P L D 1963 (W (PLP)

MUHAMMAD DAUD KHAN, J.‑

One Basra Khan, son of Sarfaraz Khan, was owner of 1312 kanals 2 marlas of agricultural land situated in the area of Thathi Nasratti, Tahsil Katak, Kohat District. He mortgaged this land with possession to Dawar Shah somewhere in 1886‑

87. About this transaction no mutation was either entered or attested, but it was incorporated in the record -of‑rights of 1886‑

87. Subsequently, Basia Khan effected a second mortgage of this land in favour of Shah Wali Khan in 1895. Shah Wali Khan redeemed the first mortgage in 1895 and entered into possession of the land.

2. Basra Khan effected a second mortgage of the same land by a registered deed dated the 3rd of January 1905, in favour of Sher Ali Khan, brother of Shah Wali, on receiving Rs. 994 and the mortgage money secured on the previous mortgage was stated to be Rs. 3,

500. In this deed the period of mortgage was stipulated to be eleven years. Before this mortgage in favour of Sher Ali was effected, Basia Khan mortgaged the same land to Gut Amin for Rs. 3,500 for a period of five years. Under the terms of the mortgage he as. permitted to redeem the mortgage of Shah Wali Khan. Basia Khan also allowed Sher Ali the third mortgagee, to redeem the mortgage of Gul Amin. Gul Amin sold his mortgagee rights to Shah Wali, the first mortgagee, along with the period of mortgage of five years by a registered deed dated the 19th of November 1908. Sher Ali, the third d mortgagee, also sold his mortgagee rights with eleven years' mortgage period to Shah Wali for Rs. 994, by a registered deed, dated the 3rd of August 1905.

3. Shah Wali, thus, became the sole mortgagee, and this fact was incorporated for first time in the jamabandi for the year 1911‑

12. Basia Khan again effected a tacking mortgage for an additional amount of Rs. 95 to Shah Wali, and the mortgage period was stipulated to be thirty‑five years, by an unregistered mortgage deed, dated the 29th of August 1912. Basia Khan thereafter effected a second mortgage in favour of Jamaraz, son of Shah Wali (first mortgagee) by mutation No. 6451, attested on the 19th of September 1913, for Rs. 500 of 52 kanals 5 marlas, out of the land in dispute, for a period of fifty years. Basia Khan, by another mutation No. 6769 (copy Exh. P. W. 1), attested on the 2nd of February 1914 effected a second mortgage in respect of the remaining area of land, viz., 1259 kanals 17 marlas, for Rs. 500 for a period of fifty years in favour of Jamaraz Khan son of Shah Wali. In both these mutations the mortgage period in favour of Jamaraz was to commence after the expiration of the period of mortgage of Shah Wali, and it was to expire in 1947 by virtue of the second mortgage in his favour.

4. Nizam and Mirbaz pre‑empted the alienation of mutation No. 6769 on the allegation that the transaction was in fact that of a sale and had been given the colour of a mortgage. The trial Judge decreed the claim on the 24th of July 1916, and the appellate Court also upheld the decree on the 30th of November 1916. In further appeal in the Court of the Judicial Commis sioner of the former North‑West Frontier Province the decrees of the Courts below were set aside, and the transaction was held to be one of mortgage by the order dated the 23rd of March 1917.

5. Basia Khan sold the equity of redemption to Karimdad (D. 11) and the predecessors‑in‑interest of the other defendant respondents for Rs. 10,000 by a registered deed, dated the 12th of April 1919, on the basis of which sale mutation No. 14305 was attested on the 7th of October 1919. Karimdad (defendant 11) brought a suit for redemption (Suit No. 82), which was decreed on the 19th of December 1921, in which it was held that the period of mortgage was for the benefit of the mortgagor, and not for the benefit of the mortgagee. In appeal, the District Judge, Derajat Division, by order, dated the 31st of May 1922, set aside the decree of the lower Court, and held that the period of mortgage being 85 years, was also for the benefit of the mortgagee. According to this judgment the period of mortgage was to expire in 1992 at the earliest or 2003. Further appeal against this order was dismissed in the Court of the Judicial Commissioner on the 4th of July 1923. Shah Wali died and his inheritance mutation No. 10892 was attested on the 18th of March 1917, in favour of Jamaraz, Gut Jan, Mughal Khan, Muhammad Jan and Shahzam, his five sons, In this way Jamaraz became the first mortgagee of 1/5th share, while he was the second mortgagee of the entire land, as mentioned above.

