RAJASTHAN HIGH COURT

                       Abdul Gani

                       Vs.

                       Abdul Gafoor

S.B. Civil Second Appeal Nos. 39 of 1984, 93 of 1984
                  (Shiv Kumar Sharma, J.)

                       19.11.2005

                       JUDGMENT

Shiv Kumar Sharma, J.

1. The point of importance that arises in the instant appeals concerns the interpretation
of 'clog on the equity of redemption'. The phrase 'clog on the equity of redemption' is
nowhere used in the Transfer of Property Act (for short TP Act'). The doctrine is
implicit in the language of Section 60 of the TP Act, which deals with the mortgagor's
right to redeem. The first proviso to Section 60 TP Act contemplates the
extinguishment of the right of redemption by the act of the parties or by a decree of
the Court.
2. The facts giving rise to these appeals are as under:

Abdul Gani, the plaintiff filed a suit for specific performance of agreement to
sell against Abdul Gafoor, the defendant, with the averments that on February
17, 1971 the defendant obtained loan in the sum of Rs. 2500/- from the plaintiff
by mortgaging his house situated at Ghat Darwaja, Jaipur and executed a
mortgage deed on February 17, 1971. On September 8, 1971 the defendant
required more money, therefore, he agreed to sell his house in consideration of
Rs. 6000/-. The amount of Rs. 2,500/- already paid under mortgage was
adjusted towards the sale price of the house and remaining amount Rs. 3,500/-
was paid to the defendant and the receipt was obtained. The agreement to sell
was drawn on September 8, 1971 with a promise to execute the sale deed within
15 days. When the sale deed was not executed the plaintiff instituted the suit for
specific performance of the agreement dated September 8,1971 and also
claimed manse profit at the rate of Rs. 100/- per month.
3. The defendant in the written statement admitted the mortgage, but denied to have
executed agreement to sell on September 8, 1971. He also pleaded that he never
received Rs. 3.500/- from the plaintiff.

4. Learned trial Court framed necessary issues and after discussing the evidence it
decreed the suit on April 24, 1973 holding that agreement to sell was executed on
September 8, 1971 by the defendant and he received Rs. 3,500/- from the plaintiff and
issued receipt. The defendant was directed to execute registered sale-deed and deliver
possession of the disputed property to the plaintiff. Mesne profits as claimed were also
awarded to the plaintiff.
5. Being aggrieved by the aforesaid decree and judgment the defendant preferred civil
regular first appeal. Learned first appellate Court vide order dated July 19,1976
remitted the following issue to the trial Court for adjudication :

       "Whether the defendant was in possession of the disputed property in the
       capacity of tenant?"

Learned trial Court vide order dated July 24, 1978 held that the relationship of
landlord and tenant existed between the parties and the defendant was in possession of
the property in the capacity of tenant. The plaintiff contested the finding by submitting
objections in the first appellate court.

6. Learned First Appellate Court however vide judgment and decree dated December
13, 1983 ultimately held that since execution of all documents had been duly proved
and agreement dated September 8, 1971 did not create any clog on the equity of
redemption, the said agreement could be enforced. It was however held that the
plaintiff was not entitled to possession and mesne profit because the relationship of
landlord and tenant was created between plaintiff and the defendant. Learned first
appellate court, therefore, decreed the suit of plaintiff only to the extent of specific
performance of agreement dated September 8, 1971.

7. It is against the decree dated December 13, 1983 that the instant second appeals
have been filed by the plaintiff and the defendant.
8. Mr. A.K. Bhandari, learned Senior Counsel for defendant canvassed that agreement
to sell dated September 8, 1971 (Ex. 3) was covered by first proviso to Section 60 of
the TP Act, which extinguishes the rights of redemption by the act of the party,
therefore, it could not have been legally enforced.

9. Per contra, Mr. Anil Mehta, learned counsel for the plaintiff urged that the finding
of learned first appellate court in partly modifying the judgment and decree of trial
Court with regard to delivery of possession was perverse, since first appellate court
did not apply its mind to the documentary evidence and oral evidence in proper
manner and arrived at an erroneous finding that the defendant was in possession of the
disputed property in the capacity of a tenant.

10. I have given my anxious consideration to the rival submissions and scanned the
material on record.

11. Both the courts below concurrently held that by executing document Ex. 3 the
defendant had abandoned all his rights in the property. It was the act of defendant
extinguishing the right of redemption and sufficient for the application of the first
proviso to Section 60 TP Act.

