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Report No. 70

50.21. Third view.-

We have referred to two views on the subject under discussion. There is yet a third view. The third view is that (i) where the property is subject to a simple mortgage, the equity of redemption is tangible immovable property, but (ii) where the mortgage is a usufructuary one, the mortgagor's interest is an "intangible thing" within the meaning of this section.1-4 This view is based on the ground that "tangible property" means property capable of present possession, while "intangible property" would connote a right apart from a right to immediate possession.5

1. Ramasami v. Chinnal Ansari, (1901) ILR 24 Mad 449 (463) (DB).

2. Dhareshwar v. Lakhradhar, AIR 1950 Assam 107 (113) (per Ram Labhaya, J.).

3. AIR 1936 Born 175.

4. AIR 1921 Oudh 124.

5. Kushwant v. Jamil, AIR 1919 Cal 325 (326).

50.22. Correct view.-

In our opinion, the last-mentioned view is to be preferred. As pointed out by Sulaiman, Ag. C.J. in Sohan Lal v. Mohan Lal,, (dissenting judgment)1:-

"According to its literal meaning, 'tangible' property would be one which is capable of being touched, and therefore capable of being possessed. It must accordingly be property which is capable of delivery of possession from one person to another. A mortgaged property itself is undoubtedly 'tangible', but the interest of the mortgagor in the property, when the mortgage is usufructuary, is not identical with the property itself, as some interest has already passed to the mortgagee, including the right to remain in possession and appropriate the profits.

The interest which the mortgagor possesses is not itself capable of being touched, nor is it such that an actual delivery of its possession can be effected by the mortgagor to the mortgagee. It seems difficult to conceive of a thing as being tangible, when it is not capable of actual delivery of possession. Although, therefore, the mortgagor is the legal owner of the usufructuarily mortgaged property, whatever rights he possesses, so long as the mortgage subsists, cannot be treated as 'tangible'. The subject-matter of ownership is 'tangible', but the interest which the mortgagor can transfer is intangible."

We find this reasoning logically convincing.

1. Sohan Lal v. Mohan Lal, AIR 1928 All 726 (733) (dissenting judgment of Sulaiman, Ag. C.J.).

50.23. Recommendation to add Explanation as to usufructuary mortgage.-

To avoid further controversy on the subject, we recommend that the third view,1 which appears to be a logical view2, should be codified by inserting a suitable Explanation3 in section 54, namely, the mortgagor's interest in a usufructuary mortgage is an intangible thing.

1. Para. 50.21, supra.

2. Para. 50.22, supra.

3. For suggested re-draft, see para. 50.37, infra.

50.24. Mortgagee's right.-

This is as regards the interest of the mortgagor. As to the right of the mortgagee, where the mortgage is simple one, his right would be "intangible property",1 and the right of a usufructuary mortgagee would be "tangible immovable" property.

The contrary view has, however, been expressed by the High Court of Allahabad in Sohan Lal's case2 namely that it is 'intangible property" in the case of a usufructuary mortgage. We think that the amendment which we propose regarding the mortgagor3 will indirectly settle the position regarding the mortgagee also.

1. (a) Moola Sons v. 0.A., Rangoon, AIR 1935 PC 230 (232);

(b) AIR 1941 Nag 5 (6);

(c) AIR 1934 Nag 13 (15);

(d) AIR 1924 Rang 267 (268).

2. Sohan Lal v. Mohan Lal, AIR 1928 All 726 (733) (Usufructuary Mortgage).

3. Para. 50.23, supra.

50.25. Delivery how effected in case of sale by mortgagor to mortgagee.-

Even if the mortgagor's interest is tangible property, some difficulty has been created on the question whether the 'delivery contemplated by section 54 is real delivery, or whether it can be constructive delivery. This question has normally arisen when a mortgagor sells the mortgaged property to a mortgagee in possession. Since the mortgagee is in possession, no real delivery can be given to him.

