1. Even though an illiterate sitting tenant, who does a good turn to his landlord by advancing a loan on mortgage, expressly does nothing, the law should attribute and ascribe to him a suicidal intention to surrender his tenancy by virtue of the fictional doctrine of merger (about which the poor tenant obviously knows nothing) say, the respondent. And it is this proposition which inter alia calls for scrutiny in this appeal.
2. On March 14, 1947, the owners of the Suit fields, which according to the appellant were in his possession as a sitting tenant since more than 6 years before the date of transaction, transferred the same to one Vadilal under a registered document EX. 54.whether the document is one of an outright sale or one creating a mortgage by conditional sale is one of the questions which confronts the Court in the present matter. 21/2 months there after the transferee, Vadilal, executed document, Ex. 25, transferring such rights as he had acquired from the original owners to the appellant who claims to be the sitting tenant. Some 18 years thereafter on April 22, 1965, the original owners transferred to the respondent plaintiff their right, title and interest in these fields. Some 2 years later i.e. some 20 years after the original transaction between the owners and Vadilal, on April 7, 1967 the heirs of Vadilal having (lied meanwhile) executed a document, Ex. 27, in favour of the respondent-plaintiff. And without losing any time i.e. within three month of the acquisition of the rights from Vadilal's heirs so respondent-plaintiff instituted the suit giving rise to the present appeal. He came to, the Court with the, case that the transaction between the original owners and Vadilal reflected in Ex. 54 was of mortgage by conditional sale. It was also his case in the plaint that subsequently a sub-mortgagee had been created by Vadilal in favour of the appellant-defendant under Ex. 25. And further more it was his case that he had required the right of redemption from the original owners and was entitled to redeem the parties from the appellant-defend ant. It was his alternative case that in the event of the Court's holding that the transactions in question created an absolute sale in favour of the transferees, ho was entitled to specific performance of the stipulation contained in the documents ex, tending to the transferor the option to claim reconveyance of the properties in question. In paragraphs 8 and 9 of the plaint it was made abundantly clear that the relief Claimed was one for redemption and in the alternative for specific performance. In other words the main relief claimed by the plaintiff was for redemption and only in the alternative the relief for specific performance of covenant to reconvey was claimed.
3. The appellant-defendant who claimed to be the sitting tenant from before 1942, i.e. from about 6 years prior to the first transaction of 1947 presumably became panicky and resisted the suit inter alia by contesting the claim of the plaintiff' that the documents in question created a mortgage by conditional sale in favour of the transferees. He assumed the posture that the documents created an out and out sale. This stand was presumably taken because the appellant-defendant in order to protect his long standing tenancy, wanted to advance the; contention that the stipulation to reconvey embodied in aforesaid documents was of' a personal character and that it was neither capable of being, assigned in favour of a. third party nor capable of being enforced by a third party. Be that as it may the appellant-defendant contended that the transaction was of the, nature of absolute sale and that the covenant embodied therein for reconveyance was incapable of being enforced. The stand was also taken that he was sitting tenant and be was not liable to be evicted having regard to the protection afforded by the Tenancy Act. A contention, was also raised to the effect the transaction relied upon by the plantiff was bit by sections 63 and 64 of the Bombay tenancy and Agricultural Lands Act, 1948 and accordingly void. It was also alleged that the parties bad colluded in order to derive of his in of him tenancy lights to dispossess him of the fields in question. Some other contention were also raised in the written statement to which a detailed reference is un necessary at the present juncture. The trial' Court did not accent the case of the plaintiff that the relevant transactions created a mortgage by conditional sale. The trial Court, however, upheld the alternative case of the plaintiff that what was created by the le in transactions was absolute said favour of the transferee coupled with a situation to reconvey. The trial Court was, however, of the opinion that the covenant for reconveyance was of a personal character and was not capable of being assigned. Having regard to this view the trial Court was of the opinion that the plaintiff in his capacity as the assignee from the purchaser was not entitled to obtain specific performance of the said covenant. The trial Court accordingly dismissed the suit. The respondent-plaintiff appealed to the District Court. The learned Extra Assistant judge who heard the appeal concurred with the view taken by the trial Court that the transaction created an out and out sale in favour of the transferees. He, however, differed from the learned trial judge in regard to the question whether the covenant to reconvey was of a Personal character and whether it was assignable. In his opinion, it was assignable. He accordingly came to the conclusion that the plaintiff was entitled to succeed 17th regard to the physical possession also the learned appellate judge was of the view that the plaintiff was entitled to claim physical possession. He accordingly decreed the plaintiff's suit and directed the appellant-defendant to execute a deed of reconveyance in favour of the plaintiff in terms of document Ex.25 dated May 29, 1947, on payment of Rs. 2500/- and further directed him to held over physical possession of the property to the respondent-plaintiff. The defendant who claims to be a sitting tenant from before the execution of the first document has now invoked the jurisdiction of this Court under Section 100 of the Code of Civil Procedure by way of the Present second appeal.
