Holding

A mortgagee cannot be deemed a tenant under Section 4A, and a redemption decree is not subject to reopening under Section 132(3) of the Kerala Land Reforms Act.

Summary

The appellant, a mortgagor, obtained a decree for redemption of his mortgage which required payment of the mortgage amount and a sum for improvements. After depositing the decree amount, the respondent mortgagee filed applications under the Kerala Compensation for Tenants Improvements Act, 1958 and later under Section 132(3) of the Kerala Land Reforms Act, 1963, claiming he was a "deemed tenant" under Section 4A because of continuous possession for over fifty years, and thus sought to reopen the redemption decree. The High Court held the respondent to be a deemed tenant and allowed the reopening. The Supreme Court examined whether a mortgagee can be treated as a tenant under Section 4A, whether a redemption decree falls within the ambit of Section 132(3), and the effect of payment of the mortgage money on the mortgagee's possession. It held that the definition of "tenant" does not include a mortgagee, that the amendment creating deemed tenancy is prospective and does not apply to the respondent, and that a redemption decree cannot be reopened under Section 132(3). Consequently, the appeal was allowed, the C.R.P. dismissed, and the order of the executing court restored.

Issues considered

Whether a mortgagee in possession can be deemed a tenant under Section 4A of the Kerala Land Reforms Act, 1963 for the purpose of reopening a redemption decree.
Whether a decree for redemption of mortgage is subject to reopening under Section 132(3) of the Kerala Land Reforms Act, 1963.
Interpretation of the term "tenant" under Section 2(57) of the Kerala Land Reforms Act and its applicability to mortgagees.
Effect of payment of the mortgage money on the mortgagee's right to possession under the Transfer of Property Act.
Whether the land vests in the State under Section 72 of the Kerala Land Reforms Act when the holder is not a cultivating tenant.

Legislation cited

Kerala Compensation for Tenants Improvements Act, 1958s. 2(d), s. 4, s. 5
Kerala Land Reforms Act, 1963s. 13, s. 132(2)(a), s. 132(3), s. 2(57), s. 4A, s. 54(2), s. 72
Kerala Land Reforms (Amendment) Act, 1969
Transfer of Property Acts. 60, s. 76(h), s. 83

Subjects

mortgage redemptiondeemed tenantKerala Land Reforms ActCompensation for Tenants Improvements ActSection 132Section 4ATransfer of Property Actland vestingtenancyexecution of decree

Judgment

A PARAMESWARAN GOVINDAN
v.
KRISHNAN BHASKARAN AND ORS.

FEBRUARY 6, 1992 •
B (K. RAMASWAMY AND K. J. REDDY, JJ.]

Kera/a La11d Refonns Act,. 1963-Sectioii 132 (2)-Reope11i11g of a
decree-<:011ditio11s-Redemption of mortgage decree-Reope11i11g-Legality
of
c
Kera/a La11d Refonns Act, 1963-Section 2 (57)-'Te11ant---Constntc-
tio11-lngredients-'Mortgage' u/ss. 60, 76 (h), 83. Transfer of Property Act,
whether te11ant-Payment of decreta/ amount (inclusive mortgage amount)
prior to comi11g i11to force of the Ame11di11g Act 35 of 1969-Effect.
D Kera/a Compensatio11 for Te11ants Improvements Act, 1958-Sectio11s
4, 5 read with section 60, Tra11sfer of Property Act-Decree of ei'ictio11 of
te11ant-Executio11 of---Conditio11s-Right and liabilities 1111der a prc-cxisti11g
contract- Whether preserved-Possessio11 11/s 60, T.P. Act on redemption of
mortgage whether affected.
E
Kera/a Compe11satio11 for Te11ants Improvements Act, 1958--0bject of
•
Kera/a Land Refonns Act, 1963-Sectio11 4-A read with Sectio11 4,
Kera/a Compe11satio11 for Tena11ts Improvements Act, 1958-Disti11c-
ti0n-No11-completio11 of 50 years conti11uo11s possession 011 the date whe11
•
F the Ame11di11g Act 35 of 1969 came into force-Effect.

