A mortgaged her land to B. She died without leaving an heir and her property went to State by escheat…B questioned his title and pleaded that the title conveyance deed in favour of C has not been registered. Decide the suit.

Question: A mortgaged her land to B. She died without leaving an heir and her property went to State by escheat. State through Collector allotted the land to C, who deposited the mortgage money in terms of allotment letter. Collector then issued a letter of possession.

B filed an injunction suit and after obtaining an ad interim injunction took possession of the land. C then filed suit for possession of the land. B questioned his title and pleaded that the title conveyance deed in favour of C has not been registered. Decide the suit. [D.J.S. 1990]

Find the answer to the mains question only on Legal Bites. [A mortgaged her land to B. She died without leaving an heir and her property went to State by escheat…B questioned his title and pleaded that the title conveyance deed in favour of C has not been registered. Decide the suit.]

Answer

Promissory estoppel as enshrined under section 115 of the Indian Evidence Act operates to preclude preparation of fraud or causing injury in a case where the representation or promise has been made to induce action on the part of the party setting up the estoppel.

In such a case, the party making the promise is precluded from asserting want of consideration thereon. Before the doctrine of promissory estoppel can be invoked it must be proved:

1. that there was a representation or promise in regard to something to be done in the future,
2. that the representation or promise was intended to affect the legal relations of the parties and to be acted upon accordingly, and
3. that it is one on which the other side has, in fact, acted to its prejudice.

Further, as per section 116 of the Indian Evidence Act governing the estoppels between mortgagor and mortgagee, when a property has been mortgaged by one person to another and the mortgagee, has been put into possession in pursuance of the mortgage, the parties will be estopped to deny the right of each other under the mortgage; Singh v. Mahasaband, AIR 1932 All 437.

The mortgagee while the mortgage subsists, i.e. before the mortgage money had been paid up and possession surrendered to the mortgagor, cannot say that the mortgagor had no interest in the property and that, he could not make a mortgage about it. The mortgagee cannot say that no right has been created by the mortgagor in favour of the mortgagee.

It should be borne in mind that the rule of estoppel between the mortgagor and mortgagee applies only to cases where the suit is brought on the basis of mortgage, where the suit is not based on the mortgage but is one of the repudiations of the mortgage, the principle of estoppel does not apply.

However, that is not the case in the present case at hand because C is not a mortgagor but a bona fide purchaser of the property sold through escheat by the state. The facts of the present case are borrowed from the case of Tara Singh (Since Deceased) v. Kehar Singh And Ors [AIR 1989 SC 1426].

In this case, before the Supreme Court, the facts in brief were:

The mortgagor Smt. Bhagwani died in the year 1960 without leaving any heirs consequently, her properties went by escheat to the State of Punjab and they were duly mutated in the Revenue Registers. After the lands had reverted to it, the State allotted the two items of land to the respondents/plaintiffs under the Nazool Lands Transfer Rules 1956 (hereinafter referred to as the Rules). The allotment was made by the Collector on behalf of the State.

As per directions given in the order of allotment, the respondents deposited two sums of money towards the redemption of the mortgage. On the said sums of money being deposited, the Collector issued warrants of possession and served notices on the two sets of mortgagees informing them that the respective mortgages in their favour stood redeemed and that they should surrender possession of the mortgaged items of land to the respondents.

After the respondents had taken possession, defendants 1 to 4 filed a suit for injunction and obtained an order of temporary injunction in the garb of protecting their possession, they had wrested the possession of the land from the respondents. On account of that, the respondents filed a suit for possession of the mortgaged lands from the defendants and questioned the title of possession and pleaded that the title conveyance deed in favour of C has not been registered.

Court’s observation:

1. The Government had the power to allot the land to the respondent as the land had reverted to the State of Punjab on the death of Smt. Bhagwani did not leave behind any heirs to inherit her properties. The State had, therefore, stepped into the shoes of the erstwhile owner and become entitled to redeem the mortgage and take over the possession of the land.
2. If the State itself had sought to redeem the mortgage through its officers, the appellants would have no right to refuse redemption of the mortgage or to surrender possession of the land.
3. The transferee of the State Government would also be entitled to redeem the mortgage. Since the reversion of the land to the State and the right of the State to redeem the mortgage is beyond dispute in the case. In addition to the order of allotment made by the Collector, warrants of possession had also been issued in favour of the respondents by which respondents had acquired a right under the doctrine of promissory estoppel to call upon the Government to regularise the land to them if for any reason the order of allotment made by the Collector was defective in any manner.
   Such being the case, even if no registered deed of conveyance or agreement of sale had been executed by the Government, the respondents had become entitled in law to claim title to the land and seek delivery of possession of the allotted land to them and ask for a charge, in the absence of delivery of possession over the property for the money deposited by them under the allotment order.
4. there was no bar in law for the State Government to allot the land to the respondents after it had become the owner of the land by escheat or to the respondents claiming delivery of possession as the transferees of the land as per the order of allotment made in their favour and the warrant of possession issued to them [Nadoda Khima Keshar v. Bombay State and Ors. (ILR 1967 Gujarat 325)]

Therefore, applying this equitable principle in the present case at hand, C is a bona fide purchaser of the mortgaged property as he is legally entitled to its possession after depositing the mortgage money in terms of the allotment letter. State which stood in the shoes of the mortgagor had parted with the equity of redemption in favour of the respondent and called upon them to deposit the sale price so that it could be paid to the appellants to redeem the mortgage in their favour.

There was, therefore, no question of the respondents seemingly entering into a mortgage transaction or their filing a suit for the enforcement of mortgage.

Thus, the suit shall be disposed of in favour of C in view of provisions of section 116 of the Indian Evidence Act.

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Important Mains Questions Series for Judiciary, APO & University Exams

1. Law of Evidence Mains Questions Series Part-I
2. Law of Evidence Mains Questions Series Part-II
3. Law of Evidence Mains Questions Series Part-III
4. Law of Evidence Mains Questions Series Part-IV
5. Law of Evidence Mains Questions Series Part-V
6. Law of Evidence Mains Questions Series Part-VI
7. Law of Evidence Mains Questions Series Part-VII
8. Law of Evidence Mains Questions Series Part-VIII
9. Law of Evidence Mains Questions Series Part-IX
10. Law of Evidence Mains Questions Series Part-X