Authored By : Atkinson, Kingsford
Atkinson, J.
1. These are appeals by the plaintiffs from a single judgment of the learned Subordinate Judge dismissing their two suits against the defendants-respondents. In Appeal No. 60 the respondent, Dhanpat Singh, has been entered in the finally published Record of Rights as mukarrari tenure-holder in respect of 162 bighas of land at a rent of Rs. 31 odd. Lakhan Singh, who is respondent in Appeal No. 204, has been similarly entered as mukarrari tenure-holder in respect of two holdings of 54 bighas and 6 bighas, at rents of Rs. 16 and Re. 1 odd, respectively. Lakhan is the father of Dhanpat. The final publication took place on the 31st October 1904. The plaintiffs prayed for a declaration that the defendants had no mukarrari right and they asked for an enhancement of rent under section 30A of the Bengal Tenancy Act. The Subordinate Judge held that the plaintiffs had failed to rebut the presumption attaching to the finally published Record of Rights and dismissed both suits.
2. It appears that the original proprietor of this village was heavily involved in debt, and after his death the District Judge appointed a manager to supervise the estate on behalf of his two minor sons. Upon the 8th July 1903 the manager appointed by the District Judge executed on behalf of the minors a consolidating mortgage charging the properties mentioned in the schedule to the bond with the principal sum of Rs. 6,400. And I gather that it was intended by this mortgage to consolidate all the debts then existing as against the property of the mortgagor. On the 1st July 1905, the mortgagee instituted a suit upon the mortgage-bond of the 8th July 1903, and he obtained a decree on the 7th August 1905.
3. The plaintiffs in this action purchased the property in execution of that decree in March 1907. The final publication of the Record of Rights took place in October 1904, at a time when the property of the minors was under the care of the Court of Wards, under the provisions of Act VIII of 1890. In 1902 the original proprietor brought a suit against Dhanpat Singh, claiming rent at a rate of Rs. 2-4-0 per bigha in respect of the holding held by him. In his written statement filed in that suit, Dhanpat alleged that he was holding 149 bighas at a rent of 4 annas per bigha, and he stated that the total rent for the 149 bighas was Rs. 37-40. But be did not assert in express terms that the tenure under which he claimed was mukarrari.
4. In April 1903, the suit instituted by the zamindar was withdrawn, the plaintiff paying the defendants' costs, with liberty reserved to the plaintiff to institute a fresh suit; but this apparently was never done. Accordingly when the Settlement proceedings were pending during the years 1903 and 1904, the dispute was again revived as between the tenant-defendants in this action on the one hand, and the zamindari interest upon the other. The estate, as I have said, was being managed at this time under the control and under the direction of the manager.
5. Then it appears that in or about October 1903, at the time of attestation, the manager, on behalf of the mortgagor, filed a tannazza claiming to have the dispute, then existing between the estate on the one hand and the defendants as tenants upon the other, settled and adjudicated upon by the Settlement Officer.
6. At this time and before the matter could come before the Settlement Officer, the manager, purporting to act on behalf of the estate, called upon the defendants to show how they supported their claim to mukarrari. The only evidence which "they adduced before the manager were valid receipts for rent running back for a period of seven years. Upon the examination of those receipts, and with no further or additional evidence, the manager assented or agreed that the tenants should be recorded in the Record of Rights in accordance with the claim pat forward by them, namely, as mukarraridars holding the specified area of land at the rate of 4 annas per bigha.
7. The main question in this case is, whether the agreement so arrived at between the manager and the defendants was a valid agreement binding upon the mortgagees, and the plaintiffs in this action as auction-purchasers, and the successors-in-title to the mortgagees.
8. After the mortgage was executed the mortgagor minors remained on in possession by their manager of the mortgaged properties, with the assent of the mortgagees. The recitals in the mortgage deed are very important in considering the nature and the scope of the implied authority, which arises as between the mortgagor and the mortgagee when a mortgagor is allowed to remain in apparent possession and ownership of the mortgaged properties.
9. I do not think in this case that any real question arises as to whether or not evidence was adduced in this action to rebut the presumption arising from the correctness of the entry in the Record of Rights. The main question seems to me to be, whether the basis upon which the entry that was made in the Record of Rights was founded upon a valid and legally binding agreement. We are entitled in law to examine and enquire into the grounds and basis upon which the entry in the Record of Rights was made.
10. No evidence was adduced in this case by the defendants before the Settlement Officer to support their claim. It is conceded by the parties that the entry that was made in the Record of Rights was based either on a compromise agreement or an admission of the manager with the tenants, whereby the mortgaged property was blistered with a mukarrari grant at a mere nominal rent in respect of a very large area of land.
