1971S29 (PLP)

The appellant, after the coming into force of the Pakistan (Administration of Evacuee Property) Ordinance, 1949, made am application to the Deputy Custodian, Sialkot, under section 1& of the said Ordinance for a declaration to the effect that he was the owner of the land in dispute and, in the alternative,, also claimed relief as a charge-holder on the land to the extent of Rs. 39,825 and maintained that he had a right to remain in possession of the land till the payment of the said amount. The Deputy Custodian granted only the alternative relief and! held the appellant to be a charge-holder on the land to the extent of Rs. 39,

825. In confirmation proceedings the Additional Custodion, Evacuee Property, Lahore, took the view that the appellant was also entitled to the declaration that he was the owner of the property, as the whole transaction entered into between the appellant and Lai Singh was an "unconscionable transac tion" and the transaction must be deemed to have become invalidated by reason of failure of consideration under section 39 of the Contract Act. He, accordingly, modified the order of the Deputy Custodian and gave the Rehabilitation Department the option either to take the property from the appellant on payment of Rs. 39,825 on or before the 14th of March 1955, or to leave the property with the appellant on realization of Rs. 5,00(1 which was the amount paid by the evacuee, if the payment is made between the 15th of March 1958, and the 15th of April, 1958. Against this order the Rehabilitation Department went in revision before the Custodian of Evacuee Property, West Pakistan. The latter took the view that after the appellant bad sold his. interest in the land to Lai Singh he lost his ownership and, therefore, he could not be declared to be the owner of the land nor could the amount he kept in deposit with Lai Singh be declared to be a charge against the property. He, accordingly, set aside the orders of the Deputy Custodian and Additional Custodian and dismissed the appellant's application under section 1& of the Pakistan (Administration of Evacuee Property), Ordinance. 1949, but gave the appellant liberty to apply to the Deputy Custodian for registration of his claim for Rs. 39,825 against Lai Singh, evacuee, after obtaining a decree for that amount from a civil Court. The appellant applied for a review of this order and on the 12th of November 1959, the Custodian reviewed his previous order on the ground that the appellant's case of having an unpaid seller's lien over the property under subsection (4) of section 55 of the Transfer of Property Act had escaped his notice on the previous occasion. He, therefore, modified his earlier order and "declared that the petitioner Muhammad Iqbal (now appellant before us) shall have a charge to the extent of Rs. 39,825 against the property in dispute". The appellant did not challenge this order but made an application under the Satisfaction of Charges (Evacuee Property) Rules, 1961, to the Additional Settlement Commissioner (Accounts), Lahore, for satisfaction of the charge created in his favour for the unpaid balance of Rs. 39,825 by the Custodian's order of the 12th of November 1959. The latter, applying the provisions of sub-rule (t) of rule 4 of the above-mentioned Rules, scaled down the amount to Rs. 21,412150 ps. The appel lant then went up in appeal to the Settlement Commissioner (Policy), Lahore, but the appeal was dismissed on the ground that scaling down was lawful, as the sliding scale had been prescribed under subsection (4) of section 3 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958. The appellant sought to challenge this order by a writ petition before the High Court but failed both before a learned Single Judge and a Letters Patent Bench. He was, however, granted leave by this Court to consider whether a charge created under the provisions of subsection (4) of section 55 of the Transfer of Property Act was a charge created by the Custodian under section 25 of the Pakistan (Administration of Evacuee,4 Property) Act XII of 1957, and whether the principles laid down by this Court in the case of Muhammad Khan v. Chie Settlement & Rehabilitation Commissioner (P L D 1962 S C 284), were attracted to a charge under section 55 (4) of the Transfer of Property Act t, in the same manner as in the case of a mortgage. Learned counsel appearing in support of this appeal has contended that a charge created by operation of law; namely, subsection (4) of section 55 of the Transfer of Property Act, is practically in the same position as a simple mortgage, as under section 100 of the Transfer of Property Act the pro visions applicable to a simple mortgage also apply to a charge. The only practical difference being that whilst a mortgage is good against all subsequent transferees a charge is only good against subsequent transferees with notice. A charge can be enforced by sale in the same manner as in the case of a simple mortgage under Order XXXIV, rule 15 of the Code of Civil Procedure, and a preliminary decree has to be passed as in a suit on a mortgage. The doctrine of subrogation has also. it is said, been applied to a charge. In this sense, learned counsel argues, there is no reason why the principles laid down by this Court in the case of Muhammad Khan v. Chief Settlement and Rehabilitation Commissioner in connection with a mortgage should not apply in the facts of the present case. As against this the learned counsel appearing on behalf' of the Settlement Authorities has contended that a charge is nor a mortgage, as it does not amount to a transfer of any interest, in property and, any event, in the present case the charge was declared by the Custodian by his order of the 12th of November 1959. The charge was, therefore, liable to be scaled down under the provisions of the Satisfaction of Charges (Evacuee Property) Rules, 1961, which had been framed in implementa tion of the powers given to the Central Government by sub section (4) of section 3 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958. The relevant portion of this sub section provides as follows:- "The Central Government shall prescribe the extent to which and the period within which, (a) any charge created by the Custodian or the Chief Settlement Commissioner on any property acquired under subsection (1) or