1. Suit for redemption of mortgages — Vesting of mortgaged tenures in State under Bihar Land Reforms Act — Claims filed before Claims Officer. (Para 4 , 5 , 9 , 10 )
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1961 Supreme(SC) 400
SUPREME COURT OF INDIA
13th December, 1961
P.B. GAJENDRAGADKAR, A.K. SARKAR, K.C. DAS GUPTA AND N. RAJAGOPALA AYYANGAR, JJ.
Raja Sailendra Narayan Bhanj Deo, Appellant
Versus
Kumar Jagat Kishore Prasad Narayan Singh and others, Respondents.
Civil Appeal No. 246 of 1959.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate (Mr. Mohan Behari Lal, Advocate, with him), for Appellant; M/s. B. K. P. Sinha and A. G. Ratnaparkhi, Advocates, for Respondent No. 1; M/s. M. K. Ramamurthy, R. K. Garg, D. P. Singh and S. C. Agarwal, Advocates of M/s. Ramamurthy and Co., for Respondent No. 6.
Advocates:
A.G.Ratnaparkhi, A.V.VISHWANATHA SASTRI, B.K.P.SINHA, D.P.Singh, M.K.RAMAMURTHI, MOHAN BEHARI LAL, R.K.GARG, RAMAMURTHI, S.C.AGRAWAL
A.G.Ratnaparkhi, A.V.VISHWANATHA SASTRI, B.K.P.SINHA, D.P.Singh, M.K.RAMAMURTHI, MOHAN BEHARI LAL, R.K.GARG, RAMAMURTHI, S.C.AGRAWAL
A redemption decree becomes infructuous once mortgaged properties vest in the State free from all encumbrances under a Land Reforms Act. Statutory determinations of mortgage debts by a Claims Officer supersede civil court directions for taking accounts to prevent double recovery and maintain statutory finality.
Headnote:(A) Bihar Land Reforms Act, 1950 - Sections 4, 14, 18(3), and 35 - Bihar Tenancy Act - Section 171 - Vesting of estates in State - Redemption of mortgage - Once estates vest in the State free from all encumbrances, the mortgage security ceases to exist, and a decree for redemption becomes infructuous. (Para 11)
(B) Bihar Land Reforms Act, 1950 - Section 18(3) and 35 - Finality of Claims Officer's decision - Taking of accounts - Where a Claims Officer has determined the amount due under the Act, a prior redemption decree directing the taking of accounts becomes infructuous to avoid double recovery and conflict with the statutory finality of the Claims Officer's decision. (Paras 13, 14)
Facts of the case:
A suit for redemption of mortgages was filed and a decree for redemption, including the taking of accounts, was passed. Subsequently, a Land Reforms Act came into force, and a notification vested the mortgaged tenures in the State free from all encumbrances. The mortgagee filed claims before the statutory Claims Officer, and the amounts due were finally determined. The High Court confirmed the redemption decree, holding that the Act barred suits by mortgagees but not by mortgagors.
Findings of Court:
The redemption decree became infructuous upon the vesting of the properties in the State. The direction to take accounts also became infructuous as the statutory Claims Officer had already determined the accounts, and such decisions are final and barred from civil court challenge.
Issues: Whether a decree for redemption and the direction to take accounts remain executable after the mortgaged properties vest in the State free from all encumbrances under the Land Reforms Act.
Ratio Decidendi: The vesting of properties "free from all encumbrances" extinguishes the mortgage security and the right to redeem. The statutory mechanism for determining mortgage debts under the Land Reforms Act supersedes the civil court's power to take accounts under a redemption decree, as the former's decisions are final and intended to be the sole means of recovery to prevent anomalous double payments.
Result: Appeal allowed.
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2. Whether a redemption decree remains executable and accounts can be taken after mortgaged properties vest in the State free from encumbrances under the Land Reforms Act. (Para 10 , 12 )
3. Vesting of properties free from encumbrances renders redemption decrees infructuous; the Land Reforms Act provides a final and exclusive mechanism for determining mortgage debts. (Para 11 , 13 , 14 , 15 )
4. A decree for redemption becomes infructuous when the mortgaged property vests in the State free from all encumbrances under a land reforms statute. (Para 11 , 16 )
5. Appeal allowed — High Court decree set aside — Suit for redemption dismissed. (Para 17 )
6. What is the effect of land vesting under a land reforms act on a pre-existing redemption decree?
A redemption decree becomes infructuous once the mortgaged tenures vest in the State free from all encumbrances. Since the mortgagee no longer holds interest and the mortgagor ceases to be entitled to the properties, the right to redeem is extinguished. (Para 11 , 16 )
7. Can a civil court take mortgage accounts for excess realization after properties have vested under the Land Reforms Act?
