Right to Redeem

The Right to Redeem is considered the most sacred and fundamental right of the mortgagor (borrower) in a mortgage transaction. This right ensures that a mortgage, which is fundamentally a security for a debt, does not become an irreversible transfer of ownership.

---

1. Statutory Basis and Definition

The Right to Redeem is codified in Section 60 of the Transfer of Property Act, 1882 (TPA).

A. The Right

Section 60 grants the mortgagor the right, at any time after the principal money has become due, to reclaim their mortgaged property upon payment or tender of the mortgage money (principal, interest, and costs).

B. Rights Acquired on Redemption

When the mortgagor successfully redeems the property, they are entitled to require the mortgagee to do three things:

1. Return Documents: Deliver the mortgage deed and all other documents relating to the mortgaged property.

2. Restore Possession: If the mortgagee was in possession of the property (as in a Usufructuary Mortgage), deliver physical possession back to the mortgagor.

3. Re-transfer Title: Either re-transfer the mortgaged property to the mortgagor (or to a third person directed by the mortgagor) or execute a formal acknowledgment that the mortgagee's interest is extinguished. (The right to ask for transfer to a third party is known as the Right to Inspection and Production of Documents).

C. Extinguishment of Right

The Right to Redeem is a statutory right that can only be extinguished in two ways:

1. By Act of Parties: By a subsequent contract (after the mortgage deed is executed) where the mortgagor legally sells, releases, or surrenders the right to the mortgagee.

2. By Decree of a Court: When the court passes a final decree of foreclosure or sale.

---

2. The Doctrine of "Once a Mortgage, Always a Mortgage"

The Right to Redeem is inseparable from the concept of a mortgage, leading to the legal maxim: "Once a Mortgage, Always a Mortgage, and Nothing But a Mortgage."

A. Principle of Equity

This doctrine originated in the English Courts of Equity (Chancery Courts) to protect vulnerable debtors from unscrupulous lenders. It recognizes that a mortgage is merely a security interest, and the ownership interest (the residual right of redemption) always remains with the mortgagor.

B. Co-extensiveness

The right of the mortgagee to recover their debt (the right to foreclose or sell) and the right of the mortgagor to redeem are co-extensive. They commence and exist together, until one right is extinguished by a final court decree.

---

3. The Doctrine of Clog on Redemption

To safeguard the fundamental nature of the mortgage as a security transaction, the law strictly prohibits any term or stipulation in the mortgage deed that restricts the mortgagor's right to redeem.

A. Definition of Clog

A Clog on Redemption is any provision inserted into a mortgage agreement that acts as a fetter or barrierpreventing the mortgagor from reclaiming their property upon repayment of the debt and associated costs. Any such condition is deemed void ab initio (void from the very beginning).

B. Examples of Void Clogs (Restrictions)

The courts have identified several types of stipulations that are considered clogs:

1. Absolute Forfeiture: A condition stating that if the mortgagor fails to pay the debt on the due date, the mortgage shall be converted into an absolute sale to the mortgagee. (This defeats the very purpose of the mortgage).

2. Unreasonable Postponement: Postponing the period of redemption for an unreasonably long time (e.g., 99 years or 240 years) that is likely to extend beyond the mortgagor's lifetime.

   • Judicial View: While a long term does not automatically constitute a clog, the Supreme Court has held that if the long term, coupled with oppressive terms, shows that the mortgagee took undue advantage of the mortgagor's position, it will be treated as a clog (Pomal Kanji Govindji v. Vrajlal Karsandas Purohit, 1989).

3. Collateral Advantage: Stipulations that grant the mortgagee a benefit that is designed to continue even after the mortgage is redeemed. For instance, a condition that the mortgagor must sell a particular product exclusively to the mortgagee even after the debt is paid.

C. Case Law Example (Ganga Dhar v. Shankar Lal, 1958)

The Supreme Court upheld the principle against clogging, asserting that any stipulation that plainly takes away the mortgagor's right to redeem after a specified period is invalid and will be set aside, confirming that the right to redemption is a matter of public policy and cannot be waived by private contract entered into at the time of the loan.

---

The Right to Redeem is thus not merely a contractual right; it is a Statutory Right and an Equitable Rightprotected by the TPA and judicial principles against any attempt by a powerful lender to convert the property secured for a loan into an absolute transfer.