6. In 1947, Jamaraz assigned his rights as second mortgagee to his four brothers, and his cousins, who were the sons of Sher Ali, by mutation No. 35742 attested on the 15th of March 1947. In fact this mutation was for the addition of the names of his four brothers and cousins as being second mortgagees of this land, which in the beginning, stood exclusively in his name. By this mutation, therefore, Jamaraz became the second mortgagee of 1/10th share of this land, while he inherited the rights of the first mortgagee in 1/5th share. Sahib Gut etc. (the present defendant‑respondents) applied in the Court of the Revenue E. A. C. Kohat, (exercising the powers of Collector) under section 4 of Act XXXII of N.‑W. F. P. (Restitution of Mortgaged Lands) Act, 1950, against the present plaintiff petitioners for redemption without payment of mortgage money, alleging that the mortgages narrated above were hit by the Act. The application was accepted and the land was ordered to be restituted to the applicants, without the payment of mortgage money. The present plaintiff‑petitioners appealed under section 10 of the Act to the Revenue and Divisional Commis sioner, Peshawar, who confirmed the order of the Collector, Kohat, and dismissed the appeal on the 30th of April 1953.

7. Aggrieved with the orders of the Collector and the Revenue and Divisional Commissioner, the plaintiff petitioners instituted the civil suit for declaration and injunction against the defendants, wherein they challenged the judgments of the Collector and the Revenue and Divisional Commissioner. The suit was dismissed on the 10th of November 1954 in the trial Court and the order was upheld in appeal by the order dated the 29th of June 1955 of the Senior Sub‑Judge, Kohat. The plaintiffs preferred further appeal to this Court and it was accepted, and the case was remanded on the 21st of February 1957, with the direction that the plaintiffs should be allowed to amend the plaint so as to change the prayer for declaration and injunction to one for possession on payment of Rs. 300 as costs. This order was passed because the plaintiffs were dispossessed on the 15th of October 1951 in execution of the order of the Collector passed under Act XXXII of 1950 of the N.‑W. F. Province. The plaintiffs amended their plaint and the prayer for possession was substituted for declaration and injunction. This suit was tried by Sub‑Judge First Class, Kohat. He decreed the suit partially, finding that the mortgagees were, entitled to remain in possession for fifteen years from 1947 onward under section 8 of the Act, and also after excluding the period for which they were out of possession on account of their having been dispossessed by the Collector, Kohat. Both the parties appealed to the District Judge, Peshawar, and an Additional District Judge (Khan Amirzada Khan) found that the civil Court bad no jurisdiction to entertain the suit as ‑it was barred under section 11 of the Act. He accepted the appeal of the defendants, and set aside the partial decree passed by the learned trial Judge, and dismissed the suit, in toto by his order dated the 26th of June 1959. The appeal of the plaintiffs to the effect that they were entitled to remain in possession of the property till the end of 20th century was also dismissed by the same order. Further appeal against the decree of the District Judge has been preferred in this Court, which is being treated as a revision petition under section 59(4) of Ordinance XLIV of 1962.

8. Mr. Muhammad Akbar Khan assailed the finding of the learned Additional District Judge on the ground that sections 2, 8 and 11 of Act XXXII of 1950 were not rightly interpreted by him and the Civil Court had the jurisdiction to come to the aid of the party who was prejudiced by the decision of the Collector when the latter had decided a case in excess of his jurisdiction. Section 2 of the Act provides that "Notwithstanding anything contained in any contract or decree or order of any Court or any enactment for the time being in force, this Act shall apply to all subsisting mortgages of land, which were effected prior to 1st January 1920."

9. Counsel urged that the second mortgage in favour of Jamaraz of the suit land was undoubtedly made by mutations attested in 1913 and 1914, but its effects were deferred up to 1947 when the mortgage period of Shah Wali, on the basis of the previous mortgage had expired as was also held in the judgment of the Judicial Commissioner. He, therefore, argued that the second mortgage was not a subsisting one, nor the mere attestation of the mutations in 1913 and 1914 would amount to their having been effected prior to the 1st of January 1920 unless the period of the first mortgage had expired and the second mortgagee had redeemed the property, and had entered into its possession. In support of his contention he relied on Haider Shah and others v. Pir Ghulam and others (P L D 1960 Posh, 5) in which it has been held that "where a mortgage was executed in 1907 and the mortgages were to go into possession in 1917 on the expiry of a prior mortgage, but they postponed going into possession till 1929, it was held that as under the deed of mortgage executed in 1907 the mortgagees were entitled to take possession of the land in 1917, the mortgage was effected in 1917. It could not be said to have been effected in 1920 when the actual possession was taken." Although this decision was given in a different set of circumstances, but the principle enunciated in it is on all fours applicable to the circumstances of the present case. No doubt the second mortgage in favour of Jamaraz was effected by the attestation of mutations in 1913 and 1914, but these mortgages were to take effect, e.g. the second mortgagee were competent to redeem the property after the expiration of the period of the first mortgage, and not earlier. The redemption of the first mortgage and the recovery of the possession of the mortgaged' property by Jamaraz could only take place after the expiration of the period of the prior mortgage. The second mortgage, therefore, remained in abeyance, and thus, under no circumstances could be construed to be a subsisting mortgage. In the ordinary parlance, the word "subsisting" means existing. The second mortgage was in abeyance and the second mortgagee was neither in possession of the property, nor was deriving any benefit on account of the mortgage. Unless he was competent to redeem it, he cannot be considered to be a mortgagee of a subsisting mortgage. The word "effected" used in the last line of this section also means that in pursuance of the mortgage transaction the mortgagee is in possession and enjoying the profits of the property as a result of the mortgage. It is, therefore, clear to our mind that the second mortgage, which was to be given effect to, after the expiration of the period of the first mortgage cannot by any stretch of imagination be considered as the subsisting mortgage, nor such mortgage can be said to have been effected from the date when it had been entered into between the mortgagor and the second mortgagee. It is, thus, clear that this Act has got a limited scope. Nothing contained in any contract or decree or order of any Court or any enactment for the time being in force, shall apply, according to section 2, to all subsisting mortgages of land, which were effected prior to 1st January 1920. The second mortgage in question is not a sub sisting mortgage, and therefore, this Act (Act XXXII of 1950) would not be applicable in the case.

