Sangar Garu Dhula vs Shah Laxmiben Tejshi and Others

M.S. Shah, J.—This appeal u/s 100 of the Civil Procedure Code, 1908 is directed against the judgment and decree dated 29th November 1979 passed by the learned Assistant Judge, Kutch at Bhuj, in Civil Appeal No. 86 of 1978 against the judgment and decree passed by the learned Civil Judge (J.D.) at Mandvi in Civil Suit No. 20 of 1974 by which the learned Civil Judge dismissed the suit filed by the appellant-plaintiff for redemption of the mortgaged property.

Facts:

The plaintiff is successor-in-interest of Tejshi Monshi who owned the suit property and who mortgaged the same to predecessors-in-title of the respondents-defendants for a period of 99 years. The mortgage deed was executed on 15-12-1940. The mortgage deed also contained a condition that the mortgagee can construct any property on the mortgaged property. The original mortgagee expired in the year 1956. The present respondent-defendant No. 1 is in occupation of the suit property on behalf of original mortgagee as a usufructuary mortgagee. The plaintiff filed the present suit for redemption of the mortgage contending that the condition of non-redemption for a period of 99 years was incorporated in the mortgage deed on account of the mortgagee taking disadvantage of the financial position of the original mortgagor - Tejshi Monshi. The aforesaid condition of non-redemption for a period of 99 years and the condition that the mortgagor can put up any type of construction in the suit property are oppressive and unconsonable and are clog on equity of redemption. The suit was resisted by the defendants denying the allegations that the conditions were a clog on the equity of redemption. It was also denied that the original mortgagee had taken the disadvantage of the financial position of the original mortgagor. The trial Court held that the conditions imposed in the mortgage deed were a clog on the equity of redemption but the suit was held to be time-barred. The plaintiffs preferred appeal. The appeal was, however, dismissed. Hence, the original plaintiff filed the present appeal through power-of-attorney holder.

When the present appeal was filed, the following substantial question of law was framed by this Court:

Whether on the facts and circumstances of the case, the lower appellate Court erred in holding that the suit was barred by law of limitation.

At the hearing of this appeal, Mr. Y.S. Mankad, learned Counsel for the appellant-plaintiff-mortgagee submitted that the matter is now squarely covered by a decision of this Court in the case of Rajgor Bhanji Mulji (Decd.) through his Legal Heirs and R. and Others Vs. Sonabai and Others, wherein this Court speaking through Hon''ble Mr. Justice A.N. Divecha has held as under:

Once it is found to create a clog on equity of redemption, that condition has to be avoided and the Court can relieve the mortgagor from obligation to abide by such condition. In that view of the matter, such a condition has to be treated as a voidable condition giving an option to the suffering party to seek its avoidance by persuading the other party to the transaction or by seeking such relief from the Court. In that case, the right to redeem the mortgage property and to seek its possession would accrue in favour of mortgagor only when the clog on equity of redemption is removed. Unless the embargo is lifted, the right to redeem the mortgagor. The starting point of limitation in that case would be the date on which the clog on equity of redemption is lifted. To hold otherwise would tantamount to violating the principle behind grant of equitable relief; it would operate against the principles of equity, justice and good conscience.

While taking the above view, Court dissented from the view taken by the Madras High Court in the case of Ramasubramania Mudaliar and Another Vs. Soorianarayana Iyer and Others, that a condition creating a clog on equity of redemption is a condition void ab initio and, therefore, the starting point of limitation would be the date of execution of the mortgage deed and not the date on which such a condition is declared as a clog on the equity of redemption.

Mr. Mankad has further submitted that the facts in the present case are also similar to the facts in the case of Rajgor (supra). In that case the mortgage deed was executed on 24th January 1944. One of the terms made the mortgage irredeemable for a period of 50 years from the date of the transaction. The mortgagee was invested with several rights including the right to spend any amount on the property and to seek reimbusrement thereof from the mortgagor at the time of its redemption. The mortgagor sought to redeem the mortgage by offering to pay back the mortgage amount with interest due thereon to the heirs of the deceased mortgagee. Since that attempt did not succeed, the appellant-mortgagor sent notice dated 4th April 1974 claiming redemption of the suit property. As the notice was not complied with, a civil suit for redemption and for possession was filed on 19-6-1974. The suit was thus was filed after 30 years and 5 months from the date of the mortgage transaction; the trial Court decreed the suit after holding that the condition making the mortgage irredeemable for a period of 50 years was a clog on the equity of redemption and after rejecting the defendant-mortgagor''s plea of limitation. In that case also, just and in the present case, the lower appellate Court dismissed the suit on the basis of the decision of the Madras High Court in the case of R. Mudaliyar (supra). This Court dissented from the view of the Madras High Court and rendered the aforesaid decision.

