No Acts & Articles mentioned in this case
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4594 OF 2010
SHANKAR SAKHARAM KENJALE (DIED)
THROUGH HIS LEGAL HEIRS …APPELLANT(S)
VERSUS
NARAYAN KRISHNA GADE AND ANOTHER ...RESPONDENT(S)
J U D G M E N T
MOHAN M. SHANTANAGOUDAR, J.
1. The instant appeal arises out of the judgment dated
08.06.2009 passed by the High Court of Judicature at Bombay in
Second Appeal No. 439 of 1987. Vide the impugned judgment, the
High Court set aside the findings of the Trial Court and the First
Appellate Court and directed the Trial Court to draw a
preliminary decree of redemption of mortgage in favour of the
Respondents herein.
2. The factual background to this appeal is as follows:
1
2.1 The land in question was Paragana watan property/Inam
land (hereinafter ‘suit land’). Such watan properties and watans
were governed by the provisions of the Bombay Hereditary Offices
Act, 1874 (hereinafter ‘Watan Act’). Smt. Laxmibai, wife of one
Bhawani Raje Ghadge, was the watandar of the suit land. She
had inducted one Mr. Ramchandra (successor of the Respondents
herein) as a permanent Mirashi tenant of the land. Such tenancy
was hereditary in nature.
2.2 On 14.05.1947, the said Ramchandra (hereinafter
‘Mirashi tenant—mortgagor’) executed a mortgage deed in favour
of one Shankar Sakharam Kenjale (hereinafter ‘mortgagee’)
mortgaging the suit land with a condition of sale for an amount of
Rs. 900/ advanced by Shankar Kenjale for the purpose of
Ramchandra’s household and personal sundry expenses. Per the
terms of this deed, a period of ten years was envisaged for the
repayment of the mortgage money and the mortgagee was placed
in possession of the suit land.
2.3 Meanwhile, the Bombay Paragana and Kulkarni Watans
(Abolition) Act, 1950 (hereinafter ‘the Abolition Act’) came into
force with effect from 25.01.1951 with a view to abolish Paragana
and Kulkarni watans and to make provision for the performance
of functions of some of these offices. Under this Act, Paragana
2
and Kulkarni watans were abolished and watan lands were
resumed to the Government, subject to Section 4. It is needless to
observe that the suit land, being watan property, was also
resumed to the Government subject to Section 4, which
empowered the holder of the watan to seek regrant of the land
upon payment of the requisite occupancy price within prescribed
period.
2.4 Notably, the original watandar did not seek regrant of
the suit land. However, relying on a Government Resolution dated
17.05.1956 (not placed on record) permitting persons in actual
possession of the watan lands to seek regrant, the mortgagee
(successor of the Appellants herein) paid the requisite occupancy
price and obtained a regrant of the suit land in his favour in the
year 1960.
2.5 The Respondents herein (successors of the mortgagor)
then filed a suit for redemption of mortgage against Shankar
Sakharam Kenjale (mortgagee) in Regular Civil Suit No. 190 of
1978 before the Civil Judge, Junior Division, Vaduj. It was
contended that they had requested the mortgagee to accept the
mortgage money and reconvey the land, but he had failed to do
so. Vide judgment dated 09.12.1983, this suit was dismissed. It
was observed that the deed dated 14.05.1947 was in the nature
3
of a mortgage by conditional sale and not an outright sale.
Further, it was found that with the coming into force of the
Abolition Act and the failure of the original watandar and the
Mirashi tenant––mortgagor to secure a regrant of the suit land,
the said land stood resumed to the Government and the
relationship of mortgagormortgagee between the parties ceased
to exist. In light of this, it was held that the mortgagor’s right of
redemption had also extinguished and the subsequent regrant in
favour of the mortgagee could not be seen as one on behalf of the
mortgagor so as to pass on the benefits of the same to him.
2.6 The Respondents herein then preferred an appeal before
the District Judge, Satara in Civil Appeal No. 25 of 1984. On
24.03.1987, this appeal was dismissed. The District Court
reiterated the reasoning of the Trial Court that by virtue of the
failure of the watandar and the Mirashi tenant—mortgagor to
obtain a regrant of the suit land in their favour, the said land
had been resumed to the Government under the Abolition Act,
thereby ending the mortgagormortgagee relationship between the
parties. Thus, in light of the subsequent regrant made to the
mortgagee, it was found that the Mirashi tenant––mortgagor’s
right to redeem shall be deemed to have been extinguished.
