RAMZAN KHAN Vs. MIR DAD KHAN

JUDGEMENT

(1.) The suit out of which this first appeal arises is based upon the following state of facts: Mir Dad Khan and others were the owners of proprietary rights in a certain mahal. Appurtenant to these proprietary rights was a considerable area of land of which these zamindars were in possession either as sir or khudkasht. With reference to the khudkasht land it is sufficient to say that it was land which had been held by the proprietors in their own cultivation for the full statutory period and which had, therefore, acquired the essential character of sir land, so far as Section 10 of the Local Tenancy Act, No. II of 1901, is concerned. For purposes of brevity, therefore, it will be convenient hereafter to speak of the sir lauds of Mir Dad Khan and others. Now these proprietors were indebted, and the evidence on the record shows that there was a decree out against them for a sum of Rs. 9,000, held by Thakur Das and others. The proprietors endeavoured to come to terms with these creditors, and I do not think that there can be any doubt as to the nature of the arrangement effected. The creditors were willing to accept a usufructuary mortgage for Rs. 9,000, that is to say, for a sum sufficient to pay off their decree, provided that the land mortgaged, being 30 bighas of the sir land of the debtors, should pass into their actual cultivating possession. In endeavouring to effect such a transaction the parties concerned had to get round the difficulties placed in their way by Statute, that is to say, by the Local Tenancy Act, and particularly by sections 10 and 20 of that Act. It so happens that the law on this point has been recently settled by the highest possible authority in the case of Moti Chand v. Ikramullah Khan (1916) I. L. R., 89 All., 178. So far as I am concerned, I think I am entitled to say that there is nothing in the propositions of law there laid down other than I have been consistently asserting for some years past, or other than were give a effect to by Mr. Justice Tudball and myself in the case of Dipan Rai v. Bam Khelawan (1910) I. L. R., 82 All., 383. Their Lordships of the Privy Council, in deciding the case before them, by no means overlooked the provisions- of Section 83 of the Tenancy Act, according to which a tenant may at the end of any agricultural year surrender his holding to his proprietor. What they point out in that this right of surrender cannot be permitted to be used in such a manner as to defeat the provisions of the law by which ex-proprietary tenancies are created. They point out that the policy of Act No. II of 1901, is to secure and preserve to a proprietor whose proprietary rights in a mahal, or in any portion of it, are transferred, otherwise than by gift or exchange between co-sharers in the mahal, a right of occupancy in his sir lands. Such right of occupancy is secured and preserved to the proprietor, who becomes by a transfer the ex- proprietary tenant, whether he wishes the right to be secured and preserved to him or not, and notwithstanding any agreement to the contrary between him and the transferee. It is further pointed out that the courts must not allow the policy of the Act to be defeated by any ingenious devices, arrangements or agreements between a vendor and a vendee for the relinquishment by the vendor of his land. They go on to point out, more particularly, that devices to compel such a surrender by the inclusion in the deed of transfer of provisions amounting to a penalty against the transferor, in the event of his failing to relinquish, the ex- proprietary tenancy, must also be regarded as devices or arrangements for defeating the policy of the Act. Cases in which attempts have been made, more or less openly, to evade the provisions of the law on the subject of ex-proprietary tenancies do from time to time come before the courts, and we have to notice more particularly the decision of a Bench of this Court in Lekhraj v. Parshadi (1909) 6 A. L, J., 718, in which it would appear that a transaction which one might at least suspect of having been of this nature was given effect to by the court. According to their Lordships of the Privy Council I take the true test to be this:---If a covenant to relinquish the sir lands is part of the transaction of sale or of mortgage, then the agreement to surrender will be void and unenforceable, no matter what ingenious devices may be employed to give colour to it. If the court is satisfied that there was first of all a transfer by way of sale or mortgage and that the transferee, having obtained the status of an ex-proprietary tenant, with full knowledge of that fact and of the rights preserved to him by the Statute, deliberately chooses, as a separate transaction, to relinquish his ex- proprietary tenancy into the hands of the new proprietor, or of the mortgagee in possession, then the law cannot go further in the way of protecting a reckless and imprudent man against the consequences of his own acts.