Kera/a Land Refonns Act, 1963-Sectio11s 13, 54 (2)-Vesting of lands .•
in lite State-Whether /a11d held by mortgagees vests. -

The appellant was a mortgagor and the respondent No. I· derendant
G No. 4 was one of the mortgagees. The suit for redemption of mortgage tiled
by the appellant was decreed providing for payment of Rs. 500, and Rs.
943/9.2 towards improvements as a condition for redemption. •

The appellate court in appeal enhanced the sum for improvements
H by Rs. 256/8.4.
582
P. GOVINDAN v. BHASKARAN 583

When appellant filed an execution application, the respondent filed A
another application under the Kerala Compensation for Tenants Improve-
ments Act, 1958 claiming a further sum for improvements:

When it was pending, the appellant deposited the decretal amount
including the enhanced sum decreed by the appellate court.
B
The respondent's application was allowed and appellant was
directed to pay a total amount of Rs.' 4,149.66 paise inclusive of decretal
amount.

Thereafter, the respondents filed another application to reopen the C
decree u/s. 132 (3) of the Kerala Land Reforms Act, 1963 contending that .
he was a tenant u/s. 4A of the Act, having been continuously in possession
for over 50 years and that, therefore, the decree of eviction cannot be
executed against the respondent •.

The executing court dismissed it, _but on revision, the High Court D
declared that the respondent was a 'deemed tenant' u/s. 4A of the Kerala
~ Land Refofllls Act, against which this appeal was filed.

The respondent No. 1 contended that he was a tenant u/s. 2 (57) of
the Kerala Land Reforms Act and that u/s. 72 of the Act the appellant no
longer was the holder of the land and the land stood vested In the State.
E

Allowing the appeal of the mortgagor and dismissing the C.R.P., this
Court,

, f- HELD : 1.01. If there is a decree passed in one of the four Acts F
< enumerated in sub-s. 2 of s. 132 and the decree remained unexecuted and
pursuant to which possession was not effected, then on the commencement
of the Kerala Land Reforms Act a tenant or landlord may make an
application upon which the decree would be reopened and be disposed of
in accordance with the provisions of the Act. [588B)
G
1.02. The decree in question is only a redemption decree pursuant
to which the mortgagor is entitled to possession, on redemption of
mortgage, under s.60 of T.P. Act. Therefore, the very application to reopen
the decree itself is misconceived, without jurisdiction and authority of law.
[588B-C] H
584 SUPREME COURT REPORTS [1992] 1 S.C.R.

A 2.01. Section 2(57) of the Act, defined 'tenant' means any person who
has paid or has agreed to pay rent or other consideration for his being
allowed to possess and enjoy any land by a person entitled to lease that
land. There should exist jural relationsl!ip of landlord and tenant and
pursuant to a lease for consideration possession was given and the lease
remained in possession· enjoying the land on payment of rent or other
B consideration. [588D-E]

2.02. The mortgagee in possession of the hypothica for a continuous
period of not less than 50 years 'immediately preceding' the commence-
ment of the Amending Act 35 of 1969 is deemed to be a tenant under the
C Act. [589B)

2.03. The mailt part of s. 2(57) does not apply to a mortgagor and
mortgagee and the mortgagee cannot be treated to be a tenant. [588E)

2.04. By Amending Act 35 of 1969, s. 4A was introduced on the
D statute. It is prospective in operation. [588E-F)
2.05. The respondents had not had continuous minimum of 50 years
possession immediately preceding Act 35/69 came into force. The mortgage
amount of Rs. 500 together with the improvements determined in the
appeal were deposited on June 21, 1961. A conjoint reading of s.60, s. 76(h)
E read with s. 83 of Transfer of Property Act would amplify that on deposit
of the mortgage amount the contractual relationship of mortgagor and
mortgagee ceases. [589B-D]

Prithi Nath Singh & Ors. v. Suraj Ahir & Ors., (1963] 3 SCR 302,
referred to.
F
3.01. A conjoint reading of ss. 4 and 5 of the Kerala Compensation
for Tenants Improvements Act, 1958 postulates that a decree of eviction
passed against tenant, namely recovery of possession of land from the
tenant, cannot be enforced until the compensation determined under the
G Improvements Act is paid. Until sOch payment of compensation for im-
provements made by him or his predecessors in interest, etc., is made, the
tenant shall be entitled to remain in possession and the decree of eviction
shall not be executed. [591A-B)