10. This leads us to the determination of the point whether the Civil Court had the jurisdiction, in spite of section 11 of this Act, which is in the following words No Civil Court shall have jurisdiction to entertain any claim to enforce any right under a mortgage declared extinguished under this Act or to question the validity of any proceedings under this Act. As found above, the second mortgage in favour of Jamaraz was not hit by section 2 of the Act, and if the Collector had decided it otherwise, then he had exceeded his jurisdiction, and in such a case, the Civil Court will come to the help of the party aggrieved by the order passed by the Collector without any jurisdiction. Counsel relied on Ghulam Jan v. Abdul All and others (P L D 1955 Pesh. 87) wherein a Division Bench of this Court had held that "section l t cannot be interpreted to mean that a Civil Court is debarred from entertaining a suit even in a case where the Collector has acted without jurisdiction. When a certain authority acts without jurisdiction in a manner which amounts to a fraud on the Statute, the Civil Courts are not only competent to step in but are duty bound to do so with a view to preventing abuse of law." In the instant case, the Collector ordered the extinction of the mortgage not covered by this Act as the second mortgage was not a subsist ing mortgage which was given effect to prior to the 1st of January 1920, and therefore, his ordering the extinction of this mortgage was not within his jurisdiction, and the Civil Court, had, there fore, the jurisdiction to step in and correct the error in spite of the section I1 of the Act.

11. The learned Additional District Judge, in interpreting section 8 of the Act, remarked as follows :‑ "The mortgagees are not entitled to the benefit of section 8 of Act No. XXXII of 1950 either. This section provides that Notwithstanding anything contained to the contrary in the preceding section, the rights of an assignee or a subsequent mortgagee of the whole or part of the mortgaged property, as the case may be, shall not be affected, if the assignment or sub‑mortgage is effected in his favour on or before the first day of January 1949, and he has enjoyed the usufruct thereof for a period of less than 16 years. In such a case the mortgage shall be deemed to be extinguished on the completion of 15 years in accordance with the provisions of this Act. I regret to point out that this section is unhappily worded. Although in the first part of the section the rights of a sub sequent mortgagee are supposed to have been protected but the latter part of the section does not protect the rights of such a mortgagee. This latter part only protects the interest of an assignee or a sub‑mortgagee, and not of a subsequent mort gagee. It appears that the words `subsequent mortgagee, has been misprinted for sub‑mortgagee, because if an owner mortgages his property to a subsequent‑ mortgagee after the 1st January 1920, Act No. XXXII of 1950 would not apply at all. Needless to point out that a subsequent mortgagee means a mortgagee to whom the owner has mort gaged his property in the presence of a prior mortgage while a sub‑mortgagee is the person to whom the mortgagee mortgages the property and it is to protect the interest of a sub‑mortgagee or of an assignee that section 8 has been enacted. This section should not, in my opinion, apply to a subsequent mortgagee. It is admitted in the present case that Jamroz was a subsequent mortgagee and as such section 8 could not be said to apply to his case."

12. In our view, the interpretation placed by the learned Additional District Judge on section E as quoted above is quite correct, but there is nothing to warrant its application to the case of the plaintiff‑petitioners, who were the subsequent mortgagees, when section 8 did not apply to the subsequent mortgages. As a matter of fact, the subsequent mortgage found above was in the instant case not a subsisting mortgage, to which section 2` of the Act had applied, and therefore, it was quite unnecessary for the Legislature to have included the subsequent mortgages of the present type in the purview of section

8. Since the Act did not apply to the subsequent mortgages, therefore, section 8, being part of the Act, was also not applicable. On this view of the matter also the subsequent mortgages have not been extinguished, although they were created under a contract entered into between the mortgagor and the mortgagee before the first of January 1920, as the mortgage was to take effect after the expiration of the period of the first mortgage, which contingency had happened in this case after the first of January 1920.

