JUDGMENT Mukerji, J.
1. The plaintiff is the appellant in this Court. His suit was, in its form, one for redemption of a mortgage which his father, defendant 13 and one Raghunandan, who died as a member of the joint family with the two other persons mentioned, purported to mortgage certain occupancy lands on Asarh Sudi 6, 1293-F., corresponding to sometime in July 1886 for a sum of Rs. 299-15.-0. The plaintiff offered to redeem on payment of the aforesaid sum. The defence was that the plaintiff never made an offer to redeem, that there were two bonds by which certain moneys were tacked on the mortgage of 1886 and that to redeem the property the plaintiff was bound to pay not only the sum of Rs. 299-15-0 but also two additional sums amounting to Rs. 1,156-4-0. One of these bonds is dated 27th July 1893 and is for Rs. 170-0-0, carrying interest at 15 per cent per annum and the other was a bond dated 22nd July 1898 for Rs. 85-0-0 carrying interest at the same rate.
2. The rejoinder of the plaintiff to the defence that the plaintiff was bound to pay two additional sums seems to have been that there were no such bonds in existence and if they did exist, the plaintiff was not bound to pay them as a condition precedent to redemption.
3. The Court of first instance held on a consideration of the terms of the bonds that one of these created a charge on the property mortgaged and the other did not. In the result, the first Court decreed redemption on payment of the amount due on one of those bonds, namely the bond of 1898 in addition to the amount due on the mortgage of 1886.
4. The defendants appealed and the plaintiff filed a cross-objection. The plaintiff contended that there was no charge created on the property by the bond of 1898, and further, having regard to the nature of the property no charge could be created according to law. The defendant's appeal was that they were entitled, as a condition precedent to redemption, to the payment of the money secured by the bond of 1893 as well.
5. In answer to the plaintiff's contention that the property mortgaged being an occupancy holding, it was not capable of having a charge or mortgage created on it, the learned Subordinate Judge; who heard the appeal, remarked that although the property could not be hypothecated, but if it has once been hypothecated, the plaintiff is bound to pay up the charges on it, before he gets back the plots. On a consideration of the language of the two bonds the learned Judge in the appellate Court came to the conclusion that the bonds created a charge on the property and the plaintiff must pay the total amount claimed by the defendants before he could redeem.
6. In this Court it has been contended that the plaintiff is not bound to pay the amounts of any of these bonds. The plea that the bonds were barred by time was not pressed. The appellant's argument divides itself up into three portions. The first is that as a matter of law, a further charge on the property could not be created by the transactions of 1893 and 1898, because the property was an occupancy holding and the law forbade any mortgage of it, much less a second mortgage, which did not involve delivery of possession. The second branch of the argument is that, having regard to the language of the two documents, it was never intended that the occupancy holding should be re-mortgaged to the mortgagee of 1886. The third argument which affects only one of the bonds under consideration is that it (the bond of 1898) being unregistered could not operate to create a second mortgage on the property mortgaged in 1886.
7. I shall take up the three points separately.
8. The question whether or not a mortgagor is liable to pay money secured on a subsequent bond by which a further liability is sought to be created on property already mortgaged has always to be answered on a consideration of the language employed in the subsequent transaction. The cases on the point are numerous, but very few of them purport to lay down any principle which may serve as a guide to the Courts in general. Further, as remarked by Banerji, J., in the Full Bench case of Har Prasad v. Ram Chandra A.I.R.1922 All 174, the case law on the point is conflicting in the extreme. It appears to me however, that it is possible to lay down a principle which alone should guide the Courts.
9. A man may borrow money on the security of his property. The property may be worth much more than the amount borrowed and both the lender and the borrower may agree that the property is capable of serving as a security for further loans. In such circumstances, there is nothing to prevent the lender from making further advances to the borrower on the same security. If there is any such second loan on the security of the property, if the borrower repays one of the loans, the lender has nothing to lose. He can hold his security till the second and subsequent advance or advances are paid up. If, however, when the second or any subsequent advance is made, the transaction happens to have no regard to the property previously given as security for the earlier transactions, the lender cannot fall back on the security given for the earlier transactions and say that, although the earlier obligations have been satisfied by the borrower, he would still hold the property pledged or given as security as security for the transaction for which, as a matter of agreement, no security was given. This statement of law is based on elementary principles and no argument is needed and no authority need be quoted for its support. Applying then, this principle to the case of a usufructuary mortgage it should follow that before a usufructuary mortgagee may be able to say that he would hold the property given to him as security for the first transaction he must satisfy the Court that the property was re-mortgaged to him, usufructuarily, for the second or subsequent advances. If the transactions by which the second or subsequent advances were made did not amount to a mortgage, or amounted only to a simple mortgage or amounted only to a charge on the property (which would mean something inferior but akin to a simple mortgage) a lender cannot say that he would hold the possession back till the further advances have been paid up. The reason is absolutely clear. Security granted to him for the second or subsequent advances did not entitle the lender to keep possession over the property, originally mortgaged to him with possession. It should follow that if the borrower wants to redeem the earliest mortgage which was with possession, he should be entitled to take back, on payment, the security which he had given for the loan. But if the second or subsequent advances are secured by way of second or subsequent usufructuary mortgages over the property originally mortgaged, the lender can easily say to the borrower:
I will accept the amount of the first mortgage and release the property so far as that mortgage goes, but I will continue to hold the property as the security for the second or subsequent advances for which I hold second or subsequent mortgages wish possession over the same property.
10. In these circumstances, if the borrower wants to take possession of the property, he must pay, not only the amount secured by the first mortgage, but also the amounts secured by the second or subsequent mortgages. The borrower may certainly redeem the first mortgage on payment of the amount of the first mortgage money, but the redemption will not bring back the property to him, if there be second or subsequent mortgages by him entitling the lender to hold possession of the property.
11. It is on the principles enunciated above that the Court has to look into the nature of the transaction by which further charges are said to have been created on the property. The Court has to see in such cases whether the second or subsequent transactions amount, substantially at any rate, to second or subsequent usufructuary mortgages over the property originally mortgaged. I have already pointed out that if the nature of the transactions by which the second or subsequent loans have been granted do not give the lender any right to keep possession over the property over which possession was given to him on the basis of the first loan, the lender cannot retain the property as his security after he has received the amount of the first loan. The Courts have no doubt sometimes used language, loosely, by saying that subsequent transactions by which money was borrowed created a "charge" on the property originally mortgaged with possession and, therefore, the lender is entitled to the subsequent advances as a condition precedent to the redemption of the original usufructury mortgage The use of the word, "charge" in such cases must be held as made in a nontechnical sense. If in the subsequent advances, no security was given or if the security given did not entitle the lender to hold possession of the property as his security, the mere fact that a charge was created on the property, which charge might allow the lender to bring the property to sale subject to his own mortgage, will not prevent the borrower from redeeming the first "usufructuary" mortgage, and from recovering possession.
12. Following up this principle, we have to see first whether the two subsequent transactions in this particular case created or not a second or subsequent mortgage over the property originally mortgaged in 1886. Before examining the language of the documents of 1893 and 1898 we have to see whether the property which, it is said, was given as security, was capable of being offered as security. As I have already said, it is so described in the deeds and, as stated by the learned District Judge in his judgment, the property mortgaged is an occupancy holding. Its mortgage was prohibited by law at the date of its mortgage: vide Act 12.of 1881, Section 9. It was however, held by this Court that a usufructuary mortgage of an occupancy holding was in the nature of a sub-letting and to that extent the mortgage was allowable. The leading case on the point is that of Kheali Ram v. Nathu Ram [1893] 15 All. 219. Their Lordships who decided the case put the sub-tenant and a usufructuary mortgagee on the same basis: see p.230 of the report. The mortgage of 1886 can therefore be upheld only as a mere subletting on the part of the mortgagors to the mortgagee. As the result of consistent decisions in this Court, based on the Full Bench ruling quoted, a first usufructuary mortgage of occupancy holding has been accepted as a valid transaction and it would be too late in the day to question it: see the case of Brij Mohan Algu [1903] 26 All. 78.
13. If, however, a first usufructuary mortgage of an occupancy holding is allowed, does it follow that an occupancy tenant is allowed, by law to raise money by second or third mortgages, over the occupancy holding? A sub-letting is permitted because it does not amount to a transfer of the occupancy rights. The tenant is entitled to hold possession and he hands over his right to hold possession to the sub-tenant. This is the basis of the Full Bench case. Where, however, the tenant has already parted with possession in favour of a sub-tenant, it cannot be said that he can "further sublet" the same property to the said sub-tenant. There is no other possible way of looking at these second and subsequent transactions of mortgage by which money is raised on the security of the occupancy holding. Such second and subsequent mortgages must be held to be invalid in law.
14. If I am right in my view of the law, it must follow that, in this particular case, the two transactions of 1893 and 1898 are void in law and the plaintiff cannot be called upon to pay the amount secured on foot of the transactions evidenced by them. It is no doubt true that this view entails a slight hardship on the defendants and gives the plaintiff a benefit which he should not ordinarily be allowed to reap. The plaintiff borrowed the money and now he wants to take shelter under a rule of law, but we must enforce the law. If a certain property is not transferable by law, the fact that money has been lent on the security of that property will not alter the law. Equitable principles cannot be brought into play to nullify the clear rules of law.