(2.) In the present case what we have to consider is the nature of the agreement actually entered into between Thakur Das and his fellow creditors on the one hand and Mir Dad Khan and his fellow zamindars on the other. Two documents were executed on one and the same date, namely, the 19th of June, 1913. By one of these documents the proprietors covenanted to mortgage with possession 30 bighas of land forming part of their air lands. They declared themselves to have put the mortgagees in actual possession of the land in question, surrendering all their rights in the sir and khudkasht. They further covenanted that, if the mortgagees should fail to obtain possession, or if the mortgagors should after all not give up the sir from their own cultivation, or should set up any claim to hold it as ex-proprietary tenants, then the mortgagees should be entitled to sue for their mortgage money with heavy interest and to enforce the same by sale of the proprietary rights of the mortgagors, not merely in the 30 bighas of laud already referred to, but in a total area of 63, bighas and odd belonging to the mortgagors. The consideration for this document was stated at a sum of Rs. 8,000. A further attempt was made to safeguard the mortgagees, in any event, against a possible refusal on the part of the mortgagors to carry cut the contract in its entirety. The mortgagees did not content themselves with taking a usufructuary mortgage pure and simple. They inserted a covenant that, in spite of their right to obtain possession of the 30 bighas of laud and to enjoy the usufruct in lieu of interest, they should nevertheless be entitled at any time to sue for the principal of their mortgage-debt and to bring to sale the proprietary rights of the mortgagors in this area of 30 bighas, which were formally hypothecated as security for the debt. The other document of the same date was a deed of relinquishment, by which the mortgagors under the former deed purported to surrender, or to relinquish in favour of the mortgagees, in return for a consideration of Rs. 1,000, their rights as ex-proprietary tenants in the 30 bighas of sir land in question. Whatever doubt there may be in particular cases as to the precise nature of the transaction entered into, it seems to me that there is no room for doubt in the present case. The total sum of money which Mir Dad Khan and his fellow zamindars owed to Thakur Das and others was Rs. 9,000, and this was distributed between the two deeds, the mortgage-deed and the deed of relinquishment. Moreover, the mortgage-deed itself contained, not merely an express stipulation to put the mortgagees in actual cultivating possession of the sir lands, but a penalty clause binding the mortgagors not to assert their rights as ex-proprietary tenants. The transaction, therefore, was one single transaction effected under cover of two deeds. It was a determined attempt to evade "by ingenious devices and arrangements," as their Lordships of the Privy Council have put it, the provisions of sections 10 and 20 of Act No. II of 1901. It is quite immaterial that, according to the terms of the two documents, the surrender purports to have been actually effected. In any such attempt to get round the provisions of the law the transferee is certain to insist upon a statement that he has actually been put in possession and that the surrender which he desires has actually been effected. I must note, however, that the mortgage-deed in question is not a usufructuary mortgage pure and simple; to a certain extent it is a combination of a simple and a usufructuary mortgage, and is therefore what the courts in India commonly speak of as an anomalous mortgage. We are principally concerned in the present case with the effect of this document as a usufructuary mortgage. On the principles laid down by their Lordships of the Privy Council all the stipulations about the surrender of ex- proprietary rights and about the transfer to the mortgagees of actual cultivating possession over this area of 30 bighas are void and unenforcible. The penalty clause goes along with the rest, being strictly analogous to the sort of device spoken of by their Lordships of the Privy Council at the close of the judgment already referred to, whereby the vendor covenants to make himself liable to a suit for breach of contract on his failing or refusing to carry out the stipulated relinquishment of his ex-proprietary rights. Such a stipulation would, in the opinion of their Lordships, be void and unenforceable. I can see nothing in the stipulation in the deed in suit by which the mortgagors bound themselves, in the event of their setting up any claim to possession as ex-proprietary tenants, to submit to a decree for sale against their proprietary rights in an area of 63 bighas and odd, to distinguish it from a stipulation that they should be liable to a suit for damages, or to any other kind of penalty, in