Janaki Ammal vs Rajammal

V. Ramaswami, J.—The suit property belonged to one Chinnakannammal, the fourth Defendant in the suit. She usufractuarily mortgaged in the same on 11th September, 1943 for a sum of Rs. 100 in favour of one Baggia Reddy. Thereafter, under an oral sale she conveyed also the equity of redemption in favour of the mortgagee and the consideration was for less than Rs. 100. Baggia Reddy sold the property to one Perumal Reddy on 5th April, 1955 for a sum of Rs 100 under a registered sale deed. Perumal Reddy''s first wife Rajammal the second Defendant in this suit, filed in Original Suit No. 506 of 1966 on the file of the District Munsif''s Court, Sholinghur, claiming maintenance against her husband Perumal Reddy and obtained a charge decree charging the suit property for the payment of maintenance. Subsequently thereafter Chinnakannammal the original owner, purported to settle the suit property in favour of the Plaintiff under a registered deed, dated 25th January, 1968, ignoring the oral sale by her in favour of the mortgagee, Baggia Reddy. On the basis of this settlement deed the Plaintiff (herein) filed the suit for redemption of the mortgagee, dated 11th September, 1943. She also pleaded that she was entitled to the benefits of scaling down the debt under Madras Act IV of 1938. These are the findings of the lower appellate Court. Since the original owner Chinnakannammal had already parted with the equity of redemption under the oral sale in favour of the mortgagee Baggia Reddy, and there was nothing remaining with her to settle under the settlement deed, the lower appellate Court reversing the judgment of the trial Court dismissed the suit.

In this appeal by the Plaintiff, the learned Counsel for the Appellant contended that an oral sale of the equity of redemption in the case of a usufructnary mortgage is not valid in law. According to the learned Counsel, in such cases the equity of redemption is an intangible property and u/s 54 of the Transfer of property Act, it could be sold only under a registered instrument irrespective of its value, Even if it could be considered to be a tangible immovable property, if it is not by a registered document, delivery of possession of the property is essential in order to constitute a valid sale and in the case of a sale of an equity of redemption to a usufructuary mortgagee there is no delivery of possession, and as such the sale is not valid. In support of this contention the learned Counsel relied on an observation of Bashyam Ayyangar J. in Ramasami Pattar v. Chinnan Asari ILR 24 Mad. 449 and the dissenting view of Sulaiman C.J. in Sohan Lal and Others Vs. Mohan Lal and Others, where he had followed the judgment of Bashyam Ayyangar J. Though the point did not directly arise for consideration, Bashyam Ayyangar J., made the following observations in Ramasami Patter v. Chinnan Asari ILR 24 Mad. 449:

The equity of redemption in a usufructuary mortgage is only an intangible thing like ''a reversion'' which immediately precedes the expression ''or other intangible thing'' (vide Williams on ''Real property'', 18th edition, pages 30-31), and it can be transferred by sale only by a registered instrument and not by delivery of the property Equity of redemption in a simple mortgage may be tangible immovable property, and its sale can be effected if its value be below Rs. 100 without a registered instrument by mere delivery of the property. The right of a simple mortgagee in the property mortgaged is in my opinion only an intangible thing like a charge on immovable property within the meaning of Section 54, and, I am unable to concur in the decision of this Court reported in Subramaniam v. Perumal Reddi ILR 18 Mad. 454 to the effect that a transfer by sale of a hypothecation executed to secure a debt under Rs. 100 may be made otherwise than by registered instrument.

The decision in Subramaniam v. Perumal Reddi ILR 18 Mad. 454, which the learned Judge dissented is a decision of a Division Bench. I would refere to it a little later. The other learned Judge, Shephard J., who constituted the Bench did not express any opinion on this question. In the dissenting view of Sulaiman C.J. in Sohan Lal and Others Vs. Mohan Lal and Others, the learned Judge observed:

There is no doubt that the ownership in the property remains vested in the mortgagee however heavily the property may be mortgaged. But in a case of a usufructuary mortgage, as distinct from a simple mortgage, the mortgagor has no right to immediate enjoyment of the profits of the property. His right to redeem it that is to say to recover possession on payment of the mortgage money. According to its literal meaning ''tangible'' property would be one which is capable of being touched, and therefore, capable of being possessed. It must accordingly be property which is capable of delivery of possession from one person to another. A mortgaged property itself is undoubtedly ''tangible'' but the interest of the mortgagor in the property, when the mortgage is usufructuary is not identical with the property itself, as some interest has already passed to the mortgagee including the right to remain in possession and appropriate the profits. The interest which the mortgagor possesses is not itself capable of being touched, nor is it such that an actual delivery of its possession can be effected by the mortgagor to the mortgage. It seems difficult to conceive of a thing as being tangible when it is not capable of actual delivery of possession. Although, therefore, the mortgagor is the legal owner of the usufructuarily mortgaged property, whatever rights he possesses, so long as the mortgage subsists, cannot be treated as ''tangible''. The subject-matter of ownership is ''tangible'' but the interest which the mortgagor can transfer is ''intangible''.

In support of this view, the learned Judge referred to the observations of Bashyam Ayyangar, J., in Ramaswami Pattar v. Chinnan Asari ILR 24 Mad. 449 and some of the earlier cases of the Allahabad, Oudh and Calcutta High Courts.