3.02. Payment is a condition precedent u/s. 4 and s. 5 provides the , •·
H procedure by which the right secured under the Act is to be enforced. The

'
II
P. GOVINDAN v. BHASKARAN 585

right to compensation given under s. 4 is a right to the improvements made A
by a tenant while in possession and enjoyment or the land before decree or
enjectment was passed against him. [591C)

3.03. The right to compensation springs into existence from his
continuance in possession as a tenant before decree of eviction was passed
and until the compensation is paid be is entitled to remain in possession. B
For the purpose of improvements, the mortgagee bas been treated by
fiction or law to be a tenant. [S91D)

3.04. Section 4(2) preserves the pre-existing contract; the right and
liabilities thereunder. The right to possession under s. 60 or the Transfer C
or Property Act, on redemption kept unetTected. [591E]

· 4.01. The object or the Improvements Act is 'to make provision for
payment or compensation for improvement made by tenant.s". [591D·E)

4.02. The Improvements Act only hedges the right to eviction and D
gives right to remain as a mortgagee till the payment for improvements
are made or deposited so that the mortgagee/tenant is not driven to a
separate suit. [591F]

5.01. The assumption orthe High Court that respondents' possession
under the Improvements Act as a statutory mortgagee and that he was in E
possession on the date s. 4A or the Act came into force and that, he is
entitled to the protection from rejectment and the decree is liable to be
reopened under s. 132(3) of the Kerala Land Reforms Act is clearly wrong.
[592C·D)

5.02. Merely the respondents remained in possession as mortgagee, F
they cannot acquire the status as deemed 'tenant' under s. 4A tagging the
period from June 21, 1961 till date the Amending Act came into force and
thereaft~r to compute continuous possessi?n as mortgagee for not less
than SO years immediately preceding Amendment Act 35 of 1969 to the Act.
[592A·B) G

5.03. The entitlement to remain in possession as a condition for
payment is different from the entitlement as a statutory tenancy under s.4A
of the Kerala Land Reforms Act. There is no non·obstenti clause in s.4 of
- .> the Improvements Act, unlike s. 4A of the Kerala Land Reforms Act, which
engrafts non·obstenti clause. The later is of little assistance to the respon- H
586 SUPREME COURT REPORTS (1992] 1 S.C,R.

A dent, as be did not complete SO years of continnous possession ori the date
when the Amending Act 35 of 1969 came into force. The High Court is in
error in holding that the respondent is a deemed tenant under fi. 4A.
[592D-E]

6. The landholder's all rights, title and interest in respect of holdings
B held by cultivating tenant for fixity of tenure under s. 13 and in respect of
which certificates of purchase under s. 54(2) have not been issued, shall
subject to the provisions of the Act, vest in the Govt., free from all
encumbrance created by the land owners etc. Therefore, it pertains to only
lands held by tenants cultivating land under fixity of tenure under s. 13.
C The respondent is not a cultivating tenant under fixity of tenure. Therefore,
the land does not vestin the Government. [592F-G]

Raghavan v. Velayudhan, 1984 K. L. T. 713, over-ruled.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2354 of
D 1979.
From the Judgment and Order dated 17.11.1977 of the Kerala High
Court in C.R.P. No. 2341 of 1977

N. Sudhakaran for the Appellant.
E
M.A. Firoz for the Respondents.

The Judgment of the Court was delivered by

K. RAMASWAMY, J. This appeal by special leave arises against the
F order dated November 17, 1977 made in C.R.P. No. 2341 of 1977 of the
Kerala High Court which granted the decree that the respondent. is a
tenant under s. 4A of the Kerala Land Reforms Act, 1963 (1 of 1964), for
short 'the Act' and is not liable to ejectment pursuant to the decree in O.S.
No. 5/64 on the file of the Munsif Magistrate, Attingal. The facts relevant
G are as under : ·

