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Nagammal and anr. Vs. Krishnaswami Nayudu - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1976)2MLJ72
AppellantNagammal and anr.
RespondentKrishnaswami Nayudu
Cases ReferredS. Udayar v. M. Padayachi
Excerpt:
- .....evidence afforded by some documents and the testimony of his witnesses, to prove the factum of the sale. exhibit b-3 is a petition given by the first appellant to the zamindar of kandamanaickenur within whose zamin the hypotheca is situate, to transfer the patta of the hypothecated land in the name of the respondent in consideration of the first appellant having received a sum of rs. 25 from the mortgagee and exhibit b-5 is the patta issued to the respondent in terms of exhibit b-3. exhibit b-6, a notice issued by alagiriswami's brother in 1945 and exhibit b-7, the reply thereto, were also relied on by the respondent to substantiate his contention of the sale, to him, of the equity of redemption. under exhibit b-6, alagiriswami's brother had warned the respondent that he had a half right.....
Judgment:

S. Natarajan, J.

1. The second appeal raises two interesting questions as to whether the mortgagors' equity of redemption in an usufructuary mortgage created by them is tangible immovable property, capable of being sold without a registered instrument therefor where its value is less than Rs. one hundred, and secondly, if, even such a' right of redemption is to be held tangible immovable property, whether delivery of the property as contemplated under Section 54 of the Transfer of Property Act, can be validly effected by the mortgagors-vendors without first dispossessing the usufructuary mortgagee.

2. The appeal has come to be filed by the appellants herein in the following circumstances: One Alagiriswami Naidu, husband of the first appellant and father of the second appellant, usufructuarily mortgaged in item of property, of which the suit property is one half, to the respondent herein on 30th April, 1931 under Exhibit B-1 for a sum of Rs. 200 and in pursuance of the mortgage, the respondent Was inducted into possession of the property. In or about the year 1934 Alagiriswami died leaving the appellants (Plaintiffs in the suit) as his heirs. In the year I960.the respondent-defendant released one half of the hypotheca and gave possession thereof to the appellants Divergent versions are put forward by the contesting parties as to how a moiety of the hypotheca was released and given to the appellants. According to the appellants, they approached the respondent in the yeard960 for releasing a portion of the hypotheca on account of the fact that the value of the property had increased considerably and therefore a. half portion of the hypotheca would be adequate. security for the debt and the income therefrom would also be adequate to discharge the interest obligation and the respondent acceded to their request and delivered possession of a half portion of the hypotheca to the appellants. According to the respondent, however, soon after the death of Alagiriswami, the first appellant received a sum of Rs. 25 from him for performing the obsequies of her husband and in consideration thereof, she, acting OH behalf of herself and the second appellant who was then a minor, made an oral sale, to him, of the equity of redemption. Since then, the mortgage became extinguished and he [the respondent) Was in possession of the entire hypotheca as owner. But, in the year 1960, the appellants approached him and asked him to covey back the hypotheca to them and he acceded to that request partly at the intervention of mediators and on account of the fact that the appellants had by then become closely related to him. It would appear that the first appellant's daughter has been given in marriage to the Respondent's brother's son. The case; Of the, respondent was that he received a sura of Rs. 100 from the appellants and effected an oral sale of a half portion of the hypotheca and it was by virtue of that sale the appellants are in possession of a portion of the property originally mortgaged. In effect, the precise stand of the appellants-plaintiffs in the suit was that 1% mortgage was still in force and therefore, they were entitled to exercise their right. of. redemption over the remaining .extent of the mortgaged property in the possession of the respondent. The categorical stand of the respondent, however, was that by virtue of the oral sale of the equity of redemption in the year 1939, the right of redemption was extinguished and the appellants were not entitled to base their action on the mortgage.

