Holding

A default by a possessory mortgagee in paying the statutory occupancy price attracts Section 90 of the Indian Trust Act, so any advantage gained by the mortgagee is held for the benefit of the mortgagor and the mortgagor’s right to redeem subsists.

Summary

The appellant, N.S. Nale, sought redemption of a possessory mortgage on an inam land that had been resumed and regranted under the Bombay Pargana and Kulkarni Watans (Abolition) Act, 1950. The mortgagee, Bapu Ganpati Jagtap, failed to pay the statutory occupancy price required for regrant, yet obtained the regrant by posing as a tenant. The legal issue was whether such failure amounted to a default attracting Section 90 of the Indian Trust Act, thereby making any advantage gained for the benefit of the mortgagor and preserving the right to redeem. The Supreme Court held that a possessory mortgagee is statutorily obliged to pay the occupancy price on behalf of the mortgagor and that failure to do so is a default attracting Section 90. Consequently, the advantage obtained by the mortgagee must be held for the mortgagor, and the right to redeem subsists despite the regrant. The Court set aside the High Court judgment, restored the District Judge’s decree, and allowed the appeal with costs.

Issues considered

Whether a possessory mortgagee is bound to pay the occupancy price under Section 4 of the Bombay Pargana and Kulkarni Watans (Abolition) Act, 1950 on behalf of the mortgagor.
Whether failure to pay the occupancy price constitutes a default that attracts Section 90 of the Indian Trust Act, 1882.
Whether any advantage gained by the mortgagee through regrant must be held for the benefit of the mortgagor, preserving the mortgagor’s right to redeem.
Whether the right to redeem survives despite the land being regranted to the mortgagee.

Legislation cited

Indian Trust Act, 1882s. 90
Transfer of Property Act, 1882s. 65(c), s. 76(c)

Subjects

possessory mortgageoccupancy pricedefaultSection 90Indian Trust Actright to redeemregrantstatutory obligationBombay Pargana Act

Judgment

A NAMDEV SHRIPATI NALE
v.
BAPU GANAPATI JAGTAP AND ANR.

MARCH 11, 1997

B
(B.P. JEEVAN REDDY AND K.S. PARIPOORAN, JJ.]

Bombay Pargana and Kulkami Watans (Abolition) Act, 1950-Section
4"-0ccupancy price-Statutory obligation of payment of-Possessory
Mo1tgage-Mortgagee in possession of morlgaged prope1ty-Default com-
C milted by possessory 11w1tgagee in not paying occupancy price within time
specifie~Regrant obtained by posing himself as tc11a111-Right to redeem will
subsist notwi1hsta11di11g any sale or f u1feiture or right of mortgagor-Ap-
plicability or Section 90 of the Tmsl Act.

D Appellant's father executed a possessory mortgage of the suit
property, an inam land, in favour of the first respondent for a period of
12 years. The mortgagee was to take the income of the. property and
appropriate the same towards the interest due etc. Appellant's father died
in 1953. The ap11ellant was a minor then. The property was an inam land.
By the Bombay Pargana and kulkarni watans (Abolition) Act, 1950, the
E land was resumed by the Government. There was a provision to regrant it
to the holder of the land on payment of the occupancy price on or before

-
,25.1.1956. The mortgagor did not pay the occupancy price till then. The
mortgage could not be redeemed within the period fixed. After the expiry
of that period, the appellant sought rcdempt.ion which was declined. The
F trial court dismissed the suit. In appeal, a preliminary decr~e fo:· redemp-
tion and 1·ecovcry uf possession of the property was passed. The District
Judge held that the mortgagee failed to remit the occuJJancy 11rice as
enjoined on him, and by putting forward the pleas that he was a tenant,
he obtained the re:,:rant and thus gained an advantage and that the right
to redeem still vested in the appellant. In second appeal, High Court
G restored the Judgment and decree of the trial court. It was held that due
to non payment of the occupancy price by the appellant as per the
provisions of the Maharashtra Act, 1950, the land vested in the Govern-
ment and was regranted to the first respondent and that the appellant had
lost his right to redeem the property. This appeal had been filed against
H the judgment of the High Court.
980
'(
N.S.NALEv. BAPUGANAPATIJAGTAP 981

- · The appellant urged that the mortgagee was bound to pay the
occupancy price and by failing to do so he brought about the situation,
enabling him to obtain a regrant of the property in his name by posing
himself a,s a tenant and committed a default or a wrong and by taking
A

advantage of his position, as one in possession of the property, obtained
a benefit or advantage and as the resultant advantage should be deemed B
to have been obtained for the benefit of the appellant, the suit for redemp-
tion should be decreed.

