Holding

A usufructuary mortgage of an occupancy holding is not a valid mortgage with all its incidents; the mortgagee’s only right is to retain possession until the debt is repaid, and no transfer of occupancy rights occurs.

Summary

The Supreme Court considered a suit under Section 202 of the U.P. Zamindari Abolition and Land Reforms Act, 1951 for possession of land on payment of a mortgage money. The mortgage in question was a usufructuary mortgage of an occupancy holding executed in 1869 when the Recovery of Rents (Bengal) Act, 1859 was in force. The appellants argued that the mortgage was valid and that the right of redemption had been extinguished, while the respondents contended that such a mortgage was not a true mortgage and that the mortgagee could retain possession only until the debt was repaid. The Court examined the statutory provisions and a long line of precedents, holding that a usufructuary mortgage of an occupancy tenant is invalid as a mortgage with all its incidents and that the mortgagee’s only right is to retain possession until the debt is satisfied. It further held that Section 6 of the Recovery of Rents (Bengal) Act does not validate such mortgages and that the legislature has expressly accepted this view in Section 21(1)(d) of the U.P. Zamindari Abolition Act. Consequently, the appeal was dismissed with costs.

Issues considered

Whether a usufructuary mortgage of an occupancy holding is a valid mortgage with all its incidents under the law
Whether Section 6 of the Recovery of Rents (Bengal) Act, 1859 validates a usufructuary mortgage of an occupancy holding
Whether the right of redemption under the U.P. Zamindari Abolition and Land Reforms Act, 1951 is extinguished by a usufructuary mortgage
Whether the mortgagee is entitled only to retain possession until the mortgage debt is repaid
Effect of the U.P. Debt Redemption Act, 1940 on usufructuary mortgages

Legislation cited

Limitation Act, 1908s. Art.148
Recovery of Rents (Bengal) Act, 1859s. 6
U.P. Debt Redemption Act, 1940
U.P. Zamindari Abolition and Land Reforms Act, 1951s. 202, s. 21(1)(d)

Subjects

usufructuary mortgageoccupancy tenancyland reformsredemptionmortgage lawtransferabilityself‑liquidating mortgageU.P. Zamindari Abolition ActRecovery of Rents Act

Judgment

RAM ADHAR SINGH (DEAD) TIIROUGH LRS. & ORS.
v. A

BANS! (DEAD) THROUGH LRS. & ORS.

MARCH 6, 1987
B
[A.P. SEN AND V. BALAKRISHNA ERADI, JJ.)

U. P. Zamindari Abolition and Land Reforms Act, 1951-Section
21(J)(d)-Usufructuary mortgage by an occupancy tenant-Not valid
in eye of law-Mortgagee entitled to retain possession only till repay-
- .,,-'> ~ ment of mortgage debt.
c
Recovery of Rents (Bengal) Act, 1859-Section 6---Usufructuary
mortage of occupancy holding-Impermissible.

U.P. Debt Redemption Act, 1940--All usufructuary mortgages
became self-liquidating mortgages. D

The first respondent's suit under Section 202 of the U.P.
Zamindari Abolition and Land Reforms Act, 1951 for possessing on
payment of the mortgage money and ejectment of the appellants under
Section 21(1)(d)·of the Act was resisted on the gronnd that the right of
redemption stood extinguished in the year 1929 as the nsufructuary E
mortgage which was executed when the Recovery of Rents (Bengal),

- .l..
Act, 1859 was in force, was a valid one and the mortgagors, the pre-
decessors in interest of the respondent had lost all their rights titles and.
interest in the land. The Judicial Officer dismissed the suit .

On appeal, the Additional Commissioner decreed the first res- F
pondent-plaintiff's suit holding that the usufructuary mortgage of occu-
pancy rights was valid only in a qualified sense in that the appellants
were entitled to retain possession until the mortgage debt was paid and
that no tenancy law right from the Recovery of Rents (Bengal) Act, 1859
to U.P. Tenancy Act, 1939 ever made the occupancy rights trans-
ferable. G

The appeal to the Board of Revenue having been dismissed, the
.)I( appellants moved the High Court under Article 226 and a Single Judge
of the High Court dismissed the writ petition and upheld the order of
the Board of Revenue.
H

595
596 SUPREME COURT REPORTS [1987] 2 S:C.R.

