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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

In 1875 Sitaram granted a permanent lease of an entire village to Kalka Prasad Singh. In 1915 and 1916 the heirs of Kalka Prasad Singh executed two mortgages over the whole village in favour of Seth Ballabha Das. The mortgagee instituted a suit for sale based on the mortgage-deeds; no written statement was filed and the mortgagors did not contest the claim on the ground that the mortgaged property was not transferable. An ex parte decree was obtained and put in execution. During the execution proceedings the judgment-debtors (mortgagors) raised the objection that their interest was not transferable because they were thekadars and not occupancy tenants within the meaning of the Agra Tenancy Act. The Courts below sustained that objection and disallowed the application for execution. The decree-holder (appellant) appealed to the present Court, advancing several contentions in support of execution.

Legal Issues Presented

  1. Whether the interest of a thekadar (as defined by the Agra Tenancy Act) is transferable in execution-sale proceedings under Section 20(3) of the Act.
  2. Whether the language of Sub-clause (3) of Section 20 makes the interest of a thekadar always non-transferable (and only heritable if the lease expressly provides), as contended by the respondent.
  3. Whether a lease executed before the Agra Tenancy Act (1875 lease) remains transferable despite later statutory prohibition (i.e., whether transfers are governed by the law at time of original lease or at time of transfer).
  4. Whether the mortgagors/judgment-debtors are precluded (by res judicata or related principles) from raising non-transferability in execution proceedings after an earlier decree.
  5. Whether, on a proper construction of the particular lease (a zeripeshgi lease in perpetuity of an entire village), the lease is a lease for agricultural purposes and therefore excluded from the general rules on transferability under the Transfer of Property Act by virtue of the Agra Tenancy Act.

Arguments of the Parties

Decree-holder (Appellant) — Contentions summarized

  • Section 20(3) of the Agra Tenancy Act, which restricts transferability of a thekadar's interest, does not apply to execution sales; when the Legislature intended to cover execution sales it said so expressly in Sub-clause (2).
  • Because the lease was executed in 1875 (before the Agra Tenancy Act), transferability existed at that time and therefore the interest remained transferable.
  • The mortgagors should have raised the plea of non-transferability earlier in the suit; their failure to do so now should bar the point (res judicata/estoppel against raising the issue in execution).
  • On proper construction the lease is not an agricultural lease; the Transfer of Property Act applies (Section 108), making the interest transferable unless expressly prohibited.

Judgment-debtors (Respondent) — Contentions summarized

  • Their interest is not transferable because they are thekadars, and Sub-clause (3) of Section 20 renders a thekadar's interest non-transferable (thekadar not being an occupancy tenant within the Act).
  • The respondent further argued (as accepted by the Courts below) that the execution of the decree should be disallowed because the property mortgaged is non-transferable by law.
  • It was also contended on the respondent's behalf that the language of Sub-clause (3) makes the thekadar's interest always non-transferable and only heritable when expressly provided in the lease.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mubarak Hussain v. Ahmad, AIR 1924 All 328 Full Bench pronouncement emphasizing want of jurisdiction in a Court to sell properties declared by law to be non-transferable. The Court relied on this Full Bench pronouncement to conclude that it was precluded from allowing the res judicata argument to bar consideration of transferability in execution when jurisdiction to sell is lacking; this influenced the treatment of the procedural point about belated pleas.
Amrit Lal Seal v. Jagal Chandra Thakur, AIR 1926 Pat 202 Held that, although transfer of the property sought to be sold was prohibited by law, it was not open to the judgment-debtor to come forward to prevent sale in execution of the decree. One judge accepted the Patna High Court's view as the correct view of law (that a judgment-debtor cannot prevent sale even if transfer prohibited), and noted that this view had also been expressed in Mubarak Hussain.
Katwari v. Sita Ram Tewari, AIR 1921 All 118 Held that where a mortgage decree ordered sale of an occupancy holding, it was open to the judgment-debtor to assert that property was an occupancy holding and the Court should not order sale (based on Clause 2 of Section 20). The Court acknowledged the ruling as binding so far as it goes but distinguished it: Katwari arose under Clause (2) (occupancy holdings) whereas the present contention is under Clause (3) (thekadar). The Court treated Katwari as not necessarily applicable to a Clause (3) thekadar case and in any event found the lease before it created a transferable interest.

