Patna High Court
Jadubans Sahai And Ors. vs Bahuria Phulpati Kuer And Ors. on 1 April, 1957
Equivalent citations: AIR1957PAT452, 1957(5)BLJR513, AIR 1957 PATNA 452
Author: Chief Justice
Bench: Chief Justice
JUDGMENT Kanhaiya Singh, J.
1. These are second appeals by the plaintiffs from the Judgment and decrees of the 4th Additional Subordinate Judge, Chapra, dated the 28th February 1950, reversing the decision of the Munsif, 2nd Court, Chapra, dated the 7th August 1948, under which the plaintiffs' suit for redemption and possession of the mortgaged properties was decreed.
2. The mortgage sought to be redeemed is a usufructuary mortgage executed so long ago as February 23, 1871, by Musammat Deorani Kuer, as mother and guardian of Agin Prasad Singh, ancestor of defendants third party in favour of Shedgulam Sah, grandfather of the husband of defendant No. 1, for a consideration of Rs. 1,875. The mortgaged properties consist of proprietary shares in certain villages comprised in new tauzi No. 1804 (parent tauzi No. 1761) of the Saran CoIIectorate. The mortgage bond provides (1) that the entire mortgage money will be repayable in five, years, and in the event of non-payment, the mortgage will remain in force until repayment, and (2) that the mortgagee will pay annually by way of haqhazri Rs. 108, in the first instance, to certain ladies named therein and later, on the death of the ladies, to the mortgagor himself., Defendant No. 1 is the successor-in-interest of the original mortgagee. The plaintiffs acquired the equity of redemption, partly by purchase at auction sale on 13-3-1912 held in execution of a mortgagee decree followed by delivery of possession on 11-12- 1912, and partly by private treaty by virtue of a registered deed of sale dated 27-6-1933, and thereafter served on defendant No. 1 a notice dated 29-5-1954 through Sri Sukhdeo Prasad, Advocate,'Chapra, offering to redeem the mortgage. Mr. Harvey, the Manager of defendent No. 1, the mortgagee, sent a reply thereto on 15-6-1934 agreeing to permit redemption on payment of the entire mortgage money.
He denied, however, the liability to account for nonpayment of the haqhazri.
The plaintiffs took no further steps; In 1.943 the entire tauzi was sold at auction which took place on 11-1-1943 under Act XI of 1859 and was purchased by Swami Satkop Dass, defendant second party. The plaintiffs instituted the present suit for redemption on 11-1-1944. They claimed possession of the mortgaged properties and also a sum of Rs. 43,083-7-74 p. from defendant No. 1 on the allegation that this sum was surplus in their hands after liquidation of the mortgage debt with the haqhazri. They alleged that the mortgagee paid the haqhazri of Rs. 108 only so long as the said ladies were alive and defaulted in payment since after 1882 when the ladies died one after another. According to them the entire mortgage money was repaid with the haqhazri by September 25, 1893, and thereafter the sum of Rs. 108 payable to the mortgagors was appropriated by the mortgagee, and the total amount of haqhazri up to the date of suit comes to Rs. 43,083 odd.
They alleged further that the mortgagee was liable for payment of "the Government revenue in respect, of the mortgaged properties, that she fraudulently brought about the revenue sale and herself purchased the properties benami in the name of defendant No. 2 and that notwithstanding the revenue sale 'the mortgage remained in force and she was holding the properties as mortgagee in trust for and on behalf of the mortgagors. They contended that it had not the effect of extinguishing the mortgage. The suit was evidently instituted more than sixty years after, but they alleged that the suit was not barred by limitation as the acknowledgment by Mr. Harvey purported to extend the period of limitation and further that, in any case, the starting period of limitation in this case was September 25, 1893 when on account of the discharge of the entire mortgage debt with the haqhazri the mortgagors became entitled to possession of the mortgaged properties.
