1. This is a plaintiff's revision under Section 115, Civil P.C. The applicant applied under Section 12, Agriculturists' Relief Act, for redemption of two usufructuary mortgages, of which one was executed on 16th March 1897 for Rs. 50 and the other was executed on 12th August 1897 for Rs. 40. The property which was the subject of each of these two mortgages consisted in plots of an occupancy holding. The Assistant Collector held that plots of an occupancy holding could not legally be mortgaged and the Court had, therefore, no jurisdiction to entertain the application under Section 12, Agriculturists' Relief Act. There was an appeal to the Civil Judge, but the appeal was dismissed. When the revision first came before me on 18th March 1943, it was contended by learned Counsel for the applicant that on the assumption that the two mortgages in question were not legally competent the opposite party had nevertheless prescribed for the status of usufructuary mortgagees. I accordingly sent down the following issue to the lower appellate Court:
Whether the defendants-opposite party have by prescription acquired the status of usufructuary mortgagees in the holdings in suit
2. The finding which has been returned to this Court is that the opposite party have by prescription acquired the limited 'right to occupy' the holdings in suit until the money advanced by them is paid off, but have not acquired the right of mortgagees of the occupancy holding. It is conceded that Section 12, Agriculturists' Relief Act, contemplates a valid e mortgage as recognised by law. The mortgage deeds in question were executed in 1897, when Act 12 of 1881 was in force. The provisions of the first two paragraphs of Section 9 of that Act read as follows:
The right of tenants at fixed rates may devolve by succession or be transferred.
No other right of occupancy shall be transferable in execution of a decree or otherwise than by voluntary transfer between persons in favour of whom as cosharers such right originally arose or who have become by succession cosharers therein.
3. In Khiali Ram v. Nathu Lal ('93) 15 All. 219 it was held by a Full Bench of six Judges that an exproprietary tenant was competent to sub-let the whole or any part of his occupancy holding and such a i sub-letting was not forbidden by Section 9 of Act 12 of 1881. At page 229 the learned Judges say:
It has recently been decided, and we think rightly, in Kbamani Ram v. Sundar ('93) 1893 A.W.N. 9 by the Board of Revenue, North-Western Provinces of Oudh, that although a tenant with a right of occupancy, other than a tenant at a fixed rate, cannot legally transfer his rights of occupancy, he can sub-let the right to cultivate the land comprised in his occupancy holding, as such a sub-letting does not profess to be a transfer of the right of occupancy and is not in contravention of Section 9 of Act 12 of 1881.
4. The question of a usufructuary mortgage of an occupancy holding was discussed and the learned Judges placed it on the same footing as a sub-lease. What was held was that an occupancy tenant was competent to transfer the right to occupy the plots, but was not competent to transfer the occupancy rights; and it was further held that the interest so transferred would only subsist until the determination of the right of occupancy. This decision was referred to and interpreted by a Full Bench of three Judges in Lallu Singh v. Ram Nandan : AIR1930All136 . In that case certain persons had executed a mortgage of their occupancy holding with possession in 1886. Thereafter, certain other transactions were entered into, but in the case before me I am only concerned with what the learned Judges said in respect to the usufructuary mortgage of 1886. At p. 161 Mukerji J. pointed out that in Khiali Ram v. Nathu Lal ('93) 15 All. 219 the learned Judges put a sub-tenant and a usufructuary mortgagee on the same basis, and he then goes on to say:
The mortgage of 1886 can therefore be upheld only as a mere sub-letting on the part of the mortgagors to the mortgagee. As a result of consistent decisions in this Court, based on the Full Bench ruling quoted, a first usufructuary mortgage of occupancy holding has been accepted as a valid transaction and it would be too late in the day to question it.
5. At page 179 Niamat Ullah J. says:
I have no doubt that a mortgage of occupancy holding, usufructuary or otherwise, is void as a mortgage. A deed creating a charge on occupancy rights is equally invalid.... In the case of usufructuary mortgage of an occupancy holding, the mortgagor cannot recover possession without payment of sums due under the mortgage, not because it is a valid mortgage and the rules applicable to valid mortgages relating to redemption compel him to do so, but because he is bound by a covenant to pay before resuming possession, which covenant is binding, apart from any supposed relationship of mortgagor and mortgagee, and under the general law applicable to agreements of a personal character.
6. At page 181 the same learned Judge says:
The ratio decidendi of Khiali Ram v. Nathu Lal ('93) 15 All. 219, so far as it relates to usufructuary mortgage of an occupancy holding, is that it is valid only to the extent that right to occupy is transferred on condition that possession is to be retained by the creditor till money is paid and that it is invalid so far as it may give a right to the creditor to realise his money by sale of the property.
7. Then, after citing certain observations from the judgment in Khiali Ram v. Nathu Lal ('93) 15 All. 219, this learned Judge goes on to say:.the transaction is not valid as a mortgage with all its incidents and subject to the provisions of law relating to usufructuary mortgages, but is valid only so far that the mortgagee can retain possession and enjoy as agreed between the parties, a feature which is not peculiar to usufructuary mortgage as such, but is also one of sub-lease or other arrangement under which possession of occupancy holding is made over by the tenant to another without creating an interest or charge in favour of the transferee. In such a case, as the ruling itself indicates, the rights and liabilities of the parties are governed, not by the provisions of the Transfer of Property Act relating to mortgages, but by the valid stipulations in the so-called mortgage deed.
8. Again at page 183 the learned Judge says:
My brother Mukerji J. has expressed the opinion that usufructuary mortgages of occupancy holdings have been held to be valid in Khiali Ram v. Nathu Lal ('93) 15 All. 219 and in cases which followed it, e.g., Brij Mohan Das v. Algu ('03) 26 All. 78, in so far as they amount to sub-letting. I am in agreement with him, with the slight difference that they held such mortgages to be valid so far, and no further, as they r amount to a contract, which in their view is a valid one by which an occupancy tenant agrees to allow the creditor to retain possession till his money is paid and that the so-called redemption suit is no more than a suit for possession in terms of an agreement and not the usual suit for redemption in which a decree for redemption can be passed directing sale of the property in the event of non-payment, as provided by Order 34, Rule 8, Civil P.C. The terms mortgage, redemption, etc., may be conveniently used, as their Lordships of the Privy Council did in Nidha Sah v. Murli Dhar ('03) 25 All. 115, but they are not such in the legal sense.
King J. appears to have taken a different view. At p. 171 he held on the authority in Khiali Ram v. Nathu Lal ('93) 15 All. 219 that the right to occupy the plots of an occupancy holding could be validly mortgaged under Act 12 of 1881 by means of a usufructuary mortgage deed.
9. The majority view appears to be that under Act 12 of 1881, an occupancy tenant could not validly effect a usufructuary mortgage of his plots; but if he did so in fact, a legal transaction was effected between the parties whereby, so long as the occupancy right subsisted, the transferee was entitled to retain possession of the plots until the amount due to him was paid. The position therefore in the case which is under my consideration is that there was no valid mortgage as contemplated by the Transfer of Property Act and therefore the Court had no jurisdiction to entertain the application under Section 12, Agriculturists' Relief Act; but there was a valid contract between the parties and therefore no question of prescribing for the status of a usufructuary mortgagee will arise. It follows that this application for revision must fail and it is accordingly dismissed with costs.