Hari Singh and Another vs L. Dina Nath Mahajan

Jia Lal Kilam, J.

1.This is a second appeal directed against an order of the learned District Judge Jammu confirming an order of the trial Court whereby it had held

that the present suit is not within its jurisdiction as a Court constituted under the Restitution of Mortgaged Property Act. The facts that have given

rise to this appeal, briefly stated, are that the Plaintiff brought a suit against the Defendant for the recovery of a sum of Rs. 6177/8/-. The

Defendant had besides binding himself by a personal covenant to pay the debt, executed a simple mortgage pledging some of his Immovable

property as a collateral security. The Plaintiff in this case has brought the present suit on the personal undertaking of the Defendant and has

abandoned his rights accruing to him as a result the contract of hypothecation.

The Defendant's learned Counsel has Strenuously argued that the present suit cannot be taken cognizance of by a Civil Court and that the

proper forum for bringing the present suit is a Court constituted under the Jammu & Kashmir Restitution of Mortgaged Property Act, hereinafter

called the said Act. In support of his argument, he has drawn our attention to Section 2 of the said Act which runs as follows: ""Notwithstanding

anything contained in any enactment for the time being in force, this Act shall apply to all the mortgages of immovable property in which the

principal money or the value of the goods actually advanced by the mortgagee to the mortgagor does not exceed rupees ten thousand and which

are subsisting on the date this Act comes into force.

His argument is that the said Act applies to all the mortgages of immovable property, whether they be usufructuary, or mortgages by conditional

sale or simple mortgages. The trial Court which has written a very lucid and able order while disagreeing with this contention has disposed of this

point in the following word's:

It may be mentioned here that the words ""all the mortgages"" in Section 2 are qualified by the clause ""in which the principal money or the value of

the goods actually advanced by the mortgagee to the mortgagor does not exceed Rs. 10,000/-"". The word ""The"" requires to be noted. The section

can only mean that the Act applies to all such mortgage's as are those in which the principal money secured is less than Rs. 10,000/- and nothing

more.

It has further found that this section does not dispense with the necessity of showing that the mortgage does otherwise also come within the

mischief of the said Act. Whether or not a mortgage comes within the ambit of the said Act, the trial Court has found, has to be decided not only

by a reference to Section 2 of the said Act, but to other provisions of the said Act as well. After discussing the various provisions of the said Act,

the trial Court has recorded a finding in clear and precise terms that the provisions of the said Act apply to such mortgages only in which

possession has passed from the mortgagor to the mortgagee. We have ourselves found that a synthetic interpretation of the various provisions of

the said Act would lead to the only conclusion that the said Act applies to those mortgages only in which possession has passed from the

mortgagor to the mortgagee or in which sale of the mortgaged property is sought, by an order of the Court. It may be stated here that the latter

remedy has become available to a mortgagor after the addition of the word 'sale' by an amendment in Section 5 of the said Act. This aspect will be

discussed at some length presently.

Reverting to the finding of the trial Court we might state that the very name of the said Act, i.e., the Restitution of the Mortgaged Property Act

would suggest such an interpretation as has been arrived at by the trial Court. The word restitution, according to the dictionary meaning, would

mean the act of putting a person in possession of some property. Now in a simple mortgage the possession always remains with the mortgagor. No

question of restitution or restoration would arise in this case. u/s 4 of the said Act the Government has-power to constitute Courts under the said

Act and empower a Wazir Wazarat, a subordinate Judge or some other judicial officer not below the rank of a Munsiff to hear cases under the

said Act. An officer so empowered shall be deemed to be a Court under the said Act. u/s 5

the provisions of the said Act shall apply to all suits for redemption or foreclosure or sale in respect of the mortgages specified in Section 2 of the

said Act.

Under Section 6 of the said Act, a mortgagor is given the right to present a petition to the Court for 'restitution of possession of mortgaged

property'. u/s 7 of the said Act the Court on receipt of Such petition shall after such inquiries as it may consider necessary, record an order in

writing giving reasons whether the said Act applies or not to the mortgage with respect to which the petition is made. Section 9 (sic) of the said Act

gives power to the Court to order restitution of mortgages. According to Section 9 if the Court finds that the mortgage is one to which this Act

applies, it shall notwithstanding anything contained in any other enactment for the time being in force pass the following orders (under certain

conditions mentioned in the said section) :

(a) that the mortgage be extinguished, and

(b) where the mortgagee is still in possession that the mortgagor be put into possession of the mortgaged property as against the mortgagee and

that the title deeds, if any, be restored to the mortgagor.

It may be noted here that the two clauses are joined by ""and""' and not by ""or"". This would show that the two reliefs have to be granted

simultaneously and not in the alternative, and that the relief visualized in Clause (a), has to be given along with the one provided by Clause (b),

which deals with the restoration of the possession of the mortgaged property. Relief under Clause 'a' alone will be granted only if the mortgagee

somehow or other has ceased to be in possession. This would further show that initially the mortgage must have been with possession and not a

simple mortgage. The occurrence of the word ""still"" in Clause (b) is very significant and lends considerable support to the view expressed here.

