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PETITIONER: JYASING DNYANU MHOPREKAR & ANR.

       Vs.

RESPONDENT: KRISHNA BABAJI PATIL & ANR.

DATE OF JUDGMENT17/07/1985

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) MISRA, R.B. (J)

CITATION:  1985 AIR 1646            1985 SCR  Supl. (2) 308  1985 SCC  (4) 162        1985 SCALE  (2)94

ACT:      Mortgage - Redemption of mortgage - Right to redeem the mortgage, extinguishment of - Whether by virtue of the grant of mortgage  lands by the Prant Officer to the mortgagees in physical possession  under section  8 of the Bombay Paragana and Kulkarni  Watans (Abolition)  Act, 1950,  the  right  of mortgagees and/or  their legal representatives to redeem the mortgage had  become  extinguished  -  Bombay  Paragana  and Kulkarni (Abolition) Act, 1950 sections 3 (4),4-A and 8 read with section 90 of the Indian Trust Act, 1882 scope of.

HEADNOTE:      Krishna Babaji  Patil, respondent  No.1 herein  and his brother Bandu  Babaji Patil were holding a half-share in the lands bearing survey numbers 221/1,222/2,226/8 and 226/12 in all measuring  22 Acres  and 13  Gunthas situated  at  Monja Shirsi, Peta  Shirola, District  Sangli in  Maharashtra,  as permanent Mirasi  tenants and  were in  actual possession of their share  in the  said Lands.  The lands in question were Paragana Watan  Inam lands and the Watandars belonged to the family of Kokrudkar Deshmukhs. On May 20, 1947 they executed a mortgage  deed in  favour of  two persons  by name  Dnyanu Krihna Mhoprekar and Ananda Santu Mhoprekar mortgaging their share in  the above lands with possession by way of security for a  loan  of  Rs.1,000  which  they  borrowed  under  the mortgage deed.  The mortgage  deed was  for five  years. The mortgagees were  entitled to appropriate the income from the mortgaged property towards interest.      During the  subsistence of  the  mortgage,  the  Bombay Paragana and  Kulkarni Watans  (Abolition) Act,  1950 Bombay Act No.  50 was  passed under  which all  the  Paragana  and Kulkarni Watans  were abolished  and  the  State  Government resumed the  watan lands.  Dnyanu Krishna  Mhoprekar, one of the mortgagees died in or about the year 1955 leaving behind him Jayasingh  Dnyanu Mhoprekar,  the appellant  1 herein as his heir  and the  Karta of  his joint  family. Bandu Babaji Patil, one  of the  mortgagors also  died in  the year  1955 leaving behind  him three  sons, plaintiff  No. 2  being the Karta of the family. 309      After the  coming into  force of  the Watans  Abolition Act, the  holders of  the Watan  i.e.  the  members  of  the

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Deshmukh family  did not pay the occupancy price as provided in section  4(1) of  the Act  within the prescribed time and apply for  the occupancy  right of  such lands. Thereupon in the proceedings  initiated to  grant the  lands in favour of the permanent  Mirasi tenants, who were in actual possession thereof, the  respondents, who were permanent Mirasi tenants of the half-share in the lands covered by the survey numbers in question deposited in the Government Treasury on July 29, 1963 a  sum of Rs.182.41 being the requisite occupancy price equivalent to  24 times  the assessment  requesting that the grant  should  be  made  in  their  favour.  The  appellants mortgagees and  their heirs  in possession of the half-share and another Pandu Krishna who by virtue of the sale deed, by the other branch of the respondent’s family in his favour is in possession  of the  other half  share in  the lands  also deposited the occupancy price claiming the whole land.      The Prant  Officer, by his order dated February 5,1964, instead of  granting occupancy  right in respect of the one- half share  of the land which belonged to the respondents in their  favour   ordered  that  the  entire  extent  of  Land measuring 22  Acres and  13 Gunthas  should  be  granted  in favour of  the appellants and one Pandu Krishna as they were in physical  possession. The respondents questioned the said proceedings before higher authorities and pending a decision thereat, made  an abortive attempt to redeem the mortgage in a proceeding  under section  83 of  the Transfer of Property Act,  1882  in  Miscellaneous  Application  No.44  of  1963. Thereafter, the  respondent instituted a suit for redemption in Regular Civil Suit No.67 of 1965 on the file of the Civil Judge, Junior  Division, Islampur. In the written statement, it was  pleaded inter alia that since after the abolition of the watans,  the mortgaged  lands  had  been  given  to  the appellants by  the Government  after receiving the occupancy price amounting  to Rs.364.81  on February 5, 1964 the right of the  mortgagors and/or  their  legal  representatives  to redeem the  mortgage had  become absolute owners of the suit lands. After  the trial, the suit was dismissed by the Civil Judge. Aggrieved  by the  decree of  the  Trial  Court,  the respondents preferred  an appeal  before the District Court, Sangli in  Civil Appeal  No. 278 of 1966. In that appeal the decree of  the trial  Court was  reversed and  a decree  for redemption was  passed. Under  that decree  the  respondents were directed  to pay, in addition to the amount of Rs.1,000 borrowed under  the mortgage  deed a  sum of Rs.182.41 which was equivalent  to one-half  of the amount paid by appellant No. 1 and others in 310 order to  obtain the  grant from the Government. Accordingly an appropriate  preliminary decree  was drawn up under order XXXIV, Rule  7 of  the Code of Civil Procedure. Aggrieved by the said  decree the appellants filed a second appeal before the High  Court of  Bombay in  SA No.  37 of  1969 which was dismissed on  March 3,  1971 and thus the decree made by the first appellate  court was  affirmed. Hence  the  appeal  by special leave.      Dismissing the appeal, the Court ^      HELD  1.1   It  is  well  settled  that  the  right  of redemption under  a mortgage deed can come to an end only in a manner  known to law. Such extinguishment of the right can take place by a contract between the parties, by a merger or by a  statutory provision  which debars  the mortgagor  from redeeming the  mortgage. A  mortgagee who  has entered  into possession of  the mortgaged  property under a mortgage will have to  give up  possession of the property when a suit for

