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Nilkanth Balvant Natu Vs. Shri Vidyashankar Bharati - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberFirst Appeal No. 146 of 1919
Judge
Reported inAIR1924Bom387; (1924)26BOMLR455
AppellantNilkanth Balvant Natu
RespondentShri Vidyashankar Bharati
Excerpt:
.....the parties has changed and the motgagors must pay interest. - - if the mortgagors failed to pass the accounts, they undertook to release the villages after clearing off the total amount of balances which were struck in each year. 7. the plaintiffs are clearly entitled to an order for possession of those properties and they are further entitled to a decree for sale, if default is made in payment of the decretal amount. so we had better leave the direction of the judge as it stands that the plaintiffs can recover possession of the villages in the kolhapur state......be shown that the mortgagors between 1840 and 1844 were not competent to alienate or mortgage the suit properties. it was particularly stated in the bond exhibit 38 that the money was borrowed for the expenses of the sansthan, and the mortgagors were competent to borrow for such purposes on the security of the sansthan property. that is the only point argued in the defendants' appeal, with the exception of the question of interest which is common to both appeals.11. we do not think the judge was justified in disallowing all further interest from the date of the suit. it would follow from that decision that the plaintiffs would be debarred thereafter from claiming interest unless they could get into possession of the properties in the kolhapur state, in which ease the terms of the.....
Judgment:

Norman Macleod, Kt., C.J.

1. The plaintiffs claimed to be entitled to recover by sale or foreclosure Rs. 5,00,001 and interest charged upon certain immoveable properties in Belgaum, Kolhapur, Sawantwadi, Kurundwad and Satara. The suit was filed in the First Class Subordinate Judge's Court at Satara against the mortgagors or their representatives to enforce the alleged rights of the mortgagee. Certain issues were taken up at the trial as preliminary issues, and from the decision of the Subordinate Judge on those issues an appeal was filed to the High Court (being F.A. No. 39 of 1913, the suit being No. 604 of 1910 of the Satara Court). On appeal the issues were decided in favour of the plaintiffs and the suit continued in the Subordinate Judge's Court.

2. It was contended by the defendants that the mortgaged property was Devasthan and Saranjam, and not liable to be mortgaged. The Judge decided this issue in plaintiffs' favour and the decision on the fourth issue would necessarily follow also in their favour. The eleventh issue was whether the claim for possession of any and which of the mortgaged properties was in time. The learned Judge held that the claim for possession of the properties in the Kolhapur State only was in time. On the twelfth issue he held that the plaintiffs were not entitled to sell or to foreclose, and he passed a decree on accounts being taken to the following effect:--

The defendants or any one of them should pay Rs. 3,31,000-0-8 and plaintiffs costs in proportion within six months from the date of the decree. In default the plaintiffs wore to recover possession of the villages in the Kolhapur State only. The claim as to other villages in suit was rejected. The learned Judge declined to allow any further interest from the date of suit until the date of the decree or the date of realization,

3. The plaintiffs have appealed. Three points have been argued before us:--

1. Whether the learned Judge was wrong in holding that the plaintiffs were not entitled to an order for sale?

2. Whether plaintiffs were not entitled to possession of all the mortgaged properties?

3. Whether the learned Judge's decision on the question of interest was wrong?

4. The mortgages in this case were entered into between the years 1840 and 1844, and were subject to the provisions of Regulation V of 1827. Clause 15 of the Regulation is as follows:-

First--When a creditor is placed in possession of property by mortgage or otherwise, as security for a debt, his claim over such property shall, in the absence of other special agreement-, constitute his sole security for payment of the debt, or such part of it as the said property may have been given in security for, and interest thereon is to be considered as included in the said security.

Second--If the property yield profit, and no stipulation has been made respecting the disposal of the said profit, or payment of interest on the debt, the profit shall be considered as equivalent for the interest.

Third--In the absence of any special agreement, or recognized law or usage to the contrary, either party may at any time, by the institution of a civil suit, cause the property to be applied to the liquidation of the debt, the surplus, if any, being restored to the owner.

5. Now the various bonds which were entered into by the defendants3 predecessors were all in the same form as Exhibit 38 at p. 13. Interest was to be paid on the amount advanced, the mortgagee was placed in possession, an account of rents and profits was to be made up on the 1st of Ashadh Vad in each year, and the amount of balance was to be settled by the parties. If the mortgagors failed to pass the accounts, they undertook to release the villages after clearing off the total amount of balances which were struck in each year. It was also agreed by the clause which appears at bottom of page 17 that if the mortgagors could get the money from any other source for the repayment of the debt, the mortgagee should accept the amount when it was paid and should release the villages.

