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Ansur Subba Naidu and ors. Vs. the Secretary of State for India in Council - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported inAIR1918Mad373; 41Ind.Cas.770
AppellantAnsur Subba Naidu and ors.
RespondentThe Secretary of State for India in Council
Cases ReferredIn Wheatley v. Westminster Brymbo Goal Co.
Excerpt:
.....it is well settled that unless the whole of the interest of the mortgagor is transferred to the mortgagee, there can be no forfeiture with reference to a clause not to assign, under an english mortgage. issue 5 raises this question, i am not satisfied that the district judge has shut out any evidence on the question. 'a proper and workmanlike manner may not mean the best possible mode of working for the lessor, but it means in such a manner as shall not be simply an attempt to get out, of the earth as much mineral as can be got for the particular purpose of the lessee, regardless of any ordinary or workmanlike proceeding? at page 550 that the mere fact that a sufficient quantity of mineral is not produced is not enough to show that the mine has not been worked continuously and..........then deal shortly with the other questions.9. the learned advocate-general contended, (1) that the mortgage exhibit 04 did not transfer any right in the mines; (2) that the transfer, if any, did not amount to an assignment of the absolute interest in the properties, and (3) that it was not open to the government to claim a forfeiture upon this ground as it was not specifically pleaded in the plaint. upon the first point, i am unable to agree with the contention put forward. the operative portion of exhibit 04 makes it abundantly clear that all the mines were intended to be transferred to the mortgagee. upon the second question, i have come to the conclusion that the contention of the learned advocate-general must prevail. section 58 clause (a) of the transfer of property act contains the.....
Judgment:

John Wallis, C.J.

1. This is an appeal from so, much of the decree of the District Judge of Nellore in Original Suit No, 7 of 1912 as declared that the right of the defendants in, the lands conveyed in the mining leases of the Tellabodu, D. F., and Palamani mines had determined and gave the plaintiffs a, decree for mesne profits and possession. The District Judge found against the plaintiff on the 6th issue that the defendants had not incurred forfeiture under their leases by failing to work their mines continuously and without voluntary intermission and in a workmanlike manner, but that they ha& done so by executing the mortgage, Exhibit 04 of 16th August 1909, which was an assignment of the premises demised without the lessor's consent. For the appellants it is contended, firstly, that this ground of forfeiture was not pleaded or made the subject of an issue, and secondly, that the mortgage in question did not amount to an assignment within the meaning of the clause against assignment.

2. The plaint after referring to the leases and, to the rules under which they were granted sets out in paragraphs 6 and 7 the substance of the covenant for continuous working without voluntary intermission in a skilful and workmanlike manner, and the condition of re-entry for breach of any of the covenants in the lease, and in paragraphs Nos. 9 and 10, us originally framed, alleges that the defendants had failed to start work in some of the mines and as regards the others had failed to work them 'continuously or without voluntary intermission and in a workmanlike manner'.

3. Paragraph No. 11 goes on to state that it had become clear that owing to their extravagance and mismanagement they had lost credit and it was impossible for them to resuscitate their business, and that it was also found that they had mortgaged the mines and entered into various transactions with divers persons touching the right to the mines which they had no right to do without the previous permission of the Government. Paragraph No. 12 then states that under the circumstances stated above the Government cancelled the nine leases.

