1. This appeal arises out of the suit for redemption filed by the respondents. Respondent 1 is the wife of respondent 2. Respondent No 2 executed a usufructuary mortgage of the plaint 'A' schedule properties, which consist of nine items under Ex. P-1 dated 15-3-1943 for Mg. 300/- in favour of one Hukreaowda, who assigned his rights in favour of the appellant-defendant 1 under Ex. D-1 dated, 6-11-1947. The appellant was in possession till a Receiver was appointed by this Court for the 'A' schedule properties as well as the 'B' schedule properties which form the Kumki lands in respect of the 'A' schedule properties. The 'B' schedule properties are alleged to be the accession to the mortgage properties. The equity of redemption was transferred by the second respondent in favour of one Bommanna Gowda on 30th July. 1943 under Ex. P-3. Bommanna Gowda in turn transferred the equity of redemption under the sale deed, Ex. P-2, dated 22-2-1965 to the first respondent.
It is also alleged that there were a number of valuable timber trees on the suit properties, that the first defendant has cut down trees worth not less, than Rs. 5,000/- and that he failed to account for the same. The second defendant is alleged to be the lessee of a portion of the said 'A' schedule properties under the first defendant. The third defendant is alleged to be in occupation of the house in the 'B' schedule properties. The term of the mortgage is 20 years. The plaintiffs also claim future mesne profits at a rate to be determined by the Court. The appellant is the contesting defendant. He denied the right of the plaintiffs to redeem either the 'A' schedule or 'B' schedule properties. He pleaded that he had effected improvements to the suit properties and claimed Rs. 70.000/- as the value of the same. He alleged that he had raised new areca gardens in punja lands and had to spend large sums for levelling the land and laving out u1ru khanis etc. He denied having caused any damage but stated that the trees were cut only to prevent menace by the monkeys.
2. A Commissioner was appointed by the trial Court. He submitted his reports, Exs. D-3 and D-4, with regard to the improvements alleged to have been effected by the appellant and the value of the same. The trial Court held, that the appellant was entitled to a sum of Rs. 7,138/- towards the value of the improvements effected, in the suit 'A' and 'B' schedule properties. It further held that he was liable to pay a sum of Rs. 5OO/- towards damages caused to the suit lands. It also held that the 'B' schedule properties form an accession to the mortgaged properties and that the respondents were entitled to redeem the same. It accordingly passed a preliminary decree directing respondent 1 to pay to the first defendant or deposit into Court a sum of Rs. 6,938/- including the mortgage debt o I f Rs. 300/- after adjusting a sum of Rs. 500/-, being the damages.
3. The first defendant went up in appeal and the plaintiffs filed cross-objections in the lower appellate Court as regards the value of the improvements. The lower appellate Court left open the question of future mesne profits to be decided in the final decree proceedings. But for this modification it confirmed the decree of the trial Court and dismissed the appeal as well as the cross-objections.
4. The main contentions urged by Mr. B. P. Holla, learned Counsel appearing for the appellant are: that the 'B' schedule properties have been wrongly held to be the accession to the mortgaged properties that the value of the improvements awarded by the lower appellate Court is low, and that the lower Courts, should have accepted the valuation given by the Commissioner.
5. The 'B' schedule properties were assigned to the appellant. According to the case of the respondents they were acquired by the appellant in his capacity as the mortgagee and they form accession to the mortgaged properties, and therefore the respondents were entitled to redeem the same. According to the case of the appellant they were acquired by him independently of his capacity as mortgagee and in his own right and, therefore do not form an accession to the mortgaged properties. S. Nos. 4511. 47/2 and 128/2 were assigned in favour of the appellant under Ex. P-4 dated 19-12-1953.
Sy- Nos.- 45/2 and 138/2 were assigned in favour of the appellant under Ex. P-5 dated 24-4-1954. Sy. No. 4412 was similar1v assigned under Ex. P-6 dated 30-6-1962. In Ex. P-5 there is an endorsement to the effect that the prayer in regard to Sy. No. 44/2 was rejected since its assignment will extend the ratio of 2 acres of dry for every one acre of wet land in the holding of the proponent and that there are no special circumstances to recommend its assignment in his favour in excess of this ratio. It is also mentioned that there is no game in Sy, No 44/2. It is not disputed that the 'B' schedule properties are Kumki lands in respect of 'A' schedule properties which are the mortgaged properties.
