SHANKAR SAKHARAM KENJALE (DIED) THROUGH HIS LEGAL HEIRS versus NARAYAN KRISHNA GADE AND ANOTHER on 17 April 2020

SHANKAR SAKHARAM KENJALE (DIED)THROUGH HIS LEGAL HEIRS

v.

NARAYAN KRISHNA GADE AND ANOTHER

(Civil Appeal No. 4594 of 2010)

APRIL 17, 2020

[MOHAN M. SHANTANAGOUDARAND R. SUBHASH REDDY, JJ.]

Bombay Paragana and Kulkarni Watans (Abolition) Act, 1950s.3(3), proviso – Whether the permanent Mirashi tenant -mortgagor’s (respondents) right of redemption ceased to exist byvirtue of resumption of the suit land under the Abolition Act and itssubsequent re-grant in favour of the mortgagee (appellants) – Landin question was Paragana Watan property/Inam land governed byBombay Hereditary Offices Act, 1874 – Watandar of suit landinducted permanent Mirashi tenant who executed a mortgage deedin favour of appellants – Bombay Paragana and Kulkarni Watans(Abolition) Act, 1950 came into force with effect from 25.1.1951with a view to abolish Paragana and Kulkarni watans – Originalwatandar and Marashi tenant did not seek re-grant of suit land –Mortgagee relying on Government Resolution paid the requisiteoccupancy price and obtained re-grant of suit land in his favour in1960 – Suit for redemption of mortgage filed by respondents –Maintainability of – Held: It is well-settled that the right ofredemption under a mortgage deed can come to an end or beextinguished only by a process known to law, i.e., either by way ofa contract between the parties to such effect, by a merger, or by astatutory provision that debars the mortgagor from redeeming themortgage – Failure on the part of the mortgagor to pay theoccupancy price and seek re-grant is not fatal to his rights as aMirashi tenant as the tenancy in his favour continued to subsistdespite the introduction of the Abolition Act – Consequently, themortgage executed by him also survived the resumption of the suitland under the Abolition Act, and it cannot be said that therelationship of mortgagor-mortgagee ceased to exist by virtue ofsuch Act – As per s.90 of the Indian Trusts Act, 1882, if a mortgagee,

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Aby availing himself of his position as a mortgagee, gains anadvantage which would be in derogation of the right of themortgagor, he must hold such advantage for the benefit of themortgagor – In the instant case, the conditions stipulated unders.90 of the Indian Trusts Act were satisfied – The fact that the lessor/Mirashi tenant did not claim re-grant is not relevant inasmuch theBright of redemption of a mortgagor is not extinguished by virtue ofre-grant in favour of the original defendant (mortgagee) inasmuchas the re- grant was obtained and the property was held by theoriginal defendant for the benefit of the mortgagors – Therefore,the advantage derived by the appellants (successors of mortgagee)Cby way of the re-grant must be surrendered to the benefit of therespondents (Mirashi tenant-mortgagor) subject to payment ofexpenses incurred by them in securing the re- grant – High Courtwas justified in decreeing suit for redemption – Bombay HereditaryOffices Act, 1874 – Indian Trusts Act, 1882 – s.90.

DDismissing the appeal, the Court

Conclusion

DDismissing the appeal, the Court

HELD: 1. Admittedly, lease was subsisting as on25.01.1951, i.e., the day on which the Abolition Act came intoforce. The proviso to Section 3(3) of the Abolition Act envisagesthat the resumption of watan land to the Government under theEAbolition Act does not affect the rights of an alienee of thewatandar or his representative of such land under the Watan Actor that of any person claiming through or under him. Further, inrespect of watan land that has been lawfully leased and whereinthe lease is subsisting on the day appointed for the coming intoforce of the Abolition Act, Section 8 of the Abolition Act accordsFprimacy to the Bombay Tenancy and Agricultural Lands Act, 1948in governing the rights and liabilities of the holder of such landand his tenant(s). In the instant case, the rights of a lawfulpermanent Mirashi tenant would survive resumption of the suitland to the Government by virtue of the proviso to Section 3(3)as well as Section 8 of the Abolition Act. This is because theGtenancy created in favour of the Mirashi tenant subsisted as onthe day on which the Abolition Act came into force, therebyimplying that his tenancy rights were protected and continued tobe governed by the Bombay Tenancy Act despite the introductionof the Abolition Act. This is well-aligned with the general primacyHaccorded to tenancy laws over other legislations, as is alsoreflected in Section 8 of the Abolition Act. Thus, the rights of permanent tenants over watan lands were intended to subsisteven after the coming into force of the Abolition Act. [Paras 7-9][230-D; 232-B-E]

