Patna High Court
Jay Prosad Choubey And Ors. vs Mt. Jasoda And Ors. on 19 February, 1958
Equivalent citations: AIR1958PAT649, 1958(6)BLJR252, AIR 1958 PATNA 649
Author: V. Ramaswami
Bench: V. Ramaswami
JUDGMENT R.K. Choudhaky, J.
1. These two appeals arise out of two redemption suits. The parties are different, but with their consent they have been heard together as a common question of law arises in both the cases. This-judgment will govern them both.
2. The facts leading to the institution of the suit of which S. A. 1384 of 1950 arises are these : Plaintiff No. 1 executed two usufructuary mortgage bonds in favour of defendant No. 1, Jairam Tewari, who died during the pendency of the suit and was substituted by his widow. One bond was for Rs. 600 and the other for Rs. 200. According to the case of the plaintiffs, a sum of Rs. 304 out of the above mortgage money was left with the mortgagee for payment of arrears of rent for the lands given in usufructuary mortgages for the year 1341 fasli, that is, prior to the execution of the usufructuary mortgage bonds.
It appears that the arrears of rent for the year 1341 fasli were not paid, and the landlords obtained a decree for rent for that year. In execution of that decree, the mortgaged lands were sold on 3rd of December, 1935, and were purchased by the defendants second party who have been found by both the Courts below to be the benamidars of the mortgagee. The plaintiffs wanted to redeem the two mortgages in-Baisakh, 1351 fasli, but the mortgagee refused to accept the money and asserted that the lands had been sold in execution of a decree for rent.
The plaintiffs thereafter instituted a suit for redemption, being title suit No. 111 of 1944, in the Court of the Munsif at Banka. The suit was contested on various grounds, but the pleas which are relevant for the purpose of the present appeal were (1) that the sum of Rs. 304 was never deposited with them for payment of arrears of rent for the year 1341 fasli and the liability to pay the same was on the mortgagors and (2) that by sale of the mortgaged property in execution of a decree for rent the right of redemption has been extinguished.
The trial Court held that the story put forward by the plaintiffs as regards the deposit of the sum of Rs. 304 with the mortgagee was not correct and the mortgagee himself purchased the lands in execution of a decree for arrears of rent for the year 1341 fasli. It may be noted that the lands in mortgage appertain to khata Nos. 3, 4, 12, 13 and 51. The trial Court held that the sale of 4.82 acres of khata No. 3 and the entire land of khata No. 51 was fraudulent and the plaintiffs' right of redemption subsisted so far as those lands were concerned.
It, however, held that the sale of the remaining area of khata No. 3, namely, 20.88 acres and the entire area of khata Nos. 4, 12 and 13 was not fraudulent and the right of redemption has been extinguished. It may also be noted that the share of the plaintiffs in khata No. 3 was four annas and in khata No. 51, eight annas. The trial Court, therefore decreed their suit for redemption of their shares in 4.82 acres of khata No. 3 and of the lands appertaining to khata No. 51 on payment of the entire mortgage money due under the two bonds, namely, a sum of Rs. 800.
With respect to the rest of the mortgaged lands, the suit for redemption was dismissed. The plaintiffs preferred an appeal in the lower appellate Court against the dismissal of their suit for the rest of the lands and the defendants filed a cross-objection with respect to the lands for which a decree for redemption had been passed. The lower appellate Court affirmed the findings of the trial Court on all the points and dismissed both the appeal and the cross-objection. Being, thus, aggrieved, the plaintiffs have preferred the present appeal in this Court and the defendants have filed a cross-objection. The cross-objection has, however, not been pressed and it is, accordingly, dismissed.
3. The facts giving rise to S. A. 919 of 1954 are as follows : Plaintiff No. 1 and his brothers, whose heirs and legal representatives are plaintiffs 2 to 6, executed a usufructuary mort-gage bond on 5-7-1927 with respect to 7.20 acres of Jand in village Hichhapore for a sum of Rs. 1000 in favour of the defendants. On 15-4-1928, they executed another usufructuary mortgage bond in favour of the defendants with respect to 7.5 acres of lands in village Utrain for Rs. 1300.
