Section 65A of the Transfer of Property Act added an implied term to the contract, making leases in contravention of a covenant void and emphasizing the mortgagor's right to lease within certain limits.

Horwill, J.

1. The appellant was a simple money creditor of defendants 2 and 3, who executed a mortgage deed in favour of the first defendant on 20th June, 1923, which contained a covenant against leasing the property. The first defendant was also an unsecured creditor of defendants 2 and 3 and obtained a simple money decree against them. The first defendant attempted to execute his decree in 1932; but by that time the defendants 2 and 3 had filed an Insolvency Petition, and so the Execution Petition was struck off. The Insolvency Petition was subsequently dismissed; and before the first defendant filed another Execution Petition against defendants 2 and 3, the plaintiff, in order to satisfy his own decree, had persuaded defendants 2 and 3 to execute a lease of the property for ten years. He then filed E.A. No. 2847 of 1933 in the Execution Petition of the first defendant, claiming that the equity of redemption could be sold only subject to his lease. That petition was dismissed, and the plaintiff thereupon filed the present suit for a declaration to that effect. The lower appellate Court dismissed his suit on the ground that under Section 65A of the Transfer of Property Act, such a lease would be void in view of the covenant against leasing the property.

2. It is argued here that Section 65-A would not apply because the mortgage took place before Section 65-A was introduced into the Transfer of Property Act. It is however contended on the other side that although that is true, the lease was actually after Section 65-A was introduced and that Section 65-A therefore applied. On this point I agree with the learned Advocate for the appellant. It is not contended that Section 65-A has any retrospective effect. Its effect was that whereas leases in contravention of a covenant were not void before the amendment, they became void afterwards. In effect, therefore, it added an implied term to the contract, which it could not do to a contract already executed on the date of the amendment.

3. Before Section 65-A was enacted, some Courts were inclined to apply the strict law of England to mortgages in India also; but the view that finally prevailed was that the mortgagor did have a right to lease and that although it was usual to introduce terms into the mortgage prohibiting the mortgagor from leasing lands, yet that condition was honoured as often in the breach as in the observance. It was accordingly held that a mortgage in breach of a covenant was not void. Radha Pershad Misser v. Monohur Das I.L.R.(1880) 6 Cal. 317, Ali Hasan v. Dhirja I.L.R.(1882) 4 All. 518 and Niader Singh v. Ram Chander A.I.R. 1935 All. 518 are authorities for that position; and it is not seriously disputed here that within certain limits leases can be granted. The above cases proceeded largely on the interpretation of Section 66 of the Transfer of Property Act, which, by implication, gives the mortgagor a great deal of freedom in the management of his lands and even allows him to commit waste provided that the security is not thereby rendered insufficient. It is argued for the appellant that the only test of the validity of a lease is whether it renders the security insufficient and that before a lease can be declared to be invalid, it is necessary for the person seeking to avoid the lease to strictly prove that the security has not been rendered insufficient, In Niader Singh v. Ram Chander AIR1935All511 , the amount of property leased was very small and it made no appreciable difference to the mortgage security. In the present case, however, the lease, as already observed, was for a period of ten years; which means that even if the property is sold, the purchaser, whether he be the mortgagor or a third party, can have no hope of getting possession for many years to come. Moreover, although the lease was bona fide in the sense that it was for consideration and that the appellant was working only to obtain satisfaction of his own decree, there can be no doubt