Court's Reasoning and Analysis

The Court proceeded in a stepwise analysis addressing the appellant's contentions and the substantive nature of the lease:

  1. On the contention that Section 20(3) does not apply to execution sales: the Court rejected the argument. It reasoned that the word "transferable" appears in both Sub-clause (2) and Sub-clause (3) of Section 20 and that in Sub-clause (2) "transferable" is used in its general sense (covering voluntary and involuntary transfers). There was no justification to construe "transferable" in Sub-clause (3) more narrowly to exclude execution sales; therefore the contention was rejected.
  2. On the argument that the 1875 lease (pre-dating the Agra Tenancy Act) remained transferable: the Court rejected this. It explained that even if transferability existed prior to the later statute, an express enactment can make an interest non-transferable and that the law governing the validity of a transfer is the law in force at the date when the transfers in dispute took place.
  3. On the plea that mortgagors are barred from raising non-transferability in execution because they failed to raise it earlier (res judicata/estoppel): the Court acknowledged some force in this contention in ambiguous cases. However, relying on the Full Bench ruling in Mubarak Hussain v. Ahmad (which emphasized want of jurisdiction in Courts to sell properties declared by law to be non-transferable), the Court felt precluded from allowing the procedural bar to defeat consideration of the jurisdictional question of non-transferability. Thus the Court did not permit procedural default to preclude the jurisdictional consideration entirely.
  4. On interpreting Sub-clause (3) of Section 20 (whether the thekadar's interest is always non-transferable and only heritable if the lease so provides): the Court noted that the language of Sub-clause (3) is "not happy" and might suggest a strict literal reading making the thekadar's interest always non-transferable. But examining legislative intent (including the Select Committee report) and the earlier law (Act of 1881), the Court concluded that the intention was not to alter the previous law as regards thekadar. The Court read Sub-clause (3) to mean that the interest of a thekadar is heritable but not transferable "provided there is no provision to the contrary in lease." (This reflects the Court's textual and contextual interpretation offered in the opinion.)
  5. The central substantive inquiry was whether the lease in question was a lease "for agricultural purposes" (which would bring it within Section 117's exception and make it governed by local tenancy law such as the Agra Tenancy Act) or whether it was not essentially agricultural and therefore governed by the Transfer of Property Act (Section 108)—which permits transfer unless expressly prohibited. The Court examined:
    • Definitions in the Agra Tenancy Act: "land" and "thekadar" (thekadar defined widely to include a farmer or other lessee of proprietary rights).
    • Section 108 of the Transfer of Property Act (a lessee may transfer unless right is clearly not transferable) and Section 117 (makes Section 108 inapplicable to leases for agricultural purposes where local law governs).
    • The terms of the lease: it was a zeripeshgi lease in perpetuity of an entire village; the lessee was put in possession and authorized to let land to tenants and to make collections; Clause (3) gave the lessee entitlement to various incomes (including mal, sair items, profits of high and low lands, water and forest produce, tanks and ponds, markets, enclosures, lands affected by river action); there was no express stipulation that the lessee must cultivate the land personally; payments were described as instalments of profits; there were prohibitions (e.g., lessee not entitled to plant groves) and the lessee was responsible for government revenue and cesses; part of the village included waste and abadi lands.
    Based on the language and overall purpose of the lease, the Court concluded that the primary object of the lease was not agriculture (cultivation) but the securing of proprietary rights and income-producing control similar to that of the zamindar. The absence of any express undertaking by the lessee to cultivate the lands personally, the inclusion of non-agricultural elements, and the character of the rights conferred led the Court to hold that the lease was not essentially an agricultural lease.
  6. Given that the lease was not a lease for agricultural purposes, the Transfer of Property Act's general rule (transferability unless expressly prohibited) applied. Accordingly, the Court found the interest created by the lease to be transferable and saleable in execution of the mortgage decree.

Holding and Implications

Holding: The Court's final ruling was to allow the appeals. The lower Courts' orders disallowing execution were set aside and the judgment-debtors' objection to execution was dismissed with costs in all Courts. The execution was ordered to proceed.

Core ruling: The lease in question is not a lease for agricultural purposes and the interest thereby created is transferable and saleable in execution of the mortgage decree; accordingly, the decree-holder's execution may proceed.