The lands appertaining to village Hicchapore were under the zamindari of the Tikari Raj and the lands appertaining to Utrain were under the khas Mahal. The holdings of the plaintiffs in both the villages consisted, besides the lands given in usufructuary mortgagees, of some more lands and the stipulation was that the mortgagees will pay the rent for the mortgaged lands and the mortgagors will pay rent for the lands which were outside the mortgages.
It appears that there was default in the payment of rent as a result of which the Tikari Raj got the holding sold in execution of a decree for rent and that was purchased by one Dwarka Lal on 18-6-1934 who obtained delivery of possession on 19-1-1936. The judgment debtors filed an application under Order 21, Rule 90 of the Code of Civil Procedure for setting aside the above sale, and in that proceeding the parties filed a petition for compromise under which the judgment-debtors undertook to pay the decretal amount with compensation money to the auction purchaser by a certain date and it was stipulated that on such payment being made, the sale shall stand set aside.
It was further stipulated that on failure of such payment being made on the date fixed, the sale shall stand confirmed. No payment, however, was made as stipulated above and the sale stood confirmed. Similarly, the khas mahal started a certificate proceeding on account of failure of payment of rent and the holding of the plaintiffs in village Utrain was sold in a certificate sale and purchased by the mortgagee-defendants themselves in the name of their servant Deokaran Singh on 22-1-1934.
The judgment-debtors again made an application under Section 29 of the Public Demands Recovery Act for setting aside the sale. There also they were allowed time to pay the dues but they did not pay and the sale was confirmed on 20-7-1934. The auction purchaser took delivery of possession on 15-8-1934. Thereafter the defendants took a sale deed from Dwarkalal the auction purchaser of Hichhapore lands and a deed of release from Deokaran Singh with regard to Utrain lands.
The case of the plaintiffs is that in 1950 they offered to redeem the two usufructuary mortgage bonds and on refusal of the mortgagees to accept the money, they deposited the same in Court under Section 83 of the Transfer of Property Act. They thereafter instituted the present suit for redemption of the two mortgages being) mortgage suit No. 91 of 1951 in the Court of the Munsif, 1st Court, Gaya.
The suit was contested by the mortgagee-defendants on various grounds, but the ground with which we are concerned in this appeal was that in view of the sale for arrears of rent due to default of the plaintiffs, their right to redemption was lost. The trial Court overruled the plea taken in defence and held that the equity of redemption was not lost and decreed the suit. The defendants, thereafter, preferred an appeal in the lower appellate Court. That Court, however, held that the mortgaged security along with the rest of the holdings was sold in auction for default of payment of rent by the mortgagors with respect to the portions of the lands not covered by the mortgage bonds and that the sales were not brought about by the mortgagees on account of their default or collusion with the landlords for the ulterior motive of depriving the mortgagors of the mortgaged property.
It was also held that the mortgagees made all attempts to save the mortgaged property even after having paid the entire rent and the mortgagors had full knowledge of the same and defaulted in payment of the arrears even after the compromise and the time allowed for payment of the decretal dues. Accordingly, it held that the purchase made by the mortgagee-defendants extinguished the equity of redemption and the same did not enure for the benefit of the mortgagors.
It appears that out of the lands given in mortgage for a sum of Rs. 1000 referred to above, plot No. 955 had an area of 4.33 acres. Out of this plot only 3.93 acres were given in mortgage and the rest of the lands, namely, .40 acres remained in possession of the mortgagors. By sale in execution of the decree for rent only .33 acres out or this plot was sold and that area was found to have been sold out of the area of this plot left in possession of the mortgagors.