13. From the above discussion it is evident, however, that up to 1947 Shah Wali was entitled to remain in possession of the property by virtue of the first mortgage and the second mortgagee was not competent to redeem it before that year. The second mortgage was, therefore, not in existence on the first of January 1920, as under the terms of the first mortgage, the period had expired in the year 193.7. This second mortgage had taken effect from 1947 for the period of fifty years. According to the decree Court of the Judicial Commissioner referred to above the period of this second mortgage was held to be binding, and was not a clog on the equity of redemption. This being the case, Jamaraz, the second mortgagee, and his successors‑in‑interest, would remain in possession of this property as mortgagees up to 1997. The learned Additional District Judge has not, therefore, properly applied the provisions of Act of 1950 to the facts of this case, nor learned trial Judge was right in holding that under section 8 of the Act, the assignees of the second mortgagee were entitled to remain in possession of the property for fifteen years with effect from 1947. The correct position was that the mortgage period of fifty years of the second mortgage had commenced from 1947 after the first mortgage had become redeemable and the second mortgagee had become entitled to the possession of the property. The position of the second mortgagee could favourably be compared with the mortgagee, who got the property, in mortgage after the first of January 1920. This Act will not apply to the mortgages effected after that date, and by redeeming the first mortgage in 1947, the second mortgagee would be considered to be mortgagee of the property, got in mortgage, after that date.

14. Counsel for the respondents urged that on the death of Shah Wali in 1917, the rights of Jamaraz,as second mortgagee, had merged into the rights of the first mortgagee at least up to 1/5th of the share, which he Lad inherited from his father, and therefore, Jamaraz had become the mortgagee before the first of January 1920, of this share, to which this Act would be applicable. Counsel for the petitioners had drawn our attention to section 101 of the Transfer of Property Act. Under this section, in the commentary by D. F. Mulla, Third Edition, 1949, Transfer of Property Act, it has been laid down that "A security may be extinguished by merger. This occurs (i) by the merger of a lower in a higher security, and (ii) by the merger of a lesser estate in a greater estate. The section only deals with the second head of merger. A merger of estates takes place when two estates held in the same legal rights become united in the same person. Where the capacity in which a person in possession of the mortgagee's right is something quite different from the capacity in which he is in possession of the equity of redemption, the mere fact that the two capacities are united in the same physical person cannot result in a merger." It is, thus, clear that under the principles of section 101 of the Transfer of Property Act, as amended, up to date, it has been provided that the merger cannot be presumed to have taken place automatically of the two rights, but it can be held to have taken place only by proving that the person in whom both the rights vest had intended to treat both the rights as one, and not otherwise. In this case, no doubt by the attestation of the inheritance mutation of his father, Jamaraz was shown to be the first mortgagee of 1/5th share, but the attestation of the mutation merely had not the effect of merger even up to 1/5th share, unless it was proved that Jamaraz intended to treat his rights as second mortgagee with the rights of the first mortgagee, which he had inherited from his father, as one and the same property. The merger cannot, therefore, be said to have taken place automatically in the present case. On the contrary, the intention of Jamaraz against the merger is borne out by the fact that in 1947 he had assigned his rights as a second mortgagee in favour of his four brothers and cousin up to 9/10th share, while he himself retained the rights of the second mortgagee with him in 1/10th share, whereas he had inherited the rights of his father as first mortgagee in 1/5th share. This is clear indication of the intention of Jamaraz that he did not want that both his rights as first and second mort gagee should merge into one right.

15. We are, therefore, clear in our mind that Act XXXII of 1950 of the old N.‑W. F. Province is not applicable to the second mortgage in the instant case, and therefore, the plaintiffs were still the mortgagees by virtue of the second mortgage, which had come into effect in 1947, and this second mortgage would be redeemed only after the expiration of fifty years. The learned Collector and the Revenue and Divisional Commissioner had no jurisdiction to find that Act XXXII of 1950 was applic able to the mortgage in question. This revision petition is, therefore, accepted and the plaintiffs are granted a decree, for possession as mortgagees of the suit land, with costs throughout. This mortgage is redeemable after the expiry of fifty years from the year 1947. The plaintiffs will also be entitled to the additional period for which they remained out of possession of the property by virtue of their having been dispossessed by the order of the Collector, passed under Act XXXII of 1950. A. H. Petition accepted.