4
2.7 Aggrieved, the Respondents filed a second appeal before
the High Court of Judicature at Bombay in Second Appeal No.
439 of 1987. Vide the impugned judgment, the concurrent
conclusions of the Trial Court and the First Appellate Court were
set aside and the suit for redemption was decreed. This was done
on the basis that but for the mortgage, the mortgagee would not
have been in possession of the suit land and could not have
obtained the regrant order in his favour. Given that such
regrant was premised on the underlying mortgagormortgagee
relationship, it was held that the benefit obtained by the
mortgagee by virtue of such regrant must accrue to the
Mirashi tenant––mortgagor. In this respect, reliance was placed
on Section 90 of the Indian Trusts Act, 1882 as well as the
decisions of this Court in Jayasingh Dnyanu Mhoprekar and
Another v. Krishna Babaji Patil and Another , (1985) 4 SCC
162, and Namdev Shripati Nale v. Bapu Ganapati Jagtap
and Another, (1997) 5 SCC 185. It is against this judgment that
the Appellants have come in appeal before this Court.
3. Heard the Counsel for the parties.
4. Learned Counsel for the Appellants relied on the
decisions of this Court in Collector of South Satara and
5
Another v. Laxman Mahadev Deshpande and Others , (1964) 2
SCR 48, and Malikarjunappa Basavalingappa Mamle Desai v.
Siddalingappa & Others , (1973) 3 SCC 180, to argue that once
the Abolition Act came into force, the suit land vested with the
Government and after its regrant to the mortgagee, he became
the absolute owner of the land and all rights of the Mirashi
tenant––mortgagor, including the right to redemption, came to an
end.
5. Per contra, learned counsel for the Respondents relied
on Section 90 of the Indian Trust Act, 1882 as well as the
decisions of this Court in Jayasingh Dnyanu Mhoprekar (supra)
and Namdev Shripati Nale (supra) to contend that the benefit
obtained by the mortgagee by virtue of the regrant must accrue
to the Mirashi tenant––mortgagor. He also drew our attention to
the proviso to Section 3 of the Abolition Act coupled with certain
provisions of the Watan Act to argue that the rights of
Ramchandra as a Mirashi tenant survived the resumption of land
to the Government under the Abolition Act, and therefore his
rights as a mortgagor (including the right to redemption) also
continued to survive despite the regrant in favour of
the mortgagee.
6
6. Upon perusing the record and hearing the arguments
advanced by the parties, we find that the central issue arising for
our consideration in this appeal is as follows:
Whether the permanent Mirashi tenant—mortgagor’s
(Respondents) right of redemption ceased to exist by virtue of the
resumption of the suit land under the Abolition Act and its
subsequent regrant in favour of the mortgagee (Appellants)?
7. As mentioned supra, it is not disputed that Ramchandra
was a permanent Mirashi tenant of the watandar of the suit land.
Admittedly, such lease was subsisting as on 25.01.1951, i.e., the
day on which the Abolition Act came into force.
8. At this juncture, it may be relevant to note certain
provisions of the Abolition Act as well as the Watan Act:
“Section 3. Abolition of certain watans together
with the right to office and incidents.—With effect
from and on the appointed day, notwithstanding
anything contained in any law, usage, settlement,
grant, sanad or order—
(1) all Parganas and Kulkarni watans shall be deemed
to have been abolished;
(2) all rights to hold office and any liability to render
service appertaining to the said watans are hereby
extinguished;
(3) subject to the provisions of Section 4, all watan
land is hereby resumed and shall be deemed to be
subject to the payment of land revenue under the
7
provisions of the Code and the rules made thereunder
as if it were an unalienated land:
Provided that such resumption shall not affect the
validity of any alienation of such watan land made in
accordance with the provisions of Section 5 of the
Watan Act or the rights of an alienee thereof or any
person claiming under or through him;
(4) all incidents appertaining to the said watans are
hereby extinguished.”