3. The suit was mainly resisted by defendants Nos. 1 and 2. Defendant No. 1 denied that the revenue sale was fraudulently effected. She denied further that she had defaulted in payment of the revenue in respect of the mortgaged properties and alleged that the revenue sale was occasioned by default of other co-sharers. She further pleaded limitation and alleged that the acknowledgment of the mortgage debt by Mr. Harvey was not binding upon her as he had no authority to acknowledge debt on her behalf. She also denied that defendant No. 2 was her benamidar and alleged that the mortgage was totally extinguished by the revenue sale and that the plaintiffs were not entitled to redemption. She denied that she was the real purchaser at the revenue sale and alleged that defendant No. 2 had purchased the tauzi in question in his own right. The further defence taken by her was that the defendants third party were not successors-in-interest of the mortgagors and, therefore, the plaintiffs had acquired no valid title by virtue of their purchase from them. Defendant No. 2 by a separate written statement supported the defence set up by defendant No. 1.
4. The learned Munsif held that the defendants third party were the successors-in-interest of the mortgagors and had validly transferred the equity of redemption to the plaintiffs. He held further that the acknowledgment of the mortgage debt by Mr. Harvey was binding upon the defendants and ope-
rated to extend the period of limitation. He held also that by her fraud defendant No. 1 occasioned the revenue sale and managed to purchase the entire tauzi benami in the name of defendant No. 8.
He was of the opinion that defendant No. 1 was a trustee for the mortgagors by virtue of the application of Section 90 of the Trusts Act, and, accordingly, notwithstanding the revenue sale the mortgage was still subsisting and the plaintiffs were entitled to redemption. He also found that the haqhazri had not been paid since after 1882 and that the mortgage money had been satisfied with the haqhazri and there was also surplus in the hands of the mortgagee for which he gave a modified decree in favour of the plaintiffs.
5. The title of the plaintiffs to redeem was not disputed before the appellate Court, and the learned Subordinate Judge held that the plaintiffs had validly acquired the equity" of redemption arid were not entitled to redeem. That matter is no longer in issue.
6. The learned Subordinate Judge also affirm ed the findings of the learned Munsif that defendant No. 1 had in fact purchased the tauzi at the revenue sale and that the ostensible purchaser defendant No. 2 was her benamidar, but on the question, of fraud he took a different view and held that the revenue sale was not effected fraudulently and defendant No. 1 was not responsible for it. He held further that Section 90 of the Trusts Act did hot apply to the present case and that the mortgage was extinguished by the revenue sale. He further differed from the learned Munsif and held that the acknowledgment of debt by Mr. Harvey, Ex. 3, was not binding upon the mortgagee and the suit was barred by limitation. He, therefore, dismissed, the suit. The plaintiffs have come up in Second Appeals.
7. The learned Advocate-General appearing for the appellants contended that the revenue sale bad not the effect of extinguishing the mortgage and the mortgagee-defendant No. 1, by virtue of her purchase at the auction, was a mere trustee for the plaintiffs and was bound to deliver possession of the properties to the plaintiffs on satisfaction of the mortgage debt. He relied strongly upon a decision of the Supreme Court in Sidhakamal Nayan Ramanuj Das v. Bira Naik, AIR 1954 SC 336 (A). In order to appreciate his argument it will be necessary to state here a few facts as found by the lower appellate Court, about which there is how no controversy. The mortgagee had regularly paid revenue in respect of the mortgaged properties for which she was liable and that no revenue was due by her up to the date of the revenue sale.
The new tauzi No. 1804, is a joint estate of several co-sharers and the other co-sharers had failed to pay the revenue for the second kist of the year 1943 which in fact occasioned the sale, and the appellate Court found that the mortgagee was under no obligation to pay the revenue due upon the shares not mortgaged to her. He further found that the sale notices had been duly served and there was no fraud practised in the matter of the revenue sale and that there was no contrivance of any sort on the part of the mortgagee to bring about the sale of the mortgaged properties fraudulently for her own benefit.
The question is whether on these facts the mortgagee can be said to be holding the properties in trust for and on behalf of the mortgagors. It is well-
settled that the mortgagee cannot be allowed to hold for herself the advantage gained by the default for which she was responsible, but the present case is not hit by this principle of law. Section 90 of the Trusts Act provides as follows:--
''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."
8. It is evident that, on the facts of this case, this section has no application. It applies only when the mortgagee by availing himself of his position as such gains any advantage. The expression 'by availing himself of his position as such' obviously signifies that in discharge of his duties he committed some act in breach of the terms of the mortgage. If the mortgagee made good the trust and did all that was enjoined upon him by the mortgage, then no question of trust comes in. In other words, there must be some causal connection between the acts of commission dr omission on the part of the mortgagee and the advantage which he gained.