11. The main question for decision is, whether that agreement is binding as against the mortgagees and the plaintiffs in this action.
12. Thus, on the argument before us two questions arise for legal determination. First, whether the deed of the 8th July 1903 is a mortgage in contradistinction to a charge. Section 58 of the Transfer of Property Act, clause (a), defines a mortgage to be "the transfer of an interest in specific immoveable property;" and clause (b) of the same section defines a simple mortgage in the following terms: "Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied, so far as may be necessary, in payment of the mortgage-money".
13. This deed which we have to consider does not expressly contain any words involving a transfer of any specific interest in immoveable property, but clause 6 runs as follows: "That as a guarantee for the repayment of the principal amount with interest covered by this bond, as also law and private expenses, we hereby mortgage and hypothecate the properties mentioned below, and we further declare that until repayment of the debt covered by this bond, we shall not mortgage, transfer, execute by gift or any other kind of transfer in any way; and if we do the same shall be void on face of this mortgage-deed."
14. In the case of Dalip Singh v. Bahadur Ram 15 Ind. Cas. 435 : 34 A. 446 : 9 A.L.J. 550, the Chief Justice of this Court, then Mr. Justice Chander, laid down the three essentials constituting a simple mortgage as follows: "In order that there may be a simple mortgage, there must be (a) a transfer of an interest in specific immoveable property, (b) a personal undertaking by the mortgagor to pay the mortgage-money, and (c) an agreement, express or implied, that in the event of the mortgagor failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold."
15. Now, admittedly in the present case the conditions (b) and (c) have been fulfilled, but there is no express transfer of an interest in the property; and the learned Judge, in the case I have referred to, deals with a case such as the present and says: "In a simple mortgage, the interest transferred is the right to have the property sold, and this need not...be provided for in the deed in so many words; it may be inferred from the language used and where such an agreement can be inferred, then the requirements of condition (a) are satisfied."
16. To the same effect is the case of Gobinda Chandra Pal v. Dwarka Nath Pal 35 C. 837 12 C.W.N. 849 : 7 C.L.J. 492. In an exhaustively considered judgment as to the distinction between a charge and a mortgage, the learned Judge in that case at page 841 of the report says: "If an instrument is expressly stated to be a mortgage, and gives the power of realization of the mortgage-money by sale of the mortgaged premises, it should be held to be a mortgage."
17. In our view, that being the law of India with regard to a simple mortgage, the requirements of the Statute in this case have been fulfilled; and this deed, which is expressly called a mortgage deed and expressly mortgages and hypothecates the property charged as security for the mortgage-debt, is, according to the law of India, a valid simple mortgage.
18. If the law of England were applicable, I think that this mortgage-bond would be held rather to be a charge by way of mortgage, than a simple legal mortgage. However, the law of India differs in this respect, and we feel ourselves conclusively bound to hold that the mortgage in the present case is a simple mortgage and not « a charge.
19. The second question arising for our consideration is the validity of the agreement made by the manager with the tenant defendant and upon which the accuracy of the Record of Rights depends.
20. The mortgage-bond in this suit is a carefully prepared document. It is executed on behalf of the minors by the manager appointed by the Court under the direction of the Court and in pursuance of a Statute, and it sets out very fully the fact that this estate has been and is being managed by the manager under the Court on behalf of the minors. I attach great weight to this fact, because it naturally would affect the mortgagees in considering the advisability of advancing their money on the security of the mortgaged property as to the nature and extent of the authority that such a manager would have to make contracts on behalf of the mortgagors while they remained in possession of the property after the mortgage money had been advanced. It seems to me that the fact that the manager was the person who executed the mortgage and is declared to be the manager of the estate, rather limits than extends the ordinary rights of a mortgagor in possession. No doubt, while a mortgagor remains in possession after the date of a mortgage he can deal with the property in the usual and customary way so as to bind the mortgagee; but he must not do anything prejudicially affecting the mortgaged property as security for the mortgage-debt.