Implications:

  • Direct effect on the parties: The decree-holder's appeal succeeds; the judgment-debtors' objection to execution is dismissed and execution can continue. Costs were awarded against the judgment-debtors in all Courts.
  • The opinion resolves the dispute on the facts of this particular lease by treating the lease as not essentially agricultural and therefore subject to the Transfer of Property Act's transferability rule. The Court distinguished earlier authorities that concerned occupancy holdings (Clause (2) of Section 20) and applied a contextual construction to Sub-clause (3) of Section 20.
  • This opinion does not purport to state that it establishes a novel, broad new legal principle beyond the resolution of the present case: the decision turns on statutory interpretation and the specific terms and character of the lease before the Court.

Disposition

The appeals were allowed; the decrees of the Courts below were set aside; the objection of the judgment-debtors was dismissed with costs in all Courts; execution will proceed.

    Ballabh Das (Decree-Holder) v. Murat Narain Singh And Others (Judgement-Debtors).

    1. This is a decree-holder's appeal arising out of an execution matter. On the 18th February 1875 one Sitaram granted a permanent lease of an entire village in favour of one Kalka Prasad Singh. The heirs of Kalika Prasad Singh, in the years 1915 and 1916, made two mortgages of the whole of this village in favour of Seth Ballabha Das. The mortgagee brought a suit for sale on the basis of the mortgage-deeds. No written statement was put in and the mortgagors did not contest the claim on the ground that the property mortgaged was not transferable. As ex-parte decree was passed which has been put in execution. The judgment-debtors have now raised the objection that their interest in the property is not transferable inasmuch as they are thekadars and therefore not occupancy tenants within the meaning of the agra tenancy act. This objection has found favour with the Courts below and the application for execution has been disallowed. The decree-holder has come up in appeal and several contentions are put forward on his behalf.

    2. First of all it is contended that Section 20(3) which make the interest of a thekadar subject to the terms of the lease not transferable does not apply to execution sales. The argument is that wherever the Legislature intends that the word "transferable" should cover execution sales also, it expressly has said so. Our attention is drawn to Sub-clause (2) where it is expressly provided that the interest of other tenants is not transferable in execution of a decree of a civil or revenue Court of otherwise. This contention cannot be accepted. The word "transferable" is used at two places in the same Section 20. In Sub-clause (2) it is used in its general sense no matter whether the transfer is voluntary or involuntary. Although the whole clause is not repeated in Sub-clause (3), there is no reason to suppose that the word ''transferable" is not used in the same sense in that clause also and that it is confined to private transfers only. In my opinion this contention therefore must be rejected.

    3. The next argument advanced before us is that the lease in question was executed in the year 1875, long before the present agra tenancy act was passed, and that inasmuch as at that time there was no prohibition against transfers of an interest by a thekadar, the interest remained transferable. This argument also has no force. Assuming that the interest was transferable prior to 1901, it can be made non-transferable by an express enactment. The law governing the transfer must be that one which was in force on the dates when the transfers in dispute took place.

    4. Thirdly, it is contended that it was the duty of the mortgagors to raise the plea of non-transferability now disputed before us and their failure to raise it prevents them from raising this point in the execution department. The contention is that the plea is barred by the principle of res judicata. There would appear to be some force in this contention, specially in cases where the nature of the tenancy is not quite clear and where it may be disputed whether the right is or is not transferable. But in view of the pronouncement of the Full Bench in the case of Mubarak Hussain v. Ahmad AIR 1924 All 328, where stress was laid on the want of jurisdiction in the Court itself for selling properties which were declared by law to be non-transferable, I feel precluded from allowing this point to be raised.

    5. Before I come to the main point which really arises in this case, I must note an objection that has been raised on behalf of the respondent. The contention is that the language of Sub-clause (3) in Section 20 makes the interest of a thekadar always non-transferable and that it is only heritable when the terms of the lease expressly provide for it. If the language of Sub-clause (3) were to be interpreted strictly and literally, there may at first sight appear to be some force in this contention. It must be admitted that the language is not happy. But if he were permitted to examine the report of the Select Committee, it would appear that the intention was not to alter the law so far as a thekadar was concerned. In the Act of 1881 there was no absolute prohibition against the transfer of an interest by a thekadar, the transferability depending on the terms of the contract. It seems to me that although the language is not happy the meaning of Sub-clause (3) is that the interest of a thekadar is heritable but not transferable provided there is no provision to the contrary in lease,