3. The oral sale of the equity of redemption projected by the respondent is not evidenced by any letter or document. But, he placed reliance on the evidence afforded by some documents and the testimony of his witnesses, to prove the factum of the sale. Exhibit B-3 is a petition given by the first appellant to the Zamindar of Kandamanaickenur within whose Zamin the hypotheca is situate, to transfer the patta of the hypothecated land in the name of the respondent in consideration of the first appellant having received a sum of Rs. 25 from the mortgagee and Exhibit B-5 is the patta issued to the respondent in terms of Exhibit B-3. Exhibit B-6, a notice issued by Alagiriswami's brother in 1945 and Exhibit B-7, the reply thereto, were also relied on by the respondent to substantiate his contention of the sale, to him, of the equity of redemption. Under Exhibit B-6, Alagiriswami's brother had warned the respondent that he had a half right over the hypotheca and consequently, any sale of the equity of redemption by the first appellant would not be binding on him. In his reply, Exhibit B-7,the respondent had met this claim by saying that the hypotheca was the absolute property of Alagiriswami and therefore, the sale of the equity of redemption in his favour was unassailable. Exhibit B-9 which relates to the sub-division of the hypotheca into two portions in 1965 was also pressed into service to show that one half of the hypotheca was given to the appellants in 196,0 by virtue, of an oral sale, and not, as contended by the appellants, on account of the respondent releasing a portion of the property from the mortgage. Among the witnesses examined on the respondent's side, considerable stress was laid on the evidence of D.W. 5, the village karnam, who has spoken about the patta transfer application (Exhibit B-3) given by the first appellant and the endorsement (Exhibit B-10) made by him thereon.

4. The learned District Munsif of periakulam who tried the suit, upheld the case of the appellants and decreed the suit for redemption. He did not believe the oral sale of the equity of redemption in 1934 or the oral sale of a moiety of the hypatheca in l960. In the appeal preferred by the rsepondent, the learned Subordinate Judge of Dindigul took a different view of the matter and held that the mortgage Was extinguished on account of the oral sale of the equity of redemption and the giving away of a portion of the hypotheca in the year I960 by the respondent was not by way of release, but was by way of sale to the appellants. He therefore allowed the appeal and dismissed the appellant's suit.

5. Mr. Rangaswami Iyengar, learned Counsel for the appellants, advances a three-fold argument in the appeal to contend that the Subordinate Judge should have sustained the judgment of the trial Court and ought not to have reversed the finding. The first contention is based on appreciation of evidence and the other two contentions are on questions of law. The first ground of attack of the judgment of the lower appellate Court is that there was no acceptable evidence for the Court to conclude that the first appellant had made an oral sale of the equity of redemption in 1934. On this atpect of the matter, I have already referred to the fact that the sale is not evidenced by anything in writing and the factum of the sale has been proved only from attendant circumstances. The principal document on which reliance is placed is Exhibit B-3, viz., the patta transfer application given by the first appellant. There is some confusion in the minds of the Courts below about Exhibit B-3, viz., as to whom the petition was addressed and as to the averment therein about the person from whom the first appellant had received money. The District Munsif as well as the Subordinate Judge have stated that under Exhibit B-3 the first appellant had acknowledged payment of Rs. 25 from the lessee of the hypotheca 'and, While the District Munsif has held that the wrong recital fortified the case of the respondent, the Subordinate Judge has held that the recital was wrong, but did not affect the genuineness of the transaction. A scrutiny of Exhibit B-3, however, reveals that the endorsement therein was in favour of the mortgagee and not any lessee, and since consent was given for transfer of the patta, the endorsement has been addressed to the Zamindar. The contention of Mr. Rangaswami Iyengar is that the first appellant would not have received a sum of Rs. 25 and sold the equity of redemption because she was possessed of other properties at that time arid would not have, therefore, been compelled to raise funds for the obsequies ceremonies of her husband by selling the equity of redemption. The failure of the respondent to have obtained a receipt from the first appellant evidencing payment of Rs. 25 is also relied upon to contend that the oral sale cannot be true. Lastly, the comment made on Exhibit B-3 is that the first appellant was not confronted with this document when she was in the witness-box. It is no doubt true that the respondent had not obtained an independent receipt from the first appellant, nor was Exhibit B-3 shown to her when she was in the witness-box. Notwithstanding these features, I do not think the conclusion 'of the Subordinate Judge that Exhibit B-3 is a genuine document can be disturbed; Though the first appellant was not directly confronted with Exhibit B-3, she has nevertheless been made aware of the existence of the document, for, in the pleadings as well as in the cross-examination, reference has been made to this document and in her evidence, the first appellant has denied having executed such a documert. it is rot, therefore, as if Exhibit B-3 had been surreptitiously introduced into evidence and the first appellant was kept in the dark about the whole thing. Secondly, it is seen that Exhibit B-3 contains Exhibit B-4 which is an application by the respondent to the Zamindar for patta being transferred to his name. There is also the endorsement of D.W. 5, the karnam, therein that patta can be transferred as desired by the parties. An office-note by the Manager of the Estate, marked as Exhibit B-11, also lends credence to the patta transfer application. As pointed out by the Subordinate Judge, it will be too much to hold that all these things had been fabricated by the respondent. The subsequent conduct of the parties also is found to be in conformity with the application made in Exhibit B-3. The patta itself had been transferred to the respondent as borne out by Exhibit B-5.

