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Sourendra Mohan Singh v. Kunjbihari Lal Mander

Patna High Court
Dec 5, 1928
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Judgment Summary — Jwala Prasad, J. (with C.J. Courtney Terrell concurring)

Factual and Procedural Background

This opinion arises out of a mortgage suit in which the plaintiffs (mortgagees) obtained a decree for sale of mortgaged properties. The defendants (described in the opinion as landlords who had earlier obtained and executed rent decrees) had purchased the disputed holdings in execution of those earlier rent decrees and were in possession through their lessees. The defendants contended that because they had acquired a paramount title by purchase in execution of a prior charge they were not necessary parties to the mortgage suit and should be discharged. That contention had been raised previously in a second appeal and was overruled. A direction by Ross, J. had been recorded that the decree for sale of the mortgaged properties should be made “subject to the prior charge of the defendants 2nd and 3rd parties.”

The present opinion addresses whether that direction and the plaintiffs' entitlement to sell the holdings are correct in light of the nature of the holdings (occupancy/qaimi) and the relevant provisions of the Bengal Tenancy Act and earlier decisions of this Court. The Court ultimately sets aside the earlier order of this Court in Second Appeal No. 68 of 1925 and restores the order of the District Judge.

Legal Issues Presented

  1. Whether defendants who acquired the disputed holdings by purchase in execution of an earlier rent decree are necessary parties to the plaintiffs' mortgage suit and whether their rights should be determined in the present litigation.
  2. Whether holdings of the type in question (described as qaimi or occupancy) are transferable in the absence of proof of a custom or consent, such that a mortgage executed by the tenant could bind the landlords or a purchaser in execution of a mortgage could oust the landlord purchaser.
  3. Whether a decree for sale of the mortgaged properties should be made subject to the prior charge of the defendants who purchased in execution of rent decrees, or whether the plaintiffs are precluded from selling holdings already purchased and held in possession by those defendants.
  4. What statutory mechanism (if any) creates a relationship of prior and subsequent mortgagee between a landlord purchaser in a rent sale and an incumbrancer from the tenant, and whether that mechanism was invoked in this case.

Arguments of the Parties

Defendants (2nd party appellants) — Main contentions

  • The defendants had acquired paramount title by purchase in execution of a prior rent charge and thus were not necessary parties to the plaintiffs' mortgage suit; they should be discharged.
  • The holdings are non-transferable (being qaimi or occupancy holdings); therefore the mortgage is not binding upon the landlords who purchased the holdings in execution of rent decrees, and mortgagees cannot force themselves upon the landlords as tenants without the landlords' consent.
  • The plaintiffs cannot, by selling in execution of a mortgage decree, obtain possession against the landlord purchasers or their lessees merely because the mortgagee purchased at a mortgage sale.