The law laid down by this Court (Coram : Hon''ble Mr. Justice A.N. Divecha) is squarely applicable to the facts of the present case also and in that view of the matter the appeal would have been required to be allowed.

However, Mr. N.V. Anjaria, learned Counsel for the respondent-defendant-mortgagee has vehemently submitted that the decision of this Court in the case of Rajgor (supra) is required to be reconsidered and the matter is required to be referred to a larger Bench, as the principle laid down in the case of Rajgor (supra) that a condition imposing a clog on the equity of redemption is not void ab initio but is merely voidable is contrary to the view taken by this Court through Hon''ble Mr. Justice S.B. Majmudar (as His Lordship then was) in the case of Soni Bhailal Damji Vs. Hiralal Lakhamshi, . Mr. Anjaria strenuously relied upon the following observations made by this Court in para 24 (page 490) of the said decision:

It is necessary to keep in view the fact that once a contention is raised that a term of non-redemption for a given number of years in the original document amounts to a clog on equity of redemption, if it is so found, it will have no effect, and will be treated as a still-born term and will be null and void from the very inception. Such a term is to be construed in the light of the attendant circumstances which prevailed at the relevant time when the concerned mortgagor was prevailed upon by the mortgagee to enter into impugned term. Once the fact is established, the term becomes non-existent from the very inception.

In other words, Mr. Anjaria submitted, the period of 30 years prescribed as the period of limitation for redeeming a mortgage under Article 61(a) of the Limitation Act, 1963, is also the period of limitation for filing a suit for a declaration that particular condition/s in the mortgage deed is/are clog on the equity of redemption and for the further relief to get the mortgage redeemed. According to Mr. Anjaria, once the mortgagor misses the bus by not filing the suit for redemption with or without the prayer to declare any condition as a clog on the equity of redemption, thereafter the mortgagor''s right to redeem accrues only upon expiry of the period stipulated in the mortgage deed, e.g., in the instant case, on expiry of the period of 99 years from the date of execution of the mortgage deed. Mr. Anjaria also relied upon the following decisions:

(1) Seth Ganga Dhar Vs. Shankar Lal and Others,

(2) Maganlal Chhotalal Chhatrapati v. Bhalchandra Chhaganlal Shah 1974 GLR 193 (Para 8 & 11)

(3) Ramasubramania Mudaliar and Another Vs. Soorianarayana Iyer and Others,

(4) Parma Nand Vs. Babu Ram,

(5) Pomal Kanji Govindji and Others Vs. Vrajlal Karsandas Purohit and Others,

Mr. Anjaria has further relied on the decisions in Binod Bihari Singh Vs. Union of India, and P.K. Ramachandran Vs. State of Kerala and Another, for contending that when the statute prescribes the period of limitation, the Court must decide the question about the maintainability of the suit or the suit being barred by the law of limitation in accordance with the provisions of the statute as the underlying policy enacting such a Statute is in larger public interest and the Court should, therefore, not hold that the suit filed by the mortgagor for redemption after a period of 30 years from the date of execution of the mortgage deed would not be hit by the bar of limitation merely because the mortgage deed included a condition for making mortgage irredeemable for a long period like 50 years or 99 years. He further submitted that mortgagors in whose case such a condition is imposed cannot be better off than those in whose case such a condition is not imposed and for whom the period of limitation would expire upon the expiry of 30 years from the date of execution of the mortgage deed.

Before dealing with the rival contentions of the learned Counsel for the parties, it may be stated at the outset that in this appeal this Court is not required to go into the correctness or otherwise of the finding given by the lower appellate Court that the condition in the mortgage deed making the mortgage irredeemable for a period of 99 years was a clog on the equity of redemption because such a finding is on a mixed question of law and facts. In this appeal, this Court is concerned with the limited question whether the suit was barred by the law of limitation.

Now the crucial question is whether the condition found by the Court to be imposing a clog on the equity of redemption is void ab initio as held by this Court (Hon''ble Mr. Justice S.B. Majmudar) in the case of Soni Motiben (supra) and by the Madras and Punjab & Haryana High Courts or whether such a condition found to be a clog on the equity of redemption is voidable at the instance of the suffering party - the mortgagor as held by this Court (Coram : Hon''ble Mr. Justice A.N. Divecha) in the case of Rajgor (supra).