The respondents contended that in view of the failure of. the
mortgagor remit the occupancy price within the time' limited by law, the
land vested in the Government and it could not be said that he committed C
any default and obtained any undue advantage in the subsequent regrant
made in his favour and that the provisions of Section 90 of the Indian
Trust Act were not attracted.

Allowing the appeal, this Court
D
HELD : 1.1. The occupancy price payable under Section 4 of the
Bombay Pargana and Kulkarni Watans (Abolition) Act, 1950, to obtain a
regrant, will be covered by the expression 'all public charges accruing due
in respect of the property', 'all other charges of public nature' as specilied
in Sections 65 (c) and 76 (c) of the Transfer of Property Act res11ectively. E
In the absence of a contract to the contrary, during the pendency of the
mortgage, when the mortgagee is in possession of the mortgaged pro11erty,

- he was bound to pay or remit the occupancy pl'ice under Section 4 of the
Act for and on behalf of the mortgagor, so as to prevent the happening of
the consequences stated in the proviso. The first respondent-mortgagee
failed to comply with the aforesaid statutory obligation. He committed a
wrong or a default. Whether the default/wrong committed has as it!P-basis
a contractual obligation or a statutory obligation, makes no difference. He
F

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 ad- G
vantage of his position as a possessory mortgagee. In so doing he faulted.
So, on facts, the first respondent obtained regrant in his favour or ob-
tained an advantage in his favour, by availing himself of his position as a
mortgagee. In law, the advantage obtained by the first respondent, the
qualified owner, must be held to be for the benefit of the persons inter- H
982 SUPREME COURT REPORTS
1
[1997] 2 S.C.R. -

A ested-the mortgagor-appellant. (988-F-H]
1.2 In the totality of the facts and circumstances, the provisions of
Section 90 of the Indian Trust Act are attracted. The first respondent-
mortgagee gained an advantage by availing himself of his position as a
. possessory mortgagee and obtained the regrant. This he did by committing
B . 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 posse3sory mortgagee).
The advantage so gained by ~im in derogation of the right of the mortgagor
C should attract the penal consec1uences of Section 90 of the Indian Trust
Ad. 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 Trust Act. In such cases any benefit
obtained by the qualified owner, the mortgagee, will enure to or for the
D benefit of the mortgagor. The right to redeem will subsist notwithstanding
any sale or forfeiture of the right of the mortgagor. [989-A-F]

M1it1111joy Pani and Anr. v. Nannanda Bala Sasmal a11d Anr., [1962]
·• 1 SCR 2911, relied on.
E Nahia Yathu Ummal v. Muhammed Mythee11 a11d Ors., (1963) KW
1177, approved.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 172 of
1980.
F
From the Judgment and Order dated 9.11.79 of the Bombay High
Court in S.A. No. 514 of 1974.

Aman Hingorani for M.C. Dhingra for the Appellant.

G A.S. Bhasmefor the Respondents.

The Judgment of the Court was delivered by

PARIPOORNAN, J. The plaintiff in Civil Suit No. 40 of 1970 - Civil
Judge, Junior Division, Vaduj, is the appellant herein. His father one
H Shripati executed a pos~essory mortgage uf the suit property,. R.S. No.
N.S.NALEv. BAPUGANAPATIJAGTAP[PARIPOORNAN,J.] 983

