P L D 1973 Lahore 476 (PLP)

Date of hearing : 2nd June 1972. The land in dispute measuring 152 kanals 12 marlas situate in the revenue estate of Nakowal, Tehsil and District Sialkot, was mortgaged by the predecessor of the respon dents to one Lala tlari Chand by a registered deed which was executed on the 1st of April 1930. The possession of the land was delivered to the mortgagee. Lala Hari Chand sold away his mortgagee rights to one Sikandar Lal by a registered deed dated the 27th of April 1944 and the latter in turn transferred his rights to the petitioners. They applied on the 8th of March 1968 under section 10 of the West Pakistan Redemption and Restitution of Mortgaged Lands Act, 1964 (Act XIX of 1964) to the Collector for restitution of the possession of the mortgaged land. The Collector ordered the restitution by his order dated the 14th of December 1968. The petitioners preferred an appeal under section 14 of the Act which was accepted by the Additional Commissioner (Revenue), Lahore Division, Lahore, on the 24th of June 1969 on the ground that the mortgage was not a usufructuary mortgage and, therefore, its restitution could not be ordered under section 10 of the Act. The respondents challenged the order in revision under section 15 of the Act which was accepted on the 29th of December 1970 by the learned Member, Board of Revenue, Punjab, Lahore, and he by setting aside the order of the Additional Commissioner restored that of the Collector. This is a petition under Article 98 of the Con stitution of the Islamic Republic of Pakistan (1962).

2. The learned Additional Commissioner observed in his order that the terms and conditions in the original "mortgage deed dated the 1st of April 11930 were that the mortgagees would be entitled to recover the entire mortgage money after a period of 3 years from the mortgaged land and if the same could not be recovered from the mortgaged land; the balance would be recovered from the persons and other properties of two of the mortgagors". The original mortgagee was Lala Hart Chand. Sikandar Lala was the transferee from him and the appellants, in turn, being transferees from Sikandar Lal, claim under Lala Harl Chand and are, therefore, bound by the terms and conditions of the original mortgage deed dated 1st of April 1930, and so are the respondents who claim under the original mortgagors. The respondents in their grounds of revision (Annex 'B') did not contradict this position nor did they urge before the learned Member, Board of Revenue, as is manifest from his order, that these were not the conditions. The learned Member, Board of Revenue, accepted the revision petition without adverting to this aspect of the case by observ ing "It is not at all clear how it has been held that the mortgage was not a usufructuary one. The land was in possession of the mortgagees and their successors‑in‑interest and the usufruct was enjoyed by them. The other ingredients ace also present and 20 years have elapsed". I have also examined the original deed which was produced before me by Mr. M. A. Ghani, learned counsel for the respondents, and have found that one of the conditions of the mortgage was that the mortgagees had the right, in case the mortgage money and the Interest thereon was not satisfied from the mortgaged land, to recover the money from the person and other property of the mortgagors.

3. The fact that the petitioners and their predecessors‑in -Interest bad been in possession of the land in dispute since 1st of April 1930 is not disputed. It is also not denied that they have been in the beneficial enjoyment of its income. The question arises whether this circumstance by itself is sufficient to prove that the mortgage created on the 1st of April 1930 was a usufructuary mortgage. Section 10 of the Act can be pressed into service only in the case of a subsisting usufructuary mortgage. It reads; "The mortgagor of any subsisting usufructuary mortgage not less than twenty years old, or of any usufructuary mortgage the period whereof has expired, may present a petition to the Collector for the restitu tion of possession of the mortgaged land". Mortgage is defined in section 58(a) of the Transfer of Property Act, 1882, as "the transfer of an interest m specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability". The following kinds of mortgages have also been defined In the said section :‑