It is true that in the case of Soni Motiben (supra), this Court was concerned with a question arising in a different factual backdrop, inasmuch as the right to redeem was sought to be exercised by the purchaser of the equity of redemption and the only question was whether the purchaser of the equity of redemption has a right to challenge any condition in the mortgage deed as a clog on the equity of redemption. In that case, the mortgagee contended that if at all such a suit could be filed, it was only the original mortgagor who could contend that he was oppressed into agreeing to a term making the mortgage irredeemable for a period of 99 years, but the purchaser of the equirty of redemption, who was a stranger to the original transaction, cannot go behind the condition stipulated in the mortgage deed making the mortgage irredeemable for a period of 99 years. In the facts of that case, this Court was also not called upon to decide the question whether the suit filed by the purchaser of the equity of redemption was time-barred or not; the mortgage deed was executed in 17-7-1940, the equity of redemption was purchased by the plaintiff from the original mortgagors by registered document dated 14-2-1969 and thereafter in 1970 the purchaser filed the suit for redemption of the mortgage. The suit was admittedly filed within the period of limitation prescribed by the Limitation Act starting from the date of mortgage (17-7-1940) and the trial Court also gave such a finding. Hence, the issue of limitation never arose in the case of Soni Motiben (supra). The only questions which were raised by the mortgagee in that case were (i) whether the impugned terms in the original mortgage deed amounted to any clog on the equity of redemption and therefore, the suit filed by the plaintiff was not premature and alternatively (ii) whether a suit for such declaration could be filed by the plaintiff who was a mere transferee and purchaser of equity redemption from the original mortgagor. This Court took the view that the original mortgagor, his legal heirs and representatives or even purchaser of the equity of redemption are entitled to file a suit for redemption of the mortgage and in such a suit it is open even to the legal representatives or even to the purchaser (by leading cogent evidence pertaining to the attendant circumstances prevailing at the relevant time) to show that the condition which was oppressive created a clog on the equity of redemption and was, therefore, inoperative from the very inception.

In the above view of the matter, it is possible to take the view that the principle laid down by this Court in Soni Motiben (supra) that such a condition amounting to a clog on the equity of redemption is void ab initio was not required to be decided by this Court. No question was posed before this Court in the said decision whether the purchaser of the equity of redemption is entitled to challenge any condition as imposing a clog of redemption only if the condition is void ab initio, and not if such a condition is voidable.

It would be interesting to note that such a question had been examined in the context of the provisions of Sections 15 to 19 of the Indian Contract Act, 1962. As noticed by Pollock & Mulla''s Indian Contract & Special Reliefs Acts (11th Edition Vol. 1 Page 275), in Shravan Goba Mahajan Vs. Kashiram Devji, , Rash Behari Naskar and Others Vs. Haripada Naskar and Others, and Mt. Manbhari Vs. Pt. Sri Ram, , various Courts have taken the view that when consent in the agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable not merely at the option of the party whose consent was so caused but also at the option of such a party''s representatives unless at the date of his death the original party had lost such an option by acquiescence or otherwise. Whether the successor-in-title of the party whose consent was procured by any such vitiating element would also have the option of avoiding such an agreement or any unconscionable or oppressive terms in the contract was not examined by this Court in the case of Soni Motiben (supra) from the above angle.

Nevertheless, since in the case of Soni Motiben (supra) this Court observed in no unmistakable terms that when a condition in a mortgage deed is found to be a clog on the equity of reception, it is a condition void ab initio and such a view is also taken by the Madras and Punjab & Haryana High Courts and when another learned single Judge of this Court (Hon''ble Mr. Justice A.N. Divecha) has taken a contrary view that when such a condition is found to be a clog on the equity of redemption, it is not void ab initio but merely voidable at the instance of suffering party, and having regard to a number of cases in which such a question has been arising or is likely to arise in view of the prevalence of such transactions in certain areas of the State, it would be in the fitness of things if this matter is heard and decided by a larger Bench for deciding the following questions:

(1) Whether a condition in a mortgage deed which is found by the Court to be a clog on the equity of redemption is void ab initio or merely voidable at the instance of the suffering party, i.e., mortgagor.

(2) When a mortgage deed stipulates a condition that the mortgage is irredeemable for a period of 99 years or any such long period, whether the starting point of the period of limitation prescribed by Article 61(a) of the Limitation Act, 1963 for filing a suit for redemption would be the date of execution of the mortgage deed or the date of declaration by the Court that such a condition was a clog on the equity of redemption.

(3) Whether a suit for a declaration that any such condition is void or voidable (with or without a prayer for redemption of mortgage) filed after expiry of the period of 30 years from the date of execution of the mortgage deed would be time-barred under Article 61(1) of the Limitation Act, 1963.

The office is directed to place the papers of this appeal before the Hon''ble the Chief Justice for appropriate orders for referring this matter to a larger Bench.