Jyasing Dnyanu Mhoprekar & ANR Vs.
Krishna Babaji Patil & ANR [1985] INSC 159 (17 July 1985)
VENKATARAMIAH, E.S. (J) VENKATARAMIAH, E.S.
(J) MISRA, R.B. (J)
CITATION: 1985 AIR 1646 1985 SCR Supl. (2)
308 1985 SCC (4) 162 1985 SCALE (2)94
ACT:
Mortgage - Redemption of mortgage - Right to
redeem the mortgage, extinguishment of - Whether by virtue of the grant of
mortgage lands by the Prant Officer to the mortgagees in physical possession
under section 8 of the Bombay Paragana and Kulkarni Watans (Abolition) Act,
1950, the right of mortgagees and/or their legal representatives to redeem the
mortgage had become extinguished - Bombay Paragana and Kulkarni (Abolition)
Act, 1950 sections 3 (4),4-A and 8 read with section 90 of the Indian Trust
Act, 1882 scope of.
HEADNOTE:
Krishna Babaji Patil, respondent No.1 herein
and his brother Bandu Babaji Patil were holding a half-share in the lands
bearing survey numbers 221/1,222/2,226/8 and 226/12 in all measuring 22 Acres
and 13 Gunthas situated at Monja Shirsi, Peta Shirola, District Sangli in
Maharashtra, as permanent Mirasi tenants and were in actual possession of their
share in the said Lands. The lands in question were Paragana Watan Inam lands
and the Watandars belonged to the family of Kokrudkar Deshmukhs. On May 20,
1947 they executed a mortgage deed in favour of two persons by name Dnyanu
Krihna Mhoprekar and Ananda Santu Mhoprekar mortgaging their share in the above
lands with possession by way of security for a loan of Rs.1,000 which they
borrowed under the mortgage deed. The mortgage deed was for five years. The
mortgagees were entitled to appropriate the income from the mortgaged property
towards interest.
During the subsistence of the mortgage, the
Bombay Paragana and Kulkarni Watans (Abolition) Act, 1950 Bombay Act No. 50 was
passed under which all the Paragana and Kulkarni Watans were abolished and the
State Government resumed the watan lands. Dnyanu Krishna Mhoprekar, one of the
mortgagees died in or about the year 1955 leaving behind him Jayasingh Dnyanu
Mhoprekar, the appellant 1 herein as his heir and the Karta of his joint
family. Bandu Babaji Patil, one of the mortgagors also died in the year 1955
leaving behind him three sons, plaintiff No. 2 being the Karta of the family.
309 After the coming into force of the Watans
Abolition Act, the holders of the Watan i.e. the members of the Deshmukh family
did not pay the occupancy price as provided in section 4(1) of the Act within
the prescribed time and apply for the occupancy right of such lands. Thereupon
in the proceedings initiated to grant the lands in favour of the permanent
Mirasi tenants, who were in actual possession thereof, the respondents, who
were permanent Mirasi tenants of the half-share in the lands covered by the
survey numbers in question deposited in the Government Treasury on July 29,
1963 a sum of Rs.182.41 being the requisite occupancy price equivalent to 24
times the assessment requesting that the grant should be made in their favour.
The appellants mortgagees and their heirs in possession of the half-share and
another Pandu Krishna who by virtue of the sale deed, by the other branch of
the respondent's family in his favour is in possession of the other half share
in the lands also deposited the occupancy price claiming the whole land.
The Prant Officer, by his order dated
February 5,1964, instead of granting occupancy right in respect of the one-
half share of the land which belonged to the respondents in their favour
ordered that the entire extent of Land measuring 22 Acres and 13 Gunthas should
be granted in favour of the appellants and one Pandu Krishna as they were in
physical possession. The respondents questioned the said proceedings before
higher authorities and pending a decision thereat, made an abortive attempt to
redeem the mortgage in a proceeding under section 83 of the Transfer of
Property Act, 1882 in Miscellaneous Application No.44 of 1963.
