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Bhikhabhai Nanabhai Patel Vs. Chimanlal Maganlal Shah and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberSecond Appeal No. 993 of 1948
Judge
Reported inAIR1953Bom437A; (1953)55BOMLR641
ActsTransfer of Property Act, 1882 - Sections 54 and 60; Dekkhan Agriculturists' Relief Act - Sections 15D
AppellantBhikhabhai Nanabhai Patel
RespondentChimanlal Maganlal Shah and ors.
Appellant AdvocateD.V. Patel, Adv.
Respondent AdvocateS.M. Shah, ;R.N. Shah and ;N.C. Shah, Advs.
Excerpt:
.....the declaration by the mortgagor of the right of the sub-mortgagee to the property was sufficient delivery of possession within the meaning of section 54 of the transfer of property act, 1882:-;that even assuming that what was sold by the mortgagor to the sub-mortgagee was tangible immoveable property, in the absence of a registered document no valid title was created in favour of the sub-mortgagee because no delivery of the property was given to him.;tuharam v. atmaram (1938) 40 bom. l.r. 1192 sibendrapada banerjee v. secretary of state for india in council (1907) i.l. r. 34 cal. 207 kulaehandra ghosh v. jogendra chandra ghosh (1932) i.l. r. 60 cal. 384 pheku mian v. syed ali(1936) i.l. r. 15 pat. 772, puran mahton v. bhago mahton [1946] a.i. r. pat. 81 sheik dawood v. moideen bataha..........unregistered deed where the value of the property did not exceed rs. 100. in holding that it was a tangible property the court followed the decision of a full bench of the allahabad high court in -- sohan lal v. mohan lal : air1928all726 . we shall presently deal with that ease. but what has been strongly relied upon by mr. shah is the observations of broomfield j. with regard to the proper construction to be placed upon the expression 'delivery' used in section 54. broomfield j. at p. 33 notices the argument that was advanced before him :'the next point taken by the appellant was that even if the property be regarded as tangible property, since there is no registered deed, delivery is necessary to complete the transfer and there could be no delivery by the vendor because the mortgagee.....
Judgment:

Chagla, C.J.

1. This is a second appeal referred to this Full Bench. The facts briefly are that land in question belonged to one Venidas and in 1880 he mortgaged this land for a sum of Rs. 400 to one Kishor-das Jethabhai. Kishordas Jethabhai sub-mortgaged the land to one Shah Chhagan-lal Mulji for Rs. 261, and there was a further sub mortgage on 13-5-188G, for a sum of Rs. 560. The plaintiff in the suit from which this appeal a vises acquired the right of Venidas in this property by a registered document on 8-2-19-15, and he filed the suit for redemption under the Dakkhan Agriculturists' Relief Act. Defendants 1 to 6 are the representatives of the sub-mortgagee and defendants 7 and 8 are the representatives of Venidas. Both the trial Court and the lower appellate Court concurred in dismissing the suit.

2. Now, in the written statement the contesting defendants alleged that there was a sale-deed executed by defendants 7 and 8 in respect of the equity of redemption of this property and this sale-deed was executed on 2-1-1908. They further contended that the sale-deed was lost. There was no allegation in the written statement that delivery was given of the property and therefore the sale could be effected without a registered document. It is clear that if the sale of the equity of redemption relied upon by defendants 1 to 7 could only be effected by a registered document, then the defendants must fail as no registered document has bean proved before the Court below. In the trial Court no attempt was even made either to give secondary evidence of the document on which reliance was placed, nor was any attempt made to suggest that delivery of the property was given and therefore no registration was necessary. The learned District Judge, however, took the view that reading between the lines of the written statement it may be said that the defendants relied upon delivery of the property.