6. It has been contended by the plaintiffs that the learned Judge was wrong in holding that the plaintiffs were debarred from instituting a civil suit for the purpose of causing the properties to be applied to the liquidation of the debt. We cannot agree with the reasoning of the learned Judge by which he came to that conclusion. We have to consider paragraph 3 of Clause 15 of the Regulation V of 1827, and then apply it to the document before us. Unless there is a special agreement between the parties, when the bond is entered into, to the effect that the property shall not be brought to sale by the mortgagee, then the mortgagee has a right to institute a suit for the purpose of bringing the property to sale. There is no use referring to documents which have been construed in other cases in order to ascertain whether they contained such special agreements. It seems to have been argued before the learned Judge that it was a relevant question whether the document contained a covenant by the mortgagor to repay the mortgage money. But in my opinion that could have no bearing on the question whether or not there has been a special agreement that the mortgagee cannot realize his security by sale. The covenant as to repayment is purely personal, and is only relevant on the question whether a suit can be brought, not against the security, but against the mortgagor for the repayment of the money borrowed. In this document I can find no evidence whatever of a special agreement such as is relied upon by the defendant. Nor can it be inferred that the parties agreed that the mortgagee should not sell merely because the mortgagors were entitled to redeem. In my opinion, therefore, the suit for sale was competent and the plaintiffs are entitled to an order for sale of the mortgaged properties in the Kolhapur State.

7. The plaintiffs are clearly entitled to an order for possession of those properties and they are further entitled to a decree for sale, if default is made in payment of the decretal amount.

8. With regard to the properties in British territory, it has been argued that the plaintiffs were entitled to possession of those properties, because they were in possession before 1902 of the mortgaged properties in the Kolhapur State, and possession of one was possession of the other. No authority has been cited before us for the proposition that if two separate properties are given over into the possession of a usufructuary mortgagee, and if he loses possession of one of the properties, possession of the other saves limitation with regard to a suit to recover possession of the first property. But in this case we need not decide that point because we think the evidence is clear that these properties in British territory were given back to the mortgagors before 1860, and no steps whatever were taken to recover possession until this suit was filed. That we think raises the presumption that the parties agreed that the security of the properties in British territory should be given up, and that the Kolhapur properties only should be considered as security for the debt.

9. We have been referred to a document, Exhibit 58 at p. 53, which was a petition of the then mortgagors dated August 16, 1879, appealing against an order of the Political Agent, Kolhapur and Southern Maratha Country, referring them to a Civil Court for redress in the matter of the forcible recovery from them by the Jagadguru of Sankeshwar and Kolhapur of certain Inam villages situated in the Kolhapur territory. That petition and the Resolution of Government thereon dealt only with mortgaged properties in the Kolhapur State, and that to some extent is evidence that the mortgagees and the mortgagors had come to some arrangement with regard to the properties originally mortgaged in British territory, so that in effect the mortgagees agreed to retain their security only on the properties in the Kolhapur territory.

10. It has been argued by the defendants that the learned Judge was wrong in holding that it is not proved that the properties were not liable to be mortgaged as being Devasthan or Saran-jam properties. But they produced no evidence to support their contention, and there is nothing before us from which it can be shown that the mortgagors between 1840 and 1844 were not competent to alienate or mortgage the suit properties. It was particularly stated in the bond Exhibit 38 that the money was borrowed for the expenses of the Sansthan, and the mortgagors were competent to borrow for such purposes on the security of the Sansthan property. That is the only point argued in the defendants' appeal, with the exception of the question of interest which is common to both appeals.

11. We do not think the Judge was justified in disallowing all further interest from the date of the suit. It would follow from that decision that the plaintiffs would be debarred thereafter from claiming interest unless they could get into possession of the properties in the Kolhapur State, in which ease the terms of the mortgage bonds would revive, and they would have to render account of rents and profits against the interest due. But all sorts of difficulties may arise in that case if the judgment should stand. Considering that we think that the parties agreed that the mortgaged properties in British territory should be surrendered to the mortgagors, and that the mortgagees only remained in possession of the Kolhapur properties until 1902, when they were deprived of possession, it seems to us inequitable that interest should not run on the principal amount due from the date of the suit. It is quite true in the ordinary case of a usufructuary mortgage where a mortgagee is in possession of the mortgaged property either in lieu of interest entirely, or on the terms that he must render an account of rents and profits against interest, that the rule of Damdupat would apply. But when the terms of the mortgage have been departed from, and the mortgagors have deprived the mortgagees of possession, then it seems to me very clear that that principle can no longer be considered as binding as the relationship of the parties has changed and the mortgagors must pay interest.

12. We amend the decree by directing that interest must run on the principal amount from the date of suit until realisation, and that amount of interest must be added to the decretal amount, which the defendants must pay within six months from the date these proceedings are returned to the trial Court. In default the plaintiffs will be entitled to bring the properties in the Kolhapur State to sale. There may be difficulties with regard to the sale of the properties. So we had better leave the direction of the Judge as it stands that the plaintiffs can recover possession of the villages in the Kolhapur State. As a matter of fact it will be far simpler if they can bring the properties to sale at once after the six months expire, if default is made. If instead of bringing the properties to sale, they go into possession, they must, under the terms of the mortgage, render an account of rents and profits against the interest which becomes due.

13. The plaintiffs do not ask for any order as to the properties in Savantvadi and Kurundvad. They do not ask for possession of those properties as apparently they have been out of possession for a considerable period.

14. The plaintiffs have been on the whole successful. They will be entitled to add their costs to the mortgage amount. The defendant No. 2's appeal will be dismissed with costs.

Shah, J.

15. I agree. I desire to add a word with reference to the point relating to the applicability of the rule of Damdupat to the facts of this case. Having regard to the terms of the mortgage bond in this case, I think the application of that rule is excluded according to the Full Bench ruling in Gopal Ram-chandra v. Gangaram Anand Shet I.L.R. (1895) 20 Bom. 721.


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