Bhanwarlal v. Dhulilal

1. This case has been referred to a Division Bench by a learned Judge sitting in Single Bench, before whom the case first came for hearing,

2. The respondents Dhulilal and Chandralal instituted a suit in the court of the Munsif, Mainwa, on the allegations that the first defendant Sukh-deva had mortgaged a mango tree in village Jaja-war, situated in the land of Dewlawala well, and later on by document of Kartik Sudi 12, Smt. Year 1998 (November, 1941), the said mortgagor transferred his ownership of the mango tree to the plaintiffs for a consideration of Rs. 72/-, the stipulation being that the plaintiffs will continue to enjoy the fruits of the tree so long as it will exist.

It was alleged that the said defendant Sukh-deva wrongfully purported to sell the same tree by registered document of 7-11-1950 to defendants Nos. 2 to 5, Bhanwarlal, Birdhilal, Mohanlal and Sualal. The plaintiffs instituted the suit for decla-ration that the said document was null and void, as the vendor had no interest left in the tree which could be transferred to defendants Nos. 2 to 5.

The findings of the trial court were that the tree had been mortgaged with the plaintiffs and thereafter the mortgagor executed the deed of transfer in favour of the plaintiffs dn Kartik Sudi 12 of Smt. Year 1998, but the said transfer was invalid, owing to non-registration. It was further held that the defendants 2 to 5 had taken possession of the mango tree after notice of the prior sale to the plaintiffs, but as a result of the finding of invalidity of the sale to the plaintiffs, the suit was dismissed by judgment dated 14-12-1951.

3. On appeal the learned Civil Judge of Bundi was of opinion that the transfer in favour of the plaintiffs by document of Smt. Year 1998 was of tangible immovable property of the value of under Es. 100/- and the document did not require registration. He held that the plaintiffs being already in possession as mortgagees, the recitals contained in the document of Smt. Year 1998, amounted to delivery of property contemplated by Section 54 of the Transfer of Property Act, and made the sale valid and complete.

As a consequence he held that the sale made by Sukhdeva in favour of defendants 2 to 5 was not valid, as the vendee was not left with any interest in the property after the prior sale to plaintiffs. He accordingly allowed the appeal, set aside the judgment and decree of the Munsif, Nainwa, and declared the sale-deed of 7-11-1950, to be ineffective against the rights and interest of the plaintiffs.

4. The defendants Bhanwarlal and Mohanlal have filed this appeal and two others. Birdhilal and Suwalal have been joined as pro forma respondents. It was contended that the transfer in favour of Dhulilal and Chandralal was of an intangible immovable property and could be done only by a registered instrument as provided in Section 54 of the Transfer of Property Act.

On behalf of the respondents it was urged that the Transfer of Property Act was not properly brought into force in the former State of Bundi and in any case the transfer was of tangible immov-abe property and had been properly effected by the execution of the document of Smt. Year 1998, which purported to transfer delivery of possession also.

5. The learned Single Judge while referring the case pointed out that there were two questions involved in this appeal.

(1) Whether the Transfer of Property Act was properly brought into force in the former Bundi State by Robkar No. 90 dated 31-7-1950 issued from the office of the Diwan of Bundi State?

(2) If so, whether under Section 54 of the Transfer of Property Act the interest of a usufructuary mortgagor is a tangible immovable property or intangible property and if it is tangible immovable property whether the transfer of it to this mortgage for a sum less than Rs. 100/- by an unregistered document is valid?

6. As there was difference of opinion in the High Court of India on the second point, the learned Judge referred the case to the Division Bench.

7. We do not propose to go into the first question and assume that the Transfer of Property Act was properly brought into force in the former Bundi State by a Kobkar No. 90 dated 31-7-1950, because on the second question we agree with the lower court.

8. The majority of the decisions of the Indian High Courts have taken the view that the transfer of ownership of the property subject to mortgage by the mortgagor in the case of usufructuary mortgage in favour of the mortgagee is a transfer of tangible immovable property. The principle of the decisions is that a mortgage as defined in Section 58 of the Transfer of Property Act is the transfer of an interest in specific immovable property but not the ownership of it.

