regarding effect of tenancy in mortgage

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IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 3RD DAY OF SEPTEMBER 2012

BEFORE

THE HON’BLE MR.JUSTICE B.S.PATIL

W.P.No.36364/2004 (LR-)

BETWEEN:

Raju M.Hegde,

S/o Mahabala Hegde,R/o Heggunje Village,‘Doddamane’, Mandarti Post,Udupi Taluk & Dist. … PETITIONER

(By Sri M.R.Rajagopal, Adv.)

AND:

1.

The Land Tribunal,Udupi,

Rep.by its chairman,Udupi Taluk & Dist.

2.

Sri H.Bhaskar Hegde,Major,S/o K.Nandiyappa Hegde,R/o Chavadi Mane,

Heggunje Village,Mandarti Post,Udupi Taluk & Dist. … RESPONDENTS

(By Sri Shashidhar S.Karmadi, G.P. for R1, Sri S.Prakash Shetty, Adv. for R2)



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This Writ Petition is filed under Article 226 & 227 of the

Constitution of India, praying to quash the order passed by the

1st respondent dated 22.1.2004 vide Annexure-B and etc.

This petition coming on for further hearing this day, theCourt made the following:

ORDER

1.

The order dated 22.1.2004 passed by the land Tribunal,

Udupi, conferring occupancy rights in favour of the 2nd

respondent in respect of 4 items of lands situated in Heggunje

Village of Udupi Taluk is called in question in this writ petition.

2.

The facts leading to this writ petition, stated in nutshell,

are that the petitioner is the owner of the agricultural properties

which are described in the petition schedule. The 2nd

respondent filed application in Form No.7 under Section 48-A of

the Karnataka Land Reforms Act, 1961 (for short ‘the Act’)

seeking grant of occupancy rights. It was contended by the

petitioner that the applicant who had sought for grant of

occupancy rights was a mortgagee with possession of the

schedule property and therefore he could not maintain an

application under Section 48-A of the Act as he was not a

tenant in cultivation of the land as on the appointed date, i.e.,

01.03.1974.



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3.

On a previous occasion, the Tribunal had rejected the

application by passing an order dated 22.10.1981. This was

challenged in writ petition. The writ petition was allowed and

the matter was remanded. Thereafter, the Tribunal having

conducted fresh enquiry granted occupancy rights in favour of

the 2nd respondent on 25.06.1986. This was challenged by the

petitioner before this Court. Again, the writ petition was allowed

and the order passed by the Tribunal was quashed remanding

the matter for fresh disposal. Thereafter, the Tribunal has

conducted a fresh enquiry and has passed the impugned order.

The Tribunal has found that the disputed lands were held by

the 2nd respondent as tenant with effect from 1966 and on

19.04.1968 usufructuary mortgage had been created by the

land owner in favour of the tenant, therefore, as it was clear

that the 2nd respondent was cultivating the land as tenant

before the mortgage was created, he was entitled for grant of

occupancy rights.

4.

Learned counsel appearing for the petitioner

Sri.M.R.Rajagopal contends that though the 2nd respondent was

a tenant inducted into the land during the year 1966, in view of

the admitted fact that usufructuary mortgage was created on



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19.04.1968 in favour of the tenant which was in force for a

period of 10 years up to 1978, as on the appointed date

01.03.1974, there was no relationship of landlord and tenant

and therefore the 2nd respondent could not have maintained an

application under Section 48-A of the Act seeking grant of

occupancy rights.

5.

Learned counsel for the petitioner refers to Section 4 of

the Act to contend that a mortgagee in possession is not a

deemed tenant though he may be cultivating the land belonging

to the owner. It is his further submission that if Section 4 of the

Act is read along with Section 26, it will be clear that in the

present case as the mortgage was in existence as on the

appointed date 01.03.1974 the relationship of landlord and

tenant was in abeyance and what was in existence was the

relationship of a mortgagor and mortgagee and therefore, the

land could not be regarded as tenanted land as on the

appointed date. He further points out that Section 44 of the Act

will come into picture only if the land was a tenanted land as on

01.03.1974 resulting in vesting of the land in the State

Government. He also refers to Section 5 of the Act to contend

that there is prohibition for creation of any lease after the date



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of the commencement of the amendment Act, therefore, if

Section 26 is understood keeping in mind Sections 4 and 5 of

the Act, it cannot be held that the mortgagee put in possession

of the land prior to 01.03.1974 can claim that he is entitled for

grant of occupancy rights as a tenant.

