Patna High Court
Sushil Kumar Singh And Anr. vs Braj Mohan Singh And Ors. on 6 November, 1980
Equivalent citations: AIR1981PAT172, 1981(29)BLJR361, AIR 1981 PATNA 172, (1981) BLJ 364, (1983) PAT LJR 178, 1981 BLJR 361
JUDGMENT K.B. N. Singh, C. J. 1. In both these writ petitions common questions of law arise and they have been heard together and are being disposed of by this order. 2. The necessary facts for the disposal of these two writ petitions may shortly be stated. On the 26th of March, 1964, Braj Mohan Singh (respondent No. 1) and Ram Mohan Singh, father of respondents 2 to 4, of C. W. J. C. No. 984 of 1978 borrowed a sum of Rs. 2800/- from Sushil Kurnar Singh, the petitioner in the said writ petition, and put the mortgagee in possession of 1 acre and 13 decimals of land, describing the document as Shartia Sudbharna Meyad Panch Sal, a true copy of which has been filed as Annexure 1. 3. By a similar document dated the 28th of June, 1966 respondents 1 to 4 of C. W. J. C. No. 985 of 1978, who are the same persons as respondents 1 to 4 in the first writ petition, borrowed a sum of Rs. 11,000/- and put the mortgagee Murlidhar Singh, the petitioner of C. W. J. C. No. 985 of 1978, in, possession of 3 acres and 61 decimals of land. This document has also been described as Sharlia Sudbharna Wo Meyad Chhey Sal. 4. After coming in force of the Bihar Money Lenders Act, 1974 (hereinafter referred to as "the Act"), which provided automatic redemption of usufructuary mortgage after a period of seven years, respondents 1 to 4 filed two applications before the Deputy Collector Incharge Land Reforms, Monghyr (respondent No. 5) in respect of the aforesaid two mortgage bonds, claiming to recover possession of the mortgaged land as more than seven years had expired (which were numbered as Cases Nos. 186 and 187 of 1976-77) in relation to both the mortgages respectively. The mortgagees appeared and contested claiming that the mortgages in question were not usufructuary mortgages but mortgages by conditional sale and no payment had been made within the due period and consequently the right of redemption of the morlgagors was extinguished. Respondent No. 5 rejected the contention of the mortgagees in both the cases and directed the mortgagees to deliver possession of the mortgaged land by two separate orders dated 17-8-1976, as contained in Annexure '2' to each of the writ petitions. Against those orders the writ petitioners filed revisions before the Collector of Monghyr (respondent No. 6), who heard both the revisions together and by a common order dated 31-3-1978 dismissed the revisions filed by the writ petitioners, a copy of which has been filed as Annex-lire '3' to each of the writ petitions. Against this order the present two writ petitions have been filed by the mortgagees and a prayer has been made in both the writ petitions to quash Annexures 2 and 3. A counter-affidavit has been filed on behalf of respondents 1 to 4 in each of the writ petitions challenging certain assertions made in the writ petitions. 5. Mr. R. K. Verma, learned counsel appearing, on behalf of the writ petitioners has urged that the mortgage bonds in question are anomalous mortgages and as Section 12 of the Act applies only to usufructuary mortgage bonds and not to anomalous mortgages, the impugned orders (Annexures 2 and 3) are wholly without jurisdiction. Learned counsel has placed reliance in this connection on a Full Bench decision of this Court in the case of Madho Singh v. State of Bihar (1978 BBCJ (HC) 86) : (AIR 1978 Pat 172). The ground of attack that the mortgages in question are not usufructuary mortgages but anomalous mortgages is based on two factors, namely (a) that there is a covenant to pay the mortgage money on the due date and (b) that there is also a recital in the mortgage bonds that in case the mortgagees are dispossessed from the mortgaged security before the due date, the mortgagors are to pay damages and interest to the mortgagees. In the alternative it has also been argued that even if the condition that redemption has to be made by a particular date and not thereafter be construed to be B clog on the equity of redemption and, therefore invalid, still the mortgages would not be usufructuary mortgages but anomalous mortgages. 