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redemption is filed unless he is able to show that the right of redemption  has come to an end or that the suit is liable to be  dismissed on some other valid ground. This flows from the legal  principle which  is applicable  to all mortgages, namely "Once a mortgage, always a mortgage. [315 D-H, 316 A]      1.2 It  is no  doubt true  that the father of the first appellant  and   the  second  appellant  have  been  granted occupancy right  by the  Prant Officer  by his  order  dated February 5,  1964 along  with Pandu,  the uncle of appellant No. 1. But the appellants would not have been able to secure the said  grant in  their favour  but for the fact that they were in actual possession of the lands. They were able to be in possession  of the  one-half share  of the respondents in the lands  in question  only by reason of the mortgage deed. If the  mortgagors had  been in  posssession of the lands on the relevant  date, the  lands would have automatically been granted in  their favour,  since the right of the tenants in the watan  lands were  allowed to  subsist  even  after  the coming into force of the Act and the consequent abolition of the watans by virtue of section 8 of the Bombay Paragana and Kulkarni Watans (Abolition) Act,1950. The fact that they had mortgaged land  with possession  on the  relevant date would not make their position any different.[316 A-D]      1.3 Section  90 of  the Indian Trusts Act, 1882 clearly shows 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 a mortgagor, he has to hold the advantage so derived 311 by him  for  the  benefit  of  the  mortgagor.  Section  90, therefore, casts  an obligation  on a  mortgagee to hold the rights required  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. [317 C-D, F-G]      In this  case the  mortgagees i.e.  Dnyanu, and  Ananda could each  get 1/4th  share in  the total  extent  of  land measuring  22   Acres  and   13  Gunthas  only  by  availing themselves of  their position  as mortgagees. The grant made in their  favour is an advantage traceable to the possession of the  land which they obtained under the mortgage and that the said  grant is  certainly in  derogation of the right of the  mortgagors   who  were  the  permanent  Mirasi  tenants entitled to  the grant  under  the  Government  orders.  The appellants could  not have asserted their right to the grant of the  land when the plaintiffs had deposited the requisite occupancy price  well in  time. The  mortgagees obtained the grant in  their favour by making an incorrect representation to the  Government that  they were  permanent Mirasi tenants although they  were only  mortgagees. As such the appellants are liable  to surrender  the advantage  they  have  derived under the  grant in  favour of  the respondents  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.[317 D-F, G- H]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1599(N) of 1971.      From the  Judgment and  Order  dated  3.3.1971  of  the Bombay High Court in S.A. No. 37 of 1969.

