Ramchandra Seth v. Srinath Singh — 1958 DIGILAW 57 (PAT)

Judgment N.L.Untwalia, J. 1. This is an appeal by the defendants and it arises out of Title Suit No. 24 of 1948, which was tried by the court below analogous to another title suit, namely, Title suit No. 38 of 1949. We are not concerned with the latter title suit in this appeal. Title suit No. 24 of 1948 was filed originally by Raja Jagarnath Singh, son of Raja Ran Bahadui Singh and after the death of Jagarnath Singh, his minor son, Sri Nath Singh, was substituted in place-of the sole plaintiff. The facts to be found in the plaint are with respect to Jagarnath Singh as the, original plaintiff. 2. There is an estate in the district of Hazari-bagh known as Palganj Estate, the inheritance to which was governed by the custom of lineal primo-geniture. Raja Paras Nath Singh was the proprietor of this estate in the year 1903. During his time the management of the estate was taken over by the Encumbered Estate under the provisions of the Chotanagpur Encumbered Estates Act (Act VI of 1876), Paras Nath Singh died in the year 1907 and: he was succeeded by his son, Ran Bahadur Singh, father of the plaintiff, Jagarnath Singh, since deceased. In 1918, the estate was released from the management of the Encumbered Estate Manager. According to the case of the original plaintiff, his father Ran Bahadur Singh was a man of weak intellect and was entirely dependent on his amlas who always dominated on him in the affairs of the estate. Ran Bahadur Singh was duped by the defendants or by their ancestors to execute a handnote for a sum of Rs. 17,889 on 22-7-1925. Money suit No. 18 of 1928 was filed by Kishori Lal, deceased brother of Ram Chandra Seth, defendant No. I, for recovery of Rs. 28,291/1 based upon the said handnote in the court of the Additional Subordinate Judge at Hazaribagh against Ran Bahadur Singh. Ran Bahadur Singh was duped by the defendants with the aid of the amlas to compromise that suit which was compromised for a sum of Rs. 30,151/- plus costs to the extent of Rs. 1791/10/-. The decree was put in execution in Execution Case No. 108 of 1930 and again the Raja was duped to compromise the execution case also. Ran Bahadur Singh was duped by the defendants with the aid of the amlas to compromise that suit which was compromised for a sum of Rs. 30,151/- plus costs to the extent of Rs. 1791/10/-. The decree was put in execution in Execution Case No. 108 of 1930 and again the Raja was duped to compromise the execution case also. Thereafter another execution case, namely, execution case No. 63/104 of 1932 was filed by the defendants in which the properties in question, namely, the 16th villages were put to sale and were sold in court auction on 5-11-1932. It was alleged by the plaintiff that in this execution case also all the processes were suppressed and the plaintiff, namely, Jagarnath Singh had no knowledge of the execution and the sale held thereunder. The Raja thereafter filed an application for setting aside the sale and being deceived by the amlas the Raja was duped by the defendants to file a compromise petition, which petition according to the case of the plaintiff amounted to a mortgage by conditional sale. 3. Plaintiffs case further was that Raja Paras Nath Singh was the karta of a joint Hindu family and he was holding the estate on behalf of the joint family. The encumbered estate Manager had taken over the estate on behalf of the joint family and when it was released to Ran Bahadur Singh, he was also holding the estate on behalf of the entire family including the plaintiff. The estate was released subject to the provisions of Sec.12-A of the Chotanagpur Encumbered Estates Act of 1876 according to which Ran Bahadur Singh was not authorised to deal with the properties without the consent of the Commissioner. In that view of the matter all transactions entered by Han Bahadur Singh with the defendants were attacked as void, illegal and not binding upon the plaintiff. The estate was again taken over for management by the Encumbered Estate in the year 1940. The Manager of the estate thereafter took delivery of possession of all the villages of the estate including the 16 villages in question under Sec.16 of the Chotanagpur Encumbered Estates Act. The estate was again taken over for management by the Encumbered Estate in the year 1940. The Manager of the estate thereafter took delivery of possession of all the villages of the estate including the 16 villages in question under Sec.16 of the Chotanagpur Encumbered Estates Act. After taking possession, the Manager began to make collections of rent and the defendants had no right to keep possession over the villages as their only remedy was to prefer a claim