Case: Rana Sheo Ambar Singh Vs. Allahabad Bank Ltd., Allahabad

It is true that under S. 44 of the Act when calculating net assets, the income from sir and khudkashat land and grove land has been excluded on the ground that bhumidari rights have been conferred therein under S. 18 of the Act. That is however for the purposes of calculating what should be paid to the intermediary as compensation and in that connection it was necessary to take into account the fact that the legislature was creating a new right in the intermediary with respect to certain lands and therefore it was not necessary to give money as compensation. That would not however make any difference in our view as to the legal effect of the notification under S. 4 and under the notification sir and khudkashat land and grove land would vest in the State and would not be an exception to the consequences of vesting in S. 6 and therefore the proprietary right in sir and khudkashat land and grove land which were mortgaged would be extinguished and the bhumidari right which is created by S. 18 would be a new right altogether and would not therefore be considered to be included under the mortgage in this case.9. This brings us to a consideration of S. 6 (h) of the Act. That lays down that"no claim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in S. 73 of the Transfer of Property Act, 1882, be enforceable against his interest in the estate."This provision has in our opinion a two-fold effect. In the first place, it makes it impossible for the mortgagee to follow the proprietary right after it vests in the State. Secondly it provides that the only way in which the mortgagee can recover his money advanced on the security of the property which vested in the State by virtue of the notification under S. 4 and the consequences thereof under S. 6 is to follow the procedure under S. 73 of the Transfer of Property Act. Section 73 (2) provides that :"where the mortgaged property or any part thereof or any interest therein is acquired under the Land Acquisition Act, 1894 (of 1894), or any other enactment for the time being in force providing for the compulsory acquisition, of immovable property, the mortgagee shall be entitled to claim payment of the mortgage money, in whole or in part, out of the amount due to the mortgagor as compensation."There is no doubt that the property mortgaged has been compulsorily acquired in this case by the State under the Act. Therefore, S. 6 (h) read with S. 73 directs that the mortgagee shall proceed in the manner provided in S. 73, namely, follow the compensation money, and there is no other way possible for him in view of S. 6 (h) with respect to the property which has been acquired under the Act. We have held that sir and khudkashat land and grove land have been acquired under the Act and have vested in the State; therefore the mortgagee is relegated to enforce his rights against the mortgagor in the manner provided in S. 73 of Transfer of Property Act and in no other way. What we say here does not affect that property which is not acquired by the state, for example, property expectted under S. 9 of the Act; but where the property has vested in the State by virtue of a notification under S.4 and its consequences under S.6, the only course open to the mortageee is to follow the compensation money under S.6(h). The bhumidari rights created under S. are not compensation; they are special rights confered on the intermidiary by virtue of his cultivatory possession of the lands comprised therein. The respondent therefore cannot enforce his rights under the mortgage by sale of the bhumidari rights created in favour of the appellant under S. 18 so far as his sir and khudkashat land and grove land and concerned; it can only follow the compensation money as provided in S. 6 (h). The argumed that bhumidari rights can be followed as substituted security must therefore equally fail.10. Out attention in this connection was drawn to S. 8 (2) of the U. P. Zamindars Debt Reduction Act No. XV of 1953. That Act provides for scaling down of debts of zamindars whose estate have been acquired under the Act. It also provides that the debts due shall be realisable from the compensation and rehabilitation grant, and in particular S. 8(2) provides that "notwithstanding anything in any law the reduced amount found in the case of a mortgagor or judgment-debtor as the case may be, under section 3 or 4 as respects mortgaged estates shall not be legally recoverable otherwise than out of the compensation and rehabilitation grant payable to such mortgagor or judgment-debtor in respect of such estates." We have not been able to understand how the provisions of the U. P. Zamindars Debt Reduction Act can affect the construction of S. 6 (h) of the Act read with other provisions of the Act. It is not necessary for us therefore to construe S. 8 (2) of the U. P. Zamindars Debt Reduction Act, for we are clear on the provisions of S. 6 (h) and the other provisions of the Act that bhumidari rights created in favour of the appellant cannot be sold in execution of the decree held against him by the respondent under the mortgage of 1914.11. This brings us to the question of limitation. Mr. Aggarwala conceded that if the appellant succeeds on the first point it would not be necessary for us to consider the question of limitation. Therefore, as the appellants succeeds on the first point we need not consider whether the application for execution by sale of bhumidari rights created under S. 18 is barred by limitation.