15. Reliance has been placed on the case of Hardayal v. Ganga Koeri A.I.R. 1927 All. 743. It is said that this case is an authority for the proposition that where the property originally mortgaged is an occupancy tenancy, it is permissible to the parties to the transaction to borrow further sums on the security of the said holding. I have carefully read the judgment but could find no indication of any consideration of the question raised before us. Their Lordships no doubt purport to follow the case of Har Prasad v. Ram Chandra A.I.R.1922 All 174. The Full Bench case related to zamindary property. It does not appear that, in the case of Hardayal v. Ganga Koeri A.I.R. 1927 All. 743 any discussion was directed towards the nature of the property mortgaged and to the law, viz., although a subletting of an occupancy holding by way of usufructuary mortgage was allowed, whether a second or third mortgage was permissible under the law. The case is therefore entirely distinguishable from the case before us. I hold that the two bonds of 1893 and 1898 create no obstacle to the success of the plaintiff in the suit.
16. Taking the third point next, namely whether the fact that the bond of 1898 is not registered, is any bar to the success of the defendants? If the defendants can succeed in claiming the money secured by the transaction of 1893, only by establishing that the transaction of that year amounts to a second mortgage over the property mortgaged in 1886, it seems to me that the non-registration is fatal to the claim. Allowing for the sake of argument that the second transaction was nothing but usufructuary mortgage, it could be created in law only by a registered document. The possession was already with the defendants and no fresh mortgage therefore could be created by delivery of possession. In a recent Full Bench case, viz., Sohan Lal v. Mohan Lal A.I.R. 1928 All. 726, it has been held that where a property is already in the possession of one party, it could not be transferred to him by the ceremony of "delivery." It follows that where the transaction to be valid must be made, either by a registered instrument or by the "delivery" of the property, the transaction must be made by a registered instrument where delivery is not possible. In this view the deed of 1898 did not create a valid mortgage: see Section 59 T.P. Act.
17. Coming to the second point, both the documents of 1893 and 1898 are described as documents of Mashrutal Rahan". It is said in the bond of 1893 that the money borrowed would be paid on a particular date with a certain rate of interest and if it is not repaid, then it would be repaid as a condition precedent to the redemption of the mortgage of 1886. In the second deed of 1898, there is no date fixed for payment of the money, but the stipulation is that the money secured would be paid with interest as a condition precedent to the redemption of the mortgage of 1886. In the deed of 1898 there is also a reference to the deed of 1893. I am, therefore, not prepared to differ from the Court below and would accept its interpretation that it was agreed to treat the two documents as creating second and third mortgages respectively over the property originally mortgaged. The Full Bench case of Har Prasad v. Ram Chandra A.I.R.1922 All 174 lends support to this view.
18. In the result, I would allow the appeal, modify the decree of the Court below and grant to the plaintiff a decree for redemption on condition of payment of Rs. 299-15 within six months of this date under the usual terms. Only in case of default of payment there will be no order for the sale of the property, because the property being an occupancy holding cannot be sold to satisfy the mortgage.
Niamatullah, J.
19. This appeal arises out of a suit brought by the plaintiff-appellant for redemption of 13 bighas 16 biswas 10 dhurs of land in village Bhagwan on payment of Rs. 299-15, the principal money due under a mortgage-deed, dated Asarh Sudi 6th 1293, Fasli (1886). The deed in question admittedly allows redemption on payment of the principal sum. The profits of the property are to be appropriated by the mortgagee in lieu of his interest and no accounting is to take place. It was executed by the mortgagors Mahadeo Singh, father of the plaintiff-appellant, Mahabir Singh, defendant 13 and Raghunandan Singh, who is said to have died childless and whose heirs, if any, are no parties to the present litigation. The original mortgagee Paran Pat Shukul is now represented by his heirs and representatives, defendants 1 to 12 who are in possession of the mortgaged property.
20. The suit was contested by defendants 1 to 12 who claim in all Rs. 1711-3 due under (1) bond, dated 27th July 1893 for Rs. 170 carrying an interest at Rs. 1-4-per cent per mensem, (2) bond, dated 22nd July 1898 for Rs. 85 carrying interest at the same rate and (3) Rs. 299-15 principle due under the original mortgage-deed aforesaid.
21. The Court of first instance decreed redemption on payment of the principal sum due under the mortgage-deed in suit and Rs. 429-4 due under the second bond, dated 22nd July 1898 which was found to contain stipulations making the sum due thereunder payable as a condition precedent to redemption. As regards the first bond of 27th July 1893, it held that it contained no such stipulations and the mortgagor could ignore it in redeeming the mortgaged property. On appeal by the plaintiff and on cross-objections being filed by the contesting defendants, the learned Subordinate Judge modified the decree passed by the Court of first instance so far as to make the principal and interest due under the first bond of 27th July 1893 also payable on redemption. The present second appeal has been preferred by the plaintiff seeking exemption from the payment of sums alleged to be due under the two bonds already mentioned.
22. One of the contentions put forward before this Court by the plaintiff-appellant is that the mortgaged property is an occupancy tenure under Section 9, Act 12 of 1881, which is declared by law to be non-transferable, and that the two bonds in question, even if they otherwise operate as mortgage-deeds or create a charge, cannot affect the property in dispute so as to prevent the plaintiff-appellant from recovering possession of it. The argument is that the transfer of a property declared by law to be inalienable by sale, mortgage or otherwise is void ab initio, and whatever claim the creditor under the bonds may have for recovery of money, the property attempted to be hypothecated under those bonds cannot be considered to be subjected to any lien in favour of the creditor. As regards the usufructuary mortgage which the plaintiff seeks to redeem, the substance of his claim is said to be the right to recover possession from the defendants whose possession is that of sub-tenants. In so far as the bonds do not give any right to the creditor to possession of the mortgaged property it is argued, he cannot retain possession thereunder. I think a case such as this is not open to the plaintiff-appellant for more reasons than one. It was not raised either in the pleadings or afterwards before the Court of first instance. The defendants have had no opportunity of meeting it. It involves a consideration of at least one very important question of fact, viz., whether the lands in question were part of an occupancy tenure under Section 9, Act 12 of 1881, the transfer of which is forbidden by law. There is no specific ground of appeal raising that question before us. The second ground of appeal is said to cover it. It runs thus:
Because the two bonds do not hypothecate any property and as such cannot be tacked on to the bond, dated Asarh Sudi 6th 1293 Fasli.
23. Prima facie this ground of appeal only raises a question of construction of the bonds and enables the appellant to argue only that the stipulations contained therein do not amount to a tacking" of them to the original mortgage deed. It was it is true, distinctly raised before the lower appellate Court. It does not, however, appear that the argument was developed before is in the manner it has been done here. The only reference we find to it in the judgment of the learned Subordinate Judge is contained in the following two sentences:
The plots under mortgage are occupancy holding plots. Of course there cannot be any hypothecation of them. But when hypothecated the plaintiff is bound to pay up the charges before ha gets back the plots.
24. Assuming the second ground of appeal before us can be taken to cover it I am strongly of opinion that the appellant should not be allowed to urge it. The whole argument rests on the assumption that the lands hypothecated under the mortgage deed and the two bonds in question form part of an occupancy tenure under Section 9, Act 12 of 1881. It is not borne out by the evidence on the record that this assumption is well founded. The defendants can justly complain that they had no opportunity of meeting this case and are taken by surprise. The only evidence to which we have been referred in support of this allegation is to be found in certain vague recitals in the mortgage deed and the second of the two bonds. The mortgage deed describes it as:
our tenancy fields in village Bhagwan 13 bighas 16 biswa 10 dhurs Khet apna kashtkari mauza Bhagwan me terah bigha solah biswa das dhur, hasb tafsil. Underneath the deed plot numbers and their areas are detailed without specifying the nature of the tenancy. The only other reference to the land in the deed is contained in a sentence to the effect that 'if any interference is made by us or our heirs in the occupation dakhalkari khet ke sath kisi tarah ka muzahim ho to batil wa najaez hoga the same will be void and unlawful.
25. The bond dated 22nd July 1898 refers to the land covered thereby as "our tenancy land'' already mortgaged musallam kashtkari apni. There is no justification for holding on this dubious description of the property that it is an occupancy tenure of the specific character defined in Section 9, Act 12 of 1881, and declared by that Act to be inalienable. It is as likely to be held under a lease in perpetuity or for other long term in which case its transferability or otherwise would depend upon the terms of the lease. If it is one to which Transfer of Property Act applies it can be transferred in terms of Section 108(i) of that Act. Even if it is not transferable under the lease, different considerations will apply and the transfer of the leasehold rights in contravention of the terms of the lease will be only voidable at the option of the landlord. There is an essential difference between a transfer forbidden by statute and that in contravention of the terms of the lease. In the former case the transfer is void ab initio being in defeasance of law, and even the parties to that transfer may question it subject to important exceptions; while in the latter the breach of a covenant against transfer makes it only voidable at the instance of the landlord, but as between the parties thereto the transfer is binding. Abdulla v. Mammod [1903] 26 Mad. 156 and Wazir Mahomed v. Har Prasad [1922] 15 O.C. 67. As the record stands there is no more reason for us to assume that the mortgaged land is tenancy land of the former description than of the latter. A mortgagor is to be deemed to contract with the mortgagee that the interest which he professes to transfer subsists and that he has the power to transfer the same Section 65(a), T.P. Act. If, therefore, we have to decide this important question on what is to be found in the mortgage deed and the bond, assuming the latter to be a mortgage, the only possible conclusion, to my mind, is that if the mortgaged property is no more than tenancy land, it is one which the mortgagor had the power to transfer.
