Equity of redemption and mortgagee-created tenancies in urban property cannot be made to defeat redemption rights.

The right of redemption under the Transfer of Property Act is an incident of every mortgage and cannot be rendered illusory by contract. Long duration alone is not a clog, but a combination of deferred redemption, accumulated interest payable only at term end, financial distress, and reconstruction clauses may make the bargain unconscionable and unenforceable to that extent. A mortgagee in possession generally cannot create a tenancy in urban property that survives redemption unless the mortgage deed clearly permits it or a statute enlarges tenant rights. A tenant inducted by the mortgagee therefore cannot resist delivery of possession after redemption under the Bombay Rent Act.

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Issues: (i) Whether the long-term mortgage terms, including deferred redemption, accumulated interest payable at the end of the term, and reconstruction clauses, constituted a clog on the equity of redemption; (ii) whether tenants inducted by the mortgagees in urban property were entitled to remain in possession and claim protection under the Bombay Rent Act after redemption.

Issue (i): Whether the long-term mortgage terms, including deferred redemption, accumulated interest payable at the end of the term, and reconstruction clauses, constituted a clog on the equity of redemption.

Analysis: The right of redemption under section 60 of the Transfer of Property Act, 1882 is an incident of every mortgage and cannot be taken away or made illusory by contractual stipulation. Long duration by itself is not always a clog, but the surrounding circumstances, including the mortgagor's financial distress, the very long redemption period, the obligation to pay accumulated interest only at the end of the term, and the clauses permitting demolition and reconstruction at the mortgagor's expense, may together show an unconscionable bargain. In urban immovable property, where prices and conditions are rapidly changing, such a structure may practically defeat the right to redeem.

Conclusion: The mortgage terms amounted to a clog on the equity of redemption and were unenforceable to that extent, in favour of the mortgagor.

Issue (ii): Whether tenants inducted by the mortgagees in urban property were entitled to remain in possession and claim protection under the Bombay Rent Act after redemption.

Analysis: A mortgagee in possession cannot ordinarily create a tenancy that survives redemption unless the mortgage deed clearly authorises tenancy beyond the mortgage term or a special statute enlarges the tenant's rights. The exception in section 76(a) of the Transfer of Property Act, 1882, which permits prudent management, is not readily extended to urban property so as to bind the mortgagor after redemption. Where the mortgage deed itself contemplates redelivery of possession on redemption and does not clearly confer a right to continue beyond the mortgage, a tenant inducted by the mortgagee cannot claim the protection of section 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 against the mortgagor.

Conclusion: The tenants were not entitled to remain in possession or claim protection under the Bombay Rent Act after redemption, in favour of the mortgagor.

Final Conclusion: The mortgages were redeemable despite the long term, and the tenants inducted by the mortgagees could not resist delivery of possession after redemption; the appeals therefore failed.

Ratio Decidendi: A mortgage becomes void as a clog on the equity of redemption when, in the totality of circumstances, its terms make redemption illusory or unconscionably burdensome, and a tenancy created by a mortgagee in possession of urban property does not bind the mortgagor after redemption unless clearly authorised or enlarged by statute.

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