Sheikh Ahmed v. Babu Devji Zujam

Patkar, J.:—

The property in suit belonged to the ancestors of the plaintiffs and defendants Nos. 13 to 15 as occupancy tenants in the Khoti village of Dayal in Taluka Khed and was mortgaged by their ancestor Pandu to the ancestors of defendants Nos. 1 to 12 under the mortgage-deed, Exhibit 50, dated August 24, 1870. The mortgagees were in possession of the mortgaged property since the date of the mortgage. On October 9, 1882, the ancestor of the plaintiffs and defendants Nos. 13 to 15 sold the equity of redemption along with some other property to the mortgagees under the registered deed, Exhibit 51. Defendants Nos. 1 to 12 claiming under the mortgagees were in possession of the property till the year 1915 when the plaintiffs recovered possession by a possessory suit under section 9 of the Specific Relief Act. In 1918, defendants Nos. 1 to 12 filed Suit No. 243 of 1918 against the descendants of the mortgagors, that is, the present plaintiffs and defendants Nos. 13 to 15, to recover possession. The learned Subordinate Judge passed a decree in favour of the defendants Nos. 1 to 12 who were the plaintiffs in that suit for possession of the plaint property and mesne profits and held that though the sale was invalid under section 9 of the Khoti Settlement Act, the then plaintiffs had acquired a title to the property by their possession for more than 12 years since the date of the sale which was held binding on the descendants of the mortgagors, the then defendants. The appellate Court also came to the same conclusion. In second appeal, the High Court confirmed the decree of the Court and observed as follows:—

“The only point urged in support of this appeal on behalf of the appellant, defendant No. 1, is that it should be made clear that the question whether his right to redeem under the mortgage of 1870 is barred by the sale-deed (Exhibit 42, i.e, Exhibit 51 in this case) of 1882 is left open. That question has never been considered in the lower Courts and as we read the judgment of the lower appellate Court, the only question that has been decided is whether the plaintiff is entitled to possession under the sale-deed. To that extent the decision is right, and no further question as to the validity of the sale as affecting the right of defendant No. 1 to redeem has been dealt with by the lower appellate Court, nor has it been decided. We confirm the decree of the lower appellate Court and dismiss the appeal with costs.”

The present suit was brought by the plaintiffs to redeem and recover possession of the property. The learned Subordinate Judge dismissed the plaintiffs' suit on the ground that the suit was barred by res judicata by reason of the decision in the previous Suit No. 243 of 1918 and that the plaintiffs had no subsisting right to redeem the mortgage sued on. On appeal the learned Judge held that the present suit was not barred by res judicata by the decision in Suit No. 243 of 1918, that the sale of the equity of redemption was not legal and valid and the possession of defendants Nos. 1 to 12 was not adverse since the date of the sale, and that the plaintiff had a subsisting right to redeem the mortgage, and remanded the suit for taking accounts under the Dekkhan Agriculturists' Relief Act and for passing a final decree of redemption in favour of the plaintiffs. The present appeal is filed against this order of remand.

It is urged on behalf of the appellants, the descendants of the original mortgagee, that the plaintiffs are estopped from denying that they had a right to transfer the property to the mortgagees under the sale-deed, Exhibit 51, and reliance is placed on the ruling in Jayram v. Narayan and section 55, clause (2) of the Transfer of Property Act.

