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Panchanan Mandal and anr. Vs. Sashi Bhusan Pradhan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1940Cal281
AppellantPanchanan Mandal and anr.
RespondentSashi Bhusan Pradhan and ors.
Cases ReferredNadan v. The King
Excerpt:
- .....not be entitled to, nor shall the mortgagee be liable for, any compensation in respect of the mortgagee's possession from the date of the expiry of the said period to the date of the commencement of the said act.2. the mortgage in the present case was not a 'complete usufructuary mortgage,' as defined in section 3(3), ben. ten. act, because the usufruct was not intended to extinguish both principal and interest, but only the interest. we have however to take into account sub-section (1a) of section 26g, which provides thatevery usufructuary mortgage subsisting on or after the first day of august 1937, which was so entered into before the commencement of the bengal tenancy (amendment) act 1938, shall be deemed to have taken effect as a complete usufructuary mortgage for the period.....
Judgment:

Narsing Rau, J.

1. The petitioners executed a usufructuary mortgage of certain occupancy holdings in favour of the predecessor in interest of the opposite parties on 5th March 1923 by way of security for a loan of Rupees 1750, the stipulation being that the mortgagee should enjoy the usufruct in lieu of interest. The deed was registered on 6th March 1923. On 10th March 1939 they applied to the Munsiff of the second Court at Contai under Section 26G, Ben. Ten. Act, to be restored to possession of the holdings, more than fifteen years having elapsed since the registration of the mortgage. The Munsiff dismissed the application of 12th July 1939. The present rule is directed against this order. Sub-section (5) of Section 26G, under which the application was made, runs thus:

Notwithstanding anything contained in this Act or in any other law or in any contract, the consideration (with all interest thereon) for a complete usufructuary mortgage or for another form of usufructuary mortgage deemed under Sub-section (1a) to have taken effect as a complete usufructuary mortgage, entered into by an occupancy raiyat in respect of his holding or a portion or share thereof, shall be deemed to have been extinguished on the expiry of the period (a) mentioned in the instrument of the mortgage, or (b) of fifteen years, whichever is less, from the date of the registration of the instrument, or where there is no registered instrument, from the date of the mortgagee's entry into possession, and the mortgagor shall thereupon become entitled to possession of the mortgaged holding, and he may, if he is not forthwith given possession, apply to the Court or to a revenue-officer to be restored thereto:

Provided that, if in the case of such mortgage subsisting, on or after the first day of August 1987 the said period has, on the date of the commencement of the Bengal Tenancy (Amendment) Act 1938, already expired, the mortgagor shall, immediately on the commencement of the said Act, become entitled to possession of the mortgaged holding, but he shall not be entitled to, nor shall the mortgagee be liable for, any compensation in respect of the mortgagee's possession from the date of the expiry of the said period to the date of the commencement of the said Act.

2. The mortgage in the present case was not a 'complete usufructuary mortgage,' as defined in Section 3(3), Ben. Ten. Act, because the usufruct was not intended to extinguish both principal and interest, but only the interest. We have however to take into account Sub-section (1a) of Section 26G, which provides that

every usufructuary mortgage subsisting on or after the first day of August 1937, which was so entered into before the commencement of the Bengal Tenancy (Amendment) Act 1938, shall be deemed to have taken effect as a complete usufructuary mortgage for the period mentioned in the instrument OE for fifteen years whichever is less.

3. We have therefore to consider whether the mortgage in this case was a usufructuary mortgage within the meaning of this sub-section. There is no special definition of a usufructuary mortgage in the Bengal Tenancy Act and we may accordingly assume that the term is to be understood in. the sense defined in Section 58(d), T.P. Acts. The relevant part of this definition runs:

Where the mortgagor delivers possession...of the mortgaged property to the mortgagee and authorizes him to retain such possession until payment of the mortgage money and to receive the rents and profits accruing from the property...and to appropriate the same in lieu of interest...the transaction is called a usufructuary mortgage.

