Mohim Singh vs Chattar Singh

Fazl Ali, C.J.—This is a defendant's second appeal in a suit for possession of 8 kanals and 7 marlas of land in Khata No. 19 situate in village

Goda Chabilian Tehsil Jammu.

The plaintiff brought the present suit for possession and in the alternative for redemption on the ground that the land in question had been

mortgaged by the plaintiff to the defendant on 17th Chet 2005 (B), for a sum of Rs. 200/-. Since the mortgage was an unregistered one, the

plaintiff prayed for possession of the property or in the alternative for redemption of the mortgage on payment of a sum of Rs. 200/-. The plaintiff

alleged that he had served a notice on the defendant to redeem the land and hand over possession to him, but in reply to this notice the defendant

denied the subsistence of the mortgage and pleaded that the mortgage was superseded by an oral sale and the mortgagee had acquired title by

adverse possession. Hence the plaintiff prayed for a decree for possession.

The suit was resisted by the defendant on the ground that soon after the mortgage was executed, there was an oral sale between the parties by

which the land mortgaged to the defendant was sold to him for a sum of Rs. 550/-. According to the defendant this sale took place on 1st Jeth

2007 and ever since then he was in possession of the property and even if the sale was invalid, he had acquired title by adverse possession. The

trial court decreed the suit on payment of Rs. 450/-, but the District Judge on appeal held that the oral sale was proved and he therefore dismissed

the suit. There was a second appeal to this court which was heard by one of us (Bhat, J.) who remanded the suit for framing additional issues. The

learned Judge, however, held that the factum of the oral sale was proved beyond any doubt and he accordingly closed this part of the case. When

the case went back on remand, the trial court of the Sub-Registrar Munsiff dismissed the suit on 31-8-65, but on appeal the District Judge

accepted the appeal and decreed the plaintiffs suit, holding that since the oral sale was invalid and hit by Section 138 of the T.P. Act and the

defendant was a mortgagee, he could not acquire title by adverse possession. Hence this second appeal before us.

The learned counsel appearing for the appellant submitted before us that in view of the admitted findings of the District Judge that the oral sale

was invalid the defendant started prescribing from the date of the sale, namely 1st Jeth 2007 and had acquired title by prescription. The learned

counsel relied upon several authorities in AIR 1963 SC 70, Soni Lalji Jetha and Others Vs. Soni Kalidas Devchand and Others, and Badri Singh

and Others Vs. Baldeo Singh and Others, . It was submitted before us that even though the sale was invalid, the character of possession of the

defendant as a mortgagee was converted into that of a trespasser and ripened into title by adverse possession after the expiry of 12 years from the

date of the sale. It was pointed out that in similar circumstances the Supreme Court in AIR 1963 SC 70 (supra) had held that the mortgagee had

acquired title by adverse possession. In this connexion reliance was placed on the following observations of the Supreme Court:-

It is not disputed that when a person gets into possession of properties as mortgagee, he cannot by any unilateral act or declaration of his prescribe

for a title by adverse possession against the mortgagor, because in law his possession is that of the mortgagor. But what is contended is that if the

mortgagor and mortgagee subsequently enter into a transaction under which the mortgagee is to hold the properties thereafter not as a mortgagee

but as owner that would be sufficient to start adverse possession against the mortgagor if the transaction is for any reason inoperative under the

law. This contention, in our opinion, is well founded. Though there was at one time a body of judicial opinion that when a person enters into

possession as a mortgagee he cannot under any circumstances acquire a title by prescription against the owner, the law is now fairly well settled

that he can do so where there is a change in the character of his possession under an agreement with the owner, vide Karnam Kandaswamy Pillay

Vs. Chinnabha alias Subbaraya Pillay and Others, .

A perusal of these observations of their Lordships shows that two important propositions had been adumbrated by them: (1) That it was not open

to a mortgagee to convert the nature of his possession as a mortgagee into one of an owner merely by a unilateral act or declaration; (2) where,

however, the two parties entered into a transaction, though illegal, by which the mortgagee was put in possession as an owner, then the mortgagee

will start prescribing from that date. Presumably this decision seems to support the contention of the counsel for the appellant, but having regard to

the peculiar position of law in our State, the present case falls within the proposition No. 1 laid down by their Lordships, that is to say, a unilateral

act of the mortgagee will not enable him to convert his possession from a mortgagor to that of an owner. In this case it is admitted that the

defendant was a mortgagee before the sale took place- It is further submitted that the sale was an oral one and was neither reduced into writing

nor was it registered. Section 138 of the T.P. Act is a provision which is peculiar to our State and does not exist in the T.P. Act applicable to the

rest of India. The relevant part of Section 138 runs thus:-

No transfer of immovable property, except in a case governed by any special law to the contrary, shall be valid unless and until it is in writing

registered and (the registration thereof has been completed in accordance with sub-s. (3) of S. 61 of the Registration Act, 1877).