Thereafter, the respondent instituted a suit
for redemption in Regular Civil Suit No.67 of 1965 on the file of the Civil
Judge, Junior Division, Islampur. In the written statement, it was pleaded
inter alia that since after the abolition of the watans, the mortgaged lands
had been given to the appellants by the Government after receiving the
occupancy price amounting to Rs.364.81 on February 5, 1964 the right of the
mortgagors and/or their legal representatives to redeem the mortgage had become
absolute owners of the suit lands. After the trial, the suit was dismissed by
the Civil Judge. Aggrieved by the decree of the Trial Court, the respondents
preferred an appeal before the District Court, Sangli in Civil Appeal No. 278
of 1966. In that appeal the decree of the trial Court was reversed and a decree
for redemption was passed. Under that decree the respondents were directed to
pay, in addition to the amount of Rs.1,000 borrowed under the mortgage deed a
sum of Rs.182.41 which was equivalent to one-half of the amount paid by
appellant No. 1 and others in 310 order to obtain the grant from the
Government. Accordingly an appropriate preliminary decree was drawn up under
order XXXIV, Rule 7 of the Code of Civil Procedure. Aggrieved by the said
decree the appellants filed a second appeal before the High Court of Bombay in
SA No. 37 of 1969 which was dismissed on March 3, 1971 and thus the decree made
by the first appellate court was affirmed. Hence the appeal by special leave.
Dismissing the appeal, the Court ^
HELD 1.1 It is well settled that the right of
redemption under a mortgage deed can come to an end only in a manner known to
law. Such extinguishment of the right can take place by a contract between the
parties, by a merger or by a statutory provision which debars the mortgagor
from redeeming the mortgage. A mortgagee who has entered into possession of the
mortgaged property under a mortgage will have to give up possession of the
property when a suit for redemption is filed unless he is able to show that the
right of redemption has come to an end or that the suit is liable to be
dismissed on some other valid ground. This flows from the legal principle which
is applicable to all mortgages, namely "Once a mortgage, always a
mortgage. [315 D-H, 316 A]
1.2 It is no doubt true that the father of
the first appellant and the second appellant have been granted occupancy right
by the Prant Officer by his order dated February 5, 1964 along with Pandu, the
uncle of appellant No. 1. But the appellants would not have been able to secure
the said grant in their favour but for the fact that they were in actual
possession of the lands. They were able to be in possession of the one-half
share of the respondents in the lands in question only by reason of the mortgage
deed.
If the mortgagors had been in posssession of
the lands on the relevant date, the lands would have automatically been granted
in their favour, since the right of the tenants in the watan lands were allowed
to subsist even after the coming into force of the Act and the consequent
abolition of the watans by virtue of section 8 of the Bombay Paragana and
Kulkarni Watans (Abolition) Act,1950. The fact that they had mortgaged land
with possession on the relevant date would not make their position any different.[316
A-D]
1.3 Section 90 of the Indian Trusts Act, 1882
clearly shows that if a mortgagee by availing himself of his position as a
mortgagee gains an advantage which would be in derogation of the right of a
mortgagor, he has to hold the advantage so derived 311 by him for the benefit
of the mortgagor. Section 90, therefore, casts an obligation on a mortgagee to
hold the rights required by him in the mortgaged property for the benefit of
the mortgagor in such circumstances as the mortgagee is virtually in a
fiduciary position in respect of the rights so acquired and he cannot be
allowed to make a profit out of the transaction. [317 C-D, F-G] In this case
the mortgagees i.e. Dnyanu, and Ananda could each get 1/4th share in the total
extent of land measuring 22 Acres and 13 Gunthas only by availing themselves of
their position as mortgagees. The grant made in their favour is an advantage
traceable to the possession of the land which they obtained under the mortgage
and that the said grant is certainly in derogation of the right of the
mortgagors who were the permanent Mirasi tenants entitled to the grant under
the Government orders. The appellants could not have asserted their right to the
grant of the land when the plaintiffs had deposited the requisite occupancy
price well in time. The mortgagees obtained the grant in their favour by making
an incorrect representation to the Government that they were permanent Mirasi
tenants although they were only mortgagees. As such the appellants are liable
to surrender the advantage they have derived under the grant in favour of the
respondents even if the order of grant has become final before the Revenue
authorities, of course, subject to the payment of the expenses incurred by them
in securing the grant.[317 D-F, G- H]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1599(N) of 1971.
From the Judgment and Order dated 3.3.1971 of
the Bombay High Court in S.A. No. 37 of 1969.
P.H. Parekh, C.S. Singh and Miss Indu
Malhotra for the Appellants.
V.A. Bobde,A.G. Ratnaparkhi and Miss A.
Chauhan for the Respondents.
The Judgment of the Court was delivered by
VENKATARAMIAH, J. This appeal by special leave arises out of a suit for
redemption. Krishna Babaji Patil (Plaintiff No.1) and his brother Bandu Babaji
Patil were holding a half share in the lands bearing Survey Nos.
