Case Note & Summary
The petitioner, South Canara District Central Co-operative Bank Ltd., filed a writ petition under Articles 226 and 227 of the Constitution of India seeking quashing of an endorsement dated 18.07.2023 issued by the Tahsildar, Brahmawara (Respondent No.4), which rejected the bank's application for mutation entry in respect of a site granted to Respondent No.5 under the Ashraya scheme. The site was granted to Respondent No.5 subject to conditions that she shall not alienate the site for 25 years and shall not transfer possession or rights to any other person. Respondent No.5 mortgaged the site by deposit of title deeds with the bank to secure a loan. Upon her default, the bank initiated recovery proceedings under the Karnataka Co-operative Societies Act, 1959, and purchased the site in an auction conducted by the Deputy Registrar of Co-operative Societies. The bank then applied for mutation of its name in the revenue records, which was rejected by the Tahsildar citing the grant conditions. The bank contended that the mortgage by deposit of title deeds is not an alienation and that the auction sale was valid. The State respondents argued that the grant conditions prohibited any transfer. The High Court held that the condition against alienation does not bar creation of a mortgage by deposit of title deeds, as mortgage is only a security interest and not a transfer of ownership. The court further held that the bank, having purchased the site in a valid auction, is entitled to mutation. The impugned endorsement was quashed, and the Tahsildar was directed to consider the bank's application afresh and pass appropriate orders in accordance with law.
Headnote
A) Land Grant - Alienation Restriction - Mortgage by Deposit of Title Deeds - Condition in grant order prohibiting alienation for 25 years does not bar creation of mortgage by deposit of title deeds in favour of a bank, as mortgage is not a transfer of ownership but a creation of security interest. The bank, after purchasing the site in auction for recovery of loan, is entitled to have its name entered in revenue records. (Paras 1-5) B) Karnataka Land Grant Rules, 1969 - Rule 19 - Condition Against Alienation - The condition that the grantee shall not alienate the site for 25 years and shall not transfer possession or rights to any other person, does not prohibit the grantee from mortgaging the site to a bank. Mortgage by deposit of title deeds is a mode of creating security and does not amount to alienation or transfer of ownership. (Paras 1-5) C) Karnataka Land Revenue Act, 1964 - Section 135 - Mutation Entry - Bank as auction purchaser is entitled to mutation entry in revenue records. The Tahsildar's endorsement rejecting the application for mutation on the ground that the grant condition prohibits alienation is erroneous and liable to be quashed. (Paras 1-5)
Issue of Consideration
Whether the condition in a grant order under the Karnataka Land Grant Rules, 1969 that the grantee shall not alienate the site for 25 years and shall not transfer possession or rights to any other person, prohibits the grantee from mortgaging the site to a bank and consequently, whether the bank can seek mutation in its name after purchasing the site in an auction conducted pursuant to recovery proceedings under the Karnataka Co-operative Societies Act, 1959.
Final Decision
The writ petition is allowed. The impugned endorsement dated 18.07.2023 issued by Respondent No.4 Tahsildar is quashed. The Tahsildar is directed to consider the petitioner's application for mutation afresh and pass appropriate orders in accordance with law, without being influenced by the observations made in the order.
Law Points
- Interpretation of grant conditions
- alienation restriction
- mortgage by deposit of title deeds
- auction sale by bank
- mutation entry
- Karnataka Land Grant Rules
- 1969
- Rule 19
- Section 135 of Karnataka Land Revenue Act
- 1964