(emphasis supplied)
Additionally, Section 5 of the Watan Act is notable:
“Section 5. Prohibition of alienation of watan and
watan rights.—(1) Without the sanction of [the [State]
Government], [or in the case of a mortgage, charge,
alienation, or lease of not more than thirty years, of the
Commissioner] it shall not be competent
(a)to a watandar to mortgage, charge, alienate or
lease, for a period beyond the term of his natural life,
any watan, or any part thereof, or any interest therein,
to or for the benefit of any person who is not a
watandar of the same watan;
(b) to a representative watandar to mortgage,
charge, lease or alienate any right with which he is
invested, as such, under this Act.
(2) In the case of any watan in respect of which a
service commutation settlement has been effected,
either under section 15 or before that section came
into force, clause (a) of this section shall apply to such
watan, unless the right of alienating the watan without
the sanction of [the [State] Government] is conferred
upon the watandars by the terms of such settlement or
has been acquired by them under the said terms.
8
It is also relevant to note Section 8 of the Abolition Act:
“Section 8. Application of Bombay Tenancy and
Agricultural Lands Act, 1948.–––
If any watan land has been lawfully leased and such
lease is subsisting on the appointed day, the
provisions of the Bombay Tenancy and Agricultural
Lands Act, 1948, shall apply to the said lease and the
rights and liabilities of the holder of such land and his
tenant or tenants shall, subject to the provisions of
this Act, be governed by the provisions of the said Act.
Explanation. For the purposes of this section the
expression ‘land’ shall have the same meaning as is
assigned to it in the Bombay Tenancy and Agricultural
Lands Act, 1948.”
From a reading of the proviso to Section 3(3) of the
Abolition Act, it is clear that the resumption of watan land to the
Government under the Abolition Act does not affect the rights of
an alienee of the watandar or his representative of such land
under the Watan Act or that of any person claiming through or
under him. Further, in respect of watan land that has been
lawfully leased and wherein the lease is subsisting on the day
appointed for the coming into force of the Abolition Act, Section
8 of the Abolition Act accords primacy to the Bombay Tenancy
and Agricultural Lands Act, 1948 (hereinafter ‘Bombay Tenancy
9
Act’) in governing the rights and liabilities of the holder of such
land and his tenant(s).
9. In light of this, when we turn to the facts of the present
case, we find that the rights of Ramchandra, who was a lawful
permanent Mirashi tenant, survive resumption of the suit land to
the Government by virtue of the proviso to Section 3(3) as well as
Section 8 of the Abolition Act. This is because the tenancy created
in favour of the Mirashi tenant subsisted as on the day on which
the Abolition Act came into force, thereby implying that his
tenancy rights were protected and continued to be governed by
the Bombay Tenancy Act despite the introduction of the Abolition
Act. This is wellaligned with the general primacy accorded to
tenancy laws over other legislations, as is also reflected in Section
8 of the Abolition Act. Thus, it is amply clear that the rights of
permanent tenants over watan lands were intended to subsist
even after the coming into force of the Abolition Act.
10. At this juncture, it may be useful to note certain other
provisions of the Abolition Act, which are as follows:
“Section 4. Holder of watan land to be occupant .—
(1) A watan land resumed under the provisions of this
Act shall subject to the provisions of Section 4A, be
regranted to the holder of the watan to which it
appertained, on payment of the occupancy price equal
10
to twelve times of the amount of the full assessment of
such land within five years from the date of the coming
into force of this Act and the holder shall be deemed to
be an occupant within the meaning of the Code in
respect of such land and shall primarily be liable to
pay land revenue to the State Government in
accordance with the provisions of the Code and the
rules made thereunder; all the provisions of the Code
and rules relating to unalienated land shall, subject to
the provisions of this Act, apply to the said land:
Provided that in respect of the watan land which
has not been assigned towards the emoluments of the
officiator, occupancy price equal to six times of the
amount of the full assessment of such land shall be
paid by the holder of the land for its regrant:
Provided further that if the holder fails to pay the
occupancy price within the period of five years as
provided in this section, he shall be deemed to be
unauthorisedly occupying the land and shall be liable
to be summarily ejected in accordance with the
provisions of the Code.
