Copyright
Chas. A. Stevens & Bros.

The Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) online

. (page 127 of 155)
Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 127 of 155)
Font size
QR-code for this ebook


The difference which exists between s. 9 of Act No. XVIII of 1873
and s. 9 of Act No. XII of 1881 is immaterial to the purpose for which we
refer to s. 9 of Act No. XVIII of 1873.

In Goki v. Kewal Ram (3) the Sudder Board of Revenue, N. W. P.,
held, with reference to s. 9 of Act No. XVIII of 1873, that an occupancy
tenant had a right to sub-let his holding. In Kunj Behari v. Kinlock (4)
Spankie and 01dfield, ( JJ., held that s. 9 of Act No. XVIII of 1873, did
not bar a sub-letting " by an occupancy tenant, as by so doing he does not
part with bis occupancy right within the meaning of that section."

In Haji Hidayat-ulla v. Ran Newaz Rai (5) Sir E. Stuart, C. J., and
Oldfield, J., held that s. 8 of Act No. XVIII of 1873 showed that a sub-
lease by an occupancy tenant was contemplated by that Act and
consequently was not a transfer of the right of [227] occupancy to which
s. 9 of that Act would apply. The lease in that case was granted by an
ex-proprietary tenant and provided that the lessor should have no right of
re-entry on the land so long as the stipulated rent was paid. Those
learned Judges held that the perpetual character of the lease made no
difference, that under the lease the use of the land passed to the lessee,
that such use was recoverable on non-payment of the rent reserved, and
that the right of occupancy remained iu the lessor, who was an ex-proprie-
tary tenant.

The authorities which we have cited show that down to 1882 the right
of every occupancy tenant to sub-let his occupancy holding was recognised.

(1) 12 W.B.C.B. 110. (2) 8.D.A.N.W.P.R. 1866, Vol. I, p. 37.

(3) 1 Legal Remembrancer, Rent and Revenue Series, 202.
U) 1 A.W.N. (1881), 11. (5) 2 A.W.N, (1883), 80,

863



15 All. 228



INDIAN DECISIONS, NEW SERIES



[Yol.



1893

JUNE 28.

liULL

BENCH.
is A. 219

(P.B,) =
13 A.W.N,
(1893) 125.



The earliest decision, of which we are aware, which threw a doubt
upon the right of an occupancy tenant, other than a tenant at a fixed rate,
to sub-let his occupancy holding was that of Ganga Din v. Dhurandhar
Singh. That case came before the Full Bench in 1883 and is reported in
I. L. K., 5 All. 495, and W, N. for 1883, p. 89. It was there held that
a mortgage with possession by an occupancy tenant of his occupancy
holding was a transfer which was prohibited by the second paragraph of
s. 9 of Act No. XII of 1881. The mortgagor was not a tenant at a fixed
rate. The mortgage then in question was usufructuary. No doubt a
usufructuary mortgage by an occupancy tenant of his occupancy holding
does for the term of the mortgage transfer such right to the'possession ofjthe
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 No. IV of 1882, whether che second
paragraph of s. 9 of Act No. XII of 1881 applied or not. Even if an
occupancy tenant ofoer than a tenant at a fixed rate were to bring a
suit for the redemption of a usufructuary mortgage of his occupancy hold-
ing, no decree for sale under s. 92 and no order for sale under s. 93 of
Act No. IV of 1882 of the right of occupancy could, by reason of the
bar of the second paragraph of s. 9 of Act No. XII of 1881, be made.
Possibly Act No. IV of 1882 did not apply to the mortgage in the case
[228] which we are considering, or was not present to the minds of the
learned Judges who decided that case. It is plain from ss. 58, 67, and 68
of Act No. IV of 1882 that a usufructuary mortgagee of land cannot
maintain a suit for sale of the mortgaged property, and that his rights of
suit are confined to a right of suit for possession for the purposes of
enjoying the usufruct in the manner provided by the mortgage, and to a
right of suit for the mortgage money, when such suit would lie under
s. 68 of Act No. IV of 1882. We fail to see how the second paragraph of
s. 9 of Act No. XII of 1881 can apply to a usufructuary mortgage, as that
word is defined in clause (d) of s. 58 of Act No. IV of 1882, of an occu-
pancy holding by the tenant having the right of occupancy. On the other
hand, the second paragraph of s. 9 of Act No. XII of 1881 would,
as it appears to us, apply to a simple mortgage, a mortgage by condi-
tional sale, or an English mortgage, as such mortgages are defined
respectively in clauses (61, (c), and (e), of s. 58 of Act No. IV of
1882, as the mortgagee would, if it were not that the second paragraph
of s.. 9 enacts that " no other right of occupancy shall be transferable
in execution of a decree, &c., " be entitled in case of default to obtain
from a Civil Court a decree for sale of all the mortgagor's rights in the
property, or a decree for foreclosure which would deprive the mortgagor
of all rights in the property. By reason of the second paragraph of s. 9 of
Act No. XII of 1881 a mortgagee, under a simple mortgage, a mortgage
by conditional sale, an English mortgage, or any other form of mortgage
under which in other cases a mortgagee could obtain a decree for sale or a
decree for foreclosure, granted by a tenant, other than a tenant at a fixed
rate, having a right of occupancy, would take no interest in the occupancy
holding, as any such mortgage would be in contravention of the spirit, if
not of the letter, of the paragraph in question.

