Full Judgment Text
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PETITIONER:
JYASING DNYANU MHOPREKAR & ANR.
Vs.
RESPONDENT:
KRISHNA BABAJI PATIL & ANR.
DATE OF JUDGMENT17/07/1985
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
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
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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
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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]
JUDGMENT:
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.
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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.
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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
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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
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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
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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.
319