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  • s. 100, T. P. Act,
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Structured Summary of the Opinion

Factual and Procedural Background

This matter arises out of a preliminary decree for partition of the properties of a tarwad, as settled by a judgment in S.A. No. 690 of 1124 (Travancore-Cochin High Court). In an earlier suit (O.S. 1239 of 1102) the deceased 43rd defendant had purchased an item of property in execution of a decree. The purchase was subsequently set aside by the judgment in S.A. No. 690 of 1124, subject to a charge in her favour over the property for the sale amount and for the value of improvements effected by her, and to a right to remain in possession until payment of the amount due to her.

In execution of the partition decree, the 62nd defendant (to whom part of the property was allotted) attempted to obtain possession. A dispute arose between him and the 68th defendant (impleaded as the legal representative of the 43rd defendant and the appellant in this appeal) concerning the value of improvements payable to the latter. A commission assessed the value of improvements by the customary method (i.e., without applying the Kerala Compensation for Tenants' Improvements Act, Act XXIX of 1958). The appellant contended that the 43rd defendant was a "tenant" under that Act and that improvements should be valued under the Act; the courts below rejected that contention.

Legal Issues Presented

  1. Whether the 43rd defendant was a "tenant" within the meaning of section 2(d) of the Kerala Compensation for Tenants' Improvements Act (Act XXIX of 1958), such that the value of improvements ought to be assessed under the Act.

Arguments of the Parties

Appellant's Arguments

  • The appellant asserted that the 43rd defendant fell within the definition of "tenant" under section 2(d)(iii) of the Act: "a person who comes into possession of land belonging to another person and makes improvements thereon in the bona fide belief that he is entitled to make such improvements."
  • Greater emphasis was placed on section 2(d)(i): that a person "as lessee, sub-lessee, mortgagee or sub-mortgagee or in good faith believing himself to be lessee, sub-lessee, mortgagee, or sub-mortgagee of land, is in possession thereof" — the appellant argued that by virtue of the decree in S.A. 690 of 1124 the 43rd defendant obtained a charge and a right to continue in possession, which ipso facto resulted in a mortgage-like status making her a "tenant" under clause (i).
  • On this basis the appellant insisted the improvements ought to be valued pursuant to the Act rather than by the customary method applied by the commission.

