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B. Ramman Lal Vs. Raghunath Shanker and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty ;Civil
CourtAllahabad
Decided On
Reported inAIR1941All56
AppellantB. Ramman Lal
RespondentRaghunath Shanker and anr.
Excerpt:
.....the full period of ten years by enforcement of the charge against the two mahals. act, that in the case of a lease there is a mere transfer of a right to enjoy the property leased, and no interest in the same is transferred in favour of the lessee. ramman lal has therefore the right to enjoy the property covered by the document for the period mentioned above and this right was transferred to him by executants first party......it is clear from this order that the learned judge, who was then seized of the case, treated the claim filed by ramman lal on 29th april 1937, as a claim under sub-section (2) of section 11. the issue that he framed was in the following terms:what were the rights of the claimant ramman lal in the zamindari property of mouza deosasand on what condition is it liable to attachment, sale or mortgage in satisfaction of the debts due from the applicants?3. the claim of ramman lal was eventually heard and decided by a judge other than the judge who had passed the order and framed the issue quoted above. the learned judge dismissed the claim of ramman lal on three grounds. he held that, if the statement made by eamman lai's counsel on 12th september 1938 be treated as a claim under section 11,.....
Judgment:

Iqbal Ahmad, J.

1. This appeal is directed against an order passed by a special Judge, first grade, in proceedings under the U. P. Encumbered Estates Act (Act 25 of 1934) and arises under the following circumstances. Raghunath Shanker and his minor son, Girish Prasad, the respondents in the present appeal, filed an application under Section 4, U.P. Encumbered Estates Act, before the Collector who, in accordance with the provisions of Section 6 of the Act, in due course, forwarded that application to the special Judge. After the receipt of the application by the special Judge, the applicants filed a written statement on 12th February 1937 containing the particulars enumerated in Section 8 of the Act. In their written statement the applicants alleged that B. Ramman Lal, the appellant in the present appeal, was one of their creditors. The learned Judge then directed the publication and the service of the notices prescribed by Section 9 of the Act. There was however this irregularity that the publication of the notice in the Gazette enjoined by Sub-section (1) was subsequent to the publication and the service of the notices in accordance with the provisions of Sub-section (2) of Section 9. But it is admitted that on 2nd March 1937, notice was served on Ramman Lal calling upon him to file a written statement of his claim. In pursuance of this notice Ramman Lal, on 29th April 1937, filed a written claim. In the claim submitted by him, Ramman Lal denied that he was a. creditor of the applicants and maintained that under two documents, both dated 12th September 1935, executed by the applicants in his favour, three mahals of village Deosas, viz., mahal Surkh, mahal Lakhi and mahal Zard, were leased to him for a period of ten years commencing from 1343 F. On the basis of this allegation he maintained that he was entitled to remain in possession of the three mahals as a lessee for the period reserved by the two leases. He, accordingly, submitted that the mahals could not be attached or sold for the' satisfaction of the debts due from the applicants so as to prejudicially affect his rights as a lessee.

2. After Ramman Lal had preferred this claim, a notice in accordance with the provisions of Sub-section (1) of Section 9 was published in the official Gazette on 12th June 1937. Thereafter, on 9th April 1938, notice in accordance with the provisions of Sub-section (1) of Section 11 was published, specifying the properties, mentioned by the applicants in the written statement filed by them under Section 8 of the Act, as also the properties specified by the claimants under Section 10 of the Act. Admittedly no fresh claim was filed by Ramman Lal asserting his rights as a lessee within three months of the publication of the last-mentioned notice as required by Sub-section (2) of Section 11. The case was taken up for settlement of issues on 12th September 1938, and, on that date, the counsel for Ramman Lal was called upon to state whether the claim preferred by Ramman Lal was under Section 9 or Section 11(2) of the Act. The counsel stated that Ramman Lal's claim should be treated primarily as a claim under Section 11 and that his claim was that the three mahals referred to above could not be sold or mortgaged until the expiry of the period for which Ramman Lal was entitled to remain in possession as a lessee. The counsel further stated that after the claim under Section 11 was decided, the claim of Ramman Lal, if necessary, might also be treated as a claim tinder Section 9. The Court then passed the following order : 'Seen. Let the W.S. filed by these claimants be treated as one under Section 11 of the Act.' It is clear from this order that the learned Judge, who was then seized of the case, treated the claim filed by Ramman Lal on 29th April 1937, as a claim under Sub-section (2) of Section 11. The issue that he framed was in the following terms:

What were the rights of the claimant Ramman Lal in the zamindari property of mouza Deosasand on what condition is it liable to attachment, sale or mortgage in satisfaction of the debts due from the applicants?

