1. This appeal raises the question whether a landlord can redeem a mortgage effected by his permanent tenant who dies without leaving any heirs. The point does not appear to have been covered by authority. The land in suit belonged to the plaintiff's grandfather, Ramji, from whom one More took it on a lease in the year 1863. The land was given to Moro for building a house on the site and Moro agreed to pay an annual rent of Rs. 4-8, The lease embodied the conditions that so long as the house stood on the site, Moro 'his bhaubands or such others as there may be' will continue to pay the rent according to the agreement, and in case the shop or the house were to be sold, it was not to bo sold without informing the landlord, and in case a sale was made, a quarter of the proceeds would bo payable to the landlord.
2. In 1875 Moro's widow mortgaged the property in favour of the predecessors of defendants Nos. 1. to 3. The tenant died without leaving any heirs, and the present suit was brought by the grandson of the original landlord to redeem the mortgage effected in the year 1875.
3. Both the Courts held that the landlord had no right to redeem. There are no words of inheritance in the lease, Exh. 27. But as the land was given for building purposes and the tenancy is an ancient one, there would be a presumption that it is a permanent lease, according to the decisions in Navalram v. Javerilal (1905) 7 Bom. L.R. 401 Caspersz v. Kader Nath Sarbadhikari I.L.R. (1901) Cal. 738 and Musammat Afzul-un-Nissa v. Abdul Karim : (1919)21BOMLR891
4. The question is whether the landlord has a right to redeem the mortgage effected by the tenant. Under Section 91, Clauses (a) and (b), of the Transfer of Property Act:-
Besides the mortgagor, any of the following persona may redeem, or institute a suit for redemption of, the mortgaged property :-
(a) any person (other than the mortgagee of the interest sought to be redeemed) having any interest in, or charge upon, the property;
(b) any person having any interest in, or charge Upon, the right to redeem the property;.
According to Section 91, as amended by Act XX of 1929, Clauses (a) and (6) have been combined in one Clause (a) as follows :-
Any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged, or in or upon the right to redeem the same;.
It is, therefore, clear that besides the mortgagor, any person who has any interest in or charge upon the property mortgaged, or in or upon the equity of redemption, has a right to redeem. The question is whether the landlord who has effected a permanent lease upon his property has an interest sufficient to fall within the terms of Section 91 of the Transfer of Property Act.
5. A lease is denned in Section 105 of the Transfer of Property Act as a transfer of a right to enjoy the property, made for a certain time, express or implied, or in perpetuity. There is no transfer of ownership as in the case of a sale, which is defined in Section 54 as a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. The landlord, therefore, retains the ownership of the land in respect of which a lease is passed whether for a certain time or in perpetuity. In Kally Dass A hiri v. Monmohini Dassee I.L.R. (1897) Cal. 440 where it was held that a lease, notwithstanding that it is permanent, is liable to forfeiture under the provisions of the Transfer of Property Act if the tenant deities the title of the landlord. It was observed by Sir Lawrence Jenkins as follows (p. 447) :-
The impossibility on which the defendant relies is based upon the assumption that a lessor has no reversion. There seems to me to lurk in this assumption a fallacy baaed on the theories of English real property law.
A man who being owner of land grants a lease in perpetuity carves a subordinate interest out of his own and does not annihilate his own interest. This result is to be inferred by the use of the word 'lease,' which implies an interest still remaining in the lessor. Before the lease the owner had the right to enjoy the possession of the land, and by the lease he oxcludos himself during its currency from that right, but the determination of the lease is a removal of that barrier, and there is nothing to prevent the enjoyment from which he had been excluded by the lease.
This view is accepted by their Lordships of the Privy Council in Abhiram Goswami v. Shyama Charan Nandi and also in Raghunath Roy Marwari v. Raja of Jheria
6. The lower Courts have relied on the decision, in the case of Ranee net Kowar v. Mirza Himmat Bahadoor where the question was whether on the failure of heirs of a grantee of an absolute hereditary mokurrari tenure, the zamindar or the Crown takes by escheat, and it was held that where there is a failure of heirs, the Crown, by the general prerogative, will take the property by escheat, subject to any trusts or charges affecting it. It appears that the mokurrari lease was a transfer of an absolute interest. It could not have been forfeited for nonpayment of rent. Further, it was held that there was no ground for holding that the lands could revert, in the proper sense of the term, to the zamindar. This case was followed in Panchubala Debi v. Jatindra Nath Goswami I.L.R. (1926) Cal. 816
7. It was held by a full bench of the Allahabad High Court in Tulshi Ram Sahu v. Gur Dayal Singh I.L.R. (1910) All. 111 that on the death of a fixed-rate tenant without heirs his tenancy does not escheat to the Crown, but reverts to the zamindar who can redeem the mortgage effected by the tenant. The previous case of the same Court in Ram Dihal Rai v. The Maharaja of Vizianagram I.L.R. (1908) All. 488 was overruled. It was held in Ram Dihal Rai's case that in order to redeem, the person seeking redemption must have an interest in 'the mortgaged property,' and the mortgaged property being the interest of a fixed-rate tenant, the mere fact that the zamindar has a proprietary interest in the land out of which the interest of a fixed tenant is carved does not give him ' an interest in the mortgaged property' within the meaning of Section 91 of the Transfer of Property Act. But it was held by the full bench in Tulshi Ram Sahu's case by a reference to the Agra Tenancy Act, I of 1901, that a fixed-rate tenancy was but a limited interest, which cannot be the subject of escheat to the Crown, for the Act provided that on the death of the tenant without heirs the interest of such a tenant shall be extinguished. The previous case of Ram Dihal Rai v. The Maharaja of Vizianagram was overruled, and the case of Ranee Sonet Kowar v. Mirza Himmut Bahadoor was distinguished on the ground that a mokurrari lease was clearly an absolute interest. It was also an alienable interest and that it could not be resumed or forfeited for the non-payment of rent.
