What is clog on redemption
The Doctrine of Clog on Redemption
Overview
The Doctrine of Clog on Redemption is a legal principle that affects the enforceability of certain contractual provisions or conditions in relation to the redemption of the property. It serves as a safeguard against the potential abuse of power by lenders and aims to protect borrowers from unfair and oppressive terms.
Nooks v. Rice,
it has been said:
There are three doctrines of the Courts of equity in this country. The
first is expressed in the maxim Once a mortgage, always a mortgage. The
second is that the mortgagee shall not reserve to himself any collateral
advantage outside the mortgage contract; and the third is that a provision
or stipulation which will have the effect of clogging or fettering the
equity of redemption is void.
Once a mortgage, always a mortgage
The meaning is that the mortgagee shall not make any stipulation which will prevent a mortgagor who has paid principal interest and costs from getting back his mortgaged property in the condition in which he parted with it.”
Thus any agreement which directly bars the mortgagor’s right to redeem or a stipulation which directly or indirectly may have the effect of making the mortgage irredeemable or the property being still subject to encumbrances after redemption, are clogs on the equity of redemption.
The provisions contained in section 60 of Transfer of Property Act, affirms the maxim "once a mortgage always a mortgage". The doctrine of a clog on redemption is in fact a rule of justice, equity and good conscience. The right of redemption cannot be controlled by any agreement made as part of the transaction of mortgage itself in view of the clear provisions contained in section 60 of the Transfer of Property Act, although after the mortgage the mortgagor may deal as he pleases with his property and so the maxim "once a mortgage always a mortgage" has no reference to agreements subsequent to the mortgage.
Description of Clog on Redemption:
A clog has been described as any contrivance or method whereby the mortgagor’s right of redemption is impaired.
Tests of Clog on Redemption:
The test whether a particular agreement or stipulation is a clog or not depends on the nature, import and scope of the stipulation and whether the same has been a part of the mortgage agreement itself. The needy mortgagor cannot bargain on equal terms with the mortgagee and it is to save him from pressures of the mortgagee that this rule has been made by equity.
You may also interested in reading Kinds of Mortgage in Transfer of property Act
Modern Trend of Courts on doctrine of Clog on Redemption:
Courts in England were at one time inclined to rule even further than this that any benefit or advantage which may endure beyond the period of repayment of the debt with interest and costs (called “the price of redemption”) was invalid but the modern trend is not so harsh, it restricts the rule to the Clogging of equity and will not allow it to go further.
Consequently, in the Kreglinger case, Lord Mercey described this doctrine as an unruly dog, which if not chained and confined to its own kennel, was prone to wander into places where it ought not to be. It was observed in that case that if the collateral advantage is not unjust, unfair, extravagant or oppressive, or in the nature of penalty or inconsistent with the right to redeem, the same is valid. This view finds expression in Kanahayalal v. National Bank of India and is in line with the construction of Section 60 of the Transfer of Property Act.
Who can Exercise the right of Redemption
As to who can exercise this right and how, is laid down in Section 91 of the Transfer of Property Act. It can be exercised before it is foreclosed, or the mortgaged property is sold by the mortgagee or before it becomes time-barred.
Provision of S.91 of the Act notifies the persons besides mortgagor, who can sue for redemption, including any person who has any interest in, or charge upon, property mortgaged or upon the right to redeem the same; any surety for the payment of mortgage debt or any part thereof, or any creditor of the mortgagor who has in suit for administration of his estate had obtained decree for the sale of mortgaged property. A co-sharer may also redeem property mortgaged by another co-sharer.
You should also know⮚⮚⮚ What is Mortgage
Important case laws on doctrine of Clog on Redemption:
it has been held:-
In considering whether a condition in a mortgage amounts to a clog on the
equity of redemption, each case must be examined individually on its own
merits. The whole circumstances of the case must, be looked at and it
must be seen whether the agreement was drafted with the intention that
redemption of the property should be practically frustrated, i.e., made so
difficult and so hedged about that there was no human likelihood of its
ever being redeemed. [P L D 1971 Peshawar 28]
(c) Mortgagee entering into possession under mortgage deed‑Cannot be in adverse possession‑Character of mortgagee‑Cannot be changed till redemption of mortgage or extinction of right of redemption by lapse of time. Mortgage-Deed containing condition that land shall stand sold to mortgagee if not redeemed within specified time‑Such condition, held, invalid being clog on equity of redemption. A mortgage with conditional sale held could be redeemed any time within the period of limitation as prescribed by Article 148 of the Limitation Act. [P L D 1971 Lahore 77]