Citation Codes

Equivalent Citations

citation codes

Case Number

Appeals Nos. 2134 and 2364 to 2366 of 1915

Judges

Mullick
Jwala Prasad, JJ.

Acts

provisions of the Bills of Sale Act,

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Smart Summary

Judicial Opinion Summary — Second Appeal (Mullick, J.)

Factual and Procedural Background

On 14 August 1896 defendants 1 and 2 and their father Mahabir Singh executed a mortgage in favour of the plaintiff in respect of shares in several mouzas, including 200 bighas of zerait land. Of those 200 bighas, 50 bighas were left in the possession of the mortgagors “as licensees” with a nominal rent of 8 annas per bigha. By a kabuliyat dated 25 September 1902 a further area of 4 bighas 10 cottahs (described as jungle land) was let to the defendants at a rental of Rs. 14-5-6.

The defendants in the suit included (1) the mortgagors, (2) subsequent mortgagees, and (3) persons recorded as raiyats on the zerait lands. The plaintiff sued for arrears of rent and for khas possession in terms of the mortgage.

The Munsif found that the occupiers had acquired occupancy rights in all the lands and granted only the claim for rent. On appeal, the Subordinate Judge held that occupancy rights had been acquired in the jungle lands but not in the 50 bighas of zerait land (which, he held, fell under Section 116 of the Bengal Tenancy Act), and decreed the suit for rent; he directed that if the mortgagors paid arrears under Section 66 within 15 days they would be exempted from ejectment. He dismissed the suit for ejectment with respect to the jungle land. The plaintiff pursued this second appeal.

Legal Issues Presented

How should the clause relating to the letting of the 50 bighas be construed — was it an attornment creating a landlord‑tenant relationship or a mere condition of the mortgage (i.e., an arrangement akin to a license) whose stipulated payment was, in substance, security for principal and interest?
If the clause is an attornment, does it create a tenancy governed by rent law (and therefore expose the mortgagee to the consequences of tenancy law such as acquisition of occupancy rights)?
What is the legal effect of the kabuliyat of 25 September 1902 (letting of 4 bighas 10 cottahs) — did it create a tenancy and thereby bring rent law into operation for that portion?
What is the status of the mortgagors and other persons in possession of the zerait lands under the Bengal Tenancy Act (occupancy raiyats vs non‑occupancy raiyats), and can a point not raised in the lower appellate court be raised for the first time in this Court?

