LexRUKMINI AMMA & ORS. versus RAJESWARY (DEAD) THROUGH LRS. & ORS.
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[2013] 5 S.C.R. 579 RUKMINI AMMA & ORS. v. RAJESWARY (DEAD) THROUGH LRS. & ORS. (Civil Appeal Nos. 1475-1476 of 2005) MARCH 22, 2013 [DR. B.S. CHAUHAN AND FAKKIR MOHAMED IBRAHIM KALIFULLA, JJ.] A B Mortgage - ~edemption - Permissibility - Land mortgaged - During subsistence of the mortgage, the land C sold in auction by Revenue authorities for appropriation of agricultural income tax liabilities of the mortgagor - The land was purchased by the mortgagee - After about 30 years, mortgagor filing suit for redemption - Suit dismissed by trial court, but decreed by first appellate court and High Court - D On appeal, held: Mortgagor not entitled to redemption - The . sale of land in auction by Revenue authorities to the mortgagee has extinguished the redemption rights of the mortgagor - Under the contractual terms of the mortgage deeds, there was no obligation on the part of the mortgagee E to clear the tax liability of the mortgagor - Obligation of the mortgagee to pay Government dues, can only be relatable to the dues, arising against the land mortgaged and not against the person of the mortgagor - Even under s. 76(c) of the Transfer of Property Act, the liabilities contemplated to be F cleared by the mortgagee, will not include the Income tax liability of an assessee - Transfer of Property Act, 1872 - s. 76(c) - Trust Act 1882 - s.90. Predecessor-in-interest of the respondents created. usufructury mortgage in favour of predecessor-in-interest G of the appellants, initially in 1958 (Exbt B-1) and then in 1959 and 1961 (Exbts B-2 and A-1 respectively) for further sums. While the mortgage was subsisting, the property 579 H 580 SUPREME COURT REPORTS [2013] 5 S.C.R. A in question was attached under the Revenue Recovery Act for appropriation of agricultural income tax liabilities of the mortgagor. The property was sold in public auction and the same was purchased by the son of the mortgagee, being the highest bidder in the auction. B The mortgagor-respondents, after a lapse of 30 years, filed the present suit for redemption of the mortgage. Trial Court dismissed the suit. The first appellate court decreed the same, holding that the, mortgagee was C entitled to redeem the property in question because as per terms of the mortgage deeds (Exbts A1, B-1 and B~ 2), the liability to pay the revenue dues and other does to the Government was on the mortgagee; also in view • of s.76(c) of Transfer of Property Act, it was the duty of the mortgagee to pay the Government dues towards the D agricultural income; and also because the revenue sale was fraudulently brought out by the mortgagee to defeat the right of the mortgagor. The judgment of the first appellate court was upheld by the High Court. Hence the present appeals. E Allowing the appeals, the Court HELD: 1.1. The sale effected under Exhibit 85 to meet the agricultural income tax liability of the mortgagor has F extinguished the mortgagors' right and consequently the suit was liable to be dismissed. [Para 27] [603-D] 1.2. The levy of income tax on the agricultural income would be based on whatever the mortgagor derived from the produce of the lands owned by him including the G mortgaged lands and, therefore, such liability towards agricultural income tax cannot be held to be Government dues simpliciter in order to fasten the liability on the mortgagee. [Para 15] [595-C-D] H S.S. Rajalinga Raja vs. State of Madras 1967 (1) SCR RUKMINI AMMA v. RAJESWARY (DEAD) THROUGH 581 LRS 950 - relied on. Plakkad Estate (P) Ltd. and Ors. vs. Agricultural Income Tax Officer and Ors. (1980) 125 ITR 564 (Ker); R. Vaidyanatha Mudaliar vs. State of Madras (1976) 104 ITR 444 (Mad) - referred to. 1.3. An Agricultural income tax levied and demanded against an assessee can never be held to be a liability qua the land but can only be held to be a liability qua the A B . land owner or the one who was responsible for the cultivation of such lands and the income derived from the C produce so cultivated. [Para 16] [596-H; 597-A-B] 1.4. The agricultural income tax payable by the mortgagor cannot be held to be an assessment of tax made with reference to the extent of land mortgaged by 0 him. What was assessed by way of agricultural income tax was based on the total agricultural income derived by the land holder from and out of the entirety of the land held by him which may also include the lands mortgaged. It ca
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