    6. The main question to consider is whether the present lease is really a lease for agricultural purposes or not. No doubt the word "thekadar" which was not defined in the Act of 1873 and was defined to include a tenant in 1881 and now includes every farmer or other lessee of proprietary rights under Section 4(6), is of a wide scope. But it does not follow that every theka is governed by the agra tenancy act. The preamble of the Act indicates that the object of the Legislature was to consolidate and amend the law relating to agricultural tenancies and certain other matters in these provinces. Under Section 108(f) of the Transfer of Property Act a lessee is entitled to transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in property unless the right is clearly not transferable. Section 117 of the Act however makes the provision of that section inapplicable to leases for agricultural purposes unless notified by Government. It is therefore important to consider whether the lease in question was or was not a lease for agricultural purposes; if it was not a lease for a lease for agricultural purposes then it would be governed by the Transfer of Property Act and not by the agra tenancy act. "Land" is defined in Section 4(2) as land which is let or held for agricultural purposes. Sub-Cl. (6) defines "thekadar" as farmer or other lessee of proprietary rights which must mean rights in land, otherwise a lessee of proprietary rights in house properties would come within the definition of a thekadar in the agra tenancy act. That obviously could not have been the intention. The expression "agricultural purposes" has not been defined anywhere but a lease cannot be called a lease for agricultural purposes unless the primary object of the lease is cultivation or agriculture. It is therefore necessary to examine the terms of the lease.

    7. The lease itself is called a zeripeshgi lease in perpetuity. The entire village is leased to the lessee who is put in possession thereof and authorized to let out land to tenants and make collections. Clause (3) of the lease provides that the lessee will be entitled to all the income produce mal and profit arising from mal, sair items, sir land, high and low lands, water and forest produce, tanks and ponds, groves, markets, Baras (enclosures), land on the banks of the Ganges, which may appear or disappear by fluvial action of the river. Although the power of the lessee is described in detail there is no express mention that he is to cultivate the lands himself. No doubt such power would be implied but the point is that there is no express mention of any intention on the part of the lessee to cultivate the lands himself. Furthermore the amounts which are to be paid to the lessor are called instalments of profits and in case of default of payment interest at the rate of eight annas per cent per mensem is to run on the amount which could be deducted from the premium (zeripeshgi) advanced to the lessor. The lessee is not entitled to plant groves on the land. The lessee is also to be responsible for payment of Government revenue and cesses.

    8. Reading the lease as a whole therefore it is impossible to say that the primary object of this transaction was agriculture; that is to say, that the entire village was let out to Kalka Prasad Singh for the purposes of cultivation or other agricultural purposes. Part of the village consists of waste and abadi lands and it was not likely that all the area could be brought under cultivation. Having regard to all these circumstances it is impossible to hold that the lease in dispute in this case was a lease for agricultural purposes so as to be exempted from the operation of Section 108 of the Transfer of Property Act and to be governed by the agra tenancy act. The lease is therefore not governed by the agra tenancy act and the rights under it are not non-transferable. I would allow the appeals and setting aside the order of the Courts below dismiss the judgment-debtors' objections with costs in all Courts.

    Mukerji, J.

    9. I agree with my learned brother that the judgment-debtor's objection to the execution of the decree must be disallowed.

    10. The facts of the case are briefly these; A permanent lease of an entire village was granted by a landlord to the predecessor-in-title of the judgment-debtor. The judgment-debtor made a mortgage of his interest in favour of the appellant decree-holder. On foot of the mortgage a decree was passed which was made final later on. It is this decree which is in execution. The judgment-debtor has come up and urges that his interest In the property mortgaged is not saleable. The decree-holder raised the plea in the Courts below that it was not open to the mortgagor, the transferrer himself to raise the plea after the decree and it was not open to the Court to entertain the objection after a decree has been passed for the sale of the property. This plea has been overruled by the Courts below and has been repeated in this Court. A further this Court. A further question has been raised as to whether the lease on a proper construction of it is such a lease the transfer of which is prohibited by Section 20 of the Tenancy Act.