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    P.H. Parekh,  C.S. Singh and Miss Indu Malhotra for the Appellants.      V.A. Bobde,A.G. Ratnaparkhi and Miss A. Chauhan for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  This appeal  by special leave arises out  of   a  suit   for  redemption.  Krishna  Babaji  Patil (Plaintiff No.1)  and his  brother Bandu  Babaji Patil  were holding a  half share  in  the  lands  bearing  Survey  Nos. 221/1,222/2,226/8 and 226/12 in 312 all measuring  22 Acres  and 13  Gunthas situated  at  Mouje Shirsi, Peta  Shirola, District  Sangli as  permanent Mirasi tenants and  were in actual possession of their share in the said lands.  The lands  in question were Paragana Watan Inam lands and  the Watandars belonged to the family of Kokrudkar Deshmukhs. On  May 20,  1947 Krishna Babaji Patil (Plaintiff No. 1)  and Bandu  Badaji Patil  executed a mortgage deed in favour of  two persons  by name Dnyanu Krishna Mhoprekar and Ananda Santu  Mhoprekar (Defendant  No. 2)  mortgaging their share in  the above lands with possession by way of security for a loan of Rs.1000 which they borrowed under the mortgage deed. The  mortgage was  for five years. The mortgagees were entitled  to  appropriate  the  income  from  the  mortgaged property towards  interest. Dnyanu Krishna Mhoprekar, one of the mortgagees,  died in  or about  the  year  1953  leaving behind him  Jayasingh Dnyanu Mhoprekar, (Defendant No. 1) as his heir  and the  ’Karta’ of his joint family, Bandu Babaji Patil, one of the mortgagors, referred to above, died in the year 1955 leaving behind him his son plaintiff No. 2 and two other sons  as his  heirs. Plaintiff No. 2 is the ’Karta’ of that branch of the family.      The remaining  one-half share in the lands comprised in the above  Survey Numbers  belonged to  Ganu Vithu and Pandu Vithu who  were members of the other branch of the family of the mortgagors.  They had  also  mortgaged  their  share  in favour of  one Pandu  Krishna who  was  no  other  than  the brother of  Dnyanu and  the father of Ananda Santu Mhoprekar (Defendant No.  2). Defendant No. 2 had, however, been given in adoption  to Santu.  Subsequently Ganu  Vithu  and  Pandu Vithu sold  their share  in favour  of  the  mortgage  Pandu Krishna. Thus the family of the defendants was in possession of both  the shares  in the lands bearing Survey Nos. 221/1, 222/2, 226/8 and 226/12.      The plaintiffs  instituted the  suit for  redemption in Regular Civil  Suit No.  67 of 1965 on the file of the Civil Judge, Junior  Division, Islampur  out of  which this appeal arises after an abortive attempt to redeem the mortgage in a proceeding under section 83 of the Transfer of Property Act, 1882 in  Miscellaneous Application  No.44 of  1963. The suit was resisted  by the  defendants. In  the written  statement filed by  the Defendant  No.1 it was pleaded inter alia that since after  the abolition of the Watans the mortgaged lands had  been  granted  in  favour  of  Dnyanu  (the  father  of defendant No.  1 Jayasingh),  Ananda  (Defendant  No.2)  and Pandu Krishna  (brother of  Dnyanu) by  the Government after receiving the occupancy price amounting to Rs.364.81 on 313 February 5,  1964 the  right of  the mortgagors and/or their legal   representatives to  redeem the  mortgage had  become extinguished and  that the  grantees of  the land had become absolute owners of the suit lands. After the trial, the suit was dismissed by the Civil Judge. Aggrieved by the decree of the Trial  Court, the  plaintiffs preferred an appeal before the District  Court, Sangli in Civil Appeal No. 278 of 1966.

