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SUPREME COURT OF INDIA
21st November, 1957.
T.L. VENKATARAMA AYYAR, S.K. DAS AND P.B. GAJENDRAGADKAR, JJ.
Asa Ram and another, Appellants
Versus
Mst. Ram Kali and another, Respondents.
Civil Appeal No. 56 of 1956.
Advocates appeared
Dewan Charanjit Lal, Advocate, for Appellants; Mr. S. P. Sinha, Senior Advocate, (M/s. J. B. Dadachanji, S. N. Andley, Rameshwar Nath, Advocates of M/s. Rajinder Narain and Co.), for Respondents.
U. P. Tenancy Act, 1939 - S. 29 (a) - Hereditary rights - Kabuliat executed by mortgagees - Whether binding on mortgagors - Lease not prudent and bona fide - Kabuliat not binding on mortgagors - Respondents not hereditary tenants.
Fact of the Case:
The suit property was agricultural land held in Sir by the mortgagors. On 8-7-1930, the mortgagors executed a usufructuary mortgage over the land in favor of the mortgagees. The mortgagees applied to have the mortgagors' names removed from the Sir, and the lands were thereafter entered as Khudkasht in the names of the mortgagees. In 1941, the surviving mortgagor filed a suit for redemption of the mortgage, which was decreed. The mortgage was redeemed by the appellants, the legal representatives of the mortgagor, on 6-9-1945. When they sought to take possession of the suit properties, they were obstructed by the respondents, who claimed to have been admitted as tenants by the mortgagees. The appellants filed a suit under S. 180 of the U. P. Tenancy Act, 1939, to eject the respondents, treating them as trespassers. The Revenue Officer and the Commissioner passed a decree in favor of the appellants, but the Board of Revenue allowed the appeal and dismissed the suit, holding that the respondents were hereditary tenants under the Act.
Finding of the Court:
The Supreme Court held that the Kabuliat executed by the mortgagees was not binding on the mortgagors as it was not a prudent and bona fide transaction. The Court also held that the respondents were not hereditary tenants under S. 29 (a) of the U. P. Tenancy Act, 1939, as they were not admitted as tenants by a person who had the right to do so.
Issues: Whether the Kabuliat executed by the mortgagees was binding on the mortgagors.
Ratio Decidendi: The Court held that the Kabuliat was not binding on the mortgagors as it was not a prudent and bona fide transaction. The Court also held that the respondents were not hereditary tenants under S. 29 (a) of the U. P. Tenancy Act, 1939, as they were not admitted as tenants by a person who had the right to do so.
Final Decision: The appeal was allowed, the decree passed by the Board was set aside, and that of the Revenue Officer, Meerut affirmed by the Commissioner, restored.
Certainly. Here are the key points derived from the provided legal document:
A lease created by a mortgagee is binding on the mortgagor only if it is of such a character that a prudent owner of property would enter into it in the usual course of management (!) .
The transaction of leasing land by mortgagees must be prudent and bona fide; otherwise, it will not be binding on the mortgagors (!) .
A lease or settlement that is not made in a prudent manner or is not bona fide is not binding on the mortgagors, especially if it appears to be undertaken for ulterior motives or is not supported by proper evidence of reasonableness (!) .
The rent fixed in a lease or Kabuliat must be reasonable and fair, considering the income that a prudent owner could derive from the land, and not merely compare favorably with the circle rate (!) .
Evidence of net yield from the land and the prevailing prices of produce at the time is crucial in determining whether the rent is fair and whether the transaction was prudent (!) .
A transaction that results in a rent significantly lower than the income a prudent owner could obtain, especially if supported by evidence of higher profits or profits from restitution proceedings, indicates that the lease was not a prudent or bona fide transaction (!) .
An act of leasing land that was originally held in Sir, especially when the land is fertile and suitable for direct cultivation, is unlikely to be a prudent management decision unless supported by exceptional reasons (!) .
A lease or settlement made without proper authority or which is unilateral and not supported by the landlord’s authority does not confer tenancy rights on the lessee against the true owner (!) .
Rights of hereditary tenancy under applicable tenancy laws are only conferred if the lease or settlement was made by a person who had the authority to admit a tenant, such as the owner or a person with proper authority (!) .
A mortgagee in possession cannot create a lease that confers occupancy rights if such a lease is not made in accordance with the law or is not a prudent management act, especially if it is not binding on the mortgagor (!) (!) .