6. With regard to the events of the year 1960, the appellants contend that at their, request the respondent released a portion of the property, from the mortgage, but it is hardly acceptable. Without payment of any money the respondent would not have released a portion of the property, even assuming that the value of the property had appreciated beyond proportion to the mortgage debt. The respondent's version that he received Rs. 100 and sold a moiety of the hypotheca to the appellants appears to be the more acceptable version, for, it is seen that in the year 1965 a subdivision has been effected of the hypotheca and the second appellant had consented to the sub-division proceedings. If really the mortgage was subsisting and the appellants were owners of the entire hypotheca there was no need for any sub-division. As pointed out by the Subordinate Judge, the second appellant seems to have been keptout of the witness-box lest he be confronted with his statement during the sub-division proceedings. On this aspect of the matter too, the finding of the Subordinate Judge appears to be well-founded.

7. It is no doubt true that, for reaching the conclusion that the appellants must have made an oral sale of the equity of redemption, the Subordinate Judge was not justified in placing reliance on Exhibits B-6 and B-7. These letters were not written by or addressed to the appellants and Exhibit B-6 cannot even be deemed to have been validly proved. These documents should, therefore, have been clearly eschewed from consideration. But, even if these documents are kept out of mind, it is difficult to accept the contention of the appellants that there was no oral sale of the equity of redemption in the respondent's favour and consequently, the finding of the learned Subordinate Judge in that behalf is not unwarranted by, or opposed to evidence.

8. Having failed to assail the finding of the lower appellate Court about the truth and genuineness of the oral sale of the equity of redemption, the attempt of Mr. Rangaswami Iyengar is to render ineffective the sale on two legal grounds. The first argument of Mr. Rangaswami, Iyengar is that equity of redemption, particularly in the case of an usufructuary mortgage, is an intangible property arid therefore, its sale can be effected only by means of a registered instrument; In support of this contention, he places reliance on the definition of 'sale' in Section 54 of the Transfer of Property Act, wherein it is stated that a transfer, in the case of a tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by way of registered instrument; On this aspect of the matter, there have been judicial pronouncements. But, unfortunately, the views expressed therein are not only different, but conflicting as well. In Subramaniam v. Perumal Reddi I.L.R. (1895) Mad. 454 : 5 M.L.J. 92 it was held that an oral transfer cf a hypothecation deed would not attract the restriction imposed' by Section 54 of the Transfer of Property Act that a sale of intangible thing can only be effected by means of registration. This view of the Bench was not shared by another Berch which decided Ramaswami Pattar v. Chinnan Asari I.L.R. (1901) Mad. 449 : 11 M.L.J. 132 Though the question for determination in that case was whether a mortgagee in possession was entitled to exercise his right of preemption against a transferee of the equity of redemption, Bhashyam Ayyangar, J., helo (at page 463) as follows:

The equity of redemption in a usufructuary mortgage is only an intangible thing like 'a reversion' which immediately precedes the expression 'or other intangible thing' (vide Williams on 'Real Property', 18th Editor, pages 30, 31), and it can be transferred by sale only by a registered instrument and not by delivery of the property. Equity of redemption in a simple mortgage may be tangible immovable property, and its sale can be effected if its value be below Rs. 100, without a registered instrument, by mere delivery of the property. The right of a simple mortgagee in the property mortgaged is, in my opinion, only an intangible thing like a charge on immovable property within the meaning of Section 54, and I am unable to concur in the decision of this Court reported in Subramaniam v. Perumal Reddi I.L.R. (1895) Mad. 454 : 1895 5 M.L.J. 92 to the effect that a transfer by sale of a hypothecation executed to secure a debt under Rs. 100 may be made otherwise than by registered instrument.

9. Sitting singly, Wallis J., held in Dwarka Doss v. Danakoti Ammal A.I.R. 1914 Mad. 353, that the observation of Bhashyam Ayyangar J, in Ramaswami Pattar v. Ghinnatt Asari I.L.R. (1901) Mad. 449 : 1909 11 M.L.J. 132, was purely obiter end, on the other hand, the earlier Bench decision in Subramaniam v. Perumal Reddi I.L.R. (1895) Mad. 454 ; 5 M.L.J. 92 would be binding on him to hold that a transfer of a mortgage by the deposit of title deeds does hot require registration either under the Transfer of Property Act or the Registration Act. The same view was taken in Cunniah v. Gopal (1919) M.W.N. 613 ; 52 IND.CAS. 879 : A.I.R. 1919 Mad. 547 which was a Bench decision by Wallis and Napier, JJ.

10. By way of obiter, Mukerji and. Kendall, JJ., (Sulaiman, Ag.C.J. dissenting) observed in Soban Lal v. Mohan Lal : AIR1928All726 as follows:

In selling what is popularly called his 'equity of redemption', even a usufructuary mortgagor is in reality selling the property itself and the sale of the interest of Such mortgagor is of tangible property He can, therefore sell it by placing the buyer in possession of the property (provided that the property, was of less value than Rs. 100 without executing a registered instrument.

This view was adopted by a Bench of the Patra High Court in Phokit Mian v. Syed Ali : AIR1937Pat178 . So too, held the Bombay High Court in Tukaram v. Atmaram : AIR1939Bom31 the view taken being that the equity of redemption in the case of a usufructuary mortgage is tangible property capable of being transferred by an unregistered deed where the value of the property docs not exceed Rs. 100. In Venkatasubbamma v. Subbayya : AIR1964AP21 . a Bench of the Andhra Pradesh High Court also concurred with the view stated above.

11. In view of the preponderance of authorities in support of the proposition that the right of a mortgagor in property usufructuarily mortgaged by him is tangible immovable property within the ambit of paragraph 3 of Section 54 of the Transfer of property Act, it is difficult to accept the appellants contention, that the said right is to be construed as an intangible thing and therefore impossible of transfer except by means of a registered instrument. It is, no doubt, true that Ramaswami Pattar v. Chinnan Asari I.L.R. (1910) Mad. 449 : 11 M.L.J. 132 expressed a contrary view, but on account of the observation being by way of obiter and there being direct rulings on the question in Subramaniam v. Perumal Reddi I.L.R. (1895) Mad. 454 : 5 M.L.J. 92 Dwarka Doss v. Danakoti Ammal A.I.R. 1914 Mad. 353 and Cunniah v. Copal (1919) M.W.N. 613 : A.I.R. 1919 Mad. 547 I am bound by the view taken in these decisiors and therefore, I have to find against the contention of the appellants.