3. The claim of Ramman Lal was eventually heard and decided by a Judge other than the Judge who had passed the order and framed the issue quoted above. The learned Judge dismissed the claim of Ramman Lal on three grounds. He held that, if the statement made by Eamman Lai's counsel on 12th September 1938 be treated as a claim under Section 11, 'it was manifestly time-barred.' Secondly, he held that the claim filed by Ramman Lal on 29th April 1937, was a claim under Section 9 and not under Section 11 of the Act. Thirdly, he held that the position of Ramman Lal under one of the documents was that of a usufructuary mortgagee, and under the other document was that of a mere manager and, as such, Ramman Lal was not entitled to the possession of the three mahals in the capacity of a lessee.

4. Ramman Lal has filed the present appeal and it is argued on his behalf that the conclusions arrived at by the learned Judge are erroneous. In our judgment this contention is well-founded and this appeal must prevail. The applicants, as already stated, had in their written statement, mentioned Ramman Lal aa one of their creditors, and it was in that capacity that Ramman Lal was served with a notice and was called upon to file a written statement of his claim. Ramman Lal admittedly filed a written statement within the time fixed by the notice but, in the written statement, he disclaimed being a creditor of the applicants. He definitely asserted that his position was that of a lessee and that, in view of the stipulations contained in the two documents referred to above, his possession over the three mahals could not be disturbed for a period of ten years. In other words, the assertion contained in the written statement of Ramman Lal was that the applicants' proprietary rights in the mahals were subject to the right of Ramman Lal to remain in possession of those mahals for a period of ten years. In consequence of these allegations Ramman Lal's contention was that the three mahals could not be attached, sold or mortgaged in satisfaction of the debts due from the applicants so as to prejudicially affect his rights as a lessee. The claim embodied in the written statement of Ramman Lal was in substance a claim that fell within the purview of Sub-section (2) of Section 11 and not within the purview of Sections 9 and 10. That this is so is apparent from the fact that a claim under the last-mentioned sections could be preferred only by a creditor, whereas Ramman Lal, as stated before, disclaimed the position of a creditor.

5. It is true that Ramman Lal did not, after the publication of the notice under Section 11, prefer a claim. But as he had already done so, it would have been idle for him to file a fresh claim reiterating the very grounds that were embodied in the claim already filed by him. A claim under Sub-section (2) of Section 11 has to be filed within a period of three months from the date of the publication of the notice in the Gazette. But this provision does not debar the Court from entertaining, and adjudicating upon, a claim which was filed before the publication of the notice, if, in fact and in substance, the claim amounts to a claim under Sub-section (2) of Section 11. In this view of the matter, it was open to the Court to treat the claim filed by Ramman Lal as a claim under Section 11(2) of the Act, and the Judge, who framed the issues, was therefore right in passing the order that we have quoted above. As the claim was filed even before the publication of the notice, there can be no question of the claim being time-barred. In this connection we may point out that the statement made by Ramman Lal's pleader on 12th September 1938 was not a claim, but was a mere statement specifying the nature of the claim that had already been filed by Ramman Lal.

6. This brings us to the consideration of the merits of the claim preferred by Ramman Lal and it necessitates an examination of the two documents on which Ramman Lal's claim was based. Both the documents were executed on one and the same date. But as the terms of the two documents are not identical it would be convenient to deal with them separately. One of the documents is in terms described as a lease (patta). This document was executed by the applicants as first party and by Ramman Lal as second party. It relates to mahal Surkh and mahal Lakhi of village Deosas. It begins with a recital that the executants first party had given a zarepeshgi lease of the two mahals for a period of ten years (1343-1353 P) and that the executant second party was liable to pay Rs. 990 a year on account of Government revenue and had already paid profits at the rate of Rs. 500 a year to the executants first party. It was stated in the deed that a sum of Rs. 5000 on account of the profits for ten years at the rate of Rs. 500 a year had already been paid in advance by the executant second party to the executants first party, and that the executant second party was entitled to remain in possession in the capacity of a lessee' for a period of ten years. There was a clear stipulation in the deed that the sum of Rs. 5000 paid in advance would be liquidated in full on the expiry of ten years.

7. There was no provision in the deed entitling the executants first party to demand accounts from the executant second party, nor was any liability cast on the latter to maintain accounts of the profits of the two mahals. By para. 3 of the deed, executant second party was authorized to institute suits for arrears and enhancement of rent, for ejectment and to realize nazrana from the ryots who constructed new houses in the mahals. In short, all the rights that the executants first party could exercise in the management of the affairs of the mahals were given to executant second party. The document consists of twelve paras, and provisions contained in ten of those paragraphs clearly disclose a transaction of lease. But by paras. 7 and 9 of the deed, Ramman Lal was authorized, in certain contingencies, to realize the balance of the money paid by him in advance with interest by enforcement of charge against the two mahals. By the last mentioned paragraphs the two mahals were hypothecated by the executants first party and, in the event of the possession of Ramman Lal being disturbed, he was given the right to realize the balance of the zarepeshgi with interest at 12 per cent, per annum, as well as such profits as he could have made if the lease had remained in operation for the full period of ten years by enforcement of the charge against the two mahals. It is argued on behalf of the respondents that in view of the hypothecation of the two mahals the document in question embodied a transaction of usufructuary mortgage and not of a lease. We are unable to agree with this contention.

