VARIAVAN SARASWATHI AND ANR. v. EACHAMPI THEVJ AND ORS.

A

NOVEMBER 13, 1992

B [R.M. SAHA! AND B.P. JEEVAN REDDY, JJ.]

Kera/a Land Reforms Act, 1964 :

Section 4(A)(l)(aj-Acquisition of right of tenant-Junior member of C Tarwad redeeming mortgage and continuing in possession of land for more than five years-Whether can be deemed to be a mortgagee-Whether can acquire the rights of tenant.

Two junior members of a Tarwad (somewhat like a joint family) redeemed a mortgage execute~ in 1870 by the Karnavan (akin to Manager) D of the Tarwad. They paid the amount in 1886, got the property released, obtained possession and they or their descendants continued in posses- sion as such.

In 1967 a suit for partition was filed by successors, of other mem- E hers of the Tarwad, in whose favour equity of redemption, of the suit land was transferred in a family partition in 1962. The suit was resisted amongst others on acquisition of right of tenant under Section 4A(l)(a) of the Kerala Land Reforms Act, 1964.

The trial court and first appellate court held that the junior mem- F hers, as a result of getting the property release~, were holders of special right under Marumakkathayam Law and they could not be held to be mortgagees and, therefore, they did not acquire any right under the Land Reforms Act.

The High Court, however, held that the junior members being assig- G nee of mortgage in possession for fifty years, on the date the Kerala Land Reforms Act, 1964, was amended and Section 4(1)(a) was added by Amendment Act of 1969, were entitled to rights as tenants, and thus, accepted the claim of junior members, because the members of the Tarwa<I treated the mortgage to be continuing on the date the suit was filed. It also H held that a junior member of the Tarwad, paying off the debt of TarwaD, 418

p. 419 Copy page pinpoint

became a mortgagee of the excess share in his own right. A Allowing the appeals of the successors of other members of Tarwad, this Court,

2.1 Mortgage is creation of an interest in the property for payment of debt. Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by I operation of law. Consequently, the relationship of mortgagor and D • mortgagee cannot subsist. [423-E, F]

2.2. In law, the status of a person paying olT debt to secure the property either with consent of others or on own volition is that he becomes the owner, entitle to hold and possess the property. But, in equity the right is to hold the property till he is reimbursed. In other words, he may hold the property in surety or he may bring the claim for contribu- tion. Similarly, the co-mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share. But these rights in equity, either in favour of the person who discharges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee. [423-F, G; 424-B]

2.3. A plain reading of Section 92 of the Transfer of Property Act, 1882 does not warrant a construction that the substitutee becomes a mortgagee. The expression is, 'right as the mortgagee' and not right of mortgagee. The legislative purpose was statutory recognition of the equi- table right to hold the property till the co-mortgagor was reimbursed. And not to create relationship of mortgagor and mortgagee. The section con· fers certain rights on co-mortgagor and provides for the manner of its exercise as well. The rights are of redemption, foreclosure and sale. And H

p. 420 Copy page pinpoint

A the manner of exercise is as mortgagee. The word, 'as' means, 'in the manner prescribed'. [425-B-C]

2.4. A co-mortgagor in possession, of excess share redeemed by him, can thus enforce his claim against non-redeeming mortgagor by exercising fights or foreclosure or sale as is exercised by mortgagee under section 67 B of the Transfer of Property Act. But that does not make him mortgagee. [425-C-D]

Raghavan Nair v. Anandavally Amma, 1986 K.L.T. 623, approved.

C Kochuni v. States of Madras Kera/a, A.I.R. 1960 S.C. 1080; Ganeshi Lal v. Joti Pershad, [1953] S.C.R. 243 and Valliamma Champaka Pil/ay v. Sivathanu Pillay & Ors., [1980] 1 S.C.R. 354, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8244 of 1983. D From the Judgment and Order dated 22.7.1980 of the Kerala High Court in Second Appeal No. 171 of 1976.

E.M.S. Anam for the Appellants.

N. Sudhakaran for the Respondents. E The Judgment of the. Court was delivered by

R. M. SAHAI, J. Whether a junior member of the Tarwad, in Kerala, who redeems the mortgage and is in possession for more than 50 years is a 'mortgagee holding the land comprised in a mortgage' so as to acquire F rights of tenant under Section 4(A} of the Kerala Land Reforms Act, is the legal issue that arises for consideration in this appeal, by successors of other members of the Tarwad whose suit for partition was dismissed in second appeal by the High Court.