Plaintiffs — As discernible from the opinion

  • The plaintiffs prosecuted the mortgage suit and obtained a decree for sale on the basis of their mortgage; Ross, J. directed that the sale be made “subject to the prior charge of the defendants 2nd and 3rd parties.”
  • According to the opinion, the plaintiffs did not plead or prove that the holdings were transferable by custom or by landlords' consent — i.e., they did not base their claim on a showing that the mortgage was binding upon landlords by virtue of transferability.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bhiram Ali Shaik Shikdar v. Gopi Kanth Shaha In absence of custom or local usage to the contrary, a raiyati holding in which the raiyat has only an occupancy right is not saleable at the instance of the occupancy raiyat or any creditor of his other than his landlord seeking satisfaction of a decree for arrears of rent. Used to support the presumption that occupancy/qaimi holdings are non-transferable unless plaintiffs prove transferability by custom or consent; supports plaintiffs' burden to show transferability.
Badlu Pathak v. Shibran Singh Held that a landlord purchaser of a non-transferable occupancy holding in execution of his rent decree can, qua landlord, ignore the mortgage without formally annulling the incumbrance under section 167 of the Bengal Tenancy Act; mortgagee who purchases under a mortgage decree cannot claim possession from such a landlord purchaser. Relied upon to conclude that a purchaser in execution of a rent decree (the landlord) has a right which permits him to ignore the mortgage vis-à-vis his position as landlord; supports the conclusion that mortgagees cannot force themselves on landlords as tenants.
Surat Lal Chowdhry v. Lola Murlidhar (and Lala Murlidhar v. Surat Lal Chowdhry) Held that the purchaser in execution of a rent decree (landlord purchaser) could not be redeemed by the plaintiff purchaser under a mortgage decree — the holding stood free of incumbrance as against the landlord purchaser. Applied as authority that a landlord purchaser's title to a non-transferable holding is not affected by a prior mortgage executed by the tenant; supports disallowing the mortgagee purchaser from claiming redemption or possession against the landlord purchaser.
Cheoditti v. Quadress Held that a purchaser in execution of a decree for road cess (included in definition of "rent" and thus a first charge) obtains the tenure free from incumbrances and is not affected by the mortgage charge; decision upheld on Letters Patent Appeal. Used to reinforce the proposition that enforcement of certain prior charges (e.g., rent) by sale can result in a purchaser taking the tenure free of incumbrances.
Har Gobind Das v. Ramchander Jha Distinguished the position of a landlord purchasing a non-transferable holding in a rent sale (who is to be considered qua landlord) from that of an ordinary third-party purchaser who steps into the shoes of the original tenant; in the former case the transfer by mortgage was not valid against the purchaser qua landlord. Relied upon to emphasize the distinct legal status of landlord purchasers in rent sales and to distinguish cases where the purchaser was a third party rather than the landlord.
Chowdhry Mahadeo Prasad v. Shaikh Azmat Decision concerned a purchaser in execution of a rent decree who was not the landlord but a third person; thus treated differently from landlord purchasers. Referenced to show factual distinction: the present case involves landlord purchasers (so Chowdhry Mahadeo Prasad is distinguishable).
S.M. Meherunnisa v. Shyam Sunder Bhwiya Laid down that a landlord purchasing a raiyati holding in execution of a rent decree takes it absolutely and is entitled to the property; in that case the mortgagee was regarded as a second mortgagee with the landlord's charge for rent as a prior charge. Relied on by respondents but the opinion notes limitations: it is not clear in that case whether the holding was transferable and there was no clear decision that the mortgagee could redeem as against the auction purchaser; thus the case is distinguished on the facts.

Court's Reasoning and Analysis

The Court proceeded through several analytical steps, applying statutory provisions and the line of preceding decisions of this Court:

  1. Necessity of Parties and Present Determination: The Court agreed with the earlier learned Judge that once the defendants had been impleaded in the mortgage suit their rights ought to be determined in that litigation. The Court observed practical consequences: if the defendants were deleted from the suit now, the mortgagees would proceed to sell the properties in execution of the mortgage decree and then attempt to evict the defendants by writs of delivery — producing inevitable subsequent litigation (often initiated under Order XXI, rule 100 and then a regular suit). To avoid protracted disputes the Court held the rights should be decided at this stage.
  2. Transferability of Occupancy/Qaimi Holdings: The Court examined the nature of the holdings under the Bengal Tenancy Act, citing sections 23–26 (incidents of occupancy right) and section 183 (with Illustration 2). It noted that sections 23–26 confer specific incidents (use, protection from ejectment except under decree, descent) but do not expressly confer a right of transfer as is done for permanent tenure-holders (sections 11 and 18). Section 183 (and its illustration) permits transferability only where a custom or usage exists that is not inconsistent with the Act.
  3. Presumption and Burden of Proof: The Court relied on the decision in Bhiram Ali Shaik Shikdar v. Gopi Kanth Shaha to hold that, in the absence of proof of a custom or usage to the contrary, a raiyati occupancy holding is presumed non-transferable. The plaintiffs had not pleaded or proved that the holdings were transferable by custom or consent; the defendants had pleaded non-transferability. Consequently the legal presumption of non-transferability stood, which dictated the analysis of competing rights.
  4. Effect of Sale by Mortgagee vs. Landlord Purchaser: The Court reviewed authorities (notably Badlu Pathak v. Shibran Singh and Surat Lal Chowdhry v. Lola Murlidhar / Lala Murlidhar v. Surat Lal Chowdhry) that had held that a landlord purchaser in a rent sale of a non-transferable occupancy holding could, in effect, ignore a mortgage executed by the tenant and need not formally annul the incumbrance under section 167 to vindicate his position as landlord. Those decisions established that a purchaser in a rent sale (particularly the landlord) acquires a tenure or holding such that a mortgagee who purchases under a mortgage decree cannot displace the landlord purchaser or their raiyat-settlee out of possession merely by virtue of the mortgagee's purchase.
  5. Statutory Procedure to Create Priority Between Incumbrancer and Landlord Purchaser: The Court analysed the statutory mechanism under section 171 of the Bengal Tenancy Act, which permits a person having an interest that would be voidable upon a rent sale to pay into Court the amount required to prevent the sale; the amount so paid becomes a mortgage of the tenure that takes priority over every other charge except a charge for arrears of rent, and the payor may retain possession as a mortgagee until his debt is discharged. The Court emphasized that this statutory provision is the only means expressly provided by the Act to create a relationship of prior and subsequent mortgagee in relation to a landlord's rent decree sale, and it can only operate if payment is made into Court before the sale.
  6. Application to the Present Case: In the present litigation the mortgagees had not availed themselves of section 171 (i.e., they did not pay into Court the amount requisite to prevent the rent sale before it occurred). The defendants had obtained rent decrees, sold and purchased the holdings and were in possession. Given the presumption of non-transferability and the authorities cited, to permit the mortgagees to sell the holdings subject to the defendants' prior charge would, the Court observed, enable the mortgagee “to force himself upon the landlords as a tenant without the latter's consent,” a position the Court rejected as contrary to the jurisprudential trend.
  7. Conclusion of Law: On this analysis, and following the trend of the decisions of this Court and the statutory scheme of the Bengal Tenancy Act, the Court concluded that the plaintiffs were not entitled to sell the holdings already purchased and possessed by the defendant landlords in execution of their rent decrees. Accordingly, the order of this Court in Second Appeal No. 68 of 1925 directing sale subject to the defendants' prior charge was set aside and the District Judge's order (which had refused such sale) was restored.