26. Another serious objection to a plea of this kind being allowed in appeal is that the plaintiff-appellant framed his suit as one for redemption which presupposes a valid mortgage. He sought to redeem the entire mortgaged property without impleading the representatives of one of the mortgagors as he had every right to do in a suit for redemption. To allow him to succeed on the plea under discussion the suit has to be treated as one for possession from a sub-lessee as he alleges or a trespasser as the defendants may well be. If a question of the character we are now required to consider had been raised in the pleadings, he would have been put out of Court by the defendants on the ground that the plaintiff cannot maintain a suit for possession against his sub-lessee in a civil Court and that the proper forum for such suits is the revenue Court. As a matter of fact the defendants cannot be regarded as the plaintiff's sub-lessees. They have never paid any rent to the plaintiff, and if there is any relationship of landlord and tenant between the defendants and some other person, it is with the landlord to whom they have been attorning. It is only by introducing a fiction that the plaintiff would treat the defendants as his sub-tenants, that fiction being that the mortgage as a mortgage is invalid and that the defendants' possession under a transaction of a permissive character should be deemed to be under a sub-lease, which is the only form of transfer which can be made by an occupancy tenant such as the plaintiff is said to be. This position is in my opinion untenable in view of total absence of attornment by the mortgagee to the mortgagor. If the mortgage was invalid, the possession of the defendants as against the plaintiff was in trespass and could be put an end to at the option of the plaintiff. The transferee under a void deed cannot plead estoppel against statute. I do not consider it necessary to pursue this aspect of the ease further, as, in the view I take, it is only a hypothetical proposition. But if the defendants are not sub-tenants and have been in possession all these years as trespassers, the defendants could well have pleaded limitation and adverse possession. They could also have questioned the right of the plaintiff to recover possession without impleading all the cosharers in the tenancy. It should be noted, as mentioned before, that the representatives of one of the mortgagors are no parties to this case.
27. Having succeeded in obtaining from the Courts below the relief of possession by redemption the plaintiff cannot turn round and maintain his ground on any other footing than that of a redeeming mortgagor. To allow him to do otherwise would not only be to inflict a hardship on the defendants but to permit him to approbate and reprobate. For all these reasons I hold that the plaintiff-appellant can urge only such grounds on appeal as are to be found in his pleadings and that he should not be permitted to impugn the two bonds on the ground that they cannot operate as creating a mortgage or a charge on a property which is an occupancy tenure declared inalienable by law:
28. As regards the liability of the plaintiff to pay money under the two bonds I find myself in agreement with the learned Subordinate Judge. The first bond dated 27th July 1893 is a registered deed containing the usual clauses which make it a deed of additional mortgage or charge. It provides that the sum of Rs. 170 borrowed thereunder will be paid in 1301 Fasli, i.e., a year later, and that if it is not so paid, the creditor will he at liberty to recover the same with the mortgage money due under the deed, dated Asarh Sudi 6th 1293, Fasli and that the executant will first pay the amount due under the bond and then redeem the aforesaid mortgage. The transaction embodied in the bond is therein described as Mashrutul-rehan. The property mortgaged in the original deed is mentioned at the foot of the bond. It is quite clear that the intention of the parties wag to make the property already mortgaged as security for the payment of the fresh advance made by the mortgagee to the mortgagor under the bond and that redemption was made conditional on payment of the amount due thereunder. The case Har Prasad v. Ram Chandar A.I.R.1922 All 174 fully applies to this bond.
29. It has been contended that the bond does not declare the fresh advance as secured on the mortgaged property initially and that the charge fastens on the property subsequently on non-payment on due date. I am unable to accede to this contention. In every mortgage deed or a deed creating a charge which contains a personal covenant to pay after a certain time, the encumbrance is created forthwith, though it cannot be enforced till after the expiry of the period within which the debtor is allowed to pay. The definition of simple mortgage contained in Section 58(b) is as follows:
Where... the mortgagor binds himself personally to pay the mortgage money, and agrees... that in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied... in payment of the mortgage money. The transaction is called a simple mortgage....
30. Similarly charge has been defined to mean:
Where an immovable property of one person is... made security for the payment of money to another and the transaction does not amount to a mortgage the latter person is said to have a charge on the property.
31. Construing the language of the bond above referred to in the light of these definitions I think that the covenant to pay in 1301 fasli does not postpone the creation of a charge to a later date, viz., that fixed for payment or to the date of redemption of the original mortgage. If the intention of the parties was by make the property referred to in the bond as security for the payment of the new advance, a charge must be deemed to have been thereby created. The case of Harjas Rai v. Naurang [1906] 3 A.L.J. 220 does not apply to the facts before us. It was the case of a covenant contained in the sale deed indemnifying the vendee from possible loss of the property sold. The covenant in that case entitled the vendee to recover the consideration of the sale transaction with interest if there was:
any injury to the property sold and if we do not effect mutation of names or do not give possession... from out of our persons or the property sold or any other property.
32. The Court of first instance granted to the plaintiff-vendee who had sued for damages a decree for a certain sum of money by sale of the property sold which the vendors failed to secure possession of to the vendee, but refused to direct sale of "other property" belonging to the vendors. It was with reference to the latter that the High Court on second appeal held that:
the covenant in question is not such as to create a specific charge in his favour.
33. The learned Judges thought that:
the purchase money may in certain events be recovered generally from the persons or the property of the vendors. They do not create a charge within the meaning of the expression in the Transfer of Property Act.
34. The case before us is not one in which the plaintiff is seeking to enforce a charge said to exist on property not specific on the bond but described generally as the property of the executant. It is settled law that a stipulation which makes the person and property generally or the covenantor liable for a certain claim does not create a charge on any specific property. The case Madho Misser v. Sidh Binaik Upadhya [1887] 14 Cal. 687 is likewise distinguishable. The bond in that case provided;
Whereas I have borrowed Rs. 99 from Madho Misser.... I shall pay interest at the rate of one rupee six annas per cent per mensem without any objection. I shall pay the entire principal with interest in the month of Baisakh 1289 Fasli without any objection. If I do not pay the money according to the stipulation, then I declare in writing that I shall lose my right to 1 bigha 7 cottas of guzashta land situated in mauza Kutha. If I do not pay the money according to the promise then the aforesaid Misser shall take possession of the land. Since Misser shall take possession of the land no interest of the money shall be paid by me, and he shall pay the rent of the landlord out of the profits of the land without any objection.
35. There is no difficulty in holding that the bond in that case contains no words which create any kind of hypothecation or charge. The creditor in that case was to take possession of the property, apparently for good, in default of pay ment on due date. The observation of the learned Judges that the document in that case did not create a charge at the time of its execution but operated:
only as a chargee upon the land in question upon the non-payment of the principal money in 1289 Fasli. All that it does is to create the possibility of a charge ultimately arising on the land
36. is an obiter dictum and has not been approved of at least by two High Courts. Balasubramania Nadar v. Sivaguru Asari [1911] 21 M.L.J. 562 and Nand Lal v. Daramdeo Singh A.I.R. 1925 Pat. 288. Each deed has to be construed with due regard to its own terms and as I have already held the bond dated. 27th July 1893 creates a charge from its date enforceable at a given time and in a given manner.
37. The second bond dated 22nd July 1898 is unregistered. It is argued that as a mortgage deed it is invalid in the absence of registration and delivery of possession of the property, which was already held by the mortgagee under the original mortgage-deed. It is not necessary to discuss the debatable question as to whether a mortgage can be made of the equity of redemption by an unregistered deed and as to whether an equity of redemption is susceptible of such delivery of possession as the mortgagor can make. It is conceded that in so far as a document creates merely a charge no registration thereof is necessary. As I read the bond I have no doubt that it creates at least a charge. It recites that the property specified therein had been mortgaged by the deed dated the 6th Asarh Sudi 1293 Fasli, that a deed of Mashrutul-rehan was executed previously and that another Mashrutul-rehan deed is now executed with the covenant that the sum of Rs. 85 borrowed then would be paid on or before redemption along with the sums due under the earlier deeds. It winds up by a declaration that the executant and his representatives-in-interest will pay the principal and interest due under the mortgage deed and the two deeds of Mashrutul-rehan and can then take back the deeds and possession of the property covered thereby and shall have no objection to abiding by that covenant. The deed in my opinion clearly secures the payment of money advanced thereunder on the property originally mortgaged.
38. The mortgagee is entitled to enforce the covenants contained in the two bonds which make redemption conditional on payment of all the sums due under the three deeds. They are not merely personal covenants but accompany a charge validly created on the equity of redemption left to the mortgagor after the first mortgage transaction. Such covenants run with the land and can be enforced not only against the executants of the bonds but against his heirs and representatives in respect of the property subject to the charge. The Full Bench case of Har Prasad v. Ram Chandar A.I.R.1922 All 174, is sought to be distinguished on the ground that the bond in that case was held to create a mortgage whereas in the case before us the unregistered bond cannot be held to create a mortgage. I do not think that the ratio decidendi of that case can be limited to the case of a mortgage so as not to be applicable to the case of a bond creating merely a charge. In either case an encumbrance is created on the property and the debtor is made liable to discharge it at the time of redemption. Section 100, T.P. Act, makes "all the provisions hereinbefore contained as to a mortgagor" applicable to the owner of the property subject to a charge. I hold, therefore, with the Court below that the money due"; under the second bond must be paid before the plaintiff can redeem the mortgaged property and recover possession thereof from the mortgagee.