In the year 1045 (1870) a mortgage was executed by the Karnavan G (akin to Manager) of the Tarwad, (somewhat like a joint family}. Two junior members, of the Tarwad, paid the amount in the year 1061 (1886}, got the property released, obtained possession and they or their descen- dants continued in possession as such. In 1967 a suit for partition was filed by successors, of other member of the Tarwad, in whose,favour equity of H redemption, of the land in suit, was transferred in a family partition in 1962.

V. SARASWA11H v. E. THE.VJ [SAHA!, J.] 421

The suit was resisted amongst others on acquisition of right of tenant under A Section 4(l)(a) of the Land Reforms Act. Since there was no dispute on basic facts, namely, redemption of mortgage by two junior members and their continuance in possession for more than fifty years on the date Section 4(1)(a) was added to the Land Reforms Act the rights of parties were decided, more, as a matter of law. According to the trial court and first appellate court the junior members, as a result of getting the property B released, were holder of special right under Marumakkathayam Law. They could not be held to be mortgagee, therefore, they did not acquire any right under the Land Reforms Act. But the High Court held otherwise, mainly because in 1962 when the Tarwad was partitioned the property was treated as under mortgage since equity of redemption for the same was given to c the plaintiff-appellant. It was found that, even, in the plaint it was averred that in consequence of release the mortgagee right vested in the predeces- sor of defendants who were junior members of the Tarwad. The High Court, therefore, held that the defendants being assignee of mortgage in possession for fifty years, on the date the Land Reforms Act was amended D and Section 4(1)(a) was added by Act XXXV of 1969, were entitled to rights as tenants.

The High Court, thus, accepted the claim of defendants because the member of the Tarwad treated the mortgage to be continuing on the date the suit was filed. This, apart, it was held that junior member of the Tarwad E paying off the debt of Tarwad becomes a mortgagee of the excess share in his own right. But this enunciation, of law, was not accepted, as correct by a division bench of the Kerala High Court itself in Raghavan Nair v. Anandaval/y Amma, 1986 KLT 623. The question, therefore, is if a jnnior member of the Tarwad who redeems the property, and gets release, is F holder of special right only or he steps into the shoes of mortgagee.

Nature of right of a junior member in the Tarwad, a family corpora- tion, in which every member male or female possesses equal right has been explained by this Court in Kochuni v. States of Madras & Kera/a, AIR 1960 SC 1080 at 1099, thus:- G

"......... The incidents of a tarwad are so well-settled that it is not necessary to consider the case-law, but it would be enough if the relevant passages from the book "Malabar and Aliyasanthana Law" by Sundara Aiyar are cited. The H

p. 422 Copy page pinpoint

A learned author says at p.7 thus:

"The joint family in a Marumakkathayam Nayar tarwad consists of a mother and her male and female children, and the children of those female children, and so on. The issue of the male children do not belong to their tarwad B but to the tarwad of their consorts. The property belong- ing to the tarwad is the property of all the males and females that compose it. Its affairs are administered by one of those persons, usually the eldest male, called the karnavan. The individual members arc not entitled to c enforce partition, but a partition may be effected by com- mon consent. The rights of the junior members are stated to be (1) if males, to succeed to management in their turn, (2) to be maintained at the family house, (3) to object to an improper alienation or administration of the fatnily property, (4) to see that the property is duly conserved, D (5) to bar an adoption, and (6) to get a share at any partition that may lake place. These are what may be called effective rights. Otherwise everyone is a proprietor and has equal rights."

E One of the rights according to this decision which vests in the junior member is to see that the property is duly conserved. Such a right, obvious- ly, includes a r;ght to redeem the property by paying the debts outstanding against the Tarwad. It is an incidence of co-ownership or co-proprietorship which flows from the nature of Tarwad. But whether the person who thus conserves the property steps into shoes of mortgagee and holds the same rights and interests or he is a surety holding the property on behalf of the Tarwad subject to right of contribution has to be decided on general principles of mortgage as the customary law of Tarwad does not throw any l;ght on it. Mortgage has been defined in Section 58 of the Transfer of Property Act as transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced. The definition brings out clearly the nature of mortgage. It was understood and followcp in same sense, even, before the Act came into force. In Gopal v. Parsotam, 1883 5 All. 121. 137 F.B. it was observed :-

1 H ' Mortgage as understood in this country cannot be defined

V. SARASWATHI v. E. THEY! [SAHA!, J.] 423

better than by the definition adopted by the Legislature in A section 51l of the Transfer of Property Act (IV of 1882). That definition has not in any way altered the law, but, on the contrary, has only formulated in clear language the ,, ' notions of mortgage as understood by all the writers of text-books on Indian mortgages. Every word of the defini- B tion is borne out by the decisions of Indian Courts of Justice. 11