8. The answer to the question whether a transaction amounts to a mere zarepeshgi lease or to a usufructuary mortgage is often attended with considerable difficulties. Both in the case of a zarepeshgi lease and in the case of a usufructuary mortgage the person in whose favour the document is executed is entitled to possession. Similarly, in both cases there is an advance of money to the executants of the deed. But in the case of a usufructuary mortgage, there is a statutory liability for accounting cast upon the mortgagee by Section 76(g), T.P. Act. In the case of a zarepeshgi lease however normally there is no such liability on the lessee. Further, in the case of a zarepeshgi lease pure and simple the lessee is not given any security for the amount advanced by him. Whereas in the case of a usufructuary mortgage there is a transfer of interest in the property mortgaged in favour of the mortgagee. It is clear from the provisions of Section 105, T.P. Act, that in the case of a lease there is a mere transfer of a right to enjoy the property leased, and no interest in the same is transferred in favour of the lessee. Again, in the case of a lease there is no right of redemption vested in the lessor, whereas such a right exists in the case of a mortgage.

9. The question that arises is as to what was the effect of the inclusion of paras. 7 and 9 in the document in question. Those paragraphs no doubt created a charge over the two mahals, but the charge could become operative only on the happening of the contingencies mentioned in those paragraphs. The document primarily embodied a transaction of lease and it was simply with a view to secure to Ramman Lal the rights given to him in his capacity as a lessee that a charge was created over the two mahals. In other words, the covenant as to the charge contained in the document was with a view to ensure the performance of their part of the contract by the lessors. But the inclusion of the paragraphs mentioned above could not and did not nullify the transaction of lease. Because of the inclusion of the two paragraphs the document became more than a mere zarepeshgi lease. It embodied a transaction of zarepeshgi lease and it also contained a hypothecation clause which was to come into operation on the happening of specified contingencies. In short, it partook of the character both of a zarepeshgi lease and of a simple mortgage. In Nidha Sah v. Murli Dhar ('3) 25 All. 115 their Lordships of the Privy Council were concerned with the interpretation of a document which was described as a deed of mortgage. Their Lordships made the following observation in that case:

This instrument, though it is called a mortgage, and though it will be convenient to follow the nomenclature used in the document itself and in the pleadings and judgments in the Courts below, is not a mortgage in any proper sense of the word. It is not a security for the payment of any money or for the performance of any engagement. No accounts were to be rendered or required. There was no provision for redemption expressed or implied. It was simply a grant of land for a fixed term...in consideration of a sum made up of past and present advances.

10. In the case before us the document fully satisfies the tests laid down by their Lordships of the Privy Council for holding that the document before their Lordships did not embody a transaction of mortgage. We therefore hold that by the document the appellant acquired the rights of a lessee and his possession as a lessee could not be disturbed for a period of ten years.

11. The second document was also executed by the applicants as executants first party and by Ramman Lal as executant second party. The document is styled as 'wasiqa qaim-muqami' (instrument of representation). It is recited in the deed that the executants first party had appointed executant second party as their ' qaim-muqam ' (representative). The document relates to mahal Zard and authorises executant second party to remain in possession of that mahal and to exercise all proprietary rights with a view to realise the profits of that mahal. The liability to pay the Government revenue and a sum of Rs. 50 a month as profits to executants first party is cast by the document upon the executant second party. The document was to remain in operation for a period of ten years and the possession of executant second party during that period could not be disturbed by the executants first party. There is a clear provision in the deed that the executants first party shall not be entitled to demand accounts from the executant second party. In short, the rights given by the document to Ramman Lal are identical with the rights possessed by a lessee. The document is however not described as a deed of lease.

12. But in order to ascertain the real character of the document one has to look to the terms of the deed, and the description of the document given by the executant cannot be an infallible guide. The document) secures to Ramman Lal the right of possession over the mahal for a period of ten years certain, and casts on him the liability to pay the Government revenue and Rs. 600 a year on account of profits to executants first party. Ramman Lal has therefore the right to enjoy the property covered by the document for the period mentioned above and this right was transferred to him by executants first party. The document therefore fulfils all the characteristics of a lease and must be regarded as such. We may mention that the document is inscribed on a stamp paper of Rs. 15 which, in the year 1935, was the correct stamp duty payable on a deed of lease of this character. If by the document Ramman Lal was to be appointed a mere manager, as found by the Court below, much less stamp duty would have been paid. We therefore hold that this document also embodies a transaction of lease.

13. In view of the conclusions arrived at by us this appeal must prevail. We accordingly allow the appeal, set aside the order of the Court below and send the case back to that Court with the direction to treat Ramman Lal as a lessee under the two documents for a period of ten years from 1343 w. and then to proceed with the case according to law. Ramman Lal is entitled to the costs of this appeal.


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