(a) Simple mortgage ; (b) Mortgage by conditional sale; (c) Usufructuary mortgage ;, (d) English mortgage; (e) Mortgage by deposit of title‑deeds ; and (f) Anomalous mortgage. According to clause (d) of section 58 ibid "where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorises him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lien of interest, or In payment of the mortgage‑money, or partly in lieu of Interest or partly in payment of the mortgage‑money, the transaction is called an usufructuary mortgage and the mort gagee an usufructuary mortgagee". It is provided in section 67 that there is no remedy by sale or foreclosure in a usufructuary mortgage. The essential feature of a usufructuary mortgage is that the mortgagee cannot sue for payment of the debt and recover it from the person of the mortgagor. He is only entitled to remain in possession of the mortgaged property till the principal and the interest are defrayed according to the terms of the agreement. In Lachhman Singh v. Natha Singh (A I R 1940 Lah. 401) It was held; "Though the Transfer of Property Act Is not in force in the Punjab, the definitions of the various kinds of mortgages given in it have always been accepted as correctly describing their essential ingredients and incidents". It was further held by relying on Ram Narain Singh v. Adindra Nath (A I R 1916 P C 119) that in a usufructuary mortgage there is no personal liability of the mortgagor to pay. Again, in a number of cases it has been held that the mortgagee Is not entitled to sue for sale of the property and where there is a stipulation to the contrary, the transaction ceases to be one of usufructuary mortgage, but is what is described as an "anomalous mortgage": It may be pointed out that where the mortgagee is to appropriate the rents and profits towards the payment of interest and also towards the principal, and when the entire amount on account of the principal and Interest Is liquidated, he must deliver possession of the mortgaged property to the mortgagor free from all encumbrances. The mortgagor, however, can at any time claim redemption on payment of the mortgage amount found to be due under the mortgage unless there is a term to the contrary. The mortgagee is, on the other hand, debarred from suing for his debt. Another type of usufructuary mortgage may be when the principal and the interest are wiped off, or paid off, or are to be paid according to the terms and conditions of the deed within the specified period. There may be a case where a mortgagee can appropriate the rents and profits in lien of the Interest and the mortgage amount. The mortgagee is, in such a case, entitled to retain possession till ouch time the mortgagor chooses to redeem on payment of the principal sum secured. In the present case, the mortgagee, according to the mortgage deed, dated the 1st of April 1930, could, after the expiry of three years, recover the amount from the mortgaged land. In other words, he could sue for the sale of the mortgaged property. He could also, if he was not able to recover the entire amount by the sale of the mortgaged property, recover the amount personally from the mortgagors. The mortgagors thus made themselves personally liable for the mortgage debt. In order that a mortgage may be usufructuary, there should be no personal liability of the mortgagor nor there should be a right in the mortgagee to sue for sale of the mortgaged property. Both these condition were present In the dead of the instant case. It was thus no a usufructuary mortgage. The precise question came up to consideration in Muhammad Saeed v. Abdul Alim (A I R 1947 Lah. 40) where It was held : "It is a settled proposition of law that if a deed of mortgage contains a personal covenant to pay the principal mortgage debt or Interest by the mortgagor such a covenant implies the right of sale unless there is some specific term to the contrary". The mortgage deed in that case contained a covenant of personal liability to pay the principal and also provided that in case of default in payment of Interest for three successive months the mortgagee was entitled to recover both the principal and interest by sale of the mortgaged property and could make good the deficiency by having recourse to the person and other property of the mortgagor, The same terms and conditions are in the mortgage deed In respect of the present property executed in 1930 which provides for the payment of the mortgaged amount by the mortgagor within three years and on his failure to do so the mortgagee could recover the mortgage amount from the mortgaged property and could also recover from the person and other properties of the mortgagor. Their Lordships of the Full Bench with reference to such con ditions held in Muhammad Saeed's case "that the mortgage transaction was neither purely usufructuary mortgage nor a simple mortgage but was an anomalous mortgage with the result that the property in suit could be brought to sale at the instance of the mortgagee". In Akbar Ali v. Mafijuddin (A I R 1942 Cal. 55) it was held that "the remedy of the mortgagee is only to remain in possession till the money is paid. He can neither sue the mortgagor per sonally for the debt, nor can have a decree for foreclosure or for sale". It was further observed; "If there is really a personal covenant to pay within the meaning of section 68(1)(a), T. P. Act, and the mortgagor besides delivering possession of the mortgaged property to the mortgagee binds himself personally to repay the debt, the mortgagee will certainly get an additional remedy and will be entitled to sue for the mortgage money under section 68(1)(a), T. P. Act. The mortgage however In that case would cease to be a usufructuary mortgage under the Transfer of Property Act. It would no longer be a pure usufructuary mortgage as defined in section 58(d), T. P. Act I it can rank only as an anomalous or mixed mortgage, where the rights would be regulat ed by the contract between the parties".

4. On the above view of the matter, the learned Member, Board of Revenue, since he has not adverted to the fact that there was a personal liability of the mortgagor to pay the debt and also that the mortgagee had been given the right to recover the mortgage money from the person and other property of the mortgagor, has acted without lawful authority inasmuch as there being no usufructuary mortgage section 10 of the West Pakistan Redemption and Restitution of Mortgaged Lands Act, 1964, was not applicable to the instant case. His order, therefore, merits to be set aside.

5. The result is that this petition succeeds and the order of the learned Member, Board of Revenue, is declared as without lawful authority and of no legal effect. Consequently, the order dated the 24th of June 1969 of the Additional Commissioner (Revenue), Lahore Division, Lahore, is restored. There shall, however, be no order as to costs. S. A.H. Petition allowed.