The decision in Jayram v. Narayan proceeds on the principle of estoppel as between the mortgagor and the mortgagee recognised in the ruling in Narayan Khandu Kulkarni v. Kalgaunda Birdar Patel, that the mortgagor could not have questioned his own right to mortgage the property in dispute, and has not extended the principle of estoppel as between a vendor and a purchaser. Section 55 clause (2) of the Transfer of Property Act relates to an implied covenant by a vendor that he has power to transfer the property and in case of a breach of the covenant the vendor exposes himself to a suit for damages by the purchaser. It is urged that according to Caspersz on Estoppel, paragraph 210, a vendor will not be permitted to contend in his own interest as against the purchaser that he had no right to sell the property and reliance is placed on the case of Bhagirath Changa v. Sheikh Hafizuddin. The question in the present case is whether the sale of the equity of redemption of the occupancy rights of the mortgagor by Exhibit 51 was valid. The words “without the consent of the Khot” in section 9 of the Khoti Settlement Act were inserted by Bombay Act VIII of 1912 and were not in existence in section 9 as it stood in 1882 when the sale-deed, Exhibit 51, was passed by the mortgagors to the mortgagee. The sale, therefore, of the occupancy rights would be invalid. Under section 9, the rights of occupancy tenants would not be transferable, subject to two exceptions, (1) where the right to transfer is created by custom under the conditions specified in section 9, and (2) where the Khot has in granting a lease conferred upon the lessee the right of transfer at the time of creating the tenancy. It is neither alleged nor proved in this case that either of these exceptions exists in the present case. Further, the words “without the consent of the Khot” did not appear in section 9 as it stood in 1882. The sale of the occupancy rights, according to the decision in Mahadev v. Mahadaji, must be treated as illegal and void. The point of estoppel was not taken in the lower Courts or in the memorandum of appeal to this Court. Assuming, however, that the principle of estoppel applies as between a vendor and a purchaser, there could be no estoppel against an Act of Legislature. In Shridhar Balkrishna Vaidya…Plaintiff v. Babaji Mula Agarya…Defendant ., where the defendant purported to resign his occupancy rights in Khoti lands to the plaintiff who was one of the Khots and at the same time attorned to the plaintiff by executing a lease for a term of five years, it was held that the resignation was not valid under section 9 of the khoti act as the consent of all the Khots had not been obtained, that the transaction could not be regarded as a resignation, and that the foundation of the plaintiff's title was illegal and the plaintiff was entitled to estop the defendant from showing the illegality of the title so founded. There can be no estoppel against an Act of Parliament or against an Act of Legislature and the principle of estoppel cannot be invoked to defeats the plain provisions of the Statute. See Jagadbandhu Saha v. Radha Krishna Pal and Abdul Aziz v. Kanthu Mallik. As between a mortgagor and a mortgagee the principle of estoppel which is otherwise clearly recognised is inapplicable where the mortgage is void as contrary to a Statute. See Mahamaya Debi v. Haridas Haldar. We think, therefore, that the plaintiffs are not estopped from contending that the sale of the equity of redemption under the sale-deed, Exhibit 51, is illegal and void.

The next question is whether the decision in Suit No. 243 of 1918 operates as res judicata. The learned Subordinate Judge in the previous suit found that the sale-deed was binding on the mortgagors though the lands were Khoti, and that the mortgagees proved adverse possession for more than twelve years, and that though the sale-deed was invalid under section 9 of the khoti act, the transfer did not annihilate the occupancy tenant's rights and the transferee of the occupancy right would be entitled to claim that he had by the transfer obtained such rights as an ordinary tenant could give, and he relied in support of his conclusion on the rulings in Dayamayi v. Ananda Mohan Roy Chowdhurya and Behari Lal Ghose v. Sindhubala Dasi. The learned Judge on appeal in the previous litigation held that the sale-deed was binding on the mortgagors and though the occupancy rights were not transferable, the transferee from the occupancy tenant could claim that he had by the transfer obtained the rights of an ordinary tenant, and that the mortgagees were in possession even before the purchase and their possession since 1882 was clearly adverse to the present plaintiffs and defendants Nos. 13 to 15. In second appeal, the High Court awarded possession to the mortgagees not on the strength of their title as mortgagees but on the strength of their title under the sale-deed. Though the question as to whether the right to redeem under the mortgage of 1870 was barred by the sale-deed of 1882 and the question as to the validity of the sale-deed as affecting the right to redeem were not decided and left open, the defendants Nos. 1 to 12 in this case were awarded possession on the strength of their title as purchasers. The title, therefore, to possession under the sale-deed, Exhibit 51, was decreed in favour of the present defendants Nos. 1 to 12 in the previous litigation. The lower Court in this case was of opinion that in the previous litigation the decree for possession in favour of the then plaintiffs was upheld apparently on the sole ground that the plaintiffs had long been in possession and that they were entitled to regain that possession as mortgagees. We think that the lower appellate Court has misunderstood the effect of the judgment in the three Courts in the previous litigation. Defendants Nos. 1 to 12 were awarded possession not as mortgagees but on the strength of the sale-deed, Exhibit 51, and so far as the previous decrees awarded possession to the defendants Nos. 1 to 12 on the strength of the sale-deed, the decision, in our opinion, operates as res judicata in favour of defendants Nos. 1 to 12. The sale-deed, Exhibit 51, therefore, according to the previous litigation conveys rights to possession as against the plaintiffs and defendants Nos. 13 to 15. The plaintiffs and defendants Nos. 13 to 15, therefore, cannot in this suit for redemption recover possession of the property by redemption of the mortgage.

