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Gangaram Icharam Vs. Bhikasing Nathusing and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberCivil Revn. Appln. No. 1936 of 1956
Judge
Reported in(1959)61BOMLR666
ActsBombay Agricultural Debtors Relief Act, 1947 - Sections 22 and 24
AppellantGangaram Icharam
RespondentBhikasing Nathusing and ors.
Appellant AdvocateV.V. Divekar, Adv.
Respondent AdvocateM.V. Paranjape, Adv.
Excerpt:
.....section 24(1) -- whether mortgagee liable to account for rents and profits received by him from date of application or from date of award.;where under section 24(1) of the bombay agricultural debtors relief act, 1947, a transfer is declared to be a mortgage, the mortgagee will be liable to account for the rents and profits received by him from the date of the institution of the debt adjustment proceedings.;by adjudicating the true nature of a transaction under section 24 of the act the court as not converting a transfer in the nature of a sale or other transfer into a mortgage. the court being authorised to declare the real nature of the transaction, the declaration operates as from the date of the transaction.;ratilal ranchhodji davda v. narsinhdas jamnadas (1951) civil revision..........s. nos. 3/5a and 31/3/1 of the village borkhede. taluka raver, were ostensibly sold, was in the nature of a mortgage and for accounts. the suit was transferred under section 19(b) of the bombay agricultural debtors relief actm 1939, to the board established in that behalf, and it was numbered as application no. 4374 of 1945. it was heard by the civil judge on whom the powers of the board were conferred by the b. a. d. r. act, 1947 with other applications in which the respondents were concerned. the joint civil judge, junior division, bhusaval by his order dated 28-6-1955 declared the impugned transaction to be in the nature of a mortgage, and directed the transferee gangaram ichharam to deliver possession of the lands to the respondents and to pay to the respondents mesne profits from.....
Judgment:

Shah, J.

(1) The respondents filed Civil suit No. 169 of 1945 in the Court of the Joint Civil Judge, Junior Division, Bhusaval, claiming that a transaction effected by their father Nathusing on 30-4-1938 in favour of the petitioner, whereby lands S. Nos. 3/5A and 31/3/1 of the village Borkhede. Taluka Raver, were ostensibly sold, was in the nature of a mortgage and for accounts. The suit was transferred under section 19(b) of the Bombay Agricultural Debtors Relief Actm 1939, to the Board established in that behalf, and it was numbered as application No. 4374 of 1945. It was heard by the Civil Judge on whom the powers of the Board were conferred by the B. A. D. R. Act, 1947 with other applications in which the respondents were concerned. The Joint Civil Judge, Junior Division, Bhusaval by his order dated 28-6-1955 declared the impugned transaction to be in the nature of a mortgage, and directed the transferee Gangaram Ichharam to deliver possession of the lands to the respondents and to pay to the respondents mesne profits from the date of the application. Against that order an appeal was preferred to the District Court at Jalgaon. In appeal, the learned Assistant Judge confirmed the order passed by the trial Court in revision against the order passed by the District Court.

(2) The question whether the transaction, dated 30-4-1938, was in the nature of a morgage is essentially a question of fact and the finding on that question by the Courts below is not liable to be challenged in this revision application. But Mr. Divekar, who appears on behalf of the petitioners contends that the Courts below were in error in awarding mesne profits from the date of institution of the debt adjustment proceeding against the petitioner. Mr. Divekar contends that the disputed transaction could be regarded as a mortgage from the date on which the award was made by the B. A. D. R. Court and the mortgagees' hability to pay mesne profits will arise only from that date and not anterior thereto. Mr. Divekar submits that the B. A. D. R. Act was passed with the object of relieving debtors of their indebtedness and that once the liability of a debtor under a disputed transaction creating a debt is regarded as discharged, it was not the intention of the Legislature to render the creditor liable to pay to the debtor any amount which he may be found liable on taking accounts under the special procedure prescribed by the B. A. D. R. Act. Therefore, Mr. Divekar contends that if under a transaction which is found to be in the nature of a mortgage on taking accounts nothing is due by the debtor at the date of the application, the mortgagee will not be required to account for the rents and profits received by him during the period that the application was pending in the Court of First Instance. In our view, these contentions cannot be accepted. By section 24 of the B. A. D. R. Act a Debt Adjustment Court is authorised to declare the true nature of a transaction by declaring it to be a mortgage though ostensibly in the form of a sale or of any other nature. the power conferred upon the Court under the B. A. D. R. Act is, however, a power to declare the true nature of a transaction, that is, to ascertain the true intention and agreement between the parties irrespective of the from in which the transaction is clothed and umhampered by any rules of evidence or other law. Section 24(1) of the B. A. D. R. Act, in so far as it is material provides:

'Notwithstanding anything to the contrary contained in any law, custom, or contract whenever it is alleged during the course of the hearing of an application made under section 4 that any transfer of land by a person whose debts are being adjusted under this Act ........... was a transfer in the nature of a mortgage, the Court shall declare the transfer to be a mortgage, if the Court is satisifed that the circumstances connected with that transaction showed it to be in the nature of a mortgage.'

Even if a transaction is intended by the parties to be in the nature of a mortgage. but is in from otherwise, under the Evidence Act the Court will not be entitled to declare such a transaction to be in the nature of a mortgage. The only effect of S. 24 is to do away with the restrictions placed by the Evidence Act or other laws upon the powers of the Court if from the circumstances connected with the transaction it is shown to be in the nature of a mortgage. We are, therefore unable to agree with the contention raised by Mr. Divekar that a transaction becomes a morgage only when it is so delcared under the provisions of section 24. In our view, by its adjudication, the Court declares the true nature of the transaction, and does not impress upon it a character which was not initially intended by the parties thereto.

(3) Reliance was sought to be placed by Mr. Divekar upon an unreported judgment of Chief Justice chagla in Civil Revn. Appln. No. 151 of 1951 D/- 16-11-1951 (Bom). In that case, it is true that the learned Chief Justice took the view that only when the declaration is made under the B. a. d. R. Act that the transaction operates as a mortgage and, therefore mesne profits cannot be awarded from the date of the application but can only be ordered from the date of the award with respect, we are unable to accept that view. If the power as we have already observed under section 24 of the B. A. d R. Act conferred upon the Court is to declare the real nature of the transaction, the Court is not by adjudicating the true nature of a transaction converting a transfer in the nature of a sale or other transfer into a mortgage. The Court being authorised to declare the real nature of the transaction; the declaration, in our judgment, operates as from the date of the transaction.

(4) The alternative argument advanced by Mr. Divekar cannot also be sustained. It is true that under Section 22 of the B.A.D.R. Act and account has to be taken between the parties in the manner prescribed thereby for determining the amount due to the creditor at the date of the application under section 4 by sub secs. (2)(3) and (4) of section 22 it is provided that the account has to be taken till the date of institution of the application, but the Legislature has made no provision for the manner of taking accounts after the date of the application Undoubtedly, if it he found on taking accounts according to the special made prescribed by section 22 that the creditor has at the date of the application been overpaid in respect of a transaction which is creditor will not be called upon to repay the amount to the mortgagor. But if the creditor remains in possession of the property mortgaged after the date of the application, in the absence of any stautory provisions to the contrary, we see no reason why the mortgagee will not be liable to account for the rents and profits received by him since the date of the application.

(5) The view we are taking is supported by a judgment of Mr. Justice Gendragadkar in Danepa Staveerappa v. Magouda Ananda, : AIR1956Bom630 . In that case, it was held that under the B.A.D.R. act, 1947 accounts can be taken between the creditor and the debtor subsequent of debts and up to the date when the award is made. In our judgment, the judgment in Danepa's case. : AIR1956Bom630 sets of the mortgaged property is in the position of a trustee for the mortgagor and when the legislature has not made any provision relating to the method of taking accounts from the mortgageee under the special statute by which the rights of the mortgagor and the mortgageee are governed, in our judgment, accounts must be taken under the Transfer of Property Act and the Civil Procedure Code. Absence of an express provision in the special statute about the method of taking accounts since the institution of the debt adjustment proceeding does not justify the inference that there is no liability to account.

