JUDGMENT Ashworth, J.
1. This second appeal arises out of a suit brought by the plaintiff-appellants for redemption of a certain mortgage of a house. The mortgage set out that the mortgagee was to do all the repairs of the house in question and moreover to rebuild certain dilapidated portions. In addition to enjoyment of the house he was to get Rs. 24 per cent interest per year. The mortgage was also not redeemable for a period of 20 years.
2. The trial Court came to a finding that the present value of the house is about Rs. 1,000, and that according to the terms of the mortgage-deed the mortgage debt must have amounted at the date, when the mortgage became redeemable, to a sum of Rs. 2,120. It consequently held that the provision as to interest at this high rate amounted in effect to a denial of all rights to redeem, and allowed redemption upon repayment of the principal amount only, namely Rs. 200.
3. In appeal the Subordinate Judge held that the repairs and rebuilding of the house must have swallowed up all the pecuniary advantage to be enjoyed by the mortgagee from enjoyment of the house, that a high rate of interest could not be deemed a clog on the equity of redemption and that the mortgager must have agreed to this interest and was not proved to have been subjected to undue influence or pressure. He, therefore, allowed redemption only on payment of the entire interest at the full contractual rate.
4. In this second appeal the first plea taken is that the lower appellate Court wrongly construed the mortgage deed, but counsel for the appellants admits that this only means that the lower appellate Court should have found the exorbitant rate of interest to be a clog on the equity of redemption. We are, therefore, solely concerned in this appeal with the question whether an exorbitant rate of interest, so exorbitant as to make it impossible or at least improbable that the mortgagor would ever dream of redemption if required to pay the contractual interest, can be treated as a clog on the equity of redemption.
5. I am referred by the appellant's counsel in support of his contention that it can, to a decision of a two Judge Bench of the Judicial Commissioners Court of Oudh (now Chief Court), namely Mohammad Ali v. Ramzan Ali [1917] 3 O.L.J. 746. The Judges composing this Bench were Pandit Kanhaiya Lal, for many years a Judge of this Court, and Mr, Kendall, who is at present a Judge. The relevant portion of that judgment is as follows:
A covenant, which renders redemption prohibitive or penal, is very often added with the object of fettering the equity of redemption, and the question for consideration in such cases is whether the covenant is reasonable so as not to go beyond what is necessary for the protection of the covenantee, or impair his security. Where the parties occupy an unequal position, as they do in this case, it is not open to the mortgagee to stipulate for a condition that operates oppressively on the mortgagor and renders the property practically irredeemable.
6. It is sufficient for this case to remark, without otherwise expressing my concurrence with the principles laid down in that judgment, that in that judgment there was a finding that undue pressure was used to obtain the excessive and impossible interest. I do not construe that judgment to mean that high interest alone could be construed as a clog on the equity of redemption. If I had to construe it in this manner, I regret that I could not agree with it. As in this case the lower appellate Court has expressly stated that no undue influence was proved, that case cannot be deemed applicable to the facts in this case.
7. In that case reference was made to the very illuminating judgment of Viscount Haldane, L.C., in Kreglinger v. New Patagonia Meat and Cold Storage Co Ltd. [1914] A.C. 25, where the whole history and principles of the law as regards a clog on the equity of redemption as administered by Chancery Courts was set forth. In particular Viscount Haldane pointed out that the previous decisions of Courts are more binding under a system of jurisprudence such as the English system than under a system where the paramount authority is that of a Code. It appears to me, therefore, desirable to see how far the Transfer of Property Act justifies the application of the English doctrine of the clog on the equity of redemption.
8. There is nothing in the Transfer of Property Act to justify the application of this doctrine except the provisions of Section 60. That section gives a statutory right to the mortgagor to redeem on payment of the mortgage money, and qualifies this right only by a proviso that the right conferred by the section has not been extinguished by act of the parties or by order of a Court. Looking at Section 58 we find that the expression "mortgage money" in Section 60 is to be construed as the principal money and interest of which payment is secured for the time being.
9. From this it is clear that the parties may agree to any rate or amount of interest that they choose, and that a mortgagor cannot redeem without payment of that interest, even if the interest is so excessive as to prevent all possibility of redemption. The terms of Section 60 afford no relief to the mortgagor. Nor will the principle embodied in the phrase "once a mortgage always a mortgage" operate in favour of the mortgagor; for a mortgage providing for redemption being deferred until a time when the mortgage money at the contractual rate of interest amounts to such a sum that no sane person would redeem, if he had to pay that sum, will in effect be an absolute transfer and not a mortgage. It is necessary to look at the substance and not the form and where the mortgage contains terms in effect preventing any possibility of redemption, the contract in effect is not a mortgage even though it is called one. So the principle will not apply. My conclusion then is that in no circumstances can a high rate of interest in the mortgage be construed as a clog on the equity of redemption, provided that the parties entered into the contract with eyes open and on equal terms, and that the terms of the mortgage were clear and not equivocal. Accordingly I dismiss this appeal with costs.