The true scope and effect of Section 90 of the Trusts Act came up for consideration before a Division Bench of this Court, of which my Lord the Chief Justice was a member in Kewal Sarihar v. Bikan Sarihar, 1957 BLJR 158: (AIR 1957 Pat 497){B). Their Lordships observed as follows.--
"During the course of argument of this appeal it was contended on behalf of the respondents that there was no-duty on the part of defendant No. 1, to pay the amount of rent. It was suggested that there was an assignment on the 21st July 1933, by defendant No. 1 of 4 kathas. 14 dhurs of land in favour of defendant No. 5 and there was liability on the part of defendant No. 5 to pay rent.
It was also contended that there was no mention in the deed of assignment about the liability for payment of rent, and under Section 76 (c) of the Transfer of Property Act the defendant No. 5 was liable to pay the rent so far as his share of the property is concerned. It is not necessary for us to go into this question in this appeal. Even assuming in favour of the appellants that there was liability on the part of defendant No. 1 to pay the entire amount of decretal dues, it does not necessarily follow that the provisions of Section 90 of the Trusts Act are applicable.
It has been found by the lower Courts that there was no collusion between the landlord and the mortgagee and therefore there was no causal connection between the default of defendant No. 1 to pay the rent and save the property from sale on the 18th September 1933, and the settlement by him from the landlord on the 22nd August 1938. In the absence of such causal connection, it cannot be said that defendant No. 1, the mortgagee had 'by availing himself of his position as such, gained an advantage in derogation of the rights of the other persons inte-
rested in the property' within the meaning of Section 90 of the Trusts Act. It follows, therefore, that the equity of redemption has been extinguished in this case and the lower appellate Court was right in holding that the suit of the plaintiffs must fail."
9. The principle laid down in the above case applies to the present case also. A fraudulent, collusive or male-fide purchase at an auction sale by a mortgagee will no doubt defeat the equity of redemption, but, in the present case, as held by the lower appellate Court, there was no attempt at all on the part of the mortgagee to take any undue advantage of her position as such. She had discharged all her obligations under the mortgage," and the sale was brought about in spite of her. Considered in the context of these facts, the case of Sidhakamal Nayan Ramanuj Das (A), above referred to, is clearly distinguishable. In that case the defendant who was a simple mortgagee paid up the arrears of rent to avert an auction sale in order to safeguard his rights and then obtained possession of the property under Section 225, Orissa Tenancy Act.
In other words, by virtue of the deposit he became a statutory mortgagee in possession of the disputed property. While he was so in possession rent fell into arrears again and the landlord sued for a second time. This time no one paid the rent and the property was put up for sale again, and it was purchased by the defendant and he was given possession through Court in due course. It will appear that the defendant being a statutory mortgagee in possession was bound to pay the rent and, therefore, it was due really to his default that the sale of the property was brought about. In these circumstances, their Lordships of the Supreme Court held that in the absence of any special statutory provision to the contrary, the case was governed by Section 90 of the Trusts Act and the maxim 'once a mortgage always a mort gage' applied. They held that the mortgage was not extinguished by the rent sale.
The position here is entirely different. In this case the mortgagee was not in default at all, and it cannot be said that she attempted to take any advantage, from her own wrong. In my opinion, it cannot be said in the present case that defendant No. 1, the mortgagee, had; by availing herself of her position as such, gained an advantage in derogation of the rights of the other persons interested in the properties within the meaning of Section 90 of the Trusts Act. It follows that the mortgage was entirely extinguished by the revenue sale, and, the learned Subordinate Judge was right in holding that the suit must fail on that ground alone.
10. The next question is whether the suit is barred by limitation. The usufructuary mortgage bond was executed on the 23rd February 1871. The date fixed by the mortgage for the repayment of the mortgage money was 1876. The present suit was instituted on 11-1-1944. The period of limitation under the Limitation Act for a suit against a mortgagee to redeem or to recover possession of mortgaged property is sixty years from the date of the accrual of the right to redeem or to recover possession.