Under Sub-section (2) of Section 9 also power has been given to the Courts to deliver possession to the mortgagor subject however to the

payment of amount found due to the mortgagee. u/s 10 of the said Act the Court is empowered to order the mortgagor to deposit the amount

found due from him to the mortgagee and then declare the rights of the mortgagee extinguished and also require the mortgagee to deliver

possession of the property to the mortgagor. u/s 11 of the said Act the Court after declaring the rights of the mortgagee to have been extinguished

is empowered to eject the mortgagee and order delivery of the possession of the mortgaged property to the mortgagor.

We have given above a resume of the powers that are vested in a Court constituted under the said Act. A perusal of the above would make it

abundantly clear as to what was the intention of the legislature. It would also give us a clue to understand the scheme of the Act which appears to

be that the said Act would apply only to mortgages with possession. This would become further clear when we bear in mind that in a simple

mortgage possession always remains with the mortgagor. The security which the mortgagee obtains is that of the mortgaged property, and not of

the rents and profit arising out of it. In the absence of an express stipulation the rents and profits of the land belong to the mortgagor. Such being

the case, the said Act cannot be invoiced to give relief to a mortgagor in a simple mortgage, unless as already hinted, a prayer is made for bringing

the mortgaged properly to sale. According to law, a mortgagor in a simple mortgage remains in possession of the property and also retains

ownership of the property and can deal with the property in any manner he pleases which is not inconsistent with the conditions laid in the

mortgage deed, He may, subject to the conditions laid in the mortgage deed, even alienate his property in part or wholly. Under these

circumstances the words ""to all mortgages of immovable property"" in Section 2 cannot admit of the interpretation sought to be given to it on behalf

of the Defendant.

The Defendant's learned Counsel has built yet another argument which is to the effect that according to Section 5 the said Act has been made

applicable to all suits for redemption, foreclosure or sale. It is argued that by the addition of the word ""sale"" which has been added after the word

'foreclosure' in Section 5 by' a recent amendment, even simple mortgages have been brought within the scope of the said Act. In order to

understand the force of this argument, the section may be reproduced here. It runs as follows :

The provisions of this Act shall apply to all suits for redemption or foreclosure or sale in respect of the mortgages specified in Section 2 and such

suits shall be triable as petitions u/s 4 of this Act.

To our mind the addition of the word 'sale' does not make any difference, so far as the present case is concerned. The learned Counsel has,

however, stressed the point that under a simple mortgage the mortgaged property can be brought under sale, and as such the suit by which sale is

claimed, can come under the purview of the said Act. It is true that under a simple mortgage in order to make a security available, the mortgagee

has a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied in payment of the mortgage money.

If in the present case the Plaintiff had made a prayer to the effect that the mortgaged property be sold, there would be, as hinted above,

considerable force in the argument of the learned Counsel. But in the present case what we find is that the Plaintiff has specifically abandoned his

rights on the mortgaged property and has prayed for a simple money (sic) cree. In-'Jiwan Das v. Mt. Janki', AIR 1922 Nag 98 it has been laid

down that

there are in practically all simple mortgages two separate contracts engrossed on one piece of paper. One is a simple money bond and the other is

a mortgage bond hypothecating certain immovable property as security.

In- Nrisingha Charan Nandy Chowdhry Vs. Rajniti Prasad Singh and Others, (B), it has been held that

the mortgagee in the case of a simple mortgage merely has the right to sue upon the j personal covenant or to bring the property to sale.

There is no binding upon a mortgagee Plaintiff to bring the property to sale in all cases. He has an option of so doing and it is upto him to avail of it

or not. If he does not en-force his right of bringing the property to sale, and seeks only a simple money decree, the provisions of the said Act can

with no stretch of imagination apply to such a case. To make the point further clear reference be made to an earlier judgment of the Allahabad High

Court reported as-'Khub Chand v. Kalian Das', 1 All 240 (FB) in which a simple mortgage has been described as:

an arrangement by which the borrower, binding himself personally for the repayment of a loan, pledges his land as a collateral security... The

pledge does not directly confer on the mortgagee the power of sale. In order to make his security available he must obtain an order of a Civil

Court directing a sale. The mortgagee, in the case of a simple mortgage, has, in the event of default being made in the payment of the debt two

causes of action, the one arising out of the breach of the personal obligation and the other arising out of the contract of hypothecation. He may put

both these causes of action in suit at once or he may pursue the only remedy at one time and the other at another. If he sues on the personal

undertaking only he obtains what is known as a money decree; if he sues on the contract of hypothecation, he obtains only an order for the sale of

the property.

We are in respectful agreement with the above authoritative pronouncement, and (sic) that the present suit does not come within the cognizance of

a Court constituted under the said Act. We, therefore, find no force in this second appeal which is rejected. In view of the fact that an important

point of law is involved in the case, we leave the parties to bear their own costs.