Once A Mortgage Always A Mortgage

The maxim "once a mortgage, always a mortgage" is a cornerstone of Indian mortgage law, enshrined within the Transfer of Property Act, 1882. This principle guarantees the mortgagor's enduring right to redeem their property upon repayment of the loan, preventing any contractual clauses or actions by the mortgagee from permanently extinguishing this right. This principle ensures fairness and protects borrowers from exploitation within mortgage transactions.

What is Once A Mortgage Always A Mortgage?

The principle "once a mortgage, always a mortgage" is a fundamental tenet of Indian mortgage law. It signifies that the mortgagor's right of redemption cannot be extinguished by any agreement or condition within the mortgage deed. This right is inherent to the nature of a mortgage and remains with the mortgagor until it is extinguished by the act of the parties or by a decree of a court.

While the mortgagor generally cannot redeem before the principal money is due, they have the right to redeem at any time after the due date, unless their right is foreclosed by a decree of the court or extinguished by operation of law. The mortgagee cannot unilaterally convert the mortgage into a sale.

Key Provisions Related To Mortgages

Several sections of the Transfer of Property Act, 1882 are relevant for understanding the concept of the phrase "once a mortgage, always a mortgage":

Section 58

Defines the term mortgage. It further provides for different types of mortgages. Section 58 also provides for terminology used on mortgage transactions. This Section establishes the understanding required to interpret the subsequent provisions.

Section 60

Section 60 provides for the right of the mortgagor to redeem. This Section constitutes the equity of redemption. It provides that the right to redeem the property arises when the loan amount is repaid. Even if the mortgagor and the mortgagee agree on this, the right to redemption cannot be taken away.

Section 62

Section 62 deals with redemption by a usufructuary mortgage. This section allows the mortgagor to recover possession of the property on repaying the mortgage money.

Section 91

Section 91 provides the list of persons who may sue for redemption. Section 91 confers the redemption right not merely on the mortgagor but also anyone having an interest or charge on mortgaged property.

Section 94

Section 94 provides for the rights of mesne mortgagee. A mesne mortgagee is someone who holds a mortgage on a property that has been previously mortgaged. The section clarifies that such a mortgagee possesses the same legal recourse against later mortgagees as they do against the original owner of the property.

Principles And Implications

The Transfer of Property Act protects mortgagors' right to redeem their property by repaying the loan, invalidating any clauses that obstruct this right or unfairly convert the mortgage into full ownership for the mortgagee.

Equity Of Redemption

This is the core concept that allows the mortgagor to redeem the property by repaying the loan. Any clause in the mortgage deed that goes against this right is considered invalid.

Clog On Redemption

Any term that serves as a bar to the right of redemption is a clog on redemption and is void. The Act makes sure that the right of redemption of the mortgagor is not defeated and cannot be waived off through any agreement.

Fair Treatment Of Mortgagors

The Act ensures that mortgagors are not unfairly deprived of their properties. It stops mortgagees from taking advantage of the conditions of the agreement to turn a mortgage into a full ownership.

Relevant Judgements

Some of the relevant judgements are as follows:

Harbans vs. Om Prakash & Ors (2005)

In this case, the court reiterated the doctrine of "once a mortgage, always a mortgage" stating that a mortgage shall always be redeemable, and that any contract between parties cannot take away or limit a mortgagor's right to redeem. It means that any provision contained in a mortgage agreement which restrains or impairs redemption is void. The court also observed that the right of redemption is a statutory right in India, and no kind of condition can restrict it.

The court held the following:

• The right of redemption cannot be taken away. Courts will disregard any contract that aims to deprive a mortgagor of their right to redeem the mortgage.
• Anything which prevents redemption is a clog or fetter on equity of redemption and so void.
• Redemption is a statutory right and is not controlled by any contract to the contrary.
• The court further pronounced that the essence of a mortgage is the security of a debt. In the case that the mortgagor does not pay at due date, his right to redeem persists. Provisions to prevent, avoid or impede redemption are considered null and void.
• The "clog on equity of redemption" doctrine is a rule of justice, equity, and good conscience.
• The right of redemption is an incident of a subsisting mortgage and it continues to exist as long as the mortgage itself subsists.
• The right of redemption can only be extinguished by the act of parties, by a merger, or by a statutory provision.
• The mortgagor's right of redemption and the mortgagee's right of foreclosure are co-extensive.
• The court further remarks that, though a long period for redemption makes a mortgage look illusory, it is not the decisive factor in determining whether the equity of redemption has been limited, and each case must be judged on its specific facts.

Shankar Sakharam Kenjale(D) By Lrs. vs. Narayan Krishna Gade (2020)

In this case, the court considered the doctrine of "once a mortgage, always a mortgage" in the context of a dispute over land that had been mortgaged and was subsequently re-granted to the mortgagee. The court declared that the right of redemption under a mortgage can only be destroyed by contract between the parties, merger, or a statutory provision. The court underscored that a mortgagee who assumes possession of the mortgaged property shall abandon such possession once a suit for redemption is instituted, unless it can be proven that the right of redemption has been legally terminated. This is based on the maxim "once a mortgage, always a mortgage.".

Modern Context And Relevance

Although enacted in 1882, the provisions of the Act governing mortgages continue to be relevant in contemporary times. Even today, the essence of "once a mortgage, always a mortgage" is reflected in the current regulatory frameworks:

Consumer Protection

The principles of the Act are echoed in modern regulations by giving rights and protection to the mortgagor. It makes the mortgage transactions fair and transparent.

Judicial Interpretation

Indian courts have always upheld the principle enshrined in this maxim. It has always ensured that the right of redemption and protection from clogs have been preserved.

Conclusion

The principle of "once a mortgage, always a mortgage" remains a vital safeguard for mortgagors in India. Rooted in equity and codified in the Transfer of Property Act, 1882, this doctrine, reinforced by consistent judicial interpretation, ensures that the right of redemption remains inviolable. It prevents unfair practices and maintains a balance between the rights of mortgagors and mortgagees, promoting fairness and transparency in mortgage transactions.

FAQs

A few FAQs on the principle of "once a mortgage, always a mortgage" are:

Q1. Can a mortgage agreement ever take away the mortgagor's right to redeem?

No, any clause attempting to extinguish the right of redemption is considered void under Indian law.

Q2. What is the "equity of redemption"?

It is the mortgagor's right to reclaim their property by repaying the mortgage debt, a fundamental principle protected by law.

Q3. Which sections of the Transfer of Property Act, 1882 relate to the "once a mortgage" principle?

Key sections include Section 58 (definition of mortgage), Section 60 (right of redemption), Section 62 (usufructuary mortgage redemption), Section 91 (who can sue for redemption), and Section 94 (rights of mesne mortgagee).

Q4. Is the "once a mortgage" principle still relevant today?

Yes, it continues to be a fundamental principle protecting mortgagors' rights and is reflected in modern consumer protection laws and judicial interpretations.

Q5. What is a "clog on redemption"?

It is any term or condition in a mortgage agreement that restricts or impedes the mortgagor's right to redeem the property. Such clogs are considered void.