Ramdhani Sahu and others vs Pitambar Singh

Agarwala, J.—This appeal arises out of a suit for redemption in the following circumstances. In 1886, 20 kats of majhias land in village Jamudag were given in usufructuary mortgage by the mother of Thakur Dubraj Singh to Achhaibar for three years, to secure an advance of Rs. 800. On attaining majority, Thakur Dubraj Singh gave a zarpeshgi of the same land, plus 13 kats of land in village Dirsir, to Achhaibar, in April 1889. The zarpeshgi was for a period of live years and the consideration was Rs. 466-3-0. The mortgagor was unable to put the mortgagee in possession of the lands in Dirsir. In the following year, that is to say, in June 1890, Dubraj granted a permanent raiyati lease of the same 20 kats of majhias land of Jamudag and also of 2 tats of don land and 15 kats of tanr land to the eons of Achhaibar in consideration of a salami of Rs. 300. The lessees are the defendants-appellants in the present suit. Two days after the grant of this lease Dabraj Singh executed a zarpeshgi of all the lands covered by the lease in favour of Achhaibar. A manager of the mortgagor''s estate was appointed under the Chota Nagpur Encumbered Estates Act in 1897. The estate was released in 1923. In the meantime Achhaibar was recorded as mortgagee in the Record of Rights in 1906 and his sons were recorded as raiyats. Dabraj died in 1909 and was succeeded by his son Pitambar, the present plaintiff. In 1917 the manager repaid-all the sums due on the three mortgages of 1886, 1889 and 1890, and thereafter recovered from the defendants the rent due under the lease. In the present suit, which was instituted on 21st February 1927, Pitambar sought to redeem the three mortgages and also prayed for an account.

In the plaint it was alleged that the lease of June 1890 was void by reason of its having been obtained by the exercise of undue influence on the part of Achhaibar and his sons. It was further alleged that the lease was never acted upon; that there was no consideration for it and that in any event it was void as being a clog on the equity of redemption. The findings of fact are that the lease was genuine and for consideration and was acted upon; but the Court below has granted the plaintiff a decree on the ground that the lease was a clog on the plaintiff''s right to redeem. In view of the findings arrived at by the Court of fact, the only question for determination is whether in the circumstances the lease is void as being a clog on the equity of redemption.

It is contended on behalf of the defendants appellants that the lease was a transaction entirely separate from the mortgage; and that it was a transaction of which the mortgagor has had the fullest advantage, and that it was in no way unfair to him. On behalf of the plaintiff-respondent reliance has been placed upon the decision of Baker, J., in Parshram Yeshwantshet v. Laxmibai Babaji, 1929 Bom 186 = 115 IC 405 = 53 Bom 360, in which it was held that a permanent lease by a mortgagor to a mortgagee is void. That case went in appeal to a Division Bench which upheld the judgment of Baker, J., apparently on the ground that the lease was void on the ground of failure of consideration and of unfairness. The findings of fact in that case therefore differ from the findings in the present case. The Court below has also relied upon a decision of this Court in Ram Narain Pathak v. Surath Nath Bandopadhya, 1920 Pat 144 = 57 IC 337 = 5 Pat LJ 423, in which the question was raised as to whether a lease by the mortgagor in favour of the mortgagee was binding on the former. It was held by Dawson Miller, C.J. that if the lease in question was, a lease in futureit was void altogether, and if it was a lease in present it was void as being a clog on the equity of redemption. It is to be observed that in that case the equity of redemption bad been sold to a third party; and that in fact rent under the lease had never been paid, so it would appear that the lease was not acted upon. Das, J., a member of the Bench who decided that case, guarded himself against expressing an opinion that a lease by a mortgagor to a mortgagee is necessarily void. He pointed out that although a mortgagee may take a release of the equity of redemption from the mortgagor, he may not take from him an interest such as a long lease at any ordinary fixed rent, by the grant of which the value of the estate is materially lessened, and the mortgagor is hindered from redeeming while at the same time remaining liable to a suit for foreclosure or for recovery of the debt. The latter eventuality does not arise in the present instance for the debt was repaid in 1917.

The decision in Ram Narain Pathak v. Surath Nath Bandopadhya, 1920 Pat 144 = 57 IC 337 = 5 Pat LJ 423, follows that in 16 Bom. 705 (3), which was also a case in which rent bad never been paid by the lessee. That case was based on two Irish cases, Webb v. Rorke, (1800) 9 R.R. 122 = 2 Sch & Let 661, and Hickes v. Cooke, (1816) 16 RR 1 = 4 Dow 16. In both of these cases relief was granted to the mortgagor not on the ground that the lease granted was a clog on the equity of redemption, but on the ground that the transaction was unfair and unconscionable. The decision in Mahomed Musa v. Jijibhai Bhagwan, (1885) 9 Bom 524 which was cited also in the judgment of the Court below is distinguishable from the present case inasmuch as in that case the lease was contained in the mortgage deed itself. Similarly, in Bhimrao Nagojirao v. Sakharam Sabaji, 1922 Bom 277 = 64 IC 612 = 46 Bom 409, it was held that a lease executed contemporaneously with a mortgage constituted one transaction and, therefore, the lease was a clog on the equity of redemption. In Halsbury''s Laws of England Vol. 21, p. 144, para. 276, it is stated that a lease by a mortgagor to a mortgagee for a long period at an inadequate rent will not be upheld by the Courts, but an ordinary occupation lease at a fair rent is not objectionable. In the present case the question of the adequacy of the rent was never raised by the plaintiff and, as has already been stated, the manager of the plaintiff''s estate realised from the defendants rent at the rate stipulated for in the lease from 1908 until the estate was released in 1923. Before 1908, of course, the rent was payable to Achhaibar, the mortgagee, and not to the plaintiff''s estate.

The findings of fact arrived at on the issues raised by the plaintiff negative the suggestion that there was anything unfair or unconscionable in the transactions between the mortgagor and the mortgagee. The authorities cited do not establish that a permanent lease by a mortgagor to a mortgagee is always void as being a clog on the equity of redemption. On the contrary the proviso to S. 60, T.P. Act, contemplates that the equity of redemption may be extinguished, without limiting the method of extinguishing it by sale of the equity of redemption to the mortgagee. Viewing the transaction between the parties as a whole, it does not appear to me that in the circumstances of the present case the lease and mortgage can be held to form one transaction. At the time of the original mortgage in 1886 it is clear that it was not in contemplation of the parties that the transaction should be followed by a lease. It was only after the mortgagor failed to put the mortgagee in possession of the additional land which was mortgaged in 1889 that he was driven to adopt other means of securing from his creditor an additional advance. It was in consequence of this necessity that the lease of 1890 was executed. It was clearly no part of the original transaction between the parties and, as I have already stated, cannot now, in view of the findings of fact, be challenged on the ground of unfairness or want of consideration. In this view of the matter, it is not necessary to consider the further questions that were raised, namely whether the mortgage had been properly cancelled by the manager under the Chota Nagpur Encumbered Estate Act, or whether the defendants have acquired occupancy rights in the land. In the result I would allow the appeal and set aside the decision of the Court below, and dismiss the plaintiff''s suit with costs throughout.

Rowland, J.

I agree.