The appellant is the mortgagor. The respondent, is one of the
mortgagees/4th defendant. The appellant's suit for redemption of the
mortgage was decreed on December 23, 1965. The decree provides pay-
ment of Rs. 500, and Rs. 943/9.2 towards improvements as a condition for
H redemption. On appeal, the. appellate court enhanced the improvements
P. GOVINDAN v.. BHASKARAN (K RAMASWAMY, J.] 587

by Rs. 256/8.4. In the execution application filed by the appellant the A
respondent filed another application uµder the Kerala Compensation for
Tenants Improvements Act, 1958 (Act 29 of 1958), for short 'the Improve-
ments Act' claiming a further sum for improvements. Pending application,
the appellant deposited on June 21, 1961 the decretal amount including the
sum decreed by the appellate court. Under the Improvements Act, in 1975 B
the respondents' application was allowed and total amount of Rs. 4,149.66
paise inclusive of decretal amount was directed to be paid, which became
final. Then the respondents filed yet another I.A. No. 2340/75 to reopen
the decree under s. 132 (3) of the Act, contending that he is a tenant under
s. 4A of the Act, having been continuously in possession for over 50 years ,
and that, therefore, the decree of eviction cannot be executed against the C
. respondents. The executing court dismissed it, but on revision, the High
Court declared that the respondent is a 'deemed tenant' under s. 4A.
Assailing the legality thereof this appeal has been filed.

Section 132 is a repealing and saving section under the Act and D
sub-section 3 (a) postulates thus:

'Notwithstanding the. repeal of the. enactments mentioned in
sub-section .(2).

(a) Any decree passed before the commencement of this Act E
for the eviction .of a tenant from his holding, pursuant to which
eviction has not'been affected, may, on the application of the
tenant or the landlord, be reopened and the matter may be
disposed of in accordance with the provisions of this Act.

The other sub-sections are not relevant. Hence omitted. Sub- section F
2 thereto provides that :

- 'The following enactments as in force in any part of the State
of Kerala are hereby repealed, namely:-
G
(i) The Cochin Verumpattamdars Act, VII of 1113.

(ii). The Travancore-Cochin Prevention of Eviction of
Kudikidappukars Act, 1955.

(iii) The Malabar Tenancy Act, 1929. H
588 SUPREME COURT REPORTS (1992) 1 S.C.R.

A (iv) The Madras Cultivating Tenants (Payment of Fair Rent)
Act, 1956.

A bare reading of both sub-sections would demonstrate that, if there
is a decree passed in one of the four Acts enumerated in sub-s.2 of s. 132
and the decree remained unexecuted and pursuant to which possession was
B not effected, then on the commencement of the Act a tenant or landlord
may make an application upon which the decree would be r.eopened and
be disposed of in accordance with the provisions of the Act. Undoubtedly
decree in question is only a redemption decree pursuant to which the
mortgagor is entitled to possession, on redemption of mortgage, under s.
c 60 of T .P. Act. Therefore, the very application to reopen the decree itself
is misconceived, without jurisdiction and authority of law. But this question
was not gone into by either of the courts. Therefore, we do not propose to
allow the appeal on this short ground .

. The controversy is whether the respondent is a tenant under the Act,
D Section 2 (57) of the Act defined 'tenant' means any person who has paid
or has agreed to pay rent or other consideration for his being allowed to
possess and enjoy any land by a person entitled to lease that land. A _.1.,

reading would indicate that there should exist jural relationship of landlord
and tenant and pursuant to a lease for consideration possession was given
E and the lease remained in possession enjoying the land on payment of rent
or other consideration. Therefore, the main part of s. 2(57) does not apply
to a mortgagor and mortgagee and the mortgagee cannot be treated to be
a tenant. But by Amending Act 35 of 1969, s. 4A was introduced on the
statute. Admittedly, it is prospective in operation. It r~ads thus: .

F "Certain ·mortgagees and lessees of mortgagees to be deemed
tenants-

(1) Notwithstanding anything to the contrary contained in any
law or in any contract, custom or usage, or in any judgment,
decree or order of court, a mortgagee with possession of land,
G other than land principally planted with rubber, coffee, tea or
cardamom, or the lessee of a mortgagee of such land shall be
deemed to be tenant if -

(a) The mortgagee ·or lessee was holding the land comprised •.
H in the mortgage for a continuous period of not less than fifty
P. GOVINDAN v. BHASKARAN [K. RAMASWAMY, J.] 589

years immediately preceding the commencement of the Kerala A
- Land Reforms (Amendment) Act, 1969; or