(See Article 148, Schedule II of the Limitation Act.) If the period of limitation is computed from the due date for payment, that is, from the year 1873, the suit is hopelessly barred by time.
The learned Advocate-General, however, argued that this was a suit for possession of the mortgaged properties on the ground that the entire mortgage money had been satisfied with the haqhazri and that consequently the starting point of limitation is the 25th September 1893, when the entire mortgage debt was liquidated with the haqhazri. In my opinion, this contention does not appear to be well founded. It is true that under Article 148 of the Limitation Act the sixty years' period of limitation is available for both the suit to redeem and the suit to recover possession. The important question is when a mortgagor can bring a suit for redemption and when for possession of the mortgaged property? Section 60 of the Transfer of Property Act provides as follows:--
"At any time after the principal money has become due the mortgagor has a right, on payment of tender, at a proper time and place, of the mortgage money, to require the mortgagee (a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where "the mortgage has been effected by a registered instrument) to have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished:
Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court.
The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption....."
This section deals with the redemption of mortgages of all kinds. It confers upon the mortgagor a right to redeem the mortgage on payment or tender of the mortgage money, and in the case of usufructuary mortgage it gives the mortgagor an additional right to require the mortgagee tp deliver possession of the mortgaged property to him. It will appear that a suit for redemption of a usufructuary mortgage necessarily involves a prayer for possession o£ the mortgaged property. It is essentially a suit for both redemption and possession of the mortgaged property. But, there, may be cases where the mortgagee may claim only possession of the mortgaged property and for this, provision has been made in Section 62 of the Transfer of Property Act which runs as follows :--
"In the case of a usufructuary mortgage, the mortgagor has a right to recover oossession of the property together with the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, --
(a) where the mortgagee is authorised to pay himself the mortgage money from the rePts and profits of the property -- when such money is paid;
(b) where the mortgagee is authorised to pay himself from such rents and profits or any part there of a part only of the mortgage money -- when the term, if any, prescribed for the payment of the mort gage money has expired and the mortgagor pays or tenders to the mortgagee the mortgage money or the balance thereof or deposits it in Court as hereinafter provided."
11. Sections 60 and 62 lay down the statutory conditions for a suit to redeem and for a suit to recover possession at the instance of the mortgagor, Section 60 gives the mortgagor a right to redeem and also lays down the condition when redemption can be claimed. Section 62 is in marked contrast to Section 60 and provides for a suit for possession in the case of a usufructuary mortgage. It has no application to other mortgages. It will appear that a suit for possession can be instituted in the two cases specified in Clauses (a) and (b). So far as the cases falling under Clause (a) are concerned, the only relief which the mortgagor can claim is a relief for possession.
This clause comes into operation when by the contract between the parties the mortgagee is authorised to recover the mortgage debt from the usufruct of the property in mortgage. Clause (b) contemplates cases where the mortgagee is authorised by the contract to satisfy only a part of the mortgage debt and not the whole of it; for instance, where the rents and profits of the mortgaged property are to be applied towards interest accruing due on the mortgage debt, or towards principal, or partly towards principal and partly towards interest. It will be seen that prima facie Clause (b) appears to be redundant, because cases falling under Clause (b) may appropriately come also under Section 60; but there is this distinction: it comes into operation where by contract between the parties the mortgagee is authorised to appropriate the rents and profits of the mortgaged property towards partial deduction of either the principal amount or interest or both.
There may be cases where accounts may have to be taken before a redemption of the mortgage is granted. Wherever the mortgagor claims satisfaction of the mortgage debt with the usufruct, the suit is hot necessarily a suit for possession. In a pure redemption suit also there may be a prayer for account for redemption and for possession. If the mortgagor claims that the entire mortgage money had been satisfied and nothing is due on the basis of the mortgage, it is for the Court to determine whether or not there is satisfaction of the mortgage. Therefore, such an allegation is immaterial so far as the determination of the question whether the suit is one for possession or one for redemption is concerned. In my opinion, a suit purely for possession arises only when the case falls under Clause (a) of Section 62.