244/23 situate at Lalgun Taluka Khatav, Distt. Satara, by Exhibit 35A dated A
3.4.1947 for Rs. 1,200/- in favour of the first respondent, (1st defendant),
Bapu Ganpati Jagtap. Pending this appeal, first respondent died on
1.6.1985. His three sons Nivruti Bapusaheb Katkar (Jagtap) Dhyandev
Bapusaheb Katkar (Jagtap) and Sahelrao Bapusaheb Katkar (Jagtap) have
been impleaded as his legal representatives. The second respondent LaXIni B
Devi Shripati Nale is the appellant's mother. Exhibit 35A mortgage was for
a period of 12 years. The mortgagee was to take the income of the property
and appropriate the same towards the interest due etc. Appellant's father
did in 1953. The appellant was a minor then. The mortgage could not be
redeemed within the period fixed. After the expiry of the said period, the C
appellant caused a notice to be sent agreeing to repay the mortgage amount
_ Rs. 1,200/- and sought redemption. The first respondent declined to accede
to the request. So, the suit was laid for redemption of the mortgage, Exhibit
35A. The first respondent pleaded that the transaction Exhibit 35A was
really a sale. In the alternative, he pleaded that the plaint item is an inam
and it was abolished by the Bombay Pargana and Kulkarni Watans (Aboli- D
tion) Act, 1950 (Maharashtra Ad 60 of 1950) (hereinafter referred to as.
the Act.) The land was resumed by the Government and was regranted to
the first respondent (Ext. 26). So, the appellant has not subsisting right to
redeem. The first respondent also pleaded that in case of redemption he
should be paid compensation. E
2. The trial court, by order dated 8.12.1971, dismissed the suit. In
appeal the District Judge, Satara, in Civil Appeal No. 29 of 1972, by order
dated 30.1.1974, decreed the suit and passed a preliminary decree for
redemption and recovery of possession of the property. In second appeal F
No. 514 of 1974, by order dated 19.11.1979, a learned single Judge of the
High Court of Bombay restored the judgment and decree of the trial Court.
That has resulted in the appellant's coming in appeal before this Court.

3. The trial court, the lower appellate court and High Court have -
found that the Exhibit 35A is a deed of lll;Ortgage and not a sale. The trial G
court found that as per Act the land vested in the Government and was
regranted to the first respondent. The appellant has lost his right to redeem
the property. The plea that the first respondent was only a trustee and
Sectio11 90 of the Indian Trust Act, 1882 was attracted, was repelled. In
appeal the District Judge held that the first respondent-mortgagee failed H;
984 SUPREME COURT REPORTS (1997]2S.C.R. {

A to remit the occupancy price as enjoined on him, and by putting forw~rrd
the plea that he is a tenant, he obtained the regrant and thus gained an
advantage; it should ensure of the benefit of the mortgagor and so, the right
to redeem still vested in the appellant. It is a case where Section 90 of the
Indian Trust Act was clearly attracted. Jn second appeal, the learned single
B Judge of the High Court took the view that (1) due to non payment of the
occupancy price by the plaintiff within the period. of five years (on or before
25.1.1956) the suit property vested in the Government and this was not
challenged; (2) the first respondent was taken to be a tenant and the land
was regranted to him, (Ext. 26); and (3) it cannot be said that the first
C respondent gained an advantage by availing his position as mortgagee in
getting the regrant. In the above premises, the suit for redemption was
dismissed.

4. We heard counsel. Counsel for the appellant urged before us that
the first respondent-mortgagee was bound to pay the occupancy price and
D by failing to do so he brought about the situation, enabling him to obtain
a regrant of the property in his name by posing himself as a tenant; in other
words, first respondent committed a default or a wrong and by taking
advantage of his position, as one in possession of the property, obtained a
benefit or advantage. He has committed a wrongful act, in not remitting
E the occupancy price as contemplated by law. The resultant advantage,
obtained thereby should 'en ure to the benefit of the appellant or, in other
words, the resultant advantage should be deemed to have been obtained
for the benefit of the appellant. So, the suit for redemption should be
decreed. On the other hand, counsel for the respondents contended that
in view of the failure of the mortgagor to remit the occupancy price within
F
the time limited by law, the land veste.,d in Government; it cannot be said
that he committed any default and obtained any undue advantage in the
subsequent rei,'Tant made in his favour. The provisions of Section 90 of the
Indian Trust Act are not attracted.