Respondent's Arguments / Cross-Objection

  • The respondent (62nd defendant) filed a cross-objection contending that the lower appellate court had allowed the full value of the reclamation to the appellant without making any deduction for the expenses of planting the reclaimed area, which had been separately assessed. The respondent observed that the execution court had made a deduction of one-third (without stating reasons).
  • The respondent pressed that a deduction ought to have been made, but the Court declined to entertain that point because it did not appear to have been raised in the courts below in the form presented in the cross-objection.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Gopal v. Parsotam, 5 All. 121 at 137 The definition of "mortgage" in section 58 of the Transfer of Property Act accurately formulates the notion of mortgage as understood in Indian law. Quoted to support the proposition that a mortgage must be as defined in the Transfer of Property Act and cannot be loosely conceived otherwise; used to reject the appellant's contention that the decree effectively created a mortgage.
Srinivasa Raghava Iyengar v. K. R. Raghunatha Iyengar, A.I.R. 1919 Madras 528 at 530 Where a charge is created by law and not by act of parties, it is not a mortgage (because mortgage under s.58 contemplates creation by the intentional act of the mortgagor). Relied upon to distinguish a charge (including charges arising by operation of law or decree) from a mortgage created by transfer under the Transfer of Property Act.
Balasubramani Nadar v. Sivagura Asari, 11 I.C. 629 at 632 Proposes the same test to distinguish a charge from a mortgage. Used to reinforce the distinction between charge and mortgage in the court's analysis.
Lakshmanan Mariady v. Narasimha Aiyan Ranga Rao, 10 T.L.R. 147 Case involved transfers within the definition of section 5 of the Transfer of Property Act. Distinguished as inapplicable because it dealt with transfers (i.e., deliberate transfers under s.5) rather than charges by decree or operation of law.
Krishnan Sivaramakrishna Pillai v. Sankaran Narayan Pillai, 22 T.L.J. 1127 Case involved transfers within the definition of section 5 of the Transfer of Property Act. Distinguished as inapplicable for the same reason as Lakshmanan Mariady — it concerned a transfer as defined by s.5.
Raj Raghubar Singh v. Jai Indra Bahadur Singh, 42 All. 158 at 167 Authority supporting the proposition that a court cannot and does not make a "transfer of property" as defined; a decree itself cannot transfer property. Quoted to support the court's conclusion that a decree or court sale does not effect a transfer in the sense required for a mortgage under the Transfer of Property Act.
Sayid Wajid Ali Shah v. Mussamat Umrai Bibi, (1940) 1 All. L.J. 621 Authority that a decree itself cannot transfer property. Adduced to support the view that court decrees and court sales do not effect transfers in the statutory sense necessary to create a mortgage.
Mangal Lal v. Gasi Khan, A.I.R. 1929 All. 800 In an auction sale there is no person who conveys; hence, transfer (in the sense of s.5) does not occur through auction or court sale. Applied to show that court sale/delivery does not amount to a transfer as defined in the Transfer of Property Act.
Bapurao v. Narayan, A.I.R. 1950 Nag. 117 Hidayatullah, J. (as he then was) held that a charge created by decree may be regarded as a charge by operation of law (indicative of a contrary view adopted by some High Courts). Noted as a contrary authority (Madras and Bombay High Courts and this decision have held a charge by decree may be by operation of law) but the court said it was unnecessary to pursue this question further in the present case.

Court's Reasoning and Analysis

The court's analysis proceeded in several discrete steps, driven by the statutory definition of "tenant" in section 2(d) of the Kerala Compensation for Tenants' Improvements Act and by established principles distinguishing charges from mortgages under the Transfer of Property Act.

1. Statutory framing: The court first examined the statutory definition of "tenant" in section 2(d), which contains three illustrative clauses: (i) persons in possession as lessee, sub-lessee, mortgagee or sub-mortgagee (or those in bona fide belief of being such); (ii) persons who cultivate without permission believing they will attorn and pay rent; and (iii) a person who comes into possession of land belonging to another and makes improvements in the bona fide belief he is entitled to make such improvements.

2. Construction of clause (iii): The court emphasised that the Act was intended to extend the category of those who, upon eviction, may claim value of improvements, and that the extended notion generally contemplates some form of derivative possession (possession under or in relation to another). Clause (iii) must be read as envisaging derivative possession in this extended sense, requiring two conditions: (a) ownership in another, and (b) the requisite bona fide belief in making improvements. Applying that construction, the court held that a person who enters possession pursuant to a court sale in his favour comes into possession of property belonging to himself (i.e., he becomes owner) and therefore improves as owner; the "belief" referred to in clause (iii) is wholly irrelevant to such a purchaser-owner. Consequently clause (iii) did not apply to the 43rd defendant.

3. Analysis of clause (i) and the mortgage argument: The appellant's alternative contention under clause (i) rested on the premise that the decree in S.A. 690 of 1124, by creating a charge in favour of the 43rd defendant and guaranteeing her continued possession until payment, effectively made her a mortgagee (and thus a "tenant" under clause (i)). The court rejected this contention for the following reasons:

  • A mortgage, as understood in Indian law, is governed by the Transfer of Property Act (see s.58) and involves a "transfer" of interest in specific immovable property — a transfer being an act by which a living person conveys property (s.5).
  • A transfer, in this statutory sense, cannot be effected by operation of law or by a court decree; a court is not a juridical person that can transfer property in the sense required for a mortgage, and a decree or court sale does not effect a transfer under s.5.
  • Accordingly, the charge and the right to remain in possession created by the judgment in S.A. 690 of 1124 could not be equated to a mortgage; at most the judgment created a charge and a conditional right to possess until payment (akin to a lien or possessory right), but not a transfer creating a mortgagee status under the Transfer of Property Act.

