P L D 1958 (W (PLP)

S. 58‑In absence of stipulation to contrary transfer of interest takes place at time when contract of mortgage is entered into and not when consideration is paid. Allah Ditta v. Nazar Din 53 P. R. 1916 foll. Maqbool Ahmad for Appellants. Mazhar‑ul‑Haq for Respondents Dates of hearing : 21‑11‑57, 20‑1‑58, 24‑2‑58 and 8‑9‑58. This is a second appeal against the decree of District Judge; Sargodha, affirming a decree of the Senior Civil Judge, Sargodha, by which he dismissed a suit for a declaration that the order of the Collector redeeming a mortgage under the Restitution of Mortgaged Lands Act was ultra vires and that the plaintiffs were still the mortgagees of the land in dispute. 2. The facts are that one Bakhsha owned 1413 kanals of land in village Thathi Jalal, Tahsil Shahpur. Out of this land he had received 438 kanals and 15 marals, which are mentioned in schedule `B' attached to the plaint, as heir of Pathana, his first cousin, who had died childless. Pathana had mortgaged with possession the land in schedule `B' in favour of Narain Singh and Bhai Singh for a sum of Rs, 1,500, by a registered deed dated the 13th August, 1898 (Exh. P. 1.) On the death of Bakhsha the whole of his land was inherited by his son Habib and on the death of Habib, who died while he was still a bachelor, the land passed on to Mst. Muradan, widow of Bakhsha, in life estate. Mst. Muradan mortgaged the whole of 1413 kanals in favour of Saleh and Sultan, plaintiffs in the suit out of which this appeal arises, for a sum of Rs. 9,000, by a registered deed dated the 11th of September, 1934. Out of this sum of Rs.9,000, Rs. 1,000 were left with the plaintiffs for payment to the previous mortgagees. (The sum of Rs. 1,000 was mentioned on account of a misapprehension as to the amount of the previous mortagage). On the 19th June, 1935, Mst. Muradan sold the whole of this land in favour of defendant‑respondents. On the 1st December, 1935, the plaintiffs paid the sum of Rs. 1,500 to the previous mortgagees. A receipt was executed by the mortgagees and on the basis of that receipt a mutation was entered on the 1st January 1936 and sanctioned on the 26th March 1936. This mutation is not of redemption but of purchase of mortgagee rights and it is this circumstance which had led to this litigation. The mortgage by Bakhsha was of a date prior to the year 1900 and the respon dents applied to the Collector under the Restitution of Mortgaged Lands Act for redemption of this mortgage without any payment. The Collector granted their prayer. The appellants then filed the present suit attacking the order of the Collector on the ground that they had in fact redeemed the previous mortgage which no longer existed and that they still held a mortgage for Rs. 9,000 for the whole of 1413 kanals. Both the lower Courts have decided on the basis of the mutation referred to above that this was a case of the purchase of mortgagee rights and the order of the Collector was, therefore, valid in law. 3. The appellants had produced in the trial Court only oral evidence with respect to the payment of money to the previous mortgagees. When I looked at the mutation sanctioned on 26th March 1936, I came to the conclusion that without the production of the receipt dated 1st December 1935, on the basis of which the mutation was sanctioned, a satisfactory decision of this appeal was not possible. On enquiry from learned counsel for the appellants I was told that the receipt had been filed in a previous suit which was instituted by the collaterals of Bakhsha challenging the mortgage in favour of the appellants and learned counsel for the appellants actually produced before me a certified copy of that receipt. I suggested to him that he should put in an application for admission of this evidence. He put in an application and I passed an order permitting him to produce evidence to prove the receipt. The receipt has now been produced and the appellants also have produced two witnesses to prove it. One of them is Muhammad son of Dad, a marginal witness of the receipt, and the other is one of the plaintiffs‑appellants, Sultan. Both of them have proved the execution of the receipt by the previous mortgagees and there is no reason for rejecting this evidence. They also have made statements that the money was paid in order to redeem 'the mortgage. However, it is not simply on their statements that I rely but on the contents of the receipt and the circumstances. I reproduce below the relevant portion of the receipt :‑ "We, Jawind Singh son of Narain Singh and Kishan Singh son of Bhai Singh, caste Bazzaz of Baran, Tahsil and District Shahpur‑We have received in cash a sum Rs. 1,500 in respect of total mortgage money relating to 88 bighas 2 kanals and 5 marlas, Khasra Nos. 74‑75 of Chah Mahmoodwala situate in Thathi Jalal owned by Mst. Muradan mortgaged with us Pathana son of Shera, caste Lai of Thathi Jalal, from Saleh and Sultan sons of Walia, caste Lai of Thathi Jalal, mortgagees of the land and we have executed this receipt in token thereof so that it may be used in time