221/1,222/2,226/8 and 226/12 in 312 all
measuring 22 Acres and 13 Gunthas situated at Mouje Shirsi, Peta Shirola,
District Sangli as permanent Mirasi tenants and were in actual possession of
their share in the said lands. The lands in question were Paragana Watan Inam
lands and the Watandars belonged to the family of Kokrudkar Deshmukhs. On May
20, 1947 Krishna Babaji Patil (Plaintiff No. 1) and Bandu Badaji Patil executed
a mortgage deed in favour of two persons by name Dnyanu Krishna Mhoprekar and
Ananda Santu Mhoprekar (Defendant No. 2) mortgaging their share in the above
lands with possession by way of security for a loan of Rs.1000 which they
borrowed under the mortgage deed. The mortgage was for five years. The
mortgagees were entitled to appropriate the income from the mortgaged property
towards interest. Dnyanu Krishna Mhoprekar, one of the mortgagees, died in or
about the year 1953 leaving behind him Jayasingh Dnyanu Mhoprekar, (Defendant
No. 1) as his heir and the 'Karta' of his joint family, Bandu Babaji Patil, one
of the mortgagors, referred to above, died in the year 1955 leaving behind him
his son plaintiff No. 2 and two other sons as his heirs. Plaintiff No. 2 is the
'Karta' of that branch of the family.
The remaining one-half share in the lands
comprised in the above Survey Numbers belonged to Ganu Vithu and Pandu Vithu
who were members of the other branch of the family of the mortgagors. They had
also mortgaged their share in favour of one Pandu Krishna who was no other than
the brother of Dnyanu and the father of Ananda Santu Mhoprekar (Defendant No.
2). Defendant No. 2 had, however, been given in adoption to Santu. Subsequently
Ganu Vithu and Pandu Vithu sold their share in favour of the mortgage Pandu
Krishna. Thus the family of the defendants was in possession of both the shares
in the lands bearing Survey Nos. 221/1, 222/2, 226/8 and 226/12.
The plaintiffs instituted the suit for
redemption in Regular Civil Suit No. 67 of 1965 on the file of the Civil Judge,
Junior Division, Islampur out of which this appeal arises after an abortive
attempt to redeem the mortgage in a proceeding under section 83 of the Transfer
of Property Act, 1882 in Miscellaneous Application No.44 of 1963. The suit was
resisted by the defendants. In the written statement filed by the Defendant
No.1 it was pleaded inter alia that since after the abolition of the Watans the
mortgaged lands had been granted in favour of Dnyanu (the father of defendant
No. 1 Jayasingh), Ananda (Defendant No.2) and Pandu Krishna (brother of Dnyanu)
by the Government after receiving the occupancy price amounting to Rs.364.81 on
313 February 5, 1964 the right of the mortgagors and/or their legal
representatives to redeem the mortgage had become extinguished and that the
grantees of the land had become absolute owners of the suit lands. After the
trial, the suit was dismissed by the Civil Judge. Aggrieved by the decree of
the Trial Court, the plaintiffs preferred an appeal before the District Court,
Sangli in Civil Appeal No. 278 of 1966.
In that appeal which was heard by the
Assistant Judge, Sangli the decree of the Trial Court was reversed and a decree
for redemption was passed. Under that decree the plaintiffs were directed to
pay, in addition to the amount of Rs.1,000 borrowed under the mortgage deed a
sum of Rs.182.41 which was equivalent to one-half of the amount paid by
defendant No.1 and others in order to obtain the grant from the Government.
Accordingly an appropriate preliminary decree was drawn up under Order XXXIV,
Rule 7 of the Code of Civil Procedure. Aggrieved by the decree of the learned
Assistant Judge, Sangli, the defendants filed a second appeal before the High
Court of Bombay in S.A. No. 37 of 1969. The Second Appeal was dismissed on
March 3, 1971 and the decree made by the first appellate court was affirmed.
This appeal by special leave is filed against the judgment and decree of the
High Court.