6. Standing Order No. 15 of the Standing Orders of the Board of Revenue, Madras, relate to disposal of land by the Government. Paragraph 40 of the Standing Order No. 15 sets out the modifications in the Rules contained in that Standing Order in their application to South Kanara. These are obtained in Volume I of the Standing Orders of the Board of Revenue Published, by the Government Press in 1955. Kumaki land is Government waste land within 100 yards of assessed land included in a holding formed prior to fasli 1276. Kumkidar is a person who is entitled to enjoy the kumaki privilege and is necessarily either the registered holder, walawargdar or mulgenidar of the land to which the Kumaki privilege is attached. A Kumakidar's privileges in the land are grazing his cattle, cutting and collecting leaves, timber and other forest produce for his agricultural and domestic purposes.
Any registered holder or walawargdar or mulgenidar who is a kumakidar of the land applied for should be given preference over all other applicants to the extent of those privileges. No kumakidar as such will have any preference to land beyond his kumaki. The kumaki privilege will be admitted even if the land in connection with the enjoyment of which the privilege is claimed is situated in a different village. In the case of unauthorised occupation of kumaki the adjacent registered holder or walawargdar or mulagenidar shall be liable to forfeit his preferential claim as kumakidar in favour of the occupant if he has failed to bring the occupation to the notice of the authorities for a period of more than six months unless it can be shown that the occupation was without his knowledge. When kumaki land is assigned on darkhast to the kumakidar the value of the trees except sandalwood which stand on the land will be foregone. The right of Government shall be reserved to all other sandal trees which are left standing at the time of assignment as well as those which may grow subsequent1y on the land assigned.
7. In Sorabjee v. Dwarkadas Ranchhoddas it was held that Section 63 of the T. P. Act does not entitle the mortgagor to recover acquisitions made by the mortgagee for his own benefit in circumstances which do not bring him within Section 90 of the Trusts Act, and that he would be entitled to redeem the property when the mortgagee had any special advantage by reason of his possession as mortgagee in acquiring it.
After considering the said decision it was observed by B. M. Kalagate. J. in Mahalinga Shetty v. B. Monappa Hegde. (1965) 2 Law Rep 639) that it is for the mortgagor who claims the gains as an accretion to the mortgaged property to show that it was acquired or made by the mortgagee during the continuance of the mortgage making use or taking advantage of his position as a mortgagee and that too in derogation of his own right, and unless that is shown, the mortgagor would not be entitled to claim the acquisition made by the mortgagee as an accretion to the mortgaged property. In that case the application of the mortgagee for the grant of the kumki lands was opposed by the mortgagor before the revenue authorities, Since the mortgagee obtained it in opposition to the mortgagor. It was held that he did not make use of the position as mortgagee to obtain the grant of the lands. The lands were therefore held to be not an accession to the mortgaged property.
8. In Rama Handa v. Shankar Narayana Rao, ((1966) 2 Mys LJ 38). the scope of paragraph 40 of the Board's Standing Order No. 15 was considered. It was observed that whatever may be the preferential claims which the wargdar and mulgenidars might have either by virtue of the practice of the revenue authorities or by virtue of the Board's Standing Orders such preference was undoubted1y extended to them by the Government as the paramount owners of all waste lands.
It was further observed that even in the case of encroachments the law both in England as well as in India lays down for more than a presumption to the effect that encroachments made by lessees upon land adjacent to leasehold land may be treated as having, been made for the more beneficial enjoyment of the leasehold land and therefore intended to be held as part of the leasehold: but that presumption can be rebutted by a number of circumstances tending to show that the intention of the lessee was to acquire the land for his own benefit or that the intention of that lessor was that the said encroached land need not be treated as having been incorporated in his land. But the decisive factor which determined the question in that case wag considered to be the fact that the lessor opposed the grant and the lessee acquired the land, in spite of the said opposition. It was therefore held that the lessee must necessarily have acquired the land for his, own benefit and not for the benefit of the lessor or as part of the leaseholding.
9. Mr. Holla has relied on the decision in Sri Venkataramana Devaru Trust y. Vanajakshi Amma. M970) 2 Mys LJ 39). In that case the 'A' schedule property originally belonged to the deity under a trust or endowment. The previous manager or trustee had sold the same several years ago to the predecessor-in-interest of the first defendant. The present trustee filed a suit for declaration that the said alienation is invalid and for recovery of 'A' schedule property. The suit was decreed and confirmed in second appeal. But subsequent to the decree, and before the actual recovery of possession in execution of the decree was secured. The defendant obtained 'B' schedule property under a darkhast grant made by the Government. For securing the grant the defendant made it appear that she was the owner and occupier of the Verga land of the Plaint 'A' schedule and pleaded its Kumki privilege as a around for preference in her favour so far as the darkhast was concerned.