With respect to the learned District Judge, one should first look at the lines of the written statement themselves and not try and read between the lines, and when we look at the actual lines we find that there is no plea whatever of delivery of possession as now contended before us. Therefore, it would be possible to dispose of this appeal on the ground that as delivery of the property has not been alleged by the defendants and there is no registered document conveying the interest of the mortgagor to the sub-mortgagee, the plaintiff is entitled to succeed. But we arc prepared to take the same lenient view that the learned District Judge took of the pleadings and consider the matter on merits. The value of the property admittedly is less fhan Rs. 100, and the sale of an immoveable property can only be effected in the manner laid down in Section 54. Section 54 in the first place defines what a sale is, and that is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Then the section goes on to lay down the mode in which a transfer can be effected. If the property is tangible immoveable property of the value of Rs. 100 and upwards, or an intangible thing, then the sale can only be effected by a registered instrument. When property is tangible irnmove-able property of a value less than Rs. 100, the transfer can be effected in one of two modes; it may be either by a registered instrument or by delivery of the property.

3. The first question that arises in this case is whether the sale by the mortgagor of the equity of redemption in favour of the sub-mortgagee was the sate of tangible immoveable property, because if the sale was not of tangible immoveable property, then it is not disputed that it could only be effected by a registered instrument. The contention of Mr. Shah before us is that what the mortgagor transferred to the sub-mortgagee was tangible immoveable property and not intangible im-movfable property, and therefore it was open to him to bring about a fransfer of ownership not merely by a registered instrument but also by delivery of the property. One possible view seems to be that when a mortgagor sells the equity of redemption, he does not sell the property, but he sells his right in that property which remains after the mortgage has been executed. It may be said that ownership is constituted by the totality of attributes attaching to a property. It is only when all these attributes are vrsted in one person that he can be called the owner of the property.

When a mortgage is executed, an interest in property is transferred to the mortgagee, and therefore after the mortgage what is left in the mortgagor is not the totality of rights, but the totality of rights less the interest that is transferred to the mortgagee. Therefore, when a mortgager sells the equity of redemption, he sells not the property, but a right in that prooerty. and the right in that property is the right given to the mortgagor under Section 60 which is the right to redeem, and it is difficult to understand, if that be the correct position, how a right to redeem can be tangible immoveable property. On the other hand, Mr. Shah has relied on some eminent autnors on jurisprudence for the contention that the owner of a property continues to remain the owner although be creates various interests in favour of third parties and even' though his ownership is denuded of many of its valuable attributes, and Mr. Shah's contention is that when a mortgagor sells a property which is already mortgaged, he does not sell merely a right in property, but he sells the property itself as the owner and therefore what is transferred is tangible immoveable property.

Mr. Shah points out that the rights of a mortgagor, after he has executed the mortgage, are not necessarily those confined to Section 60. He gives the instance of a simple mortgage. He says that in the case of a simple mortgage the mortgagor continues in possession and he would be entitled to sell the property subject to the mortgage and give possession to the vendee. That is a right not contemplated by Section 60, but that would be a right which would go with the ownership of the property of the mortgagor. Mr. Shah also points out that a distinction must be made between the position in law in England and the position here. In England a mortgage is brought about by the conveyance of the property by the mortgagor to the mortgagee. The mortgagee becomes the legal owner, and at its inception the doctrine of equity of redemption was evolved by the Courts of Chancery which came to the rescue of the mortgagor, and notwithstanding the legal title being in the mortgagee it gave a relief to the mortgagor who was prepared to pav the debt and redeem the property.

But Mr. Shah is right that as far as our Indian law is concerned, a mortgage does not mean the conveyance of the property in favour of the mortgagee. As the very definition of a 'mortgage' shows, a mortgage is nothing more than a transfer of an interest in im-moveable property, and all that the mortgagee gets is not the legal ownership of the property, but merely an interest in immoveable property. Therefore, there is force in Mr, Shah's contention that when a mortgagor sells the interest left in him after he has executed a mortgage, he is transferring his ownership and that he continues to be the owner of the property and what he is selling is not merely an interest in the property but the property itself, although in selling that property the property may be encumbered by the mortgage which the mortgagor has created.

