Patna High Court
Mahabir Singh And Ors. vs Rameshwar Singh And Ors. on 27 June, 1978
Equivalent citations: AIR1979PAT46, 1978(26)BLJR768, AIR 1979 PATNA 46, (1978) BLJ 728, 1978 BLJR 768, (1979) PAT LJR 86
JUDGMENT S.K. Jha, J.
1. The defendants in the action are the appellants here having directed this appeal against a judgment of reversal.
2. The respondents instituted the suit for redemption of a usufructuary mortgage dated 9-11-33 for a consideration of Rs. 180 only with regard to 2.25 acres out of plot No. 1728 appertaining to khata No. 788. Admittedly the plaintiffs respondents' predecessors in interest had a holding comprising khata No. 788 consisting of plot Nos. 1727, 1728 and 2796, the entire measuring 3.46 acres. Out of this area, as stated earlier, 2.25 acres out of plot No. 1728 were mortgaged by the plaintiffs' predecessors in interest in favour of the defendant appellants' family. The plaintiffs' case simply stated is that they approached the appellants to redeem the mortgage by accepting the mortgage dues which the latter declined. As a result, the plaintiffs tendered the money in court in accordance with the provisions of Section 83 of the Transfer of Property Act. The appellants not having redeemed the mortgage, the suit has been instituted.
3. The defence of the appellants was three-fold-
(i) That shortly after the transaction of mortgage it was redeemed on payment. This defence has not been accepted by final court of fact.
(ii) That the mortgagors defaulted in the payment of rent as a result of which a rent suit was instituted and a decree thereon obtained by the landlords of the tauzi. After the rent decree the landlords purchased the holding in execution of the rent decree and came in actual physical possession of the same. Subsequently they settled the land in favour of the appellants and the appellants came in possession as settlee. The equity of redemption was lost and the mortgage extinguished.
(iii) That the appellants have been coming in possession openly and adversely for more than the statutory period to the knowledge of the respondents, thereby acquiring a right of prescription.
4. The trial court had dismissed the suit on the ground that the mortgage has been wiped out by the auction purchase at the rent sale by the landlords. The appellants, it was held, came in possession by virtue of the settlement in their favour and there was no question of the application of the principles of Section 90 of the Trusts Act, 1882 (hereinafter called the Act). The lower appellate court has rather confused the issues. It has held that the rent decree and auction sale seemed to be surreptitious and the landlords' possession sub- sequent to the auction purchase was doubtful. And, since a part of the rent for the holding was to be paid by the mortgagee, the principles of Section 90 of the Act will be attracted, and, therefore, the respondents' suit has been decreed.
5. The true appreciation of the position in law with regard to the application of the principles of trust would not have led to the confusion in the appellate court. The position in law is well settled. The contribution to the bringing about of the sale must be a direct result of the mortgagee's possession as such who purchases the property himself at the sale in execution of the rent decree gaining an advantage by availing himself of his fiduciary position [(refer to Smt. Basanti Devi v. Chamru Sao (AIR 1964 SC 1707)]. The transaction of sale and purchase by the landlord and the subsequent settlements by him should form part of the same transaction or part of the same design, artifice or device brought about by the mortgagee in order to attract the principles of Section 90 of the Act. If the rent sale is a genuine sale, it extinguishes the mortgage and the relationship of mortgagor and mortgagee comes to an end. In such circumstances, the mortgagor or his successors in interest are not entitled to the advantage of Section 90 of the Act. The question as to whether that provision is attracted or not must depend on the facts of each case. The purchase of the holding by the mortgagee himself is an important factor in such cases in order to press in aid the principle of Section 90. Even in the absence of such a purchase by the mortgagee himself if it is established that there was some sort of a collusion between the mortgagee and the auction purchaser from whom he subsequently takes by settlement or otherwise, the principle may be invoked. But not so where the mortgagee is nowhere in the picture at the time of the auction sale [refer to Ramjit Choudhary v. Satan Devi (1970 BLJR 756)] Where the co-owner or the mortgagee is not a purchaser nor has been in any way instrumental in bringing about the auction sale but has merely taken settlement of the original holding from the auction purchaser, Section 90 of the Act cannot be pressed into service [refer to Md. Israfil v. Md. Israil (AIR 1971 Pat 350)] There is another principle of law relevant in such cases. A decree in a rent suit is a money decree. Where a decree for rent is passed and the mortgaged property is put out to sale what is sold is the mortgagor's right to redeem thereby putting an end to the mortgage. In such circumstances, the purchaser becomes the owner of the property free from encumbrances and, therefore, no question of application of S, 90 of the Act arises [vide Janki Sah v. Girja Singh (AIR 1973 Pat 211)].
6. In such cases, therefore, in order to hold the mortgagor entitled to any relief by virtue of the provision of Section 90 of the Act it is essential to find out as to whether the mortgagee has himself brought about the sale with an ulterior motive to gain advantage of the fiduciary relation that he enjoys. Even if he himself is not the auction purchaser, yet if there be cogent evidence on the record to establish that he has been instrumental in some way or the other by having the property auction-sold through some agency in his collusion and ultimately gains an advantage by holding over the property in question he may be subject to the provision of Section 90. But in such cases there must be clear and unequivocal proof of his collusion. Fraud and collusion can never be presumed. This aspect of the case has been lost sight of by the lower appellate court.
7. There is yet another error of law committed by the learned Additional Subordinate Judge who seems to carry an impression that, unless there was annulment of the encumbrance under Section 167 of the Bihar Tenancy Act, the auction sale could not enure to the advantage of the landlord or the auction purchaser or his subsequent settlee. The position in law is this. If a tenant of 3 holding mortgages it to a third person notwithstanding the fact that it is not transferable, the landlord of the holding is not bound to recognise the mortgage or admit the mortgagee to be his tenant even though the mortgagee may have obtained a decree on the basis of the mortgage. In such a case if the holding is sold in execution of rent decree and the landlord himself purchases it, there is nothing to prevent him from ignoring the mortgage without ultimately annulling the encumbrance under Section 167 of the Bihar Tenancy Act. Furthermore, it will appear from Section 161 (a) of the Bihar Tenancy Act that the term 'encumbrance' used with reference to a tenancy means, inter alia, an interest created by the tenant on his holding in limitation of his own interest. In such a case, as the instant one, the encumbrance would be the mortgagee's interest and in order to avail of the provisions of S, 167 of that Act it is the mortgagee who must come forward. It cannot lie in the mouth of the mortgagor to say that the encumbrance created by him in favour of the mortgagee has not been wiped out at the auction sale.
8. A point has further been taken by Mr. Balabhadra Prasad Singh, learned Counsel for the respondents, while supporting the judgment, that the lower appellate court has committed an error of law in treating Exts. Q and Q/1 as substantive pieces of evidence. I, however, refrain from going into this question in view of the fact that I propose to remand the case to the lower appellate court which shall have the opportunity afresh of applying its mind to this argument also since it appears that such an argument was not raised before that court.
9. For the reasons given above, I am constrained to allow this appeal set aside the judgment and decree passed by the lower appellate court and remit the case back to the first appellate court with a direction to hear the appeal afresh and come to a decision in consonance with the principles of law enunciated above and in accordance with law. Cost shall abide the result.