No reason has been given by Bashyam Ayyangar, J., for the view expressed by him. But in the decision of Sulaiman, C.J., while agreeing that even after the mortgage the ownership in the property remains vested in the mortgagor, however heavily the property may be mortgaged, as seen from the passage extracted has given the following reasons for coming to that conclusion. The mortgaged property itself is undoubtedly tangible, but the interest of the mortgagor in the property when the mortgage is usufruetuary, that is, the right to redeem and recover possession on payment of the mortgage money not identical with the property itself, as some interest has already passed to the mortgagee including the right to remain In possession. The interest which the mortgagor possesses is not itself capable of being touched, nor is it such that an actual delivery of possession can be effected by the mortgagor to the mortgagee. These are the two reasons on which the learned Judge has coma to that conclusion. On both these points, apart from the majority view in the same decision, the other High Courts as also this Court had taken a different view. All the learned Judges are agreed that the ownership in the property remains vested in the mortgagor however heavily the property may be mortgaged even in the case of a usufructuary mortgage. When the mortgager, therefore, purports to sell whatever remains vested in him he sells the right in the property itself. Along with that right, his right to recover possession on redemption is also conveyed. The mere fact that he has transferred the right to immediate possession to the mortgagee, in my opinion, does not make the transfer itself of the very right to recover possession. In fact, if the right of the mortgagor in such eases is to be an intangible right to recover the property, it may become a mere right to sue within the meaning of Section 6(e) of the Transfer of Property Act, which cannot be transferred at all. The right to recover possession goes with the ownership still remaining vested in him and it could not be dissociated from the right to the property itself, Even in regard to possession. I do not find any insuperable difficulty, Actual delivery of possession by the mortgagor to the mortgage could be effected by a mere declaration that from the date of sale he would be holding the property as his own, and not as a mortgage, Transfer of possession has always been understood as effective in such manner as it is capable of. Further mortgage has been defined u/s 58 as a transfer of an interest in specific Immovable property, If the mortgage was for less than Rs. 100 the law does not require any registration. Would the Legislature have intended that inspite of the original mortgage being not required to be registered when the mortgagor transfer the right remining with him it had to be dealt with only under a registered document whatever be the value? I am of the view that the Legislature would not have intended such an anomalous position. In fact in Subramaniam v. Perumal Reddi ILR 18 mad. 454, a Division Bench of this Court held that when a mortgagee sells his rights under the mortgage, the assignee is entitled to a personal decree for the debt as well as a charge on the immovable property. In other words, the transfer of a mortgage is a transfer of the mortgage debt with the transfer of the security, and, that, therefore, the transfer in such case is tangible immovable property and not an intangible right. Though the decision related to a simple mortgage, since it is with reference to the mortgagee''s right that the decision was given, the principle will also apply to the case on hand. This decision was followed as against the view of Bashyam Ayyangar, J., in Dwaraka DOSS Govardana Doss v. Danakoti Ammal 15 M.L.T.R. 242, Cunniah v. Gopala Chettiar 26 M.L.T.R. 242 and by the majority of the Judges in Sohan Lal and Others Vs. Mohan Lal and Others, in Sreeram Venkatasubbamma Vs. Somisetti Subbayya and Others, , and the Full Bench decisions in Suraj Prasad Vs. Mt. Aguta Devi and Others, , and Bhikabhai Nanabhai v. Chimanlal Maganlal AIR 1953 Bom. 437. Even in regard to possession, the view of Suliman C.J., had not been followed by the Court. In one of the earliest cases reported in Muthukaruppan v. Muthu ILR 38 Mad. 1158, it was held that if an oral sale (sic) made of immovable property of the value of less than Rs. 100 to a person already in possession of the property, it is sufficient to pass title if the vendor converts by appropriate declarations or acts the previous possession into a possession as vendee and that it is not necessary to satisfy Section 54 of the Transfer of property Act that a person in possession should give it up formally and take it up afterwards at vendee. This decision wag followed in Sheik Dawood Saheb v. Moideen Batcha Saheb 48 M.L.J. 264, where also it was held that when a property which Is the subject-matter of a usufructuary mortgage is sold to the mortgagee in discharge of the mortgage, a direction by the vendor to the vendee to keep the property as absolute owner amounts to delivery of possession. The learned Judges observed:

There is no reason to think that the word ''delivery'' in Section 54 is used In peculiar sense or that the words ''places the buyer in possession of the property'' in the 4th clause are intended to alter the legal conception of ''possession'' or of ''delivery''. ''Delivery'' usually means ''such delivery as the thing to be delivered is capable of. Possession cannot be taken to be synonymous with ''occupation'' as has been done in Sibendrapada Benerjee v. Secretary of State for India in Council (1907) 1 ILR 34 Cal. 207 with which decision we cannot agree.

In one of the recent cases in Swaminatha Udayar Vs. Mottaya Padayachi and Others, . Rajagopala Ayyangar J., also followed these two tests and held that in such cases a direction by the vendor to the vendee to keep the property as absolute owner amounts to a delivery of possession. Therefore, both the grounds mentioned by Sulaiman, J., are against the preponderance of opinion expressed by a number of other learned Judges, I have therefore, to hold that the interest of mortgagor in the case of a usufruetuary mortgage is a tangible immovable property, within the meaning of section 54 of the Transfer of Property Act, and if the value of the property in less than one hundred rupee, it could be sold orally and the argument that it could be transferred only by a registered document is not acceptable. The result of it is, since Chinnakannammal had already sold the equity of redemption to Baggia Reddi, there was nothing for her to settle on the Plaintiff under the deed, dated 25th January, 1963, and the suit filed by the Plaintiff for redemption on the basis of the settlement was liable to be dismissed. The second appeal accordingly fails, and it is dismissed, but there will be no order as to costs. No leave.