4. But there is still a very serious difficulty in the way of Mr. Shah. Even assuming that a sale by a mortgagor of (to use the well-known expression) equity of redemption constitutes a transfer of tangible immoveable property and even where the value of the property is less than Rs. 100, if the transfer is not made by a registered instrument it must be made by delivery of the property. In this particular case the mortgage in favour of the original mortgagee was a usufructuary mortgage and when the sub-morigage was created the sub-mortgage went into possession. Therefore, when the mortgagor sold the equity of redemption to the sub-mortgagee, admittedly no possession was given to the sub-mortgagee as he was already in possession, and the question that arises for our determination is whether on these fads it could be stated that delivery of possession was given by the mortgagor to the sub-mortgagee as required by Section 54. Mr. Shah relies on one fact as constituting delivery of possession, and the fact he relies on is that thcre was a mutation in the Record of Rights at the instance of the mortgagor in favour of the sub-mortgagee, and Mr. Shah's contention is that where the mortgagee is himself in possession and where possession could not he given to him, a declaration by the mortgagor of the right of the mortgagee to the property is sufficient delivery of possession within the meaning of Section 54.

Apart from any authorities, turning to Section 54 itself and the principle underlying that section, it seems to us that the delivery contemplated by Section 54 is not constructive or symbolic delivery, but actual or real delivery. The law requires that title to property can only be transferred by two modes, and the reason why the law has laid down these two modes is that there should be sufficient publicity and sufficient notice to the world when a title is transferred. Registration itself is sufficient notice, but where registration is dispensed with in the case of property of small value, the law requires that there should be delivery of property. In the case of a tangible immove-able property, delivery can only be given by transfer of possession. In the case of registration, the transfer of possession would constitute sufficient notice, and therefore in our opinion it would not be proper, looking to the principle underlying Section 54, to give a wide or a loose interpretation to the expression 'delivery' used by the Legislature. In its own context used as it. is in Section 54 along with 'registration', 'delivery' can only mean actual Or real delivery. Mr. Shah says that that would be perfectly all right where the mortgagor or the transferor was in possession of the property; then the Court would be right in insisting upon possession being given to the transferee. But Mr. Shah says that the position is different where the transferee himself is in possession and no possession could he given to him.

In our opinion in a case like this, where no possession can be given, the law insists upon registration. In this particular case the sub-mortgagee was in possession, the mortgagor sold the property to him, as the sub-mortgagee was already in possession no further possession could be given to him, and therefore the law requires that in order that the sub-mortgagee could acquire title to the property he should obtain a registered instrument. Mr. Shah says that although possession was not given to the sub-mortgagee the nature of his possession was altered; from being in possession as a sub-mortgagee he went into possession as a vendee and as the owner of the property. But what Section 54 contemplates is not change in the nature of possession. What it requires in order that delivery should be constituted is the transfer of actual possession, and if transfer of actual possession is not possible then the only way title can be transferred is by registration. Therefore, in this particular case, even assuming that Mr. Shah is right and that what was sold by the mortgagor to the sub-mortgagee was tangible immoveable property, in our opinion the sub-mortgagee acquired no title to the property because no delivery of the property was given to him.

5. Turning to the authorities, we have a decision of our Court on which reliance has been placed by Mr. Shah, and that is a judgment of Broomfield and Macklin JJ. reported in -- 'Tukaram v. Atmaram', AIR 1939 Bom 31 (A). That was a case of a usufructuary mortgage and the Court held that the equity of redemption in the case of a usufructuary mortgage was tangible immoveable property and it could be transferred by an unregistered deed where the value of the property did not exceed Rs. 100. In holding that it was a tangible property the Court followed the decision of a Full Bench of the Allahabad High Court in -- Sohan Lal v. Mohan Lal : AIR1928All726 . We shall presently deal with that ease. But what has been strongly relied upon by Mr. Shah is the observations of Broomfield J. with regard to the proper construction to be placed upon the expression 'delivery' used in Section 54. Broomfield J. at p. 33 notices the argument that was advanced before him :

