Bombay High Court Clarifies Tenancy Rights Post-Mortgage, Upholds Purchase Rights For Portion Retained By Tenant-Mortgagee

Mumbai: In a significant judgment concerning agricultural land disputes and the intersection of tenancy and mortgage laws, the Bombay High Court has ruled that while a usufructuary mortgage involving a tenant does not extinguish their tenancy rights, the protection offered under Section 25A of the Maharashtra Tenancy and Agricultural Lands Act, 1948 ('Tenancy Act') applies only to the portion of land that remains in the actual possession of the tenant-mortgagee, not to land handed over to a third-party joint mortgagee.

The ruling, delivered by Justice Sandeep V.Marne , came in a batch of writ petitions challenging an order of the Maharashtra Revenue Tribunal (MRT) which had denied tenancy rights to the petitioners (legal heirs of the original tenant, Kadam family) over two land parcels in Pune district, thereby rejecting their claim to purchase the lands under Section 32G of the Tenancy Act.

Case Background

The dispute centered around two pieces of land, Gat Nos. 28/1-28/4 (admeasuring 18 Acre 21 Guntha) and Gat No. 31 (admeasuring 15 Acre 38 Guntha), originally owned by the Khaire family (landlords). The petitioners claimed their predecessor, Vishnu Limba Kadam , was inducted as a tenant in 1935 via a written agreement. Revenue records from 1935-36 onwards showed cultivation by the Kadam family, and a 1949 mutation entry recorded Dinkar Bala Kadam as a protected tenant for both lands.

A critical development occurred in May 1949 when the landlord mortgaged both lands by conditional sale to Sopana Bala Kadam (the tenant) and Bhiku Daulatrao Jarande (a third party) for Rs. 5,500. The mortgage deed indicated Jarande provided 2/3rd of the funds and Kadam 1/3rd, and recorded possession being handed over to both mortgagees. The mortgage was for a period of 10 years.

Following the mortgage, a 1953 mutation entry reflected the actual possession split: Jarande took possession of Gat No. 31, while Kadam retained possession of Gat Nos. 28/1-28/4.

Years later, the landlord's son filed a suit in 1974 to redeem the mortgage. The suit was decreed in 1979, directing repayment of the loan but not granting possession, allowing the landlord to approach revenue authorities for possession. In the pleadings and evidence of this civil suit, the landlord's side admitted that the Kadam family was cultivating the land as a tenant at the time of the mortgage.

The tenancy dispute then moved through the revenue courts. The Agricultural Lands Tribunal (ALT) initially denied tenancy rights for both lands in 2010. The Sub Divisional Officer (SDO), in appeal, partially allowed the claim in 2011, recognizing tenancy for Gat Nos. 28/1-28/4 and fixing the purchase price, but denying it for Gat No. 31. Cross-revisions before the MRT followed. The MRT, in its 2016 order (challenged in the High Court), set aside the SDO's finding on Gat Nos. 28/1-28/4 (denying tenancy) and upheld the SDO's finding on Gat No. 31 (denying tenancy), effectively holding that the Kadam family was never a tenant of either parcel.

Arguments Presented

The petitioners contended that the MRT erred by ignoring clear evidence of tenancy, including the 1935 agreement, cultivation entries, and the landlord's admission in the civil suit. They argued that the mortgage did not extinguish tenancy, relying on Section 25A of the Tenancy Act, which states that tenancy remains in abeyance during a usufructuary mortgage in favour of a tenant and revives thereafter. They asserted S. 25A applied even though enacted after the mortgage, as the mortgage was subsisting. They also argued tenancy should be recognized for both lands based on the original agreement and entries.

The respondents countered that Kadam was not cultivating the land at the time of mortgage, as the deed recorded possession being given to the mortgagees. They argued civil court admissions were not binding on tenancy authorities and that revenue entries were inconsistent. They claimed the mortgage implied surrender of tenancy, and being a mortgagee in possession on Tiller's Day (April 1, 1957) disqualified them under Section 4(c) of the Tenancy Act. They further argued that the registered mortgage deed's 2/3 - 1/3 split should prevail over the 1953 mutation entry showing the actual possession split.

Court's Analysis

Justice Marne found sufficient evidence supporting the initial creation and subsistence of tenancy in favour of the Kadam family before the mortgage, citing the 1935 agreement, cultivation entries, and the 1949 protected tenant entry. Crucially, the court emphasized the binding nature of the landlord's admissions in the 1974 civil suit, relying on the Supreme Court's judgment in Nagindas Ramdas vs Dalpatram Ichharam @ Brijram .

The court then analyzed the effect of the 1949 mortgage in light of Section 25A of the Tenancy Act. Rejecting the argument that S. 25A (inserted in 1951) did not apply retrospectively, the court held that the provision applies to any usufructuary mortgage in favour of a tenant that was subsisting on the date of its insertion. Citing Supreme Court precedents, including Parmar Kanaksinh Bhagwansinh , the court reiterated that a leasehold interest does not merge with a mortgagee's interest; tenancy is merely suspended and revives upon the mortgage's expiry.

However, the court identified the joint nature of the mortgage (to tenant and third party) as the "twist." Section 25A protects tenancy when land is mortgaged "to a tenant cultivating such land." It does not extend protection to land that goes into the possession of a third party, even if that third party is a joint mortgagee with the tenant.

The court accepted the 1953 mutation entry reflecting the actual possession split ( Jarande with Gat No. 31, Kadam with Gat Nos. 28/1-28/4) as decisive for determining which portion of land remained in the tenant's possession after the mortgage. Since Gat No. 31 went into Jarande 's possession, Section 25A's protection did not apply to it. The Kadam family lost possession of Gat No. 31 upon execution of the mortgage and could not claim tenancy or purchase rights over it.

Conversely, the Kadam family retained possession of Gat Nos. 28/1-28/4 after the mortgage. Thus, Section 25A applied to this portion, suspending their tenancy rights during the mortgage period. The court rejected the argument that being a 'mortgagee in possession' on Tiller's Day (1957) extinguished their tenancy right, holding that the legislative intent of S. 25A was to protect the subsistence of tenancy, which merely remained in abeyance and revived post-mortgage, making the tenant eligible to purchase under Section 32 thereafter.

The court found the MRT's reversal of the SDO's order regarding Gat Nos. 28/1-28/4 perverse, noting the existence of continuous cultivation entries and landlord admissions.

Court's Decision

The High Court partly allowed the petitions. It set aside the MRT's order dated January 30, 2016, with respect to Gat Nos. 28/1, 28/2, 28/3, and 28/4. It sustained the MRT's order with respect to Gat No. 31.

Consequently, the court confirmed the SDO's order dated July 14, 2011, holding that the petitioners are entitled to purchase land bearing Gat Nos. 28/1 to 28/4 under Section 32 of the Tenancy Act, but their claim for purchase of Gat No. 31 is rejected.

Following the judgment, the court granted a stay on the operation of the order for 8 weeks, subject to the condition that the respondents do not disturb the petitioners' possession of Gat Nos. 28/1 to 28/4.

The judgment clarifies that the protection under Section 25A is contingent on the tenant retaining possession of the land even after the mortgage, and that involvement of a third-party mortgagee can limit the extent of this protection based on actual post-mortgage possession.

Case Title: Sopana Bala Kadam (since deceased through his legal heirs & representative) 1a. Anandrao Sopanrao Kadam and Ors. vs. Vijay Harishchandra Khaire and Ors.

Case No.: WRIT PETITION NO. 10316 OF 2016 and connected matters

Bench: Justice Sandeep V.Marne

Pronounced on: April 25, 2025