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Letters Patent Appeal No. 63 of 1968, decided on god May 1968.

S. 14‑A [as amended by Displaced Persons Laws Amendment Ordi nance (XIII of 1964)]‑Right of possession of mortgagees in lands mortgaged by evacuees‑Can no longer be claimed after amendment of 1964‑Mortgage money now converted into a charge‑Mere charge does not create any right in property‑Such mortgagees now liable to eviction by Settlement authorities.

Ramzan v. Chief Settlement and Rehabilitation Commissioner and another P L D 1968 Lah. 258 upheld.

Muhammad Yusuf v. Chief Settlement and Rehabilitation Commissioner P L D 1963 Lah. 590; Muhammad Yusuf and another v. The Chief Settlement and Rehabilitation Commis sioner Writ Petition No. 1070/R of 1961; Muhammad Ilyas v. The Chief Settlement and Rehabilitation Commissioner Writ Petition No. 575/R of 1961 and Muhammad Khan and others v. The Chief Settlement and Rehabilitation Commissioner and another P L D 1962 S C 284 ref.

Shah Muhammad Malik for Appellants.

Date of hearing: 2nd May 1968.

This order shall dispose of Letters Patent Appeals Nos. 63 and 78 of 1968 in which a common question of law is involved. In both the cases the appellants are mortgagees in possession of certain lands, detailed in the writ petitions out of which the present Letters Patent Appeals have arisen.

2. In the first case (L. P. A. No. 63 of 1968), arising out of Writ Petition No. 242‑R of 1968, one Teja Singh, an evacuee, some time before Partition, mortgaged the lands in question, situated in village Guhrah Ghulab Singh, Tehsil Chunian, District Lahore, which belonged to him in favour of one Sona predecessor in‑interest of appellants Nos. 1 to 5 and two others, Hassan and Nur Muhammad, sons of Bagarh. In L. P. A. No. 78 of 1968, arising out of Writ Petition No. 314‑R of 1968, certain evacuee owners, mentioned in column No. 3 of Annexures 'A‑1' and 'B‑1' to the writ petition, mortgaged the lands in dis pute, situated in village Shampur, Tehsil Shakargarh, District Sialkot, in favour of one Taj Din, the predecessor‑in‑interest of the appellants in L. P. A. No. 78 of 1968. The grievance of the appellants in both the appeals is that the lands in question have been transferred to the respondents Nos. 2 to 5 in L. P. A. No. 63 of 1968 and respondent No. 3 in L. P. A. No. 78 of 1968 under the Displaced Persons (Land Settlement) Act (XLVII of 1958) hereafter described as the Act), and the transferees are taking steps to dispossess the appellants from the lands in dispute without payment of their mortgage money. The appellants in both the appeals are mortgagees in possession of the lands In dispute. Both the matters came up before K. E. Chauhan, J. ho, following the decision of Muhammad Gul, J. in Ramzan v. Chief Settlement and Rehabilitation Commissioner and another (P L D 1968 Lah. 258), held that section 14‑A of the Act, as finally amended, has converted the mortgagees into mere charge‑holders, and that a charge‑holder having no right of possession, liable to be dispos sessed after a property has been transferred under the Act. This view is challenged in both the Letters Patent Appeals before us.

3. It may be mentioned that before section 14‑A of the Act was amended in 1964 a full Bench of this Court in Muhammad Yusuf v. Chief Settlement and Rehabilitation Commissioner (P L D 1963 Lah. 590), had expressed the view that mortgagees in possession of the lands could not be disturbed until the mortgage is fully redeemed notwithstanding the transfer of the land to a claimant under the Act. After the above view was expressed by the Full Bench, the Legislature by Ordinance XIII of 1964 has amended section 14‑A by omitting provisos (a) and (b) to subsection (1) of section 14‑A and substituting them by a new proviso which was in the same language as proviso (a) to the un amended section 14‑A of the Act. Section 14‑A, as finally amended, now reads as under:‑

"14‑A. Allotment of certain lands under mortgage, etc. (1) Notwithstanding anything contained in any law for the time being in force or in any judgment of any Court, where a person has been allotted, under any scheme prepared under section 14, any land which was at any time before the commencement of this Act, subject to a mortgage created by an evacuee, the allotment shall be deemed to be valid:

Provided that the mortgage money due to the mortgagee shall be a charge on such land.