(6) Mr. Divekar contends that the rule that the mortgagee after the date of the application for adjustment of the debts is liable to account for the rents and profits received by him must be restricted only to those cases where something is found due to the mortgagee from the mortgagor at the date of the application and it cannot apply to cases where the mortgage debt is before that date fully satisfied out of the rents and profits. In support of this contention, our attention is invited by Mr. Divekar to a judgment of this court in Ramachandra Venkail Naik v. Kallor Devji 17 Bom LR 630 AIR 1915 Bom 131 It is true that in that case a Division Bench of this court held that under the Dekkhan Agriculturists Relief Act, 1879. if it be found on taking accounts that at the date of institution of the suit nothing was due to the mortgagee from the mortgagor, the mortgageee after the date of the suit will not be held liable for mesne profits till the date of the decree. But we are unable to hold that thhis decision can be regarded as binding in interpreting the provisions of the B.A.D.R Act. The schme of the D.A.R. Act and the scheme of the B.A.D.R Act are not identical . Whereas the D.A.,R. Act makes provision for taking accounts between a debtor and his individual creditor and for assessing his liability according to the procedure and in the manner prescribed thereby the B.A.D.R Act is intended to provide for a scheme of settlement of the liability of the debtor qua all his creditors. The D.A.R. act provided for taking accounts on terms favourable to the agriculturist debtor and for other facilities such as paying the debt by instalments and exemptiion from liability for personal arrest and exemption from attachment and sale of unencumbered property. Under the B.A.D.R Act, the court has to asses the liability of the debtor and to ascertain the assets of the debtor and his paying capacity and to prepare a scheme under which the liability is scaled down and related to his paying capacity. It is evident that the accounts of all trnasactions of the debtor are required to be taken by the B.A.D.R Court and the assets and liabilities have then to be assessed and related. If liabbility of a creditor to account for the rents and profits received by him after the application is to depend upon the accidental circumstance whether the debt due to him before the date of the application has been satisfied, in our judgment, the rule suggested will be inequitable and unjust and operate to the prejudice of the debtors as well as the general body of creditors. We are, therefore, unable to hold that the decision in Ramachandras case 17 Bom LR 630 : AIR 1915 Bom 131 can be pressed into service in construing the provisions of the B.A.D.R. Act. It may be observed that even under the D.A.R. Act this court has taken the view that a mortgageee in possession since the date of institution of the suit is liable to account for the rents and profits received by him accound has to be taken under the provisions of the Civil Procedure Code and the Transfer of Property Act see Dattatraya Gopal V. Mahjomedkham Fatekhan Deshmukh 37 Bom LR 76 : AIR 1935 Bom 122. It may be that to the prinviple enunciated in Dattatrayas case 37 Bom LR 76 : AIR 1935 Bom 122 the principle in Ramachandras case 17 Bom LR 630 : AIR 1915 Bom 131 is an exception. But we do not see any reason why any similar exception should be engrafted in interpreting the provisions of the B.A.D.R. Act, in the absence of any compelling ground of justice or equity of binding authority.

(7) We are, therefore, of the view that the courts below were right in directing the creditor to pay mesne profits from the date of institution of the proceeding. It is true that the courts below should strictly speaking, have directed the creditor to account for the rents and profits received by him. But whether the court directs the creditor to account for the rents and profits received by him or to pay mesne profits for the period during which he is in possession, it will make no susbtantial difference in the extent of the ultimate liability incurred by the creditor. On the view taken by us the rule is discharged with costs.

(8) Rule Discharged.


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