4. All these elements are present in the mortgage now under consideration, but the Munsiff has taken the view that, as certain additional elements are also present, the mortgage is an anomalous mortgage and not a usufructuary mortgage. These additional elements are : (a) a covenant that the mortgagor would pay the rent of the mortgaged land and that if on any occasion the mortgagee has to pay an arrear of rent he may recover the sum from the mortgagor with interest; (b) a covenant that if it should transpire that the mortgagor had already made any transfer in respect of the mortgaged property or created a charge upon it, the mortgagee would be entitled to realize his dues by sale of other properties of the mortgagor; and (c) a covenant that if the mortgagee is dispossessed from the mortgaged land or any part of it for want of title in the mortgagor or for any other reason, the mortgagee would be entitled to recover the principal money or a proportionate part of it with interest at one anna per rupee per month from the date of dispossession.

5. As to the first of these covenants, it should be noticed that by virtue of Section 76(c), T.P. Act, a usufructuary mortgagee must, 'in the absence of a contract to the contrary' pay the Government revenue and all rents accruing due in respect of the mortgage property during his possession. It is thus clear that the statute itself permits a variation of the general rule by a special stipulation to the contrary, so that it is not an essential element of a usufrucbuary mortgage that the mortgagee should be liable for these payments. Therefore, the mere fact that a special stipulation exists in the present case throwing the liability on the mortgagor can make no difference to the nature of the mortgage, if in other respects it is a usufructuary mortgage. As regards the other two covenants, they are in the nature of indemnity clauses which were meant to come into operation only if for any reason the arrangement really intended by the parties failed, whether wholly or in part. They cannot therefore have any bearing on the question what was the arrangement really intended. The real intention of the parties was that the mortgagee should remain in possession, without dispute, deduction or disturbance, of the entire mortgaged property in lieu of interest, and so long as this intention did not fail, there was no room for the operation of the indemnity clauses, so that the arrangement really intended was a pure usufructuary mortgage. And, indeed, there is no question but that the arrangement actually took effect in the present case as a usufructuary mortgage, the indemnity clauses having never hitherto come into operation.

6. In Ram Narain Singh v. Adhindranath Mukherji (1916) 3 A.I.R. P.C. 169 and Ram Narain v. Adindra Nath (1916) 3 A.I.R. P.C. 119 the Privy Council had to construe a mortgage of certain mokurari villages under which the mortgagee was given the right to realize the mortgage money by remaining in possession of the villages until a certain date and collecting the rents and cesses thereof. To this extent the mortgage belonged to one of the ordinary types of usufructuary mortgages. But there were certain additional covenants in the deed of which two may be mentioned here : (1) That if by mistake the mortgagor collected the rents or cesses of any of the mortgaged villages he would be liable to pay the amount collected with interest to the mortgagor. (2) That the mortgagee was not to be liable for the Government revenue or the road and public works cess, which would remain the concern of the mortgagor. In spite of these personal covenants, their Lordships held that the mortgage was only a usufructuary mortgage. It is obvious that the first of these two covenants was in the nature of an indemnity clause intended to come into operation only if the usufructuary mortgage failed by reason of the mortgagor exercising possession to the detriment of the mortgagee; and the second covenant was, as in the case now before us, merely a special stipulation permitted by Section 76(c), T.P. Act. None of the three covenants reliedi upon by the Munsif in the present case are therefore such as to change the character of the mortgage from that of a usufructuary mortgage.

7. The other point raised on behalf of the opposite parties in this rule relates to the validity of Section 26-G as an enactment of the Provincial Legislature. The argument may be put thus : Under one of the indemnity clauses in the mortgage now in question, the mortgagor has bound himself to repay the mortgage money if the mortgagee is dispossessed for any reason. Accordingly under Section 68 (1)(a), T.P. Act, the mortgagee has a right to sue for the mortgage-money in the event of dispossession; and this right arises out of a contract between the parties. Furthermore, the contract in this behalf is one not relating to agricultural land : indeed, it is a contract which comes into operation only if the security offered in the shape of the possession of agricultural land fails. We have therefore here a right conferred by an existing Indian law, namely Section 68, T.P. Act, relating to a matter enumerated in entry 10 of the Concurrent Legislative List in Schedule 7, Government of India Act, 1935. The entry in question reads:

Contracts, including partnership, agency, contracts of carriage, and other special forms of contract, but not including contracts relating to agricultural land.

