Case: Gulab Chand Sharma Vs. Saraswati Devi and Another

These two appeals by certificate arise out of two suits, one a suit for redemption of mortagage instituted by thet of the first respondent, and the other a suit for injunction filed by the appellant. The relevant facts are these : On Oct. 20, 1936, the Secretary of State forl through the Chief Commissioner, Delhi, executed a deed leasing out in perpetuity a Plot of 0.445 acre of land in New Delhi, which later came to be known as 13, Keeling Road, in favour of two persons, Niranjan Das Sason and Hans Raj Senon. The deed provides inter alia that on breach by the lessees or any person claiming through them of any of the covenants of the lease, the lessor or any person duly authorised by him shall have right ofy upon the premises and thereupon the lease shall cease and stand determined. The lessees who constructed a one storeyed building on the plot sold their leasehold rights in the land with the building thereon to one Bakshi Mohan Lal Sason on March 21, 1949. Bakshi Mohan Lal Sason transferred the property to the appellant, Gulab Chand Sharma, by way of mortagage by conditional sale for Rs. 70, 000/on May 31, 1956. The mortagagor was given four years time from the date of execution of the mortagage deed to repay the sum. Clause 9 of the terms and conditions of the mortagage set out in the deeds reads as follows :      "In case the said mortagagor received a notice ofy from the Land and Development Officer or any other such authority for the breach of convenants of the lease dated 20th October, 1936, before the expiry of the said period of 4 years, the transfer hereby made shall become absolute in terms stated above in favour of the mortagagee who will get the restoration of the property but all the expenses shall be borne by the mortagagor. This clause will have effect notwithstanding the fact that the period of four years shall not have expired."

Court's reasoning:
4. The High Court held that condition No. 9 of the mortgage was a clog on the equity of redemption and, therefore, void, as it had the effect of depriving the mortgagor of his right of redemption while the mortgage was subsisting. We do not think it can be seriously disputed that the view taken by the High Court was right; condition No. 9 of the mortgage which seeks to take away the right of redemption even before the period of four years within which the mortgagor was entitled to pay off the mortgage debt had run out, is obviously a clog on the right of redemption. Counsel for the appellant contended before us that Clause 9 was not really a term of the mortgage transaction but an independent condition that was to come into operation on the service of the notice ofy on the mortgagor. It was argued that the notice ofy which was served on the mortgagor divested him of his interest in the property and in terms of Clause 9 the mortgagee became the owner of it. We find it difficulty to appreciate the contention. Clause 9 provides that on the mortgagor receiving notice ofy before the expiry of the period of four years from the date of the mortgage "the transfer hereby made shall be absolute....... in favour of the mortagagee who will get the restoration of the property but all the expenses shall be borne by the mortgagor". What was transferred to the mortgage was the lessees interest that the mortgagor had in the land. Clause 9 implies that on the service of the notice ofy the transfer of this interest will become absolute and the mortgagee will be the owner of the leasehold property even if the notice is served during the subsistence of the mortgage. Clause 9 therefore appears clearly to be a term of the mortgage transaction. This was how the appellant also construed Clause 9 in the written statement filed by him in the suit for redemption and in the plaint of his suit for injunction. What counsel for the appellant sought to contend was that on the service of the notice ofy on the mortgagor the leasehold itself disappeared. If this was so, it is not clear of what property then the mortgagee claimed ownership; the land belonged to the Government and no. condition contained in the mortgage instrument, whether it was part of the mortgage transaction or independent of it, could confer ownership of the land on the mortgagee. Besides, this is a point not raised in the trial court or in the High Court, and not considered by either of them. As stated already, the only question considered both by the trial court and the High Court was whether clause 9 of the mortgage deed was a clog on the equity of redemption.