On appeal, the Division Bench held that the transaction of the
A present kind was not a mortgage properly so-called hut yet was a mort· ':'f'
gage within the meaning of Section 2l(l)(d) of the Act.

In appeal to this Court, challenging the correctness of the view of
the High Court, it was contended that both the Board of Revenue as
B well _as the High Court failed to appreciate that the usufructuary mort-
gage in question was executed at a time when the Recovery of Rents
(Bengal) Act, 1859 was in force, and that a usufructuary mortgage was
y,
valid under Section 6 of the Act.
- -.4..., ...
Dismissing the appeal, this Court,
c HELD: 1.1 The settled law as administered in the then United
Provinces was that a usufructuary mortgage of an occupancy holding
was invalid and there was no transfer of an interest by the occupancy
,
tenant and the mortgagee acquired no right other than the right to
retain possession and fall back upon the stipulation in the so-called
D mortgage bond till his money was paid. [599C·D)

1.2 The view that a usufructnary mortgage by an occnpancy
tenant was not valid In the eye of law has been accepted by the Legisla·
lure in clause (d) of Section 21(1) of the U.P. Zamindari Abolition and ~
Land Reforms Act, 1951 and the matter stands concluded by the
E doctrine of stare decisis. To hold otherwise now would imply not only
unsettling the law which has stood the test of time for over 100 years but
would have the effect of reopening transactions past and closed and
unsettling titles. [599D·El

2.1 There is nothing in Section 6 of the Recovery of Rents
•
F (Bengal) Act to sugest that a usufructuary mortgage of an occupancy :~
holding like the transaction in question was permissible. [599F)

2.2 The right of occupancy tenant was not transferable under
Section 6 of the Act and in case of such a transfer the tenant would be
deemed to have abandoned tbe holding and, therefore, the right of an
G occupancy tenant cannot be set up by the purchaser in defence to a suit
for ejectmeot by the zamindar. [600B I '
.~.

3. In the instant case, the relationship of the parties was
regulated by the stipulations contained in the mortgage bond and under
the terms the appellants were entitled to retain possession till the mort·
H gage debt was paid off. Under the U.P. Debt Redemption Act, 1940, all
R.A. SINGH v. BANS! [SEN, J. J .. 597

usufructnary mortgages became self-liquidating mortgages. The mort· A
y gage money would be deemed to have been paid off. [600F-GI

Narendra Narayan Roy Chowdhary v. Ishan Chandra Sen, [1974]
13 Bengal LR 278; Khiali Ram v. Nathu Lal, ILR [1893] 15 All 219
(FB); Samharu v. Dharamraj Pandey and Ors., (1969] All. W 943 (FB);
Barhu Singh & Ors. v. Kharpattu & Ors., [1956], All W 87 and Rall} B
Prasad v. Bishambhar Singh, AIR 1946 All 400, referred to. •

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 188
/ " · - of 1974.

From the Judgment and Decree dated 25.8. 72 of the Allahabad C
High Court in Special Appeal No. 223 of 1966.

P.P. Juneja for the Appellant.

Mrs. Rani Chhabra and . Mrs. Rachna Gupta for the Res-
pondents: D

The Judgment of the Court was delivered by

SEN, J. The short question involved in this appeal on certificate
is whether a Division Bench of the Allahabad High Court was right in
following the decision of an earlier Division Bench in Barhu Singh & E
Ors. v. Kharpattu & Ors.; [1956] All U 87, which was later reiterated
in Samheru v. Dharamraj Pandey & Ors., (1969] All LJ 943 (FB), that
a usufructuary mortgage of an occupancy holding was not valid as a
mortgage with all its incidents and subject to the provisions of law
. relating to usufructuary mortgages, but was valid only to the limited
extent that the mortgagee was entitled only to retain possession of the F
land mortgaged till there was repayment of the mortgage debt. ·