No Court shall entertain a suit for pre-emption in respect of transfer of any such immovable property unless the transfer complies with the

provision of sub-section (1).

No person shall take possession of, or commence to build or build on, any land in the province of Kashmir which has been transferred or has

been contracted to be transferred to him unless and until such transfer becomes valid under the provisions of sub-s. (1).

No person who has obtained a transfer of immovable property referred to in sub-s. (1) shall apply for and obtain from any Revenue or

Settlement Officer or Court any alteration in any existing entry in any Settlement Record or paper, unless such person produces before such officer

or court a duly executed registered instrument the registration whereof has been completed in the manner specified in sub-s. (1). And no such

officer or court shall alter or cause to be altered any such entry except upon the production of an instrument registered (in the aforesaid manner).

It is therefore clear that this section prohibits any transfer, unless it is in writing registered. Secondly it prohibits even the revenue or the

Settlement Officer or the Court from altering any existing entry in any settlement record or paper in respect of such a transaction. Thus the

alteration or change in the status of the mortgagee effected by a transfer which is in contravention of Section 138 of the T.P. Act is completely

prohibited. This being so, the transaction of sale is completely effected (effaced?) and the law prohibits a person in possession from changing or

altering the nature and character of his possession. In other words, the position is that the mortgagee is prevented by the statute to alter or change

his status as a mortgagee into any other capacity by virtue of Section 138(1) and 138(4) of the Act (Supra). Thus it is quite clear that a mortgagee

is not permitted to change his status under an oral sale and if he does so, it will be deemed to be his unilateral and not a bilateral act. Their

Lordships of the Supreme Court have already pointed out that the mortgagee cannot be allowed to change his status merely by a unilateral act.

Since the statute in the present case steps in order to prevent the vendor from allowing the vendee to acquire the status of a vendee or from

changing his previous status, in the eye of law, the vendor must be deemed to be incompetent to confer any right on the vendee. If, therefore, the

mortgagee is prevented from altering the nature and character of his possession as a mortgagee, then it is manifest that his possession even after the

sale would be referable to a lawful title and the previous status he possessed. A mortgagee, so long as he remains a mortgagee, cannot acquire an

absolute title by prescription. In other words, the possession of a vendee is just like a vendee who has taken a sale deed from a minor who is

incompetent to contract. Thus as the incompetency in such case arises out of the provisions of the Contract Act. Similarly the incompetency of the

vendor to sell property arises out of the statutory prohibition contained in Section 138 of the T.P. Act (Supra). The position, however, would be

different if the defendant would not have been a mortgagee at all and would have been put in possession under an oral sale. In that case he would

have become a rank trespasser and would have started prescribing from the date when he was let in possession by the owner and the

considerations mentioned above would not have applied to such a case. We are fortified in this view by a decision of the Supreme Court in Soni

Lalji Jetha and Others Vs. Soni Kalidas Devchand and Others, where their Lordships held that where the sale was voidable at the instance of the

respondents, the mortgagee purchaser being in fiduciary possession, his possession would not be adverse as against the respondents. In that case

their Lordships observed as follows:-

It is thus clear that though the sale dated September 10, 1930, in favour of Kanji and Lalji was not void but voidable at the instance of respondents

1 and 2 by reason of their earlier contract and though as between the mortgagors and Kanji and Lalji the sale was valid and binding, it was subject

to the right of specific performance which respondents 1 and 2 had acquired and Kanji and Lalji being in a fiduciary position, their possession was

not adverse as against respondents 1 and 2. Therefore their suit for redemption cannot be said to be barred even though the statutory period had

expired.

The decision in Badri Singh and Others Vs. Baldeo Singh and Others, merely repeats the proposition of law adumbrated in AIR 1963 SC 70

(Supra).

In AIR 1965 J&K 83 a Division Bench of this court (to which both of us were a party) has held that since a transfer to a non-State subject was

prohibited by Section 139 of the T.P. Act, such a transfer could not be permitted even if it was in the name of Benamidar and the real owner was a

non-State subject. In this case the following observations were made by the Division Bench:-

S. 139 of the T.P. Act says that all Hidayats, resolutions and Allans restricting and regulating transfers of immovable property in any part of the

State of Jammu and Kashmir preserve intact the right of transfer expressly taken away or restricted by any such enactment. A whole list of

circulars and hidayats in particular has been mentioned in sub-section (2) of this very-section and the commands, one of which has been referred to

above in addition to others to the same effect have also been mentioned. That means acquisition or transfer of any immovable property in favour of

a person who is not a resident of this State is completely prohibited and banned under the laws of the State. The legal validity of these commands

of His Highness has been kept intact under the Constitution Act (XIV) of 1996 as well as Section 157 of the J. & K. Constitution.

For the reasons given above we find that the cases relied upon by the learned counsel for the appellant are distinguishable and appear to be of no

assistance to him. The appeal therefore fails and is dismissed but in the circumstances without any order as to cost.

J.N. Bhat, J.

I agree.