39. In view of the findings arrived at by me above I would dismiss this appeal with costs.
40. As the members of this Bench are not agreed as to how the appeal ought to be decided we direct that the case be laid before the Hon'ble the Chief Justice so that the appeal might be heard by one or more of the other Judges as the Hon'ble the Chief Justice may direct for the decision of the points of law formulated below. Having regard to the fact that the opinion of the Hon'ble Judge or Judges who may hear the appeal on the points of law raised, specially the third point, will lay down, once for all, the principle or principles on which the vexed question of 'tacking of bonds to usufructuary mortgages' will have to be decided in future, we recommend that, if possible, the number of Judges who may hear the appeal may be as large as possible:
41. Points which have to be decided are:
1. Whether it was open to the plaintiff to raise the plea, viz., the property mortgaged is occupancy holding, in the Court below (see memorandum of objection, para. 2, pp. 12 of the paper book)?
2. Assuming that the property mortgaged is, occupancy holding, is the plaintiff entitled to redeem without paying the amounts secured by the deeds of 1893 and 1898, on the ground that the transfer of occupancy holding is void in law?
3. Assuming that the property mortgaged is transferable, whether the deed of 1898 cannot be treated as compulsorily redeemable by the plaintiff along with the mortgage of 1293 Fasli on the ground that the deed (of 1898) is not registered?
Mukerji, J.
42. Three points have been referred for the decision of the Full Bench and they are:
1. Whether it was open to the plaintiff to raise the plea, viz. 'the property mortgaged is occupancy holding', in the Court below: see memorandum of objection, para. 2, p. 12 of the paper book?
2. Assuming that the property mortgaged is occupancy holding, is the plaintiff entitled to redeem without paying the amounts secured by the deeds of 1893 and 1898, on the ground that the transfer of occupancy holding is void in law?
3. Assuming that the property mortgaged is transferable, whether the deed of 1898 cannot be treated as compulsorily redeemable by the plaintiff along with the mortgage of 1293 fasli, on the ground that the deed (of 1893) is not registered?
43. As to the first point, it was conceded that it was open to the plaintiff to raise in the Court below the plea, viz., the property mortgaged was occupancy holding. I hold accordingly.
44. On point 2 I do not propose to write another judgment, although fresh arguments have been adduced before the Full Bench. My judgment on which the referring order is based, viz., the judgment dated 20th February 1929, answers most of the points argued. I shall, however, say just a few words more.
45. I have held that the deeds of 1893 and 1898, by their language, would constitute subsequent mortgages over the property originally mortgaged: see p. 10 of my judgment. My brother King, J., has taken the view, that the documents create charges and in view of the ruling of their Lordships of the Privy Council in Panaganti Ramarayanimgaru v. Maharaja of Venkatagiri A.I.R. 1927 P.C. 32 a mortgagor has to pay not only the money secured by the original mortgage of 1886, but also the amounts charged by the two subsequent deeds, on the property. On this point I do not propose to express any opinion, for in view of my finding no question of "charge" arises.
46. The next point on which I would like to say a few words more is this. My brother Niamatullah, J., is of opinion that the mortgagor or his legal representative, so long the latter is not a transferee of the property, should be held bound by the personal covenant to pay, into which he has entered, although the property was not made security for the loan. This would mean that what was not a security is to be converted into a security, simply because there is an agreement to pay the money, personally. Either there was a security or there was no security. If there was no security, the personal promising to pay cannot be converted into a security, for ex hypothesi there is no security.
47. I, therefore, am unable to resile from my position that so long as the subsequent bonds do not constitute a mortgage (preferably usufructuary mortgage, but a simple mortgage or at least a charge, in any case), there can be no bar to the redemption and recovery of property on payment of the mortgage amount originally secured. I answer accordingly.
48. On the point 3, for reasons already given my answer is that the plaintiff cannot be compelled to pay the amount secured by the deed of 1898 for the reason (inter alia) that the document is unregistered.
King, J.
49. The facts of the case are set forth in the judgments dated 20th February 1929 of my learned brothers Mukerji and Niamatullah, JJ., who differed in opinion and referred the appeal to a larger Bench for decision. The first point for decision is:
Whether it was open to the plaintiff to raise the plea viz., the property mortgaged is an occupancy holding, in the Court below.
50. The fact that the property mortgaged is an occupancy holding was expressly agreed to by both parties in the lower appellate Court: see paper 69 C. I see no reason why a question of pure law arising out of admitted facts should not be raised in first appeal. No authority has been shown for the contrary view which has not been seriously pressed. I would answer the first question in the affirmative.
51. The second question for decision is:
Assuming that the property mortgaged is an occupancy holding is the plaintiff entitled to redeem without paying the amounts secured by the deeds of 1893 and 1898 on the ground that the transfer of occupancy holding is void in law?
52. It may be noted at the outset that the fact, that the property mortgaged is an occupancy holding, is not based upon a mere assumption but upon the express agreement of the parties.
53. The right of an occupancy tenant to make a usufructuary mortgage of his holding during the currency of U.P. Act 12 of 1881 was recognized in the Full Bench decision in Khiali Ram v. Nathu Lal A.I.R.1922 All 174. The learned Judges took the view that, although the "right of occupancy" was declared to be not transferable, the legislature did not intend to prohibit the occupancy tenant from transferring the "right to occupy", or the right of possession, by way of sub-lease or usufructuary mortgage. This leading case, which was decided so long ago as 1893, has been uniformly followed ever since without any expression of doubt or dissent and we are bound to take it as laying down the correct law on this point. We must hold, therefore, that the usufructuary mortgage of 1886 was perfectly valid. In accordance with the terms of that mortgage deed, Ex. A, the mortgagor is prima facie entitled under Section 62(b), T.P. Act, to recover possession of the property upon payment of the principal money only, as he offers to do.
54. Now we have to consider the effect of the subsequent deeds of 1893 and 1898, Exs. B & C.
55. The first question is whether they purported to create mortgages or charges on the property.
56. In my opinion they do not amount to usufructuary mortgages for the following reason:
(1) They do not purport to transfer any interest in the property. The only interest which the borrower could originally transfer was the right of possession and enjoyment of the profits. This right had already been transferred by the mortgage of 1886. The deeds of 1893 and 1898 do not purport to transfer this right over again (if such transfers were possible) or to extend the right of possession for a longer term.
(2) The borrower did not deliver possession. The lender was already in possession as usufructuary mortgagee and there was no pretence of delivering possession to him over again. The delivery of possession is an essential feature of a usufructuary mortgage.
(3) The borrower did not authorise the lender to appropriate the profits in lieu of interest or in payment of the principal, or partly in lieu of interest and partly in payment of the principal. This is another essential feature of a usufructuary mortgage which is wanting.
57. So in my opinion the deeds of 1893 and 1898 cannot amount to usufructuary mortgages as defined in Section 58(d), T. P, Act.
58. They cannot amount to simple mortgages as there is no express or implied agreement that the lender might cause the mortgaged property to be sold in payment of the mortgage money. The borrower never had any saleable interest and he never professed to give the lender any right of sale.
59. I hold that these deeds do not amount to mortgages of any description.
60. On the other hand, I think these deeds do purport to create charges, as defined in Section 100. I.P. Act. The parties in tended that the leader should retain the property as security for the further loans. The borrower agreed not to recover possession of the property, by redemption of the mortgage, without repaying the further loans together with interest at the stipulated rate. I agree with Niamatullah, J., and the lower appellate Court that the deeds should be construed as purporting to create charges, but not mortgages.
61. The distinction between mortgages and charges is, however, unimportant in view of the interpretation which the Privy Council have put upon Section 61, T.P. Act in the ease of Panaganti Rama Rayanimgar v. Maharaja of Venkatagiri A.I.R. 1927 P.C. 32. Their Lordships held that Section 61 enacts by implication that a mortgagor cannot redeem a mortgage without paying money due under a separate mortgage or charge on the same property. Upon this interpretation the mortgagor in this case would not be entitled to redeem the mortgage of 1886 without paying the money secured by the deeds of 1893 and 1898, if the latter are held to create valid mortgages or charges upon the property. In the present case there are express contracts in Exs. B and C to the effect that the money secured by them must be paid before, or at the time of, the redemption of the mortgage of 1886, but it appears from the Privy Council ruling just mentioned that the mortgagor would be compelled to pay the money secured by Exs. B and C (assuming that they are valid mortgages or charges) as a condition of redeeming the mortgage of 1886, even without any express contract to that effect.
62. The next question for determination, therefore, is whether Exs. B and C do create valid mortgages or charges. We have not been referred to any case in which a similar question has been decided or discussed. In the case of Hardayal v. Ganga Koeri A.I.R. 1927 All. 743, the facts were very similar. An occupancy tenant mortgaged his holding with possession in 1876. Subsequently he took a further loan from the mortgagee and executed a bond promising to repay the further loan together with interest before redeeming the mortgage. A Division Bench of this Court held that the bond created a further mortgage and the mortgagor could not redeem the original mortgage without paying the amount due on the further mortgage also. The validity of the further mortgage by the occupancy tenant was never questioned or discussed, so this ruling is not of much help to us.