Other clauses are not necessary. Hence omitted. It would be manifest
that the mortgagee in possession of the hypothica for a continuous period
of not less than 50 years 'immediately preceding' the commencement of the
Amending Act 35 of 1969 is deemed to be a tenant under the Act. B
Admittedly the respondents had not had continuous minimum of 50 years
possession immediately preceding Act 35/69 came into force. The mortgage
amount of Rs. 500 together with the improvements determined in the said
appeal were admittedly deposited on June 21, 1961. A conjoint reading of
s. 60, s. 76 (h) read with s. 83 of Transfer of Property Act w.ould amplify C
that on deposit of the mortgage amount, the contractual relationship of
mortgagor and mortgagee ceases. This Court in Prithi Nath Singh & Ors. v.
Suraj Ahir & Ors., [1963] 3 S.C.R. 302 held that when the mortgage money
is paid by the mortgagor to the mortgagee, there does not remain any debt
from the mortgagor to the mortgagee and, therefore, the mortgagee can no
longer continue after the mortgage money is paid. Therefore, on the D
payment of mortgage money or deposit thereof in the court by the
mortgagor, the mortgage comes to an end and the right of the mortgagee
to remain in possession is also coterminus. Thereafter, the mortgagee
continues in unlawful possession.
E
The Improvements Act defines 'tenant' under s. 2( d) thus:

"tenant'' with its grammatic3.I variations and cognate expressions
includes-

(i) a person who, as lessee, sub-lessee, mortgagee or in good F
faith believing himself to be lessee, sub-lessee, mortgagee, or
sub-mortgagee of land, is in possession thereof;

Clauses (ii) and (iii) are not relevant. Hence ommitted. Section 2 (a)
defines eviction ~bus:
G
"eviction" means the recovery ·of possession of land from a
tenant".

Section 4 reads thus:
• >
4. Tenant "entitled to compensation" for improvements: H
590 SUPREME COUR'f REPORTS [1992] 1 S.C.R.

A (1) Every tenant shall, on eviction, be entitled to compensation
for improvements which were made by him, his predecessor-in-
interest or by any person not in occupation at the time of the
eviction who derived title from either of them and for which
compensation had not been paid; and every tenant to whom
compensation is so due shall, notwithstanding the determina-
B tion of the tenancy of the payment of the mortgage money or
premium, if any, be entitled to remain in possession until
eviction in execution of a decree or order of court :

Provided that nothing herein contained shall be construed as
c affecting the provisions of the Kerala Land Conservancy Act; .
1957:

Provided further that this section shall not apply to tenants
holding lands under the Government.

D (2) A tenant so continuing in possession shall, during such
continuance, hold as a tenant subject to the tenns of his lease
on moltgage,. if any.

Section 5 grants payment of compensation as a condition precedent
to enforce a decree of eviction which reads thus:
E
"5. Decree in eviction to be conditional on payment of com-
pensation : -

(1) In a suit for eviction instituted against a tenant in which the
plaintiff succeeds and the defendant establishes a claim for
F compensation due under section 4 for improvements, the court
shall ascertain as provided in sections 7 to 16, the amount of
the compensation and shall pass a decree declaring the amount
so found due and ordering that on payment by the plaintiff into
the court of the amount so found due and also the mortgage
G money or the P,emium, as the case may be, the defendant shall
put the plaintiff into possession of the land with the improve-
ments thereon."

Sub-sections 2 and 3 are not relevant ·and hence omitted.
,.' ....
H Sections 7 to 16 provides the mode to accretion· improvements and
P. GOV!NDAN v. BHASKARAN [K. RAMASWAMY, J.] 591