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent / Statute	Rule or Principle Cited For	Application by the Court
Bills of Sale Act (referred to in text)	Registration requirement under the Act prevents the landlord (mortgagee) from levying distress in the ordinary way; affects incidents of attornment.	The Court noted that, apart from the registration requirement under the Bills of Sale Act, other incidents of landlord‑tenant relations operate if attornment is clearly created.
Daubuz v. Lavington	English authority showing that attornment can create an express tenancy coexisting with mortgage relationship.	Used as part of the exposition of English law: if a tenancy is clearly created in the mortgage deed, the landlord‑tenant relationship may subsist alongside mortgagor‑mortgagee relations.
Isherwood, Ex parte	Illustrative English decisions concerning attornment/tenancy by mortgagor.	Referred to as supporting English law position that express tenancy may be created by mortgage instrument.
Knight, In re	Illustrative English decisions concerning attornment/tenancy by mortgagor.	Referred to in the same context as the other English authorities about coexistence of tenancy and mortgage.
Hall v. Comfort	Illustrative English decision on the legal incidents of attornment.	Referred to for the proposition that an express attornment can create landlord‑tenant incidents (subject to statutory qualifications such as the Bills of Sale Act).
Nanu v. Raman	Authorities holding that courts should look to the real intention of the parties and that mortgage + lease may constitute one transaction.	Grouped with similar authorities to support the view that arrears called "rent" may in substance represent a charge for principal and interest if that was the parties' intention.
Altaf Ali Khan v. Lalta Prasad	Supports examining real intention; rent may be treated as charge on mortgaged property.	Relied on to justify treating the stipulated payments as principal/interest when the transaction so indicates.
Imdad Hasan Khan v. Badri Prasad	Authority on examining substance/real intention in mortgage + lease contexts.	Used to support the approach that courts may treat alleged rent as security for the mortgage debt.
Madhwa Sidhanta Onahini Nidhi v. Venkataramanjulu Naidu	Similar principle: look to real intention; mortgage and lease may be one transaction.	Included among authorities favouring treating stipulated rent as charge when intention so indicates.
Baghelin v. Mathura Prasad	Supports the proposition that the real intention of parties controls characterization of payments as rent or mortgage charge.	Grouped with other authorities to support construing the transaction as mortgage (payments as principal/interest) when justified by intention.
Chimman Lal v. Bahadur Singh	Holds that where leases are executed subsequent to the mortgage‑deed they may show an intention to create tenancy rather than continue mortgage relationship.	The Court treated this as authority for the general proposition that facts determine intention; it noted such cases are fact‑sensitive and considered them in assessing the separate 1902 letting.
Khuda Bakhsh v. Alimunnissa	Similar to Chimman Lal: subsequent leases may evince intention to create tenancy.	Relied on for the principle that subsequent deeds may demonstrate an intention to create landlord‑tenant relations; applied to distinguish the 1902 letting from the mortgage clause.
Bengal Tenancy Act, Section 116	Described as affording protection against the acquisition of occupancy rights (as referenced by the Court).	The Court accepted the Subordinate Judge's finding that the 50 bighas were zerait land and that the protection of s.116 applies (i.e., the tenancy‑law consequences are relevant to that classification).
Bengal Tenancy Act, Section 66	Procedural provision referenced by the Subordinate Judge permitting exemption from ejectment if arrears paid within specified period.	The Subordinate Judge had directed that payment of arrears under s.66 within 15 days would exempt mortgagors from ejectment; the point is noted in the procedural history relied on by the Court.
Bengal Tenancy Act, Section 4	Enumerates classes of raiyats (referenced in the opinion in relation to who qualifies as a raiyat under the Act).	The Court observed that the Act does not contemplate a raiyat outside the classes in s.4, and said that mortgagors held not to be occupancy raiyats must be non‑occupancy raiyats.

Court's Reasoning and Analysis

The Court began by identifying the principal question: whether the clause permitting the mortgagors to remain in possession of the 50 bighas on payment of a nominal sum operated as an attornment (creating landlord‑tenant status) or was merely a condition of the mortgage that secured principal and interest.

On close analysis of the mortgage bond, the Court concluded that the relationship of landlord and tenant was not created by the stipulation in the deed. The arrangement was characterized as one by which the mortgagor was permitted to remain in possession in a license‑like capacity rather than as an attornment. The Court emphasized that the stipulated rent (8 annas per bigha) was not a fair and reasonable rent and observed that a prudent mortgagee would not, ordinarily, expose himself to the risk of creating tenancy rights in the mortgagor by stipulating such an inadequate rent. The Court regarded construction that creates tenancy (and thereby creates rights under statutory tenancy law) as one to be adopted only when the instrument clearly and unequivocally expresses such intention.

The Court reviewed English authorities showing that an express attornment in a mortgage deed may create a landlord‑tenant relationship alongside the mortgage relationship, subject to statutory qualifications like the Bills of Sale Act. However, the Court stressed that in India, because statutory tenancy and occupancy rights arise by operation of law, courts should be especially cautious in construing a mortgage instrument as creating tenancy unless the intention to do so is plain.

Applying these principles, the Court held that the mortgage deed in this case should be construed as maintaining the real relation of mortgagee and mortgagor. Consequently, the arrears called “rent” in respect of the 50 bighas were viewed, in substance, as representing principal and interest of the mortgage (a charge on the property in English law; the Court also noted divergent treatments elsewhere but relied on the set of Indian authorities that look to the parties’ real intention).

