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Niader Singh Vs. Ram Chander and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1935All511
AppellantNiader Singh
RespondentRam Chander and ors.
Cases ReferredMathura Rai v. Mangil Das
Excerpt:
.....him for his mortgage money but so long as the mortgagee's security is not rendered insufficient, as already stated, it he mortgagee has no right to complain against any act done by the mortgagor. a covenant against a lease in a mortgage deed cannot put the mortgagee in a better position as regards his rights which are laid down in sections 66 and 68, t......in adanki teli v. moti chand (1912) 16 i.c. 102 after the passing of the decree for sale of mortgage property certain leases were granted by the judgment-debtor in the ordinary course of management of his estate and not fraudulently, and subsequently the estate was, with the permission of the court, purchased for a sum far in excess of the decretal money which was fully discharged. it was held that such purchaser acquired the right of the mortgagee to the extent of the mortgage and such right in the mortgaged property as was left with the mortgagor on the date of purchase and was consequently entitled to question the alienations made prior to his purchase. the same point was considered in nathu singh v. lachu singh 1928 pat. 238. there it was held i that a mortgagor in possession.....
Judgment:

Ganga Nath, J.

1. This is a plaintiffs' appeal and arises out of a suit brought by them against the defendants-respondents for a declaration that the lease executed by Harbans Singh, defendant 3, in favour of Ram Chandar and Ram Das, defendants 1 and 2 and Bakhtawar, brother of defendants 1 and 2, on 5th September 1917, in respect of the plots in mouza Kharkhanda described in the plaint was ineffectual and not binding on the plaintiffs. Hairbans Singh, defendant 3, bad executed a mortgage of the property in village Kharkhanda and other property in other villages in favour of Kanhaiya Lal on 5th September 1902, Harbans Singh executed subsequently another mortgage in favour of the plaintiffs on 26th February 1913. After the two mortgages Harbans Singh executed a permanent lease of 7 bighas and 18 biswas of land in village Kharkhanda in favour of Ram Chander and Ram Das, defendants 1 and 2. The heirs of Kanhaiya Lal who is dead brought a suit and obtained decree on the basis of their mortgage. The mortgaged property in village Kharkharada was put up for auction and sold, and purchased by the plaintiffs for Rupees 20,000. For the balance of the mortgage money the other mortgaged property which was in other villages was. sold and after satisfying the balance, a surplus of about Rs. 1,309 was left. After the decree of the heirs of Kanhaiya Lal, the plaintiffs also obtained a decree on the basis of their mortgage on account of which they realised Rs. 1,049 out of the surplus-money. The plaintiffs have now brought this suit for a declaration that the lease referred to above was ineffective, void and not binding on them. The defendants contended that the lease was valid, that its terms were fair and reasonable, that there was no ground for setting it aside, that the plaintiffs were only the auction-purchasers, and had no subsisting rights of the mortgagees and that the lease was binding on them.

2. The trial Court framed an issue as regards the reasonableness of the rent and recorded a finding that the rent was not low but was reasonable. The plaintiffs' own evidence shows that the rent prevalent in the village was Rs. 7 or Rs. 8 per bigha and even less. The rent of the lease in suit worked out at Rs. 9-8-0 per bigha. No collusion or fraud as regards the lease was proved. The trial Court dismissed the suit. The decree of the trial Court was confirmed in appeal by the learned Subordinate Judge of Meerut. The only question in this appeal is how far the lease is valid and binding on the plaintiffs. The mortgage was simple and the mortgagor remained in possession of the mortgaged' property. In the case of non-possessory mortgage a mortgagor remains the owner of the property with every right to manage his property in the manner he thinks proper and suitable. There was some doubt as regards the mortgagor's power to grant leases after having made non-possessory mortgages but this doubt has been removed, now by Section 65(a), T.P. Act. Section 65(a), T.P. Act, lays down that:

Subject to the provisions of Sub-section (2), a. mortgagor while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee.

3. Sub-Clause (a) lays down that:

Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage.

4. Clause (b) lays down that:

Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rant shall be payable in advance.

5. Clause (3) lays down that:

The provisions of Sub-section (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed,

6. If there is no covenant in the mortgage deed contrary to the mortgagor's power of giving a lease, the lease would be binding on the mortgagee; but if there is a covenant in the mortgage deed against the grant of a lease, the lease will not be binding on the mortgagee. Whether there be any covenant or not a mortgagor in possession of the mortgaged property cannot commit any act which is destructive or permanently injurious thereto if the security is insufficient or will be rendered insufficient by such act as has been laid down in Section 66, T.P. Act. The mortgagee cannot complain unless his security is or is likely to be diminished to the extent stated in the explanation in Section 66, T.P. Act. If the mortgagor commits any such act as diminishes the security, the remedy of the mortgagee is under Section 68, T.P. Act. He can ask the mortgagor to give additional security or can sue him for his mortgage money but so long as the mortgagee's security is not rendered insufficient, as already stated, it he mortgagee has no right to complain against any act done by the mortgagor. A covenant against a lease in a mortgage deed cannot put the mortgagee in a better position as regards his rights which are laid down in Sections 66 and 68, T.P. Act. The existence of a covenant in the mortgage deed cannot entitle the mortgagee to claim rights other than those which are necessary (according to the nature of the mortgage) for the maintenance or enforcement of his security for re-payment of the mortgage debt, the sole object of the contract. This proposition is not without authority. In Ali Hasain v. Dhirja (1882) 4 All. 518. at p. 524, Mahmud, J., said:

I am quite prepared to hold that any alienation by the mortgagor, which infringes upon or is capable of doing injury to the rights of the prior mortgagee is not binding upon him, and he may sue to set it aside. But this in my judgment follows more from the rule of law than from any express covenant in the mortgage-deed. The rights of a mortgagee holding a mortgage with covenant or without covenant against alienation cannot be injured by any act of the mortgagor subsequent to the mortgage, and the mere existence of such covenant cannot entitle the mortgagee to claim rights other than those which are necessary (according to the nature of the mortgage) for the maintenance or enforcement of his security for re-payment of the mortgage debt, the sole object of the contract, lam therefore of opinion, that transfers made in breach of covenants against alienation covenants so often introduced in mortgage-deeds and so often infringed by mortgagors in this country are valid except in so far as they encroach upon the rights of the prior mortgagee, and that, with this reservation such covenants do not bind the property so as to prevent the acquisition of a valid title by the aliene.

7. Section 66 instead of rendering all alienations made in derogation of the rights of the mortgagee invalid prescribes the limits within which the mortgagor's transfer would be upheld. If the acts of the mortgagor render the security insufficient but not so insufficient as to diminish the ready but dimly foreshadowed by Section 66, T.P. Act, the mortgagee may protect himself under the provisions of Section 68, T.P. Act. As regards the rights of the mortgagee against the alienations made by the mortgagor all that the mortgagee can claim is that no right derogatory to his grant shall be recognised. In Radha Pershad Misser v. Monohur Das (1881) 6 Cal 317 in which the mortgagee-purchaser was held disentitled to oust a zar-i-peshgidar whose lease was was made in contravention of the covenant and not to grant zar-i-peshgi to any one or to execute any deed in any way by which any difficulty might arise in the realization of the money covered by the deed, the mortgagee was held entitled only to bring a suit against the zar-i-peshgidar to have his right declared to sell the property to satisfy his mortgage debt, so as to give the zar-i-peshgidar an opportunity of redeeming, which indeed, would have been his course if the zar-i-peshgidar had been the puisne mortgagee. If any alienation or lease renders the security insufficient, the mortgage has every right to ignore it and to get the mortgaged property sold free from the alienation or the lease. As already stated, the mortgaged property was sold under the mortgage decree and it fetched more than the mortgage money that was due. It is therefore evident that the lease in dispute which was given only for a few bighas in a village did not, in any way, dimmish or affect the security of the mortgagees. As already stated it has also been proved that the lease was in. no way collusive or fraudulent or prejudical to the estate. It was given during the ordinary course of management of the property by the manager who was in possession of the property and had every right to manage his property in such a manner as he thought fit. Under these circumstances the mortgagee could not challenge the lease.

8. When a mortgagee himself had no right to challenge the validity of the lease much less could an auction-purchaser in his decree do so. That an auction-purchaser of the mortgaged property cannot turn out the lessee is supported by several authorities. In Adanki Teli v. Moti Chand (1912) 16 I.C. 102 after the passing of the decree for sale of mortgage property certain leases were granted by the judgment-debtor in the ordinary course of management of his estate and not fraudulently, and subsequently the estate was, with the permission of the Court, purchased for a sum far in excess of the decretal money which was fully discharged. It was held that such purchaser acquired the right of the mortgagee to the extent of the mortgage and such right in the mortgaged property as was left with the mortgagor on the date of purchase and was consequently entitled to question the alienations made prior to his purchase. The same point was considered in Nathu Singh v. Lachu Singh 1928 Pat. 238. There it was held I that a mortgagor in possession was entitled to lease out the mortgaged property permanently irrespective of its effect on the mortgagee provided it is not destructive or permanently injurious to the property so as to render the mortgagee's security insufficient. The purchaser of the property in execution of the mortgage decree is not entitled to turn the lessee out. This case applies on all fours to the present case.

9. The learned Counsel for the appellants has relied on Mathura Rai v. Mangil Das 1921 Pat. 183 but this case is distinguishable inasmuch as the alienation was made in collusion with tenants and to injure the mortgagee. There the mortgagor in possession entered into an agreement with his tenants after the date of mortgage that they should thenceforward pay him nagdi rents, and up till the time of the agreement they had paid produce rents and the rate settled on conpromise was considerably lower than the fair rent, and this low rate was entered into in collusion with tenants after taking heavy nazranas because the mortgagor saw no means of saving his property. The lease is valid and the plaintiffs have no right to challenge its validity. It is therefore ordered that the appeal be dismissed with costs. Permission to file a Letters Patent appeal is granted.


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