Admittedly the lands in question were
comprised in a Paragana Watan. Under the Bombay Paragana and Kulkarni Watans
(Abolition) Act, 1950 (Bombay Act No. 50 of 1950) (hereinafter referred to as
'the Act') all the Paragana Watans were abolished. Section 3 of the Act
provided :
"3. With effect from and on the
appointed day, not withstanding anything contained in any law, usage, settlement,
grant, sanad or order- (1) all Paragana and Kulkarni watans shall be deemed to
have been abolished;
(2) all rights to hold office and any
liability to render service appertaining to the said watans are hereby
extinguished;
(3) subject to the provisions of section 4,
all watan land is hereby resumed and shall be deemed to be subject to the
payment of land revenue under the provisions of the Code and the rules made
thereunder as if it were an unalienated land:
314 Provided that such resumption shall not
affect the validity of any alienation of such watan land made in accordance
with the provisions of section 5 of the Watan Act or the rights of an alliance
thereof or any person claiming under or through him;
(4) all incidents appertaining to the said watans
are hereby extinguished." Section 4 of the Act provided that a watan land
resumed under the provisions of the Act should subject to the provisions of
section 4A thereof be regranted to the holder of the watan to which it
appertained on payment of the occupancy price equal to twelve times of the
amount of the full assessment of such land within five years from the date of
the coming into force of the Act and the holder should be deemed to be an
occupant within the meaning of the Bombay Land Revenue Code, 1879 in respect of
such land and would primarily be liable to pay land revenue to the State
Government in accordance with the provisions of the said Code and the rules
made thereunder. Under the first proviso to sub-section (1) of section 4 the
occupancy price payable was fixed at six times the amount of the full
assessment of such land in certain cases. The second proviso to sub- section
(1) of section 4, however, provided that if the holder failed to pay the
occupancy price within a period of five years, as provided therein, he should
be deemed to be unauthorisedly occupying the land and would be liable to be
summarily ejected in accordance with the provisions of the Bombay Land Revenue
Code. Section 8 of the Act provided that if any watan land had been lawfully
leased and such lease was subsisting on the appointed day, the provisions of
the Bombay tenancy and Agricultural Lands Act, 1948 would apply to the said
lease and the rights and liabilities of the holder of such land and the tenants
would subject to the provisions of the Act be governed by the provisions of the
Bombay Tenancy and Agricultural Lands Act, 1948. After the Act came into force,
the Paragana watan which comprised the mortgaged property also came to be
abolished. It appears that the holders of the watan i.e. the members of the
Deshmukh family did not pay the occupancy price as provided in section 4 of the
Act within the prescribed time and apply for the occupancy right. Thereupon
action was taken by the State Government to grant the lands in favour of the
persons who were in actual possession thereof in accordance with the directions
contained in the Order passed by the State Government in G.R.R.D. No.
PKA-1056-IV-L dated May 3, 1957 and in G.R.R.D. No. 2760-III-48810-L dated
November 23, 1960 which directed that wherever the holder or the 315 watandar
had failed to pay the occupancy price as required by section 4(1) of the Act
before the prescribed period the lands in question should be granted in favour
of the permanent Mirasi tenants who were in actual possession of such lands. In
those proceedings the plaintiffs who were permanent Mirasi tenants of the half
share in the lands covered by the Survey Numbers in question deposited in the
Government Treasury on July 29, 1963 as per challan Ex. 45 Rs. 182.41 being the
requisite occupancy price equivalent to 24 times the assessment requesting that
the grant should be made in their favour. The defendants and Pandu Krishna who
were in possession of the entire extent of land covered by the Survey Numbers
also deposited the occupancy price claiming the whole land, that is, both the
one-half share of the plaintiffs which had been mortgaged by them and the other
half share which Pandu Krishna had acquired from Ganu Vithu and Pandu Vithu the
other branch of the plaintiff's family. The Prant Officer instead of granting
the one-half share of the land which belonged to the plaintiffs in their favour
ordered that the entire extent of land measuring 22 Acres and 13 Gunthas should
be granted in favour of the defendants and Pandu Krishna as they were in
possession of the whole land by his order dated February 5, 1964 in
WTN/LGL/SR772. He, however, ordered that Dnyanu (father of defendant No. 1)
would get 1/4 share, Ananda (Defendant No.
2) 1/4 share and Pandu Krishna the remaining
1/2 share. It may be noted that Dnyanu was dead by then. But his son defendant
No.1 claimed that he should be treated as the grantee in his father's place.
The plaintiffs having questioned the said proceedings before higher authorities,
no final decision appears to have been given yet. It appears that, a final
judgment in those civil proceedings is awaited by the revenue authorities as
can be seen from the letter dated December 3, 1965 (Ex.43) and the letter dated
June 6, 1966 (Ex.44) written by the Mahalkari of Shirala during the pendency of
the suit which has given rise to this appeal.
The only question which arises for decision
in this case is whether by reason of the grant made in favour of the defendants
the right to redeem the mortgage can be treated as having become extinguished.