4. Conclusion from the above analysis: Because the 43rd defendant did not possess derivative possession under another (as contemplated by clause (iii)) and was not a mortgagee as required by clause (i) (no transfer creating a mortgage took place), she did not come within the statutory definition of "tenant" in section 2(d) of the Act. The courts below were therefore justified in rejecting the appellant's claim that the value of improvements should be assessed under the Act rather than by the customary method used by the commission.

5. On the respondent's cross-objection about deductions for planting expenses: The court noted the procedural point that the specific form of the point raised in the cross-objection did not appear to have been raised in the courts below, and declined to entertain or decide that issue.

Holding and Implications

Holding: Both the appeal and the cross-objection are dismissed.

Direct consequences and implications:

  • The appellant's claim that the 43rd defendant was a "tenant" under section 2(d) of the Kerala Compensation for Tenants' Improvements Act and thereby entitled to have improvements valued under the Act is rejected.
  • The effect of the earlier judgment (S.A. 690 of 1124) is characterised as creating a charge and a conditional right to possession (akin to a lien) until payment is made; it did not effect a transfer so as to make the 43rd defendant a mortgagee under the Transfer of Property Act.
  • The appellant is ordered to pay the full costs of the respondent; there is no order as to costs in respect of the cross-objection.
  • The court declined to entertain the respondent's contention on deduction for planting expenses because that point, in the form presented, was not raised below.

The opinion does not purport to establish a broad new legal precedent beyond its application to the facts before it; its outcome is the dismissal of both the appeal and the cross-objection and the costs order stated above.

    Chempaka Pillai v. Nadaraj A Pillai

    1. By the preliminary decree for partition, Of the properties of a tarwad", As settled by the judgment of the travancore - cochin high court in s. A. No. 690 of 1124, The purchase made by the deceased 43rd defendant of an item of property in execution of the decree in o. S. 1239 of 1102 was set aside, Subject to a charge in her favour over the property, For the sale amount and for the value of improvements effected by her, And to her right to be in possession till the payment of the amount due to her. In execution of the partition decree, When the 62nd defendant, To whom apart of the property was allotted on partition, Attempted to obtain possession, A dispute arose between him and the 68th defendant who was impleaded as the legal representative of the 43rd defendant, And is the appellant here, As to the value of improvements payable to the latter. A commission which was issued, Assessed the value of improvements according to the customary method, I. E., Irrespective of the provisions of the kerala compensation for tenants improvements act, Act xxix of 1958, Or shortly the act. The appellant however claimed to be a "tenant" within the meaning of the definition of the term in s. 2 (d) of the act, And insisted, That the improvements ought to be valued pursuant to the provisions of the act. The courts below have negatived the claim.

    2. The only point to be decided in the appeal is, Whether the 43rd defendant was a "tenant" under the act. In the courts below, This contention was founded on s. 2 (d) (iii) of the act, Which runs as follows:

    s. 2 (d). "'tenant' with its grammatical variations and cognate expressions' includes"

    (iii)

    "a person who comes into possession of land belonging to another person and makes improvements thereon in the bona fide belief that he is entitled to make such improvements."

    this contention was repeated in this court too, But greater stress was laid on s. 2 (d) (i) of the act which reads thus:

    "a person who, As lessee, Sub - lessee, Mortgagee or sub - mortgagee or in good faith believing himself to be lessee, Sub - lessee, Mortgagee, Or sub - mortgagee of land, Is in possession thereof."

    for the sake of completeness, The remaining clause may also be quoted:

    (ii)

    "a person who with the bona fide intention of attorning and paying a reasonable rent to the person entitled to cultivate or let waste - land, But without the permission of such person, Brings such land, Under cultivation and is in occupation thereof as cultivator."