Therefore, the entire area given in mortgage, namely 3.93 acres out of this plot continued to remain in possession of the mortgagees as being mortgaged property. The lower appellate Court, therefore, allowed the redemption of this area and decreed the suit to that extent entitling the mortgagees to withdraw the entire sum of Rs. 1000 deposited with respect to this usufructuary mortgage. With respect to the rest of the lands given in usufructuary mortgage the suit was dismissed. Being, thus aggrieved, the plaintiffs have presented this second appeal in this Court.
4. Mr. Mahabir Prasad appearing for the appellants in both the cases has advanced an argument that under Section 76 (c) of the Transfer of Property Act the mortgagees in possession were bound to pay rent and to save the mortgaged property from sale, and, they not having done so, must be held to have defaulted in carrying out their obligation as envisaged by that section, and they cannot take advantage of their own default so as to extinguish the mortgagors' right of redemption. That section reads as follows :
"When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property, he must, in the absence of a contract to the contrary, out of the income of the property, pay the Government revenue, all other charges of a public nature and all rent accruing due in respect thereof during such possession, and any arrears of rent in default of payment of which the property may be summarily sold."
The first portion of this section admittedly is of no assistance to the appellants because in S.A. 1384 of 1950 the arrears of rent for which the mortgaged properties were sold accrued prior to the period of the execution of the usufructuary mortgage bonds, and in S.A. 919 of 1954 the arrears of rent were due for lands other than the lands given in mortgage. Mr. Mahabir Prasad, however, relied on the latter portion of that section and submitted that any arrears of rent in default of payment of which the mortgaged property could be sold should have been paid by the mortgagee in possession, I am, however, unable to accept this contention. This portion of the section makes it perfectly clear that only such arrears of rent have to be paid by a mortgagee in possession in default of which the property may be summarily sold. The expression "summarily sold" implies that the proceeding for realisation of rent by sale of the mortgaged property is of a summary nature, such as a certificate proceeding under the Public Demands Recovery Act.
This view is borne out by a Bench decision of this Court in Jagat Mohan v. Sheonarain, AIR 1938 Pat 196 (A). It has then been contended by Mr. Mahabir Prasad that on the above view of law the right of redemption with regard to Utrain lands in S.A. 919 of 1954 which were sold in a certificate proceeding must be held to be subsisting. But the above section in my opinion, contemplates arrears of rent for the lands in mortgage and not for those which are outside the mortgage.
The Utrain lands having been sold in a certificate proceeding for arrears of rent due for lands outside the mortgage, the above principle of law is not applicable to them. In that view of the law, the mortgagees in possession in both the cases had no obligation to pay arrears of rent for which the mortgaged properties were sold inasmuch as in the first case the rent due was for the period prior to the mortgage and in the other case the arrears were for lands which were outside the mortgages. Thus the argument advanced on behalf of the appellants in this regard fails.
5. The next point taken on behalf of the appellants is that under Section 90 of the Indian Trusts Act, 1882, the purchase by the mortgagees in possession in both the cases should enure to the benefit of the mortgagors, and, as such, the right of redemption could not be lost. In support of this contention reliance has been placed on two Bench decisions of this Court in Ram Rup Singh v. Jang Bahadur Singh, AIR 1951 Pat 566 (B) and Deo Saran Singh v. Barhu Singh, AIR 1952 Pat 2SG(C). Section 90 of the Trusts Act states that;
"Where a tenant for life co-owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested the advantage so gained, but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage."
6. In order that the principle of this section should apply to the facts of the cases under consideration, it must be shown that the mortgagees in possession by availing themselves of their position as such have gained any advantage. The ingredients for applying the above principle are absolutely wanting in these cases.
On the findings of the final Courts of fact in both the cases it is manifest that the mortgagors themselves were the defaulters and the mortgagees in possession did all what they could do as being such and it must, therefore, beheld that they did not avail of their position as mortgagees in possession for gaining any advantage. They purchased the mortgaged properties to save their own interests inasmuch as if they would have allowed the mortgaged properties to be sold in execution of decrees for rent, they would have suffered a loss as the sale would have been free from encumbrances. Section 90 of the Trusts Act, therefore, has no application to these cases.