It was contended by the plaintiff that the 'B' schedule land was secured by the first defendant on a darkhast by pleading Kumki privileges that she acquired the same by making use of her position as the occupant of the Verga land and that there was a resulting or constructive trust. Following the decision in (1966) 2 Mys LJ 38. it was held that so far as the Kadim Vargadar is concerned, what is called preferential treatment in the matter of darkhast grants or kumki lands cannot be regarded as an advantage or proprietary right or right to proprietorship of the varga land and that the grantee of kumki land cannot be regarded as having made use of his position as the Vargadar or occupant of the Varga land in acquiring the said grant. It was further held that by securing the grant of 'B' schedule property on darkhast the first defendant had not to any extent derogated from any of the proprietary rights or even advantages annexed to proprietorship enjoyed by the plaintiff. The contention of the plaintiff was, therefore, rejected.
10. The question whether assignments made on the basis of the Kumaki privileges in favour of the mortgagee can be considered as an accession to the original mortgaged property was considered by a Division Bench of this Court in Padmaraja Ariga (since deceased) By L. Rs. v. Kusumamma, M965) 4 Law ReD 820). After considering the provisions of the Board's Standing Order No, 15 it was observed that the benefit of preferential claim does not, to any extent, detract from the Government's right of absolute, disposal. It was further observed as follows:
'There is another matter which also should be stated in this connection where the Government waste land is unauthorisedly occupied and cultivation conducted thereon or improvements effected therein, the Government instead of total1y evicting the person does reserve to itself the right of converting the land unauthorisedly occupied into wara land of the occupant by impossible on him back assessment calculated at certain stipulated rates in respect of the entire period of unauthorised occupation and collects the same before conferring upon the occupant the right of an owner. The legal position is stated in Section 3 of the Madras Land Encroachment Act (III of 1905). In such a case, it will be noticed, the position is not different from an actual grant of land by the Government upon certain conditions. When such grant is made, the fact taken into consideration by the Government would obviously be that the occupation though unauthorised, has resulted in benefit to the public by the occupant or trespasser growing food crops.' It was also noticed that when waste land is granted, the Government generally charges what is called seignioragae, being the amount calculated at certain rate in respect of trees grown thereon, but where, however, the land granted is within kumaki limits of the warg, seigniorage is not charged in respect of trees standing on the kumaki land. The observations in (1965) 2 Law Rep 639 with regard to burden of proof were referred to with approval. It is clear therefore that this decision accepted the principle that when the lands are assigned to the mortgagee on the basis of the preferential claim of kumaki, the lands so assigned can be considered to be an accession to the mortgaged property. But this decision does not appear to have been brought to the notice of the learned Single Judge who decided the cases in (1966) 2 Mvs LJ 38 and (1970) 2 Mys LJ 39.
The decision of the Division Bench is binding on me though the decision in (1970) 2 Mys LJ 39- appears to support the contention of Mr. Holla. It has to be noticed that on the date of the assignment in (1970) 2 Mys LJ 39 the assignee had lost all right to the warg property though he made a false representation to the Revenue Authorities that he was still the wargedar of those properties.
11. The appellant was put into possession of the mortgaged property soon after Ex. D-1, the deed of assignment in his favour of the mortgagee's rights. He also got himself registered as wargdar at about the same time. Both the lower Courts have relied on the admission of the appellant in his evidence that he took the assignment of the mortgagee's rights for the purpose of getting lands on darkhast. They have also relied on the endorsement on Ex. P-5 to the effect that one of the lands applied for namely Sy- No. 4412, was refused to be granted on the ground that the ratio of 2 acres of dry land for every one acre of wet land would be exceeded. But there is no material to show that the refusal was due to the fact that the applicant claimed preferential rights based on kumaki. Hence the endorsement is of no help to the mortgagor.
It is the contention of Mr. Holla that under Exs. P-4 and P-6 back assessment has been levied on the assignee and that the grant was therefore on the basis of the wrongful cultivation or encroachment by the mortgagee of the kumaki lands and not on the basis of any preferential claim of the mortgagee in his capacity as wargdar. In Ex. P-4 back assessment has been levied for the period of five years. In Ex. P-6 back assessment has been levied for the period of six years. Except the orders of grant. Exs. P-4, P-5 and P-6, there is no documentary evidence to show the circumstances under which the grants were made in favour of the mortgagee. All the three orders state that the grants are made under B. S. O. No. 15 including B. S. O. No. 15. paragraph 14. Paragraph No. 14 of B. S. O. No. 15 states that the value of trees standing on the land except those proved to have been planted by him should be recovered from the successful applicant.
