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Anandaji Sawaji and Co. Vs. Ahmedbhoy Abedinbhoy Peerbhoy - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 20 of 1939 and L.A. Ref. No. 29 of 1929
Judge
Reported inAIR1940Bom287; (1940)42BOMLR580
AppellantAnandaji Sawaji and Co.
RespondentAhmedbhoy Abedinbhoy Peerbhoy
Excerpt:
mortgage-accounts under mortgage-reference to commissioner-if mortgagee in possession, court to make clear basis on which accounts can be taken-time when order can be made-practice-procedure-transfer of property act (iv of 1882), section 76.;where an order is made for taking the accounts of a mortgage without any reference to the mortgagee being in possession, the commissioner should take the accounts on the basis that the mortgagee is not in possession. if it is desired that accounts should be taken as against the mortgagee in possession, that is to say, on the basis that he is liable to account under section 76 of the transfer of property act, there must be a special direction in the decree.;the court should, therefore, determine at the hearing, if the question be raised, whether the..........normally it is sufficient, in my opinion, to prove that the mortgagee has taken possession and the basis of accounting follows. in my view, although this was not an ordinary mortgage suit, it was essential for the mortgagor to allege at the hearing, when this court was making an order for accounts, that the mortgagees were mortgagees in possession, and had that allegation been made, the court would have had to determine the question. but as the point was not taken, and an order was made on a different basis, it seems to me; that it is not competent to this court now to alter the order.5. the motion, therefore, must be dismissed with costs.6. liberty to the mortgagees to add their costs of this notice of motion to their security.b.j. wadia j.7. i agree. in an ordinary mortgage suit the.....
Judgment:

John Beaumont, Kt., C.J.

1. This is a motion asking us to direct the Commissioner for Taking Accounts to take an account of the rents and profits of the mortgaged premises realised by the appellants as mortgagees in possession and of the disbursements made by them on the footing of wilful default. The order for taking accounts was made by this Court on October 9, 1939, and it directs merely that in the absence of agreement the matter be referred to the Commissioner to take an account and determine the amount due under the mortgage in suit.

2. The suit was not an ordinary mortgage suit. What happened was that the mortgagees sold the mortgaged property, and after having done so, Government paid into Court under the Land Acquisition Act a sum of Rs. 9,000 odd as damages for denotification of the property, and the question before the Court was whether the mortgagor or mortgagees were entitled to that money. This Court held that the money was subject to the mortgage, but as the mortgagor alleged that there was nothing due on the mortgage, it was necessary to take an account in order to ascertain whether that plea was well-founded.

3. Now the order does not direct that the account be taken on the basis that the mortgagees were in possession, and it is not disputed that if an order is made for taking the accounts of a mortgagee without any reference to the mortgagee being in possession, the Commissioner will take the accounts on the basis that the mortgagee is not in possession. If it is desired that accounts should be taken as against the mortgagee in possession, that is to say, on the basis that he is liable to account under Section 76 of the Transfer of Property Act, then there must be a special direction in the decree. It seems to me necessarily to follow from that practice, which I think is right, that the Court must determine at the hearing, if the question be raised, whtether the mortgagee is a mortgagee in possession, and, if so, from what date, and that is not a matter which ought to be left to the Commissioner, The question is primarily one of fact, but it frequently involves matter of law, for example, whether particular acts of a mortgagee,-directions given to tenants and so forth, -amount in law to taking possession. In ray opinion the Court must determine those questions at the hearing and direct accounts to be taken against the mortgagee in possession, and if no special direction is given, the Commissioner is right in not taking accounts on the basis of the mortgagee being in possession. But then it is said by Mr. Chagla that it is open to the parties, if they succeed in establishing before the Commissioner that the mortgagee did take possession, to come back to the Court and ask the Court to direct accounts on that basis. I do not see on what principle that can be done; the Court cannot alter its own order. It seems to me necessary for the parties at the hearing to allege, if they desire to do so, and to prove that the mortgagee is a mortgagee in possession, and if the Court has not directed accounts on that basis, it cannot afterwards alter its order by doing so.

4. Mr. Chagla relies on a decision of Jessel M.R. in Mayer v. Murray 1878 8 Ch. D. 424, butin that case the fact that the mortgagee was in possession was admitted by the defendant, and all that the Master of the Rolls held was; that in taking accounts against the mortgagee as a mortgagee in possession, it was not essential that particular acts of wilful default should be pleaded. I do not think such a question is likely to arise in this country, because we have a statutory provision in Section 76 of the Transfer of Property Act that a mortgagee in possession is liable to account on a particular basis. Therefore, if the Court directs that an account should be taken as against a mortgagee in possession, the basis of the account is settled by statute, and the Commissioner must take the accounts on such basis. In particular cases it may be necessary to allege and prove special acts of default by the mortgagee, but normally it is sufficient, in my opinion, to prove that the mortgagee has taken possession and the basis of accounting follows. In my view, although this was not an ordinary mortgage suit, it was essential for the mortgagor to allege at the hearing, when this Court was making an order for accounts, that the mortgagees were mortgagees in possession, and had that allegation been made, the Court would have had to determine the question. But as the point was not taken, and an order was made on a different basis, it seems to me; that it is not competent to this Court now to alter the order.

5. The motion, therefore, must be dismissed with costs.

6. Liberty to the mortgagees to add their costs of this notice of motion to their security.

B.J. Wadia J.

7. I agree. In an ordinary mortgage suit the Court directs accounts to be taken of what is due to the mortgagee for principal and interest under his mortgage, and for any costs, charges and expenses properly incurred by him. When, however, it is alleged that the mortgagee has gone into possession, a mixed question of law and fact arises. There is usually no dispute that the mortgagee has entered into possession. If the question is in dispute, the Court has to determine whether the mortgagee is a mortgagee in possession. If he is, he is bound to account under Section 76(h) of the Transfer of Property Act, unless he establishes a contract in terms of Section 77. The English rule is that the mortgagee in possession is always directed to account on the footing of wilful default, though no charge of wilful default has been made on the pleadings and there is no proof of it at the trial. In India his position is governed by statute, and it is generally considered necessary to allege that he is in possession in the character of a mortgagee, and that he should account on the footing of wilful default. According to Form No. 32 given at p. 247 of the High Court Rules, the Court, if satisfied, specifically directs that the account be taken on the footing of wilful default, and on such direction the Commissioner takes accounts not only of the rents and profits received by the mortgagee, but also of the rents and profits which, without the wilful default of the mortgagee, might have been received by him. In the absence of such special direction the Commissioner does not take the account on the footing of wilful default.

8. A mortgagee in possession is not a trustee for the mortgagor, and has to render accounts according to Section 76, and to prove that his accounts are true and correct.

9. This was not an ordinary mortgage suit. It was nevertheless open to the mortgagor tohave pointed out to the Court, when the reference was made, that the mortgagees had gone into possession from a particular date. If that fact was disputed, the Court would have had to determine the question. That was not pointed out to the Court, and I do not think it will be right to allow the mortgagor at this stage to allege that the mortgagees were in pos- session.

10. Under the circumstances I agree that this notice of motion must be dis- missed with costs.


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