The 4 bighas 10 cottahs (jungle land) were treated differently: that letting occurred six years after the mortgage and, on its terms, plainly created a tenancy. The mortgagee there entered into a contract of tenancy "with his eyes open" and must bear the consequences of rent law; accordingly the mortgagor could secure occupancy status in that holding and could not be ejected for non‑payment of rent — the relief there was limited to recovery of arrears of rent and not recovery of possession.

On the question of the mortgagors' status under the Bengal Tenancy Act, the Court stated that the point did not arise in light of its primary construction. It noted a conflict of opinion in the Calcutta High Court but expressed the view that mortgagors held not to be occupancy raiyats must be non‑occupancy raiyats because the Act's s.4 enumerates the classes of raiyats. The Court also addressed procedural points: a defendant who failed to raise a relevant point in the lower appellate court could not raise it for the first time in this Court.

Holding and Implications

Core Ruling: The appeal is allowed. The Court set aside the order of the lower Court and held that, as to the 50 bighas of zerait land, the clause in the mortgage did not create a landlord‑tenant relationship; the arrears claimed in respect of that area represent principal and interest and the plaintiff is entitled to a money decree and to re‑enter for recovery of khas possession under the mortgage terms.

As to the 4 bighas 10 cottahs (jungle land) let by the kabuliyat of 25 September 1902, the Court held that the letting plainly created a tenancy and that the mortgagor thereby obtained occupancy protection; the plaintiff's claim for khas possession of that jungle land was dismissed and the plaintiff was confined to recovery of arrears of rent.

The appeal was decreed with costs in this Court; the orders as to costs made in the two lower Courts were maintained. The judgment was directed to govern certain connected appeals (No. 2364 of 1915, No. 2365 of 1915 and No. 2366 of 1915).

Implications: The decision resolves the parties' rights in the subject parcels: plaintiff obtains a money decree and khas possession of the zerait lands (50 bighas) treated as mortgage security; plaintiff cannot obtain khas possession of the jungle holding (4 bighas 10 cottahs) but may recover arrears of rent. The opinion emphasizes that construing mortgage instruments as creating tenancy (with attendant statutory occupancy consequences) requires clear and unequivocal intention in the instrument; otherwise courts may treat stipulated payments as securing the mortgage debt. The opinion does not purport to lay down a novel general rule beyond its application to the facts, and it applies and distinguishes existing authorities accordingly.

Concurring note: Jwala Prasad, J. concurred with the conclusions that the plaintiff is entitled to re‑enter and recover khas possession of the zerait lands but is not entitled to recover khas possession of the jungle lands.

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Udai Chand v. Jang Bahadur Singh

Mullick, J.:— This second appeal arises out of a mortgage executed by defendants 1 and 2 and their father Mahabir Singh on 14th August, 1896 in favour of the plaintiff in respect of the shares in several mouzas inclusive of 200 bighas of zerait land. Out of the said 200 bighas an area of 50 bighas was, according to the plaintiff, left in the possession of the mortgagors as licensees, who were liable to pay a nominal rent of 8 annas per bigha for use and occupation. By a kabuliyat dated 25th September, 1902 a further area of 4 bighas, 10 cottahs was let out to the defendants at a rental of Rs. 14-5-6. The defendants in the present suit comprise three sets of persons: (1) the mortgagors, (2) the subsequent mortgagees, and (3) certain persons recorded as raiyats upon the lands alleged to be zerait. The plaintiff's suit is for arrears of rent and for khas possession in terms of the mortgage.

2. The Munsif found that the persons in occupation bad acquired occupancy rights in all the lands and decreed only the claim for rent. On appeal the learned Subordinate Judge held that occupancy rights had been acquired in the jungle lands, but not in the 50 bighas which were zerait and which came under the operation of Section 116 of the Ben. Ten. Act, and he decreed the suit for rent and directed that if the mortgagor defendants paid the arrears under Section 66 of the Ben. Ten. Act within 15 days they would be exempted from ejectment. With regard to the jungle land he dismissed the suit for ejectment. The plaintiff now prefers this second appeal. The first and most important question for determination is what is the construction to be put upon the clause relating to the letting of the 50 bighas. Was it an attornment clause creating the relationship of landlord and tenant or was it a mere condition of the mortgage as between mortgagor and mortgagee, and was the stipulation for payment of Rs. 25 per year in essence a condition for securing the principal and interest.