The legal status of tenants claiming hereditary rights depends on whether their tenancy was established through a transaction that was legally valid, prudent, and bona fide, and whether it was made by a person with the authority to admit tenants (!) (!) .
The provisions of tenancy laws and related statutes establish that rights of tenancy are only acquired if the transaction was made in a manner consistent with legal requirements, including proper authority and bona fide intent (!) .
When a transaction is not binding on the mortgagor, such as a lease or settlement not made prudently or bona fide, the purported tenants do not acquire rights as hereditary tenants under the relevant laws (!) .
The decision emphasizes that the management and transactions concerning land must be conducted prudently and bona fide to be legally binding on the mortgagor, especially when the land is suitable for direct cultivation and has high fertility (!) .
The overall ruling supports that a lease or settlement that is not prudently made or lacks proper authority does not grant tenancy rights, and the rights of the mortgagor to redeem and regain possession are upheld (!) (!) .
Please let me know if you need further elaboration or specific legal principles.
Judgment
T. L. VENKATARAMA AIYAR, J. : The facts material for purposes of this appeal have been stated by us in our order dated 6-2-1957, and may be briefly recapitulated. The suit property is agricultural land of the extent of 10 Bighas, 13 Biswas. On 8-7-1930, the then owners of the land, Ram Prashad and Uadiraj, executed a usufructuary mortgage over it and certain other properties, with which we are not concerned in this litigation, in favour of Dwarka Prashad, Naubat Singh and Munshilal. The lands were originally held in Sir by the mortgagors, but as part of their bargain with the mortgagees, they applied to have their names removed from the Sir, and that was done by an order dated 18-6-1930, the lands being thereafter entered as Khudkasht in the names of the mortgagees. In 1941, Ram Prashad, the surviving mortgagor, filed Suit No. 132 of 1941 for redemption of the mortgage. The suit was contested, but it was eventually decreed, the amount due to the mortgagees being fixed at Rs. 1,860. Subsequent to the decree, Ram Prashad died leaving him surviving, the appellants herein, as his legal representatives. On 6-9-1945, the amount due under the mortgage was paid by them and the mortgage was redeemed. When they sought to take possession of the suit properties, they were obstructed by Govind Sahai and Bhagwan Sahai, who claimed to have been admitted as tenants by the mortgagees. Thereafter, the appellants filed the suit, out of which the present appeal arises, under S. 180 of the U. P. Tenancy Act No. XVII of 1939, hereinafter referred to as the Act, to eject them, treating them as trespassers. The defendants resisted the suit on various grounds, of which only one is now material. They claimed that they were not trespassers but hereditary tenants under the Act and could not therefore be ejected, and Issue 2 was raised with reference to this plea.
2. The Revenue Officer, Meerut, who tried the suit held on this Issue that as the lands had been held by the mortgagors as Sir, and that as the mortgagees had been themselves cultivating them as Khudkasht, the defendants could not be held to be hereditary tenants, and passed accordingly a decree in ejectment in favour of the appellants, and this decree was confirmed on appeal by the Commissioner, Meerut Division. The defendants took the matter in appeal to the Board of Revenue (Second Appeal No. 96 of 1948). By its judgment and decree dated 4-2-1954, the Board held that the defendants had been put in possession by the mortgagees under a Kabuliat dated 26-5-1936, that the rent fixed under the Kabuliat, Rs. 112 per annum, was a reasonable rate of rent as the circle rate was Rs. 76-6-0, and that, therefore, the settlement was binding on the mortgagors, as it was for "prudent and economic rent". On this finding, it allowed the appeal and dismissed the suit. Against this judgment, the plaintiffs have preferred this appeal by special leave.
3. At the original hearing before us, the main contention pressed by the appellants was that the Kabuliat dated 26-5-1936, was not referred to in the written statement, and had not been exhibited at the trial, and that, therefore, no relief should have been granted on the basis of that document in second appeal. We, however, came to the conclusion that as the point had been raised, though not clearly in the written statement, it ought to be tried on the merits, and we accordingly remanded the case to the Board of Revenue for trial on the following two Issues :
(1) Whether the lease deed dated May 26-1936, by the mortgagees in favour of the respondents is true and legally valid; and
(2) Whether the said lease is binding on the appellants.
4. At the re-hearing which we directed, the parties have adduced fresh evidence on both the Issues, and the Board of Revenue has submitted its findings thereon. On the first Issue it has held that no lease deed had been executed by the mortgagees in favour of the lessees, but that the latter had executed a Kabuliat in favour of
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