G 5. The following statutory provisions are relevant to adjudicate the
controversy in this case. They arc :-

"(I) Section 2 (l)(b), 3 and 4 of the Bombay Pargana and
Kulkarni Watans (Abolition) Act, 1950 (Maharashtrafct 60
H of 1950): ·
N.S. NALEv. BAPU GANAPATIJAGTAP [PARIPOORNAN,J.] 985

"2Definitions - (1) In this Act unless there is anything repugnant A
in the subject or context,--

(a)

(b) "code" means the 80111/my Land Revenue Code, 1879;"
B
"3. Abolitio11 of ce1tain watans together with the tight to office a11d
incident. -- With effect from and on the appointed day, not-
withstanding anything contained in any law, usage, settlement,
grant, sanad or order --

( 1) all Paraganas and Kulkarni watans shall be deemed to have C
been abolished;

t2) all rights to hold office and any liability to render service
appertaining to the said watans are hereby extinguished;

(3) subject to the provisio11s of section 4, all watan la11d is hereby D
resumed and shall be deemed to be subject to the payment of
la11d revenue under the provisions of the Code a11d the mies
made thereunder as if it were a11 1111alie11arcd land;

Provided that such resumption shall not effect the validity of E
any alienation such watan land made in accordance with the
provisions of section 5 of the Watan Act or the rights of all
alienee thereof or any person claiming under or throu~h him;

(4) all incidents appertaining to the said watans arc hcarby ex-
. tinguished." F
"4. Holder onvatan land to be occupant.-- (l)A war an land resumed

-
under the provisions of this Act shall subject to the provisions of
section 4-A, be r.:pwlfed to the holder of the watan to which it
appeltained, 011 paymellt of tlie ocwpancy p1ice equal to twell'e times
of the amount of the full assessment of such land wit/1i11 five yemJ G
from the date of the coming into f orcc of this Act and the holc.lcr
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 Staie Government in accordance with the provisions
of the Code and the rules made thereunder; all the provisions of H
986 SUPREME COURT REPORTS [1997] 2 S.C.R. - y
A 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 laml 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
B shall be paid by the holder of the lands for its regrant:

Provided further that if thay holder fails to pay the occupancy
price within the pe1iod of five years as provided in this section. he
shall be deemed to be Unauthmisedly occupying the land and shall
c 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
D such amount as the State Government may by general or special
order determine.

(3) Nothing in sub-section (1) and (2) shall apply to any land --

E (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

(b) which has been validly alienated with the sanction of
F the State Government under section 5 of. the Watan
Act.

Explanation -- For the purposes of this section the expression
"holder" shall include --
.....
G
(i) all persons who on the appointed day arc 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 apper-
H taining thereto, a person in whom the ownership of such
N.S. NALE v. BAPU GANAP ATI JAGTAP [PARIPOORNAN, J.] 987

land for the time being vests." A
(emphasis supplied).

(II) Section 65 (c) and 76 (c) of the Transfer of Property Act are
to the following effect :-
B
"65. In the absence of a contract to the contrary, the mortgagor shall
be deemed to contract with the mortgagee - /

(c) that the mortgagor will, so long as the mortgagee is not
in possession of the mortgaged property, pay all public
charges accniing due in respect of the property;" C

"76. it7zen, during the continua11ce of the mortgage, the mortgagee
takes possessio11 of the mortgaged property, -

(c) he must, in the absence of a contract to the contrary, D
out of the income of the property, pay the Government
revenue, all other charges of a public nature and all rent
accruing due in respect thereof during such possession
and any arrears of rent in default of payment of which
the property may be summarily sold."
E
(emphasis supplied)

(Ill) Section 90 of the Indian Tnist Act, 1882:

"90. '4dvantage gained by qualified owner.- Where a tenant for
life, co-owner, mortgagee or other qualified owner of any F
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 mvner, interested
in such prope1ty, gains any advantage, he must hold, for the
benefit of all persons so interested, the advantage so gained, G
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 gain-
ing such advantage."

(Emphasis supplied) H
A
988 SUPREME COURT REPORTS [1997] 2 S.C.R.