2. Section 4 indicates that with the coming into force of theAbolition Act, watans were abolished and all watan lands vestedabsolutely with the Government, subject to Section 4. UnderSection 4(1), ‘holders’ of the watans were allowed to pay a certainoccupancy price within five years from the date of coming intoforce of the Act and obtain a re-grant of the land. However,according to the second proviso to Section 4(1) of the AbolitionAct, if the holder failed to pay such occupancy price within thefive-year period, he would be deemed to be in unauthorisedoccupation of the land and would be liable to be summarily ejectedin accordance with the Bombay Land Revenue Code, 1879. Thewatandar in the instant case did not exercise her right to seekre-grant of the land under Section 4(1) of the Abolition Act. Itseems, the State Government passed orders dated May 3, 1957and November 23, 1960 to grant the lands in favour of personswho were in actual possession. By virtue of the said orders,wherever the holder or watandar had failed to pay the occupancyprice as required by Section 4(1) of the Act before the prescribedperiod, the lands in question be granted in favour of permanentMirashi tenants who were in actual possession of lands. But theMirashi tenant in this matter did not apply for re-grant pursuantto the said orders. On the other hand, the mortgagee applied forre-grant, though he was not a permanent Mirashi tenant. Thefailure on the part of the mortgagor to pay the occupancy priceand seek a re-grant is not fatal to his rights as a Mirashi tenantas the tenancy in his favour continued to subsist despite theintroduction of the Abolition Act. Consequently, the mortgageexecuted by him also survived resumption of the suit land underthe Abolition Act. [Paras 10, 11 and 13][233-G-H; 234-A-D, H;235-A]

3. A mortgagee who has entered into possession of themortgaged property will have to give up such possession when asuit for redemption is filed, unless he is able to establish that theright of redemption has come to an end as per law. This emanatesfrom the legal principle applicable to all mortgages - “Once amortgage, always a mortgage”. In the instant case, none of theconditions in which the right of redemption comes to an end exist A

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Awith respect to mortgage deed dated 14.05.1947. As regards theimpact of the re-grant on such right of redemption, such re-grantin favour of the mortgagee could not have been made but for thefact that he was in actual possession of the property by virtue ofhis position as a possessory mortgagee. The re-grant to theAppellants’ predecessor based on actual possession as mortgageeBcannot be divorced from the existence of the underlyingmortgagor-mortgagee relationship between the parties. A barereading of Section 90 of the Indian Trusts Act, 1882 indicatesthat if a mortgagee, by availing himself of his position as amortgagee, gains an advantage which would be in derogation ofCthe right of the mortgagor, he must hold such advantage for thebenefit of the mortgagor. In the instant case, the conditionsstipulated under Section 90 of the Indian Trusts Act, 1882 aresatisfied. Section 90 of the Indian Trusts Act, 1882 casts a clearobligation on the mortgagee to hold any right acquired by him inthe mortgaged property for the benefit of the mortgagor, as he isDseen to be acting in a fiduciary capacity in respect of suchtransactions. Therefore, the advantage derived by the Appellants(mortgagee) by way of the re-grant must be surrendered to thebenefit of the Respondents (Mirashi tenant-mortgagor), subjectto the payment of the expenses incurred by them in securing theEre-grant. This is because the Mirashi tenant-mortgagors’ rightto redeem the mortgage was not extinguished but was protectedby virtue of the Abolition Act as well as under the provisions ofthe Bombay Tenancy and Agricultural Lands Act, 1948; in otherwords, the tenancy in his favour continued to subsist. [Paras 14-17][235-C-F; 236-B-C, F-G]F

Jayasingh Dnyanu Mhoprekar and Another v. KrishnaBabaji Patil and Another (1985) 4 SCC 162 : [1985] 2Suppl. SCR 308 – relied on.