subsection (2) or . . . . . shall be satisfied and the manner in which it shall be satisfied." There can be no manner of doubt that the power of scaling down which has been given by the Satisfaction of Charges (Evacuee Property) Rules, 1961, can be exercised only in respect of "charges created at any time in favour of an individual charge holder" but a charge under the definition given in rule 2 (c) only means "a charge created by a Custodian or the Chief Settlement Commissioner on any acquired property but does not include a tax due to Government or to a local authority". This definition seems to suggest that the intention was not to include within the term "charge created by a custodian" any and every kind of charge including a charge created by operation of some other law, as for instance the taxing statutes of Govern ment or of local authorities. If that had been the intention, the express exclusion of taxes due to Government or to local authori ties would not have been made. The question, however, is does this exclusion also apply to charges created by operation of other statutes, such as the Transfer of Property Act? There can be no gainsaying the fact that the right of being repaid cut of the specific property which accrued to the appellant was not because of the declaration granted by the Custodian but as a result of the application of the provisions of subsection (4) of section 55 of the Transfer of Property Act, as has been recognised by the Custodian himself in his order of review. But for this he would have insisted upon the appellant going to a Court of law and first getting a charge declared by the Court before recognising it. When it was pointed out to him that the charge bad accrued in favour of the appellant by operation of law, i. e., under subsection (4) of section 55 of the Transfer of Property Act, he immediately modified his previous order, because he rightly realised that this was not a mere equitable charge but a charge created by a statute which, though not strictly in the same position as a mortgage, partook substantially of the same characteristics as those of a simple mortgage. As pointed out by the Privy Council in the case of Webb and .another v. Maopherson (1) "the Transfer of Property Act gives a (1) LR 301 A238 1971 statutory charge upon the estate to an unpaid vendor unless it be excluded by contract. Such a charge, therefore, stands in quite a different position from a vendor's lien. You have to find something, either express contract, or at least something from which it is a necessary implication that such a contract exists, in order to exclude the charge given by the statute." Thus a charge, which a vendor obtains under the Transfer of Property Act, is not only different in its origin and nature from the simple vendor's lien given by the Courts of equity in England to an unpaid vendor but it stands on a somewhat higher footing B and "can be enforced by the sale of the property under section IOU of the Transfer of Property Act read with Order XXXIV, rule 15 of the Code of Civil Procedure as in the case of a simple mortgage," as was pointed out by the Privy Council in the subsequent case of Raja Kooharlakota Venkata Jagannatha Rao Garu v Maharajah Ravu Venkata Kumara Mahipati Surya Rao Bahadur (L R 63 I A 304). It is true that in a charge there is no transfer of any interests in the property but by operation of law a right is created in the charge-holder to receive payment out of the property specified, and this right can be enforced in the same manner as a simple mortgage by a preliminary decree for sale, vide Ram Raghubir Lal and others v. United Refineries (Burma) Limited and others (60 I A 183). For all practical purposes, therefore, the charge created, by subsection (4) of section 55 of the Transfer of Property Act partakes substantially of the same characteristics as a simple mortgage and can be enforced in the same manner. Even though such a charge does not create a right in rem it is a jus ad rem and' not a money claim simpliciter. Can it then be said that this is a charge created by the Custodian within the meaning either of rule 4 (e) of the Satisfaction of Charges (Evacuee Property) Rules or section 25 (p) of the Pakistan (Administration of Evacuee Property) Act, 1957? Under these latter provisions the Custodian has the right to accept and create an equitable charge even though it has not been created by operation of any law. I am not in a position, therefore, to agree with the learned counsel for the Settlement Authorities that the charge that was recognised in the present case was a charge created by the Custodian within the meaning of either section 25 of the Pakistan (Administration of Evacuee Property) Act, 1957, or rule 4 of the Satisfaction of Charges (Evacuee Property) Rules, 1961. The Custodian by his order in review merely accepted the position that the appellant had a statutory charge in his favour under the provisions of sub section (4) of section 55 of the Transfer of Property Act which could be enforced against the specific property, and this was not a case of a creation of a charge by the Custodian himself. Even though a charge created under section 55 (4) of the Transfer of Property Act is not an interest in property it is a right to receive payment out of a specific property and it could not have been the intention of the Satisfaction of Charges (Evacuee Property) Rules to deprive a Pakistani owner of a right given to him by the law of the land. The "charge" referred to in these rules must be restricted to a "charge created by a Custodian "as specified in subsection (4) of section 3 of the Displaced Persons (Compen sation and Rehabilitation) Act, 1958 and not be extended even to charges recognised by the Custodian although created by other laws. In this view of the matter the principles laid down in the case of Muhammad Khan v. Chief Settlement Commissioner will also be applicable in this case. I would, therefore, allow this appeal and set aside the order of the Settlement Authorities scaling down the charge. The appellant is, in my view, entitled to the full amount of Rs, 39,

825. This appeal is, accordingly, allowed but having regard to the fact that the dispute relates to an evacuee property there will be no order as to costs. MUHAMMAD YAQUB ALI, J.-I agree. SALAHUDDIN AHMED, J.-I agree. APPEAL ALLOWED