4. The first question is as regards the true nature, of the transactions reflected in Ex. 54, Ex. 25 and incidentally in regard the other two documents. So far as Ex 54 is concerned, it opens with the recital to the effect that a sum of Rs. 2500/- in cash bad been taken by the transferor from the transferee in order to meet the expenditure in connection with a marriage in the family .On the heals of the aforesaid statement is a recital to the effect that in consideration of the aforesaid sum of Rs.2500/- the properties described in the document were being sold. Further onwards it hag been mentioned that the transaction has been effected towards 'Pete' the sum referred to earlier. For the sake of preciseness the relevant recitals may be quoted in the words of the document, in Gujarati, 'Uparani rakamana rupiyana Pete'. Thereafter it has been mentioned in the document that the transferee would become an owner. But one paragraph later it has been mentioned it hat the transferee would become an absolute owner of the property provided the sum of 'Rs. 2500/- was not returned within the stipulated period of 21 years. It was provided that if the sum was returned, the property would have to be reconveyed by the transferee to the transferor at the cost of the transferor. Now, barring the user of the expression 'sold' at one place and the user of the expression owner' at another place, all the recitals and the stipulations clearly point at the relationship of mortgagor and mortgagee. The document will have to be interpreted as a whole with the end in view to reconcile the various recitals and covenants. If it was a transaction of absolute sale, it would not have been mentioned in the document that the transferee would become an absolute owner only provided the sum of Rs. 2500/-was not returned within the stipulated period of 21 years. This clause clearly shows that the vesting of the property was postponed for 21 years. The very fact that this statement has been incorporated in the document itself is also indicative of the relationship of mortgagor and mortgage. What is, however, of much greater importance in the circumstance is that a long period of 21 years is provided for exercising the right to claim re-conveyance. If the transferee was purchasing the property outright, why should be agree to keep the matter wide open for as many as 21 years during which his title would remain in an inchoate and nebulous form, that is to say, it would remain in jeopardy of being annulled. The user of the expression 'return of Rs. 2500/' also indicates the existence of the relationship of debtor and creditor. The question of 'return' can only arise: in case of a 'debt.' It cannot arise in the context of an outright sale. Again, the fact that the agreement provided for reconveyance on the 'return' of the identical amount Of Rs. 2500/- also impels one to the conclusion that it was a transaction of mortgage by conditional sale. Would a purchaser give a one-sided option to the vendor to reverse the transaction at any time within 21'years irrespective of the appreciation in the value of the property? If he was desirous of purchasing a property (and not of advancing monies against the security of immovable property), it is difficult to conceive, he should agree to such a stipulation particularly when the time provided was as long as 21 years. One who intends to purchase a property outright wants the property in specie and does not think of re-selling it except when it fetches a better price and brings, profit to him or when he is in need of a cash or when he wants to, change the nature of big investment by selling one property and purchasing another. There is no reason why be should agree to a transfer at any time within 21 years at the choice of the transferor at the same price unless of course (which appears to be the case) it is not a transaction of purchase of property but a transaction of investing money by way of mortgage by conditional sale, the property being available by way of security for the advance. There is yet another circumstance which buttresses ,this inference. The transferors: who executed document Ex. 54 in favour of Vadilal themselves executed the document Ex. 24 in favour of respondent-plaintiff on 22-2-65 and in his document executed 18 years after the original transaction there is a clear recital to the effect that the transaction dated March 14,1947 reflected in Ex. 54 was one of conditional sale. And under the circumstances it is not surprising that the plaintiff himself came to the Court on the premise that the transaction was one of mortgage by conditional sale and his substantive plea and the prayer that he made was for redemption based on the assumption that it was a transaction of mortgage. The cumulative effect of all these circumstances leaves no room for doubt that the transaction was one of mortgage by conditional sale and not a transaction of a completed sale with a contemporaneous agreement to reconvey. Be it realised that the stipulation to reconvey can not be construed as a contemporaneous agreement to reconvey for the very good reason that it only gives a one-sided option to the transferor to claim reconveyance and does not enable the transferee to claim specific performance of the agreement by insisting on the transferor performing his part of the contract by purchasing the property. This circumstance also reinforces the, conclusion reached by me that it is a transaction of mortgage by conditional sale.