It was not different where customary law prevailed. Even in customary Marumakkathayam Law, governing section of people inhabiting the West Coast, the law of mortgage was understood in no different sense. C

Since the transfer in a mortgage is, only, of interest and not of the · entire right and title, as takes place in sale, the mortgagor and the mortgagee can transfer or assign their interest. A mortgagor may assign or transfer the equity of redemption or may even create second mortgage. D Similarly a mortgagee may assign his interest or create another mortgage. What happens when a mortgagee assigns his interest in favour of another person? Since an assignor can pass interest that he has, the assignee becomes holder of the same interest that a mortgagee has. In other words, he steps into the shoes of the mortgagee. Can the same be said where a co-mortgagor or anyone on behalf of mortgagor authorised under law, pays E the amount and brings to an end the interest the mortgagee had? Mortgage is creation of an interest in the property for payment of debt. Once the mortgage debt is discharged by a person beneficially interested in equity of redemption the mortgage comes to an end by operation of law. Conse- quently the relationship of mortgagor and mortgagee cannot subsist. What F then is the status of a person paying off debt to secure the property either with consent of others or on own volition? In law he becomes .the owner, entitled to hold and possess the property. But in equity the right is to hold the property till he is reimbursed. In other words, he may hold the property in surety or he may bring the claim for contribution. In Ganeshi Lal v. Joti Pershad, [1953] SCR 243, it was held;- G

".... Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it and it is well recognised that where there are several joir.t debtors, the person making the payment is a principal H

p. 424 Copy page pinpoint

A debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors .... "

Similarly the co-mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the B amount of his share. In Val/iamma Champaka Pillay v. Sivathanu Pillay & Ors., [1980] l SCR 354 the principle was explained thus:-

"From what has been said above it was clear that where the Transfer of Property Act is not in force and a c mortgage with possession is made by two persons, one of whom only redeems discharging the whole of the common mortgage debt, he will, in equity, have two distinct rights: Firstly, to be subrogated to the rights of the mortgagee discharged, vis-a-vis the non-redeeming co-mortgagor, in- cluding the right to get into possession of the latters portion or share of the hypotheca. Secondly, to recover contribution towards the excess paid by him on the security of that portion or share of the hypotheca, which belonged not to him but to the other co-mortgagor. It follows that where one co-mortgagor gets the right to contribution against the other co-mortgagor by paying off the entire mortgage debt, a co-related right also accrues \o the latter to redeem his share of the property and get its possession on payment of his share of the liability to the former. This corresponding right of the 'non- F redeeming' co-mortgagor, to pay his share of the liability and get possession of his property from the redeeming co-mortgagor, subsists as long as the latter's right to con- tribution subsists ..... 11

But these rights in equity, either in favour of the person who dischar- G ges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee. Even under subrogation, a legal ·concept, meaning substitution, applied, on English Law principle, even earlier, inserted now as Section 92 in Transfer of Property Act since 1929, the rights that are created in favour of a co-mortgagor as H a result of discharge of debt are 'so far as regards redemption, foreclosure

V. SARASWATHI v. E. THEVI !SAHA!, J.] 425

or sale of such property, the same rights as the mortgagee whose mortgage he redeems'. What is the meaning of expression 'right as mortgagee'? Does a person who, in equity, gets subrogated becomes mortgagee? Or his rights are confined to foreclosure or sale? A plain reading of the section does not warrant a construction that the substitutee becomes a mortgagee. The expression is, 'right as the mortgagee' and not right of mortgagee. The legislative purpose was statutory recognition of the equitable right to hold the property till the co-mortgagor was reimbursed. And not to create relationship of mortgagor and mortgagee. The section confers certain rights on co-mortgagor and provides for the manner of its exercise as well. The rights are of redemption, foreclosure and sale. And the manner of exercise is as mortgagee. The word, 'as' according to Black's Legal Dic- c tionary means, 'in the manner prescribed'. Thus a co-mortgagor in posses- sion, of excess share redeemed by him, can en_force his claim against non-redeeming mortgagor by exercising rights of foreclosure or sale as is exercised by mortgagee under section 67 of the Transfer of Property Act. But that does not make him mortgagee. Therefore, a co-mortgagor or a D junior n1ember of the Tarwad wh9 continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(l)(a) of the Kerala Land Reforms Act.

Legal position explained above does not alter either because during partition equity of redemption in respect of property redeemed by iunior members was transferred or because in the plaint it was claimed that mortgage subsisted. None of these actions could effect the operation of law.

In the result this appeal succeeds and is allowed. The judgment and order of the High Court is set aside and the order of the trial court decreeing the suit for partition is restored. Parties shall bear their own costs.

N.P.V. Appeals allowed.