Holding and Implications

Core ruling: APPEAL ALLOWED; the order of this Court in Second Appeal No. 68 of 1925 (dated 22 February 1928) is set aside and the order of the District Judge is restored.

Direct consequences for the parties (as stated in the opinion):

  • The plaintiffs (mortgagees) are not entitled to sell the properties which the defendants 2nd party appellants had already purchased in execution of their rent decrees and in respect of which those defendants are in possession.
  • The defendants 2nd party appellants are entitled to their costs of the litigation throughout.
  • The appeal was formally allowed (the opinion concludes: “Appeal allowed.”), and Courtney Terrell, C.J. concurred.

Broader implications and precedent: The Court's decision applies existing statutory provisions of the Bengal Tenancy Act (particularly sections 23–26, 167, 171 and section 183 with its illustration) and follows a line of earlier decisions of this Court about the special legal position of landlord purchasers in rent sales of non-transferable occupancy holdings. The opinion does not state that it establishes a new legal principle beyond applying and following the existing authorities and statutory framework; its practical effect is to deny the mortgagees the relief of selling holdings already purchased and possessed by the landlord purchasers in this factual context.

Show all summary ...

Jwala Prasad, J.:— (after stating the facts set out above, proceeded as follows): It is contended that the defendants having acquired a paramount title by reason of their purchase in execution of a prior charge are not necessary parties to the plaintiffs' mortgage suit and they should be discharged from it. This contention was also raised in the second appeal and was overruled. I agree with the learned Judge that the defendants having been impleaded the rights of the parties should be determined in this litigation. If it is not determined now, it is bound to arise soon inasmuch as if the defendants are now deleted from this litigation the mortgagees will sell the mortgaged properties in execution of their mortgage decree unless redeemed and will try by means of a writ of delivery of possession to oust the defendants from the possession of the holdings in dispute. Such a dispute has always given rise to proceedings under Order XXI, rule 100, and thereafter to a regular suit. It will save protracted dispute and litigation between the parties by determining their respective rights at this stage and this happened whenever a purchaser in execution of a rent decree has been made party in a mortgage suit. The contention is overruled, and the rights of the parties must now be determined.

Ross, J., has determined it by directing that the decree for sale of the mortgaged properties should be made

“subject to the prior charge of the defendants 2nd and 3rd parties.”

The learned Advocate on behalf of the defendants appellants contends that such a direction is wrong, inasmuch as the holdings are non-transferable and the mortgage is not binding upon the landlords and the mortgagees can acquire no right against the defendants landlords who have purchased the holdings in question and are in possession thereof through their lessees defendants 3rd party and the mortgagees cannot force themselves upon the landlords as tenants thereof without their consent. This point was not dealt with by the learned Judge of this Court upon the ground that it was not open to the defendants to contend that the holdings were not transferable inasmuch as though

“It was pleaded that the holdings were not transferable but no issue was raised.”