Collector of South Satara and Another v. LaxmanMahadev Deshpande and Others [1964] 2 SCR 48;GMalikarjunappa Basavalingappa Mamle Desai v.Siddalingappa & Others (1973) 3 SCC 180 –distinguished.

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Namdev Shripati Nale v. Bapu Ganapati Jagtap andAnother (1997) 5 SCC 185 : [1997] 2 SCR 980 –referred to.

Case Law Reference

[1985] 2 Suppl. SCR 308relied onPara 2.7[1997] 2 SCR 980referred toPara 2.7[1964] 2 SCR 48distinguishedPara 4(1973) 3 SCC 180distinguishedPara 4

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4594of 2010.

From the Judgment and Order dated 08.06.2009 of the High Courtof Judicature at Bombay in Second Appeal No. 439 of 1987.

Sagar N. Pahune Patil, Ravindra Keshavao Adsure, Advs. forthe Appellant.

Aditya P. Khanna, Nicholas Choudhary, Shivaji M. Jadhav, Advs.for the Respondents.

The Judgment of the Court was delivered by MOHAN M. SHANTANAGOUDAR, J.

1. The instant appeal arises out of the judgment dated 08.06.2009passed by the High Court of Judicature at Bombay in Second AppealNo. 439 of 1987. Vide the impugned judgment, the High Court set asidethe findings of the Trial Court and the First Appellate Court and directedthe Trial Court to draw a preliminary decree of redemption of mortgagein favour of the Respondents herein.

2. The factual background to this appeal is as follows:

2.1 The land in question was Paragana watan property/Inam land(hereinafter ‘suit land’). Such watan properties and watans weregoverned by the provisions of the Bombay Hereditary Offices Act, 1874(hereinafter ‘Watan Act’). Smt. Laxmibai, wife of one Bhawani RajeGhadge, was the watandar of the suit land. She had inducted one Mr.Ramchandra (successor of the Respondents herein) as a permanentMirashi tenant of the land. Such tenancy was hereditary in nature.

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A2.2 On 14.05.1947, the said Ramchandra (hereinafter ‘Mirashitenant—mortgagor’) executed a mortgage deed in favour of one ShankarSakharam Kenjale (hereinafter ‘mortgagee’) mortgaging the suit landwith a condition of sale for an amount of Rs. 900/- advanced by ShankarKenjale for the purpose of Ramchandra’s household and personal sundryexpenses. Per the terms of this deed, a period of ten years was envisagedBfor the repayment of the mortgage money and the mortgagee was placedin possession of the suit land.

2.3 Meanwhile, the Bombay Paragana and Kulkarni Watans(Abolition) Act, 1950 (hereinafter ‘the Abolition Act’) came into forcewith effect from 25.01.1951 with a view to abolish Paragana and KulkarniCwatans and to make provision for the performance of functions of someof these offices. Under this Act, Paragana and Kulkarni watans wereabolished and watan lands were resumed to the Government, subject toSection 4. It is needless to observe that the suit land, being watan property,was also resumed to the Government subject to Section 4, whichDempowered the holder of the watan to seek re-grant of the land uponpayment of the requisite occupancy price within prescribed period.

2.4 Notably, the original watandar did not seek re-grant of the suitland. However, relying on a Government Resolution dated 17.05.1956(not placed on record) permitting persons in actual possession of theEwatan lands to seek re-grant, the mortgagee (successor of the Appellantsherein) paid the requisite occupancy price and obtained a re-grant of thesuit land in his favour in the year 1960.

2.5 The Respondents herein (successors of the mortgagor) thenfiled a suit for redemption of mortgage against Shankar SakharamKenjale (mortgagee) in Regular Civil Suit No. 190 of 1978 before theFCivil Judge, Junior Division, Vaduj. It was contended that they hadrequested the mortgagee to accept the mortgage money and reconveythe land, but he had failed to do so. Vide judgment dated 09.12.1983, thissuit was dismissed. It was observed that the deed dated 14.05.1947 wasin the nature of a mortgage by conditional sale and not an outright sale.GFurther, it was found that with the coming into force of the Abolition Actand the failure of the original watandar and the Mirashi tenant––mortgagorto secure a re-grant of the suit land, the said land stood resumed to theGovernment and the relationship of mortgagor-mortgagee between theparties ceased to exist. In light of this, it was held that the mortgagor’sright of redemption had also extinguished and the subsequent re-grant inHfavour of the mortgagee could not be seen as one on behalf of themortgagor so as to pass on the benefits of the same to him.