In Wajiha Bibi v. Abhman Singh (l) a Division Bench followed the
ruling of the Full Bench in Ganga Din v. Dhurandhar Singh (2).



(1) 8 A.W.N. (1883) 166.



(2) 5 A. 495,



864



YII]



KHIALI BAM V. NATHU LAL



15 All. 230



[229] In Abadi Husain v. Jurawan Lai (1) ife was held by a Full Bench
that a zar-i-peshgi lease of an occupancy holding granted by tenants with
a right of occupancy was a transfer in contravention of s. 9 of Act No. XII
of 1881. The grantors were not tenants at fixed rates. How far the
fact that the zar-i-peshgi lessees claimed and pleaded that they had acquire-
ed all the rights of the occupancy tenants may have influenced the Full
Bench in its decision, we cannot say. For the same reasons which we
have expressed in our comments upon the decision in Ganga Din v. Dhu-
randhar Singh (2) we are of opinion that the decision in Abadi Husain
v. Jurawan Lai and others was wrong, and was based on a confusion by
one or more members of the Court of a grant of a right to occupy with a
grant of a right occupancy.

In Jharan Singh v. ShadiRam(S), in Wall Muhammad v. Baghubar(4:) t
and ic Nugpal v. Sital Puri (5) the decision of the Full Bench in
Abadi Husain v, Jurawan Lai (1) and others was followed by Division
Benches.

So far as the decision in Madho Lai v. Sheo Prasad Misr (6) related
to the second paragraph of s. 9 of Act No. XII of 1881, it followed the
decisions in Ganga Din v. Dhurandhar Singh (2) and Abadi Husain v.
Jurawan Lai (1), and was, we are satisfied, wrong. The case of Jhinguri
Tewari v. Durga (7) does not affect the question which we have to consi-
der, as there the sale-deed professed to transfer the right of occupancy.
It has recently been decided, and we think rightly, in Khamani Bam v.
Sundar (8), by the Board of Eevenue, North- Western Provinces and
Oudh, that although a tenant with a right of occupancy, other than a
tenant at a fixed rate, cannot legally transfer his right of occupancy, he
can sub-let the right to cultivate the land comprised iu his occupancy
holding, as sucb a sub-letting does not profess to be a transfer of the right
of occupancy, and is not in contravention of seetion 9 of Act No. XII of
1881

[230] Our answer to the question referred is, that an ex -proprietary
tenant can sub-let the whole or any part of his occupancy holding, and
fehat such a sub-letting is not forbidden by section 9 of Act No. XII of
1881.