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It is not in dispute that the Taluka of Khajurgaon was an estate within the meaning of the Act. It may be mentioned that the judgment-debtor had certain sir and khudkashat lands and zamindars grove in the sixty-seven villages comprised within the Talukdarilands therefore whether cultivable or barren or grove lands vested in the State on the notification under S. 4 having been made save as otherwise provided in this Act. Therefore, proprietary rights in sir and khudkashat land and grove land would vest in the State on the coming into force of the notification under S. 4 unless there was some provision otherwise in theprovision clearly creates an exception to the property which vests in the State on the making of a notification under S. 4. The exception is in favour of all wells and trees in abadi and all buildings and it is significant to note that these things will continue to belong to the intermediary, though the further provision shows that the site of the wells, and buildings with the area appurtenant thereto would vest in the Government and would be deemed to be settled with the intermediary on such conditions and terms as may be prescribed.legislature was therefore creating a new right under S. 18 and the old proprietary right in sir and khudkashat land and any intermediarys grove land had already vested under s. 6 in the State. Therefore, it cannot be said that S. 18 is an exception to the consequences provided in S. 6 and therefore sir and khudkashat land and grove land continue to be the property of the judgment-debtor in this case in the same manner as they were his property at the time of the mortgage and would therefore be available in execution of the decree as the proprietary rights mortgaged. We are of opinion that the proprietary rights in sir and khudkashat land and in grove land have vested in the State and what in conferred on the intermediary by S. 18 is a new right altogether which he never had and which could not therefore have been mortgaged inis true that under S. 44 of the Act when calculating net assets, the income from sir and khudkashat land and grove land has been excluded on the ground that bhumidari rights have been conferred therein under S. 18 of the Act. That is however for the purposes of calculating what should be paid to the intermediary as compensation and in that connection it was necessary to take into account the fact that the legislature was creating a new right in the intermediary with respect to certain lands and therefore it was not necessary to give money as compensation. That would not however make any difference in our view as to the legal effect of the notification under S. 4 and under the notification sir and khudkashat land and grove land would vest in the State and would not be an exception to the consequences of vesting in S. 6 and therefore the proprietary right in sir and khudkashat land and grove land which were mortgaged would be extinguished and the bhumidari right which is created by S. 18 would be a new right altogether and would not therefore be considered to be included under the mortgage in thisprovision has in our opinion a two-fold effect. In the first place, it makes it impossible for the mortgagee to follow the proprietary right after it vests in the State. Secondly it provides that the only way in which the mortgagee can recover his money advanced on the security of the property which vested in the State by virtue of the notification under S. 4 and the consequences thereof under S. 6 is to follow the procedure under S. 73 of the Transfer of Property Act.is no doubt that the property mortgaged has been compulsorily acquired in this case by the State under the Act. Therefore, S. 6 (h) read with S. 73 directs that the mortgagee shall proceed in the manner provided in S. 73, namely, follow the compensation money, and there is no other way possible for him in view of S. 6 (h) with respect to the property which has been acquired under the Act. We have held that sir and khudkashat land and grove land have been acquired under the Act and have vested in the State; therefore the mortgagee is relegated to enforce his rights against the mortgagor in the manner provided in S. 73 of Transfer of Property Act and in no other way. What we say here does not affect that property which is not acquired by the state, for example, property expectted under S. 9 of the Act; but where the property has vested in the State by virtue of a notification under S.4 and its consequences under S.6, the only course open to the mortageee is to follow the compensation money under S.6(h). The bhumidari rights created under S. are not compensation; they are special rights confered on the intermidiary by virtue of his cultivatory possession of the lands comprised therein. The respondent therefore cannot enforce his rights under the mortgage by sale of the bhumidari rights created in favour of the appellant under S. 18 so far as his sir and khudkashat land and grove land and concerned; it can only follow the compensation money as provided in S. 6 (h). The argumed that bhumidari rights can be followed as substituted security must therefore equally fail.We have not been able to understand how the provisions of the U. P. Zamindars Debt Reduction Act can affect the construction of S. 6 (h) of the Act read with other provisions of the Act. It is not necessary for us therefore to construe S. 8 (2) of the U. P. Zamindars Debt Reduction Act, for we are clear on the provisions of S. 6 (h) and the other provisions of the Act that bhumidari rights created in favour of the appellant cannot be sold in execution of the decree held against him by the respondent under the mortgage ofas the appellants succeeds on the first point we need not consider whether the application for execution by sale of bhumidari rights created under S. 18 is barred by limitation.