    3. The basic facts have to be kept in view. The hypothecation bond on which the 43rd defendant sued and obtained the decree in 0. S. 1239 of 1102 was found to be supported by consideration and necessity, But the purchase by her in execution was held to be invalid, By the judgment in s. A - 690 of 1124. The purchase by the 43rd defendant was evidenced by ext. V certificate dated the 17th karkadakam 1106. She thereby became the owner, And reduced the property to her possession, Through court delivery, On the 29th karkadakam,1107. The judgment in s. A. 690 of 1124 was pronounced several years later, On the 20th october 1953.

    4. To put it simply and shortly, A tenant is one who holds or possesses land or property under another; what underlies this concept, Is certainly one of derivative possession. One of the objects of the act being to define, As widely as possible, If not to enlarge, The category of those, Who, Upon eviction from their holdings, May claim the value of improvements which they may have effected, The act has extended the concept outside its strict limits, So as to take in those, Who, If not by mutual agreement, Unilaterally and subjectively by reason of their bonafide intention or belief, Hold under others. This extended notion underlies the latter part of clause (i), And the whole of clause (ii) of the definition in s. 2 (d). There is no reason to think, That this is not true of clause (iii) also, Though in one view, This may be deemed to be a residuary clause.

    5. So understood clause (iii) also envisages a case of derivative possession in the extended sense explained above, Which must fulfil the two conditions prescribed, Of ownership in another, And of the requisite "belief" in making the improvements. The latter part of clause (iii) has therefore to be read in conjunction with, And supplementary to, The earlier part. A person who therefore enters possession in pursuance of a court sale in his favour, Does come into possession of property belonging to himself and not to another, And when he improves it, He does so as owner, His "belief" in making the improvements being wholly irrelevant. I am therefore of the view, That the courts below were justified in rejecting the appellant's claim on the basis of clause (iii).

    6. The argument based on clause (i), Was, That by virtue of the decree in s. A. 690 of 1124, The 43rd defendant obtained a charge and also a right to continue in possession, And that this ipso facto resulted in a mortgage. I cannot accept this argument. To me, It seems impossible to conceive of a mortgage, Except as defined in the transfer of property act, Or in accordance with the principles of that act in cases not governed by it. The learned counsel for the appellant has not pointed out one instance, Either from the text books or from decided cases, Where a notion like this has been entertained. Speaking of the definition of a mortgage in the transfer of property act, Mahmood, J. Observed as follows in gopal v. Parsotam, 5 all. 121 at 137:

    "mortgage as understood in this country cannot be defined better than by the definition adopted by the legislature in s. 58 of the transfer of property act. That definition has not in any way altered the law, But on the contrary, Has only formulated in clear language, The notions of mortgage as understood by all the writers of text books on indian mortgages. Every word of the definition is borne out by the decisions of the indian courts of justice."

    7. It is therefore to the definition in the transfer of property act, That one must turn, In order to understand what a mortgage is. A mortgage involves a "transfer" of an interest in specific immovable property. A transfer means, In terms of s. 5 of that act:

    "an act by which a living person conveys property to one or more other living persons and to 'transfer property' is to perform such act."

    8. While a charge under s. 100, T. P. Act, May be created by act of parties or by operation of law, A transfer as defined, Can never take place by operation of law. This has become so well - established, As to be one of the important distinguishing principles between a charge and a mortgage. Sadasiva jyer, J. Observed thus in srinivasa raghava iyengar v. K. R. Raghunatha iyengar, A. I. R. 1919 madras 528 at 530 (2) :

    "where it (a charge) is created by law and not by act of parties, It is of course, Not a mortgage, As the definition of a mortgage under s. 58 contemplates the creation of the mortgage by the intentional act of a private person called the mortgagor who transfers the mortgage interest in favour of the mortgagee."