before the Proper authority for their dues under the alleged mortgage by conditional sale. But the defendants began to interfere with the possession of the Encumbered Estate since the year 1942 and began to make collections forcibly from some tenants. They also succeeded in securing some decrees in court and the result was that the Encumbered Estate was dispossessed from some villages. Hence the suit was brought by the original plaintiff praying that his title concerning the original villages be declared and it be further declared that the defendants have no right, title and interest therein. A prayer, however, was made for recovery of possession of the entire 16 villages. In the alter-native it was also prayed that the compromise in execution case No. 63 of 1932 created the rights of mortgagee by way of conditional Sale in favour of the defendants and that the rights of the defendants came to an end when the Manager took over the management of the estate. A prayer for injunction was also made restraining the defendants from making any collection. 4. The defence set up by the defendants, inter alia, was that the suit was not maintainable and was bad for non-joinder and misjoinder of parties. Bar of limitation and adverse possession were also pleaded. The inheritance to the Palganj Estate being governed by the custom of lineal primogeniture, it was asserted that the proprietor at a particular time was the absolute holder of the estate and he could not be regarded as holding the same on behalf of the entire family. In that view of the matter, taking over of the estate by the Encumbered Estate was on behalf of the absolute owner, Paras Nath Singh and not on behalf of the family. The benefits of Sec.12-A of the Act were available to Paras Nath Singh only and not to Ran Bahadur Singh. In that view of the matter, taking over of the estate by the Encumbered Estate was on behalf of the absolute owner, Paras Nath Singh and not on behalf of the family. The benefits of Sec.12-A of the Act were available to Paras Nath Singh only and not to Ran Bahadur Singh. Therefore, the Litter was entitled to enter into transactions in respect of the properties of the estate. The defendants further alleged that the hand note in question was a genuine transaction for consideration and the various facts of fraud and duping were denied either in regard to the execution of the handnote or in regard to the compromise in Money Suit No. 18 of 1928. It was denied that the Raja was a man of weak intellect. The compromise in Execution case No. 108 of 1930 was also pleaded to be valid and with full knowledge of its terms and implications on the part of the Raja. Since the terms of the compromise entered into in the Execution case No. 108 of 1930 was not given effect to by the Raja, another execution case, namely, Execution case No. 63 of 1932, was started. The Raja, in the mean time, had filed Title suit No. 2 of 1931 which was also compromised. In Execution case No. 63 of 1932 a compromise with full understanding was entered into by the Raja and no fraud was practised upon him by the defendants in collusion with the amlas, as alleged. The Raja filed an application under Order 21, Rule 90, Civil Procedure Code, in the said execution case and the compromise was entered into in these proceedings. The compromise in question did not create any mortgage by way of conditional sale in favour of the defendants but it was an out and out sale and only certain terms were arrived at by way of agreement in the interest of the Raja which was a sort of contract between the parties. The Raja did not fulfil his part of the contract embodied in the compromise and, therefore, lost all his rights under the contract. They denied receipt of any notice under Sec.16 of the Chotanagpur Encumbered Estates Act and asserted that they were not bound by the alleged dakhaldehani by the Manager. The Raja did not fulfil his part of the contract embodied in the compromise and, therefore, lost all his rights under the contract. They denied receipt of any notice under Sec.16 of the Chotanagpur Encumbered Estates Act and asserted that they were not bound by the alleged dakhaldehani by the Manager. The defendants asserted that they were all along in possession of the estate and it was the Manager who began to interfere with their possession by making collections from some tenants and, therefore, they were obliged to file rent suits in which they got decrees in presence of the Manager. Some of these cases were fought up to the High Court and the defendants were successful all through. The compromise also was considered and dealt with in these cases and was held to be not a document by way of conditional sale. In that view of the matter bar of res judicata was also pleaded. 