4. As I read the plaint the case set up is that in consequence of the breaches specified in paragraphs Nos. 9 and 10 of the covenant set out in paragraph No. 6, the plaintiff had determined the leases under the power of re entry specified in paragraph! No. 7. Paragraph No. 11 I think merely refers to some reasons which induced the Government to insist on their rights of forfeiture, viz., that by extravagance and mismanagement the lessees had lost credit and were not in a position to resuscitate the business, and that they had mortgaged the mines to the creditors and entered into various transactions with divers persons touching the right to the mines which they had no right to do without the previous permission of Government. Paragraph No. 12 whilst stating that, the Government had cancelled the leases in the circumstances stated above leaves the legal grounds of forfeiture to be ascertained from the earlier part of the plaint (paragraphs Nos. 6 to 10) where they are duly pleaded, and cannot I think be read as justifying the cancellation pleaded on the ground of any of the matters referred to in paragraph No. 11. Some of the matters referred to in paragraph No. 11 are not grounds of forfeiture under the lease; and, if it had been intended to rely on them as such, both the particular covenants and the breaches relied on would have been specifically pleaded as in the case of the covenant for continuous working. The defendants in paragraph No. 9 of their written statement were fully justified in treating the grounds of forfeiture as contained in paragraphs Nos. 8 to 10 of the plaint, and in only applying for particulars as regards the alleged failure to work continuously, though they took occasion in paragraph No 8 to answer the allegations against them in paragraph No. 11 of the plaint. In this paragraph they expressly denied the execution of the mortgages referred to in paragraph No. 8, and, if the plaintiff's advisers had understood that the execution of these mortgages was relied on as a ground of forfeiture, it would have been their duty to ask for an issue as to whether any such mortgages had been executed, and, if so, whether they constituted a breach of the covenant not to assign, in the same way as they obtained an issue as to the alleged failure to work continuously, etc., in which case the defendants would have had an opportunity of asking for any other issues they might wish for with regard to the ground of forfeiture. This in my opinion shows conclusively that the pleadings were not then regarded as raising any question of forfeiture on this ground. It has been suggested that this question may be raised under issue 4, but that issue was clearly raised with regard to the specific pleas in paragraphs Nos. 10 and 11 of the defendant's written statement and cannot be extended so as to include matters not properly pleaded. No such question then arose in the pleadings or issues. What happened at the trial, as appears from the B diary, was that after P. W. No. 8 had been examined and almost at the close of the plaintiff's case the plaintiff marked a number of agreements, Exhibit O series, which were not proved by witnesses but admitted apparently for the defendants without objection. Our attention has not been called to any reference in the subsequent oral evidence to Exhibit 04, the mortgage now in question, but the 1st defendant having been questioned at the close of his cross-examination as 1st witness for the defence, as to his indebtedness deposed in reexamination that he had not obtained any advances under Exhibit 05 and Exhibit 05 and had got back the documents. It appears, however, from the B diary that at the very end of the case, on 25th March 1914, after the close of the plaintiff's evidence in rebuttal and on the day fixed for argument the defendants filed Exhibit XVII, the plaint in Original Suit No. 41 of 1913, in which the mortgagees under Exhibit 04 sued the present defendants on their mortgage. The relevancy of the document apparently was that it did not treat Exhibit 04 as a mortgage of the mines themselves. The fact that the defendants filed it at the very last moment may show that they had heard this case was to be raised, not that they consented to its being raised or went to trial upon it. At the final argument the present Advocate-General, who was brought in to sum up the case for the defendants, contended, and in my opinion rightly, that the questions whether the execution of mortgages put in evidence constituted a breach of the covenants and whether the leases had been cancelled on that ground did not arise in the case, and I think for the reasons already given, the District Judge was not justified in treating this question as raised in the plaint and as covered by the second part of the fourth issue. If the plaintiff's advisers desire to rely on the ground of forfeiture it was their duty to ask for an amendment of the plaint, and, if this had been granted, the defendants would have been entitled to put in fresh pleas and appropriate issues could have been raised. Moreover, this is a case of forfeiture and without saying that there are any special rules of pleading applicable to such cases, I think the Court should be specially careful to see that the forfeiture is not upheld on grounds on which the parties have not gone to trial. This is sufficient to dispose of this part of the case, and it is unnecessary for me to express any final opinion on the contention of the learned Advocate-General that Exhibit 04, which is an English mortgage and would operate as an assignment in England has not this effect in India because under Section 53 (a) of the Transfer of Property Act it is only a transfer of an interest in specific immoveable property for securing the payment of money and does not pass the whole interest to the mortgagee but only certain rights including apparently the rights to possession as mortgagee and to foreclosure or sale.

5. After discussing the evidence as to the working of the mines his Lordship concluded.

6. If the plaintiff had relied on a breach of the covenant as far as possible to obtain mica, his case would have been overwhelming but putting this altogether out of the case as not relied on in paragraphs Nos. 9 and 10 of the plaint, I think that looking at the effect of the evidence as a whole both oral and documentary, for the defendants as well as for the plaintiffs, the breaches of covenant charged in the plaint are sufficiently proved to justify the forfeiture and I find the 6th issue in the affirmative and would dismiss the appeal with costs.

7. It follows from my finding as to the Nandalagunta mine on the 6th issue that the plaintiff's memorandum of objections must be allowed with costs and the decree varied by upholding the forfeiture of this mine also.

Seshagiri Aiyar, J.

8. I agree with the judgment of the learned Chief Justice. I shall first say a few words on the question whether the execution of Exhibit OA caused a forfeiture of the leases and then deal shortly with the other questions.