6.

Sri. S. Prakash Shetty, learned counsel appearing for the

2nd respondent submits that the effect of Section 26 of the Act

is that the lease created by the land owner prior to the

appointed date would not become extinct by reason of creation

of a mortgage in favour of the tenant. His submission is that

both the rights as mortgagee and lessee could be held at the

same time in respect of the land as one right is neither higher

nor lesser than the other and if so understood it would mean

that the tenancy does not cease on the creation of usufructuary

mortgage. In support of his contention he has placed reliance

on the Division Bench judgment of this court in the case of

MELEGOWDA vs. GAIBU SAB AND ANOTHER – ILR 1978 KAR

PAGE 423 and MALLAPPA BHARAMAPPA MADAR vs .

BASAVANTHAPPA – ILR 1994 KAR 804. He has also relied upon

the judgments in the case of BASAPPA K.K. AND ANOTHER VS.

LAND TRIBUNAL, SOMWARPET AND ANOTHER – 1976(1) KLJ



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PAGE 274 and SURESH S. RAO vs LAND TRIBUNAL, BELGAUM

AND OTHERS – ILR 2007 KAR 2409 .

7.

Having heard the learned counsel for the parties and on

perusal of the entire materials on records, the only point that

requires to be considered is:

“Whether the subsequent creation of usufructuary

mortgage by the petitioner-owner of the land during 1968 in

favour of the 2nd respondent-tenant in respect of the land in

question brings about cessation of the relationship of landlord

and tenant as on the appointed date so as to disentitle the 2nd

respondent from successfully claiming occupancy rights under

the provisions of the Act?”

8.

The relevant provisions of the Act which are required to

be considered to address the question raised above are Section

2(34), Section 4, Section 26 and Section 44. The definition of

the word ‘tenant’ is contained in Section 2(34) of the Act. It

reads as under:

“Tenant, means an agriculturist who cultivates

personally the land he holds on lease from a

landlord and includes



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(i)

a person who is deemed to be a tenant under

Section 4;(ii)

a person who was protected from eviction

from any land by the Karnataka Tenants

(Temporary Protection from Eviction) Act,

1961;

(ii-a) a person who cultivates personally any

land on lease under a lease created

contrary to the provisions of Section 5

and before the date of commencement

of the Amendment Act;

(iii)

a person who is a permanent tenant; and

(iv)

a person who is a protected tenant.”

9.

Section 4 deals with persons to be deemed tenants. It

reads as under:

“A person lawfully cultivating any land belonging to

another person shall be deemed to be a tenant if

such land is not cultivated personally by the owner

and if such person is not-

(a)

a member of the owner’s family or

(b)

a servant or a hired labourer on wages payable

in cash or kind but not in crop share cultivating

the land under the personal supervision of the

owner or any member of the owner’s family, or





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during the period the mortgage subsists. After the

expiry of the said period it shall be lawful to thetenant to continue to hold the land on the terms

and conditions on which he held it before the

mortgage was created.”

11.

In terms of Section 44 the tenanted lands in possession

shall vest in the State Government with effect from the

appointed date.

12.

Section 14 of the Act, prior to amendment, enacted a

provision for resumption of the land. It reads as under:

“14. Resumption of land from tenants – (1)

Notwithstanding anything contained in Sections 22

and 43, but subject to the provisions of this section

and of sections 15, 16, 17, 18, 19, 20 and 41, a

landlord may, if he bonafide requires land, [other

than land referred to in the first proviso to clause

(29) of sub-section (A of Section 2),

(i)

for cultivating personally, or

(ii)

for any non-agricultural purpose

file with the Tribunal a statement indicating the

land or lands owned by him and which he intends to

resume and such other particulars as may be

prescribed. On such statement being filed, the

Tribunal shall, as soon as may be, after giving an

opportunity to be heard to the landlord and such of

his tenants and other persons as may be affected,



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and having due regard to contiguity, fertility and fair

distribution of lands, and after making such otherinquiries as the Tribunal deems necessary,

determine the land or lands which the landlord shall

be entitled to resume and shall issue a certificate to

the landlord to the effect that land or lands specified

in such certificate has been reserved for resumption;

and thereupon the right to resume possession shall

be exercisable only in respect of the lands specified

in such certificate and shall not extend to any other

land.