    11. I will consider these two points. There is a divergence of opinion as to whether the fact that a particular law prohibits a transfer of a particular class of property enables or not a judgment-debtor to raise in execution of the decree the question of non-transferability of the property where the execution proceeds under a mortgage decree. Some of the cases on either side will be found cited in a case recently decided by the Patna High Court in Amrit Lal Seal v. Jagal Chandra Thakur AIR 1926 Pat 202. In the case before the Patna Court it was held that although the transfer of the property sought to be sold was prohibited by law, it was not open to the judgment-debtor to a decree for sale to come forward and to prevent the sale of the property in execution of the decree. I have no hesitation in accepting this view of the law to be the correct view, I gave expression to in it my judgment in Mubarak Hussain v. Ahmad AIR 1924 All 328.

    12. Now the question is whether in spite of my view I am not bound by the ruling of our own High Court in the case of Katwari v. Sita Ram Tewari AIR 1921 All 118. There can be no doubt that the ruling is binding on me so far as it would go. In that case it was held that where a mortgage decree ordered the sale of an occupancy holding it was open to the judgment-debtor to come forward and tell the Court that the property to be sold is an occupancy holding and the Court should not sell it. It may be noted that in that case the mortgage-deed itself declared that the property mortgaged was an occupancy holding. The judgment was based on the express words of Clause 2 of Section 20 of the Tenancy Act. That clause in express terms does not apply to the present case. The present case is said to be that of the interest of a thekadar and is therefore governed by Clause 3. There is a substantial difference between the two clauses in the language and I am not quite sure if the difference is intentional. In Clause (2) as much stress as it was possible by use of the language to lay, was laid to express the rule that an occupancy right and a non-occupancy right could not be transferred by the agency of any Court whatsoever. But so far as the case of a thekadar went no such stress was laid. I should not therefore be at all surprised if it was beyond the intention of the Legislature to put the interest of a thekadar in the same category as the interest of an occupancy tenant or non-occupancy tenant. If this be the case, the ruling in Katwari v. Sita Ram Tewari AIR 1921 All 118 will not be applicable. It is not however necessary to finally decide the point, as in this case the lease itself shows that a transferable property was created by it.

    13. As pointed out by my learned brother, the main law on the question of transferability of leases is contained in the Transfer of Property Act which is an All India Act. By that law all leases, except where the terms prohibit, are transferable. Such being the case, the present lease should also be transferable. If there be a prohibition in law, we must see where that prohibition is. In Section 117 of the Transfer of Property Act an exception has been made in the case of agricultural leases and it has been laid down that those shall be governed by the local laws where there are any. Such a local law is the Tenancy Act of Agra. Now we have to see whether the lease before us is governed by the agra tenancy act. We must remember that a lease which is to be exempted from the general provisions of the Transfer of Property Act must be essentially an agricultural lease. If it be not an agricultural lease in its essence it will not be exempted. My learned brother has already pointed out, and I need not repeat it, that the Tenancy Act is directed to govern agricultural tenancies and not tenancies the object of which is not the promotion of agriculture.

    14. The lease in this case nowhere states that the lessee has taken the land for the purpose of cultivating it himself. There is not a word to that effect. The lease, read as a whole, shows that the zamindar put the lessee in the same position as he himself occupied, except in a few minor matters, in consideration of a small sum of money to be paid to him year by year. The primary object of the lease was to secure the proprietary rights of the lessor and not to utilize ady land for the purpose of agriculture. Of course it would be open to the lessee to cultivate any particular land if he so desired. But that is a secondary object and not the primary object ln this view we cannot treat this lease as a lease of a farm. The word 'thekadar' has been defined in the agra tenancy act as including a farmer or other lessee of proprietary rights. The language employed is too wide and it must be conceded that, a lessee of a house, although he would be a lessee of proprietary rights, would not be a thekadar within the meaning of the agra tenancy act. Where the primary object of the lease, as in this case, is not agriculture, the lease must be treated as not an agricultural lease. In this view the interest of the lessee is transferable and saleable in execution of the mortgage decree passed for the purpose.

    15. The appeal is allowed. The decrees of the Courts below are set aside and the objection of the judgment-debtor is dismissed with costs in all Courts. The execution will proceed.

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    Comments

    Ballabh Das (Decree-Holder) v. Murat Narain Singh And Others (Judgement-Debtors).
    (Feb 1, 1926)