63. I have already expressed the opinion that Exs. B and C do not even purport to create mortgages although they do purport to create charges. Ex. C cannot in any view of the case create a valid mortgage because it is unregistered and there was no delivery of possession of the property. But apart from this defect (which applies only to Ex. C), I hold that when Exs. B and C were executed the executant was not competent to create a mortgage or charge upon the property. The only transferable interest which he ever had was the right of possession or cultivation. This right was only transferable by sublease or usufructuary mortgage and not in any other way, e.g. by sale. Now the executant had already transferred this right to the mortgagee by the usufructuary mortgage of 1886. He could not transfer possession for the second time to the mortgagee who was already in possession as a mortgagee. So the executant retained no transferable interest whatever in the property.
64. Now I think it is clear that a person having no transferable interest whatever in property cannot validly pledge that property as security whether by way of mortgage or of charge. So in my opinion Exs. B and C cannot operate either as mortgages or charges and I agree with my learned brother Mukerji, J. on this point.
65. But it has been argued that, even if Exs. B and C are invalid as mortgages or charges, why should not the plaintiff be bound by the personal covenants evidenced by those deeds to pay up the sums due upon them before redeeming the mortgage of 1886? The plaintiff is not a transferee from the original mortgagors but is the son and heir of a mortgagor. Prima facie he ought to be bound by the lender's personal covenant.
66. This question is not free from difficulty. The Transfer of Property Act itself does not afford any clear guidance on this point. It is argued for the appellant that Section 60 gives the mortgagor an absolute and unqualified right to redeem the original mortgage upon payment of the mortgage money, in spite of the subsequent contracts not to redeem without repaying the further loans, Reliance is placed on a Privy Council ruling in Mohammad Sher Khan v. Seth Swami Dayal A.I.R. 1922 P.C.117, in which their Lordships point out that Section 60 is unqualified in its terms and contains no saving provision, as other sections do, in favour of contracts to the contrary. It must be observed, however, that their Lordships were considering contracts contained in the original mortgage deed itself. The view taken, as I understand it was that the mortgagor could not, by stipulations in the contract of mortgage derogate from the absolute right of redemption conferred on him by statute. The same argument applies to Section 62 where the right to recover possession of the property under Clause (b) upon payment of the principal money appears to be absolute, notwithstanding any contract to the contrary. This doctrine cannot be applied without qualification to a subsequent and independent contract entered into by the mortgagor in consideration of receiving a further loan. Their Lordships of the Privy Council have themselves laid down in Shankar Din v. Gokul Prasad [1912] 34 All. 620, that there is nothing in law to prevent the parties to a mortgage from coming to a subsequent arrangement qualifying the right to redeem. This ruling, however, cannot be taken to mean that every subsequent agreement, qualifying the right to redeem, whatever the form or terms of the agreement may be, must be upheld as valid. The question is whether the ruling covers a subsequent agreement not to redeem without paying unsecured debts due to the mortgagee.
67. First we should see whether the Act itself throws any light upon the question. Section 61(as interpreted by the Privy Council) enacts that where the same mortgagee holds several mortgages of the same property then the mortgagor is not entitled to redeem one mortgage without paying the money due under the other mortgages. It also enacts that a mortgagor seeking to redeem one mortgage must also pay the money secured by a separate mortgage of separate property if he is bound by a contract to this effect.
68. It appears, therefore, that the right conferred by Section 60 or Section 62 to redeem a mortgage upon payment of the mortgage money due under that mortgage is not absolute, but is qualified by the provisions of Section 61. When a mortgagor seeks to recover possession of mortgaged property by payment of the principal money under Section 62(b) the only qulifications of his right, recognized by statute, are that he cannot redeem (1) without paying money due to the mortgagee cinder a separate mortgage or charge (a) upon the same property even without a contract to this effect: (b) upon separate property if there is a contract to this effect; and (2) without giving reasonable notice of tender or payment, in accordance with para, 4, Section 60, if there is a contract to this effect. It appears then that the legislature recognizes that the mortgagor, when seeking to redeem a mortgage, is bound in certain circumstances to discharge certain secured debts as a condition precedent to redemption. There is no provision stating that the mortgagor is also liable to discharge unsecured debts, as a condition of redemption if he is bound by a contract to do so, but it cannot be safely inferred from the absence of such provision that the mortgagor is not so liable.
69. In the absence of clear statutory guidance we are entitled to consider the recognized principles of the English law of mortgage According to Coote's Law of Mortgages (Edn. 8), Vol. 2, p. 1175:
the general principle governing the question as to when a mortgagee will be allowed to charge further advances in account appears to be that such advances must have been made on the faith of an actual charge on the land and not on merely personal security.
70. On this principle a mortgagor cannot be compelled to pay off unsecured debts as a condition of redemption. This passage is quoted by Alston, J. in Ranjit Khan v. Ramdhan Singh [1909] 31 All. 482 where he discusses the case Sheo Shankar v. Parma Mahton [1904] 26 All. 559 and observes:
In my opinion the finding there was no charge on the property was a sufficient answer to the plea that the plaintiff must pay off both debts before he could redeem.
71. In the latter case the mortgagor was the plaintiff's predecessor in title, so it is not clear whether the plaintiff was a transferee or a representative of the mortgagor; the decision did not turn upon that distinction. I gather from this passage in Coote's treatise that even the mortgagor himself would not be bound to pay an unsecured debt as a condition of redemption.
72. There is a further passage on the same page of Coote's treatise which is even more directly apposite:
a further advance cannot be allowed in account if made on the security of a charge which proves to be invalid.
73. This rule is directly applicable to the present case as I have held that Exs. B and C purport to create charges but they do not create valid charges. It would seem anomalous to allow the lender to enforce an invalid charge indirectly under the guise of a personal covenant, when he could not enforce it directly as a charge.
74. The principle of English law appears to be that a mortgagor cannot be compelled, as a condition of redemption, to pay sums which are not secured upon the mortgaged property; mere personal covenants to pay unsecured debts, as a condition of redemption may be ignored. I see no reason why the same principle should not be applied in India in the absence of statutory authority to the contrary.
75. The case law on this point is conflicting. In Allu Khan v. Roshan Khan [1881] 4 All. 85 a proprietor having made a usufructuary mortgage of his property gave the mortgagee four successive bonds in consideration of further loans and stipulated that he would pay off the amount of the bonds before claiming redemption of the mortgage. It was held that the bonds did dot create charges on the property but the mortgagor's representative was nevertheless bound by the contract and must pay the amount of the bonds before redeeming the mortgage. This ruling is unsatisfactory as it speaks of the mortgagor seeking redemption as if he were a person seeking an equitable relief and proceeds upon the view that it would be inequitable for him to set aside the obligation contained in the bond. There are rulings of other High Courts to the same effect, namely, that bye-agreements to pay unsecured debts as a condition precedent to redeeming a mortgage are binding upon the mortgagors and their representatives although not binding upon assignees of the right to redeem: see Hari Mahadaji v. Balambhat Raghunath [1885] 9 Bom, 233; Yashvant Shenvi v. Vithoba Sheti [1887] 12 Bom. 231; Unni v. Nagamma [1895] 18 Mad, 368; Raisunnissa v. Zorawar Sah A.I.R. 1926 Oudh 228.
76. The contrary view was taken in Sheo Shankar v. Parma Mahton [1904] 26 All. 559 where it was held that such bye-agreements to pay unsecured debts were void as clogs upon the right of redemption and as inconsistent with the rights conferred upon mortgagors by Section 60, T.P. Act, 1882. This case was followed in Rugad Singh v. Sat Narain Singh [1904] 27 All. 178 and in Durga Pershad v. Dukhi Roy [l905] 9 C.W.N. 789. A similar view was taken in Rajmal v. Shivaji (1902] 27 Bom. 151 in which the soundness of the decision in Hari Mahadaji v. Balambhat Raghunath [1885] 9 Bom, 233 was doubted. With due respect to the learned Judges responsible for these decisions, I do not think that the equitable doctrine about clogging the equity of redemption is properly applicable to subsequent and independent contracts qualifying the right to redeem. The decisions may, however, be supported on the ground that contracts not to redeem without paying unsecured debts due to the mortgagee are inconsistent with the recognized principles of the law of mortgage in England and that those principles may be applied in India as rules of justice, equity and good conscience.
77. Sir Rash Behari Ghose in his Tagore Law Lectures on the Law of Mortgage (Edn. 5, p. 241) clearly expresses his own opinion as follows:
But if there is no pledge of the land, a mere agreement to pay other debts which may be due to the mortgagee as one of the conditions of redemption will not be binding upon the mortgagor so as to prevent him from redeeming on payment of the secured debt only. The cases in which contrary view was taken can hardly not be regarded as law. It is true that they have not been expressly overruled; but the trend of recent case law is in favour of the mortgagor.
78. He points out that to say that a mortgagee may not foreclose for anything beyond the debt due on the security, but a mortgagor must pay as the price of redemption unsecured debts due to the mortgagee as well as the mortgage money, is not merely anomalous but postulates:
something that is not true, namely, that redemption is not a right of the mortgagor but a mere favour shown to him.
79. His opinion is entitled to great weight. I agree to his view which is in accordance with the trend of most of the more recent decisions. I also agree with him that it was:
hardly necessary to invoke the highly ambiguous rule against clogging the equity of redemption, which has been preserved in the English law merely on account of its venerable age.
