1938 (11) TMI 24 - HC - Indian Laws

Summary

Issues Involved:
1. Liability of mortgagees under Indian law for the burdens of a lease.
2. Distinction between English and Indian mortgage laws.
3. Privity of estate between lessor and mortgagee in Indian law.
4. Interpretation of the Transfer of Property Act, 1882.

Detailed Analysis:

1. Liability of Mortgagees under Indian Law for the Burdens of a Lease:
The primary issue in this case was whether mortgagees of a leasehold interest are liable for the burdens of the lease under Indian law. The appellants argued that the mortgagees should be held liable based on the principle established in English law, specifically the decision in Williams v. Bosanquet (1819) 1 Brod & B 238. However, the court held that under Indian law, a mortgage of a lease does not constitute an absolute assignment and does not create privity of estate between the lessor and the mortgagee. Therefore, the mortgagees were not liable for the burdens of the lease.

2. Distinction between English and Indian Mortgage Laws:
The court emphasized the significant differences between English and Indian mortgage laws. Under English law, the whole legal interest of the mortgagor passes to the mortgagee, creating privity of estate. However, in India, the Transfer of Property Act, 1882, does not allow for such a distinction between legal and equitable interests. The Indian mortgagor retains a legal right to redemption, which prevents the whole interest from passing to the mortgagee.

3. Privity of Estate between Lessor and Mortgagee in Indian Law:
The court discussed the concept of privity of estate and concluded that under Indian law, privity of estate does not exist between the lessor and the mortgagee. This is because the mortgagor retains a legal interest in the property, which is different from the English system where the mortgagee would have an equitable interest. The court referred to several Indian cases and authorities that support this view, including Fala Krista Pal v. Jagannath Marwari (1932) 19 A I R Cal 775 and Bengal National Bank v. Janoki Nath (1927) 14 A I R Cal. 725.

4. Interpretation of the Transfer of Property Act, 1882:
The court analyzed various sections of the Transfer of Property Act, 1882, particularly Sections 58 and 60, which deal with different types of mortgages. The court noted that Section 58(a) defines a mortgage as a transfer of an interest in specific immovable property, and Section 58(e) defines an English mortgage as an absolute transfer of the mortgaged property to the mortgagee, subject to a proviso for retransfer upon repayment. The court concluded that these sections deal with the form of the mortgage rather than the substance, and that the mortgagor retains a legal interest in the property.

Conclusion:
The court concluded that in India, a mortgage of a lease does not constitute an absolute assignment under any of the forms specified in Section 58 of the Transfer of Property Act, 1882. Consequently, the mortgagee is not liable by privity of estate for the burdens of the lease. The appeal was dismissed with costs, and the appellants were ordered to pay the costs of each of the two sets of mortgagees.