A) ABSTRACT / HEADNOTE

This case, Raja Kamakshya Narayan Singh Bahadur v. Chohan Ram and Another (1953 SCR 108), dealt with the power of a mortgagor in possession to lease mortgaged property before the enactment of Section 65-A of the Transfer of Property Act, 1882 by the Amending Act XX of 1929. The Supreme Court of India clarified the legal position applicable to leases executed by a mortgagor prior to the 1929 amendment. The core legal question was whether such a lease would be binding on the mortgagee, especially when the lease was a permanent one and executed without the mortgagee’s concurrence. The Supreme Court held that unless the mortgagor executed the lease in the usual course of management, conformable to customary practice, it would not bind the mortgagee. The Court emphasized that a mortgagor could only create such interests in the mortgaged property that do not alter its character or usage and do not impair the security. The decision overruled the High Court’s interpretation which relied upon Section 66 of the Transfer of Property Act, and it harmonized conflicting earlier decisions by establishing a uniform principle of law. This ruling has become a leading authority on the issue of a mortgagor’s leasing power before the statutory clarification introduced in 1929.

Keywords: Mortgagor’s power to lease, Transfer of Property Act, Section 65-A, Permanent lease, Usual course of management, Security of mortgagee, Supreme Court, Pre-1929 law

B) CASE DETAILS

i) Judgement Cause Title
Raja Kamakshya Narayan Singh Bahadur v. Chohan Ram and Another

ii) Case Number
Civil Appeal No. 73 of 1950

iii) Judgement Date
October 29, 1952

iv) Court
Supreme Court of India

v) Quorum
Mehr Chand Mahajan, Chandrasekhara Aiyar, and N.H. Bhagwati, JJ.

vi) Author
Justice N.H. Bhagwati

vii) Citation
(1953) SCR 108

viii) Legal Provisions Involved
Transfer of Property Act, 1882 – Sections 65-A and 66

ix) Judgments Overruled by the Case
Balmukund v. Motilal (1915) 20 C.W.N. 350 – dissented from

x) Case is Related to which Law Subjects
Property Law, Mortgage Law, Contract Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The legal issue revolved around whether a mortgagor, who remained in possession after executing a mortgage, could legally lease the mortgaged property to a third party without the consent of the mortgagee, especially when such lease was permanent in nature. The Transfer of Property Act, prior to the 1929 amendment, did not contain an explicit provision regarding the leasing powers of a mortgagor. The Supreme Court’s task was to resolve conflicting judicial precedents and provide clarity on the scope of such authority exercised by mortgagors before Section 65-A was added to the Act.

The case arose from a mortgage created in 1914, and a subsequent lease executed in 1925, which the auction-purchasing plaintiff contended was void as against the mortgagee. The High Court had ruled in favour of the defendants (the lessees), reasoning that the lease did not impair the mortgagee’s security under Section 66. However, the Supreme Court was called to determine whether that section had any bearing on a mortgagor’s power to lease, and whether such lease was binding on an auction purchaser under a mortgage decree.

D) FACTS OF THE CASE

In this matter, one Wazir Narayan Singh, who was in possession of Gadi Sirampur, executed a simple mortgage on August 1, 1914, in favour of Chota Nagpur Banking Association Ltd.. The Bank obtained a mortgage decree in 1921, and purchased a one-third share of the property through a court auction in 1922. However, a settlement was later reached, and Wazir Narayan Singh agreed to repay the debt, following which the auction sale was set aside in 1926.

Crucially, on November 5, 1925, while the Bank’s auction sale was still under challenge, Wazir Narayan Singh granted a permanent lease over four villages—Nawaaih, Kolaih, Panana, and Chihutia—to one Hiraman Ram, who was the Karta of a joint Hindu family. The lease was recorded through a registered patta in the names of Hiraman Ram and his son Chohan Ram. The plaintiff, through the Court of Wards, later mortgaged the property again to settle the Bank’s claim and obtained a final mortgage decree in 1931. The plaintiff purchased the property at a court auction in 1935 and obtained possession in 1936. However, the defendants remained in possession of the leased villages.

The plaintiff, asserting that the lease was invalid and not binding upon him as a mortgagee and auction purchaser, filed a suit for khas possession in 1939. The defendants contested the claim on the ground that the lease was valid, and binding since it did not impair the mortgage security. The High Court agreed with the defendants, but the Supreme Court took a different view.