80. I should prefer to hold that such bye-agreements are void as being inconsistent with recognized principles of the law of mortgage.
81. I would answer the second question in the affirmative.
82. The third question is;
assuming that the property mortgaged is transferable, whether the dead of 1898 cannot be treated as compulsorily redeemable by the plaintiff along with the, mortgage of 1293 Fasli on the ground that the deed of 1898 is not registered.
83. I have pointed out above that it is common ground that the property mortgaged is an occupancy holding and that the right of occupancy is non-transferable. This question was based upon a misunderstanding of the facts, and clearly does not arise from the facts admitted in this case. If, however, it is considered necessary to answer a hypothetical question, then my answer is that non-registration would not affect the plaintiff's liability under the deed of 1898.
84. The result is that I would agree with my learned brother Mukerji, J., in allowing the appeal in the terms specified by him.
Niamatullah, J.
85. At the hearing before the Full Bench we were referred to a statement of the defendant's pleader before the lower appellate Court, contained in paper No. 69-C, which puts the defendant out of Court so far as the first question referred to the Full Bench is concerned. In that statement it was admitted that the lands in dispute formed part of an occupancy holding. If the attention of the Division Bench had been drawn to it, a reference of the first question to the Full Bench would have been avoided. In view of the defendant's readiness to admit that the lands in dispute constitute an occupancy tenure, no possible objection can be taken by him to the case being argued on that assumption, It is only if that fact were in controversy that the plaintiff could complain of being taken by surprise at a time when he had no opportunity of establishing that the land in question is not tenancy land at all or, if it is such, it is not an occupancy tenure a transfer of which is void, being in defeasance of statute prohibiting alienation. The nature of the tenancy being admitted and there being no possibility of a question of fact being raised, the plaintiff-appellant was rightly allowed to argue what were questions of law pure and simple. I would answer the first question in the affirmative.
86. The principal point in the case is the one embodied in the second question, viz., whether:
assuming that the property mortgaged is occupancy holding, is, the plaintiff entitled to redeem without paying the amounts secured by the deeds of 1893 and 1898 on the ground that the transfer of occupancy holding is void in law.
87. I may mention at the outset that both the bonds contain the usual stipulations which characterize deeds of further charge expressly making payment of sums due thereunder a condition precedant to redemption of the usufructuary mortgage of 1886. The bonds are described as mashrutul-arehen deeds, and the property mortgaged is detailed at the foot of each bond. The position of the parties to these deeds may be summed up in a few words. An occupancy tenant made a usufructuary mortgage of his holding in 1886, agreeing that he would not redeem or resume possession without paying a certain amount. Subsequently, in 1893, he executed a second bond hypothecating the holding in lieu of a fresh advance, agreeing not to redeem or resume possession of his holding without paying not only the sum advanced under the first deed but also that under the second. Lastly, in 1898, he executed a third bond in consideration of a further advance, agreeing that he would not redeem or resume possession of his holding without paying not only what was due under the first and second deeds, but also what would be due under the third. The question is whether the covenants contained in the later two deeds, which disentitle the mortgagor to redeem or to resume possession without payment of sums due thereunder are binding.
88. As regards the so-called mortgage of 1886, it is conceded that the plaintiff-appellant, the son and heir of the original mortgagor, cannot be allowed to recover possession without paying the amount due thereunder. It is argued that ha is not under a similar obligation in relation to the later bonds because, being deeds of simple mortgage or charge, they are void and unenforceable. The distinction, thus sought to be drawn, postulates, by implication, the rule that mortgage of an occupancy holding is valid, if usufructuary, and invalid if simple. Having regard to the definition of mortgage as "a transfer of an interest in specific immovable property for securing payment of money" such a position is an impossible one. A simple mortgage of an occupancy holding is invalid, because it is a mortgage, i.e., "transfer of an interest." A usufructuary mortgage is no less a "mortgage" or "transfer of an interest." A transaction must be a mortgage first, and simple or usufructuary afterwards, The subtle distinction between "a right of occupancy" and "a right to occupy" does not make it valid as a mortgage. An occupancy tenant has no more than a permanent right to occupy, acquired either by a lease or prescription. The essential distinction between a leasehold right and rights created by transfer such as sale or mortgage, is that in the former only "a right to enjoy the property" is created: cf. Section 105, T.P. Act, while in the latter property itself or interest therein is transferred. Whenever a leasehold right is assigned by sale or mortgage, if it is assignable, only "the right to enjoy" is transferred and the transferrer, the original lessee, continues liable to his own lessor: cf. Section 108, T.P. Act. We cannot, therefore; justify usufructuary mortgage of an occupancy holding on the ground that it operates as a transfer of "right to occupy" and not of "occupancy right," as even in case of sale, assuming it to be valid, no more than right to occupy is transferred, for the simple reason that the occupancy tenant has no more than a permanent right to occupy. The distinction, therefore, between the transfer of an "occupancy right" and of "right to occupy" is without difference.
89. The distinction has, however, been recognized: Khiali Ram v. Nathu Ram [1893] 15 All. 219, and the cases that follow it and should be accepted; but it must be said that the learned Judges who made it did not thereby uphold the validity of usufructuary mortgage as such of occupancy right. I have no doubt that a mortgage of occupancy holding usufructuary or otherwise, is void as a mortgage. A deed creating a charge on occupancy rights is equally invalid. It does not matter if such a deed is registered. It may, however, be upheld otherwise than as a mortgage and to a lesser extent. In case of usufructuary mortgage of an occupancy holding the mortgagor cannot recover possession without payment of sums due under the mortgage, not because it is a valid mortgage and the rules applicable to valid mortgages relating to redemption compel him to do so, but because he is bound by a covenant to pay, before resuming possession, which covenant is binding, apart from any supposed relationship of mortgagor and mortgagee, and under the general law applicable to agreements of a personal character. In this view of the matter, no distinction can be made between a covenant contained in the so-called deed of usufructuary mortgage and a covenant contained in the so-called deed of simple mortgage, a deed of further charge or simple money bond. In each case, it can be enforced against the person bound by it. Reliance is placed on Khiali Ram v. Nathu Ram [1893] 15 All. 219 and Brij Mohan v. Algu [1903] 26 All. 78, for the proposition that a usufructuary mortgage of an occupancy holding is valid and, for that reason, money due thereunder must be paid if the mortgagor seeks to redeem. The same reason, it is said, does not exist in case of simple mortgage, which implies a right of sale and is, therefore, invalid. I shall presently deal with the contention, but would remark in passing that a right of sale is equally implied in case of a usufructuary mortgage.
90. It is true Section 67, T.P. Act, disentitles a usufructuary mortgagor "to institute a suit for foreclosure or sale" but, if the mortgagor seeking to obtain possession institutes a suit for redemption and fails to pay within the period of grace, the mortgaged property is to be sold: vide 0. 34, Rr. 7(d) and 8(4). Under the initial contract between the parties the mortgagee is only entitled to retain possession till he is paid off; and if dispossessed, he can sue for possession within 12 years: Article 125, Lim. Act. The mortgagor cannot withhold it, relying on his proprietary title. The mortgagee, if left in possession, cannot call in his money by sale of the property except in the event of a decree for redemption being passed and money not being paid before due date. It cannot be suggested consistently with the definition of a mortgage, of usufructuary mortgage and their incidents that there is no transfer of an interest in case of usufructuary mortgage or that the mortgaged property is not made security for the money advanced. Mortgage has been defined in Section 58, T.P. Act to mean:
the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan.
91. Then follows the definitions of various forms of mortgages, and usufructuary mortgage is defined thus:
Where the mortgagor delivers possession of the mortgaged property to the mortgagee and authorizes him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property and to appropriate them in lieu of interest or in payment of the mortgage money and partly in lieu of interest and partly in payment of the mortgage, the transaction is called an usufructuary mortgage....
92. A simple mortgage and an usufructuary mortgage are both mortgages,' as defined, with additional incidents. It cannot be doubted that one of the characteristics in both is that the mortgaged property is security for the loan. The rights of a usufructuary mortgagee broadly speaking, are (1) to retain possession till paid off, and (2) to recover his money, if he so desires, by sale of the property, when and if a decree for redemption is passed and money is not paid during the period of grace. The former right is also the characteristic of an arrangement in the form of a sublease or otherwise under which possession is made over by one to another on condition that it shall not be resumed without repayment of a sum of money advanced. It falls short of usufructuary mortgage because sale cannot take place in any contingency. The ratio decidendi of Khiali Ram v. Nathu Ram [1893] 15 All. 219, so far as it relates to usufructuary mortgage of an occupancy holding is that it is valid only to the extent that right to occupy is transferred on condition that possession is to be retained by the creditor till money is paid and that it is invalid so far as it may give a right to the creditor to realise his money by sale of the property.