    9. The same test to distinguish a charge from a mortgage, Was proposed in balasubramani nadar v. Sivagura asari,11 i. C. 629 at 632. The two cases lakshmanan mariady v. Narasimha aiyan ranga rao, 10 t. L. R. 147 and krishnan sivaramakrishna pillai v. Sankaran narayan pillai, 22 t. L. J 1127, Were both cases of transfers within the definition of s. 5 of the transfer of property act, And have no application.

    10. Counsel for the appellant contended, That a charge created by a decree of court, Is not a charge by operation of law, Within the meaning of s. 100 of the transfer of property act. This has really nothing to do with the distinction pointed out already, Once it is realised, That a court cannot and does not make a "transfer of property" as defined. A court is not a juridical person and cannot hold or assign property. Raj raghubar singh v. Jai indra bahadur singh 42 all. 158 at 167. A decree itself cannot transfer property, Sayid wajid ali shah v. Mussamat umrai bibi (1940) 1 all. L j. 621; nor is a court sale such transfer. As observed in mangal lal v. Gasikhan, A. I. R. 1929 all. 800 "for transfer there must be a person who conveys in the case of an auction sale, There is no person who conveys". At the same time, It must be observed, That the proposition that a charge created by a decree is not one created by operation of law, Is open to doubt, And courts are not uniform in their opinion. The madras and bombay high courts have held, That it is a charge by operation of law. Hidayutallah, J., As he then was, Has taken the same view in bapurao v. Narayan a. I. R, 1950 nag. 117. However, It is unnecessary to pursue this matter,

    11. The 43rd defendant came into possession in the year 1107 under the court delivery. This certainly did not amount to a mortgage, Nor was it contended to be so. There was no transfer in any sense of the term, Even of possession, By the judgment in s. A. 690 of 1124, Assuming it to be capable of making a transfer, Because the 43rd defendant had been in possession all the time. It may be, That her right was guaranteed to continue in possession till the amount due to her is paid, And this may partake of the nature of a lien, Which, As supposed, Is not altogether unknown in india, Even with respect to immovable property; for example, See instances of such liens over immovable property mentioned by rashbehari ghosh in "the law of mortgage in india", 4th edition, Vol. I, Pages 111, 126,127, And of a possessory lien of an agent over immovable property, See page 140 of the same book, And s. 221 of the indian contract act, Not to mention the lien of an unpaid vendor which has been enacted as a charge in s. 55 (4) (b) of the transfer of property act. It seems to me, That the right and the proper view to take, Of the effect of the judgment in s. A. 690 of 1124 is, That while it created a charge in favour of the 43rd defendant, It made also the recovery of the property from her, Prayed for by the tarwad members claiming partition, Conditional upon their paying the full amount due to her; this affected only the nature or the substance of the relief granted in the suit.

    12. On the principles discussed above, There is no reason to hold, That by virtue of the directions in the judgment referred to, The 43rd defendant became a mortgagee of the properties. She was not therefore a "tenant" within the meaning of clause (1) of s. 2 (d) of the act, And her prayer for assessing the improvements pursuant to the provisions of the act, Was rightly dismissed.

    13. The respondent, The 62nd defendant, Has preferred a cross - objection, In that, The lower appellate court allowed the full value of the reclamation to the appellant, And did not make any deduction from it, On account of the expenses of planting the reclaimed area, Which had been separately assessed. While it is true, That the execution court had made a deduction of 1/3rd stating no reason therefor, It does not appear, That the point taken in its present form, Had been raised in the courts below, And i therefore decline to go into it.

    14. No other point was pressed in the appeal and in the cross - objection, Which are both dismissed; but in the appeal the appellant shall pay the full costs of the respondent. No order for costs in the cross - objection.

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    Chempaka Pillai v. Nadaraj A Pillai
    (Jul 21, 1959)