In order that the effect of our opinion may not be misunderstood and
our decision be not misapplied, it is necessary to say that it is obvious to
us that the interest in an occupancy holding of any person to whom an
occupancy tenant sub-lets, or to whom he grants a usufructuary mortgage
of land comprised in his occupancy holding, will determine, if it has not
previously determined, on the termination of the right of occupancy, and
can subsist no longer than the right of occupancy subsists. Such sub-
tenant does not by the sub-letting become the tenant of the zemindar,
who is entitled to receive from his occupancy tenant the rect due by him.
The rights of the zemindar under Act No. XII of 1881 to obtain an
enhancement of the rent payable to him or to obtain an ejectment of his
occupancy tenant and of those holding under him, cannot be interfered
with or lessened by the fact that his occupancy tenant has by a lease, or
other form of sub-letting, or by a usufructuary mortgage, to the granting
of which the zemindar was not an actively consenting party, sub-let or
mortgaged the occupancy holding or any part of it. A sub-tenant or
usufructuary mortgagee as such ia not entitled to use the land for any



(1) 7 A. 866. (2) 5 A- 495.

(4) 9 A.W.N. (1889) 145.

(6) 12 A. 419. (7) 7 A, 878.



(3) 9 A.W.N. (1889) 145.
(5) 10 A.W.N. (1890) 3.
(8) 13 A.W.N. (1893) 9.



1893

JUNE 28,

FULL
BENCH

15 A. 219

(P.B.)-

13 A.W.N.

(1893)125.



A VII 109



865



15 All. 231



INDIAN DECISIONS, NEW SERIES



[Vol.



1893

JUNE 28.

FULL
BENCH.

IS A. 219

4F.B.) =
13 A.W.N.
(1893) 125.



purposes other than those for which the occupancy tenant, if in posses-
sion, would be entitled to use it.

On the appeal heing sent back to the Bench concerned, judgment
was delivered on the 30th of June 1893 dismissing the appeal in accordance
with the judgment of the Full Bench given above.



IS A. 231 (F.B ) = 13 A.W.N. (1893) 130.
[231] FULL BENCH.

Before Sir John Edge, Kt., Chief Justice, Mr. Justice Tyrrell,

Mr. Justice Knox, Mr. Justice Blair, Mr. Justice Burkitt and

Mr. Justice Aikman.



MAHESH SINGH (Defendant) v. GANESH DUBE AND ANOTHER
(Plaintiffs)* [28th June, 1898.]

Act XT I of 1881, ss. 7. 8, 9 Landlord and tenant Occupancy tenant, power cf, to sub-
let Ptrpetual Itase by occupancy tenant.

Tbe effect of a perpetual lease male by an occupancy tenant of his occupancy
holding to a person not n co-sbarer in the right, of occupancy considered.
[R., 5 A.L.J. 30 = A.W.N. (1903J, 83 ; 11 C.P.L.B. 22 (25) ; 2 0.0. 12 ; '2 O.C. 204 ;
2 O.G. 294.]

THIS was a reference to the Full Bench made by Edge, 0. J., and
Aikman, J., as to the effect of the granting, by an occupancy tenant, of a
perpetual lease of his occupancy holding. The essential facts of the case,
with fche exception that in this instance the lease purported to be per-
petual, were similar to those in Khiali Earn v. Nathu Lai reported above
at p. 219.

Munsif Jivala Prasad, for the appellant.

Mr. D. Banerji, for the respondents.

JUDGMENT.

The judgment of the Court was delivered by EDGE, C. J.

The question referred to the Full Bench is as follows :

" Is a lease in perpetuity of an occupancy holding granted by the
occupancy tenant to whom the second and third paragraphs of s. 9 of Act
No. XII apply, to a person who is not a co-sharer in the right of
occupancy, valid as against the occupancy tenant?"

In the reference to the Full Bench in S. A. No. 948 of 1889t we have
in our judgment delivered this day expressed our opinion that s. 9 of Act
No. XII of 1881 does not prohibit a sub-letting by an occupancy tenant
of bis occupancy holding or of any part of it. The term for which the
occupancy tenant may have sub-let is immaterial, as by sub-letting be
does not and cannot transfer his right of occupancy. The sub-tenant by
the sub- letting in perpetuity does not become a tenant of the zemindar,
and his interest will not survive the determination of Jibe occupancy right.
Such sub-tenant cannot use the land for anv purpose other than that for
which the occupancy tenant, if in possession, would he entitled to use it.
That is our answer to the question referred.