No. The Land Reforms Act provides a comprehensive and final mechanism via the Claims Officer to determine debts and realizations. Allowing a civil court to take accounts would conflict with the statutory finality of the Claims Officer's decision and risk double payment. (Para 13 , 14 )
8. Does the Claims Officer under the Land Reforms Act have jurisdiction to investigate excess realizations by a mortgagee?
Yes. Under Section 16(2)(b) of the Act, the Claims Officer is empowered to determine the amount realized by the mortgagee. This ensures that the mortgagor's rights are protected and that compensation is adjusted based on actual dues. (Para 15 )
Judgment
SARKAR, J.: This appeal arises out of a suit brought by the respondent Kumar Jagat Kishore Prasad Narayan Singh, hereafter called the respondent against the appellant, the Raja of Kanika, for redemption of certain mortgages. The suit was decreed by a learned Subordinate Judge of Gaya and the High Court at Patna confirmed that decree on appeal. The appellant has now appealed to this Court against the judgment of the High Court.
2. In the High Court many points were argued but in this Court Mr. Sastri for the appellant pressed only one point. We have therefore to state only such of the facts as concern the point raised by Mr. Sastri.
3. The respondent claimed to be entitled to redeem the mortgages as the executor of the estate of Chandreshwar Prasad, the mortgagor, and as the receiver appointed in certain execution proceedings hereafter mentioned. It has since been finally held, as will appear later, that the will appointing the respondent executor was not genuine. It may also be stated that the respondent is no longer holding the office of receiver. It would, therefore, appear that the respondent has now no locus standi to contest the appeal. He was, however, the only person opposing the appeal in this Court. As learned counsel for the appellant did not object to the respondent appearing in this appeal, it is unnecessary to discuss the respondent s position further.
4. It appears that on February 17, 1924, Chandreshwar Prasad executed a mortgage in favour of the then Raja of Kanika to secure a sum of Rs. 4,00,000/The mortgaged properties consisted of certain Mokarrari tenures. The mortgage debt not having been paid, the Raja of Kanika filed a suit on the mortgage and obtained preliminary and final decrees thereon. Thereafter he put the decree into execution sometime in 1938 and we are informed that the execution case was never finally disposed of. It was in these execution proceedings that the respondent had been appointed the receiver of the mortgaged properties.
5. The Mokarrari tenures were held under the Tikari Raj. The Tikari Raj had mortgaged its proprietary interests in these and other tenures to the Darbhanga Raj by way of a usufructuary mortgage. Chandreshwar Prasad appears to have failed to pay the rent of the mortgaged and other tenures which he held under the Tikari Raj. Thereupon, the Darbhanga Raj as the usufructuary mortgagee of the proprietary interests in these tenures started certificate proceedings for the realisation of the rent and in or about 1940 obtained a certificate for Rs. 83,267/- in respect of arrears of rent. The certificate put the mortgage security of the Raja of Kanika in jeopardy and the latter thereupon on September 28, 1940, paid the amount of the certificate. In view of this payment, under S. 171 of the Bihar Tenancy Act the Raja of Kanika became the mortgagee of the tenures in respect of the rent of which the certificate had been issued and also entitled to possession of the tenure villages till the amount paid by him in respect of the certificate was repaid with interest at the rate prescribed. On November 23, 1940, the Raja of Kanika took possession of all the tenures in respect of the arrears of rent of which the certificate had been issued. As a result, the receiver appointed in the execution case earlier mentioned was dispossessed.
6. The mortgagor Chaudreshwar Prasad died on September 28, 1941. The respondent as the executor under a will alleged to have been left by Chandreshwar Prasad obtained probate of it from the High Court on December 10, 1945. He was appointed receiver in the execution case on February 17, 1949.
7. On September 20, 1949, the respondent as the receiver and executor as aforesaid filed the suit for the redemption of the aforesaid mortgages. By this date, the Raja of Kanika in whose favour the mortgage had been executed in 1924 had died and the suit was brought against the appellant as his successor and as the person then entitled to the mortgagee s interest. The