5. As many as 10 issues were framed in title suit No. 24 of 1948 and most of the issues were decided in favour of the defendants and some against them. The learned Subordinate Judge has held that the first issue of the suit as framed being not maintainable was not pressed and under the third issue it was held that the suit was not barred by non-joinder and mis-joinder of parties. The seventh issue was decided in favour of the defendants and the court below has held that the restriction imposed under Sec.12-A of the Chotanagpur Encumbered Estates Act imposed by the Government upon Ran Bahadur Singh was inoperative and void and was not binding upon him, Under issue Nos. 8 and 9 it has been held that the proceedings under Sec.16 of the Act were not illegal and void because earlier under issue No. 6 it was held by the court below that the compromise in Execution case No. 63 of 1932 amounted to a mortgage by conditional sale and it was valid under Sec. 58 of the Transfer of Property Act. It was further held, while deciding the fifth issue, that the suit was barred under Sec. 47, Civil Procedure Code, in so far as it wanted a relief that the sale held in Execution case No. 63 of 1932 was void and that it had been vitiated by fraud and undue influence. It was further held, while deciding the fifth issue, that the suit was barred under Sec. 47, Civil Procedure Code, in so far as it wanted a relief that the sale held in Execution case No. 63 of 1932 was void and that it had been vitiated by fraud and undue influence. Issue No. 4 was also decided in favour of the defendants and it was held that the present plaintiff is not entitled to question either the consideration of the handnote or the validity of the decree passed in Money suit No. 18 of 1928 or the validity of the compromise entered into in Execution case No. 108 of law, Having found that the defendants were the mortgagees by way of conditional sale, the learned Subordinate Judge has held under issue No, 2 that no question of limitation or adverse possession arises in this case. Lastly, in view of the finding under issue No. 6 that the defendants are the mortgagees by way of conditional sale, the court below has decreed the suit and has held that the plaintiff is entitled to get a declaration of his title to the village in suit. And since he is out of possession, he is entitled to recover possession of the villages. But, the remedy of the defendants would be to file a claim before the Encumbered Estate according to the procedure laid down in the Chotanagpur Encumbered Estates Act. In that view of the matter Title suit No. 24 of 1948 was decreed on contest with costs. 6. Mr. B. C. De, learned Counsel for the appellant, began to argue several points but, ultimately, focussed his strenuous argument on only one point, namely, that the compromise dated 29-7-1933, in Execution Case, No. 63 of 1932, did not create any mortgage by conditional sale in favour of the defendants. 6. Mr. B. C. De, learned Counsel for the appellant, began to argue several points but, ultimately, focussed his strenuous argument on only one point, namely, that the compromise dated 29-7-1933, in Execution Case, No. 63 of 1932, did not create any mortgage by conditional sale in favour of the defendants. The defendants purchased the property in a court auction on 5-11-1932, and that sale was sought to be set aside by an application under Order 31, Rule 90, of the Civil Procedure Code filed by Ran Bahadur and, therefore, the compromise entered into in such a proceeding only recognised the sale held in court auction and there were some additional terms of agreement between the parties embodied in the compromise petition, which would be enforced if the Raja so chose after performing his part of the contract or showing his readiness and willingness to perform his part of the contract. That is to say, his first submission was that the compromise petition was not a document of transfer creating a mortgage by conditional sale and in the alternative, even if it be held that the compromise petition was a document of transfer of property, its terms did not amount to a mortgage by conditional sale but a sale out and out. 7. Mr. Rai Paras Nath, learned Counsel appearing on behalf of the respondents, did not attack the findings of the learned Subordinate Judge on issues which were decided against the plaintiff and ultimately he also had to concede that the only question involved in the case was as to whether the compromise dated 29-7-1933, in Execution case No. 63 of 1932 was a document which created a mortgage by conditional sale in favour of the defendants. He submitted that the compromise petition was a document of transfer and its terms amounted to a mortgage by conditional sale under Sec. 58 (c) of the Transfer of Property Act. 8. Having heard the parties I am of the opinion that the only paint involved in the case is as to whether Ext. 1, the compromise dated 29-7-1933, is a document of transfer by the then Raja, creating a mortgage by conditional sale in favour of the defendants. In that view of the matter I have not referred to many other facts and the oral and documentary evidence in support of that, found in the paper book of this appeal. 