5. Once this conclusion is reached in -regard to Ex. 54, the same conclusion must be drawn in regard to Ex. 25 executed by Vadilal within three months of his obtaining the mortgage from the original owners. What the mortgagee, Vadilal lid was to execute document, Ex. 25, on May 29, 1947, in favour lot the appellant-defendant who claims to be a sitting tenant in occupation of the lands 'from about six years prior to the date of the transaction, The matter is simplified because it in terms contains a recital to the effect that such rights as the transferor had in respect of these lands under the document in his favour were being transferred to the defendant. It also contains a recital to the effect that the transferor reserved the right to claim reconveyance, of the property on the return .of the consideration amount of Rs. 2500/- within 20 years of the date of the agreement. In the first place, what have been conveyed tire all such rights as have been acquired by Vadilal under Ex. 54 from the original, owners, And as I have already come to the conclusion that what has been acquired under Ex. 54 is a right as a mortgage in respect of the transaction of mortgage by conditional sale, the conclusion is inevitable that what the appellant has obtained is a right as a mortgage, that is to say, that he becomes as mortgage in respect of these lands. If Ex. 54 is a transaction of mortgage and not of sale, Ex. 25 cannot create a transaction other than that of sub-mortgage. Besides, having regard to the user of the expression, return of the consideration' and having regard to the fact that the identical amount is mentioned for re-conveyance, and further having regard to the fact that the time-limit provided is for 20 years, the same reasoning which has prevailed in the context of Ex. 54 must prevail in regard to Ex. 25 as well. In order to avoid repetition, I do not propose to reiterate-the reasoning. Suffice it to say that for the same reasons this transaction must also be treated as a transaction creating a sub-mortgage and not effecting an out and out sale. The result is that the finding recorded by the lower Courts that the transactions operate as sales cannot be sustained. The true effect of these transactions considered in the light of the aforesaid circumstances clearly establishes that the transactions create mortgage by conditional sale and not an absolute sale.
6. It is, however argued by counsel for the respondent plaintiff that the, appellant should not be permitted to urge that the transactions in question create a mortgage and not a sale. I fail to understand why the appellant should be prevented from urging that the, finding recorded on this point by the lower Court is wrong. In the trial Court the suit was dismissed and, therefore, it was not necessary for him to appeal to the District Court. It is true that in the District Court be argued that the transaction was one of sale and not of, mortgage. But the question as regards the true nature of transaction is a question of law so far as the present case is concerned. It is: not a question of fact. Assuming that under some misconception or being ill-advised it was argued that it was a transaction of outright sale and not a mortgage, this Court is not obliged to prevent him from correcting the mistake. At the highest it was a concession on a question of law. It cannot be called into question by the other side by contending that the appellant should be prevented from urging this point. There is no question of estoppel for obvious reasons. Strangely enough, the, respondent contends that the appellant should, not be permitted to argue that it was a transaction of mortgage though be himself should be permitted to argue that it was not a transaction of mortgage notwithstanding: the fact that he himself from the very inception has been persistently as certain that it wag a transaction of mortgage. I have referred to the relevant averments in the plaint and the main relief for redemtion claimed by him in the plaint in the earlier part of the in judgment in this connection. Unless the appellant has forfeited his right to urge a point under any provisions of law, he cannot be prevented from doing so. It makes one feel sad that the and basis should be on whether or not a point should be allowed to be urged: not on whether or not there is merit in the contention. The Court desirous of doing real and substantial justice cannot persuade itself to take a view which would feat the ends of justice. Since on merits I am of the view that the transaction is one of mortgage, as has been contended by tile respondent-plaintiff himself from the inception, the appellant-defendant cannot be precluded from contending likewise. The only argument canvassed by counsel for the respondent was in the form of a question:-
'How can the appellant be permitted to argue contrary to the stand taken by him in the lower appellate Court?'