It is for these two distinct classes of cases that Article 148 has been divided into two parts -- one dealing with a suit by a mortgagor for redemption, and the other dealing with a suit for recovery of, possession by the mortgagor. Now, the question is whether the present suit is one for redemption or for possession of the mortgaged property. In this case, there was no contract between the parties that the haqhazri remaining unpaid will be debited against the mortgagee in reduction of the amount of interest or in reduction or discharge of the mortgage money.
The plaintiffs claimed, however, that the haqhazri which had accumulated in the hands of the mortgagee liquidated the entire mortgage debt by 1893 and, therefore, according to them the starting point of limitation is the year 1893. Even assuming this to be correct, it is for the Court to consider whether or not the mortgage debt has been satisfied on the allegations made by the plaintiffs and in spite of these allegations it will be essentially a suit for redemption of the usufructuary mortgage as contemplated by s; 60 of the Transfer of Property Act.
Considered from this point of view, the ruling relied upon ,by the learned Advocate-General, namely, the case of Ram Prasad v. Bishambhar Singh, AIR 1946 All 400 (C), is clearly distinginshable. In that case, the mortgage debt was satisfied not by virtue of a contract between the parties but because of the statutory term super-added to the contract of mortgage by the U. P. Redemption Act (XIII of 1940). On calculation under that Act, it was held that the mortgage had been satisfied and the mortgagor had the right to' recover possession of the mortgaged property. This case was distinguished in another Division Bench case of the Allahabad High Court, namely, Mohammad Khan v. Mohammad Salim Khan, AIR 1951 Ail 392 (D), Their Lordships in this case observed as follows:
"In AIR 1946 All 400: 227 Ind Cas 541 (C) the suit was for possession of a certain property and not for redemption. The learned Judges, who decided that case; referred to the distinction between a suit for redemption under Section 60 and a suit for possession under Section 62, T. P. Act, and pointed out that the suit before them was under Section 62, T. P. Act.
The present case is that of an application under Section 12 for the redemption of a mortgage to which Section 60, T. P. Act applies. The fact that possession of the property is also claimed is immaterial, because a suit for redemption implies a relief for possession also on redemption. Further the fact that the mortgagor alleges that nothing is due on the mortgage is also immaterial because in a suit for redemption, the Court can come to a finding that nothing is due on the mortgage. If the suit is for redemption, limitation begins to run under Article 148 from the date when the right to redeem accrues. If the suit is for possession under Section 62, T. P. Act, the period of limitation (again under Article 148) starts from the date on which the right to recover accrues, and that will, be after the mortgage money has been paid off in the circumstances mentioned in Section 62. The ruling in AIR 1946 All 400: 227 Ind Cas 541 (C), therefore, is distinguishable."
In my opinion, this suit is purely a suit for redemption. Apart from this, this suit stands on a different footing altogether. The plaintiffs themselves have treated this suit as a suit for redemption and have claimed reliefs accordingly. The reliefs claimed by them are as follows:
"1. On adjudication of the above facts let a decree under Order 34, Rule 7, C. P. C., be passed in favour of the plaintiffs with' a declaration that the zerpeshgi has been satisfied on account of non-payment of the Haqhazri.
2. That a decree for possession in plaintiffs' favour be passed by dispossessing the defendants 1st party and such of the defendants who may be found in possession.
3. That a decree for Rs. 43,083/7/7 1/2 the excess amount or whatsoever is found on accounting, be passed in favour of the plaintiffs against the defendant 1st party.
4. That costs of this suit be awarded.
5. Such other reliefs to which the plaintiffs may be found entitled be granted to the plaintiffs."
They have also paid a court-fee of Rs. 206/4/-on the amount of the consideration of the mortgage money, that is, Rs. 1875. They have not paid court-fee for a suit for possession and also on the amount sought to be recovered from the mortgagee. Therefore, apart from any other consideration, this suit is essentially a suit for redemption, and the contention of the learned Advocate-General that it is a suit for recovery of possession does not hold good. I must hold, therefore, that it is a suit for redemption and the period of limitation will run from the date when the plaintiffs became entitled to redeem the mortgage, that is, from 1876. The suit was instituted more than sixty years after from the due; date, and therefore it is barred by time.
12. It follows, therefore, that the decision of the learned Subordinate Judge is correct, and there is no substance in these appeals. Both these appeals are accordingly dismissed with costs.
Ramaswami, C.J.
13. I agree.