Satar and Others vs Mahantu and Another

K.V. Gopalakrishnan Nair, J.—The question that falls for the decision of the Full Bench is whether a mortgage effected by oral agreement

or by an unregistered instrument prior to the year 1996 is a valid mortgage to which the provisions of the Restitution of Mortgaged Properties Act,

2006, will be attracted.

A Division Bench of this Court consisting of Kilam and Ali JJ. has referred this question to the Full Bench for an authoritative decision.

The Respondents who are the representatives-in-interest of the mortgagor presented a petition to the Dy. Commissioner Doda u/s 6 of the

Restitution of Mortgaged Properties Act for restitution of the mortgaged property. The Appellants who represent the mortgagees interest resisted

the petition on the ground that the transaction was not a mortgage but only a lease. The Dy. Commissioner dismissed the petition on the ground

that, the transaction did not constitute a valid mortgage. On appeal, the learned Addl. District Judge at Jammu came to the conclusion that the

property in question was held under a mortgage, and directed restitution of the mortgaged, property to the Respondents. The Appellants came up

in second appeal to this Court against this order of the Addl. District Judge. A Division Bench which heard the appeal made the reference stated

above to the Full Bench.

The finding of the Addl. District Judge is that the land in question was mortgaged by the predecessors-in-interest of the Respondents some time

before the 26th Chet 1975. We shall assume this finding of fact to be correct for the purpose and only for the purpose of answering the question of

law raised in this case. It is common ground that a part of the land in question, was mortgaged by means of an unregistered document and the rest,

under an oral agreement. These transactions took place some time in 1975, if not earlier. The simple question is whether they constitute valid

mortgages within the meaning of the provisions of the Restitution of Mortgaged. Properties Act?

learned Counsel for the Appellants based his arguments on the definition of mortgage contained in Section 3(vii) of the Act. It reads:

The expressions ""mortgage"" ""mortgagor"" ""Mortgagee"" the ""mortgage deed"" shall have the same meanings as are assigned to them in the Jammu and

Kashmir Transfer of Property Act, 1977.

The provision in the Transfer of Property Act which defines these words is Section 58(a) which runs as follows:

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be

advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor; the transferee a mortgagee; the principal money and interest of which payment is secured for the time being

are called the mortgage money, and the instrument by which the transfer is effected is called a mortgage deed.

Reading Section 3(vii) of the Restitution of Mortgaged Properties Act and Section 58(a) of the T.P. Act together, one can easily find the exact

meaning of the expression ""mortgage."" Section 59 of the Transfer of Property Act enacts that a mortgage can be effected only by a registered

instrument signed by the mortgagor and attested by at least two witnesses. This section does not form a part of the definition of mortgage given in

Section 58(a). The Appellants' learned Counsel however invited us to import the provisions of Section 59 of the T.P. Act into the definition of a

mortgage in Section 58(a) of that Act and hold that a mortgage within the meaning of Section 3(vii) of the Restitution of Mortgaged Properties Act

must be effected only by a registered instrument as required by Section 59 of the T.P. Act.

We are unable to accede to this argument which runs counter to the plain words and the true import of Section 3(vii) of the Restitution of

Mortgaged Properties Act and Section 58(a) of the T.P. Act. Sections 58 and 59 of the T.P. Act are two distinct and separate sections which

deal with two separate subjects. While Section 58 points out what is a mortgage, Section 59 is devoted to the mode of validly effecting a

mortgage. Whether a transaction is mortgage or not has essentially to be determined by reference to Section 58, Section 59 will come into play

only for determining whether the mortgage is validly effected or not. It is, therefore, not permissible to consolidate the two Sections and read them

as constituting a single definition of mortgage.

The Appellant's learned Counsel then argued that the non-fulfillment of the requirements or Section 59 of the T.P. Act will render a mortgage

invalid and ineffective, and as in the instant case the mortgage is not evidenced by a registered deed, it has to be held to be wholly invalid. We

have, therefore to see whether the mortgage in question is hit by Section 59 of the T.P. Act or not? The learned Counsel for the Respondents

referred to the saving clause at the end of Section 139 of the T.P. Act. This provision, so far as it is relevant to the present case, enacts that

nothing in Section 59 of the T.P. Act shall be deemed in any way to affect

(a) the terms or incidents of any transfer of property made or effected before the date of the commencement of the Transfer of Property

(Amendment) Act, 1996;

(b) the validity effect or consequences of any thing already done or suffered before the aforesaid date.

(c) any right, title, obligation or liability already acquired accrued or incurred before such date or

(d) any remedy or proceeding in respect of such right, title obligation or liability....

The plain words of this saving take the mortgage in question out of the mischief of Section 59 of the T.P. Act. It was urged on behalf of the

Appellants that this saving has only the effect of making the amendments introduced by Act VI of 1996 inapplicable to prior mortgages. This

contention does not appear to us to be tenable. First, it is not warranted by the express words of the saving clause. Secondly Section 59 of the

T.P. Act was not in any way amended by Act VI or 1996.