93. The learned Judges had before them the case of an occupancy tenant having sublet his holding and the question was whether subletting by an occupancy tenant is valid. Certain earlier cases of this Court were cited in support of the contention that subletting was not valid. One was Ganga Din v. Dhurandhar Singh [1883] 5 All. 495 in which it had been held that an usufructuary mortgage of an occupancy holding was invalid and the other was Abadi Husain v. Jurawan Lal [1885] 7 All. 866 in which a zar-i-peshgi lease by an occupancy tenant had been declared invalid. The learned Judges who decided Khiali Ram v. Nathu Ram [1893] 15 All. 219 observed:
No doubt, a usufructuary mortgage, by an occupancy tenant of his occupancy holding doss for the terms of the mortgage transfer such right to the possession of the land mortgaged as the mortgagor has, but it does not transfer the right of occupancy and no decree for sale of the right of occupancy could be obtained in a suit by the mortgagee under Act 4 of 1882." "whether para. 2, Section 9, Act 12 of 1881, applied or not. Even if an occupancy tenant... were to bring a suit for redemption of a usufructuary mortgage of his occupancy holding, no order for sale under Section 92, and no order for sale under Section 93, Act 4 of 1882, of the right of occupancy could, by reason of the bar of para. 2, Section 9, Act 12 of 1881 be made.
94. It is manifest from this passage that the usufructuary mortgagee of an occupancy right has no security for recovery of his money, and has only the right to possession and to enjoy the profits "in the manner provided by the mortgage." In other words, the transaction is not valid as a mortgage with all its incidents and subject to the provisions of law relating to usufructuary mortgages, but is valid only so far that the mortgagee can retain possession and enjoy as agreed between the parties, a feature which is not peculiar to usufructuary mortgage as such, but is also one of sublease or other arrangement under which possession of occupancy holding is made over by the tenant to another without creating an interest or charge in favour of the transferee. In such a case, as the ruling itself indicates, the rights and liabilities of the parties are governed not by the provisions of the Transfer of Property Act relating to mortgages but by the valid stipulations in the so called mortgage deed. This view makes the principle underlying Khiali Ram v. Nathu Ram [1893] 15 All. 219 in accord with general law and with Nidha Sah v. Murli Dhar [1903] 25 All. 115 in which their Lordships had to consider the effect of a mortgage deed which purported:
to be a mortgage of them with possession to one Ishri Sah (for a period of 14 years from 1284 Fasli Jo 1297 Fasli) by which it was provided that on the expiration of the term the mortgagor 'shall come in possession of the mortgaged villages without settlement of accounts... that on the expiration of the term... the mortgagee shall have no power whatever in respect of the said estate... and after the expiration of the term this mortgage deed shall be returned to the mortgagor without his accounting for the mortgage money secured under this document.
95. Their Lordships observed that;
This instrument, though it is called a mortgage, and though it will be convenient to follow the nomenclature used in the document itself and in the pleadings and judgments in the Court below, is not a mortgage in any proper sense of the word. It is not a security for the payment of any money or for the performance of any engagement. No accounts were to be rendered or required. There was no provision for redemption expressed or implied. It was simply a grant of land for a fixed term free of rent in consideration of a sum made up of past and present advances.
96. And proceeded to say that:
It appears that the so called mortgagor had not absolute proprietary rights in all the villages, and that the mortgagee did not get the full benefit purported to be given him by the mortgage... It was contended before their Lordships that the mortgagor having broken his part of the contract by failing to give the mortgagee possession of the entirety of the premises comprised in the mortgage ought not to be allowed to enforce the contract as against the mortgagee, but the answer to this contention appears to their Lordships to be that the plaintiffs are not seeking to enforce the contract: they rely on their proprietary right, and it is for the appellant to show some stipulation either express or implied in the mortgage deed which deprives the plaintiffs of the right to recover possession. This the appellant cannot do....
97. This is an authority for the proposition, which is clear to my mind apart from it, that where the transaction does not amount to a mortgage with all its legal incidents and in the absence of any Security for repayment of money, the only guide in determining the rights and liabilities of the parties to it, is their agreement. My brother Mukerji, J. has expressed the opinion that usufructuary mortgages of occupancy holdings have been held to be valid in Khiali Ram v. Nathu Ram [1893] 15 All. 219 and in cases which followed it, e.g. Brij Mohan Das v. Algu [1903] 26 All. 78, in so far as they amount to subletting. I am in agreement with him, with the slight difference, that they held such mortgages to be valid, so far, and no further, as they amount to a contract, which in their view is a valid one by which an occupancy tenant agrees to allow the creditor to retain possession till his money is paid and that the so-called redemption suit is no more than a suit for possession in terms of an agreement and not the usual suit for redemption in which a decree for redemption can be passed directing sale of the property in the event of non-payment, as provided by Order 34, Rule 8, Civil P.C. The terms mortgage, redemption etc., may be conveniently used as their Lordships of the Privy Council did in Nidha Sah v. Murli Dhar [1903] 25 All. 115, but they are not such in the legal sense. That the usufructuary mortgagee of an occupancy tenant is enabled to retain possession by virtue of the stipulation in the deed in that behalf and not because he holds under a valid mortgage or because he is exactly a sub-tenant (in which case question of jurisdiction of civil and revenue Courts would arise) is clearly ruled in Bindeshri Rai v. Sadho Charan Rai [1904] 26 All. 591:
The suit by transferee of the occupancy tenants' right to occupy say Blair and Banerji, JJ., in a case which was one by a usufructuary mortgagee:
is in reality one to enforce the contract for delivery of possession for the term of the mortgage which the tenant made with him, a contract which is valid and enforceable at law (p. 593).
98. Regarded as subletting the position is the same, viz., that the mortgage of occupancy holding is not valid as a mortgage but as something else, i.e., sublease, and to that extent only, with, a covenant superadded that the subtenant shall not be ejected till a certain sum of money is paid, which has been held to be valid and enforceable. How far the decisions of this Court upholding usufructuary mortgages of occupancy rights in a modified form are based on good law, it is too late to consider. They are so numerous and persistent that any attempt to depart from them will result in unsettling what has been unhesitatingly accepted by all Subordinate Courts and this Court.
99. It has been argued that a covenant by an occupancy tenant embodied in deeds of further charge, that he would not recover possession of the holding without payment of the fresh advances, is invalid under Section 23, Contract Act. It is said that it defeats the provision of Section 9, Act 12 of 1881. The only provision forbidding transactions in respect of occupancy right is in these words:
No other right of occupancy shall be transferable in execution of a decree or otherwise than by voluntary transfer between persons in favour of whom as cosharers such right originally arose or who have become by succession cosharers therein.
I have quoted the relevant provision of law which it is said is defeated by the covenant in question. What the section prohibits is "transfer" of occupancy holding, which the two deeds are not; and, if they are, they are in-Valid to that extent. There is nothing in Section 9, Act 12 of 1881, or any other law which prohibits an occupancy tenant to allow another person to remain in possession of the holding as subtenant or otherwise, and to agree that he would not eject and resume possession till certain sums are paid, a proposition which must be accepted in view of what was decided in Khiali Ram v. Nathu Ram [1893] 15 All. 219. If we analyze the decision in that case, it affirms the validity of two distinct covenants, viz., (1) covenant giving to the creditor the right to occupy, (2) covenant giving him the right to retain occupation till he is paid.
100. The validity of the first only does not afford protection to the creditor, because whether his position be that of a sub-tenant or otherwise the occupancy tenant, relying on his occupancy right, can take possession. It is only covenant 2 which precludes him from doing so and enables the creditor to retain possession till he is paid. Why a covenant, couched exactly in the same terms, occurring in a subsequent deed should be held to militate against Section 9, Act 12 of 1881, it is difficult to understand. It is not an extension of the proposition which we are bound to accept in cases of usefructuary mortgages of occupancy holding on the principle of stare decisis, but it is the identical covenant in both cases. This Court has enforced such a stipulation contained in a deed of further charge relating to occupancy holding see Hardayal v. Ganga Kori A.I.R. 1927 All. 743. On its facts and the decisions arrived at, it is not possible to distinguish that case with the one before us. The learned Judges have taken note of the fact that the mortgaged property was an occupancy holding. They have, nevertheless, given effect to the deed of further charge. As I have said, once we make up our mind to accept the rule laid down in Khiali Ram v. Nathu Ram [1893] 15 All. 219, and cases which followed in its wake, we cannot refuse to give effect to the covenant that the occupancy tenant would not take possession of his holding without paying a certain sum of money, whether such a covenant occurs in a deed purporting to be one of usufructuary mortgage or one which creates only a charge. If it is not in conflict with Section 9, Act 12 of 1881, where it occurs in a usufructuary mortgage, as we must hold it cannot be so if it occurs in a deed of further charge. It would be extremely illogical and and arbitrary if we give effect to it in one case and not in the other. Consistency may not be a virtue in some walks of life, but it is absolutely necessary in administering law.
101. Another argument that has been advanced is that a covenant in a subsequent bond disentitling the occupancy tenant to take possession without paying fresh advances operates as a clog on the right of redemption of the earlier usufructuary mortgage. This argument is easily refuted, as it is based on the erroneous assumption that the so called usufructuary mortgage is valid as a mortgage, and not as an arrangement of subletting. We cannot import the doctrine of clog into a transaction which cannot amount to a mortgage subject to all its incidents including right of sale in a certain contingency. Dr. Gour, relying on London and Globe Finance Corporation v. Montgomery [1902] 18 T.L.R. 661., says:
It is perhaps unnecessary to state that the rule against clog on redemption only applied to a mortgage. If therefore the transaction was not a mortgage, no covenant could be attacked on the ground of clog, though the principle which underlies that rule may equally avail to invalidate it, but its invalidity must then be tested by the general principles upon which contracts generally are voidable. A deposit of shares as security for a loan made on condition that the creditor should have the option of purchasing the shares at a fixed price up to a certain date was held not to amount to a mortgage, and that, therefore, the covenant could not be attacked as a clog on redemption. Gours's Law of Transfers Vol. 2, p. 1095, para. 1554.
