1. This second appeal is by defendants 3 and 4, the landlord auction purchasers of an occupancy holding in execution of a rents decree obtained by them, in a suit for enforcement of a mortgage executed by the occupancy ryot on 18th May 1929 in favour of the plaintiff. The plaintiff's suit, filed on 15th June 1942, seeks to enforce the mortgage not only against the mortgagor or his successors-in-interest but also the landlord-auction-purchasers mentioned above.
2. The defence of the appellants is that they possess a superior right in respect of the occupancy holding and their purchase is free from mortgage. This contention is based upon two grounds: (i) that they are the sole landlords of the occupancy holding which was non-transferable at the time when this mortgage was executed and as such is not binding against them nor can it affect the interest acquired by them at the execution sale ; and (ii) that they have, by recourse to legitimate measures prescribed in Section 221, Orissa Tenancy Act, annulled the mortgage as an encumbrance.
3. The suit had been dismissed by the trial Court but has been decreed by the learned lower appellate Court. Hence this second appeal.
4. With regard to the question of annulment having taken place, the plaintiff raises the point of limitation. According to the appellants, they first had notice of the incumbrance on receipt of summons in the mortgage suit. In this view, their application for annulment is within one year from the date of the notice though it is beyond more than a year from the date of sale. The plaintiff wanted to establish earlier notice by adducing certain oral evidence. This evidence, however, has not been believed and acted upon by the Courts below. The contention, advanced very strenuously in this Court, is that as the alleged incumbrance was effected by a registered instrument, the appellants, on proper enquiry made with due diligence within a reasonable time after the sale, should have known it much earlier. In such a case, the proceeding for annulment shall be held to have been begun more than one : AIR1943Cal52 year after the notice. In support of this contention, reliance is placed upon the case of Sarala Sundari Debi Chowdhurani and Anr. v. Purna Chandra Bhatacharji and Anr. : AIR1943Cal52 . The passage, in which this proposition of law is contained, reads as follows:
In our opinion, a purchaser with the extreme power to avoid and annul interests otherwise perfectly valid and legal, should at least have resort to all available and authentic means of finding out whether or not there has been any such interest in the property purchased by him. When the incumbrance in question has been effected by a registered instrument an enquiry within a reasonable time after the purchase would lead the purchaser to a knowledge of it and, in our opinion, it was his duty to make such inquiry. The purchaser cannot avoid the consequences of notice simply by an abstention from such enquiry.5. From the reasonings contained in the aforesaid passage, it appears that the incumbrance must have been valid and legal in order to attract the principles of 'duty to enquire' on the part of the purchaser. In that view the position must be widely different when the auction-purchaser happens to be a landlord. The landlord, as such, has got a right to ignore certain transactions effected by the occupancy ryot in respect of the occupancy holding. The scheme of law relating to landlord and tenant in respect of agricultural holding is based upon the theory that the landlord's right to recover rent due in respect of a tenancy is supreme and all safe-guards have been provided in the legislation to obviate any difficulty that may be put in the way of the landlord, jeopardising his right of recovery of rent as first charge on the holding. Under the circumstances, if anybody enters into a transaction in connexion with a occupancy holding, he has to grapple with the situation, that might arise at his own risk, when he comes face to face with the landlord. Under the circumstances, he has to give notice to the landlord of any such transaction. In this state of law, it is difficult for me to appreciate that a landlord-auction-purchaser will have the duty to find out what has the tenant, whose tenancy is under sale or has been sold, done in respect of the tenancy, particularly what he was not permitted to do as against him. The decision cited is clearly distinguishable' Whether a stranger-auction-purchaser shall be under a duty to enquire about incumbrances is, for the present, left at large. I reserve my opinion with regard to this position till when that arises directly. But for this decision, there is nothing else which should stand in the way of the defendants in their establishing that they had the first notice at the time when they alleged they had. In this view of the matter, I would hold, agreeing with the learned Munsif, that the incumbrance has been duly and within time annulled. Before closing this part of my judgment, I must refer to Sections 229, 230 and 231 of the Act. Section 230 seems to me to be decisive in the sense that the duty of giving notice to the landlord is cast upon the incumbrancer. In the absence of the notice contemplated under Section 230 given to the landlord the latter is entitled to presume that no incumbrance of any kind whatsoever has been imposed upon the holding. It is all the more so as the law makes such a duty imperative not only upon the tenant--the creator of the incumbrance upon the person in whose favour the incumbrance is created--but also upon the officer who registered the incumbrance when he is requested to do so on payment of prescribed fees. In order to facilitate the notice, Section 229 contends (contains?) what would otherwise be considered as an abnormal procedure of attempting a document for registration under the Registration Act after expiry of the period prescribed in that behalf. Section 231 leaves the validity of an incumbrance so admitted to registration and notified to the landlord open. There is no reference to the corresponding sections of the Bengal Tenancy Act, namely, 175 to 177 inclusive. It is a matter of regret that no reference to these sections was made by the counsel on both sides during the hearing of the appeal. Consideration of these sections adds strength to my view that the decision of the Calcutta High Court in the case of Sarala Sundari Debi Chowdhurani A.I.R. 1943 Cal. 52 is clearly distinguishable and, if I may say so with great respect, leaves the consideration of the legal position in doubt.