Explanation – Subject to such rules as may be

prescribed, the Tribunal within the jurisdiction of

which the greater part of the land held by the

landlord is situated shall be the Tribunal competent

to issue a certificate under this Section.

(2) (a) In respect of tenancies existing on the

appointed day, the statement under sub-section (1)

shall be filed within fifteen months from that day.

(b) In respect of tenancies created after the

appointed day, the statement under sub-section (1)

shall be filed within five years from the date of

creation of the tenancy:

Provided that where an application has been

made by the tenant under Section 58 before such



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statement is filed, the Tribunal shall deal with the

statement along with such application.

Provided further that in the case of a landlord

who is subject to any disability, the statement under

sub-section (1) shall be filed within the period

specified in clause (a) or (b), as the case may be, by

the guardian, manager or other person in charge of

the property of such person.

(3) Same as provided in sub-section (7), if

no statement is filed within the period specified in

sub-section (2), all the land held by the landlord

concerned, and where such statement has been

filed, lands other than lands in respect of which the

certificate under sub-section (1) is issued, shall be

deemed to be non-resumable lands leased to tenants

for purposes of this Act.

(4) In respect of tenancies existing on the

appointed day, as soon as may be after the expiry of

fifteen months from the appointed day, and in

respect of tenancies created after the appointed day,

as soon as may be after the statement under sub-

section (1) is filed, the Tribunal shall after such

inquiry as it deems fit, determine the lands which

will be non-resumable lands leased to tenants for

purposes of this Act.



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(5) Where a certificate is issued in respect

of any land under sub-section (1),(a) in the case of tenancies existing on the

appointed day, the landlord shall make an

application to the Tribunal for possession of such

lands within twelve months from the date of issue of

the certificate, but the tenants shall not be

dispossessed before the 31st March of the calendar

year succeeding the calendar year in which the

application for possession is made;

(b) in the case of tenancies created after the

appointed day, the landlord shall not be entitled to

resume the land before the expiry of five years from

the date of creation of the tenancies concerned and

the tenants shall not be dispossessed before the 31st

March of the calendar year succeeding the calendar

year in which the application for possession is

made.

(6) Notwithstanding anything contained in

sub-section (5), where the landlord belongs to any of

the following categories, namely:-

(i)

a minor;

(ii)

a person incapable of cultivating land by

reason of any physical or mental

disability,

(iii)

a widow;

(iv)

an unmarried woman,



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then, the application to the Tribunal for possessionof land shall be made, within fifteen months from the

appointed day one or year from the date on which;

(a)

in the case of category (i), he attains

majority;

(b)

in the case of category (ii), he ceases to

be subject to such physical or mental

disability:

(c)

in the case of category (iii), she remarries;

(d)

in the case of category (iv), she marries:

whichever is later.

Provided that where land is held by two or more

joint landlords, the provisions of this sub-section shall

not apply unless all such landlords belong to the

categories specified in clauses (i) and (ii) and the

application shall be made within one year from the

date on which any one of such landlords ceases to

belong to any such category and an application by any

one of the joint holders shall be deemed to be a valid

application on behalf of all the joint holders;

Provided further that where a person belonging

to any of the categories specified in clause (i) or (ii) of

this sub-section, is a member of a joint family, the

provisions of this sub-section shall not apply unless all

the members of the joint family belong to the

categories specified in clauses (i) and (ii), but where



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the share in the joint family of a person belonging to

any of such categories has been separated by metesand bounds before the filing of the statement under

sub-section (1), if the Tribunal on inquiry is satisfied

that the share of such person in the land separated,

having regard to the area, assessment, classification

and value of the land is in the same proportion as the

share of that person in the entire joint family property,

and not in a larger proportion, the provisions of this

sub-section shall be applicable to such person.