(2) The occupancy of the land regranted under sub
section (1) shall not be transferable or partible by
metes and bounds without the previous sanction of the
Collector and except on payment of such amount as
the State Government may by general or special order
determine.
(3) Nothing in subsections (1) and (2) shall apply to
any land—
(a) the commutation settlement in respect of which
provides expressly that the land appertaining to the
watan shall be alienable without the sanction of the
State Government; or
11
(b) which has been validly alienated with the
sanction of the State Government under Section 5
of the Watan Act.
Explanation.—For the purposes of this section the
expression ‘holder’ shall include—
(i) all persons who on the appointed day are the
watandars of the same watan to which the land
appertained, and
(ii) in the case of a watan the commutation settlement
in respect of which permits the transfer of the land
appertaining thereto, a person in whom the ownership
of such land for the time being vests.”
The above provisions indicate that, with the coming into
force of the Abolition Act, watans were abolished and all watan
lands vested absolutely with the Government, subject to Section
4. Under Section 4(1), ‘holders’ of the watans were allowed to pay
a certain occupancy price within five years from the date of
coming into force of the Act and obtain a regrant of the land.
However, according to the second proviso to Section 4(1) of the
Abolition Act, if the holder failed to pay such occupancy price
within the fiveyear period, he would be deemed to be in
unauthorised occupation of the land and would be liable to be
summarily ejected in accordance with the Bombay Land Revenue
Code, 1879.
12
11. Notably, as mentioned supra, the watandar in the
instant case did not exercise her right to seek regrant of the land
under Section 4(1) of the Abolition Act. It seems, the State
Government passed orders in G.R.R.D. No. PKA1056IVL dated
May 3, 1957 and G.R.R.D. No. 2760III48820L dated November
23, 1960 to grant the lands in favour of persons who were in
actual possession. By virtue of the aforesaid orders, wherever the
holder or watandar had failed to pay the occupancy price as
required by Section 4(1) of the Act before the prescribed period,
the lands in question be granted in favour of permanent Mirashi
tenants who were in actual possession of lands. But the Mirashi
tenant in this matter, namely, Ramchandra did not apply for re
grant pursuant to the said orders. On the other hand, the
mortgagee applied for regrant, though he was not a permanent
Mirashi tenant.
12. By an order dated 23.11.1960, the mortgagee
(represented by the Appellants herein) obtained a regrant of the
suit land upon paying the requisite occupancy price. It is claimed
that this was done on the basis of a Government Resolution dated
17.05.1956 permitting persons in actual possession of the watan
lands to seek regrant. Notably, this Government Resolution
13
dated 17.05.1956 has not been placed on record and nor has it
been considered by the three Courts. We hasten to note that the
effect of the Government Orders dated 03.05.1957 and
23.11.1960, mentioned supra, was considered by this Court in
para 5 of the judgment in Jayasingh Dnyanu Mhoprekar
(supra). But the Government Resolution dated 17.05.1956 is not
considered by this Court earlier. Be that as it may, it is not in
dispute that a regrant order was made in favour of the
Appellants’ predecessor and has not been questioned
subsequently. Thus, proceeding on the basis that the Government
Resolution dated 17.05.1956 existed and the regrant was made
in favour of the mortgagee, we find that the central question to
be considered here is the effect of such regrant on the rights of
the Mirashi tenant––mortgagor.
13. In our considered opinion, the failure on the part of the
mortgagor to pay the occupancy price and seek a regrant is not
fatal to his rights as a Mirashi tenant as the tenancy in his favour
continued to subsist despite the introduction of the Abolition Act,
as detailed in our discussion above. Consequently, the mortgage
executed by him also survived the resumption of the suit land
under the Abolition Act, and it cannot be said that the
14
relationship of mortgagormortgagee between the parties ceased
to exist by virtue of such Act.
14. It is wellsettled that the right of redemption under a
mortgage deed can come to an end or be extinguished only by a
process known to law, i.e., either by way of a contract between
the parties to such effect, by a merger, or by a statutory provision
that debars the mortgagor from redeeming the mortgage. In other
words, a mortgagee who has entered into possession of the
mortgaged property will have to give up such possession when a
suit for redemption is filed, unless he is able to establish that the
right of redemption has come to an end as per law. This emanates
from the legal principle applicable to all mortgages – “Once a
mortgage, always a mortgage”.