7. In AIR 1951 Pat 566 (B), the entire amount of mortgage money was left with the mortgagees in possession for payment of certain rent decree with respect to the holding given in usufructuary mortgage. The mortgagees did not pay the decretal amount and in execution of the decree the landlords purchased the holding. Thereafter, they settled the same with the usufructuary mortgagees. The mortgagors brought a suit for redemption.
In that case it was found that the sale was held due to the default of the mortgagees who acted fraudulently and in collusion with the landlords in getting the mortgaged property sold and taking settlement of the same. It was, therefore, held that the mortgagees in taking settlement acted as trustees for the mortgagors and their right of redemption was not extinguished. This case, has, therefore, no application to the facts of the present cases.
Reference however, may be made to an observation made by their Lordships in that case with regard to a well known legal maxim, commodum ex injuria sua memo habere debt (convenience cannot accrue to a party from his own wrong), that the mortgagees could not take advantage of their own wrong. Applying the same principle to the present cases, it appears that the plaintiffs due to whose default the properties were sold, could not be permitted to take advantage of that default.
In AIR 1952 Pat 286 (C), some lands appertaining to a particular khata except a small area of 2 1/2 kathas were given in usufructuary mortgage by four mortgage bonds. There having been default in payment of rent of the khata, the landlords obtained a decree for rent in execution of which the entire holding was sold and purchased by the mortgagees in the benami names of their creatures. A suit for redemption was brought by the representatives of the mortgagors.
This Court on construction of the mortgage bonds held that the liability to pay rent of the entire khata was on the mortgagees and it was, therefore, held that the mortgagees could not be permitted to take advantage of their own wrong and applying the principle of Section 90 of the Trusts Act their Lordships came to the conclusion that the equity of redemption was not lost and the suit for redemption was decreed. Again that case has no application to the present cases because in the present cases the liability to pay rent was on the mortgagors 'and not on the mortgages.
8. Reliance has also been placed by Mr. Mahabir Prasad on a Supreme Court decision in Sidhakamal Nayan Ramanuj Das v. Bira Naik, AIR 1954 SC 336 (D). In that case the defendant was a statutory mortgagee under the provisions of the Orissa Tenancy Act and the arrears of rent for which the holding was sold were for the period during the continuance of the statutory mortgage. It was, therefore, held that the mortgagee himself was in default and when he purchased the holding in auction sale held due to his own default, he purchased it for the benefit of the mortgagor and the principle of Section 90 of the Trusts Act applied. For the reasons given above this case also has no application to the facts of the cases under consideration,
9. On behalf of the defendants-mortgagees in both the cases Mr. Lalnarain Sinha has contended that the plaintiffs themselves being in default and having brought about the sale for their own default cannot, either in law or in equity, put forward, a claim that their right of redemption still subsists notwithstanding sales held in execution of decrees for arrears of rent which they have failed to pay.
The contention seems to be well founded and must prevail.
The view taken by a Bench of this Court in Satahu Singh v. Sonful Singh, S.A. No. 942 of 1947, D/- 31-1-1950 (E), fully supports the above contention. In that case there was a stipulation in the usufructuary mortgage bond that the mortgagors would themselves pay the rent of the mortgaged property. They, however, defaulted in making payment of the rent, and the landlords obtained a decree for the same. In execution of that decree the mortgagees themselves purchased the holding. The claim of the mortgagors for redemption was disallowed as it was held that the right of redemption was lost by the rent sale. In this connection I may refer to an observation made by Sinha, J. (as he then was) who delivered the judgment of the Court, Rai, J. agreeing. It is as under :
"It is common ground that the mortgagors were liable to pay rents as and when they fell due. The mortgagors themselves made a default in payment of the rent, and, if the holding, including, the mortgaged portion, has been sold, they have to thank themselves and nobody else. The mortgagees purchased the holding in execution of the rent decree not to benefit the mortgagors but to benefit themselves, inasmuch as, if they allowed the sale to be held, and the property purchased by a third party, or by the decree-holder himself, their rights as mortgagees would have been thrown into jeopardy.