If the saving clause was intended only to render the amendments introduced by Act VI of 1996 inapplicable to prior mortgages there was no need

to specify Section 59 in it. It appears to us that the true intention of the saving clause was to render Section 59 inapplicable to mortgages brought

about before the coming into force of Act VI of 1996. And the plain words of the saving clause are perfectly consistent with this intention.

Indeed, they cannot reasonably be interpreted in any other manner. We are, therefore, of opinion that the saving clause according to its true

construction rendered Section 59 inapplicable to mortgages created before the commencement of the Transfer of Property (Amendment) Act,

1996. Section 2 of the Restitution of Mortgaged Properties Act accords with this conclusion. It is unnecessary in this case to consider whether this

section taken by itself can properly lead to that conclusion. Nor is it necessary to examine whether or not it has the effect of rendering oral and

unregistered mortgages created after 1996 valid for the purpose of the Restitution of Mortgaged Properties Act.

We may also notice the Transfer of Land Validation Act, 2003, which validated transfers of land made by oral agreements of unregistered

deeds effected prior to the commencement of that Act, provided mutations of such transfers had been duly sanctioned and were not subsequently

set aside. It is apparent from this that the legislature as far as possible, sought to uphold transfers of land, although they were not effected by

registered deeds as required by the provisions of the T.P. Act.

So far as mortgages are concerned, the same intention appears to be manifest in the saving clause in Section 139 of the T.P. Act. The only

difference is the saving clause does not enjoin the fulfillment of the condition as to mutation. It is, therefore, difficult to agree with the contention that

in spite of the plain words of the saving clause, we must infer that the Legislature did not intend to exempt mortgages effected prior to 1996 from

the operation of Section 59.

The Appellants' learned Counsel next contended that even if the saving clause embodied in Section 139 of the T.P. Act has the effect of

rendering a provision of Section 59 inapplicable to mortgages created prior to 1996, Section 138(1) of that Act would still operate to render those

mortgages invalid. We are unable to agree with this contention. Section 138(1) is a general provision which applied to all transfers of immovable

property. It says that 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-section (3) of Section 61 of the Registration

Act, 1977.

When there are apparently conflicting provisions in an enactment, they must as far as possible be construed in such a manner as to enable them to

operate harmoniously. Such a harmonious interpretation will 'be possible in this case only if we say that the saving in respect of mortgages effected

prior to 1996 is not affected by Section 138(1). There is also another rule of interpretation according to which ""where there are two sections

dealing with the same subject-matter, one section being unqualified and the other containing a qualification, effect must be given to the section

containing the qualification.

There is another equally important canon of construction according to which ""when a general provision and a special provision conflict, the latter

must prevail."" (Vide Maxwell on Interpretation of Statutes, 10th Ed. at page 163). The saving clause regarding mortgages being a special provision

must prevail over the general provision enacted in Section 138(1). In this view, it is not necessary for us to treat the saving provision of Section

139 as a special law to the contrary contemplated by Section 139(1) itself, although we consider it permissible to do so.

In view of the foregoing, our answer to the reference is that mortgages effected by oral agreements or unregistered documents prior to the

commencement of the Transfer of Property (Amendment) Act, 1996, are not hit by Section 59 of that Act and that the provisions of the Restitution

of Mortgaged Properties Act apply to them.

The answer to the reference does not, however, dispose of the second appeal itself. We should have left the appeal to be disposed of by the

Division Bench in the Ordinary course, but the counsel on both sides have desired that we should decide the appeal on merits, instead of leaving it

to be dealt with by the Division Bench. This request was made with a view to avoiding delay and also as a matter of convenience to the parties.

We have been taken through the evidence in the case by both sides who also addressed elaborate arguments regarding the merits of the case. We,

therefore, consider it proper to dispose of the appeal on merits.

The controversy between the parties lies within a narrow compass. The Appellants contend that the land in question was mortgaged by their

predecessors to the predecessors of the Respondents. The Respondents on the other hand claim that the land was only leased to them. The lower

appellate court has gone into the question at considerable length and arrived at the conclusion that the land was in fact mortgaged. This finding of

fact has been strenuously challenged before us by the Appellants.

14-15. (After considering the oral and documentary evidence, his Lordship continued):

We, therefore, find that the conclusion of the lower appellate court that the transaction was a mortgage and not a lease is correct. We have

already stated that absence of a registered deed does not invalidate the mortgage in this case. It is also clear that the mortgagees have been in

possession and enjoyment of the land for more than 21 years. The Respondents are, therefore entitled to restitution of the mortgaged property

under the provisions of Section 9 of the Restitution of Mortgaged Properties Act, as found by the lower appellate court.

In the result the appeal fails and is dismissed. We make no order as to costs in the circumstances of the case.

Wazir, C.J.

I agree.

Murtaza Fazl Ali, J.

I agree.