The question arose in proceedings in a suit under s.202 of the :
U.P. Zamindari Abolition and Land Reforms Act, 1951 for possession
on payment of the mortgage money. brought by respondent No. 1.
Bansi claiming himself to be an heir of the original mortgagors Sheo G
Balak and Ram Phal, on the ground that the appellants who were the
successors-in-interest of the original mortgagee-Bhairo Singh, had be-
come asamis and therefore liable to ejectment under s.21(l){d) of the ·
Act. The suit was resisted by the appellanfs on the ground inter alia
that the usufructuary mortgage deed dated July 21, 1869 having been
executed when the Recovery of Rents (Bengal) Act, 1859 was in force, H.
598 SUPREME COURT REPORTS [1987] 2 S.CR.

was a valid one and therefore the right of redemption stood exting-
A ~,
uished in the year l.929 as a result of which the mortgagors Sheo Balak
and Ram Phal, the predecessors-in-interest of the respondents lost all
their right, title and interest in the land and thus the appellants could
not be treated as asamis liable to ejectment under s..Zl(l)(d) of the Act
but had indeed becQllle sirdars. That defence of theirs weighed with
B the Judicial Officer, Varanasi who by his judgment dated May 11, 1960
dismissed the plaintiffs suit. On appeal by the respondents, the Addi-
tional Commissioner, Varanasi Division, Varanasi by his judgment ;Y-
dated October 10, 1960 decreed the plaintiff's suit holding that the
usufructuary mortgage of occupancy rights was valid only in a qualified . _.___
•
sense in that the appellants were entitled to retain possession until the
mortgage debt was paid. The learned Additional Commissioner ob-
c served that no tenancy law right from the Recovery of Rents (Bengal)
Act, 1859 to U.P. Tenancy Act, 1939 ever made the occupancy rights
transferable. The appellants preferred an appeal to the Board of
,.
Revenue but Shri S.N. Mitra, JCS, Judicial Member, Board of
Revenue by his judgment and order dated April 25, 1963 dismissed the '"
D appeal. The appellants moved the High Court under Art. 226 of the
Constitution but a learned Single Judge by his judgment dated
February 28, 1966 dismissed the writ petition and upheld the order of
the Board of Revenue. On appeal, a Division Bench following the
decisions in Khiali Ram v. Nathu Lal, !LR (1893) 15 All 219 (FB),
Barhu Singh v. Kharpattu (supra) and Samharu v. Dharamraj Pandey -+ -\

E (supra) held that the transaction of the present kind was not a mort-
gage properly so-called but yet was a mortgage within the meaning of
s.21(1)(d) of the Act.
_..
-
Shri Juneja, learned counsel for the appellants, who are
successors-in-interest of the original mortgagee Bhairo Singh strenu-
F ously assails the correctness of that view and contends that both the ""r'
Board of Revenue as well as the High Court failed to appreciate that
the usufructuary mortgage of the occupancy holding in question was
executed by Sheo Balak and Ram Phal, the predecessors-in-interest of
the respondents, on Asadh Sudi 12 Samvat 1925, corresponding to July
21, 1860 i.e. at a time when the Recovery of Rents (Bengal) Act, 1859
G was in force. He presses into service certain observations of Sir
Richard Couch, CJ in Narendra Narayan Roy Chowdhary v. Ishan ~
Chandra Sen, [1974] 13 Bengal LR 278 for the submission that a usu-
fructuary mortgage was valid under s.6 of that Act. We find it difficult
to accept the contention.