of need. 1st December 1935." This receipt does not say that Saleh and Sultan are purchasing the mortgagee rights. It is a simple receipt of mortgage money executed by a mortgagee on receipt of the mortgage money. It is true that this receipt does not at the same time state that the land has been redeemed but that is obviously due to the fact' hat if these words were put in, the receipt would have to be registered. According to a judgment of the Lahore High Court a mere receipt by the mortgagee of the payment of mortgage money without references to the fact that the mortgage is being redeemed does not require registration and the person who drafted the receipt may well have been aware of that judgment. The mutation on which the lower Courts have relied was based on this very receipt and not on any separate statement by any of the parties. This receipt is specifically mentioned in the mutation as the basis of the mutation. The mutation of purchase of mortgagee rights is not justified by the receipt and I have no hesitation in holding having regard to all the circumstances that the money had been paid only to redeem the mortgage. The person who paid the money was a puisne mortgagee who according to the terms of his mortgage was to redeem this mortgage. A. purchase of mortgagee rights could only take place in pursu ance of a contract between the parties and there is no ground at all for an inference that there was any such contract. 4. I may mention here that in addition to the oral evidence, the appellants have produced a statement made as a witness by Kishan Singh, one of the mortgagees, in the declaratory suit filed by the collaterals. In this statement he had said that this land was mortgaged with him for Rs. 1,500, that he had received Rs. 1,500 from Sultan and Saleh, that he had redeemed the land C and that he had executed the receipt Exh. D. W. 4/2. (This receipt was Exh. D. W. 4/2 in that suit). This statement is relevant because Kishan Singh is no longer available, having left Pakistan, and the statement falls under section 32 (3) being against the interest of the maker. The statement is also admissible under section 33 of the Evidence Act because the present appellants as well as Mst. Muradan, from whom the respondents derived their title, were parties to 'that suit. Mst. Muradan had the right as well as opportunity to cross- examine the witness even though she was, truly speaking, only a pro forma defendant. It may be stated here that the sale in favour of the respondent had come into existence during the pendency of that suit. 5. There is another reason why this appeal should be accepted. Even if it was a case of purchase of mortgagee rights and not of redemption, the present appellants would still be mortgagees of the entire land for a sum of Rs, 9,000 on account of the mortgage created in their favour by Mst. Muradan on the 11th September 1934. A mortgage is a transfer of interest which comes into existences, when the contract of mortgage is entered into and not necessarily when the consideration is paid. It was held by a Full Bench of the Punjab Chief Court in Allah Ditta v. Nazar Din (53 P R 1916) that in the absence of a stipulation to the contrary' the transfer of interest takes place at the time when the contract is entered into and I have no hesitation in agreeing with that: proposition. Unless I were able to hold that there was in this case an implied stipulation preventing the mortgage from taking effect with respect to the sum of Rs. 1,000 left with the appellants for redemption of the previous mortgage till that sum was actually paid, I must hold that on the 11th September 1934 a mortgage for Rs. 9,000 came into existences, in favour of the present appellants. There is no good reason for assuming such an implied stipulation. (I may point out that actually Rs. 1,000 only were left with the mortgagees for payment to the previous mortgagees and it would not even be possible for respondents to urge that a mortgage for Rs. 8,000 had not come into existence.) There is no circumstance from which it may be possible to impute to the parties an intention that transfer of interest was to be deferred till the money was paid. I would, therefore, hold that even on the assumption that the mortgagee rights had been pur chased there would be in favour of the appellants a valid mortgage for Rs. 9,000 which can only be redeemed on payment of that sum, and the order of the Collector would be void. 6. It was also urged on behalf of the appellants that on the well known principle that lesser estate merges in the larger estate, on the purchase of the rights of the previous mortgagee by the puisne mortgagee, those rights would become extinct and the only estate that would survive would be the mortgagee rights for Rs. 9,000. In view of the fact that I have come to a definite decision as to there having been no purchase but a redemption I do not find it necessary to decide this matter. 7. This appeal is accepted and the suit decreed but the parties are left to bear their own costs throughout. K. M. A. Appeal accepted.