The question whether, according to the ruling in Yesa bin Rama v. Sakharam Gopal if the rights of the occupancy tenants could not be sold, some other rights could be sold, and whether the right to possession could be validly transferred to the purchaser need not be gone into in the present case. It might be that the right to occupy is inseparable with the right of an occupancy tenant, and the question that deprived of the right to possession an occupancy tenant might be practically without any substantial rights need not be considered in the present case. A question of law even though wrongly decided between the parties operates as res judicata. In Waman v. Hari, it was held that an erroneous decision upon a point of law may yet as between the parties to it, but no further, be a sufficient res judicata to preclude them from re-agitating it. In Chhaganlal v. Bai Harkha it was held that the plea of estoppel by res judicata can prevail even where the result of giving effect to it will be to sanction what is illegal in the sense of being prohibited by Statute. It must be considered that it was decided in the previous litigation that defendants Nos. 1 to 12 were entitled to possession on the strength of the sale-deed, Exhibit 51. If the present plaintiffs and defendants Nos. 13 to 15 are right in their contention that the sale-deed is illegal and void in its inception and conveyed no rights to the purchasers, they ought to have made that a ground of defence or attack in the previous litigation. Either they failed in their contention in the previous case or if they did not advance the various points which are now relied upon, they ought to have made those grounds of attack in the previous litigation. We think, therefore, that defendants Nos. 1 to 12 having recovered possession in the previous litigation on the strength of the sale-deed, Exhibit 51, the plaintiffs cannot now in this suit seek to recover that possession back after redemption on the ground that the sale-deed did not convey any rights to the purchasers.

It was further argued on behalf of the appellants that if the decision in the previous suit does not operate as res judicata, the possession of the defendants is adverse to the mortgagors since the date of the sale-deed. In Khiarajmal v. Daim it was held that as between a mortgagor and a mortgagee neither exclusive possession by the mortgagee for any length of time short of the statutory period of 60 years, nor any acquiescence by the mortgagor not amounting to a release of the equity of redemption will be a bar or defence to a suit for redemption if the parties are otherwise entitled to redeem. It is contended on behalf of the respondents that if the mortgagee takes possession as a mortgagee, and thereafter the equity of redemption is sold by the mortgagor himself but the sale is invalid, the mortgagee cannot, by merely asserting to hold as absolute owner under such purchase, change the original character of his possession as mortgagee, and the mortgagor would be entitled to redeem within 60 years, and that the matter would have been different if the mortgagee had not entered into possession as a mortgagee but was put into possession by the subsequent invalid sale. In Khedu Rai v. Sheo Parson Rai, where the parties to a mortgage dated 1869 entered into an agreement in 1876 whereby the mortgagor gave up all his equity of redemption in the property mortgaged but the agreement was not registered, it was held in a suit brought for redemption of the mortgage in 1912 that the mortgagees and their predecessors-in-title had been in adverse possession since 1876 and the suit was barred by limitation. It was observed in that case (p. 426):—

“It is true that the Registration Act was then in force, but it seems to us that this was not a case of the mortgagee merely setting up adverse possession without any act on the part of the mortgagor in the matter. In other words that the present case is not one of mere unilateral action by the mortgagee. Both parties consented to the complete transfer of the equity of redemption to the mortgagee, and both parties have acted upon it for very nearly forty years.”