15. In the present case, it is clear that none of the
aforementioned conditions in which the right of redemption
comes to an end exist with respect to the mortgage deed dated
14.05.1947. As regards the impact of the regrant on such right of
redemption, it must be noted that such regrant in favour of the
mortgagee could not have been made but for the fact that he was
in actual possession of the property by virtue of his position as a
possessory mortgagee. There is no doubt that had the Mirashi
tenant––mortgagor applied for a regrant, the suit land would
15
have certainly been granted in his favour, as the rights of
permanent tenants in watan lands were allowed to subsist even
after the coming into force of the Abolition Act. Thus, in our
considered opinion, the regrant to the Appellants’ predecessor
based on actual possession as mortgagee cannot be divorced from
the existence of the underlying mortgagormortgagee relationship
between the parties. Therefore, any benefit accruing to the
mortgagee must necessarily ensue to the Mirashi tenant––
mortgagor.
16. In this regard, it is apposite to note Section 90 of the
Indian Trusts Act, 1882, which reads as under:
“Section 90. Advantage gained by qualified owner.—
Where a tenant for life, coowner, mortgagee or other
qualified owner of any property, by availing himself of
his position as such, gains an advantage in derogation
of the rights of the other persons interested in the
property, or where any such owner, as representing all
persons interested in such property, gains any
advantage, he must hold, for the benefit of all persons
so interested, the advantage so gained, but subject to
repayment by such persons of their due share of the
expenses properly incurred, and to an indemnity by
the same persons against liabilities properly
contracted, in gaining such advantage.”
A bare reading of this provision indicates that if a
mortgagee, by availing himself of his position as a mortgagee,
gains an advantage which would be in derogation of the right of
16
the mortgagor, he must hold such advantage for the benefit of the
mortgagor.
17. In the instant case, we find that the conditions
stipulated under Section 90 of the Indian Trusts Act, 1882 are
satisfied. As mentioned supra, the mortgagee could only obtain
the regrant in his favour by availing himself of his position as a
mortgagee, as such regrant is traceable to the possession of the
land accorded to him by virtue of the mortgage deed. Further, the
said regrant was certainly in derogation of the rights of the
mortgagor who was the permanent Mirashi tenant and thereby
protected by virtue of the subsisting tenancy. The fact that the
lessor/Mirashi tenant Ramachandra did not claim regrant is not
relevant inasmuch the right of redemption of a mortgagor is not
extinguished by virtue of regrant in favour of the original
defendant inasmuch as the regrant was obtained
and the property was held by the original defendant for the
benefit of the mortgagors. Regrant made in favour of the original
defendant is an advantage traceable to the possession of the suit
property obtained by him under the mortgage and the said re
grant certainly subserves the right of mortgagor who was a
Mirashi tenant in respect of the suit property. As mentioned
17
earlier, Section 90 of the Indian Trusts Act, 1882 casts a clear
obligation on the mortgagee to hold any right acquired by him in
the mortgaged property for the benefit of the mortgagor, as he is
seen to be acting in a fiduciary capacity in respect of such
transactions. Therefore, the advantage derived by the Appellants
(mortgagee) by way of the regrant must be surrendered to the
benefit of the Respondents (Mirashi tenant––mortgagor), subject
to the payment of the expenses incurred by them in securing the
regrant. This is because the Mirashi tenant—mortgagors’ right to
redeem the mortgage was not extinguished but was protected by
virtue of the Abolition Act as well as under the provisions of the
Bombay Tenancy and Agricultural Lands Act, 1948; in other
words, the tenancy in his favour continued to subsist.