21. I think the law on this aspect of the case is well summed up in the case of Madan Mohan Singh v. Raj Kishori Kumari 17 Ind. Cas. 1 : 17 C.L.J. 384, at page 388 Page of 17 C.L.J.-Ed. of the report, where Mr. Justice Mookerji says: It cannot, however, be maintained, as was pointed out by Lord Justice Romer in Reynolds v. Ashby (1903) 1 K.B. 87 at p. 102 : 72 L.J.K.B. 51 : 87 L.T. 640 : 51 W.R. 405 : 19 T.L.R. 70, that the mortgagor has anything like a general authority to deal with or affect the mortgaged property during his possession thereof. The true position thus is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management, for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But it is not competent to the mortgagor to grant a lease on unusual terms, or to alter the character of the land, or to authorise its use in a manner or for a purpose different from the mode in which he himself had used it before he granted the mortgage." And he adds:--If there are any defendants who have obtained settlement from the mortgagor after the mortgage but before the commencement of the mortgage suit, they can resist the claim of the plaintiff, only if they can establish that the leases in their favour were granted on the usual terms, in the ordinary course of management; such a plea, if established,--and, it must not be overlooked, that the burden of proof in this matter is upon them--will furnish a complete answer to the claim of plaintiff."
22. That, in our view, is a correct summary of the law as to the relationship existing between mortgagor and mortgagee where the mortgagor remains in possession. And it is thus laid down and recognized that where a person gets a contractual benefit from a mortgagor in possession after the date of the mortgage, the onus is upon such person to prove that it was a benefit which he might derive and retain in the usual course of the management of the property.
23. If the mortgagors had made this compromise or agreement with the defendants, instead of the manager, would it have been an agreement in the usual and customary course of management I think not. Because the essence of this agreement is, that these defendants should be entitled to hold their respective holdings under a perpetual lease at a purely nominal rent; and more especially would this be unusual in the case of property such as the present one, which was mortgaged up to its eyes in debt. Could it be said that the making of any such agreement by a mortgagor in possession would not prejudicially affect the mortgagee's security; and would it be such an agreement as any prudent man would make in transacting his own business affairs, more especially when the claim of the tenants seems shadowy and uncertain However, the manager of an estate under the Guardians and Wards Act has his duties defined and prescribed by the Act of the Legislature. By section 27 the guardian of the property of a ward is bound to deal with it as carefully as a man of ordinary prudence would deal with it if it were his own, and subject to the provisions of the Statute may do all acts which are reasonable and proper for the realisation, protection, or benefit of the property. But these powers conferred by section 27 are expressly limited by section 29. By section 29 a manager cannot mortgage without the previous permission of the Court, nor grant a lease of any part of the property for a term exceeding five years or for a term extending more than one year beyond the date on which the ward ceases to be a minor. What was the agent or manager in this matter doing He was by an agreement recognizing the doubtful validity of a tenure which would operate against the mortgagees of the estate in perpetuity. On the most unsatisfactory evidence put forward by the tenants he accepted their contention, evidence upon which the Settlement Officer, had the case gone before him in the ordinary course, would have been bound to reject the claim put forward on behalf of the tenants, because they would not have brought themselves within the provisions of section 50 of the Bengal Tenancy Act so as to be entitled to what might be called a statutory mukarrari. I ask, was that a prudent thing, or such as a reasonable man would do in the discharge of his own affairs, or with a view to the protection or benefit of the property It was almost, in my opinion, making a gift of these 124 bights of land at this nominal rent. But had the manager discharged his duty as he was bound to do, knowing that he was there as agent not only for the mortgagors, but also for the mortgagees with whom he had made the mortgage contract, he would have found three kabuliyats which would have completely negatived the case made by the tenants. The first is dated the 22nd August 1876, and the two following are dated the 5th January 1887 and deal expressly with the property now in dispute and' in possession of the defendants. And had the manager examined these documents--and they must have been within his reach or power of procurement--he would have found that the lands in question in this suit were held by these defendants' ancestors under these leases at a rent of Rs. 2-4-6, being the actual rent sued for in the rent suit instituted in 1903. These documents negative, conclusively negative, the case put forward by the defendants; and it would be quite impossible in the face of these documents to hold that when the manager made the contract he did with the defendants, he had materials before him upon which he could exercise a reasonable and satisfactory judgment as to the claims put forward by the defendants, having regard to the interest and duty which he owed to the estate.
24. Therefore, we think that the status of the defendants as recorded in the Record of Rights cannot be supported, because it is made on foot of an agreement not legally binding upon the mortgagees and consequently not binding upon the plaintiffs in this action. The plaintiffs in this action are auction-purchasers; and they by their purchase have acquired all the interest of the mortgagor in the premises, and all the interest of the mortgagee in the premises as at the date of the mortgage. Therefore we will decree that the relief sought in this action shall be granted; that the entry in the Record of Rights shall be cancelled, and the case must be remanded to the Subordinate Judge to determine what the enhanced rent of these holdings should be under the provisions of section 30A of the Bengal Tenancy Act.
25. We award to the plaintiffs the costs of this appeal and costs in the lower Court.
Kingsford, J.
I agree.