In the present case after the sale-deed in 1882 the mortgagees who were already in possession continued in possession, and it was found in the previous litigation that the possession of defendants Nos. 1 to 12 was adverse and that the purchasers paid rent to the Khot. They remained in possession under the sale-deed from 1882 till they were dispossessed after 33 years. In Kandasami Pillai v. Chinnabba, where under an oral agreement between the mortgagor and the usufructuary mortgagee, the latter retained possession of a portion of the mortgaged property in full ownership in satisfaction of the mortgage-debt, and enjoyed it as full owner for more than 12 years after the arrangement, on a suit being instituted by the mortgagor to redeem the property more than 12 years after the arrangement, it was held that the mortgagee had acquired by adverse possession an absolute title to the property, and that the mortgagor's right to redeem the property was barred by limitation. In Usman Khan v. Dasanna it was held that a mortgagee cannot by a mere assertion of his own or by any unilateral act on his part convert his possession as mortgagee into possession as absolute owner, but there is nothing to prevent a mortgagor and a mortgagee from agreeing between themselves that the future possession of the mortgagee should be adverse to the mortgagor, and if thereafter the said possession endures for the statutory period, a good title is acquired by the mortgagee. In Mahomed Musa v. Aghore Kumar Ganguli, where no conveyances were executed by the mortgagor in completion of the contract to that effect in the compromise nor was the agreement of compromise registered nor its terms incorporated into the decree, it was held by their Lordships of the Privy Council that if the agreement of compromise was defective as not being registered, the decree had been obtained only on one footing, namely, that the parties to the suit had in fact arranged their rights in the property in terms of the compromise, and that even though the compromise and the decree taken together were considered to be defective or inchoate as elements making up a final and validly concluded agreement for the extinction of the equity of redemption, the acts of the parties had been such as to supply all defects. Though the sale of the equity of redemption by a document which is not registered may be inoperative on the ground that it is not registered, the rights of the mortgagor would pass to the mortgagee on the doctrine of part performance. There is no decided case in support of the proposition that if the sale-deed is invalid otherwise than on the ground of its being not registered, the mortgagee can still claim to retain possession on the ground of adverse possession against the mortgagor. Each case will depend on its own facts. In the present case the mortgagors effected a sale-deed in favour of the mortgagees of their occupancy right in the year 1882, and in the previous litigation it was clearly held that defendants Nos. 1 to 12 were entitled to recover possession not on the strength of their title as mortgagees but on the strength of their title as purchasers, and that defendants Nos. 1 to 12 who were already in possession as mortgagees continued in possession after the date of the sale-deed and paid rent to the Khot. It was further held in the previous litigation that the possession of defendants Nos. 1 to 12 was adverse. I would be inclined to hold that under the circumstances of the present case the defendants acquired title by adverse possession since the date of the sale-deed in 1882, but the question as to adverse possession need not be further discussed as the defendants Nos. 1 to 12 are entitled to succeed on the ground that the question as to whether the plaintiffs are entitled to recover possession by redemption of the mortgage is negatived by reason of the finding in the previous case that defendants Nos. 1 to 12 were entitled to recover possession of the property of which they were wrongfully deprived by the plaintiffs and defendants Nos. 13 to 15 on the strength of the sale-deed and not on the strength of their title as mortgagees.

On these grounds I would reverse the order of remand and restore the decree of the Subordinate Judge with costs of this Court and of the lower appellate Court on the respondents.

Baker, J.:—Although the arguments in this appeal have occupied over a day, the point in issue is a narrow one. The plaintiffs mortgaged certain lands to the defendants, including the land in suit, in 1870, and in 1882 they sold the lands to the defendants by a registered sale-deed. The land in suit being occupancy tenancy land under the Khoti Act, or as it is now called permanent tenancy, such a sale is against the provisions of section 9 of the khoti act.

The defendants brought a suit on the sale-deed, and obtained a decree for possession, which was confirmed on appeal by the District Court, and in second appeal by the High Court. The invalidity of the sale was raised in the lower Courts and decided against the present plaintiffs, but in second appeal the High Court said that the question of the right of present plaintiffs to redeem the mortgage of 1870 had not been decided and was left open. The present plaintiffs (defendants in the former suit) consequently brought the present suit for redemption. The first Court dismissed the suit as barred by res judicata by reason of the decision in Suit No. 218 of 1918, but on appeal the District Court reversed the decision and remanded the suit for decision on the merits as to what was due on the mortgage, holding that the decision in Suit No. 243 of 1918 does not bar this suit, that the possession of defendants Nos. 1 to 12 since 1882 has not been adverse to the plaintiffs, and that they are entitled to redeem the mortgage, treating the sale as invalid. There can be no doubt that the plaintiffs, in view of the finding of the High Court in second Appeal No. 624 of 1919 that no further question as to the validity of the sale as affecting the right of defendant No. 1 to redeem has been dealt with nor decided by the lower appellate Court, have a right to raise this question again. There can be no estoppel against a Statute, cf. Abdul Aziz v. Kanthu Mallik and Mahamaya Debi v. Haridas Haldar, and they are not estopped from raising the contention of the invalidity of the sale-deed. Further in view of section 9 of the khoti act which prohibits alienation of a permanent tenancy the sale-deed would be invalid in law and would convey no interest to the defendants. So the only question left is whether this matter has been heard and finally decided.