3. We have most anxiously considered the bond and are satisfied that the relationship of landlord and tenant was not created by this stipulation. It was not an attornment clause at all. It was an arrangement made by favour of the landlord by which the mortgagor was allowed to remain in possession in the capacity of something like a licensee. It is admitted that the rent of 8 annas per bigha was not a fair and reasonable rent and I can conceive of no reason why the mortgagee should have brought the mortgagor upon the land at such a grossly inadequate rental, knowing full well that by the operation of our tenancy laws the latter might set up rights in derogation of his own rights as mortgagee. How dangerous such an act would have been if the lands had been ordinarily agricultural land has been shown by the fact that the Munsif; found that the 50 bighas are not zerait lands and that the occupiers have occupancy rights. In the face of the learned Subordinate Judge's finding, however, that dispute no longer arises and we must take it that the lands are zerait and that the protection afforded by Section 116 of the Ben., Ben. Act against the acquisition of occupancy rights applies.

4. In England it has been held that a mortgagor who remains in possession of the mortgaged property by the terms of the mortgage-deed without express provision is only quodam modo a tenant-at-will. A tenancy may, however, be expressly created by an express provision in the mortgage-deed and in that case he becomes a tenant by attornment and the relationship of landlord and tenant is fully created. The effect of such an attornment is that the landlord by reason, of the provisions of the Bills of Sale Act, which require registration, cannot as in ordinary rent execution levy by distress but with that exception all the other legal incidents arising out of the relationship of landlord and tenant fully operate between the mortgagor and the mortgagee. When a mortgagor enters into a contract of tenancy with a mortgagee after the latter has entered into possession then if the rent is fair and reasonable and the transaction amounts to a re-demise of the land, the mortgagee as landlord is competent to avail himself of the remedy of distress also. But in any event whether the attornment is by the mortgage deed itself or by a separate subsequent-deed, the law in England appears to be that the relationship of landlord and tenant, if clearly and distinctly created, may subsist side by side with relationship of mortgagor and mortgagee: [see Daubuz v. Lavington(1), Isherwood, Ex parte; Knight, In re(2) and Hall v. Comfort(3)].

5. The policy of the law in allowing attornment by the mortgagor to the mortgagee was apparently in case of the mortgagee and to give him the additional remedies, for securing his principal and interest of distraint and summary recovery of possession. The possibility of any prudent mortgagee creating a title in the mortgagor in derogation of his mortgage rights was never contemplated by the law of England. In India this consideration applies with still greater force. Here occupancy and non-occupancy rights are created by operation of statutory law, and unless there are the strongest reasons for doing so we ought not to give a construction to an alleged attornment clause in a mortgage-deed, which will have the effect of creating rights of tenancy in derogation of the mortgagee's rights. Is the intention to create the relationship of landlord and tenant so clearly and unequivocally expressed in the deed under consideration in the present case, that we are compelled to say that no other construction of the mortgage-deed is possible? In my opinion the answer is in favour of the mortgagee.

6. We ought not, unless we are compelled to do so, hold that the mortgagee did in this case what no ordinary prudent mortgagee would have done. In my opinion the deed may be construed as showing that the real relation between the parties was not that of landlord and tenant but mortgagee and mortgagor and that the arrears of rent claimed in the present suit are really on account of principal and interest. In England such sums are a charge upon the property but the mortgagee is entitled to re-enter if there is a clause to that effect. In America the stipulated rent is not a charge upon the property and the mortgagor may redeem without paying rent due to the mortgagee on the ground that the agreement to pay is only personal. Nanu v. Raman(4), Altaf Ali Khan v. Lalta Prasad(5), Imdad Hasan Khan v. Badri Prasad(6), Madhwa Sidhanta Onahini Nidhi v. Venkataramanjulu Naidu(7) and Baghelin v. Mathura Prasad(8), favour the view that what is to be looked at is the real intention of the parties and that when even the alleged attornment is created by a conveyance other than the mortgage-deed it is open to the Court to hold that the mortgage and the lease constitute one transaction and that the mortgagee is entitled to count the alleged rent as a charge upon the mortgaged property qua principal and interest.