It is well settled that the right of redemption under a mortgage deed can come
to an end only in a manner known to law. Such extinguishment of the right can
take place by a contract between the parties, by a merger or by a statutory
provision which debars the mortgagor from redeeming the mortgage. A mortagee
who has entered into possession of the mortgaged property under a mortgage will
have to give up possession of the 316 property when a suit for redemption is
filed unless he is able to show that the right of redemption has come to an end
or that the suit is liable to be dismissed on some other valid ground. This
flows from the legal principle which is applicable to all mortgages, namely
"Once a mortgage, always a mortgage". It is no doubt true that the
father of the first defendant and the second defendant have been granted
occupancy right by the Prant Officer by his order dated February 5, 1964 along
with Pandu, the uncle of defendant No.1. But it is not disputed that the
defendants would not have been able to secure the said grant in their favour
but for the fact that they were in actual possession of the lands. They were
able to be in possession of the one-half share of the plaintiffs in the lands
in question only by reason of the mortgage deed. If the mortgagors had been in
possession of the lands on the relevant date, the lands would have
automatically been granted in their favour, since the rights of the tenants in
the watan lands were allowed to subsist even after the coming into force of the
Act and the consequent abolition of the watans by virtue of section 8 of the
Act. The question is whether the position would be different because they had
mortgaged land with possession on the relevant date.
At this stage it is appropriate to refer to
section 90 of the Indian Trusts Act, 1882 which reads as under :- "90.
Advantage gained by qualified owner-Where a tenant for life, co-owner, mortgagee
or other qualified owner of any property, by availing himself of his position
as such, gains an advantage in derogation of the rights of the other persons
interested in the property, or where any such owner, as representing all
persons interested in such property, gains any advantage, he must hold, for the
benefit of all persons so interested, the advantage so gained but subject to
repayment by such persons of their due share of the expenses properly incurred,
and to an indemnity by the same persons against liabilities properly
contracted, in gaining such advantage." Illustrations (b) and (c) to
section 90 of the Indian Trusts Act, 1882 read thus:
(b) A village belongs to a Hindu family, A,
one of its members, pays nazrana to Government and thereby procures his name to
be entered as the inamdar of the 317 village. A holds the village for the
benefit of himself and the other members.
(c) A mortgages land to B, who enters into
possession. B allows the Government revenue to fall into arrear with a view to
the land being put up for sale and his becoming himself the purchaser of it.
The land is accordingly sold to B. Subject to the repayment of the amount due
on the mortgage and of his expenses properly incurred as mortgagee, holds the
land for the benefit of A." An analysis of section 90 of the Indian Trusts
Act, 1882 set out above shows that if a mortgagee by availing himself of his
position as a mortgagee gains an advantage which would be in derogation of the
right of a mortgagor, he has to hold the advantage so derived by him for the
benefit of the mortgagor. We are of the view that all the conditions mentioned
in section 90 of the Indian Trusts Act, 1882 are satisfied in this case. The
mortgagees i.e. Dnyanu, the father of defendant No. 1 and Ananda the second
defendant could each get 1/4th share in the total extent of land measuring 22
Acres and 13 Gunthas only by availing themselves of their position as morgagees.
The grant made in their favour is an advantage traceable to the possession of
the land which they obtained under the mortgage and that the said grant is
certainly in derogation of the right of the mortgagors who were the permanent
Mirasi tenants entitled to the grant under the Government orders referred to
above. The defendants could not have asserted their right to the grant of the
land when the plaintiffs had deposited the requisite occupancy price well in
time. It is seen that the mortgagees obtained the grant in their favour by
making an incorrect representation to the Government that they were permanent
Mirasi tenants although they were only mortgagees. Section 90 of the Indian Trusts
Act, 1882 clearly casts an obligation on a mortgagee to hold the rights
acquired by him in the mortgaged property for the benefit of the mortgagor in
such circumstances as the mortgagee is virtually in a fiduciary position in
respect of the rights so acquired and he cannot be allowed to make a profit out
of the transaction. The defendants are, therefore, liable to surrender the
advantage they have derived under the grant in favour of the plaintiffs even if
the order of grant has become final before the Revenue authorities, of course,
subject to the payment of the expenses incurred by them in securing the grant.
The decree of 318 the Ist appellate court accordingly has directed that
Rs.182.41 should be paid by the plaintiffs to the defendants alongwith the
mortgage money.
It was, however, argued on behalf of the
appellants before us that since Pandu Krishna, the other grantee, has not been
impleaded no relief can be granted to the plaintiffs. There is no merit in this
contention because the order of the Prant Officer makes the grant in specific
shares. Dnyanu, the father of defendant No. 1 and Ananda (defendant No. 2) are
granted 1/4 share each and only the remaining 1/2 share is given to Pandu
Krishna. We are concerned in this case only with the half share granted in
favour of the mortgagees. This decree relates only to that one-half share which
had been mortgaged. Pandu Krishna, the other grantee, can have no interest in
the one-half share which is the subject matter of these proceedings. This
contention is, therefore, rejected.
The High Court was, therefore, right in
affirming the judgment of the first appellate court. The appeal fails and it is
dismissed with costs.
S.R. Appeal dismissed.
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