6. The relevant portions of Exhibit 35A, deed of mortgage dated
,
3.4.1947 are as follows :-

''For repaying the loan mentioned above and for the house expenses
(the amount mentioned above) I 1,rive my land (as mentioned
below) as Mudat Kharadi. I have given the land in your possession
B
for the pe1iod 12 years to-day. So till the period of sale you should
pay the assessment and cultivate the land and should take the income
of the land. At the eiqiiry of the term of the deed, (I) will pay the
Rupaya and will take back the land by (''Sadavun") redeeming the
same. H the amount will not be paid within the time then this
c should be treated as permanent sale and you should enjoy the snit
land absolute for yourself and by your heirs. Hence neither myself
nor my heirs shall have any rigi'it of claim in respect of suit
property. You will be full owner of the suit property."

D (emphasis supplied)

The document is a pusscssory mortgage. The mortgagee is permitted to
appropriate the income land. (towards interest due.) It is stated that the
income from the property will be Rs. 500-600 per annum. Admittedly, the
properly is an inam land. By Maharashtra Act 60 of 1950, the land was
E resumed by the Government (Ext. 26). There was a provision to regrant it
to the holder of the land on payment of the occupancy price equal to 12
times of the amount of the full assessment of such land within five years
from the date of coming into force of the Act. The Act came iulo force on
25.1.1951. So the occupancy pri~e should be paid on or before 25.1.1956.
F The mortgagor did not pay the occupancy price till then. The lower
appellate court has found that the first respondent was taken to be a tenant
of the land. He paid the occupancy price (on his own) and obtained the
regrant from the Government. We ar-e;f the view that the occupancy price
payable under Section 4 of the Act to obtain a regrant, will be covered by
the expression 'all public charges accruing due in respect of the property',
G 'all other charges of public nature' as specified in Sections 65(c) and 76(c)
of the Transfer of property Act respectively. In the absence of the contract
lo the contrary, during the pcndcncy of the mortgage, when the mortgagee
is in possession of the mortgaged property, he was bound to pay or remit
the occupancy price under Section 4 of the Act for and on behalf of the
H mortgagor, so as to prevent the happening of the consequences stated in
N.S. NALEv. BAPU GANAPATI JAGTAP [PARIPOORNAN,J.] 989

the proviso. The first respondent- mortgagee failed to comply the aforesaid A
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 B
possession of the property. He took advantage of his position as a posses-
sory mortgagee. In so doing he faulted. So, on facts, it is clear that the first
respondent obtained re&'fant in his favour or obtained an advantage in his
favour, by availing himself of his position as a 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-appel- C
]ant. We are of the view that in the totality of the facts and circumstances,
the provisions of Section 90 of the Indian Trust Act arc attracted. The first
respondent-mortgagee gained an advantage by availing himself of his posi-
tion as a possessory mortgagee and obtained the regrant. This he did by
committing a wrong. He committed a default in not paying the occupancy D
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 Trust Act. We hold that the default committed by a possessory E
mortgagee, in the performance of a statutory obligation or a contractual
obligation, which entails a sale or forfeiture of right in property to the
mortgagor, v;ill attract the provisions of Section 90 of the Indian Trust Act.
In such cases any benefit obtained by the qualified owner, the mortgagee,
will enurc to or for the benefit of the mortgagor. The right to redeem will F
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 Mlitunjoy Pani and Anr. v. Namzanda
Bala Sasmal and Anr., [1962] 1 SCR 290 and by K.K. Mathew, J. (as his
lordship then was) in Nabia Yathu Ummal v. Muhammed Mytheen & 01~·.,
(1963) KU 1177. The Said decisions have our respectful concurrence. G

7. We, therefore, set aside the judgment of the learned single Judge
of the Bombay High Court rendered in S.A. No. 514 of 1974 dated
19.11.1979 and restore the judgment and decree of the District Judge,
Satara, rendered in C.A. No. 29 of 1972 dated 30.1.1974. The appeal is H
990 SUPREME COURT REPORTS (1997) 2 S.C.R.

A allowed with costs throughout. The payment ordered by the District Judge,
Satara, in his judgment dated 30.1.1974 inclusive of the amount remitted
by the 1st respondent for obtaining the occupancy right, shall be remitted
within six months from today and thereupon the appellant shall recover
from the respondents possession of the suit property.

B R.A. Appeal allowed.