2.6 The Respondents herein then preferred an appeal before theDistrict Judge, Satara in Civil Appeal No. 25 of 1984. On 24.03.1987,this appeal was dismissed. The District Court reiterated the reasoningof the Trial Court that by virtue of the failure of the watandar and theMirashi tenant—mortgagor to obtain a re-grant of the suit land in theirfavour, the said land had been resumed to the Government under theAbolition Act, thereby ending the mortgagor-mortgagee relationshipbetween the parties. Thus, in light of the subsequent re-grant made tothe mortgagee, it was found that the Mirashi tenant––mortgagor’s rightto redeem shall be deemed to have been extinguished.

2.7 Aggrieved, the Respondents filed a second appeal before theHigh Court of Judicature at Bombay in Second Appeal No. 439 of 1987.Vide the impugned judgment, the concurrent conclusions of the TrialCourt and the First Appellate Court were set aside and the suit forredemption was decreed. This was done on the basis that but for themortgage, the mortgagee would not have been in possession of the suitland and could not have obtained the re-grant order in his favour. Giventhat such re-grant was premised on the underlying mortgagor-mortgageerelationship, it was held that the benefit obtained by the mortgagee byvirtue of such re-grant must accrue to the Mirashi tenant––mortgagor.In this respect, reliance was placed on Section 90 of the Indian TrustsAct, 1882 as well as the decisions of this Court in Jayasingh DnyanuMhoprekar and Another v. Krishna Babaji Patil and Another, (1985)4 SCC 162, and Namdev Shripati Nale v. Bapu Ganapati Jagtapand Another, (1997) 5 SCC 185. It is against this judgment that theAppellants have come in appeal before this Court.

3. Heard the Counsel for the parties.

4. Learned Counsel for the Appellants relied on the decisions ofthis Court in Collector of South Satara and Another v. LaxmanMahadev Deshpande and Others, (1964) 2 SCR 48, andMalikarjunappa Basavalingappa Mamle Desai v. Siddalingappa& Others, (1973) 3 SCC 180, to argue that once the Abolition Act cameinto force, the suit land vested with the Government and after its re-grant to the mortgagee, he became the absolute owner of the land andall rights of the Mirashi tenant––mortgagor, including the right toredemption, came to an end.

5. Per contra, learned counsel for the Respondents relied onSection 90 of the Indian Trust Act, 1882 as well as the decisions of thisCourt in Jayasingh Dnyanu Mhoprekar (supra) and Namdev Shripati AB

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ANale (supra) to contend that the benefit obtained by the mortgagee byvirtue of the re-grant must accrue to the Mirashi tenant––mortgagor.He also drew our attention to the proviso to Section 3 of the AbolitionAct coupled with certain provisions of the Watan Act to argue that therights of Ramchandra as a Mirashi tenant survived the resumption ofland to the Government under the Abolition Act, and therefore his rightsBas a mortgagor (including the right to redemption) also continued to survivedespite the re-grant in favour of the mortgagee.

6. Upon perusing the record and hearing the arguments advancedby the parties, we find that the central issue arising for our considerationin this appeal is as follows:C

Whether the permanent Mirashi tenant—mortgagor’s(Respondents) right of redemption ceased to exist by virtue of theresumption of the suit land under the Abolition Act and its subsequentre-grant in favour of the mortgagee (Appellants)?

D7. As mentioned supra, it is not disputed that Ramchandra was apermanent Mirashi tenant of the watandar of the suit land. Admittedly,such lease was subsisting as on 25.01.1951, i.e., the day on which theAbolition Act came into force.

8. At this juncture, it may be relevant to note certain provisions ofthe Abolition Act as well as the Watan Act:E

“Section 3. Abolition of certain watans together with theright to office and incidents.—With effect from and on theappointed day, notwithstanding anything contained in any law,usage, settlement, grant, sanad or order—

F(1) all Parganas and Kulkarni watans shall be deemed to havebeen abolished;

(2) all rights to hold office and any liability to render serviceappertaining to the said watans are hereby extinguished;

(3) subject to the provisions of Section 4, all watan land is herebyGresumed and shall be deemed to be subject to the payment of landrevenue under the provisions of the Code and the rules madethereunder as if it were an unalienated land:

Provided that such resumption shall not affect the validityof any alienation of such watan land made in accordance with the H

provisions of Section 5 of the Watan Act or the rights of an alieneethereof or any person claiming under or through him;

(4) all incidents appertaining to the said watans are herebyextinguished.”