* Second Appeal, No. 1163 of 1890, from a decree of Babu Mritunjoy Mukerji,
Subordinate Judge of Banares. dated the llth of September 1890, confirming a decree
of the Munsif of Benares, dated the 30 January 1886.

t 15 A. 219, supra.

866



YII]



BANKE BEHARI y. SUNDAR LAL



15 All. 233



15 A. 232 (F.B.) = 13 A.W.N. (1893) 130.
[232] FULL BENCH.

Before Sir John Edge, Kt. t Chief Justice, Mr. Justice Tyrrell,

Mr. Justice Knox, Mr. Justice Blair, Mr. Justice Burkitt and

Mr. Justice Aikman.



BANKE BEHARI AND OTHERS (Defendants] v. SUNDAR LAL AND OTHERS

(Plaintiff a).* [28bh June, 1893.]
Act No. IX of 1872, s. 74 Mortgage Interest Penalty.

Where in a contract under which interest is payable it is agreed between the
parties that if such interest be not paid punctually the defaulter shall be liable
to pay interest at an enhanced rate, (whether from the time of default or from
the time when interest first became payable under the contract) such agreement
does not come within s. 74 of the Indian Contract Act, and is to be construed
according to the intentions of the parties as expressed therein and not as a stipu-
lation for a penalty. Such agreement i? to be enforced according to its terms,
unless it be found to have been when made unconscionable or fraudulent.

Tbe English doctrine of penal stipulations as applied to such agreements
considered and not followed.

Rai Balkishen Das v. Raja Bun Bahadur (1) considered and explained.
(Not F., 8 C.P.L.B. 54 ; 8 C.P.L.R. 77 ; F., 17 M. 62 = 4 M.L J. 17 ; R., 22 C. 658,



1893

JUNE 48.

FULL
BENCH.

15 A. 282

<F.B.)=
13 A.W.H.
(1893) 130.



(667); 25 M. 343 (346) = 11 M.L.J. 421
O.C. 307 (309J ; 99 P.R. 1894.]



24 M.L.J. 135 (175) = 13 M L.T. 20; 11



THIS was a reference to the Full Bench"made at the instance of
Tyrrell and Blair, JJ. The question for determination was thus stated in
the referring order : " This appeal in its single and somewhat clumsy plea
raises the question whether a portion of the contract between the parties
is liable to be treated as a promise under given circumstances to pay
damages for the breach of contract, or whether the parties did stipulate
or intended to stipulate that certain charges by way of interest should be
contractual interest, and as such not liable to be assessed by a Court as
damages. This question has recently been discussed by a Full Bench of
the Calcutta High Court in Kala Chand Kyal v. Shib Chunder Roy (2),
and by a Full Bench of the Bombay High Court in Umar Khan Muham-
mad Khan Deshmukh v. Sale Khan (3). The point was also considered by
this Court in Banwari Das v. Muhammad Mashiat (4). We think it
desirable that a Full Bench of this Court should consider and determine
the point, and we therefore refer it to a Full Bench."

[233] Tbe facts of the case, so far as they are necessary for the pur-
poses of this report, are stated in the judgment of the Court.

Mr. Boshan Lai and Babu Durga Charn Banerji, for the appellants.

Pandit Mcti Lai Nehru for the plaintiffs.

The judgment of the Court (Ec2ge, C. J., Tyrrell, Knox, Blair, Burkitt
and Aikman, JJ.), was delivered by EDGE, C. J.

JUDGMENT.

The suit, in n appeal in which this reference. to the Full Bench was
made, was brought for foreclosure of a mortgage by way of conditional
sale.



First Appeal, No 47 of 1891, from a decree of Pandit Rai Indar Narain, Subordi-
nate Judge of Mainpuri, dated the 3rd of December, 1890.

(1) L.R. 10 I. A. 162 = 10 G. 305. (2) 190. 392.

(3) 17 B. 106. (4) 9 A. 690.