9. The learned Advocate-General contended, (1) that the mortgage Exhibit 04 did not transfer any right in the mines; (2) that the transfer, if any, did not amount to an assignment of the absolute interest in the properties, and (3) that it was not open to the Government to claim a forfeiture upon this ground as it was not specifically pleaded in the plaint. Upon the first point, I am unable to agree with the contention put forward. The operative portion of Exhibit 04 makes it abundantly clear that all the mines were intended to be transferred to the mortgagee. Upon the second question, I have come to the conclusion that the contention of the learned Advocate-General must prevail. Section 58 Clause (a) of the Transfer of Property Act contains the definition of a mortgage. It begins by stating that a mortgage is the transfer of an interest in specific immoveable property. It does not say that a mortgage effects a transfer of the whole of the property to the mortgagor. Clauses (b), (c), (d) and (e) are illustration of the general definition. (b) refers to a simple mortgage; (c) to a mortgage by conditional sale; (d) to a usufructuary mortgage; and (e) to an English mortgage, These definitions of the various classifications of the mortgage should not be read as amplifying the quantum of interest which a mortgage by law confers upon the mortgagee, Clauses (6), (c), (d) and (e) only prescribe the forms in which the various mortgages are to be expressed. The general legal effect is that which is predicated in Clause (a). It was common ground that Exhibit 04 conforms to what is known as an English mortgage. It is true that the language of the definition suggests that the properties are transferred absolutely to the mortgagee, But that to my mind is not conclusive of the legal rights created by the document. When we turn to Section 98 of the Transfer of Property Act, we find that parties in the case of these four mortgages are not to be governed entirely by the rights and liabilities created by the contract. Whereas in the case of anomalous mortgages, the rights and liabilities are solely regulated by the contract of the parties, in the case of these four mortgages and the combination of some of them, the rights and liabilities are governed by Section 58 of the Transfer of Property Act. It is well settled that unless the whole of the interest of the mortgagor is transferred to the mortgagee, there can be no forfeiture with reference to a clause not to assign, under an English mortgage. West v. Bobb (1870) 5 Q. B. 460. lays this down explicitly; and that is followed in Serjeant v. Nash Field and Co. (1903) 2 K. B. 304., therefore, it seems to me that the transfer of the mines under Exhibit 04 did not violate the condition not to assign contained in the lease. It was held in Shurnomoyee Dasi v. Srinath Das 10 Ind. Jur. 458. that a mortgage in the English form between Hindus of lands in the mofussil has always been treated by the Courts as a mortgage by conditional sale. There is the dictum of Pontifex, J., in Manly v. Patterson 7 C. 394., that if the parties happen to be both Englishmen, all the incidents of an English mortgage would apply to such a transaction.

10. In the present case, the property is situated in the mofussil and one of the parties is a Hindu. Consequently the dictum in Manly v. Patterson 7 C.a 394. does not govern the present case. Both Mr. Shephard and Mr. Ghose, in their commentaries on the Transfer of Property Act, say that notwithstanding the form in which the document is expressed, an English mortgage does not transfer, in India, an absolute interest in favour of the mortgagee. I am of the same opinion. I, therefore, hold that Exhibit 04 did not offend against the condition not to assign the interest of the lessee without the sanction of the Government. The other mortgages are either simple or only convey a fractional interest in the mines. The learned Government Pleader, Mr. Ramesam, did not rely upon these mortgages as having led to the forfeiture. I entirely agree with the learned Chief Justice that it is not open to the plaintiff to rely upon the execution of Exhibit 04 as the cause of the forfeiture, as that was not properly pleaded.

11. The learned Advocate-General contended that there was a waiver of forfeiture by the Government. Issue 5 raises this question, I am not satisfied that the District Judge has shut out any evidence on the question. The facts relied on as showing the waiver have been discussed very fully by the District Judge and I see no reason to differ from his conclusions.

12. The learned Government Pleader sought to support the judgment of the District Judge upon a point decided by him against the Government. He has held that the burden of showing that the defendants did not work their mines continuously Without voluntary intermission in a skilful and workmanlike manner lay upon the Government. There can be no question that he is right. The question is whether on the facts his conclusions are justified. The test as to what is meant by working the mines in a skilful and workmanlike manner is not easy to lay down. In Lewis v. Fothergill (5) Lord Hatherley L. C. says: 'A proper and workmanlike manner may not mean the best possible mode of working for the lessor, but it means in such a manner as shall not be simply an attempt to get out, of the earth as much mineral as can be got for the particular purpose of the lessee, regardless of any ordinary or workmanlike proceeding?'

13. In Wheatley v. Westminster Brymbo Goal Co. (7) it is pointed out by Malins, V. C. at page 550 that the mere fact that a sufficient quantity of mineral is not produced is not enough to show that the mine has not been worked continuously and efficiently. The judgment suggests that if the sleeping rent is procured that would enable the lessee to continue to work.

14. The position of the Government would have been strengthened if evidence had been let in to prove the yielding capacity of the mines during the years 1909 and 1910. There is evidence that the two important mines, Tellabodu and D, were very deep and that water had accumulated in them. Expert evidence could have been let in to show within what time water could have been pumped out and how much mica could have been won by the employment of more coolies. It is to be regretted that the plaintiff has not chosen to assist the Court by giving more specific and more relevant evidence.

15. The question has now to be decided on the materials placed before the Court. The statements annexed to the plaint and Exhibits M, N, F and H series afford us some guide. There can be no question that in 1909 the mines were worked for a less number of days than in the previous years, that only a few coolies were employed in that year, and that the quantity of mica won from the mines was very small. There is evidence that the defendants were pecuniarily in an embarrassed condition, and were unable to find the necessary funds for the working of these mines. Under these o circumstances, can it be said that the mines v were worked continuously and without voluntary intermission?

16. The District Judge has been hampered a great deal by the way the case was laid before him. I hesitated a great deal before coming to the conclusion that his findings on the facts should be upset. But the facts referred to by me and which have been, examined fully and in great detail by the learned Chief Justice compel me to hold that the plaintiff has proved that the mines were riot worked continuously and without voluntary intermission. I do not think it necessary to deal with the facts again as they have been clearly analysed if I may say so with respect, in the judgment of the learned Chief Justice.

17. I am of opinion that the decree of the District Judge should be upheld, though not for the reasons given by him, and that this appeal should be dismissed with costs. I also agree that the memorandum of objections should be allowed with costs.


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