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In that  appeal which  was heard  by  the  Assistant  Judge, Sangli the  decree of  the Trial  Court was  reversed and  a decree for  redemption was  passed. Under  that  decree  the plaintiffs were  directed to  pay, in addition to the amount of Rs.1,000  borrowed under  the  mortgage  deed  a  sum  of Rs.182.41 which  was equivalent  to one-half  of the  amount paid by  defendant No.1  and others  in order  to obtain the grant  from   the  Government.  Accordingly  an  appropriate preliminary decree was drawn up under Order XXXIV, Rule 7 of the Code  of Civil Procedure. Aggrieved by the decree of the learned Assistant  Judge, Sangli,  the  defendants  filed  a second appeal before the High Court of Bombay in S.A. No. 37 of 1969.  The Second  Appeal was  dismissed on March 3, 1971 and the  decree  made  by  the  first  appellate  court  was affirmed. This  appeal by special leave is filed against the judgment and decree of the High Court.      Admittedly the  lands in  question were  comprised in a Paragana Watan.  Under  the  Bombay  Paragana  and  Kulkarni Watans (Abolition)  Act, 1950  (Bombay Act  No. 50  of 1950) (hereinafter referred  to as  ’the Act’)  all  the  Paragana Watans were abolished. Section 3 of the Act provided :           "3. With effect from and on the appointed day, not           withstanding anything contained in any law, usage,           settlement, grant, sanad or order-           (1) all  Paragana 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 provisions  of the  Code and  the  rules  made           thereunder as if it were an unalienated land: 314           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 alliance thereof           or any person claiming under or through him;      (4) all  incidents appertaining  to the said watans are hereby extinguished."      Section 4 of the Act provided that a watan land resumed under the  provisions of  the  Act  should  subject  to  the provisions of  section 4A thereof be regranted to the holder of the  watan to  which it  appertained on  payment  of  the occupancy price  equal 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 the Act and the holder should be deemed to  be an  occupant within  the meaning of the Bombay Land Revenue  Code, 1879  in respect  of such land and would primarily be  liable  to  pay  land  revenue  to  the  State Government in  accordance with  the provisions  of the  said Code and  the rules made thereunder. Under the first proviso to sub-section  (1) of section 4 the occupancy price payable was fixed  at six times the amount of the full assessment of such land  in certain  cases. The  second  proviso  to  sub- section (1)  of section  4, however,  provided that  if  the holder failed  to pay the occupancy price within a period of five years,  as provided  therein, he should be deemed to be unauthorisedly occupying  the land and would be liable to be summarily ejected  in accordance  with the provisions of the Bombay Land Revenue Code. Section 8 of the Act provided that if any  watan land  had been  lawfully leased and such lease was subsisting  on the  appointed day, the provisions of the

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Bombay tenancy  and Agricultural Lands Act, 1948 would apply to the  said lease  and the  rights and  liabilities of  the holder of  such land  and the  tenants would  subject to the provisions of  the Act  be governed by the provisions of the Bombay Tenancy  and Agricultural  Lands Act, 1948. After the Act came  into force, the Paragana watan which comprised the mortgaged property  also came  to be  abolished. It  appears that the  holders of  the watan  i.e.  the  members  of  the Deshmukh family  did not pay the occupancy price as provided in section 4 of the Act within the prescribed time and apply for the  occupancy right.  Thereupon action was taken by the State Government to grant the lands in favour of the persons who were in actual possession thereof in accordance with the directions contained  in  the  Order  passed  by  the  State Government in  G.R.R.D. No.  PKA-1056-IV-L dated May 3, 1957 and in G.R.R.D. No. 2760-III-48810-L dated November 23, 1960 which directed that wherever the holder or the 315 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  should  be  granted  in  favour  of  the permanent Mirasi  tenants who  were in  actual possession of such lands.  In those  proceedings the  plaintiffs who  were permanent Mirasi  tenants of  the half  share in  the  lands covered by  the Survey  Numbers in question deposited in the Government Treasury  on July  29, 1963 as per challan Ex. 45 Rs. 182.41 being the requisite occupancy price equivalent to 24 times  the assessment requesting that the grant should be made in  their favour.  The defendants and Pandu Krishna who were in  possession of  the entire extent of land covered by the  Survey  Numbers  also  deposited  the  occupancy  price claiming the whole land, that is, both the one-half share of the plaintiffs  which had  been mortgaged  by them  and  the other half  share which Pandu Krishna had acquired from Ganu Vithu and  Pandu Vithu  the other  branch of the plaintiff’s family. The  Prant Officer  instead of granting the one-half share of  the land which belonged to the plaintiffs in their favour ordered  that the  entire extent of land measuring 22 Acres and  13 Gunthas  should be  granted in  favour of  the defendants and  Pandu Krishna  as they were in possession of the whole  land by  his order  dated  February  5,  1964  in WTN/LGL/SR772. He,  however, ordered  that Dnyanu (father of defendant No.  1) would get 1/4 share, Ananda (Defendant No. 2) 1/4  share and  Pandu Krishna the remaining 1/2 share. It may be  noted that  Dnyanu was  dead by  then. But  his  son defendant No.1  claimed that  he should  be treated  as  the grantee  in   his  father’s  place.  The  plaintiffs  having questioned the  said proceedings  before higher authorities, no final decision appears to have been given yet. It appears that, a final judgment in those civil proceedings is awaited by the  revenue authorities  as can  be seen from the letter dated December  3, 1965 (Ex.43) and the letter dated June 6, 1966 (Ex.44)  written by the Mahalkari of Shirala during the pendency of the suit which has given rise to this appeal.      The only  question which  arises for  decision in  this case is whether by reason of the grant made in favour of the defendants the  right to  redeem the mortgage can be treated as having  become extinguished.  It is well settled that the right of redemption under a mortgage deed can come to an end only in  a manner  known to  law. Such extinguishment of the right can take place by a contract between the parties, by a merger  or   by  a  statutory  provision  which  debars  the mortgagor from  redeeming the  mortgage. A  mortagee who has entered into  possession of  the mortgaged  property under a mortgage will have to give up possession of the