867



IS All. 234 INDIAN DECISIONS, NEW SERIES [Vol.



1883 ^ ne mortgage-deed was made on, and dated, the 25th of April, 1874,

JUNE $6. by Chaudhri Nand Kishore. So far as it is material to the question we

have to consider, it is as follows :

FULL " That a 5-biswa zemindari share in the village Niwari Kalan, pargana

BENCH. Bbarthna, mahal Nand Kishore, is exclusively owned and possessed by
me as a separate mahal ; that as each mahal is now recorded as consisting
16 A. 232 o f 20 biswas ; that 5-biswa share is entered in my name as a 20-biswa
(P.B.)= (mahal) ; that in order to pay the debt and my personal expenses, I have
18 A.W N. mortgaged eight biswas out of the 20-biswa mahal, the aforesaid share,
(J483) 130. owned and possessed by me, i.e., two out of five biswas of the entire
village, together with all the rights and interests appertaining to the
aforesaid share, to Diohit Sundar Lai, Mata Parshad, and Rang Lai, sons of
Dichit Behari Lai, caste Brahmans, occupation monetary dealings and
zemindari, residents of the village Niwari Kalan, pargana Bbarthna, in lieu
of Rs. 2,000, half of which is Rs. 1,000 ; that it is agreed that I shall pay
interest of the aforesaid money at the rate of Re. 1 per cent, per mensem
every year ; that I shall pay the principal sum within 10 years; that should
I fail to pay any amount of interests in any year, it shall be added to the
principal ; that in case of default in payment of interest every year the
aforesaid rate of interest shall be disregarded and interest shall be charged on
th entire principal and interest at the rate of Re. 1-8-0 per cent, per mensem
from the date of the execution of this document ; that if I fail to pay on
due date the entire [234] principal sum, together with interest and com-
pound interest which may then be due, the mortgaged share shall be fore-
closed, in favour of the mortgagees. I or my heirs shall have no objection
to it ; that when I offer to payRs. 1,000 and interest in a lump sum within
the fixed term, the mortgagees should take the same, but I have no power
to pay the entire money within the stipulated term; that I shall get the
mortgaged share redeemed from mortgage on payment of the entire
principal and interest after the expiry of the fixed term. "

In the plaint it was alleged that no payment of principal or interest
had been made. The plaintiffs claimed to have interest allowed at the
rate of Re. 1-8-0 per centum per mensem from the date of the mortgage.

For present purposes it is necessary to refer only to the fourth para-
graph of the written statement, which is as follows : " The rate of interest
at Re. 1-8-0 instead of 1 per centum being penal, should not justly be
allowed according to many precedents. "

There is no plea that the mortgagor was induced by fraud to enter into
the contract contained in the deed. It is not suggested in the pleadings
that the mortgagor did not in fact thoroughly understand the terms of
the mortgage-deed, or that the language of the deed did not express
correctly and plainly the terms upon which the mortgagees agreed to
lend and the mortgagor agreed to borrow the Rs. 2,000 principal moneys,
nor is it alleged in the pleadings that the agreement as to interest was
unconscionable. The defendants do not suggest by their fourth plea
that the contract was made on the basis of any decisions in England or
in India, or what were the decisions prior to the 25th of April, 1874 in
India, according to which the contract as to alternative rates of interest
should be regarded as penal. No evidence has been given to show that
the mortgagor was induced by any fraud or deception to enter into the
agreement embodied in the mortgage-deed, or to show that be did not
thoroughly understand the language of that deed, or that it was not the
intention of the parties at the time the principal [235] moneys were lent,
that in the event mentioned in the deed the mortgagor should become

868



YII]



BANKE BEHARI t>. SUNDAR LAL



15 All. 236



liable to allow in account interest from the data of the deed at the rate of
Re. 1-8-0 per centum per mensem, or fchat having regard to any facts
existing an the time when the mortgage contract was made the rate of
Be. 1-8-0 per centum per mensem was an unconscionable rate of interest.