(emphasis supplied)

Additionally, Section 5 of the Watan Act is notable:

“Section 5. Prohibition of alienation of watan and watanrights.—(1) Without the sanction of [the [State] Government],[or in the case of a mortgage, charge, alienation, or lease of notmore than thirty years, of the Commissioner] it shall not becompetent- (a) to a watandar to mortgage, charge, alienate or lease, for aperiod beyond the term of his natural life, any watan, or any partthereof, or any interest therein, to or for the benefit of any personwho is not a watandar of the same watan; (b) to a representative watandar to mortgage, charge, lease oralienate any right with which he is invested, as such, under thisAct.

(2) In the case of any watan in respect of which a servicecommutation settlement has been effected, either under section15 or before that section came into force, clause (a) of this sectionshall apply to such watan, unless the right of alienating the watanwithout the sanction of [the [State] Government] is conferredupon the watandars by the terms of such settlement or has beenacquired by them under the said terms.

It is also relevant to note Section 8 of the Abolition Act:

“Section 8. Application of Bombay Tenancy and Agricultural–––Lands Act, 1948.

If any watan land has been lawfully leased and such lease issubsisting on the appointed day, the provisions of the BombayTenancy and Agricultural Lands Act, 1948, shall apply to the saidlease and the rights and liabilities of the holder of such land andhis tenant or tenants shall, subject to the provisions of this Act, begoverned by the provisions of the said Act.

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232SUPREME COURT REPORTS

AExplanation.- For the purposes of this section the expression‘land’ shall have the same meaning as is assigned to it in theBombay Tenancy and Agricultural Lands Act, 1948.”

From a reading of the proviso to Section 3(3) of the Abolition Act,it is clear that the resumption of watan land to the Government under theBAbolition Act does not affect the rights of an alienee of the watandar orhis representative of such land under the Watan Act or that of any personclaiming through or under him. Further, in respect of watan land that hasbeen lawfully leased and wherein the lease is subsisting on the dayappointed for the coming into force of the Abolition Act, Section 8 of theAbolition Act accords primacy to the Bombay Tenancy and AgriculturalCLands Act, 1948 (hereinafter ‘Bombay Tenancy Act’) in governing therights and liabilities of the holder of such land and his tenant(s).

9. In light of this, when we turn to the facts of the present case,we find that the rights of Ramchandra, who was a lawful permanentMirashi tenant, survive resumption of the suit land to the Government byDvirtue of the proviso to Section 3(3) as well as Section 8 of the AbolitionAct. This is because the tenancy created in favour of the Mirashi tenantsubsisted as on the day on which the Abolition Act came into force,thereby implying that his tenancy rights were protected and continued tobe governed by the Bombay Tenancy Act despite the introduction ofEthe Abolition Act. This is well-aligned with the general primacy accordedto tenancy laws over other legislations, as is also reflected in Section 8of the Abolition Act. Thus, it is amply clear that the rights of permanenttenants over watan lands were intended to subsist even after the cominginto force of the Abolition Act.

10. At this juncture, it may be useful to note certain other provisionsFof the Abolition Act, which are as follows:

“Section 4. Holder of watan land to be occupant.—(1) Awatan land resumed under the provisions of this Act shall subjectto the provisions of Section 4-A, be regranted to the holder of thewatan to which it appertained, on payment of the occupancy priceGequal to twelve times of the amount of the full assessment ofsuch land within five years from the date of the coming into force ofthis Act and the holder shall be deemed to be an occupant withinthe meaning of the Code in respect of such land and shall primarilybe liable to pay land revenue to the State Government inHaccordance with the provisions of the Code and the rules madethereunder; all the provisions of the Code and rules relating to SHANKAR SAKHARAM KENJALE (D) THR. HIS LRs. v. NARAYANKRISHNA GADE [MOHAN M. SHANTANAGOUDAR, J.]

unalienated land shall, subject to the provisions of this Act, applyto the said land:

Provided that in respect of the watan land which has notbeen assigned towards the emoluments of the officiator, occupancyprice equal to six times of the amount of the full assessment ofsuch land shall be paid by the holder of the land for its regrant:

Provided further that if the holder fails to pay the occupancyprice within the period of five years as provided in this section, heshall be deemed to be unauthorisedly occupying the land and shallbe liable to be summarily ejected in accordance with theprovisions of the Code.