The answer to, this argument in a way can be given by posing a counter question as to why he cannot be allowed to urge so particularly when in essence such was the very case of the plaintiff himself as set out in the plaint? A defendant can at any stage say that I abandon the mistaken plea that I initially raised out of panic in order to resist the plaintiff's suit and admit that the averment made in the plaint is true. Of course he cannot do so if as a result of the stand taken by him the other side has altered his position to his prejudice. If he could have taken this posture in the lower Court, there is no reason why he cannot assume the same posture in this Court. (As I pointed out earlier, the suit was dismissed in the trial Court). 1, therefore, cannot accede to the submission urged on behalf of counsel for the respondent that the appellant should be prevented from urging that the document in question created a mortgage and not a sale Once this conclusion is reached, the question that remains is as regards physical possession, for the plaintiff would of course be entitled to a decree for redemption. This question is of great importance from the point of view of the appellant who claims to be a tenant from as early as 1942 and who is admittedly in possession of the lands even now. The question is of great magnitude from his point of view because he is exposed to the risk of being parted from the land which be has been tilling for all these years. The relationship between the land and the actual tiller who nurses the land with his own sweat and labour is akin to the relationship between a mother and a child. This question of possession, therefore, requires to he examined with a great degree of care and anxiety. Now, there are several reasons why the plaintiff cannot obtain physical possession of the land even though be may be entitled to obtain a preliminary decree for redemption. These reasons will become evident in the course of tile discussion. The main argument on the part of the counsel for, the respondent plaintiff is that the doctrine of merger is attracted and the defendant must be deemed to have impliefying surrendered by tenanecy even assuming that he was a sitting tenant on tile date of the transaction creating a mortgage in his favour. Before I proceed to deal with this argument, it is necessary to dismissed of a half-hearted plea raised to the effect that there was no clear finding that the appillant-defendant was a sitting tenant as claimed by him. When, however it was pointed out that there was an admission to this effect in a notice addressed by, his predecessor-in-title to the appellant, counsel could not press the point any further. The, said admission is contained in E. 42 dated January 14, 1967 which is a registered notice addressed by the heirs of Vadilal speaking through the karta of the family Jawaharlal': from whom tile respondent-plaintiff, derived his title under Ex. 27. In paragraph, 2 it has been clearly mention that appellant-defendant Patel Ataram Nathudas was a sitting in tenant on the land from before the document of mortgage by conditional sale created by the original owners on March 14, 1947. Therefore is a further recital to the effect that Vadilal, required the appellant, Atmaram, to bail over possession but that the latter refused, to do so. This clearly establishes that the claim of the appellant that he was a sitting.: tenant is true. What is more, the appellant has given evidence on oath to this effect and not one single question has been put to him under cross-examination in order to, challenge the veracity of the statement. What is still worse, plaintiff Babulal, who is the, owner of an adjoining land, in his evidence does not make bold to state that someone else was in possession of these lands. If the, appellant was not in possession and some, one else was, plaintiff Babulal would have every well known about it being a person. who was tilling the neighbouring field and,' could have stated as to who was in possession. It is nobody's case that any one else was in -possession. If the appellant-defendant had come into possession later on, the, other side would have shown bow and which, he was inducted on the lands. The lower appellant Court was, therefore, right in observing that the claim of the appellant that he was sitting tenant from before the first, transaction recorded in 1947 is true. Having disposed of this incidental point by day of this digression, we may return to the original point and pick up the threads of the argument advanced by counsel for the respondent plaintiff in support of the contention-that the, appellant is not entitled to remain in possession not standing the fact that he was a sitting tenant from before the date of the creation of the mortgage in 1947. It is argued that the doctrine of merger could be attracted and as soon as the tenant advanced monies, be would be deemed to have surrendered his tenancy by implied surrendered having regard to the fact that his status a, ' a tenant is inconsistent and incompatible with big new status as a mortgage in possession. Reliance wag placed in this connection on Sardarilal v. Ramlal, AIR 1962 Puni 43 and' on Meenakshi Amma v. Kizhakke Valath Narayani, AIR 1957 Mad 212, in which the learned single judge preferred and followed a decision rendered by the Travancore Cochin High Court in Valu v. Lekshmi, AIR 1953 Trav Co 584, and refused to follow a judgment of the Allahabad High Court reported Sn Kallu v. Diwan, ILE 24 All 487. In my opinion, the view taken by the Allahabad High Court saying so with respect is the correct view and must be preferred to the -view taken by the Madras, Punjab and the Travancore Cochin High Courts. The Allahabad High Court has consistently taken the view that there would be no, merger by implied surrender. The latest decision by the Allahabad High Court on this point is the, 323, Dwivedi, J. of the Allahabad High Court as he then was, speaking for the Division Bench, has taken the view that the tenancy would remain in abeyance and the doctrine of surrender would not attracted on the reasoning reflected in the following passage:-
'There is no inconsistency or incompatibility in one person being the lessee and usufructuary mortgage of the same property at the same time, for his obligations as a 'lessee would remain suspended during the subsistence of the mortgage. The principle, of suspension is discussed in Burton's case, (1831) 7 Bing 745. We have already stated ,the facts of the case. There Tindal, C. J. said:
'Suspension, which is a partial extinguishment, takes place only where the rent or other profit a prendre issuing out of the land, comes to him who has possession of the same land for a time only.