102. Assuming the rule of clog on redemption can be invoked, it is wholly inapplicable. It is stated in Hals. Laws of England, Vol. 21, p. 143 in these terms:
No agreement between mortgagor and mortgagee contained in the mortgage can make a mortgage irredeemable; and no contract between a mortgagor and mortgagee made at the time of the mortgage, and as part of the mortgage transaction, or in other words, as one of the terms of the loan, can be valid if it provides that the mortgaged property shall become the absolute property of the mortgage upon any event whatsoever.
But the rule against clogging the equity of redemption does not invalidate subsequent and independent transactions between mortgagor and mortgagee relating to the mortgaged property. Ibid p. 140.
103. The following passage from Dr. Sir Rashbehari Ghose's Law of Mortgage, Vol. 1, Edn.5, p. 241, has been relied on:
The question whether a mortgagor may redeem the mortgage on payment of the money due on foot of his security without also discharging other debts due from him to the mortgagee in spite of an agreement to the contrary has given rise to some controversy. The solution, however, is not very difficult. Of course, if the land is charged by way of mortgage with the repayment of such debts, the mortgagor can redeem only on payment of all the moneys so secured. But if there is no pledge of the land, a, more agreement to pay other debts which may be due to the mortgagee as one of the conditions of redemption, will not be binding upon the mortgagor so as to prevent him from redeeming on payment of the 2nd debt only.
104. The cases quoted at the foot, including Sheo Shankar v. Parma [1904] 26 All. 559, on which it is based are all cases in which such a covenant was held to be a clog. This is now an exploded doctrine and cannot be accepted in view of subsequent cases: see Ranjit Khan v. Ramdhan Singh [1909] 31 All. 482. The last word on the subject has been said by their Lordships of the Privy Council in Shankar Din v. Gokal Prasad [1912] 34 All. 620, in which it has been held that:
There is nothing in law to prevent the parties to a mortgage from coming to a subsequent arrangement qualifying the right to redeem. In this case the mortgage which it was sought to redeem was dated in 1846, and in 1870 the mortgagors had, in consideration of certain additional benefit reserved to them under a compromise, agreed to subject their right of redemption to certain conditions. The deed having been lost, the onus was on the plaintiffs to prove the terms of the mortgage, so as to show that the suit was not barred by Section 6, Oudh Estates Act (1 of 1860) (see Raja Kishen Dutt Ram Panday v. Narendar Bahadoor Singh [1875] 3 I.A. 85 which onus he was found unable to discharge. Held (affirming the decision of the judicial Commissioner of Oudh) that the plaintiffs were not in any case entitled to redeem as long as there was no breach by the defendants of the covenants contained in the compromise.
105. It should be noted that, in this case, the subsequent covenant was purely personal. There is a long current of authorities which support the view that stipulations to pay, occurring in subsequent bonds, which do not create a charge are binding on the mortgagor and those bound by his personal obligations, such as heirs or donees, but not on transferees for considerations: see Alu Khan.v. Roshan Khan [1881] 4 All. 85, Hari Mahadadji Savarkar v. Balambhat Raghunath Khare [1885] 9 Bom, 233, Ragho Govind v. Balwant Amrit Gole [1883] 7 Bom. 101; case of a donee Uni v. Nagammal [1904] 27 All. 178, Rais-un-nissa v. Zorawar Sah A.I.R. 1926 Oudh 228.
106. The mere existence of a subsequent mortgage or charge created by a subsequent deed not per se make it incumbent on the mortgagor to pay the money due in respect of such mortgage or charge as a condition precedent to the redemption of an anterior mortgage. It is only a stipulation contained in the subsequent mortgage deed, or deed of charge, viz., that the mortgagor shall not redeem without payment of subsequent advances, which binds him to do so. This is clear from the terms of Section 61, T.P. Act, which provides that:
A mortgagor seeking to redeem any one mortgage, shall, in the absence of a contract to the contrary, be entitled to do so without paying any money due under any separate mortgage, made by him, or by any person through whom he claims, on property other than that comprised in the mortgage which he seeks to redeem.
107. It is, therefore, "the contract to pay" and not the nature of the subsequent transaction which creates the obligation. In Khuda Bakhsh v. Alimunnissa [1904] 27 All. 313 it was held that in the absence of a stipulation in a deed of further charge that the redemption shall not take place without payment of subsequent advance, the mortgagor can redeem without paying subsequent advances though charged on the mortgaged property. There is no warrant for the proposition that the creditor cannot recover sums due under later bonds, unless they amount to usufructuary mortgages. No case has ever gone to this length, and in practice such a second mortgage with possession is rare, if it can take place at all. The mortgagee being already in possession, the mortgagor cannot agree to deliver possession again. He can only authorize the mortgagee to retain possession till subsequent advances are paid. Even where two successive deeds of mortgage with possession over the same property are executed and the second deed does not contain the usual stipulation that redemption of the first cannot take place without discharging the second, redemption of the first cannot be prevented, though the mortgagor will be kept out of possession by the existence of a second mortgage with possession. The question is not whether the mortgagor can recover possession without paying subsequent advances, but it is whether he can redeem the first mortgage without paying subsequent advances. There is a difference between redemption and obtaining possession. The former may take place without affecting possession. In many cases the mortgagor is desirous of merely discharging the incumbrance. Conversely, in many cases, the mortgagee may be unwilling to allow redemption of the first mortgage without payment of subsequent advances. For instances of cases where payment of money due under a subsequent deed was made a condition precedent to redemption, though it did not evidence a mortgage with possession: see Bhikam Singh v. Shankar Dayal Singh [1909] 6 A.L. 3. 255 and Panaganti Ramarayanimgaru v. Maharaja of Venkatagiri A.I.R. 1927 P.C. 32 Section 62, T.P. Act, was relied on in support of the contention that only the principal money due under the first deed need be paid to enable the mortgagor to obtain possession. That section has been said to be a supplement to Section 60, T.P. Act, and does not itself provide for a suit for redemption. It presupposes that the redemption of the mortgage is an accomplished fact by payment of principal to the mortgagor, by deposit in Court or by appropriation as usufruct. If redemption has not taken place by such payment, for instance, where other sums have to be paid as a condition precedent, the section does not apply. Sir Rashbehari Ghose says:
This section should be read with Section 60; but queare, whether a suit under it should be treated as an action to redeem or as an action of ejectment.
108. Whenever Section 62 was applied, absence of a contract to the contrary was stressed: see Tajjo Bibi v. Bhagwan Prasad [1894] 16 All. 295 and Khuda Bakhsh v. Alimunnissa [1904] 27 All. 313. Mr. Lindsay (as he then was) had the occasion to consider Section 62, T.P. Act, in Zahid Ali v. Kedar Nath [1914] 17 O.C. 388 and expressed the following view:
Section 62, T.P. Act, is a special section supplementary to the general provisions of Section 60. It provides a summary remedy which is available to a mortgagor in two special cases of usufructuary mortgage (a) where the mortgagee is authorized to pay himself the mortgage-money from the rents and profits of the mortgaged property, (b) where the mortgagee is authorized to pay himself from such rents and profits the interest of the principal money. It cannot apply to cases where from the conditions contained in the mortgage, accounts have to be made up between the parties.
It contemplates the existence of only one transaction and does not at all touch the cases where a usufructuary having been executed, other mortgages by way of further charge have been executed by the same mortgagor.
109. I respectfully endorse this view in its entirety. Any other reading of the section would create endless confusion. Section 62, T.P. Act, is mandatory and unless it is subject to other contracts to the contrary a mortgagee must surrender possession, whatever rights he may have to retain possession under other legally enforceable agreements. The rational view of the section is that it provides rights and obligations of the mortgagor and mortgagee under one deed of usufructuary mortgage, assuming it is the only deed which regulates them.
110. I have discussed the effect of various rules applicable to mortgages, such as doctrine of clog, provisions contained in Sections 61 and 62, T.P. Act, only on the assumption that the deed of 1886 amounts to a valid usufructuary mortgage of an occupancy holding. I have held in an earlier part of this judgment that, on the rulings of this Court, we can give effect to it not as a mortgagee but as a sub-lease or an arrangement under which no security for recovery of the money advanced is created. In that view we cannot apply rules of law applicable to mortgages only and not to sub-leases and other similar contracts which have to be given effect to according to the stipulations in the deeds evidencing them. The covenants in the deeds of 1893 and 1898 that money due thereunder must be paid before possession is to be taken by the plaintiff is as valid as an identical covenant in the deed of 1886, viz., that possession cannot be taken without payment of the sum then advanced. It may be convenient to adhere to the nomenclature used in the deeds, but in law there is no mortgage, no mortgagor, no mortgagee and no redemption. We must treat the suit as one for possession, and the suit is to be decreed only if the terms of the contracts between the parties justify it. For these reasons I answer the second question, referred to the Full Bench, in the negative.
111. The third question does not call for a decision in view of what 1 have held on the first. But if it were otherwise I would hold, in view of the personal obligation of the mortgagor, that registration is not compulsory to bind him to pay what is due thereunder.
112. The answers of the majority of the Full Bench on the questions formulated are as follows:
(1) It was open to the plaintiff to raise the plea.
(2) The plaintiff is entitled to redeem without paying the money secured by the deeds of 1893 and 1898.
(3) The non-registration of the document is not material.