Paragraph 14 has been modified in its application to South Kanara under the provisions of Paragraph 40 of the B. S. O. No. 15. Paragraph 14 as so modified states that when kumaki land is assigned on darkhast to the kumakidar the value of the trees except sandalwood which stand on the land will be foregone. It has to be noticed that according to the report of the Commissioner there are standing trees on the lands assigned under Exs. P-4 and P-6 which were 15 to 20 years old and some of them even 25 years old. The date of the Commissioner's report is 17-1-1967. Ex. P-4, the earliest order, is dated 19-12-1953. In none of the three orders is seigniorage charged on the standing trees. This circumstance shows that the grants were made under paragraph 14 of the B. S. O. No. 15 as modified in its application to the District of South Kanara, in other words, on the basis of the preferential claim of the mortgagee as wargdar of the mortgaged properties.
It is no doubt true that under Exhibits P-4 and P-6 back assessment was also levied. But the levy of back assessment is only a prima facie indication of the grant having been made in the grantee's own right. as held in (1965) 4 Law Rep 820. It was urged on behalf of the mortgagor in that case that even though occupation and improvement by one of the grantees might have been taken to be one of the matters considered as relevant so far as the grant to the mortgagee was concerned he had no claims other than those based, upon the preferential right attached to kumaki, and that the seigniorage charged must be read in the light of the recommendation of the Tahsildar that is that it should be charged only in respect of tre-1-son lands other than kumaki lands. It was held that the order of grant contained no indication whatever of any preferential right attached to kumaki having been taken into account or the trees on such land having been excluded from seigniorage, and that the argument based solely on the basis of the Tahsildar's report could not be accepted.
In cases where back assessment was levied and there was no other indication it was held that, prima facie, the grant should be related to unauthorised occupation regularised by the levy of back assessment and the claim of the mortgagor that it is accession to the mortgaged property was rejected in those cases. It was not therefore a case where the seigniorage had been foregone in respect of trees standing on kumaki lands. But. in view of the definite indication in the orders of grant in the present case that they were made on the basis of the preferential claim of the mortgagee as wargdar of the mortgaged properties that decision is not applicable to this case. It is urged by Mr. Holla that the orders of grant should have mentioned that B. S. O. No. 15, para. 14 as modified by paragraph 40 of B. S. O. No. 15 has been relied on if grants were actually on the basis of the kumaki rights. It is no doubt true that if such a mention had been made it would have clarified the matter. But the absence of specific reference to the modification of paragraph 14 by paragraph 40 in the said orders is immaterial for the reasons already stated.
12. It is further contended that the 'B' schedule properties are not mentioned in Exhibit P-2 under which Bommanna Gowda conveyed the equity of redemption in favour of respondent 1. But the right to 'B' schedule properties accrues to the mortgagor only on redemption as provided in Section 63 of the T. P. Act. What has been conveyed to respondent 1 under Ex. P-2 is the right of equity of redemption. Hence, the absence of any mention of the right to 'B' schedule properties cannot deprive the mortgagor of the right to redeem the property which forms an accession to the mortgaged property. Hence, the finding of both the lower Courts that the 'B' schedule properties form an accession to the mortgaged property and are liable to be redeemed has to be confirmed.
13. The next question to be considered is one relating to the value of the improvements. The grievance of the appellant is that though the Commissioner valued the areca trees at Rs. 7-50 per tree, the trial Court as well as the lower appellate Court awarded only Rs. 5/- per tree. The trial Court inspected the spot at the request of the parties. It held that on the evidence in the case of the areca garden shown as AG-2 in the Commissioner report contain the most valuable areca trees that the Commissioner had valued the trees in that garden at the rate of Rs. 7/- per tree as he was of the view that the areca trees in the other areca gardens in the suit properties were inferior to those in the above said garden, and since those trees also had been valued by the Commissioner at Rs. 7/- per tree it will not be reasonable to assess the value of all the areca nut trees at Rs. 7-50 per tree.
It cannot be said that the trial Court had adopted a wrong principle in doing so. This valuation has also been accepted by the lower appellate Court. The other grounds with regard to valuation relate to the Khanis constructed by the appellant and the charges for blasting rocks for the purpose of levelling the land in order to convert the same into areca garden. In the first report the Commissioner did not state the basis on which he arrived at the value of these improvements and when objections were filed he stated in his second report that the value arrived at by him, with regard to these improvements were based on the rates which were then prevailing at the time when improvements were made. But the Commissioner has not stated the source from which he obtained the information relating to the then prevailing rates.
