Redemption of mortgaged property

What is a Mortgage Redemption under Transfer of Property Act

Overview

“Right to redeem” is the right to require a mortgagee on payment of mortgage-money to do various things referred to in Section 60. Such right accrues when mortgagemoney becomes due. Mortgage deed if provided a period for payment of mortgage-money, mortgagor’s right to redeem would arise only after the expiry of that period and not before specific date, fixed for payment of mortgage debt.

Money can only be payable after expiry of that period and no right to redeem could legally be entertained before that specific date is mentioned under terms of mortgage. Time would run from the date of mortgage as a rule. Period, if fixed for redemption is mentioned and mortgagor was not ’ entitled to redeem earlier. Limitation will reckon only from expiry of the period so fixed.

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Right of redemption of mortgage

Section 60 lays down that at any time when the principal money has become due, the mortgagor has a right, on payment, at a proper time and place, of the Mortgage. money, to require the mortgagee:

i) to deliver to the mortgagor the mortgage-deed and all documents relating to the
mortgaged property which are in the possession or power of the mortgagee;
ii) where the mortgagee is in possession of the mortgaged property, to deliver possession to the mortgagor; and
iii) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and to have registered an acknowledgement in writing that his rights as mortgagee a right to redeem.

Right to redeem mortgaged property would be available to mortgagor at any time, after the principal money had become due. Mortgagor, on payment of mortgaged money would be entitled to claim that possession of mortgage property be delivered to him, subject to contingencies enumerated under S.60, Transfer of Property Act, 1882. [1995 MLD 1064]

Equity of redemption

In England: Such right to redeem is called in England as equity of redemption based on equitable grounds.
In short, mortgagor’s right to redemption means the right of the mortgagor to get back his property free of all conditions or liens, on payment of his debt at any time and after the principal money has become due and before his equity of redemption has been actually foreclosed, notwithstanding any stipulation to the contrary. This right of redeeming the mortgagor’s property is an indefeasible right and cannot be taken away from him by any law or contract. All stipulations tending to bar this right have been held to be invalid.

Provision in mortgage deed attempting to deprive mortgagor of his right of redemption absolutely. Held, amounts to clog on equity of redemption and as such void. [1971 PLD 28 PESHAWAR]

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Redemption of mortgage limitation:

Mortgagor would be barred to approach the court for possession through redemption after lapse of sixty years, but despite the said disability the mortgagor would still be owner; and if he succeeded in getting possession of the property of time-barred mortgage, his possession could not be disturbed on the ground that the opposite side had matured his title through adverse possession or prescription. When a mortgage was created upon an immovable property and no time was fixed for its redemption, the mortgagor would get the right to redeem from the very first day; and if some other date or period was fixed for redemption, then the limitation of sixty years would run from that date or period. [2009 PLD 83 PESHAWAR]

Once a mortgage always a mortgage and mortgagee could not step in the shoes of owners by lapse of time. No period of limitation did run against the mortgagors. Mortgaged property could be redeemed by the mortgagor at any stage without mischief of law of limitation barring redemption after the passage of sixty years. [2020 YLR 2297 PESHAWAR]

Suit for possession through redemption Limitation:

Suit for redemption of mortgage or recovery of possession could be filed within a period of sixty years when right to recover the possession accrued. [2018 CLCN 98]

When the right of Redemption can be exercised:

Section 60 lays down that the right of redemption can be exercised:
(a) at any time when the principal money has become due.

(b) The right has not been extinguished by:

(i) By act of parties.
(ii) By operation of law.
(iii) By decree of the Court.

Right of redemption cannot be taken away by any stipulation in mortgage-deed. Such right remains alive unless extinguished by act of parties or decree of Court or by limitation prescribed, by Art. 148, Limitation Act (IX of 1908). [1971 PLD 77 LAHORE]

(a) any time after the principal money has become due:

The right of Redemption cannot be exercised prior to the date which has been fixed for payment in the deed of mortgage.

(b) The right has not been extinguished:

right of redemption can be extinguished by following ways
(i) By Act of Parties:

that is by some transaction subsequent to the mortgage and standing apart from the mortgage transaction. By the Mortgagee purchasing the equity of redemption from mortgagor, provided that the mortgagee has obtained the leave of the Court if the sale is in execution of his own decree.

Mortgagee has no right to sell property without intervention of Court. Right of redemption is a statutory right and can be extinguished only in manner provided by S. 60 of Transfer of Property Act, 1882. [1981 CLC 1179]
(ii) By operation of law:
By merger when the mortgagee acquires the equity of redemption by inheritance or by a suit for redemption becoming barred by limitation. ‘
(iii) By decree of the Court:
That is a final decree for foreclosure in a mortgagee’s suit under O. 34, R 3(2) of Code of Civil Procedure. or of final decree for foreclosure in a redemption suit under O. 34 R 8(3) of Code of Civil Procedure.

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How right of redemption can be exercised

The mortgagor can exercise his right of redemption either:

(a) On payment, or
(b) On tender at a proper time and place of the mortgage money.

(a) On Payment:

Payment should be made in the current coins or in currency notes, payment by check is not a valid payment and the mortgagee is not bound to accept it. The mortgagee, however, can waive the objection and accept a check. Or payment in a different currency. (34 Cal. 305]

(b) On Tender:

The creditor can accept the payment tendered in part payment provided the debtor does not make it a condition that the tender is to be in discharge of the whole. [5 Bom. LR 387]

Rights of the Mortgagor on Redemption

This section provides that on redemption, the mortgagor can require the mortgagee:

(a) To deliver to the mortgagor:

(i) the mortgage-deed, and
(ii) all documents, relating to the mortgaged property which are in possession or power of the mortgagee.

(b) Where the mortgagee is in possession of the mortgaged property

(i) To deliver the possession thereof to the mortgagor.

(c) To Re-Transfer the mortgaged property

Either the transfer of the mortgaged property to the mortgagor or to such a third person as he may direct or to execute an acknowledgement in writing that the mortgage has been extinguished.

Partial redemption of mortgage

The general rule is that a mortgage being one and indivisible security for the debt and every part of it. The mortgagor cannot redeem it in piecemeal. But there is no bar to a mortgagor of an undivided share in redeeming the entire mortgage. Thus, the owner of the part of the equity of redemption if he wishes to redeem can offer to redeem the whole mortgage but not any part of it. [3 Pat. 818]

When integrity of mortgage having been split up owing to redemption of its part, Partial redemption of remaining part can be allowed. [1971 PLD 158 DHAKA]

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