18. This is also supported by the decision of this Court in
Jayasingh Dnyanu Mhoprekar (supra) where in a similar
factual scenario of the mortgagee obtaining a regrant in
derogation of the right of the mortgagor–Mirashi tenant, this
Court held as follows:
“9. ……. It is seen that the mortgagees obtained the
grant in their favour by making an incorrect
representation to the Government that they were
permanent Mirashi tenants although they were only
mortgagees. Section 90 of the Indian Trusts Act, 1882
18
clearly casts an obligation on a mortgagee to hold the
rights acquired by him in the mortgaged property for
the benefit of the mortgagor in such circumstances as
the mortgagee is virtually in a fiduciary position in
respect of the rights so acquired and he cannot be
allowed to make a profit out of the transaction. The
defendants are, therefore, liable to surrender the
advantage they have derived under the grant in favour
of the plaintiffs even if the order of grant has become
final before the Revenue Authorities, of course, subject
to the payment of the expenses incurred by them in
securing the grant. The decree of the first appellate
court accordingly has directed that Rs 182.41 should
be paid by the plaintiffs to the defendants along with
the mortgage money.”
19. In Namdev Shripati Nale (supra), while dealing with
the applicability of Section 90 of the Indian Trusts Act, 1882, this
Court observed as follows:
“6. …....The first respondentmortgagee failed to
comply with the aforesaid statutory obligation. He
committed a wrong or a default. Whether the
default/wrong committed has as its basis a
contractual obligation or a statutory obligation, makes
no difference. He was taken to be a tenant by the
authorities, which enabled him to get the regrant in
his favour. That was only because the first respondent,
as a possessory mortgagee, was in possession of the
property. He took advantage of his position as a
possessory mortgagee. In so doing he faulted. So, on
facts, it is clear that the first respondent obtained
regrant in his favour or obtained an advantage in his
favour, by availing himself of his position as a
19
mortgagee. In law, the advantage obtained by the first
respondent, the qualified owner, must be held to be for
the benefit of the persons interested — the mortgagor
appellant. We are of the view that in the totality of the
facts and circumstances, the provisions of Section 90
of the Indian Trusts Act are attracted. The first
respondentmortgagee gained an advantage by availing
himself of his position as a possessory mortgagee and
obtained the regrant. This he did by committing a
wrong. He committed a default in not paying the
occupancy price within the time limited by law for and
on behalf of the mortgagor. The regrant was obtained
in his name by posing himself as a tenant, which was
possible only because he was in possession of the land
(as a possessory mortgagee). The advantage so gained
by him in derogation of the right of the mortgagor
should attract the penal consequences of Section 90 of
the Indian Trusts Act. We hold that the default
committed by a possessory mortgagee, in the
performance of a statutory obligation or a contractual
obligation, which entails a sale or forfeiture of right in
the property to the mortgagor, will attract the
provisions of Section 90 of the Indian Trusts Act. In
such cases any benefit obtained by the qualified
owner, the mortgagee, will enure to or for the benefit of
the mortgagor. The right to redeem will subsist
notwithstanding any sale or forfeiture of the right of
the mortgagor. We are of the view that the law on this
point has been laid down with admirable clarity by this
Court in Mritunjoy Pani v. Narmanda Bala
Sasmal [(1962) 1 SCR 290 : AIR 1961 SC 1353] and by
K.K. Mathew, J. (as his Lordship then was) in Nabia
Yathu Ummal v. Mohd. Mytheen [1963 KLJ 1177 : AIR
1964 Ker 225] . The said decisions have our respectful
concurrence.”
20
(emphasis supplied)
20.The facts in the case of Collector of South Satara (supra)
and the case of Malikarjunappa Basavalingappa Mamle Desai
(supra) were totally different and these cases were dealing with a
different point. The litigation in these cases was not related to
the rights of a permanent tenant under watandar. So also, the
point involved therein was not related to the effect of the order of
regrant made in favour of the mortgagee. Therefore, we are of the
considered opinion that the dictum laid down in the
aforementioned judgments is not applicable to the facts of the
case at hand.
21. On other hand, in our considered opinion, the question
involved in the present litigation is squarely covered by the
judgments in Jayasingh Dnyanu Mhoprekar and Namdev
Shripati Nale (supra).
22. In view of the foregoing, we hold that the High Court
was justified in decreeing the suit filed by the Respondents herein
and setting aside the judgments of the Trial Court and the First
Appellate Court. We do not find any reason to interfere with the
impugned judgment. Accordingly, the instant appeal is dismissed.
21
…..…………................................J.
(MOHAN M. SHANTANAGOUDAR)
.……………………………...............J.
(R. SUBHASH REDDY)
New Delhi;
April 17, 2020
22
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