'The next point taken by the appellant was that even if the property be regarded as tangible property, since there is no registered deed, delivery is necessary to complete the transfer and there could be no delivery by the vendor because the mortgagee was in possession,'

and Broomfield J. rejects this contention. But what must be borne in mind is that in that particular case the sale by the mortgagor was to a third party and the vendee under the agreement of sale was to pay off the mortgagee and take possession of the property. The vendee in fact paid oif the mortgagee and he took possession, and therefore, Broomfield J. relies on the definition of 'delivery' in Section 54 and points out that the case he was considering fell within the decision of --'Sibendrapada Banerjee v. Secy, of State', 34 Cal 207 (C). Therefore, on the facts of that case what was held was that possession was given by the mortgagee to the vendee and Broomfield J. holds that that possession was given on the direction of the vendor. Therefore, far from that being a case where no delivery was given, delivery was given by the mortgagee to the vendee, and in the judgment of Macklin J., who concurred with the decision of Broomfield J. the position is made even clearer. At p. 35 the learned Judge points out :

'...I have no doubt that the vendee did in the end get possession by virtue of his purchase; and the manner in which he obtained it shows, I think, that it was by delivery of possession within the meaning of Section 54 of the Transfer of Property Act as interpreted in that respect by --'Sibendrapada Banerjee v. Secretary of State', (C).'

Therefore, although this decision follows the decision of --'Sohan Lal v. Mohan Lal', (B)', in holding that in the case of a usufructuary mortgage the equity of redemption is tangible immoveable property, it follows both -- 'Sohan Lal v. Mohan Lal (B)', and -- 'Shibendrapada v. Secretary of State, (C)', in holding that actual real delivery must be given in the case of tangible property where the value is less than Rs. 100 if there is no registered document transferring title.

6. Turning to - 'Shibendrapada Banerjee's case (C)', which js the basis of the decision both of -Tukararn v. Almarani (A)', and - 'Sohan Lal v. Mohan Lal (B)', the learned Judges Mookerjee and Holm wood JJ. who decided that case point out at p. 210 :

'...The language of Section 54 is quite clear. It speaks of a transfer by delivery of the property, so that the delivery is the essence ot the transaction. We are not prepared to put any loose construction upon this section, because the consequences of such a construction might be far reaching and injurious in many instances.'

They further point out that the essence of a transfer by delivery of the property is that possession is changed. Mr. Shah has pointed out to us that the Calcutta High Court in a more recent decision in -- 'Kulachandra v. Jogendrachandra', : AIR1933Cal411 , has taken a different view. That is a judgment of Mukerji J. and the learned Judge doubts the decision in -- 'Shibendrapada Banerjee's case (C)'. With very great respect, it is difficult to understand how a single Judge of the Calcutta High Court can differ from or doubt the decision of a Division Bench. The decision of the Division Bench was not overruled and that decision presumably would be binding upon Mukerji J.

7. Then our attention hss also been drawn to the judgment of the Paina High Court in --'Pheku Mtan v. Syed Ali', AIR 1937 Pat 173 (E). In that case the Patna High Court held that where the property sold is already in possession of the vendee, renunciation of all his rights therein by the vendor and mutation of the vendee's name in the record of rights made at the instance oi the vendor were suilicient compliance with the provisions of Section 54 of the Act, and in coming to that conclusion Khwaja Mohammad Noor and Madan JJ. followed an earlier decision of the Patna High Court and also followed the decision in - 'Kulachandra v. Jogendrachandra (D)'. It is rather significant to note that the learned Judges did not refer to -- 'Shibendrapada Banerjee's case (C)', at all, nor did they refer to the decision of the Privy Council in -- 'Biswanath Prashad v. Chandra Narayan', AIR 1921 PC 8 (F), to which a reference will us presently made. Even with regard to the Patna High Court, a more recent decision in -- 'Puran Mahton v. Bhogo Mahton' : AIR1946Pat81 (G), which is a judgment of Agarwala J, has followed the principle laid down in -- 'Shibendrapada Banerjee's case (C)'. The Madras High Court has also taken the same view as the Division Bench of the Patna High Court in --'Phsku Mian v. Syed Ali (E)', and that decision is reported in -- 'Sheik Dawood v Moideen Batcha', AIR 1925 Mad 566 (H). This judgment of the Madras High Court also does not refer to the decision of the Privy Council.