7. In Chimman Lal v. Bahadur Singh(9) and Khuda Bakhsh v. Alimunnissa(10), the Court held that the leases which were executed subsequently to the mortgage-deed showed an intention on the part of the mortgagee to create a tenancy and not to continue the relationship of mortgagee and mortgagor. These cases are, however, only authority for the proposition that the facts of each particular case must be taken into account in order to see what was the intention of the parties. If the intention was to create the relationship of landlord and tenant then the rent law of the country will apply. In this view of the case it is unnecessary for us to consider the status of the mortgagors and of the persons who have been recorded in the Record of Rights as occupancy raiyats. The plaintiff is entitled upon the terms of the mortgage-deed itself to a decree for the amount claimed as rent and for recovery of possession upon the terms of the mortgage of the 50 bighas. With regard to the 4 bighas 10 cottahs of jungle land the matter is different. Here the letting was six years after the mortgage and it in clear terms creates the relationship of landlord and tenant. Here the mortgagee appears to have entered into the contract of tenancy with his eyes open and he must, therefore, take the consequence of the operation of the rent law. That law does not preclude the mortgagor from securing the status of an occupancy raiyat under his mortgagee. I agree with the learned Munsif that the mortgagor has occupancy rights in this holding and that he cannot be ejected for non-payment of rent. The decree in regard to this plot of land will be only for recovery of the arrears of rent and the prayer for recovery of possession will be dismissed.

8. A question has been raised before us as to the position of the mortgagors in respect of the zerait lands. In our view of the case that question does not arise. There is a conflict of opinion on this point in the Calcutta High Court, but we incline to the view that as the mortgagors have been held not to be occupancy raiyats they must be non-occupancy raiyats and that the Bengal Tenancy Act does not contemplate a raiyat who does not come under the classes enumerated in Section 4 of the Act. Mr. Mritunjay Lal, who appeared for certain minor defendants, attempted to attack the learned Subordinate Judge's finding that the mortgagors and other persons in possession of the zerait lands were non-occupancy raiyats. But that point was never argued before the learned Subordinate Judge. Mr. Mritunjay Lal says that the point was not taken because his clients were respondents but that is no answer. The plaintiff as appellant before the learned Subordinate Judge challenged all the findings of the Munsif and claimed to recover khas possession. It was the duty of Mr. Mritunjay Lal's clients at that stage to take all possible grounds for resisting the recovery of khas possession and they ought to have asked the Judge to hold, as they are now asking us to hold, that the Munsif's finding as to occupancy rights was correct and that the plaintiff was not entitled to re-enter. Having failed to raise the point in the lower appellate Court, the defendants cannot now do so here.

9. The result, therefore, is that the order of the lower Court be set aside and the plaintiff will get a money-decree for recovery of the arrears claimed on the footing that they represent principal and interest. The plaintiff will also be entitled to recover khas possession of the zerait lands, but his prayer for khas possession of the jungle lands is dismissed. The appeal is decreed with costs in this Court. The order as to costs in the two lower Courts is maintained. This judgment will govern the connected appeals in No. 2364 of 1915, No. 2365 of 1915 and No. 2366 of 1915.

10. Jwala Prasad, J.:— I agree that the plaintiff is entitled to re-enter and to recover khas possession of the zerait lands in terms of the clause in the mortgage-bond whereby the mortgagors were allowed to remain in possession of the lands on condition of their payment of the annual rent reserved and to vacate the lands on default of such payment. I also agree that the plaintiff is not entitled to recover khas possession of the jungle lands.

V.S/R.K

11. Appeal decreed.

Udai Chand v. Jang Bahadur Singh

Judicial Opinion Summary — Second Appeal (Mullick, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Udai Chand v. Jang Bahadur Singh

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