TMI Blog1938 (11) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... he grantees to the grantors of all cesses levied by the Government on account of the income of the colliery, (b) the payment of a minimum royalty, (c) the provision of certain quantities of coal. The lease contained a clause giving the grantees liberty to alienate the property by making gifts, sales, sub-leases or any other kind of transfer to any respectable persons or company. 2. The grantees took advantage of this provision and on 3rd June 1908 transferred the property to one J.C. Martin. The terms of the document were similar to those of the lease of 28th May except for certain increases in the burdens imposed on the lessees. In form, this grant which is described as a settlement transfers the whole and indeed more than the whole of the original grantees term to the sub-grantee and would under English law amount to an assignment of the head lease, but it is well-established by Indian law and is common ground to both parties in the present case that such a transfer operates by way of sub-demise and not of assignment: see Hansraj v. Bejoy Lal (1930) 17 A I R P C 59. 3. After various mesne assignments Martin s leasehold interest became vested in Ardhesir K. Patel who is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the respondents Worah and Dosa on 17th April 1928, and the respondent Srimani, when this suit was instituted, was still the mortgagee under the second mortgage. None of the mortgagees ever entered into possession, but the rent reserved by the sub-lease to J.C. Martin having fallen into arrear and the covenants and conditions remaining unperformed the appellants on 15th July 1929, instituted the present suit in the Court of the Subordinate Judge of Asansol, claiming against all the defendants the performance of the terms of the sub-lease at any rate during such period as they had an interest in it. To that suit the representatives of the sub-lessees and various assignees were made defendants and judgment appears to have been given for the full amount awarded against all except two defendants, one of whom was interested under the terms of a deed of gift made by: Patel on 1st December 1925, and the other of whom was the manager of the person so interested. Another defendant who had been appointed receiver by the Court in a mortgage action taken by the mortgages against the mortgagor also subsequent to the period for which rent was claimed has been dismissed from the suit by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any, and if so in what, circumstances pass to his mortgagee. 8. Until 1925 the usual form of mortgage in England, whether of a fee simple or of a lease was the transfer by assignment of the mortgagor s interest in the property with a proviso for re assignment upon payment of the mortgage money by a particular date. After that date had passed, the mortgagor s rights at law had determined and the mortgagee was in law the absolute owner of the property. But in equity the mortgagor still retained a right to redeem and upon payment of the debt and interest to have the property reconveyed to him. This right he retained unless and until by judgment for foreclosure, or (possibly) by the operation of the Statute of Limitations, the character of creditor was changed for that of owner, or until the interest of the mortgagee was destroyed by sale either under the process of the Courts or of a power contained in the mortgage itself. This right was an equitable right and under English law did not prevent the whole legal interest of the mortgagor passing to the mortgagee despite his retention of the equity of redemption. The whole legal estate passed but nevertheless the right which he retai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that the Act was a self-contained Code by which alone the rights of mortgagor and mortgagee were to be ascertained and under which statutory and not equitable rights were brought into existence. Their Lordships agree with this contention and accordingly turn to a consideration of those Sections of the Act which deal with mortgages. Section 58 (a) of the Act enacts that a mortgage is a transfer of an interest in specific immovable property. Upon this definition there follows in the Act as in force at the material date an enumeration of four classes of mortgage, viz. (1) simple mortgage, (2) mortgage by conditional sale, (3) usufructuary mortgage, (4) English mortgage. Two other classes, equitable mortgage and anomalous mortgage, are recognized and dealt with in Sections 59 and 98 respectively. Of these six it is contended that the English mortgage by its terms amounts to, and the anomalous mortgage by its terms may amount to a transfer of the whole interest of the mortgagor, and therefore where the subject matter is a lease, create privity of estate between the lessor and the mortgagee of the lease. 13. No doubt in English law they would do so, but it does not follow that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has parted with his whole interest. On the other hand, there are strong reasons against holding that he retains merely a contractual right against the mortgagee. If the case arose in England it would be possible to say that the contract for reconveyance gave the mortgagor an equitable interest in the land, but this argument is untenable in India. In the first place, as has been pointed out, equitable estates do not exist in that country, and in the second, under the provisions of Section 54, T.P. Act, a contract for the sale of immovable property does not create any interest in or charge upon the land sold. Having this provision in view, it is difficult to see how a personal contract to reconvey can create any interest in the land itself. But to regard the mortgagor s right of redemption as being merely contractual and as creating no interest in the land would make it impossible for him to assign his right of redemption or to create a second mortgage so as to bind the land. Such a state of things is, of course, theoretically possible, but it is inconsistent with the provisions of the Act (which in Sections 81, 82, 91 and 94 recognizes second mortgages) and with the possibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apsed: before, because he has a contractual right to have the property reconveyed: after, because in equity, time is not of the essence of the transaction. In each case he has an equitable estate though in the former he has not yet an equity of redemption: see Kreglinger v. New Patagonia Meat c, Co. (1914) A.C. 25, per Lord Parker at p. 49. In India the same distinction exists between the position before and after the date of payment. Before that date the mortgagor has an interest in the land which for the reasons given above is legal and not equitable. After that date he has the legal right of redemption given him by Section 60 of the statute. In each case he retains a legal interest in the property. 19. Their Lordships therefore think that in India a mortgagor, when he assigns his interest under a lease to a mortgagee, does not under any of the forms specified in Section 58 of the Act transfer an absolute interest within the principle established in England by the case in Williams v. Bosanquet (1819) 1 Brod and B 238 and consequently the mortgagee is not liable by privity of estate for the burdens of the lease. In the past there has been a conflict of authority in India on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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