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316 property when  a suit  for redemption  is filed unless he is able to show that the right of redemption has come to an end or that  the suit  is liable  to be  dismissed on some other valid ground.  This flows  from the legal principle which is applicable to all mortgages, namely "Once a mortgage, always a mortgage".  It is  no doubt  true that  the father  of the first defendant  and the  second defendant have been granted occupancy right  by the  Prant Officer  by his  order  dated February 5,  1964 along  with Pandu,  the uncle of defendant No.1. But  it is  not disputed that the defendants would not have been  able to secure the said grant in their favour but for the  fact that  they were  in actual  possession of  the lands. They  were able  to be  in possession of the one-half share of  the plaintiffs  in the  lands in  question only by reason of  the mortgage  deed. If the mortgagors had been in possession of  the lands  on the  relevant date,  the  lands would have automatically been granted in their favour, since the rights of the tenants in the watan lands were allowed to subsist even  after the coming into force of the Act and the consequent abolition of the watans by virtue of section 8 of the Act.  The question  is whether  the  position  would  be different because they had mortgaged land with possession on the relevant date.      At this  stage it is appropriate to refer to section 90 of the Indian Trusts Act, 1882 which reads as under :-           "90. Advantage  gained by  qualified owner-Where a           tenant for  life,  co-owner,  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." Illustrations (b) and (c) to section 90 of the Indian Trusts Act, 1882 read thus:           (b) A village belongs to a Hindu family, A, one of           its  members,   pays  nazrana  to  Government  and           thereby procures  his name  to be  entered as  the           inamdar of the 317           village. A  holds the  village for  the benefit of           himself and the other members.           (c)  A  mortgages  land  to  B,  who  enters  into           possession. B  allows the  Government  revenue  to           fall into arrear with a view to the land being put           up for sale and his becoming himself the purchaser           of it.  The land is accordingly sold to B. Subject           to the repayment of the amount due on the mortgage           and  of   his  expenses   properly   incurred   as           mortgagee, holds the land for the benefit of A."      An analysis  of section  90 of  the Indian  Trusts Act, 1882 set  out above  shows 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 a mortgagor, he has to  hold the advantage so derived by him for the benefit of the mortgagor. We are of the view that all the conditions mentioned in  section 90  of the Indian Trusts Act, 1882 are satisfied in  this case.  The mortgagees  i.e.  Dnyanu,  the

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father of  defendant No.  1 and  Ananda the second defendant could each  get 1/4th  share in  the total  extent  of  land measuring  22   Acres  and   13  Gunthas  only  by  availing themselves of their position as morgagees. The grant made in their favour  is an advantage traceable to the possession of the land which they obtained under the mortgage and that the said grant  is certainly  in derogation  of the right of the mortgagors who were the permanent Mirasi tenants entitled to the grant under the Government orders referred to above. The defendants could  not have asserted their right to the grant of the  land when the plaintiffs had deposited the requisite occupancy price well in time. It is seen that the mortgagees obtained the  grant in  their favour  by making an incorrect representation to  the Government  that they  were permanent Mirasi tenants  although they  were only mortgagees. Section 90  of   the  Indian  Trusts  Act,  1882  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 318 the  Ist  appellate  court  accordingly  has  directed  that Rs.182.41 should be paid by the plaintiffs to the defendants alongwith the mortgage money.      It was,  however, argued  on behalf  of the  appellants before us  that since  Pandu Krishna, the other grantee, has not  been   impleaded  no  relief  can  be  granted  to  the plaintiffs. There is no merit in this contention because the order of  the Prant  Officer makes  the  grant  in  specific shares. Dnyanu,  the father  of defendant  No. 1  and Ananda (defendant No.  2) are  granted 1/4  share each and only the remaining 1/2  share is  given  to  Pandu  Krishna.  We  are concerned in  this case  only with the half share granted in favour of  the mortgagees.  This decree relates only to that one-half share  which had been mortgaged. Pandu Krishna, the other grantee,  can have  no interest  in the one-half share which is  the subject  matter  of  these  proceedings.  This contention is, therefore, rejected.      The High  Court was,  therefore, right in affirming the judgment of  the first appellate court. The appeal fails and it is dismissed with costs. S.R.                                       Appeal dismissed. 319