The rent sought to be recovered in this action is that which is reserved under Meek's under-lease; and if either Bates or Langden had purchased the term granted by Meek's under-lease, the rent in that case would 'have been suspended during the continuance of such under-lease; for in that case there would have been a union of the rent, and of the land itself, in the same person, So, if, this action had been brought for the rent reserved under Bate's lease, there might have been a question, whether his rent was Dot Suspended until the term granted by him to Langdan bad ceased;...................(1831) 7 Bing -745 at p. 759.
As a result of the foregoing discussion ,we have come to the conclusion that Section III(d) did not apply to the facts of this case and that accordingly the tenancy of the defendants did Dot cease on their taking a usufructuary mortgage of the shop'.
We shall now discuss the cases cited 'before us. In (1902) ILE 24 All 487, the defendant was a non-occupancy tenant of some agricultural plots. He took a usufructuary mortgage of the plots from the landlord in the suit for redemption the plaintiff contended that the tenancy was merged in the mortgage and that he should get actual possession over the plots. The lower appellate court accepted his contention and granted a decree for actual possession. Blair and Airman JJ., disagreed with the lower court and held that the tenancy did not merge in the, mortgage, Blair, J. said:
'In our opinion the effect of the mortgage was not to destroy the tenancy, but only to suspend the obligation of the tenancy to pay rent to the landlord while the mortgage subsisted. (1902) JLR 24 All 487 at p. 490.' Airman J. said,
'The effect of the mortgage was to suspend for the time being the relationship of and holder and tenant between the parties. When the mortgage is redeemed, the parties are relegated to the position which they occupied immediately before the mortgage was executed, (1902) ILE 24 All 487 at p. 492.'
In my opinion there is yet another line of reasoning on which the same conclusion can be reached. Surrender is an overt, conscious and deliberate act of a tenant. The concept of implied surrender by fiction attributes to the tenant the decision to surrender though he has not expressly done so. Now, it stands to commonsense that no one would do something to his own detriment or prejudice. The tenant, when he acquires the right as a mortgage, is enlarging his interest and bettering his position. By advancing the money he is not trying to alter his position to his prejudice or trying to worsen his condition. Now it is not inconceivable that within a month of creating the mortgage, the mortgagor may redeem the property. If one were, not to attribute to the tenant (by resort to commonsense) the good sense to protect his own interest and to preserve his interest as a tenant but were to ascribe to, him the sophisticated legalistic doctrine of merger about which he can scarcely have any knowledge, out would he go. Could such an intention be ever attributed to a tenant? The Courts of equity have evolved a principle based on the presumption against merger if it is against one's interest (see Ingle v. Vaughan Jenkins, (1900) 2 Ch, D. 368). It, therefore, stands to reason to bold that unless that tenant deliberately and with design wants to cut the very branch on which be is sitting he cannot be attributed the intention to commit suicide by entertaining the desire to determine his tenancy particularly when all that be does is to do a good turn by advancing some monies to the landlord by way of mortgage. There is no question of in consistency or compatibility of status in such a case. All that has happened is that instead of paying the rent to the landlord he adjusts the rent against the amount claimable by him by way of interest from the landlord it only results in a notional adjustment entry under the different beads. It would be unreasonable to attribute to a tenant the intention to surrender the tenancy and to invoke the sophisticated doctrine of implied surrender (which doctrine does not originate in his own mind) when the unsophisticated and ignorant (often illiterate) tenant knows nothing about it. The poor tenant himself does absolutely nothing and is unaware of even the existence of such a doctrine. Shall we even so ascribe to him such an intention by some hyper-refined involved reasoning or legal erudition? It is under the circumstances not possible to agree that the tenant forfeits his right to continue as a tenant by