Is symbolical delivery permissible then? Or, is it correct to say that the only way of obtaining transfer of ownership by the mortgagee in possession who purchases the property is by registered instrument? It would appear that on this point a conflict of views prevails. The case law on the subject is conveniently discussed in a Patna judgment.1 There are, what may be called, two views-the narrower view and the wider view.

According to the narrower view, a registered instrument is the only mode of transfer and delivery is not possible, because the mortgagee being already in possession, no further possession can be given to him.2 He must to deliver the property to the mortgagor and then obtain possession again, if delivery is the mode adopted. According to the wider view,3 there is no reason why the mortgagee should be required to re-deliver the property and then to take back possession.

1. Suraj Prasad v. Aguta Devi, AIR 1959 Pat 153 (157), paras. 14 to 21.

2. Bhika Bhai v. Chiman Lal, AIR 1953 Born 437 (439 and 440), paras. 4 and 10.

3. Sohan Lal v. Mohan Lal, AIR 1928 All 726 (Majority view).

50.26. Where the vendee is a usufructuary mortgagee of the property sold and is in possession as such, the sale can only be of the equity of redemption. If, in such cases, it is regarded as intangible property, no question of a sale by delivery of such property can arise, whatever may be the value of property. Similarly, where the vendee is a lessee of the vendor, what is sold would only be a reversion which is also an intangible thing, and no question of a sale by delivery can arise in such cases.

But if it is regarded as tangible, there is, as already stated, a conflict of opinion among the High Courts on the question whether a sale in such cases should be only by a registered instrument or whether it might be by delivery of the property. This difficulty arises because of the word 'delivery'. What is transferred by the vendor may be tangible immovable property.

According to the contrary view (which also proceeds on the assumption that what is transferred is tangible immovable property), the delivery of possession contemplated in such delivery as the nature of the property admits of, and where the vendor, by appropriate acts or declarations, converts the vendee's possession into that of an owner, it is sufficient delivery of property within the meaning of this section.

50.27. Meaning of 'delivery-Privy Council case.-

In Mathura Prasad v. Chandra Narain, AIR 1921 PC 8 (9, 10), it was held by the Privy Council that for the purposes of this section there must be a real and not a constructive delivery of property. In that case the question was whether the delivery to vendee of an unregistered instrument of transfer was a delivery of the property for the purposes of this section. The Privy Council observed as follows:

"Their Lordships cannot accept the suggestion made on behalf of the applicants that for the purposes of section 54 some sort of constructive possession resulting from the delivery of the alleged instrument of transfer might be sufficient. For this purpose, their must be a real delivery of property."

These observations were not made to rule out symbolical delivery. But they have created that impression in some courts.

50.28. Other cases.-

The same view has been expressed in the under mentioned cases.1

1. (a) AIR 1956 Hyd 170 (171).

(b) AIR 1953 Born 437 (438): ILR (1953) Born 1071 (FB);

(c) AIR 1938 All 726 (728);

(d) AIR 1933 Cal 544 (545);

(e) Sohan Lal v. Mohan Lal, supra.

50.29. Scope of the problem.-

If our recommendation1 to treat the mortgagor's right in a usufructuary mortgage as intangible property is carried out, the problem will not survive in this form, for that situation. But in regard to other situations, the practical question will still remain though their number will be limited.

1. Para. 50.23, supra.

50.30. Difficulty how can be removed.-

It appears that the difficulty would disappear if the distinction between two kinds of possession-a distinction which is recognised by the Legislature in the Code of Civil Procedure, 1908, in relation to execution proceedings-is borne in mind. To quote Mr. Justice Aikman1-"if a person is wrongfully ousted from possession, he is entitled to a decree replacing him in such possession as he had, when his cause of action arose.

If, at that time, he had a right to immediate or what is called in country khas possession, then he is entitled to a decree replacing him in such possession. If, on the other hand, his possession was only derived from the enjoyment of the rents and profits, then the possession to which he is entitled is that provided for by section 264 of the Code (corresponding to present Order 21, rule 35)."

1. Sita Ram, ILR 18 All 440 (453) (FB).

The Transfer of Property Act, 1882 Back

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