computativn thereof, the details of which are not necessary: A

A .conjoint reading of ss. 4 and 5 clearly postulates that a decree of
eviction passed against tenant namely recovery of possession of land from
the tenant cannot be enforced until the compensation determined under
the Improvements Act is paid. Section 4 gives substantive right to payment B
of compensation for improvements made by him or his predecessors in
.·interest, etc. Until such payment is made, the tenant shall be entitled to
remain in possession and the decree of eviction shall not be executed.
Payment is a condition precedent under s. 4 and s. 5 provides the proce-
dure by which the right secured under the Act is to be enforced. The right
to compensation give.n under s. 4 is a right to the improvements made by C
a tenant while in possession and enjoyment of the land before decree of
ejectment was passed against him. Section 4 (1) begins by saying that every
tenant shall, on eviction, is e.ntitled to compensation for improvements
which were made by him. Therefore, the right to compensation springs into
existence from his continuance in possession as a tenant before decree of D
eviction was passed and until the compensation is paid he is entitled to
remain in possession. For the purpose of improvements, the mortgagee has
been treated by fiction of law to be a tenant. The object of the Improve-
ments Act is "to make provision for payment of compensation for improve-
ment made by tenants". Sub-section 2 of s. 4 preserves the pre-existing
contract: the right and liabilities thereunder. Thus it is clear that right to E
possession under s. 60 of the Transfer of Property Act, on redemption is
kept uneffected.

The Improvements Act only hedges the right to eviction and gives
right to remain as a mortgagee till the payment for improvements are made
. or deposited so that the mortgagee/tenant is not driven to a separate suit.
Sections 7 to· 16 prescribes procedure for computation and s. 5 prohibits
eviction till date of payment or deposit. Thus, for and no further. His
continuance in possession is by virtue of contractual relationship, but by
operation of statute, his possession after redemption remain lawful. His G
deeming tenancy under the Improvements Act is only to enable him to
recover the improvements determined under the improvements Act. It
confers no other higher rights. It does not cloth with any right to statutory
protection qua the mortgage. From June 21, 1961, but for the Improve-
ments Act, his possession would be unlawful. Section 4A of the Act would H
592 SUPREME COURT REPORTS [1992] 1 S.C.R.

A not denude the right to repossession of the mortgagor qbder s. 60 of the
Transfer of Property Act without assent of the President of India. There-
fore, merely because the respondents remained in poss,6ssion as mortgagee,
they cannot acquire the status as deemed tenant under s. 4A tagging the
period from· June 21, 19M till the date the Amending Act came 'into force .
B and thereafter to compute continuous possession as mortgagee for not less .
than 50 years immediately preceding Amendment Act 35 of 1969 to the
Act.

Admittedly, the respondents did not complete 50 years of possession
as a mortgagee preceding June 22, 1961. The High Court assumed that his
c possession under the Improvements Act as a statutory mortgagee and that
he was in possession on the date s. 4A of the Act came into force and that,
therefore, he is entitled to the protection from ejectment and the decree
·is liable to be reopened under s. 132(3) of the Act. In our considered view,
the assumption cif the High Court is clearly wrong. The entitlement to
D remain in possession as a condition for payment is different from the
entitlement as ·of statutory tenancy under s. 4A of the Act. It is necessary
to remember that there is no non-obstenti clause in s. 4 of the Improve-
ments Act, unlike s. 4A of the Act which engrafts non-obstenti clause. The
later is of little assistance to the respondent, as he did not complete 50
E years of continuous possession on the date when the Amending Act 35 of
1%9 came into force. Thus we are Of the considered view that the High
Court is in error in holding that the respondent is a deemed tenant under
s. 4A.

It is next contended by the learned counsel for the respondents that
F under s. 72 of the Act the appellant no longer is the holder of the land and
the land stood vested in the state. The landholder's all rights, title and
interest in respect of holdings held by cultivating tenant for fixity of tenure
under s. 13 and in respect of which certificates of purchase under s. 54 (2)
have not been issued, shall, subject to the provisions ofthe.Act, vest in the
G Govt., free from all encumbrance created by the land owners etc. There-
fore, it pertains to only lands held by tenants cultivating land under fixity
of. tenure under s. 13. The respondent is not a cultivating tenant under fixity
of tenure. Therefore, the land does not vest in the Government.

H The learned counsel also invited our attention to a decision of the
P. GOVINDAN v. BHASKARAN [K. RAMASWAMY, J.] 593

Kerala High Court in Raghavan v. Velayudhan, 1984 K.L.T. 713. In that A
case also the Division Bench proceeded on the same premise as i.n the
impugned order. Practically they followed this judgment. Therefore, for the
same reasons, the ratio therein is not a good law.

The appeal is accordingly allowed. The C.R.P. is dismissed and that B
the order of the executing court is restored. No Costs.

V.P.R. Appeal allowed.