reason of the determination of his tenancy upon the creation of a mortgage in his favour. This would be the result even if the tenant had acquired the status of a mortgage from the owners of the lands. In the present case, the appellant-tenant was a sitting tenant when the owners of the lands created a mortgage in favour of Vadilal. Vadilal being the mortgage, there was no question of merger. The appellant continued to retain his status as a tenant. By reason of the next transaction which took place about three months later, Vadilal created a sub-mortgage in favour of the appellant under Ex. 25 (1 have already discussed the aspect relating to the true effect of Ex. 25 in the earlier portion of my judgment and have formed the opinion that it creates a mortgage). Since the appellant was only a sub-mortgage claiming through Vadilal-the mortgage, there was no question of merger of two interests. On one hand he continues to be- the tenant of the original owners (mortgagors) and on the other band be became as a-mortgage claiming title through Vadilal in whose favour the original owners had created the mortgage. Notwithstanding the mortgage in favour of Vadilal, the appellant continued to be the tenant of the original owners. No question of merger can at all arise merely by reason of the fact that subsequently he became a sub mortgage. In any view of the matter, therefore, there is no substance in the contention that a merger by implied surrender has taken place and that the appellant-tenant has for feited his right to continue as a tenant. In the result, not with standing the decree for redemption, the respondent-plaintiff would not be entitled to claim physical possession from the appellant-tenant.
7. In the view that I am taking it is not necessary for me to pronounce my final opinion on the other contentions urged by the appellant on the basis of Section 25A of the Bombay Tenancy and Agricultural Lands Act. It was, argued that this section, which was enacted in 1951 after the mortgage in favour of Vadilal was created, would extend its protection to the appellant-tenant as well. Ort the other hand it was argued by learned counsel for the respondent-plaintiff that the said section cannot have retrospective effect and that if the merger took place in 1947 under the doctrine of implied surrender, the protection of Section 25A would not avail to the appellant-tenant in any opinion, whit Section 25A does is merely to, declare the existing law. And for the reasons articulated a moment ago, I am of the opinion that such an as implied surrender does not take place merely because a tenant becomes a mortgage. In As view of the matter, Section 25A would also extend its protection to the appellant and render him immune from being physically evicted. There is also considerable substance in the contention of the appellant tenant that having regard to Section 4 of the Tenancy Act the appellant is entitled to claim the status of a deemed tenant even assuming that he has acquired the status of a mortgage in possession. It is argued that no question of merger can arise because the appellant was tilling the lands lawfully and would be entitled to claim the status of a deemed tenant. It was also argued that the appellant-tenant was entitled to claim the status of a protected tenant under the repealed Tenancy Act,. namely, the Bombay Tenancy Act of 1939. This also appears to be an attractive and impressive argument, but I need not dwell on this aspect since the appellant is entitled to, succeed having regard to the view taken by me on the question of merger.
8. The result is that the appeal partly succeeds. The decree, passed by the lower appellate Court must be substituted by a, decree for redemption on the respondent plaintiff depositing Rupees 2500/- as per the terms of document Ex. 25 dated May 29, 1947 within six month of the drawing of the decree or within such further time as may be extended from time to time by the trial Court. A preliminary decree in the usual form in the aforesaid terms will follow. It will, however, had made clear in the said decree that the respondent-plaintiff will not be entitled to physical possession and that he will be only entitled to a symbolic possession. Having regard to the facts and circumstances of the case, there will be no order regarding costs, throughout.
9. Counsel for the respondent applies for certificate of fitness to-file a Letters Patent Appeal. Certificate is refused as I do, not consider it a fit case for certificate.
10. Appeal partly allowed.