1, the compromise dated 29-7-1933, is a document of transfer by the then Raja, creating a mortgage by conditional sale in favour of the defendants. In that view of the matter I have not referred to many other facts and the oral and documentary evidence in support of that, found in the paper book of this appeal. In my opinion, they are not relevant for the purpose of deciding this appeal. This appeal has to be allowed on a short point, namely, that the compromise petition (Ext. 1) is not a document of transfer by the Raja creating any kind of mortgage. That is to say, the compromise petition is not a document of transfer at all and in that view of the matter it will not be necessary for me to decide, as has been decided by the learned Subordinate Judge by a long discussion, that the terms of the compromise are such which would make the document a document of mortgage by conditional sale. 9. In order to decide the only point which falls to be decided in this case, only a few facts are necessary to be mentioned. The villages in question were sold on 5-11-1932 as would appear from order No. 9 of that date in Ext. A (3), which is the order sheet in Money Execution Case No. 63 of 1932. Order No. 9 runs as follows: "Decree-holder is permitted to bid at the sale as prayed for. Sale held. Judgment Debtors property lot Nos. 1 to 16 sold for Rs. 25,000.00 to the decree-holder. At this stage J. Dr. files a petition for time. Heard pleader. Petition rejected. Poundage fee Rs. 260/-, deposited with the Nazir on decree-holders petition; let the amount be set off in the decree as prayed for. Put up on 8-12-32 for confirmation or sale." 10. On 14-11-1932 an application under Order 21, Rule 90, Civil Procedure Code was filed by the judgment-debtor and was registered Miscellaneous Case No. 114 of 1932. The result was that the sale could not be confirmed before the disposal of the application under Order 21, Rule 90, Civil Procedure Code. While that application was pending, the parties entered into a compromise on 29-7-1933. The compromise petition is Ext. 1. It is necessary to quote some portions of the said petition. The result was that the sale could not be confirmed before the disposal of the application under Order 21, Rule 90, Civil Procedure Code. While that application was pending, the parties entered into a compromise on 29-7-1933. The compromise petition is Ext. 1. It is necessary to quote some portions of the said petition. The petition runs as follows: "In the above suit the mauzas specified below, have been sold by auction. The judgment-debtor has filed a petition under Order 21, Rule 90 of Code of Civil Procedure for setting aside the same in this court which is pending and today is the date fixed for hearing in this court . But the parties would be benefited by entering into compromise. Therefore the judgment-debtor sent word to the decree-holders for entering into compromise. The decree-holders agreed and accepted to enter into compromise according to the details given below." "That the sale may not be confirmed for a period of twelve months from this date i. e., up to 29-7-1934. If within the period of twelve months i. e., up to 29-7-1934, the judgment-debtor will pay in lump sum the entire dues viz. Rs. 36,027/5/-in respect of decretal money including costs Rs. 260.00 on account of poundage fee deposited by decree-holders, Rs. 1441/- in respect of (unintelligible) up to this date and Rs. 600.00 on account of costs, in all Rs. 38,328/5/- and interest at the rate of 6 per cent., per annum to the decree-holders, the sale will be set aside. Should the judgment-debtor fail to pay the entire decretal money with costs within the period of twelve months in accordance with the stipulations in that case the sale will be confirmed on 30-7-1934, without any objection and the decree-holders will obtain sale certificate in respect of the mauzas sold by auction and they will be put into possession and occupation of all the mauzas sold by auction. Since then the decree-holders will use and appropriate the entire income and profit accruing from the mauzas sold by auction and they will get their names registered in the Collectorate". Since