E) LEGAL ISSUES RAISED

i) Whether a mortgagor in possession, prior to the 1929 amendment, had the legal power to execute a permanent lease binding on the mortgagee or his successors.

ii) Whether the validity of such lease must be assessed based on whether it impaired the mortgagee’s security (Section 66) or whether it was executed in the usual course of management.

iii) Whether a mortgagee or an auction purchaser under a mortgage decree could claim possession against such a lessee.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for the Petitioner / Appellant submitted that
Wazir Narayan Singh had no legal authority to create a permanent lease after he had mortgaged the property in 1914. The appellant argued that the lease was not granted in the usual course of management, and thus could not bind the mortgagee. They relied upon Madan Mohan Singh v. Raj Kishore Kumari [(1916) 21 C.W.N. 88] which held that only leases granted in conformity with customary practice in property management could be enforceable against a mortgagee[1].

It was further argued that Section 66 of the Transfer of Property Act was not applicable in deciding a mortgagor’s power to lease, as that provision dealt solely with acts of waste and not with the creation of interests in the mortgaged property[2].

The appellant emphasized that the burden lay on the lessee to prove that the lease was granted in the ordinary course of management and on usual terms, and no such plea or evidence had been submitted by the respondents.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that
The lease was valid since it did not impair the mortgagee’s security. They referred to Section 66 of the Transfer of Property Act to argue that unless the lease rendered the mortgagee’s security insufficient, it should be considered valid[3].

They also relied on the High Court’s finding that the income from the leased villages was not significant enough to affect the mortgagee’s right or the value of his security. Therefore, the mortgagee (or auction purchaser) could not terminate the lease.

H) RELATED LEGAL PROVISIONS

i) Section 65-A, Transfer of Property Act, 1882: Introduced by Amendment Act XX of 1929, it conferred express power on a mortgagor in possession to lease mortgaged property under specific conditions.

ii) Section 66, Transfer of Property Act, 1882: Related to the liability of the mortgagor in possession for waste.

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Supreme Court ruled that Section 66 was irrelevant for determining whether a mortgagor had the authority to lease mortgaged property. The lease had to be justified under the general principles of property management, not whether it impaired the mortgagee’s security.

The Court held that unless a lease was granted in the usual course of management—for instance, agricultural leases from year to year or housing leases from month to month—it would not bind the mortgagee. The permanent lease created in 1925 did not satisfy this condition and hence was not binding on the mortgagee or the auction purchaser. The lessee failed to discharge the burden of proving that the lease was customary and granted in the ordinary course[4].

The case of Balmukund v. Motilal [(1915) 20 C.W.N. 350], which took a liberal view of the mortgagor’s powers, was dissented from. The ruling in Madan Mohan Singh v. Raj Kishore Kumari was affirmed[5].

b. OBITER DICTA 

i) The Supreme Court discussed how, even under English law, the mortgagor’s acts could not bind the mortgagee unless they were done in the course of property management. The Court emphasized that a lessee under such circumstances could, at most, have a redeemable interest but not a possessory right against a mortgagee enforcing a mortgage decree.

c. GUIDELINES 

• Mortgagor may create leases in the usual course of management only.

• Permanent leases, or those not conforming to custom, are not binding unless mortgagee consents.

• The burden lies on the lessee to prove the lease’s conformity to usage and necessity.

• Section 66 applies to waste, not leasing powers.

• Leasing power must be judged by customary legal management, not impact on security.

J) CONCLUSION & COMMENTS

This judgment remains a landmark in the law relating to mortgages and leases under Indian property law. The Supreme Court brought clarity to a previously unsettled area by reaffirming that a mortgagor’s authority to lease mortgaged property is inherently limited by custom and necessity, not by the absence of impairment to mortgagee’s security. The decision ensured that mortgagees’ rights would not be diluted through strategic long-term leases created by mortgagors seeking to limit redemption. The Court wisely dissociated the issue from Section 66, maintaining the distinction between waste and proprietary interest.

K) REFERENCES

a. Important Cases Referred
[1] Madan Mohan Singh v. Raj Kishore Kumari, (1916) 21 C.W.N. 88
[2] Balmukund v. Motilal, (1915) 20 C.W.N. 350
[3] Banee Prasad v. Reet Bhunjun Singh, (1868) 10 W.R. 325
[4] Corbett v. Plowden, (1884) 25 Ch. D. 678
[5] Moreland v. Richardson, (1857) 24 Beav. 33
[6] Pope v. Briggs, (1829) 9 B&C 245

b. Important Statutes Referred
[1] Transfer of Property Act, 1882 – Section 65-A, Section 66