6. In order to appreciate the contention of learned counsel, Section 12 of the Act may be usefully quoted here: "Notwithstanding anything to the contrary contained in any law or anything having the force of law or in any agreement, the principal amount and all dues in respect of an usufructuary mortgage relating to any agricultural land, whether executed before or after the commencement of this Act, shall be deemed to have been fully satisfied and the mortgage shall be deemed to have been wholly redeemed on expiry of a period of seven years from the date of the execution of the mortgage bond in respect of such land and the mortgagor shall be entitled to recover possession of the mortgaged land in the manner prescribed under the rules; Provided that if the mortgage bond had been executed before the commencement of this Act nothing in this section shall entitle the mortgagor to claim any accounts of profits from the mortgagee by reason of the benefit of redemption of the mortgage under this provision." On the wording of Section 12, its provision is meant to apply to an usufructuary mortgage, is beyond dispute. The Full Bench in Madho Singh's case also says so. The real question for consideration is whether the mortgage deeds in question are usufructuary mortgage deeds as contended on behalf of respondents 1 to 4 or not. Usufructuary mortgage is defined in Clause (d) of Section 58 of the Transfer of Property Act and reads as follows : "Where the mortgagor delivering possession expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest, or in payment of the mortgage money, or partly in lieu of interest and partly in payment of the mortgage money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee." The main characteristics, therefore, of an usufructuary mortgage are (i) possession of the property is delivered to the mortgagee, (ii) the mortgagee is to remain in possession of the property, (iii) the mortgagee who remains in possession of the property is to get the rent and profits from the property in lieu of interest, and (iv) no personal liability is incurred by the mortgagor and the mortgagee cannot foreclose or sue for sale. 7. 'Mortgage by conditional sale', however, has been defined in Clause. (c) of Section 58 of the Transfer of Property Act which runs as follows: "Where the mortgagor ostensibly sells the mortgaged property- On condition that on default of payment of the mortgage-money on a certain date, the sale shall become absolute, or On condition that on such payment being made the sale shall become void, or On condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale." The essential characteristic of mortgage by conditional sale is that on the breach of condition of repayment within a specified period, the contract executing the transaction stands concluded and becomes one of absolute sale to be enforced by foreclosure. It is settled law that to know real import of document we have to look into the terms of the document itself. Judged in the light of the definition of 'mortgage by conditional sale', it has to be examined as to whether, the mortgage (Annexure 1 in each case) is a document of mortgage by conditional sale. Taking the document (Annexure 1 in C. W. J. C. No. 985 of 1978), the nature of the document has been described as "Shartiya Sudbharna womeyed Chhey Sal" and the consideration is Rs. 11,000/- and the area given in possession of the mortgagee is 3.61 acres and odd. It is recited in the document that a sum of Rs. 8.000/- was due from the mortgagor on account of four Tamasuk Shartiya Sudbharnas and the mortgagors further required a sum of Rs. 3,000/-. For securing payment of the aforesaid amounts the aforesaid area of 3 acres and odd was given in possession of the mortgagee who would enjoy its usufructs in lieu of interest. It was stipulated therein that it would be open to the mortgagors to pay the aforesaid mortgage money on or before the 30th Baisakh, 1379 Fasli, and in case the aforesaid amount was not paid by that date, then the usufructuary mortgage would be treated as a sale deed. It is apparent from the recitals made in the document that there is no ostensible sale of the mortgaged property. What has been done is that the property has been mortgaged and put in possession of the mortgagee for a fixed period for securing the present advance of Rs. 3,000/- and payment of four "Shartiya Sudbharnas" three of them dated 20-5-1963 and one dated 28-9-1964 of Rs. 2,000/- each, for a total sum of Rs. 8,000/-. The four earlier Shartiya Sudbharnas are sought to be redeemed by the present Shartiya Sudbharna, and this clearly indicates that besides redeeming those earlier documents, the mortgagors also intended to create another usufructuary mortgage bond for a higher amount and not a mortgage by conditional sale. The document recites that the mortgagee is already in possession of the property and he will utilise the usufruct after payment of rent in lieu of interest The document further recites that it was open to the mortgagors to redeem the bond on or before 30th Baisakh 1379 Fasli and on failure to redeem the mortgage bond by that date, the mortgage document would be construed to be a sale deed and it would be open to the mortgagee to get his name mutated in the Government register. The other term mentioned in the document is that in case the mortgagee is dispossessed then the mortgagors will be liable to pay as damages to the mortgagee 10 maunds of paddy per bigha per year or its price at the market rate with interest at the rate of Re. 1/- per cent per mensem. 