then the decree-holders will use and appropriate the entire income and profit accruing from the mauzas sold by auction and they will get their names registered in the Collectorate". From the above quotation it would appear that Order 21, Rule 90 case was compromised on the condition that the sale was not to be confirmed for a period of 12 months, i. e., up to 29-7-1934, by which period the amount mentioned in paragraph 1 was to be paid by the judgment-debtor to the decree-holder. The sale was to be set aside if the amount was so paid: the sale was to be confirmed if payment was not so made. Therefore, the statement in the compromise petition quoted above are not words of transfer by the judgment-debtor to the decree-holder by way of an ostensible sale but are mere recognition of the fact of the sale having been held by the court, which sale was either to be set aside or confirmed in terms of the compromise. 11. Then follows paragraphs 2 to 8 in the petition of compromise, the gist of which is that the decree-holders promised to execute a registered sale deed, i. e., a reconveyance deed in favour of the judgment-debtor on the latter paying the entire amount with interest at certain rate within a period of 10 years, that is, up to 30-7-1943. Other matters for the purposes of accounting were also provided in those paragraphs. It may be that if those paragraphs were embodied in a document of transfer purporting to be an ostensible sale, the document could have been characterised as a document of mortgage by conditional sale. But, there being no transfer of interest in the property by the judgment-debtor to the decree-holder, the decree-holders agreeing to reconvey the property on getting back the payment, amounts to an agreement on his part to sell the property back to the judgment-debtor on the terms and conditions embodied in paragraphs 2 onwards in the compromise petition. Such an agreement was valid for 10 years and could be enforced by or on behalf of the judgment-debtor in a properly constituted suit on showing that the judgment-debtor was always ready and willing to perform his part of the contract. On this compromise petition the following order was passed on 29-7-1933- "Parties file a petition of compromise. The applicant in the Misc. On this compromise petition the following order was passed on 29-7-1933- "Parties file a petition of compromise. The applicant in the Misc. Case No. 114 of 1932 files another petition stating that the execution case has been compromised and prays that the Misc. case may be disposed of ." "Let the Ex. case be disposed of in terms of compromise. The Misc. case is disposed of without adjudication. Note the substance of the terms of compromise, relating to the case in the original suit register and execution register." 12. Admittedly, the money was not paid within one year as provided in paragraph 1 of the compromise petition. On such failure on the part of the judgment-debtor, the sale was confirmed by order dated 25-8-1934, which runs as follows: "The J. Dr. has not paid up the decree money in accordance with the compromise petition. Let the sale be confirmed and the case be dismissed on part satisfaction with costs." It would appear from Ext. A (3), the order sheet, that a sale certificate was issued to the decree-holder and possession was also delivered on 4-10-1934. In pursuance of the order dated 25-8-1934, it would appear from Ext. 5 (a), entry in the register of suits, that an entry to the following effect was made in that register- "As agreed by the parties that J. Dr. allowed times (sic) file 29-7-1934 to pay up the decretal money amounting to Rs. 38,328/5/- failing which the sale would stand confirmed." "J. Dr. has not paid up the decree money in accordance with the compromise petition. Sale confirmed and Ex. dismissed on part satisfaction with costs on 25-8-1934." From the above facts it is clear that the decree-holder, on confirmation of the sale, derived his title from the date of sale, that is, from 5-11-1932. So long as the sale was subsisting the judgment-debtor had no interest in the property, to transfer and obviously, therefore, on the date of the compromise, i. e., on 29-7-1933 he had no right to either sell the property or mortgage the property. In that view of the matter also the compromise petition cannot be construed to be a document of transfer by the judgment-debtor to the decree-holder. In that view of the matter also the compromise petition cannot be construed to be a document of transfer by the judgment-debtor to the decree-holder. It may also be mentioned here that, admittedly, the amount of money agreed to by paid by the judgment-debtor within 10 years, as provided in paragraphs 2 onwards in