(2) The Settlement Authority may declare that the land which is subject to a mortgage shall remain subject to a charge until the mortgage is redeemed, and any such charge shall be deemed to be a charge created by the Custodian under subsection (4) of section 4.

(3) The Collector of the district within which the land referred to in subsection (1) is situated as, if any such land is situated in more than one district, such Collector as the Chief Settlement Commissioner may direct, shall, with the assistance, of such Revenue Officers as the Collector may think fit, assess the amount of the charge referred to in subsection (2):

Provided that if the amount of any such charge has, before the commencement of the aforesaid Ordinance, been determined by the Custodian or any other competent authority, such amount shall be deemed to be the amount validly assessed."

It is in this context that the effect of the amendment is to be taken into consideration in respect of the mortgagee rights in the lands which were mortgaged by the evacuees. This point was considered at length by Muhammad Gul, J. In Ramzan v. The Chief Settlement and Rehabilitation Commissioner, already cited above. Our learned brother, after examining the various aspects of the case, has come to the conclusion that the effect of the proviso plainly is to efface the mortgagee rights in the lands and to create a mere charge on the lands to the extent of the mortgage amounts. In this connection, his Lordship has observed as under:‑--

"The effect of the proviso plainly is to efface the petitioner's mortgagee rights in the land and in their stead to create a mere charge on the land to the extent of the mortgage sum. It is a well‑established proposition that a mere charge does not create any right in the property but creates a right of payment out of the property specified: it is more than a mere personal obliga tion, for it is a jus ad rem and closely resembles a mere right of sale in the case of default by the mortgagor but not a right of possession. A mortgage on the other hand is jus in rem and in essence is a transfer of an interest in specific immovable property depending upon its terms which might include right of possession by the mortgagee. Therefore, in my humble judgment after the coming into force of Ordinance XIII of 1964, the petitioner's right of possession of the land has become extinct. Learned counsel for the petitioner also relied upon to unreported Single Bench judgments of this Court in Muhammad Yusuf and another v. The Chief Settlement and Rehabilitation Commissioner, Writ Petition No. 1070/R of 1961, and Muhammad Ilyas v. The Chief Settlement and Rehabilitation Commissioner, Writ Petition No. 575/R of 1961. The judgment in the first case is dated 30‑10‑1963 and therefore, was rendered prior to Ordinance XIII of 1964 and, therefore, must be deemed to have become obsolete like two precedents referred to earlier in this judgment. The second judgment, however, is dated 26‑10‑1965, in which the newly substituted proviso to section 14‑A (1) by Ordinance XIII of 1964 has been noticed; and the learned Judge observed as follows as to its effect on the right of possession by the non evacuee mortgagees who as from the 28th December 1964, are mere charge‑holders:‑

A further question as to whether these charge‑holders can retain possession of land till such time the charge is satisfied, has also been debated before me. Much can be said for the contentions of either side, but as I feel bound by . . Full Bench decision (Muhammad Yusuf's case), I hold that the allotment made in favour of the various allottees of lands under mortgage are valid and the mortgagees in possession can be dispossessed only after the satisfaction of the charge . . . . ".

If I may say with the greatest respect to the learned Judge, the above observations do not give full effect to the change in the law introduced by substituting new proviso to sec tion 14‑A (1) of the Act by Ordinance X111 of 1964. The Full Bench's judgment in so far as it preserved the possessory rights of the non‑evacuee mortgagees, proceeded mainly on the inter pretation of repealed proviso (b) to the section which read as follows:‑

"(b) Where the period of mortgage has expired, the mortgage money shall be paid to the mortgagee, within a, period of eighteen months from the commencement of the Dis placed Persons (Land Settlement) (Second Amendment) Ordinance, 1962."

