Gulab Chand Sharma v.

Saraswati Devi AIR 1977 SC 242

Submitted to - Dr. Alamdeep Kaur

Submitted by -Tushar Singh Roll No. 54/19
Section A
B.A. LL.B.(H) - 5th Semester 2021-22
Gulab Chand Sharma vs Saraswati Devi And Anr. on 14 December,
1976
Equivalent citations: AIR 1977 SC 242, (1977) 79 PLR 205, (1977) 2 SCC 71,
1977 (9) UJ 51 SC
Author: A Gupta
Bench: A Gupta, Y Chandrachud
JUDGMENT A.G. Gupta, J.
1. These two appeals by certificate arise out of suits, one a suit for redemption of
mortgage instituted by the predecessor-in-interest of the first respondent, and the
other a suit for injunction filed by the appellant. The relevant facts are these. On
October 20, 1936 the Secretary of State for India in council through the Chief
Commissioner, Delhi, executed a deed leasing out in perpetuity a plot of Order 445
acre of land in New Delhi, which later came to be known as 13, keeling Road, in
favour of two persons, Niranjan Das Sanon and Hans Raj Sanon. The deed
provides inter alia that on breach by the lessees or any persons claiming through
them of any of the covenants of the lease, the lessor or any person duly authorised
by him shall have right of re-entry upon the premises and thereupon the lease shall
cease and stand determined. The lessees who constructed a one storeyed building
on the plot sold their leasehold rights in the land with the building thereon to one
Bakshi Mohan Lal Sanon on March 21, 1949. Bakshi Mohan Lal Sanon transferred
the property to the appellant, Gulab Chand Sharma, by way of mortgage by
conditional sale for Rs. 70,000/- on May 31, 1956. The mortgagor was given four
years time from the date of execution of the mortgage deed to repay the sum.
Clause 9 of the terms and conditions of the mortgage set out in the deed reads as
follows:
In case the said mortgagor received a notice of re-entry from the Land and
Development Officer or any other such authority for the breach of covenants of the
lease dated 20th October, 1936, before the expiry of the said period of 4 years, the
transfer hereby made shall become absolute in terms stated above in favour of the
mortgagee who will get the restoration of the property but all the expenses shall be
borne by the mortgagor. This clause will have effect notwithstanding the fact that
the period of four years shall not have expired.
The only question for determination in these appeals is whether the condition in
Clause 9 is a ???g on the equity of redemption.
2. On October 23, 1958 the Secretary (Local Self Government), Delhi
Administration, issued a notice of re-entry to Bakshi Mohan Lal Sanon alleging
that he had violated some of the conditions of the perpetual lease.It is not necessary
to refer to the terms of the lease breach of which was alleged, nor to enter on a
consideration of the questions raised in the course of the hearing of these appeals
as to whether the notice of re-entry was subsequently withdrawn or whether waiver
of such notice was possible in law so as to keep the lease alive. These are matters
outside the scope of the present appeals which turn on the question whether Clause
9 of the mortgage deed is a clog on the mortgagor's equity of redemption.
3. Sometime in February, 1959 Bakshi Mohan Lal Sason called upon the appellant
to receive payment of the sum of Rs. 70,000/- and reconvey the mortgaged
property, and the appellant having refused Sason instituted a suit for redemption of
the mortgage against the appellant on May 24, 1960 in the court of the Senior
Subordinate Judge, Delhi. On July 27, 1960 the appellant filed his written
statement in the suit. In the written statement the appellant took up the position that
with the notice of re-entry served on Sason, Clause 9 of the mortgage deed became
operative with the result that the appellant became the "absolute owner of the
property including the lease hold rights of the plot" and the mortgage did not
subsist.Two days after Sason had filed the suit for redemption, the appellant filed a
suit for injunction restraining Sason from alienating or dealing in any manner with
the lease hold rights in the land and the building thereon. The appellant claimed
that in view of Clause 9 of the mortgage deed he had become the absolute owner of
the property.The appellant thus assisted the same right as plaintiff in his suit that he
had pleaded as his defence in the suit for redemption.These two suits were
consolidated and disposed of by the Subordinate Judge by a Common judgment on
January 30, 1962 holding that the appellant had become the owner of the property
in view of condition 9 of the mortgage.The Subordinate Judge accordingly
dismissed Sason's suit for redemption and decreed the appellant's suit for
injunction. Aggrieved by this decision. Sason appealed to the Delhi High Court. He
died during the pendency of the appeals and was substituted by the first respondent
On August 4, 1972 the High Court allowed the appeals, dismissed the appellant's
suit for injunction, and passed a preliminary decree for redemption in respect of the
property in dispute.
4. The High Court held that condition No. 9 of the mortgage was a clog on the
equity of redemption and, therefore, void, as it had the effect of depriving the
mortgagor of his right of redemption while the mortgage was subsisting.We do not
think it can be seriously disputed that the view taken by the High Court was right;
condition No. 9 of the mortgage which seeks to take away the right of redemption
even before the period of four years within which the mortgagor was entitled to
pay off the mortgage debt had run out, is obviously a clog on the right of
redemption. Counsel for the appellant contended before us that Clause 9 was not
really a term of the mortgage transaction but an independent condition that was to
come into operation on the service of the notice of re-entry on the mortgagor. It
was argued that the notice of re-entry which was served on the mortgagor divested
him of his interest in the property and in terms of Clause 9 the mortgagee became
the owner of it. We find it difficult to appreciate the contention. Clause 9 provides
that on the mortgagor receiving notice of re-entry before the expiry of the period of
four years from the date of the mortgage, "the transfer hereby made shall be
absolute in favour of the mortgagee who will get the restoration of the property but
all the expenses shall be borne by the mortgagor". What was transferred to the
mortgagee was the lessee's interest that the mortgagor had in the land. Clause 9
implies that on the service of the notice of re-entry the transfer of this interest will
become absolute and the mortgagee will be the owner of the leasehold property
even if the notice is served during the subsistence of the mortgage. Clause 9
therefore appears clearly to be a term of the mortgage transaction. This was how
the appellant also construed Clause 9 in the written statement filed by him in the
suit for redemption and in the plaint of his suit for injunction. What counsel for the
appellant sought to contend was that on the service of the notice of re-entry on the
mortgagor the leasehold itself disappeared. If this was so, it is not clear of what
property then the mortgagee claimed ownership; the land belonged to the
Government and no condition contained in the mortgage instrument, whether it
was part of the mortgage transaction or independent of it, could confer ownership
of the land on the mortgagee. Besides, this is a point not raised in the trial court or
in the High Court, and *not considered by either of them. As stated already, the
only question considered both by the trial court and the High Court was whether
Clause 9 of the mortgage deed was a clog on the equity of redemption.
5. The appeal is dismissed with costs.