Kapur Singh vs Karnail Singh and others

G.C. Mital, J.

Mehanga Ram took a loan of Rs. 11,411.13 from the Gurdaspur Central Cooperative Bank Ltd., Gurdaspur (hereinafter referred to as the Bank) and to secure the loan, mortgaged his agricultural land to the Bank by a mortgage deed dated 4.7.1958. Since Mehanga Ram was a member of the Society and was its Secretary, the matter of recovery of loan was taken up by the Bank under the Punjab Cooperative Societies Act, 1961 (hereinafter referred to as the Act) by referring the dispute to arbitration. The arbitrator gave an award in favour of the Bank for the recovery of Rs. 22,765.91. When the mortgagor did not repay the amount, the Banktook out execution. In execution the mortgaged property was put to sale. On 8.2.1974, the mortgagee rights were purchased by Kapur Singh and Tehal Singh for Rs. 31,000/. Before the purchase, the two auction purchasers, who were tenants, were in occupation of the land along with Paramjit Singh. Later on, the sale certificate was granted to the auction purchasers. On 15.5.1975 vide Exhibit P.1, Mehanga Ram sold 32 Kanals of land out of the aforesaid land to Karnail Singh and Jarnail Singh for Rs. 36,225/. On 4.9.1975, Karail Singh and Jarnail Singh sued Kapur Singh and Tehal Singh seeking redemption of the mortgage. Mehanga Ram was also joined in the suit as a plaintiff. The defendants raised several pleas and the important ones to be noticed are that they were in occupation of the land in dispute as tenants and even if redemption was to be allowed, their tenancy rights were to survive and a decree for actual possession by way of redemption could not be granted.

On the contest of the parties, the following issues were framed :

(1) Whether the plaintiffs have purchased the land in suit from the owner Mehanga Ram defendant No. 3, as alleged in the plaint? O.P.P.

(2) Whether the plaintiffs are entitled to redeem the land from defendants No. 1 and 2. If so, on what payment?

(3) In case the plaintiffs are entitled to redemption whether the defendants No. 1 and 2 are entitled to retain the possession of the suit land because of being tenants prior to the mortgage in question? O.P.D.

(4) Relief.

On the evidence led in the case, the trial Court by judgment and decree dated 4.8.1976 held that the defendants were not tenants; that by the court sale only mortgagee rights were sold and consequently granted a preliminary decree for redemption on payment of Rs. 31,000/. Against the aforesaid decree, the defendants have come to this Court in R.F.A. No. 962 of 1976.

While the aforesaid appeal (R.F.A. No. 962 of 1976) was pending in this Court, the proceedings for passing of final decree continued and the trial Court passed a final decree for possession by redemption on 2.3.1977. Against the aforesaid decree only Kapur Singh defendant filed R.F.A. No. 432 of 1977. Since both these appeals arise out of the same suit, they are being disposed of by this common judgment.

In view of the pleadings and evidence brought on the record, it is clear that only the mortgagee rights of the Bank for the recovery of the loan were sold in the auction in the sum of Rs. 31,000/ and Kapur Singh and Tehal Singh, who were the auction purchasers, only acquired the mortgagee rights in the land in dispute for a consideration of Rs. 31,000/. The equity of redemption continued with Mehanga Ram who sold 32 Kanals out of the mortgaged land to Karnail Singh and Jarnail Singh. On these facts, the suit for redemption at the instance of Karnail Singh, Jarnail Singh and Mehanga Ram was clearly maintainable and the Court below was right in decreeing the suit to this extent.

The next question would be that on payment of how much amount a decree for redemption can be granted. The principal amount was Rs. 11,441.13 and on that amount the Bank was entitled to interest. When the award was given, the total amount payable to the Bank came to Rs. 27,765.91 and by the time the property was put to auction, the amount payable to the Bank came to Rs. 31,000/, for which amount the auction took place. From the date of purchase till the date of redemption, the purchasers of mortgagee rights, i.e., Kapur Singh and Tehal Singh, would be entitled to interest on the same rate as was agreed to between Mehanga Ram and the Bank because Kapur Singh and Tehal Singh stand substituted as mortgagees. If in between the auction purchasers got possession of the property, to that extent they would be liable to account for the mesne profits. The Court below was not right in ordering redemption on payment of Rs. 31,000/ alone. In view of the observations made above, the accounting will have to be done before the trial Court.

The other point which survives for consideration is whether the plaintiffs would be entitled to a decree for actual physical possession of the land in dispute or the rights of Kapur Singh and Tehal Singh as lessees would revive on granting of decree of redemption along with Paramjit Singh. The Court below committed error of law in coming to the conclusion that the auction purchasers were not proved to be tenants. They have produced documents Exhibits D. 1 and D. 2 on the record which clearly go to show that vide the aforesaid documents dated 21.7.1973, Mehanga Ram created tenancy in favour of Kapur Singh vide Exhibit D. 1 and in favour of Kundan Singh vide D. 2. The lessees under Kundan Singh are Tehal Singh and Paramjit Singh. Mehanga Ram also appeared in Court and he deposed that he had delivered possession of the land to Kapur Singh on the basis of the lease agreement after one month of the execution. Whether possession was delivered or not, documents Exhibits D. 1 and D. 2 became operative and created tenancy rights and the tenants were entitled to recover possession or to continue in possession even on redemption. It is not disputed that at the time of filing of the suit, the lessees or sublessees were in possession and, therefore, till lease is terminated in accordance with law, they would be entitled to continue in possession despite a decree of redemption. Accordingly, I reverse the decision of the Court below on issue No. 3 and hold that the tenants or subtenants would continue to retain possession of the land in dispute despite redemption and would be liable to be evicted only in accordance with law and not in these proceedings.

For the reasons recorded above, a preliminary decree for redemption is passed in favour of Karnail Singh, Jarnail Singh and Mehanga Ram in regard to the land in dispute and it is ordered that the Court below will take accounts as to what was due to Kapur Singh and Tehal Singh as mortgagees in view of what I have observed above and keeping in view the provisions of Order 34, Rule 7(1) (a) of the Code of Civil Procedure and after it is found as to how much amount is due, the Court below will direct the plaintiffs to pay the same on or before such date as the Court may fix in accordance with Order 34, Rule 7(1)(c)(i) of the Code of Civil Procedure and on payment or deposit of the amount so found due, the plaintiffs shall be entitled to apply for passing of a final decree. In case the amount is not paid, the defendants shall be entitled to apply for a final decree in accordance with law. However, the tenants would continue to hold possession of the land in dispute until evicted in due course of law. Consequently, R.F.A. No. 432 of 1977 is allowed and the final decree passed by the Court below is hereby set aside. The preliminary decree passed by the Court below modified in the terms indicated above and the matter is remitted to the trial Court for proceeding further in accordance with law keeping in view the observations made above. The parties, through their counsel, are directed to appear before the trial Court on 4.3.1985. R.F.A. No. 962 of 1976 stands disposed of accordingly. The parties will bear their own costs.