4. After hearing the arguments of the learned counsel for the appellants, we are also of the view that the effect of the amendment made in 1964 by the Legislature is to remove the doubts which were created by the Full Bench decision of this Court in P L D 1963 Lah. 590. It will be noticed that formerly proviso (b) to subsection (1) of section 14‑A of the Act, as unamended, provided as under:‑--

"(b) where the period of mortgage has expired, the mortgage money shall be paid to the mortgagee within a period of eighteen months from the commencement of the Dis placed Persons (Land Settlement) (Second Amendment) Ordinance, 1962."

It was on the basis of this proviso that the Full Bench came to the conclusion that the view of the Supreme Court expressed in Muhammad Khan and others v. The Chief Settlement and Rehabi litation Commissioner and another (P L D 1962 S C 284), that the right, title and interest of the mortgagees with possession of land belonging to an evacuee cannot be acquired by Government's notification issued under section 4 of the Displaced Persons (Land Settlement) Act, 1958, and unless the mortgage is redeemed either by the Government or by the allottees, the mortgagees are entitled to retain possession of the lands under their mortgages, still held the field.

5. The question, however, for consideration in these appeals is whether after the amendment of section 14‑A of the Act in 1964, by Ordinance XIII of 1964 the view expressed by the Full Bench in 1963 can still be applied to the cases of mortgagees in possession of evacuee lands. It seems to us that the Legisla ture by providing that the mortgage money due to the mortgagee shall be a charge on such land' extinguished the mortgage and has now laid down an entirely different procedure for the recovery of the mortgage amounts, as envisaged by section 14‑A of the Act in its amended form read with the "satisfaction of charges" (Land Settlement) Rules, 1962. It is now open to a mortgagee to approach the Collector of the District to have the amount of the charge fixed for payment to him. In both the appeals before us, only vague allegations have been made that the mortgage amount has not been paid to the appellants so far. There is no allegation in the writ petitions, out of which the present Letters Patent Appeals have arisen, that the claims of the appellants had not been accepted or that there is any impediment in the realisation of the mortgage amounts from the Settlement Authorities. In these circumstances, the impression which we have gained is that the appellants, who are mortgagees in posses sion of the lands of dispute, are not anxious to get their mortgage amounts paid by the Settlement Authorities and mean to persist in the possession of the lands, which obviously is economically more lucrative to them. This, in our opinion, is not the object of section 14‑A of the Act. The object of this provision of law is to provide for the payment of the amount of the mortgage which has now been converted into a charge. We are in respectful agreement with the observations of the learned Single Judge that it is a well‑established principle of law that a mere charge does not create any right in the property but it is more than a mere personal obligation. We are further of the view that after the amendment made in section 14‑A of the Act, which omitted proviso (b), the position that emerges out is that the right of the mortgagees to remain in possession of the lands mortgaged with them can no longer be claimed and it is open to the Settlement Authorities to evict them from the lands in their possession and to hand them over to the persons whom the lands have validly been transferred under the relevant pro visions of law. The remedy of the appellants is to move the Collectors of their districts for the assessment of their claims and thereafter to apply to the Settlement Authorities for their payments. If there is any impediment in getting these reliefs from the appropriate authorities, it will be open to the appellants to move this Court for redress of their grievances. In the present cases, we feel that no genuine efforts have been made on the part of the appellants to get the mortgage amounts, if any, due to them, in respect of the lands about which a charge has been created under the law as it stands now. We are, therefore, of the view that on the facts and circumstances of the present case, the learned Single Judge was fully justified in dismissing the writ petitions it: limine. We would, however, direct the Collectors of Lahore and Sialkot Districts, respectively in L. P. A. No. 63 of 1968 and L. P. A, No. 78 of 1968, to determine the amounts of the respective appellants in respect of the lands in dispute, and the Settlement Authorities to pay them the amounts so determined.

6. In the result, subject to the remarks made above, both the appeals are dismissed in limine.

A.E. Appeals dismissed in limine.

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