Seth Ganga Dhar v Shankar Lal

Facts

A mortgage deed stipulated that the property could not be redeemed for a long fixed period (the deed barred redemption for about 85 years / before a distant date). The mortgagor sought to redeem before expiry of the stipulated term, arguing the long term was a clog on the equity of redemption. The mortgagee resisted, relying on the agreed term.

Issues

• Whether a long term postponing redemption is by itself a clog on the equity of redemption
• What test determines when a redemption term becomes an unlawful clog

Arguments

The mortgagor argued the lengthy bar on redemption effectively defeated the right to redeem and was a clog. The mortgagee argued the term was freely negotiated, not oppressive, and binding.

Held

The Supreme Court held that a long term for redemption is not in itself a clog on the equity of redemption. The doctrine of clog rests on equity protecting the needy and impecunious borrower from oppressive bargains; whether a term is a clog depends on the circumstances of each case. A term is struck down only if it is found to be oppressive, unconscionable, or such that it renders redemption illusory. On the facts, the long term was upheld as not oppressive, and the mortgagor could not redeem before the agreed time.

Ratio decidendi

Length of the redemption term alone does not constitute a clog; the term is invalid only where it is oppressive or unconscionable, judged on the facts of the transaction.

Significance

Leading Indian authority refining the clog doctrine for S60; established the 'oppressive/unconscionable' touchstone later applied in Pomal Kanji and distinguishing automatic invalidity of long terms.

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