The learned Advocate on behalf of the defendants appellants contends that the holdings being qaimi or occupancy were presumably non-transferable until it was shown by the plaintiffs that they were transferable by custom or consent obtained from the landlords. He says that non-transferability is an ordinary incident of an occupancy holding and it will be presumed under the law to be so until the contrary is shown. The contention seems to be sound and is borne out by an analysis of the status and incidents of occupancy holdings under the Bengal Tenancy Act. Sections 23 to 26 deal with the incidents of occupancy right. Section 23 entitles the holder of such a right to use the land in any manner which does not materially impair the value of the land or render it unfit for the purpose of tenancy. Section 25 protects the holder of an occupancy right from an ejectment by his landlord except in execution of a decree. Section 26 makes such a right descendable to heirs like any other immoveable property. No right of transfer has been expressly conferred upon the holder of an occupancy right as in the case of a permanent tenure-holder and raiyats holding at fixed rates, respectively, by sections 11 and 18 of the Act. On the other hand, section 183, read with Illustration 2 of that section, makes it clear that such a right can be acquired only by custom or usage being not inconsistent with or expressly or by implication modified or abolished by the provisions of this Act and such a

“custom or usage accordingly whenever it exists will not be affected by the Act.”

In consonance with the aforesaid provisions of the Act it was held in the case of Bhiram Ali Shaik Shikdar v. Gopi Kanth Shaha that in the absence of custom or local usage to the contrary a raiyati holding in which the raiyat has only a right of occupancy is not saleable at the instance of the occupancy raiyat or any creditor of his other than his landlord seeking to obtain satisfaction of his decree for arrears of rent. The plaintiffs mortgagees did not base their claim in the plaint upon the ground that the mortgage was binding upon the landlords, on the ground that the holdings were transferable by custom or consent. The defendants landlords pleaded that the holdings were non-transferable. It was for the plaintiffs to show that they were transferable, and they have not done, so. Consequently the presumption of law remains that the holdings were non-transferable. Upon this basis the rights of the parties should be determined.