(2) The occupancy of the land regranted under sub-section (1)shall not be transferable or partible by metes and bounds withoutthe previous sanction of the Collector and except on payment ofsuch amount as the State Government may by general or specialorder determine.

(3) Nothing in sub-sections (1) and (2) shall apply to any land—

(a) the commutation settlement in respect of which providesexpressly that the land appertaining to the watan shall bealienable without the sanction of the State Government; or (b) which has been validly alienated with the sanction of theState Government under Section 5 of the Watan Act.

Explanation.—For the purposes of this section the expression‘holder’ shall include—

(i) all persons who on the appointed day are the watandars of thesame watan to which the land appertained, and

(ii) in the case of a watan the commutation settlement in respectof which permits the transfer of the land appertaining thereto, aperson in whom the ownership of such land for the time beingvests.”

The above provisions indicate that, with the coming into force ofthe Abolition Act, watans were abolished and all watan lands vestedabsolutely with the Government, subject to Section 4. Under Section4(1), ‘holders’ of the watans were allowed to pay a certain occupancyprice within five years from the date of coming into force of the Act andobtain a re-grant of the land. However, according to the second proviso A

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Ato Section 4(1) of the Abolition Act, if the holder failed to pay suchoccupancy price within the five-year period, he would be deemed to bein unauthorised occupation of the land and would be liable to be summarilyejected in accordance with the Bombay Land Revenue Code, 1879.

11. Notably, as mentioned supra, the watandar in the instant caseBdid not exercise her right to seek re-grant of the land under Section 4(1)of the Abolition Act. It seems, the State Government passed orders inG.R.R.D. No. PKA-1056-IV-L dated May 3, 1957 and G.R.R.D. No.2760-III-48820-L dated November 23, 1960 to grant the lands in favourof persons who were in actual possession. By virtue of the aforesaidorders, wherever the holder or watandar had failed to pay the occupancyCprice as required by Section 4(1) of the Act before the prescribed period,the lands in question be granted in favour of permanent Mirashi tenantswho were in actual possession of lands. But the Mirashi tenant in thismatter, namely, Ramchandra did not apply for re-grant pursuant to thesaid orders. On the other hand, the mortgagee applied for re-grant, thoughDhe was not a permanent Mirashi tenant.

12. By an order dated 23.11.1960, the mortgagee (represented bythe Appellants herein) obtained a re-grant of the suit land upon payingthe requisite occupancy price. It is claimed that this was done on thebasis of a Government Resolution dated 17.05.1956 permitting personsEin actual possession of the watan lands to seek re-grant. Notably, thisGovernment Resolution dated 17.05.1956 has not been placed on recordand nor has it been considered by the three Courts. We hasten to notethat the effect of the Government Orders dated 03.05.1957 and23.11.1960, mentioned supra, was considered by this Court in para 5 ofthe judgment in Jayasingh Dnyanu Mhoprekar (supra). But theFGovernment Resolution dated 17.05.1956 is not considered by this Courtearlier. Be that as it may, it is not in dispute that a re-grant order wasmade in favour of the Appellants’ predecessor and has not beenquestioned subsequently. Thus, proceeding on the basis that theGovernment Resolution dated 17.05.1956 existed and the re-grant wasmade in favour of the mortgagee, we find that the central question to beGconsidered here is the effect of such re-grant on the rights of the Mirashitenant––mortgagor.

13. In our considered opinion, the failure on the part of themortgagor to pay the occupancy price and seek a re-grant is not fatal tohis rights as a Mirashi tenant as the tenancy in his favour continued toHsubsist despite the introduction of the Abolition Act, as detailed in our discussion above. Consequently, the mortgage executed by him alsosurvived the resumption of the suit land under the Abolition Act, and itcannot be said that the relationship of mortgagor-mortgagee betweenthe parties ceased to exist by virtue of such Act.