In order to conserve their own rights, they had to purchase the property at the rent sale. The question is whether that rent sale can operate to create any rights in favour of the mortgagors, the plaintiffs in this action. In my opinion, no rights were created in favour of the mortgagors, as a result of the rent sale and purchase by the mortgagees themselves."
The defence of the right of redemption having been lost in these cases also gains support from some of the lecent decisions of this Court. In Jadubhans Sahai v. Bahuria Phulpati Kuer, 1957 Pat LR 178: (AIR 1957 Pat 452) (F), a Bench of this Court held that when the mortgagee in possession had discharged all the obligations under the mortgage, and the sale was brought about in spite of the mortgagee, it cannot be said that the mortgagee had, by availing himself of the position as such, gained advantage in derogation of the rights of the other persons interested in the property within the meaning of Section 90 of the Trusts Act and it follows that the mortgage was entirely extinguished by the auction sale.
In Kewal Surihar v. Bikan Surihar, 1957 BL JR 158: (AIR 1957 Pat 497) (G), it was held that in the absence of any casual connection between the default of the mortgagee to pay rent and save the property from sale and the settlement obtained by him from the landlord it cannot be said that the mortgagee has, by availing himself of his position as such, gained an advantage in derogation of the rights of the other persons interested in the property within the meaning of Section 90 of the Trusts Act.
A later decision of this Court which appears to be on all fours with the facts of the present cases is the case of Isar Nonia v. Kariman Pandey, 1958 BL JR 64: (AIR 1958 Pat 353) (H). It was held in that case that where a part of the holding is mortgaged and proportionate rental is payable by the mortgagee and the holding is sold in execution of rent decree without any default on the part of the mortgagee and a portion of the land sold is purchased by the mortgagee from the auction purchaser, the question of resulting trust coming into being in favour of the mortgagor does not arise in the absence of any collusion or fraud or employment of any unfair means by the mortgagee in bringing about the sale of the mortgaged property.
10. On consideration of the law and the authorities referred to above, my concluded opinion is that the sale of the mortgaged property having been brought about due to the default of the mortgagor himself and without any fraud or collusion on the part of the mortgagee in possession extinguishes the mortgagor's right of redemption. In that view of the matter, the decrees of the lower appellate Courts in both the cases refusing the claim of redemption put forward by the plaintiffs to the extent indicated therein are perfectly legal and correct.
11. It has then been contended on behalf of the appellants in both the cases that the mortgagees themselves having acquired portions of the mortgaged properties, they should have been held to be entitled to only a proportionate amount of the mortgage money with respect to the portions of the mortgaged lands for which the plaintiffs had obtained decrees for redemption. For the above contention reliance is placed on the last paragraph of Section 60 of the Transfer of Property Act which runs as follows :
"Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of the mortgagor."
On behalf of the respondents, however, it has been contended, and, in my opinion, rightly, that by purchase of the portions of the mortgaged property by the mortgagees at rent sales, they purchased the entire interest of the mortgagors in the property free from encumbrances and not only their equity of redemption. The correctness of this contention is borne out by a Bench decision of the Calcutta High Court in Jasodha Kumar v. Kali Kumar, AlR 1930 Cal 619 (I).
It was held therein that where the mortgagee purchases a portion of the mortgaged property tin determination of the question whether the whole of the mortgage debt is chargeable on the remaining property mortgaged depends on whether the mortgagee purchased only the equity of redemption or the entire interest of the mortgagor and in the latter case no portion of the mortgage debt is extinguished. In the cases under consideration the mortgagees have acquired portions of the mortgaged properties under rent sales free from encumbrances and, therefore, they could not be made liable for payment of any portion of the debt. In that view of the matter, the plaintiffs could not, in law, be entitled to redeem the mortgages on proportionate payment of the mortgage money.
12. For the reasons given above, there appears to be no merit in these appeals which are dismissed with costs.
V. Ramaswami, C.J.
13. I agree.