8. Almost to the same effect is the other document i. e. Annexure 1 in C W. J. C. No. 984 of 1978, where for securing an advance of Rs. 2800/- an area of 2 acres and odd was given to the mortgagee with a stipulation to pay back the money by the 30th Baisakh 1376 Fasli and take back the mortgaged property. The mortgagee was to remain in possession of the property during this period and would, after payment of rental to the Government, enjoy the usufructs of the property in lieu of interest. There was stipulation to pay-damages by the mortgagors in case of dispossession of the mortgagee within the period of mortgage at the rate of 15 maunds of paddy per bigha per year and interest at the rate of Re. 1/- per cent per mensem, which will be paid by the mortgagors from their other properties. It is thus apparent that none of the documents fulfils the essential conditions of a document of mortgage by conditional sale, which was the stand taken by the petitioners in the Court below and also before us. 9. Coming to the question as to whether the documents in question are anomalous mortgage or not, learned counsel for the petitioners has submitted that as there is a covenant to pay on a due date and to pay damages and interest in case of dispossession, the documents in question are not usufructuary mortgage bonds. A covenant to pay is an implied term in all mortgages, whether it is mentioned or not. The mortgagor has a right to redeem the mortgaged property if there is a due date mentioned in the document of mortgage after the due date. If no due date is mentioned then at any time before expiry of limitation for redemption. Section 60 of the Transfer of Property Act recognises, generally, the right of the mortgagor to redeem the mortgaged property and Section 62 in specific terms, authorises an usufructuary mortgagor to claim possession where the mortgage money--not only interest but the debt--is satisfied from the land mortgaged, or where it is partially satisfied on payment of the balance of the mortgage money. This right of the mortgagor to redeem is there. Simply because a time limit has been fixed during which the mortgagors could redeem does not alter the essential characteristic of the transaction being an usufructuary mortgage. The mortgagors' right to redeem and take possession under Sections 60 and 62 of the Transfer of Property Act being statutory, it is well settled that there can be no clog on this right of the mortgagors to redeem the mortgages. The limitation, therefore, imposing a candition that the mortgages could be redeemed within a specified period being a clog on the equity of redemption must be treated as an 'invalid condition of the document of mortgage. The condition being invalid has to be ignored and the documen', has to be read as a whole without this void condition. Vide Srinivas v Satyanand (AIR 1969 Pat 64). A Clause, which is against statutory provision in a document, cannot be the basis of differently construing that document from what it purports to be and the clog or the invalid condition has to be ignored. The provision in the mortgage deeds in question that if the mortgagors fail to redeem the mortgages within a period of six years, the mortgages will be treated as sale is clearly a clog on the equity of redemption and is an invalid condition which has to be ignored. The following observation of their Lordships of the Supreme Court in Ganga Dhar v. Shankar Lal (1958 SCA 739 at p. 742) : (AIR 1958 SC 770) in a somewhat similar circumstance may be usefully referred to : "The rule against clogs on the equity of redemption is that, a mortgage shall always be redeemable and the mortgagor's right to redeem shall neither be taken away nor be limited by any contract between the parties. The principle behind the rule was expressed by Lindley M. R. in Santley v. Wilde ((1899) 2 Ch 474) in these words : "The principle is this: a mortgage is a conveyance of land or an assignment of chattel as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage: and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary notwithstanding. That, in my opinion, is the law. Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that 'once a mortgage always a mortgage'. The right of redemption, therefore, cannot be taken away. The Courts will ignore any contract the effect of which is to deprive the mortgagor of his right to redeem the mortgage. One thing, therefore, is clear, namely, that the term in the mortgage contract, that on failure of the mortgagor to redeem the property within the specified period of six months the mortgagor will have no claim over the mortgaged property and the mortgage deed will be deemed to be a deed of sale in favour of the mortgagee, cannot be sustained. It plainly takes away altogether, the mortgagor's right to redeem the mortgage after the specified period. This is not permissible for 'once a mortgage always a mortgage' and therefore always redeemable. The same result also follows from Section 60 of the Transfer of Property Act." 10. Learned counsel for the petitioners has urged that the provision for payment of damages and interest in case of dispossession changes the nature of the document from usufructuary mortgage bond to an anomalous mortgage and, therefore, it is outside the purview of Section 12 of the Act. A mere provision in the deed to the, effect that in case the mortgagors dispos-sess the mortgagee, they will be liable to pay interest personally or from their other property will not amount to personal covenant to pay and will not change the character of the document from usufructuary mortgage bond to an anomalous mortgage. Such a provision will have to be looked at in relation to the other provisions in the document, that the redemption can be made within a specified period and if within that period the mortgagee is dispossessed from the mortgaged property, then he would be paid damages and interest. This, in my opinion, would not change the essential characteristic of the document as an usufructuary mortgage. 11. Out of the cases relied upon by Mr. Verma, the case of Chandi Charan v. Tara Nath reported in AIR 1942 Cal 452 (2) may be noticed. This case relates a 'kot Kobala' or mortgage by conditional sale executed perhaps prior to the inclusion of the proviso to Section 58 (c) of the Transfer of Property Act, and the question was whether the transaction was an out and out sale or not. It was held therein as follows: "A mortgage by conditional sale is no doubt essentially in the nature of a security, and that being so, notwithstanding the form of the transaction, the mortgagor's right to redeem the security will remain, even if the due date of payment may have passed. But once the right to redeem is effectively cut off, there will be nothing to prevent the mortgagee acquiring full title to the property. The mortgagee will, of course have to bring a suit to foreclose the mortgage, but we do not think that that circumstance is sufficient to detract from the fact that the mortgagee will be acquiring title to the property by reason of a voluntary act on the part of the mortgagor. In our opinion, where a person executes a kot kobala or mortgage by conditional sale and then suffers a foreclosure decree to be passed against him, he virtually executes thereby a transfer in favour of the mortgagee." In my opinion, this decision is of no help to the learned counsel for the petitioners. 12. Learned counsel for the petitioners have also urged that the writ petitioners filed Mortgage Suit No. 62 of 1976 in the Court of the munsif, Monghyr, far foreclosure in case of mortgage by conditional sale, which is still pending and, therefore, the application will not be maintainable. It may be mentioned that the mortgagors filed applications under Section 12 of the Act being Cases Nos. 114 and 115 of 1975, against which the writ petitioners had filed a writ application in the High Court challenging the vires of Section 12 of the Act which was dismissed following the decision of the Full Bench of this Court in Madho Singh's Case (AIR 1978 Pat 172) (supra). However, the earlier cases filed by the respondents were dismissed on technical grounds on 29-6-1976 and soon thereafter the present cases were filed in 1976 being cases Nos. 186 and 187 of 1976-77. It may be mentioned that no argument was also advanced before us that the order of dismissal in the earlier cases on technical grounds would act as res judicata in the instant cases debarring the mortgagors from filing the subsequent applications. In view of the non obstante provisions contained in Section 12 of the Act, as already quoted, the provisions of Section 12 will prevail over other provisions of law and the filing of the suit by the petitioners will not defeat the provisions of Section 12 and will not take away the right of the usufructuary mortgagors to file applications for restoration of possession. The provision of Section 12 overrides the provisions of the Transfer of Property Act in this regard and is not subservient to it. 13. In the result, there is no merit in these applications which are accordingly dismissed, but, in the circumstances, without costs. P.S. Sahay, J.
I agree.