(7) Notwithstanding anything contained in the

preceding sub-sections, a landlord who is a small

holder, a widow or an unmarried woman may within

the period specified in sub-section (2), file a statement

before the Tribunal that he or she does not intend to

resume any land leased to a tenant and when any

such statement is filed, such small holder, widow or

unmarried woman shall not thereafter be entitled to

resume any such land, except with the previous

sanction of the Tribunal;

Provided that no sanction shall be given for

resumption of land by a small holder, widow or

unmarried woman under this sub-section before the

expiry of five years from the appointed day.

13.

It is necessary to notice here that after the amendment

which has come into force with effect from 01.03.1974, this



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provision regarding resumption of the land has been omitted.

Prior to the said date, the landlord was entitled to resume the

land by following the procedure prescribed under Section 14. It

is also to be noticed that as per the scheme of the Act, tenancy

created could not be terminated except by following the

procedure prescribed under the Act. It is in this background the

question whether creation of usufructuary mortgage prior to the

date of the vesting disentitles the tenant to claim occupancy

rights assumes importance.

14.

In the decision rendered by the Division Bench of this

Court in the case of MELEGOWDA vs. GAIBU SAB this Court has

categorically held by referring to the decision of the Supreme

Court in the case of SHAH MATHURDAS MAGANLAL AND CO. vs.

NAGAPPA SHANKARAPPA MALAGA - AIR 1976 SC 1565 that the

doctrine of merger will not apply to a case of lease followed by a

mortgage. In paragraph Nos.6 and 7 of the judgment rendered

in MELEGOWDA vs. GAIBU SAB’ s case the Division Bench has

observed as under:

“6. Section 26 of the Act modifies the provisions of

Section 111 of Transfer of Property Act insofar as

agricultural lands are concerned, to the extent it



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declares that the tenancy in the circumstances

referred to therein would be in abeyance during theperiod the mortgage subsists.

7. The true effect of Section 26 of the Act is that the

anterior lease of agricultural land would not

become extinct by reason of the creation of a

mortgage in favour of the tenant but would become

dormant. The said provision confers right on the

mortgagee, who was a tenant earlier, to continue to

hold the land after the extinguishment of the

mortgage on the terms and conditions on which he

held it before the mortgage was created. In view of

the above express provision found in the statute it

has also to be held that no support can be derived

by the respondents from the decision of this Court

in Radhabai Balakrishna Despande vs.

Raghavendra Hanumantha Despande (3) in which it

has been held that the scope of enquiry by the

Tribunal constituted under the Act is limited to the

existing tenancy in dispute and not to the tenancy

that existed at remote past because by virtue of

Section 26 the tenancy continues to be in existence

though in abeyance and does not become

extinguished on the execution of the mortgage.”

15.

In the subsequent decision of another Division Bench in

MALLAPPA BHARAMAPPA MADAR vs . BASAVANTHAPPA it has



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been held that Section 26 of the Act makes it very clear that if

any land is mortaged by a landlord by way of usufructuary

mortgage to a tenant cultivating such land, the tenancy of such

land will not cease and that after the expiry of the period of

lease it will be lawful to the tenant to continue to hold the land

on the terms and conditions on which he held it before the

mortgage was created. Further in paragraph 7 of the said

judgment after referring to the effect of the two judgments of the

Apex Court in the cases of GAMBANGI APPALASWAMY NAIDU

AND OTHER vs. BEHARA VENKATARAMANAYYA PATRO – AIR

1984 SC 1728 and SHAH MATHURDAS MAGANLAL AND CO. vs.

NAGAPPA SHANKARAPPA MALAGA - AIR 1976 SC 1565 , the

Division Bench has observed as under:

“These two decisions make it clear that both

rights as mortgagee and lessee could be held at the

same time in respect of the same land and those

rights could be simultaneously held, one right is

neither higher nor lesser than the other. If that is

so, the provision of Section 26 of the Act could be

understood as to mean that the tenancy does not

cease on the creation of the usufructuary

mortgage.”