6. The other contention which has been urged with equal strenuousness is that a landlord-auction purchaser is bound to annul and his position with regard to the incumbrance is in no way superior to that of the stranger purchaser. In consideration of the finding that incumbrance has been duly annulled, the point does no longer arise, but as the matter has been argued at length, I propose to deal with it. In this connexion, it should be observed that it is well settled for this Province that a landlord-auction-purchaser is not bound to annul an incumbrance in respect of occupancy holding. This has been so held in various cases of the Patna High Court, particularly in the Full Bench decision in the case of Mahadeo Maharaj v. Jagadev Singh and Ors. A.I.R.1939 pat. 339. It has been held in that case that
if the tenant of a holding notwithstanding the fact that the holding is not transferable mortgages it to a third person, the landlord of the holding is not bound to recognise the mortgage or admit the mortgagee to be his tenant even though the mortgagee may have obtained a decree on the basis of the mortgage. In such a case if the holding is sold in execution of a rent decree and the landlord himself purchases it, there is nothing to prevent him from ignoring the mortgage without formally annulling the incumbrance under Section 167.7. In this connexion, Mr. D. Mohanty strenuously contends, reading the group of sections dealing with incumbrances in the Orissa Tenancy Act beginning with Section 213 upto Section 215, that the Legislature has, in the language employed, made no distinction between 'a landlord-purchaser' and 'any other purchaser' of an occupancy holding in execution of a rent decree. That argument is not without its force, but the most convincing reply to this is that as soon as a landlord purchases an occupancy holding, the occupancy right merges in his superior right and he stands as nothing but a landlord as against incumbrancer. Clear analogy in support of this view can be drawn from the judgment of that distinguished Judge of the Calcutta High Court, namely, Ashutosh Mukherjee, J. in the case of Janaki Nath Hore v. Probhasini Dasee A.I.R.1916 Cal. 741. That was a case in which sub-tenancy had been created by the occupancy tenant. The holding was subsequently sold in execution of a rent decree and they were purchased by an outsider purchaser. The latter wanted to eject the under-ryot in due process of law as contained in Sub-section (i) of Section 85, Bengal Tenancy Act. There, in course of the argument, the necessity of annulment by a landlord, in such a contingency, also came to be discussed and that argument was disposed of by his Lordship with the following words:
If the landlord himself happens to purchase, it becomes superfluous for him to proceed in the manner provided in Section 167 by service of notice upon the encumbrancer, because as soon as he is brought into direct contact with the sub-tenant, he is entitled to take up the position that the sub-tenancy as against him is not valid. On the other hand, if the property passes into the hands of a stranger, he takes the requisite steps under Section 167 to annul the sub-tenancy. This view does not involve any hardship upon the purchaser.8. Mr. D. Mohanty very strongly relies upon the recent Calcutta decision' reported in Bid-huranjan Sarkar v. Soleman Pramanik and Ors. : AIR1941Cal613 in which it has been held that landlord-auction-purchaser does not stand any way in any the more favourable position than an outsider purchaser. That seems to have been the modern Calcutta view, but we being bound by the Patna view and the reasons in the latter being more convincing to us as they accord with our view of the law, we follow the latter. In this connexion, an ingenious argument has been advanced by Mr. D. Mohanty. He contends, the Patna view is based on the assumption of non-transferability of the occupancy holdings; now that they are freely transferable, the Patna decision cannot be considered to be good law. He invites our attention to a decision of the Patna High Court in the case of Sri Ramchanderji and Ors. v. Hem Chandra Singh and Ors. A.I.R. 1939 pat. 200, where a similar contention was advanced in relation to a case arising within the purview of Bihar Tenancy Act--Sections 26B and 26N. We were invited to the contention of his Lordship Chatterji J. who delivered the leading judgment. The contention, however, was negatived on the ground that in providing for the transferability of an occupancy holding, there was no reference to mortgage. The section that confers transferability upon the occupancy holding in the Orissa Tenancy Amendment Act, 1938, is Section 6 of that Aot which introduces Section 30A into the Orissa Tenancy Act. According to Sub-section (1) of this section, the occupancy holding of a ryot or a portion or a share thereof is made transferable by sale, exchange, gift or bequest with the landlord's consent and without payment of any fee to him and that such transfer should carry with it the occupancy right in the holding and all the rights appurtenant thereto. Here, too, mortgage is not contemplated as one of the permissible modes of transfer, but there is some difference between the Bihar Tenancy Act and this. In Sub-section (2) of Section 30A, it is provided:
An occupancy ryot may sublet or mortgage his holding or a portion or a share thereof without his landlord's consent.9. Mr. Mohanty lays emphasis on this and wants to argue, this makes the mortgage binding on the landlord and it is particularly so when it is interpreted in the context of repeal of the old sections which prohibited mortgages under certain conditions. He, therefore, wants to contend that sub-tenancy and mortgage of an occupancy holding is as much binding upon a landlord as any other transfer by sale, exchange, gift or bequest. This is a contention which deserves serious consideration. Mortgage is a transfer and so is a sub-tenancy. If the Legislature intended to go to that length, nothing should have prevented them from including the words 'mortgages, sub-letting and sub-tenancy' along with the words 'sale, exchange, gift or bequest' in Sub-section (l). The only extent to which the occupancy holdings have been enfranchised by the Legislature in relation to creation of sub-tenancy and mortgage is that when they are created they will not entitle the landlord to eject occupancy ryot on the ground of forfeiture incurred on breach of a condition of the tenancy, and not on the ground that the occupancy ryot abandoned the holding letting an unauthorised person to occupy it. Beyond that, what else be the effect of the sub-letting of the mortgage has to be worked out under the law, as it stands. Mr. Mohanty argues that after the amendment, the title acquired by a purchaser at a mortgage-decree-execution-sale, would be valid against the landlord. This argument does not lead us any further. We are not concerned here with such a sale but a mortgage of pre-amendment days. The real question is whether such a mortgage is valid against the landlord retrospectively. Section 31B makes other prior transfers valid but not mortgages. I am thus clear in my mind that such mortgages or sub-tenancies were never, and have not since become, binding against the landlord. Besides, we are to consider the position of the mortgagees as incumbrancers. In the group of sections already noticed, three classes of interest created by an occupancy tenant have been taken notice of: (i) protected interest, (ii) incumbrances and (iii) registered and modified incumbrances. With regard to the 'protected interest', which has been sufficiently well defined in Section 214 of the Act, it has been made clear by the provisons of Section 213 that the purchaser shall take the holding subject to such interest. This in other words, means that these are the interests which the occupancy tenants such as other tenure, holders are entitled to create so as to enure even against the rent charges of the landlord. The Legislature has not, in effecting the amendment we are here concerned with, added the aforesaid permissible mortgages or sub-tenancies to the category of 'protected interests'. That negatives the theory adduced by Mr. Mohanty that mort-gage ipso facto became binding on the landlord in relation to his right of ultimate reversion in an occupancy holding. With regard to class (iii), in order that it may have any efficacy a against the landlord's remedy against the holding to enforce the first charge of rent, Sub-clause (b) of Section 215 provides that copy of registered instrument must have been served upon the landlord not leas than three months before the accrual of arrears. These provide a key to the solution, namely, that in order to bind the landlord-purchaser in relation to his remedy of the first charge of rent, the interest created must be a valid one and must be either binding upon the landlord or must have been created after notice to the landlord. In the facts of this case, we are concerned with mere incumbrances as distinguished from 'protected interests' and 'registered and notified incumbrances'. It has been argued that in the proviso to Section 213 giving the purchaser a power to annul the incumbrance leads to the only inference that the holding is sold subject to that incumbrance. That argument overlooks the fact that para. (1) of Section 213 expressly states that the sale in execution of a rent decree shall be subject to the interest defined in this chapter as 'protected interest'. There must be some reason to thus differentiate the cases of incumbrances from that of 'protected interests'. If Mr. Mohanty contends, it was the intention of the Legislature to place the incumbrances on the same footing as the 'protected interest' with regard to their binding character against a purchaser, nothing should have prevented the Legislature to say so. On the contrary, this leads to the inference that the title of the purchaser is not, to start with, subject to any incumbrance. This power of annulments to be exercised not by way of indemnifying the incumbrancer. The mere notice melts the incumbrances and gives the incumbrancer absolutely no compensation. That precarious character makes it clear that the sale is not as such always and in all cases subject to the incumbrances. The position is no doubt, somewhat anomalous. This state of law has led in some oases to absurd results. In the case of Shiba. Das. v. Gajendra Nath Das reported in : AIR1918Pat416 , it has been held that under-ryoti interest which is an incumbrance, if not annulled by an auction-purchaser in execution of a rent decree, becomes a permanent fixture on the occupancy holding and can never be terminated even under Section 57, Orissa Tenancy Act. In other words, an under-ryot acquired a much higher interest than the statute gives him. I cannot, with great respect for the learned Judges who decided the case, accept this position as correct. If not annulled, the incumbrance shall hold good so far as statutory incidents thereof and the contractual privileges attached thereto would permit and no further. In the absence of annulment, as I have already said, the incumbrance will have its legal character as against the landlord. As against him, the position is that it is not binding as the occupancy tenant has no right to jeopardise the landlord's right to recover rent by levying the burden on the occupancy holding which will necessarily diminish its value. Therefore, even without an annulment, incumbrance vanishes in the presence of the landlord.
10. In view of what I have said above, I hold the landlord has purchased the holding in execution of the rent decree free from such incumbrances as were never binding on him when they were created. The position of a mortgage as an incumbrance created subsequent to the Orissa Tenancy Amendment Act, 1938, is left open as I had not that case before me.
11. In the result, the appeal is allowed and the plaintiff's suit be dismissed as against landlord auction-purchasers, namely, defendants 3 and 4, with costs throughout.
12. I concur.