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Jang Bahadur (Judgment-Debtor) v. Bhagatram Sheoprasad (Decree-Holders).
Factual and Procedural Background
The appellant, Jang Bahadur, held an usufructuary mortgage over a substantial property with a mortgage amount exceeding Rs. 35,000. The respondents, who held a simple money decree against the appellant, obtained attachment and sale of the appellant's interest as mortgagee. The property was sold for Rs. 2,500, a price at which the respondents themselves were the purchasers. The appellant filed an application to set aside the sale on grounds of fraud. However, this application was not heard because the court held that Order 21, Rule 89, Civil Procedure Code did not apply, reasoning that the property sold was movable property. The appellant appealed challenging this decision, raising the central question of whether the mortgagee's interest in a usufructuary mortgage constitutes immovable property within the meaning of Rule 89, Order 21, Civil P.C.
Legal Issues Presented
- Whether the mortgagee's interest in a usufructuary mortgage is immovable property within the meaning of Rule 89, Order 21, Civil Procedure Code.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Karimunnissa v. Phul Chand [1893] 15 All. 134 | Consideration of simple mortgage principles | Held not applicable to usufructuary mortgage; no guidance provided for the issue at hand. |
| Umra Singh v. Lal Singh A.I.R. 1924 All. 796 | Consideration of incidents of a simple mortgage | Proceeding based solely on simple mortgage; court declined to apply it to usufructuary mortgage for this case. |
| Peetikayil Nammad v. Othenam Nimbor [1914] 27 M.L.J. 239 | Classification of mortgagee's interest in usufructuary mortgage as movable property | Represents Madras High Court's settled view that usufructuary mortgage interest is movable property; contrasted with other jurisdictions. |
| Paresh Nath Singha v. Nabogopal Chattopadhya [1902] 29 Cal. 1 | Mortgagee's interest in usufructuary mortgage as immovable property under Civil Procedure Code | Full Bench Calcutta High Court decision supporting that such interest is immovable property; relied upon by this Court in holding the property immovable. |
Court's Reasoning and Analysis
The court examined the nature of the mortgagee's interest through two primary statutory sources: the Transfer of Property Act and the General Clauses Act. Section 58 of the Transfer of Property Act defines a mortgage as a transfer of interest in immovable property, implying that the mortgagee holds an interest in immovable property originally owned by the mortgagor. The General Clauses Act similarly defines immovable property to include land and benefits arising from land.
The court noted that a usufructuary mortgage entitles the mortgagee to possession and to receive rents and profits from the property as payment of the mortgage money, clearly linking the interest to land. It was conceded that the judgment-debtor was in possession and recorded as such at the time of attachment and sale.
The court reviewed precedents from various High Courts. It found that two cases cited from this Court dealt only with simple mortgages and were not determinative for usufructuary mortgages. The Madras High Court regarded the mortgagee's interest in usufructuary mortgages as movable property, but the Bombay and Calcutta High Courts had taken a contrary view. The Full Bench decision of the Calcutta High Court in Paresh Nath Singha v. Nabogopal Chattopadhya was persuasive, holding that the mortgagee's interest is immovable property under the Civil Procedure Code.
On this basis, the court concluded that the property sold was immovable property within the meaning of Order 21, Rule 89, Civil Procedure Code, and therefore the appellant's application to set aside the sale should have been heard on its merits.
Holding and Implications
The court set aside the order of the lower court and remanded the case for disposal according to law, with costs to abide the result.
Holding: The mortgagee's interest in a usufructuary mortgage is immovable property within the meaning of Order 21, Rule 89, Civil Procedure Code, and the appellant's application to set aside the sale on grounds of fraud must be heard on its merits.
Implications: This decision directly affects the parties by requiring the lower court to reconsider the application for setting aside the sale. No new precedent beyond this decision is explicitly established by the court.
1. This a judgment-debtor's appeal arising under the following circumstances: The appellant, Jang Bahadur, held an usufructuary mortgage over a considerable property, the amount of the mortgage being over Rs. 35,000. The respondents, holding a simple money decree against the appellant, got the interest of the appellant as mortgagee attached and sold. The sale was effected for Rs 2,500 only and the respondents them selves made the purchase. The appellant applied for the setting aside of the sale on the ground of fraud. The application was not heard on the ground that Order 21, Rule 89, Civil P. C, had no application, inasmuch as the property sold was moveable property. The appellant challenges the correctness of this decision and the only question which we have to, answer in this appeal is whether the mortgagee's interest in a usufructuary mortgage is, immovable property within the meaning of Rule 89, Order 21, Civil P.C.
2. In our opinion the answer to the question can be found out, from two sources. Either the answer will be furnished by the Transfer of Property Act which defines a mortgage or from the General Clauses Act which defines immovable property. Whichever source, we look into, we find that the answer will be the same. Under Section 58, T.P. Act, a mort gage is a transfer of an interest in an immovable property. It follows, therefore, that what the mortgagee holds is a part of the interest in immovable property originally owned by the mortgagor. If we look to the definition given in the General Clauses Act (for the Civil Procedure Code itself gives no definition) we find it as follows:
Immovable property shall include laud, benefits to arise out of laud, * * *.
3. The definition of usufructuary mortgage as given in Section 58, T.P. Act, shows that the mortgagee is entitled to take possession of the property and to receive the rents and profits in payment of his mortgage money. Obviously, his interest is something which arises out of land. It has been conceded before us that at the date of the attachment and sale the judgment-debtor was in possession and his name was recorded in the khewat.
4. Several cases have been cited before us by the learned Counsel for the respondents. Among these, two come from this Court. The one, Karimunnissa v. Phul Chand [1893] 15 All. 134, was a case of a simple mortgage and nothing was said there which might possibly apply to a usufructuary mortgage. The other case Umra Singh v. Lal Singh A.I.R. 1924 All. 796, proceeded entirely on the consideration of the incidents of a simple mortgage. It may be that, if we apply the definition of mortgage as given in the Transfer of Property Act, a simple mortgage and a usufructuary mortgage will stand on the same footing. Whether they do so stand or not for the purposes of the Civil Procedure Code we need not decide. It is enough to say, that there are essential differences between the incidents of a simple mortgage and those of a usufructuary mortgage. If we apply the definition, as given in the General Clauses Act, a difference might possibly be drawn between a simple mortgage and a usufructuary mortgage. The two cases from this Court therefore are no sure guide. We express no opinion as to their correctness or otherwise.
5. In Madras it seems to have been definitely held that a simple mortgage and a usufructuary mortgage stand on the same footing, where the nature of the mortgagee's interest is concerned. It has been held there that in both cases the interest is a moveable property. The latest Madras case seems to be Peetikayil Nammad v. Othenam Nimbor [1914] 27 M.L.J. 239, which regards the point as settled by authorities in that Court. The Bombay High Court seems to have taken a different view as also the Calcutta High Court. There is a Full Bench decision of the Calcutta High Court, reported in Paresh Nath Singha v. Nabogopal Chattopadhya [1902] 29 Cal. 1 which, although given under the old Civil Procedure Code, would be an authority for the proposition that the mortgagee's interest in a usufructuary mortgage is an immovable property, within the meaning of the Civil Procedure Code. We hold that the property sold was immovable property within the meaning of Order 21, Rule 89, Civil P. C, and the appellant's application should have been heard on its merits. We set aside the order of the Court below and remand the case to it for disposal according to law. Costs here and hitherto will abide the result.
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