12. The last ground on which the oral sale of the equity of redemption is sought to be rendered vulnerable is based on the contention that even if the right of a mortgagor in the property usufructuarily mortgaged by him is to be held to be tangible immovable property yet the oral sale cannot be recognised in the absence of delivery of the property. The point that is urged is that when the mortgagee is already in possession of the property mortgaged to him usufructuarily, the mortgagor who sells the equity of redemption cannot effect delivery of the property without first dispossessing the mortgagee. Support for this contention is sought to be derived from the decision of the Full Bench of the Bombay High Court in Bhikhabhai v. Chimanlal A.I.R. 1953 Bom. 437 which accepted the dissenting view of Sulaiman, Ag.C.J. in Soban Lal v. Mohan Lal A.I.R. 1928 All. that delivery being the essence of the transaction there cannot be delivery of a property by the mortgagor to the mortgagee when the property is already in the possession of the latter. This contention also must necessarily fail because the weight of judicial authority is against the contention of the appellants; Even in Soban Lal v. Mohan Lal : AIR1928All726 , the majority of the Bench took the view that when a mortgagor sells the property to a usufructuary mortgagee by an unregistered document, the possession of the mortgagee from the date of the sale becomes adverse to the mortgagor. True it is, that in the Bombay case Bhikhobhaai v. Chimcmlal : AIR1937Pat178 the Full Bench stated as follows:

The delivery contemplated by Section 54 is not constructive or symbolic delivery but actual or real delivery. Therefore, where a mortgagor sells the mortgaged property to a sub-mortgagee in possession, as the sub-mortagee is already in possession no further possession can be given to him and hence, even assuming that the equity of redemption constitutes a tangible immovable property the sub-mortgogee can acquire title to the property only if he obtains a registered instrument.

But, there are other cases including decision of our own Court, which are binding on me, which have taken a different view. Phoku Mian v. Syed Ali : AIR1937Pat178 took the view that a delivery of possession when the property is in the possession of the vendee can be made by the vendor making a declaration that henceforth whatever right re had has been transferred to the vendee and consequently, where a property in the possession of a usufructuary mortgagee was sold to him by the mortgagor and the mortgagor renounced this right and got the name of the mortgagee, recorded in the record of rights, it would be sufficient compliance with the provisions of Section 54 of the Transfer of Property Act. In, Venkatasubbamma v. Sub-bayya : AIR1964AP21 it was held that even in cases where a transaction is not evidenced by a registered document in regard to property of the value of less than Rs. 100,there should be delivery of property to make it effective, but such delivery should be construed as one which the property is capable of an4, consequently, there could be delivery of property within the purview of Section 54 to a usufructuary mortgagee to satisfy the requirements of Section 54 if there is agreement between the parties, that after the sale, the possession of the mortgagee should be that of an absolute owner. Coming, last to the view of our own High Court, it is to be found in Shaik Dawood v. Moideen Batcha : AIR1925Mad566 which is a Bench, decision and in S. Udayar v, M. Padayachi : AIR1957Mad209 . In the former case, it was held that where a usufructuary mortgagee in possession of a property purchases the property in lien of the debt due from the mortgagor, a direction by the vendor to keep the property as absolute owner amounts to delivery. It was further held that where a usufructuary mortgagee purchases the property in lieu of the debt, actual delivery is not necessary. This was followed by Rajagopala Ayyangar J. in S. Udayar v. M. Padayachi : AIR1957Mad209 . Having regard to these authorities, the contention of the appellants that in the absence of actual delivery of the suit property to the respondent who was already in possession of it as mortgagee, the oral sale will not satisfy the test of Section 54 of the Transfer of Property Act, must fail.

13. In the result, the judgment of the learned Subordinate Judge does not call for interference. Consequently, the second appeal will stand dismissed but there will be no order as to costs. No leave.


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