H We find that it has been the consistent view of the Allahabad
R.A. SINGH v. BANS! [SEN, J.l 599

High Court that a usufructuary mortgage of an occupancy holding was
"Y' not valid as a mortgage with all its incidents and subject to the provi- A
\ sions of law relating to usufructuary mortgage but was valid only in a
qualified sense i.e. in the sense of subletting with a covenant that the
mortgagor will not be entitled to recover possession without payment
of the mortgage money, and further that under such a mortgage there
is no transfer of the right of an occupancy tenant and consequently no B
suit for redemption was maintainable nor was there any extinguish-
.>.( ment of the right of an occupancy tenant upon the expiry of the period
of limitation fixed for redemption under Art.148 of the Limitation
Act, 1908. There is a long catena of decisions dealing with the question
- __ ,..... -- starting from Khiali Ram v. Nathu Lal (supra) down to Samharu v.
Dharamraj Pandey (supra). It follows that it has been the settled law
as administered in the then United Provinces that a usufrq,ctuary mort- c
gage of an occupancy holding was invalid and there was no transer of
1' an interest by the occupancy tenant and the mortgage acquired no
other right other than the right to retain possession and fall back upon
the stipulation in the so-called mortgage bond till his money was paid.
As pointed out in the Full Bench decision in Samharu v. Dharamraj D
Pandey (supra), the view that a usufructuary mortgage by an occu-
pancy tenant was not valid in the eye of law has been accepted by the
Legislature in cl.(d) of s.21(1) of the U.P. Zamindari Abolition &
Land Refonns Act, 1951. The matter stands concluded by the doctrine
·+ of stare decisis. If we were to subscribe to the contention advanced by

.. the learned counsel for the appellants, it would imply not only unset-
tling the law which has stood the test time for over 100 years but have
the effect of reopening transactions past and closed and unsettling
titles all over the State.
E

We also find no substance in the contention advanced. There is
-j. nothing in s. 6 of the Recovery of Rents (Bengal) Act to suggest that a F
usufructuary mortgage of an occupancy holding like the transaction in
question was permissible. Sir Richard Couch, CJ in the course of his
judgment in Narendra Narayan Roy Chowdhary's case bas referred to
s.6 of that Act which, in tenns, made the holding of an occupancy
tenant a non-transferable tenure. After referring to the provision con-
tained in s.6 which provided for conferral of occupancy rights on a ryot G
who was in cultivating possession of his land for a period of 12 years,
_i)t(
- the learned Chief Justice unequivocally stated that the occupancy
rights were not transferable:

"The ordinary construction of the word appears to me to
be, that the right is only to he in the person who has H
600 SUPREME COURT REPORTS [1987] 2 S.C.R. :..----

occupied for 12 years, and it was not intended to give any
A right of property which could be transferred." ·y- Ji
After ho.lding that the right of occupancy tenant was not transferable
under s.6 of the Act, the learned Chief Justice went on to observe that
in case of such a transfer, the tenant would be deemed to have
B abandoned the holding and therefore the right of an occupancy tenant
cannot be set up by the purchaser in defence to a suit for ejectment by
the zamindar: ' ,)l
"Now, if a ryot having a right of occupancy endeavours to
transfer it to another person, and, in fact, quits his occupa-
- "'-... ....
c lion, and ceases himself to cultivate or hold the land, it -~
appears to me that he may be rightly considered to have
abandoned his right, and that nothing is left in him which
would prevent the zamindar from recovering the posses- ... "'-~

sion from the person who claims under the transfer."

D That very eminent Judge explained this in another way:

"(I)f the right which is given by the law is one which exists
only so long as he holds or cultivates the land, when he
ceases to do that, by selling his supposed right and putting
another in his place, his right is gone and cannot stand in

-
E the way of the landlord's recovering possession."

We fail to appreciate how these observations can be of any avail
to the appellants. The view expressed by Couch, CJ that the right of an
occupancy tenant under s.6 of the Recovery of Rents (Bengal) Act -~ ..~
does not lay down any contrary principle. As to the question of
F abandonment, the relationship of the parties was regulated by the · •
stipula tiotns containt.etdl dint the tm_ortgage bondt_antdhundertr the tedrmbts the
appe11an s were en 1 e o re am possess10n 111 e mo gage e was
ti!E
paid of. we wish to point out that under the U.P. Debt Redemption
Act, 1940 all usufructuary mortgages became self-liquidating mort-
gages. As held by the High Court in Ram Prasad v. BishambharSingh,
G AIR 1946 All 400, the mortgage money would be deemed to have
been paid off. _.)c.
For these reasons, the appeal must fail and is dismissed with
costs.

N.P.V. Appeal dismissed.