14. It is well-settled that the right of redemption under a mortgagedeed can come to an end or be extinguished only by a process known tolaw, i.e., either by way of a contract between the parties to such effect,by a merger, or by a statutory provision that debars the mortgagor fromredeeming the mortgage. In other words, a mortgagee who has enteredinto possession of the mortgaged property will have to give up suchpossession when a suit for redemption is filed, unless he is able to establishthat the right of redemption has come to an end as per law. This emanatesfrom the legal principle applicable to all mortgages – ”Once a mortgage,always a mortgage”.

15. In the present case, it is clear that none of the aforementionedconditions in which the right of redemption comes to an end exist withrespect to the mortgage deed dated 14.05.1947. As regards the impactof the re-grant on such right of redemption, it must be noted that suchre-grant in favour of the mortgagee could not have been made but forthe fact that he was in actual possession of the property by virtue of hisposition as a possessory mortgagee. There is no doubt that had the Mirashitenant––mortgagor applied for a re-grant, the suit land would havecertainly been granted in his favour, as the rights of permanent tenantsin watan lands were allowed to subsist even after the coming into forceof the Abolition Act. Thus, in our considered opinion, the re-grant to theAppellants’ predecessor based on actual possession as mortgagee cannotbe divorced from the existence of the underlying mortgagor-mortgageerelationship between the parties. Therefore, any benefit accruing to themortgagee must necessarily ensue to the Mirashi tenant––mortgagor.

16. In this regard, it is apposite to note Section 90 of the IndianTrusts Act, 1882, which reads as under:

“Section 90. Advantage gained by qualified owner.—Wherea tenant for life, co-owner, mortgagee or other qualified owner ofany property, by availing himself of his position as such, gains anadvantage in derogation of the rights of the other persons interestedin the property, or where any such owner, as representing allpersons interested in such property, gains any advantage, he musthold, for the benefit of all persons so interested, the advantage so A

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Agained, but subject to repayment by such persons of their dueshare of the expenses properly incurred, and to an indemnity bythe same persons against liabilities properly contracted, in gainingsuch advantage.”

A bare reading of this provision indicates that if a mortgagee, byBavailing himself of his position as a mortgagee, gains an advantage whichwould be in derogation of the right of the mortgagor, he must hold suchadvantage for the benefit of the mortgagor.

17. In the instant case, we find that the conditions stipulated underSection 90 of the Indian Trusts Act, 1882 are satisfied. As mentionedCsupra, the mortgagee could only obtain the re-grant in his favour byavailing himself of his position as a mortgagee, as such re-grant is traceableto the possession of the land accorded to him by virtue of the mortgagedeed. Further, the said re-grant was certainly in derogation of the rightsof the mortgagor who was the permanent Mirashi tenant and therebyprotected by virtue of the subsisting tenancy. The fact that the lessor/DMirashi tenant Ramachandra did not claim re-grant is not relevantinasmuch the right of redemption of a mortgagor is not extinguished byvirtue of re-grant in favour of the original defendant inasmuch as there-grant was obtained and the property was held by the original defendantfor the benefit of the mortgagors. Re-grant made in favour of the originalEdefendant is an advantage traceable to the possession of the suit propertyobtained by him under the mortgage and the said re-grant certainlysubserves the right of mortgagor who was a Mirashi tenant in respect ofthe suit property. As mentioned earlier, Section 90 of the Indian TrustsAct, 1882 casts a clear obligation on the mortgagee to hold any rightacquired by him in the mortgaged property for the benefit of theFmortgagor, as he is seen to be acting in a fiduciary capacity in respect ofsuch transactions. Therefore, the advantage derived by the Appellants(mortgagee) by way of the re-grant must be surrendered to the benefitof the Respondents (Mirashi tenant––mortgagor), subject to the paymentof the expenses incurred by them in securing the re-grant. This is becausethe Mirashi tenant—mortgagors’ right to redeem the mortgage was notGextinguished but was protected by virtue of the Abolition Act as well asunder the provisions of the Bombay Tenancy and Agricultural LandsAct, 1948; in other words, the tenancy in his favour continued to subsist.18. This is also supported by the decision of this Court in JayasinghDnyanu Mhoprekar (supra) where in a similar factual scenario of theHmortgagee obtaining a re-grant in derogation of the right of the mortgagor–Mirashi tenant, this Court held as follows:

“9. ……. It is seen that the mortgagees obtained the grant in theirfavour by making an incorrect representation to the Governmentthat they were permanent Mirashi tenants although they wereonly mortgagees. Section 90 of the Indian Trusts Act, 1882 clearlycasts an obligation on a mortgagee to hold the rights acquired byhim in the mortgaged property for the benefit of the mortgagor insuch circumstances as the mortgagee is virtually in a fiduciaryposition in respect of the rights so acquired and he cannot beallowed to make a profit out of the transaction. The defendantsare, therefore, liable to surrender the advantage they have derivedunder the grant in favour of the plaintiffs even if the order ofgrant has become final before the Revenue Authorities, of course,subject to the payment of the expenses incurred by them insecuring the grant. The decree of the first appellate courtaccordingly has directed that Rs 182.41 should be paid by theplaintiffs to the defendants along with the mortgage money.”

19. In Namdev Shripati Nale (supra), while dealing with theapplicability of Section 90 of the Indian Trusts Act, 1882, this Courtobserved as follows:

“6. …....The first respondent-mortgagee failed to comply withthe aforesaid statutory obligation. He committed a wrong or adefault. Whether the default/wrong committed has as its basis acontractual obligation or a statutory obligation, makes nodifference. He was taken to be a tenant by the authorities, whichenabled him to get the regrant in his favour. That was only becausethe first respondent, as a possessory mortgagee, was in possessionof the property. He took advantage of his position as a possessorymortgagee. In so doing he faulted. So, on facts, it is clear that thefirst respondent obtained regrant in his favour or obtained anadvantage in his favour, by availing himself of his position as amortgagee. In law, the advantage obtained by the first respondent,the qualified owner, must be held to be for the benefit of the personsinterested — the mortgagor-appellant. We are of the view that inthe totality of the facts and circumstances, the provisions of Section-90 of the Indian Trusts Act are attracted. The first respondentmortgagee gained an advantage by availing himself of his positionas a possessory mortgagee and obtained the regrant. This he didby committing a wrong. He committed a default in not paying theoccupancy price within the time limited by law for and on behalf AB

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Aof the mortgagor. The regrant was obtained in his name by posinghimself as a tenant, which was possible only because he was inpossession of the land (as a possessory mortgagee). The advantageso gained by him in derogation of the right of the mortgagor shouldattract the penal consequences of Section 90 of the Indian TrustsAct. We hold that the default committed by a possessoryBmortgagee, in the performance of a statutory obligation or acontractual obligation, which entails a sale or forfeiture of right inthe property to the mortgagor, will attract the provisions of Section90 of the Indian Trusts Act. In such cases any benefit obtained bythe qualified owner, the mortgagee, will enure to or for the benefitCof the mortgagor. The right to redeem will subsist notwithstandingany sale or forfeiture of the right of the mortgagor. We are of theview that the law on this point has been laid down with admirableclarity by this Court in Mritunjoy Pani v. Narmanda BalaSasmal [(1962) 1 SCR 290 : AIR 1961 SC 1353] and by K.K.Mathew, J. (as his Lordship then was) in Nabia YathuDUmmal v. Mohd. Mytheen [1963 KLJ 1177 : AIR 1964 Ker 225]. The said decisions have our respectful concurrence.”

(emphasis supplied)

20. The facts in the case of Collector of South Satara (supra)Eand the case of Malikarjunappa Basavalingappa Mamle Desai(supra) were totally different and these cases were dealing with adifferent point. The litigation in these cases was not related to the rightsof a permanent tenant under watandar. So also, the point involved thereinwas not related to the effect of the order of re-grant made in favour ofthe mortgagee. Therefore, we are of the considered opinion that theFdictum laid down in the aforementioned judgments is not applicable tothe facts of the case at hand.

21. On other hand, in our considered opinion, the question involvedin the present litigation is squarely covered by the judgments in JayasinghDnyanu Mhoprekar and Namdev Shripati Nale (supra).G

22. In view of the foregoing, we hold that the High Court wasjustified in decreeing the suit filed by the Respondents herein and settingaside the judgments of the Trial Court and the First Appellate Court. Wedo not find any reason to interfere with the impugned judgment.Accordingly, the instant appeal is dismissed.

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Devika Gujral