the compromise petition, was neither paid nor tendered by i or on behalf of the judgment-debtor and the contract fell through, 13. Learned Government Pleader submitted that the compromise petition ought to be read as a whole and if read as a whole it would show that the judgment-debtor was conveying the property to the decree-holder or was agreeing to the confirmation of the sale on certain terms and conditions and, therefore, the compromise petition was a document of transfer, ostensibly a sale, in substance, a mortgage. I am unable to accept this contention. "Mortgage" is defined in Section 58 (a) of the Transfer of Property Act, as -- "the transfer of an interest in specific immovable property ....." and, therefore, the first requisite of a mortgage is the transfer of an interest in the property, and, as stated above, this first requirement is absent in this case; Section 58 (c) of the Transfer of Property Act also provides -- "Where a mortgagor ostensibly sells the mortgage property ....." It would thus appear that in order to make the document a mortgage by conditional sale, the first requisite is an ostensible sale of the property by the mortgagor, i. e., the transferor. There oannot be any doubt that if this first requirement is absent from a document, it cannot be a document of an ostensible sale or a mortgage by conditional sale. 14. In the case of Guroo Singh V/s. Latafut Hossain, ILR 3 Cal 336, it was held by Garth C. J., that a covenant not to alienate any property of the debtor until payment of the money advanced, did not amount to a mortgage at all. Similar view was taken in the case of Najibulla Mulla V/s. Nusir Mistri, ILR 7 Cal 196. To the same effect is the decision in the case of Bhupal V/s. Jag Ram, ILR 2 All 449. Similar view was taken in the case of Najibulla Mulla V/s. Nusir Mistri, ILR 7 Cal 196. To the same effect is the decision in the case of Bhupal V/s. Jag Ram, ILR 2 All 449. In a Full Bench decision of the Allahabad High Court in the case of Mohan Lal V/s. Indomati, ILR 39 All 244: AIR 1917 All 4, it was held- "In the case of a simple mortgage there is a transfer of an interest in specific property and a promise by the mortgagor to pay the mortgage money, and an agreement, express or implied, that if the money be not paid according to the contract, the mortgagee shall have a right to have the mortgaged property sold. In the document as it stands, I personally am unable to find the transfer nf any interest whatever to the money lender, nor does the language disclose to me that the executant of the deed gave to his creditor a right to put the property to sale". * * * * "The mere fact that the executant of the document agreed not to transfer the property until he had repaid the debt, does not constitute the deed a mortgage, nor does it necessarily indicate that a mortgage and only a mortgage was intended; nor does it give a right to put the property to sale." 15. The learned Advocate for the appellants and the respondent also joined issue as to whether the compromise petition, Ext. 1, required registration in order to create a valid mortgage. It Was contended by Mr. De that, even assuming that the document was a mortgage by conditional sale, it was a void document for want of registration. The learned Government Pleader, on the other hand, contended that the document being a compromise in court, did not require registration. In view of my decision that the document is not a document of mortgage at all, this point docs not fall to be decided. 16. The result, therefore, is that the Manager of the Encumbered Estate had no power to take possession of the villages in suit and if the transaction was not a transaction between a creditor and a debtor, the provisions of the Chotanagpur Encumbered Estates Act were not attracted in the year 1941 or 1942 when they were sought to be taken recourse to. The sale was a complete sale by virtue of the court auction sale in favour of the decree-holder and no relationship of creditor and debtor existed between the parties after the sale was held and confirmed. In that view of the matter, it is not necessary for me to decide, whether the Manager of the Encumbered Estate had succeeded in taking possession of the suit villages or whether the defendants dispossessed the plaintiffs thereafter. Admittedly, the defendants were in possession of the suit properties on the date of the suit. Therefore, the suit fails as no relief can be granted to the plaintiff. It is also not necessary to decide the point of res judicata raised on behalf of the defendants in the court below. 17. I, therefore, allow the appeals with costs and dismiss the plaintiffs suit with costs throughout. C.P.Sinha, J. 18 I entirely agree.