8. Section 26G, Ben. Ten. Act, was enacted by a Provincial Legislature in 1938 and was not assented to by the Governor-General under Section 107(2), Government of India Act, 1935. Therefore it cannot extinguish the right conferred by the aforesaid Section 68, T.P. Act, being itself void to the extent of the repugnancy by virtue of Section 107(1), Government of India Act, 1935. Therefore also, the last part of Section 26G(5) empowering She mortgagor to apply for possession is inoperative; and unless there is an effective application under Section 26G(5), there cannot be an effective order under Section 26G(6). This, in brief, is the argument, as it has been presented before us on the constitutional point. The fact that the point was never taken in any of the many cases that arose under Section 26G in the course of the last eighteen months might suggest that it is more ingenious than sound. Such an inference would not however be legitimate. In one well-known case in Nadan v. The King (1926) A.C. 482, a certain provision which had been on the Canadian statute-book for nearly 40 years (since 1888) was for the first time declared altra vires and invalid by the Privy Council in 1926. We have therefore to consider she question now raised on the merits. Put-ting the contention at its highest, what it comes to is this : that the opening words of Section 26G(5) 'notwithstanding anything contained in this Act or in any other law' must be deemed to mean and always, to have meant: 'Notwithstanding anything contained in this Act or in any other law, not being an 'existing Indian law' with respect to a matter enumerated in the Concurrent Legislative List.'

9. With the addition of the italicized words, all repugnancy to any 'existing Indian law' of the kind described would cease and the sub-section would be valid and effective beyond controversy. Whether the limitation expressed by these added words has the effect of saving the right conferred by Section 68(1)(a), T.P. Act, or any similar right conferred by any other 'existing Indian law' is a question upon which it is unnecessary to pronounce any opinion in the present rule. That question may arise for decision if and when the opposite parties claim such a right in some future suit on the basis, for instance, of their dispossession in the present proceeding: whether such a suit would lie at all is another matter on which we express no opinion. But even conceding that the limitation contained in the added words has the effect of saving certain rights, the result is merely that the extinction of the consideration for the mortgage which the first part of Section 26G(5) purports to achieve, instead of being complete, is partial. This, however, does not take away from the effect of the second part of the sub-section, which enacts that the mortgagor shall thereupon become entitled to possession of the mortgaged holding and he may, if he is not forthwith given possession apply to the Court or to a revenue officer to be restored thereto.

10. 'Thereupon' in the context means, upon the expiry of the period specified immediately before, so that this part of the sub-section merely gives the mortgagor certain rights in land at the end of a certain period. Eights in land fall wholly in entry 21 of the Provincial Legislative List; therefore this part of the sub-section, as distinct from the first part, can be subject to no limitations flowing from any 'existing Indian law' in the Concurrent field, the two fields being different. For the same reason, the proviso at the end of the sub-section must also continue to have full effect according to its tenor. The result is that the mortgagor's right to apply for restoration of possession under Section 26G(5) and the power of the Court under Section 26G(6) to make appropriate orders upon such an application are in no way affected. The rule mush therefore be made absolute; the petitioners' application must be granted and their possession of the mortgaged holdings restored to them. There will be no order as to costs.

11. It may at first sight seem very hard that a mortgage which was intended by the parties to extinguish only the interest on a loan of Rs. 1750 should have been given by law the effect of a 'complete usufructuary mortgage' extinguishing both principal and interest. Actually, in the present case at any rate, no such inference can safely be drawn. It is true that the total quantity of land mortgaged was not large; but it will bo seen from one of the indemnity clauses that in the event of dispossession the mortgagee was entitled to recover interest at one anna per rupee per month, i.e. 75 per cent, per annum. In other words, the rent-free possession of the mortgaged property was estimated by the parties as equivalent to interest at 75 per cent, per annum. How far this was an over-estimate we have no means of judging. The mortgagee and his successors-in-interest have now been in possession for over sixteen years, so that for every Rs. 100 lent, they have, on the above estimate, already recovered a sum of Rs. 1200 a sum sufficient to liquidate the principal loan as well as to provide interest at a little under 70 per cent, per annum. In these circumstances, the wiping out of the loan can hardly be regarded in this particular case as a patent injustice. We certify in terms of Section 205(1), Government of India Act, 1935, that this case involves a substantial question of law as to the interpretation of that Act.

Nasim Ali, J.

12. I agree.


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