What is left after the mortgage with the mortgagor, is the ownership of the property. The notion of English Law that the mortgagee becomes a legal owner of the property and nothing is left in the mortgagor except what is called equity of redemption, is not applicable in India. The Indian Legislature has not imported the expression "equity of redemption" but used the expression "right to redeem", which is not the same thing as the equity of redemption in England.

This exposition of law is found in the judgment of Mukherji J. in Sohan Lal v. Mohanlal, AIR 1928 All 726. The other view is that after the property has been mortgaged by usufructuary mortgage what remains is a right to redeem and the transfer of that right does not amount to a transfer of the property itself. It is found in the dissenting judgment of Sulaiman, Acting C. J., in the same case.

9. The first view has found favour in the following decisions: Dawood Saheb v. Moideen Batcha Saheb, AIR 1925 Mad 566; Kulachandra v. Jogendrachandra, AIR 1933 Cal 411; Maung Mya Maung v. Ma Khine, AIR 1936 Rang 497; Imam Shah v. Hayat Mohammad, AIR 1935 Lah 164 (2); Ram Nath Singh v. Gajadhar Lal, AIR 1926 All 300; Tukaram Ganpatrao v. Atmaram Vinayak, AIR 1939 Bom 31; Pheku Mian v. Syed Ali, AIR 1937 Pat 178.

10. The other view has been taken in the following decisions; Kaliram v. Dularam, AIR 1933 Cal 544; Mahendra Bahadur Singh v. Chandrapal Singh, 63 Ind Cas 284: (AIR 1921 Oudh 124 (2)); Ram Narayan Gope v. Kula Chandra, 49 Ind Cas 426: (AIR 1919 Cal 107); Dharameshwar Sarma v. Lakhyadhar, AIR 1950 Assam 107.

11. In the case of AIR 1933 Cal 544, it is not clear whether the sale was in favour of the mortgagee, and in the Assam case, AIR 1950 Assam 107, while Ram Labhaya J., has taken this view, Thadani C. J., has taken a contrary view. No reasons are given in the other two cases for the view taken.

12. In our opinion the transfer of ownership of property subject to mortgage is a transfer of tangible immovable property and with great respect we agree with the reasons given by Mukherji J., in Sohanlal's case, AIR 1928 All 726.

13. The next point for determination is what should be held to be done in order that the delivery of property may be said to have been effected. In the Allahabad case, AIR 1928 All 726, the view taken was that although the transfer was of tangible immovable property, there could not be delivery of possession because the property was already in the possession of the mortgagee but the claim of the transferee was upheld on the ground that he had been in possession after the said transfer for a period of more than 12 years.

In Pheku Mian's case, AIR 1937 Pat 178, it was found that the mortgagor had renounced his rights and got the name of mortgagee recorded in the Record of Rights, and it was held that this was sufficient compliance with the provisions of Section 54 of the Transfer of Property Act, in the matter of delivery of possession.

14. In Dawood Saheb's case, AIR 1925 Mad 566, the observations are that a direction by the vendor that the vendee is to keep the property as absolute owner amounts to delivery, in case he is already in possession. It was observed that there was no reason to think that the word "delivery" in Section 54 is used in peculiar ssnse or that it is intended to alter the legal sense of the delivery.

15. The observations in Kulachandra Ghos's case, AIR 1933 Cal 411, are that where the ven-dee was already in permissive possession of the property on the date of sale, it is enough for such delivery of possession to be sufficient within the meaning of Section 54, if the character of his possession changes; and this can be effected if the vendor converts by appropriate declarations or acts the previous permissive possession of the vendee into possession as that of a vendee.

16. It is not necessary to multiply authorities. In the present case the document of Smt. Year 1998 clearly recites on behalf of the transferor that he will have no right or concern with the mango tree hereafter and that he had sold the same to Dhulilal and Chandralal, who are to enjoy the same till the tree exists. The vendor renounced all his rights to the tree with effect from that date.

These declarations clearly purport to change the character of the possession of the vendees from that of mortgagees to that of purchasers. In our opinion such declaration amounts to a delivery of possession in the present case within the meaning of Section 54 of the Transfer of Property Act, and the transfer is completed.