the event of their failure to relinquish. In the view of the case which I take I am by no means disposed to differ from such decisions as that which we have been referred to, viz., I. L. R., 39 All., p. 539, where a mortgage affecting some property which was transferable, along with other property which was by law non-transferable, was allowed to be enforced against the former of the two properties. I do not say for a moment that the mortgage-deed in suit, regarded as a usufructuary mortgage, was altogether void and of no effect. What it gave the mortgagees was the right affirmed by Mr. Justice Tudball and myself in Dipan Rai v. Ram Khelawan (1910) I. L. R., 32 All., 383, namely, the right to proprietary possession in respect of this area of 30 bighas and the right to have rent assessed thereon upon the mortgagors, as ex- proprietary tenants, and to receive and enjoy the said rent in lieu of interest on their money. This was no doubt less than the mortgagees wanted and hoped to secure by the transaction, but it was the legal effect of the transaction actually entered into, in view of the provisions of Section 10 of the Tenancy Act, by which the ex-proprietary tenure was preserved to the former proprietor, "whether he wished it or not," as the Privy Council have said. We have been asked, however, to consider further the anomalous nature Of this mortgage and the legal effect of hypothecation of the proprietary rights in this area of 30 bighas as security for repayment of the principal loan. For reasons which I shall have to state presently, I do not think that any decision on this point is necessary to the determination of this appeal. My own opinion undoubtedly is that the original mortgagees, Thakur Das and others, could have enforced this stipulation. They could have taken up the position that the contract of mortgage which they had entered into was a usufructuary mortgage combined with a simple mortgage; that they had made a mistake in attempting to evade the statute law by the terms of their usufructuary mortgage, and that they, therefore, claimed to fall back upon the document as a simple mortgage and to ask for a decree on that basis. It may, however, be noticed at the same time that this remedy would have been worth extremely little to the mortgagees. If the proprietary rights of Mir Dad Khan and his fellow zamindars in this area of 30 bighas had been brought to sale on a decree enforcing the hypothecation of the same for repayment of the loan of Rs. 8,000, the sale itself would at once have given rise in favour of the mortgagors to this very ex-proprietary tenure which it was the object of the deed in suit to get round. The purchaser at auction, whether Thakur Das, or another, would have had to be content with the rent assessed by the Collector on this ex-proprietary tenure as representing to him the usufruct of the property purchased. This right the original mortgagees could enjoy as mortgagees under the usufructuary part of the mortgage, and it would not have made much difference to them to have endeavoured to work out the same result by enforcing the hypothecation lien, if that were limited (as it must be limited apart from the penalty clause) to the proprietary rights in the area of 30 bighas.

(3.) The case now before us is not between the mortgagors and the original mortgagees. The plaintiffs, who are the respondents to this appeal, were co- sharers in the same mahal, and the transfer of the proprietary rights of Mir Dad Khan and others by way of usufructuary mortgage gave rise to a right of preemption on their part. This right they claimed to enforce and they brought a suit accordingly. That suit was finally settled by a compromise and the compromise decree, which is dated the ,16th of June, 1914, gives these plaintiffs as pre-emptors the right of possession as mortgagees over the property pre- empted, that is to say, over the 33 bighas of sir land in suit. It gives them nothing more: even if what I have called the penalty clause of the original contract of mortgage were enforceable by the original mortgagees, which I believe it was not, there is nothing in this decree to make it enforceable by the pre-emptors. Still less does this decree give the plaintiffs any right, under the mortgage-deed of the 19th of June, 1913, to bring the property to sale under the hypothecation effected in the earlier part of the said deed. I doubt whether an alienation by way of simple mortgage would have given rise to any right of pre-emption. The presumption is that ? persona possessing the right of preemption would have had to wait until the property was brought to sale in enforcement of the hypothecation lien, and then to have asserted any rights of pre-emption which they might claim. However this may be, the pre-emption decree actually passed does not transfer to these plaintiff s any rights as simple mortgagees in respect of the land in suit.