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16.

It is thus very clear that if tenancy is created of an

agricultural land under the provisions of the land Reforms Act,

the same cannot be unilaterllay terminated by the land owner.

Even the subsequent creation of usufructuary mortgage in

favour of a tenant will not extinguish the tenancy and the

relationship of landlord and tenant does not cease as the lease

does not get merged with that of mortgage. In such event, the

tenancy rights of the lessee continue to operate and the lessee

will be entitled to maintain an application under Section 48-A of

the Act claiming occupancy rights.

17.

If this principle is applied to the facts of the present case,

it emerges that admittedly the 2nd respondent was a tenant of

the land prior to the date of commencement of the usufructuary

mortgage in his favour that is to say the tenancy of the 2nd

respondent commenced with effect from 1966 whereas the

usufructuary mortgage was created in favour of the very tenant

by the land owner during the year 1968 for a period of ten

years. Therefore, as on 01.03.1974 both the lease and the

mortgage were in existence and there was no merger of the

lease with the mortgage. The fact that usufructuary mortgage

was in existence as on 01.03.1974 will not bring about the



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extinction of tenancy resulting in deprivation of the lessee from

availing the benefit conferred under the Act. The judgment of

the Division Bench in the case of MALLAPPA BHARAMAPPA

MADAR vs . BASAVANTHAPPA is very clear in this regard.

18.

Though it is sought to be urged by the learned counsel for

the petitioner that in the facts of the said case the loan was

obtained by the land owner in a sum of Rs.100/- per year

between 1972 and 1983 for a period of 11 years towards the

land already under cultivation of the tenant from 1963 and that

distinguishes the facts of the present case, I am unable to

accept this distinction sought to be made out. What is

important is the fact that the land was a tenanted land and the

relationship of landlord and tenant existed before the

usufructuary mortgage was created. If the said factor is

established then by operation of Section 26 and in view of the

judgment of the Division Bench referred to above the tenant will

not lose his right to claim occupancy rights by establishing that

relationship of landlord and tenant continued as on

01.03.1974.

19.

Insofar as the understanding of the provision contained

under Section 4 of the Act, it is clear that though a mortgagee



20

in possession is not included in the definition of the term

deemed tenant, reading of the said provision along with Section

26 and the principle laid down in the two judgments of the

Division Bench will make it clear that if the tenancy was

already created, the subsequent creation of usufructuary

mortgage will not take away the tenancy rights of the lessee

over the agricultural land. Therefore, in such circumstances,

Section 4(c) cannot have the effect of extinguishing the rights of

a tenant by virtue of subsequent usufructuary mortgage created

by the landlord.

20.

Similarly, the contention advanced by the learned counsel

for the petitioner based on Section 5 of the Act has no relevance

to the question raised before this Court. Section 5 of the Act

deals with prohibition of creation or continuation of lease after

the commencement of the amendment Act of 1974. In the case

on hand there is no creation or commencement of the lease as

the lease was created in the year 1966 and it continues by

operation of law even after the expiry of the usufructuary

mortgage. The parties do not create or continue the lease in the

instance case, it is by virtue of the provision contained under



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Section 26 of the Act such lease is continued. Therefore,

Section 5 has no application in such case.

21.

For the above mentioned reasons, I am of the view that

the tenancy created by the land owner-petitioner in favour of

the 2nd respondent in the year 1966 is not extinguished nor is

the tenant precluded from maintaining an application claiming

occupancy rights merely because of the subsequent creation of

usufructuary mortgage by the petitioner land owner in favour of

the 2nd respondent during the year 1968. The Tribunal has

rightly come to the conclusion that the 2nd respondent was a

tenant in occupation of the land as on 01.03.1974 and was

entitled for grant of occupancy rights in respect of the petition

lands. No apparent illegality or error of jurisdiction can be

found in the order.

Hence, the writ petition being devoid of merits is

dismissed.

Sd/-JUDGE

VP

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