8. In the case of a permanent lease the landlord is the owner of the land and the interest of the tenant is determined by denial of the landlord's title under Section 111 of the Transfer of Property Act. There is a distinction made in Section 91 of the Transfer of Property Act between a, person who is entitled to an interest in the mortgaged property and a person who is entitled to an interest in the equity of redemption, and though the landlord may not 'be entitled to the interest in the equity of redemption so far as the permanent tenant's right is concerned, it can not be said that the landlord has no interest in the property mortgaged. The property mortgaged is the house together with the land. The landlord is the owner of the laud and has carved out of his ownership a certain portion, viz., his right of enjoyment which he has transferred to the permanent tenant which could be determined in certain circumstances and the property would revert to the landlord. If the landlord carves out an absolute transferable interest in favour of a permanent tenant which under no circumstances would revert to the landlord, it would be difficult to hold that the landlord would have right to redeem the mortgage effected by the tenant, but if on the other hand the interest carved out would revert to the landlord under certain circumstances, e. g., non-payment of rent or denial of landlord's title, the landlord Would have sufficient interest to redeem such a mortgage.
9. The right of a permanent tenant to redeem a mortgage effected by the landlord is recognized by the decisions in the cases of Raghunandan Prasad v. Ambika Singh I.L.R. (1907) All. 679 and Paya Matathil Appu v. Kovamel Amina I.L.R. (1895) Mad. 151 which follow the general principle laid down in Tarn v. Turner (1888) 39 Ch.D. 456 If a permanent tenant is entitled to redeem a mortgage effected by the landlord, it would be on the ground that he is interested in the property mortgaged, as it cannot be said that he is interested in the landlord's interest or in the equity of redemption of the mortgage passed by the landlord.
10. Having regard to the view taken by Sir Lawrence Jenkins in Kally Dass Ahiri v. Monmohini Dassee I.L.R. (1897) Cal. 440 and the definition of 'lease' in Section 105 of the Transfer of Property Act, I think the landlord, even in the case of a permanent tenancy, has an interest in the mortgaged property, and would be entitled to redeem under Section 91 of the Transfer of Property Act,
11. There is an additional ground in the present case that the landlord has an interest in also the building erected by the tenant on the land as the tenant agreed to pay a quarter of proceeds in case he sold the property. The landlord has, therefore, not only an interest in the land but also in the building mortgaged by the tenant.
12. I think, therefore, that the view taken by both the lower Courts is not correct. The decrees, therefore, of both the lower Courts will have to be reversed and the case remanded to the Subordinate Judge for a decision on the merits in order to ascertain the amount due on the mortgage and pass a decree for redemption. The costs will be costs in the suit.
13. The suit was filed by a superior holder to redeem a mortgage incurred by his permanent tenant, who has since died, leaving no known heirs, against the permanent tenants' mortgagees, who are in possession and who disputed the claim. It has been held that in the circumstances the landlord has no right to redeem and the suit has been dismissed, the dismissal being confirmed by the Court of first appeal.
14. The terms of the permanent lease are set out in the original Court's judgment. No right of re-entry is stated, but a sale had to be reported, and on such an occasion the landlord was entitled to a quarter of the price got for the building. We have been referred to the cases of Ranee Sonet Kowar v. Mirza Himmat Bahadoor and Tulshi Ram Sahu v. Gur Dayal Singh I.L.R. (1910) All. 111 which have been distinguished by the Court below, and Mr. Nadkarni's argument has been founded mainly on the definition of 'lease' in the Transfer of Property Act. One possible view, of course, is in this connection that the subject of the mortgage referred only to the tenancy rights-rights which the landlord having parted with-he could not in consequence be held to be interested in. This is the view taken in Tulshi Ram Sahu v. Our Dayal Singh by the Judge who first heard the appeal on similar facts.
15. The correct answer seems to me to depend on the attributes of the permanent lease. If, as in the Privy Council case, the inferior holding has been carved out of and permanently separated from the superior one, so that it can only revert to the superior holder by inheritance or a purchase, he can, I think, have no interest left in it, and cannot redeem the permanent tenants' mortgage. If, on the other hand, he can resume in certain contingencies, for failure to pay rent or denial of title, he appears to me to retain some interest in the inferior holding, and in that case can, I judge, redeem.
16. The present case is a case of an ordinary holding of an urban site. It seems to be clear that the superior holder has still an interest in it, for he would be liable to pay any assessment or other tax leviable on it, in case the permanent tenant did not do so, apart from the rights of resumption possible to him in certain contingencies. It seems, therefore, that the superior holder still has such an interest as would come within Section 91 of the Transfer of Property Act, and can redeem. I agree, therefore, with the order proposed by my learned brother, that the decrees of both the Courts below on the preliminary point should be set aside and that the remaining issues arising on the pleadings should be tried and found on.