12. A look at the first proviso to Section 60 of Transfer of Property Act demonstrates
that there was nothing to prevent the parties to a mortgage from coming to a
subsequent arrangement qualifying the right to redeem. Where the mortgagor by his
own overt act very much subsequent to the date of the mortgage had given possession
of the mortgaged property to the mortgagee, thereby confirming the condition of
absolute transfer in favor of the latter and extinguishing his own right of redemption.

13. The Division Bench of this Court in Ratan Lal v. Prabhu Dayal, 1 indicated that
there can be hardly any doubt as to correctness of the proposition that by a subsequent
and wholly independent transaction, the right of redemption in the mortgaged property
could be conveyed to the mortgagee. The fresh transaction of conveyance must not be
an integral part of the mortgage itself, but must be altogether independent thereof,
otherwise it might well be regarded as clogging the right of redemption of the
mortgagor which is a very valuable right jealously guarded by courts of law on
account of the fiduciary relationship which subsists between the parties as long as the
mortgage lasts.

14. Vaughan Williams, L.J. in the case of Lisle v. Reeve, 2 enunciated the principle
thus:

       "I did not understand the defendant's counsel to dispute that it is competent for a
       mortgagee to enter into an agreement to purchase from the mortgagor his equity
       of redemption. The only objection to such an agreement is, that it must not be
       part and parcel of the original loan or mortgage bargain. The mortgagee cannot,
       at the moment when he is lending his money and taking his security, enter into
       an agreement, the effect of which would be that the mortgagor should have no
       equity of redemption. But there is nothing to prevent that being done by an
       agreement which in substance and in fact is subsequent and independent of the
       original bargain."

15. In Jalappa v. Narasimha Setty, 3, the Division Bench held thus :

       "Where the manager of a joint Hindu family incurs a mortgage debt for family
       necessity and sells the hypotheca to the mortgagee in discharge of the mortgage
       debt, there is extinguishment of the right to redeem by act of parties and a suit
       for redemption filed thereafter by a member of the family is misconceived. A
       suit for redemption can lie only if there is a subsisting mortgage. The mortgage
       having been discharged the suit for redemption is misconceived."

16. It is well settled that mortgagor and mortgagee can enter into a contract
subsequently to the mortgage for the sale of the mortgaged property to the mortgagee.
But the contract must not be part and parcel of the original loan or mortgage bargain.
In other words, the act of the parties that is referred in Section 60 TP Act as
extinguishing a mortgage must be one which is independent of the mortgage
transaction and not a part and parcel of it. On a close scrutiny of agreement Ex. 3, I
am of the view that by executing the said document the defendant acted in
extinguishing his right of redemption. The agreement was in substance and in fact was
subsequent and independent of the original bargain. The suit for specific performance
of the said agreement was rightly decreed by the courts below.

17. That takes me to the substantial question formulated at the time of admission of
the appeals which reads thus:

       "Whether the appellate court was justified in law in holding that the respondent
       was in possession of the disputed premises as a tenant without considering the
       objections that were submitted by the appellant against the finding recorded by
       the trial Court on additional issues framed by the appellate court ?"

18. A close look at the judgment of first appellate court reveals that the objections
submitted by the plaintiff against the finding of the trial Court wherein defendant was
held to be the tenant of the plaintiff, were not considered. On facts so far as the matter
is concerned, after executing the mortgage deed dated February 17, 1971 (Ex. 2), the
defendant became the tenant in the disputed premises. Later on when the agreement to
sell Ex. 3 was entered upon by the defendant on September 8, 1971 and disputed
property was agreed to be sold in consideration of Rs. 6000/- and entire amount was
received by the defendant on a promise to execute the sale deed within 15 days, the
tenancy of the defendant ceased to exist. After the right of redemption of the
defendant was extinguished under the first proviso of Section 60 TP Act, the
defendant ceased to be the tenant in the disputed premises. The documentary and oral
evidence was not properly considered by the learned first appellate court while
arriving at the finding that the defendant was in possession of the property in the
capacity of tenant and to the extent of this finding the judgment and decree of the first
appellate court deserves to be set aside. I hold that the defendant was not in possession
of the disputed premises in the capacity of tenant.

19. Resultantly the appeal of plaintiff stands allowed and the impugned judgment and
decree dated December 13, 1984 of the learned Additional District Judge No.4, Jaipur
City to the extent of the decision of additional issue whereby the defendant was held
to be tenant in the disputed premises shall stand set aside. Rest part of the judgment
and decree is confirmed. The appeal of the defendant being devoid of merit stands
dismissed. There shall be no order as to costs.
Appeal dismissed.

Cases Referred.

1. (ILR 1960 Raj Series 517)
2. (1902) 1 Ch. 53
3. AIR 1963 AP 420