8. Turning to the decision of the Privy Council in -- 'Biswanath Prasad v. Chandra Narayan (F)', their Lordships were called upon to construe Section 54, and they have placed upon that section a clear and definite interpretation. At p. 9 their Lordships observed :

'Their Lordships cannot accept the suggestion made on behalf of the appellants that, for the purposes of S, 54, some sort of constructive possession resulting from the delivery of the alleged instrument of transfer might be sufficient. For this purpose there must be a real delivery of the property.' Therefore, the Privy Council rejected the suggestion that a constructive or symbolic delivery was sufficient for the purposes of Section 54. What Section 54 required was real or actual delivery.

9. Turning to the decision in -- 'Sohan Lal v. Mohan Lal (B)', on which the judgment of this Court in -- 'Tukaram v. Atmaram (A)', was based, the judgment of the majority, Mukerji and Kendall JJ. first held at p. 727 that

'...the property, professed to be sold, was already in the possession of the proposed transferee; it follows that, in the circumstances, there could be no delivery of the property. If a party be already in possession of the property, you cannot deliver the property to him again, without first asking him to vacate the property.'

In coming to this conclusion the learned Judges followed the decision in -- 'Shibendrapada Banerjes's case (C)'. Having held this they went on to consider whether the equity at redemption was tangible or intangible property, and in holding that it was tangible property they relied on various authorities on jurisprudence, and at p. 720 they quote Salmond on Jurisprudence :

'The right of the owner of a thing may be all but eaten up by the dominant rights of lessees, mortgagees and other encumbrancers. His ownership may be reduced to a mere name rather than a reality. Yet, he nonetheless remains the owner of the thing, while all others own nothing more them 'rights' over it...He, then, is the owner of a material object, who owns a right to the ganeral or residuary uses of it, after the deduction of all special and limited rights of use vested by way of encumbrance in other persons.'

These are undoubtedly weighty observations and they strongly support Mr. Shah's contention that where an owner of a property executes mortgage, although he is deprived of some of the rights in that property, he still continues to be the owner of that property, and that if he disposes of that property, he would be disposing of a tangible immoveable properly.

10. In the case before us, even assuming that the mortgagor sold a tangible immoveable property when he sold the equity of redemption, we have still to consider whether delivery of that property was given to the purchaser. As there is no registered document, it is only by delivery of possession as laid down in Section 54 that title could ha transferred to the purchaser. As we have already pointed out, the sub-mortgagee was the purchaser of the equity of redemption and the sub-mortgagee was already in possession of the property. Therefore, no delivery was given to the sub-mortgagee, as indeed no delivery could be given, as he was already in possession, and therefore in our opinion even assuming that the equity of redemption constitutes tangible immoveable property, no valid title was created in favour of the sub-mortgagee because no delivery of the property was given to him.

11. We will, therefore, set aside the decision both of the trial Court and of the lower appellate Court and send the matter down to the trial Court with a direction to the learned Judge to take accounts under Section 15D, Dekkhan Agriculturists' Relief Act of the mortgage which the plaintiff wants to redeem. The appellant will get the costs of the second appeal in this Court and the costs of the lower appellate Court, and the costs of the trial Court will be costs in the cause.

12. Order accordingly.


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