In the former suit the second issue was: Do plaintiffs prove that the sale-deed is binding on the defendants though the lands might be Khoti? The finding was in the affirmative. The third issue was: Do plaintiffs prove that their possession was adverse against the defendants for more than 12 years and hence it had ripened into ownership when defendants entered into possession? The finding was that the possession of plaintiffs was adverse. There was no finding on the second part of the issue.

On appeal the District Judge after finding the sale-deed proved held that it was binding on defendants, and plaintiffs had proved their adverse possession against defendants.

On second appeal the defendants raised a number of points about the invalidity of the sale-deed under section 9 of the khoti act, but argued none of them. The High Court in their judgment in S.A No. 624 of 1919 say:—

“The only point raised in support of this appeal on behalf of the appellants (defendant No. 1) is that it should be made clear that the question whether his right to redeem under the mortgage of 1870 is barred by the sale-deed of 1882 is left open.”

The High Court held that it was left open. The question in that case was whether the sale-deed was binding on the defendants. The lower appellate Court held that it was binding. The question of its binding nature was not argued in the High Court, and must be taken to have been given up.

The view of the lower appellate Court was that the questions whether the sale of the equity of redemption was valid under section 9 of the khoti act, whether the defendants had lost their right to redeem the mortgage of 1870 as a result of that sale, and whether the possession of the plaintiffs was adverse to the defendants, on all of which questions the lower Court had recorded findings against the then defendants, were left open by the High Court, and the decree for possession in favour of the then plaintiffs was upheld apparently on the sole ground that the plaintiffs had long been in possession and that they were entitled to possession even as mortgagees. All that the High Court said was that the question of the right to redeem had not been considered, and

“as we read the judgment of the lower appellate Court, the question that has been decided is whether the plaintiff is entitled to possession under the sale-deed. To that extent the decision is right and no further question as to the validity of the sale as affecting the right of defendant No. 1 to redeem has been dealt with by the lower appellate Court or decided.

“Now it is true that the lower appellate Court in S.A No. 624 of 1919 said that under section 9 of the khoti act, occupancy rights are not transferable, and Exhibit 2 (the sale-deed of 1882) is invalid as far as the transfer of those rights go, cf. Yesa v. Sakharam, which lays down that a transferee from an occupancy tenant could at the very least claim that he had by the transfer obtained the rights of an ordinary tenant. As far as the defendants are concerned therefore they cannot deprive the plaintiffs of possession.”

This is the passage to which the High Court refer when they say that the lower Court correctly decided that the plaintiff is entitled to possession. If this be taken to mean that the plaintiffs by the transfer obtained the rights of an ordinary tenant, the occupancy tenancy rights remaining in defendants, it is difficult to see how the rights of an ordinary tenant including the right to possession could vest in one person while the occupancy tenancy rights, which presumably carry the right to possession, vested in another person.

But the District Judge found that the possession of plaintiffs from 1882 was adverse to the defendants. He recorded a finding that the plaintiffs proved their adverse possession for over 12 years against the defendants. There could be no adverse possession in the case of mortgagees. Therefore, the adverse possession must be attributed to the sale-deed. This finding was not attacked in appeal as it should have been. I have already pointed out that the only point argued in second appeal was that the question of the redemption of the mortgage was left open.

Either possession is adverse or it is not. If it is adverse for more than 12 years the equity of redemption must be extinguished. The learned Judge of first appeal has quoted a para from Rustomji's Limitation which says that

“If the mortgagee takes possession as mortgagee and thereafter the equity of redemption is sold to him by the mortgagor but the sale is invalid, the mortgagee cannot by merely asserting to hold as an absolute owner under such a sale change the original character of his possession as a mortgagee, and the article applicable to the mortgagor's suit would be 148 and not 144.”

This is no doubt correct, but unfortunately the District Judge in the former suit held that the plaintiffs' possession was adverse. This is binding between the parties: cf. Khedu Rai v. Sheo Parson Rai. This finding should have been attacked in second appeal. The defendant No. 1 made a second appeal to the High Court, and all his grounds of appeal were concerned with the invalidity of the sale, but for reasons best known to himself he confined himself in appeal to the question of whether his right to redeem was left open. The question of adverse possession was not argued in the High Court or considered by it. I think the finding as to adverse possession will operate as res judicata and the present suit must therefore fail.

The order of the lower appellate Court should be reversed and the suit dismissed.

Order set aside.

J.G.R