishing the existing structure, costs of which were to be paid by the mort-
I
POMAL KANJI v. V.K. PUROHJT (MUKHARJI, J.)
839
gagor. After examining the facts and the relevant decisions, the first
Appellate Court came to the conclusion that the terms were oppressive
and harsh-and-There -was-Clog on equity Of redemption and the mort·
gagor 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
condition permitting the mortgagee to reconstruct the whole premises
was natural consequence of long term and that should not be treated as
clog on equity of redemption. The learned Assistant Judge had
rejected the similar contention made before him on behalf of the mort·
gagees and tenants in view of tl)e decisions of the Gujarat High Court
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 another cir·
cumstance i.e., to the condition of mortgage which indicated the
oppressive nature of the term. By mortgage de~d being Ext. 103
usufructuary mortgage was created for 20,000 koris only and addi·
tional mortgage of 10,000 koris was also created for which the mort·
gagor had to pay interest at the rate of 1/2 per cent per month. Fur·
thermore, the mortgagor was not allowed to discharge interest liability
periodically, but he had to pay the whole amount of interest at the end
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of 99 years at the time of redemption of the mortgage. Naturally, there
-would be huge accumulation of interest which for all practical prob·
abilities 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 F
could never be exercised. On the other hand, it was contended before
the learned Assistant Judge that the transaction was bona fide because
reasonable consideration was paid as mortgage money. There was no
direct contact between the mortgagor and the mortgagee. There could
not be any collusion. The mortgagees were abroad. The learned As·
sistant Judge examined the evidence of one Madhavji Shivji Soni in
order to show comparable instances for reasonableness of the consid·
·eration. The learned Assistant Judge after discussing tbe evidence
proceeded on the assumption that the consideration paid as mortgage
money was reasonable and proper and, according to him, it did not
make any difference if the other conditions in the mortgage deed were
found to be oppressive and amounting to clog on equity of
redemption.
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SUPREME COURT REPORTS
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Attention of the learned Assistant Judge was drawn to the fact
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that this was a bona fide transaction at the time when made, but
subsequently, the prices of immovable properties increased so the
plaintiffs had come forward to file suit.s after a lapse of long time. It
was highlighted that the plaintiff No. 1 was serving qs a Civil Judge and
if he came to know that the transaction was oppressive, he would not
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have sat idle for such for a long period. Reference was l)lade to the
decision of this Court 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 conclusion on point No. 1 that
there was clog on equity of redemption and accordingly answered the
Issue No. l in the affirmative. With the other issues we are not conc
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cerned in this appeal except Issue No. 4. Regarding Issue No. 4, as
mentioned hereinbefore, which is on th~ 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 no dispute in this case and
in the facts of the other three appeals that the 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
conpetent to lease out the suit property and if in exercise of that
power, they inducted the tenants in the suit properties, their tenancies
would not come t.o an end on .the redemption of mortgage, it was
argued. The Full Bench of the Gujarat High Court in La/ji 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
not 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 not 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
1-righ Court and the High Court 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 possesH
sion.