As the case thus stands we have to determine whether the plaintiffs
are entitled to be allowed in the taking of the accounts interest at the rate
of Re. 1-8-0 per centum per mensem, as from the date of the mortgage-
deed, or at some other and what rate, or are to be allowed interest at the
rate of Re. 1 per centum per mensem with or without some and what
compensation for the non-payment of the yearly interest as it became
due. In other words, are we on the above facts bound to interpret the
contract in accordance with th?? ordinary and natural meaning of its
language, or are we entitled to say that the parties did not mean what
is expressed by the language which they used in this document in writing,
and can we discard the clearly expressed intention of the parties and
make a contract for them which they neither made, nor intended to make
for themselves ? If we are bound to follow blindly the law as decided in
English Courts on contracts made in England and apply that law in this
case to a contract made in these Provinces by parties who are not alleged
to have known what the law on this subject in England was, or to have
intended that their contract should be interpreted by the law of England
and not according to their intention as expressed by them in thier own
language, the answer would be obvious. It would be, we must disregard
the intentions of the parties to the contract and declare that the stipula-
tion as to the Re. 1-8-0 per centum per mensem interest is penal, and
not to be enforced. Before doing violence to the expressed intention
of the parties to the contract we must see whether in the case of this
contract made in these Provinces of India between natives of these
Provinces, we should ba justified by statute or other law or on authority
in holding that the plaintiffs are not entitled to the interest at the rate of
Re. 1-8-0 per centum per mensem which the [236] mortgagor by his
contract agreed that the mortgagees in the event which happened should
have.

It has not been suggested, nor could it indeed be suggested, that an
agreement for compound interest and for interest at the rate of Re. 1-80
per centum per mensem would prima facie be an exorbitant, unconscion-
able, or unjust agreement in a contract of mortgage made in these
Provinces. The rate is no doubt high, but it is not unusual, and, although
above the average, the security might be doubtful, or the lender might not
be disposed to tie up his capital for 10 years at a less rate of interest.
According to the English decisions and some of those in India such
considerations would not affect the question.

As the contract in this case was made subsequently to the first day
of January, 1856, on which day Act No. XXVIII of 1855 came into force,
the Regulations relating to usury, which were then repealed, do not
apply. By s. 2 of Act No. XXVIII of 1855 it was enacted " In any suit
in which interest is recoverable, the amount shall be adjudged or decreed
by the Court at the rate (if any) agreed upon by the parties ; and if no ,
rate shall have been agreed upon, at such rate as the Court shall deem
reasonable. " Consequently, we are not allowed in deciding on the rights
of the parties to this mortgage-deed or their representatives to regard
any argument that the rate of interest was usurious. As the rate of inter-
est in the event which has happened has been agreed upon by the parties
to the contract, and is not shown to have been unconscionable, s. 2 of Act

869



1893

JUNE as,

FULL
BENCH.

15 1. 282

(P.B.)-

13 A.W.H.

(1893) m



15 All. 237 INDIAN DECISIONS, NEW SERIES [Yol.

1893 No. XXVIII of 1855. unless it has been modified by subsequent legisla-
JUNE 28. tj ion, precludes us from decreeing any other rate which we might deem
reasonable, and from interpreting the agreement as to interest in any other
FULL sense than that which was expressed by the parties.

BENCH. Unless s. 74 of the Indian Contract Act, 1872 (Act No. IX of 1872)

* g T~2"2 k &s *' 3e e ^ ecfc f modifying s. 2 of Act No. XXVIII of 1855, we are aware

_ B \^ of no statutory modification of s. 2 of Act No. XXVIII of 1855.

13 A W.N. [237] It appears to us that s. 74 of the Indian Contract Act, 1872,

(1893) 130. relates only to those cases in which a specific sum is named in a contract

as the sum to be paid on a breach of the whole contract or on a breach of

a particular and specified condition or conditions contained in a con tract,

and cannot possibly apply to a contract such as the present one in which

no specific sum is named in that respect, and the contract is to make

periodic yearly payments of interest at the rate of Ee. 1 per centum per

mensem, and that, if a default is made, the rate of interest shall be li

per centum per mensem from the date of the contract.

In the present case the term of the mortgage has expired, no interest



Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 127 of 155)