Now, if the plaintiffs are allowed to sell the holdings in question in execution of their mortgage decrees, the purchaser will not be entitled to oust the landlords from their possession through their lessees of the holdings purchased by them in execution of their rent decrees in spite of the fact that they did not annul the incumbrance under section 167 of the Bengal Tenancy Act. This is concluded by the authorities of this Court. The last case is that of Badlu Pathak v. Shibran Singh decided last year by Sir Dawson Miller, C.J and Adami, J. There also the mortgage was not annulled under section 167 of the Bengal Tenancy Act. It was held that a landlord purchaser of a non-transferable occupancy holding in execution of his decree for rent can, qua landlord, ignore the mortgage of such a holding without formally annulling the incumbrance under section 167 of the Bengal Tenancy Act, 1885. A mortgagee of a non-transferable occupancy holding, who has obtained a decree on the mortgage and purchased the property in execution, cannot claim possession from the landlord who has purchased the holding in execution of a decree for rent, or from the; raiyat settled on the land by the landlord, although the landlord purchaser did not annul the mortgage under section 167 of the Bengal Tenancy Act. As to the mortgagee's right to redeem the landlord by payment of rent charge under section 83 of the Transfer of Property Act, or to share any surplus proceeds second mortgagee his Lordship the Chief Justice observed that “Even had proceedings been taken under section 83 (of the Transfer of Property Act), I apprehend that when the plaintiffs came to take possession they would still have been in difficulty unless the landlord consented to accept them as tenants”. Continuing his Lordship says, “The truth would appear to be that the transferee of a non-transferable occupancy holding, whether he takes by kabala from the original tenant, or whether he acquires the property by purchase under a mortgage decree, has a very precarious right, for he cannot force himself upon the landlord as a tenant without the latter's consent.” The decision given in this case was in accordance with an earlier decision in the case of Surat Lal Chowdhry v. Lola Murlidhar. Ross, J., himself, Courts, J., concurring, took a similar view in the case of Lala Murlidhar v. Surat Lal Chowdhry. His Lordship disallowed the plaintiff purchaser of a non-transferable holding in execution of a decree on a mortgage executed by the original tenant to redeem the defendant purchaser of the holding in execution of a rent decree. He held that the holding stood free of incumbrance and the plaintiff was not entitled to redeem. Mullick, J., took a similar view in the case of Cheoditti v. Quadress where he held that the purchaser in execution of a decree for road cess, which is included in the definition of “rent” and consequently is a first charge on the property, obtains the tenure free from incumbrances and is not affected by the mortgage charge. This was upheld: in Letters Patent Appeal by Sir Dawson Miller, C.J and Coutts, J. In the case of Har Gobind Das v. Ramchander Jha, Adami, J., Macpherson, J., concurring, drew a distinction between the position of a landlord purchasing a non-transferable holding in a rent sale and that of an ordinary 3rd party purchaser who in fact steps into the shoes of the original tenant and becomes a tenant of the landlord, whereas the position of a landlord purchasing in execution of a rent decree is that of an ordinary purchaser pins his position as a landlord which “has to be considered separately” and the transfer by mortgage was not valid against the purchaser qua the, landlord. That distinguishes the case of Chowdhry Mahadeo Prasad v. Shaikh Azmat relied upon by the respondents, where the purchaser in execution of a rent decree was not the landlord but a third person. Adami, J., was a party to that decision also as well as to the recent decision of Badlu Pathak v. Shibram Singh already referred to. On behalf of the respondents reliance is also placed on the case of S.M Meherunnisa v. Shyam Sunder Bhwiya. That case laid down that a landlord purchasing a raiyati holding in execution of a rent decree takes it absolutely and is entitled to the property, but the learned Judges regarded the mortgagee as a second mortgagee, the landlord's charge for rent being a prior charge. But as pointed out by Adami, J., in the case of Har Gobind Das v. Ramchander Jha already referred to, there was no actual decision in that case that the mortgagee could have a right to redeem as against the auction purchaser. It is also not known whether the holding in that case was transferable or not, and this distinguishes that case from the present one. It has often been said that the position of a landlord having a rent decree is that of a holder of a prior mortgage in relation to a mortgage executed by the tenant, the mortgagee from the tenant being-deemed to be a subsequent mortgagee and thus having a right to redeem the landlord's charge by, paying up the decree and the arrears of rent. The position of a first or prior mortgagee to the landlord is assigned merely by reason of the rent having been declared by section 65 to be a first charge on the property. The Bengal Tenancy Act has laid down the procedure by which the first charge of a landlord is to be enforced and that is indicated by section 158B of the Bengal Tenancy Act, namely, that where as tenure or holding is sold in execution of a decree for arrears of rent thereof the tenure or holding shall, subject to the provisions of section 22, pass to the purchaser, and not merely the right, title and interest of the tenant. The purchaser acquires a tenure or holding with power to annul the interest defined as incumbrance by adopting the procedure laid down in section 167 of the Act. Nowhere in the Act has it been said that the holder of an incumbrance from the tenant has the position of a subsequent mortgagee in relation to the landlord obtaining a decree for arrears of rent as a first charge. Section 171 entitles a person having an interest, which would be voidable upon the sale, to pay into Court the amount requisite to prevent the sale of a holding advertised for sale in execution of a rent decree. If he does so pay into Court, the amount paid by him shall be deemed to be a debt “secured by a mortgage of the tenure or holding to him,” and this mortgage of his shall take priority of every other charge on the tenure or holding other than a charge for arrears of rent; and then he shall be entitled to retain possession of the tenure or holding as a mortgagee of the tenant until his debt has been discharged. This is the only way in which the relationship of a first and subsequent mortgagee is created by the express statutory provision under section 171 and that is only after the incumbrancer has paid into Court “the amount requisite to prevent the sale before the sale takes place in execution of a decree for rent obtained by the landlord”. Thus, where a rent decree is not satisfied by payment into Court before, the sale no such relationship of prior or subsequent mortgagee is created between the landlord holding a decree for rent and the incumbrancer. In the present case no such payment was made by the mortgagees, although they obtained the mortgage from the tenant subsequent to a large portion of the rent having accrued in respect of which the defendants landlords obtained rent decrees and sold the holdings and purchased the same themselves. To permit the mortgagees in the present case to sell the holdings in question subject to the prior charge of the defendants appellants, who have already purchased the holdings and are in possession thereof, would be to enable him to “force himself upon the landlords as a tenant without the latter's consent”, a position which was deprecated by his Lordship Sir Dawson Miller, C.J, in the case of Badlu Pathah v. Shibram Singh already referred to.

Thus, following the trend of decisions in this Court and upon an appreciation of the various provisions in the Bengal Tenancy Act, I think that the only way in which the rights of the parties can be adjusted in this litigation is to hold that the plaintiffs are not entitled to sell the holdings already purchased by the defendants 2nd party appellants in execution of their rent decrees, possession whereof they have already obtained.

I would, therefore, set aside the order passed by the learned Judge of this Court in Second Appeal no. 68 of 1925, directing the sale of the properties in execution of the mortgage decree of the plaintiffs subject to the prior charge of the defendants 2nd and 3rd parties, and in agreement with the view of the learned District Judge would hold that the plaintiffs are not entitled to sell the said properties.

The result is that the order passed by this Court in Second Appeal no. 68 of 1925, dated the 22nd of February, 1928, is set aside and that of the District Judge is restored. The defendants 2nd party appellants are entitled to their costs of this litigation throughout.

Courtney Terrell, C.J:— I agree.

Appeal allowed.