The trial Court, therefore cannot be said to be in error in assessing the value of those improvements at what it considered to be reasonable and in awarding a lump sum for the same. Mr. Holla bas relied on the decision in Chandan Mull Indra Kumar v. Chiman Lai Girdhar Dag Parekh in support of his contention that the report of the Commissioner should have been accepted in toto by the lower Courts. In that case the statement of the Subordinate Judge to the effect that 'interference with the result of a long and careful local investigation except upon clearly defined and sufficient grounds is to be deprecated' was accepted as a correct statement of the principle to be adopted in dealing with the Commisioner's report. But in the present case the trial Court hag given valid and sufficient reasons for departing from the valuation adopted by the Commissioner.
14. It is further contended by Mr. Holla that the lower appellate Court was in error in not awarding any amount towards the value of the improvements effected by the appellant on Kumaki lands. He relied on the decision in Ramakrishna Bhatta v Subbanna Bhatta ((1954) 2 Mad LJ 1565) according to which the mortgagee will be entitled to half the value of the improvements effected by him on Kumaki lands on redemption of the mortgage. The lower appellate Court rejected this claim on the ground that if the amount determined by the trial Court is enhanced it would amount to a clog on the equity of redemption.
15. Mr. Krishna Bhat has relied on the decision in C Krishnamurthy Setty v. Abdul Khadar. (AIR 1956 Mys 14). In that case the mortgage was for Rs. 12,500/- The mortgagee claimed Rs. 10,000/- for making alterations to the buildings and another Rs. 15,000/- for putting up a stair-case on the mortgaged property. The following passage from the book by Fisher an Law of Mortgages was relied on and the claim of the mortgagee was rejected as it would amount to a Clog on redemption:
'The mortgagee in possession need not rebuild ruinous premises or increase his debt by laying out large sums beyond the rent for the property when restored ought to be of the same nature as when the mortgagee received it: and if it be wholly or in part converted from its original purpose the money expended will not be allowed to be charged upon it.
16. Mr. Holla, however relied on the decision in Chhedi Lal v. Babu Nandan : AIR1944All204 and contended that the mortgage deed Ex. P-1 contains a recital to the effect that the mortgagor will pay for the improvements effected by the mortgagee at the time of redemption and that therefore the mortgagee will be entitled to the value of the improvements effected. In that case the mortgage deed provided that if the mortgagee constructs any building on the mortgaged property by demolition of the mortgaged property or otherwise, the mortgagor shall pay the entire mortgage money with costs of construction at the time of redemption of the mortgaged property before it is redeemed.
It was held that Section 63-A of the T. P. Act applies on1y when there is no contract between the parties. In the absence of any agreement the question whether the mortgagor has to pay for the improvements depends upon whether the claim of the mortgagee comes within the terms of sub-section (2). and if there is such an agreement it prevails over subsection (2) of Section 63-A. Their Lordships recognized the principle that a mortgagee ought not to be allowed to improve the mortgagor out of his estate, but held that on the facts of that case it could not be said that the spending of the amount by the mortgagor on the construction of the new house which was obviously contemplated by the parties at the time of the execution of the mortgage deed amounted to improvement of the mortgagor out of his estate.
The mortgage money was Rs. 1,200/-The amount which the mortgagor was required to pay was less than nine times the mortgage money. The question, according to the learned Judges, which came up for decision before them was whether upon a consideration of the facts and circumstances of that case and of the covenant in question it could be said that the covenant was unconscionable or oppressive so as to make it impossible for the mortgagors to redeem. Thus the question whether it amounts to a clog on redemption is a question to be decided on the facts and circumstances of each case.
In the present case the mortgage amount is Rs. 300/-. The period of redemption is 20 years. The amount awarded by the lower Courts towards the value of the improvements was Rs. 7,138/- i.e., more than 23 times the mortgage money. The undertaking in Ex. P-1 to pay for the improvements must be understood as being an undertaking to pay for any reasonable improvements. No decision has been cited by Mr. Holla to show that where the value of the improvements exceeded 23 times the amount of the mortgage money it has been considered to be reasonable or not a clog on the equity of redemption. Hence, the lower appellate Court was right in rejecting the prayer of the appellant for enhancement of the value of the improvements payable by the mortgagor.
17. It is next urged by Mr. Holla that the usual rule is to award costs to the mortgagee in a redemption suit. Both the lower Courts have refused to, award costs to the mortgagee on the ground that he denied the plaintiffs' right to redeem and also on the ground that he out forth an unreasonable claim for Rs. 70,000/- as the value of the improvements It cannot be said that the discretion exercised by the lower Courts is erroneous.
18. The Receiver has been appointed by this Court during the pendency of this appeal and he is in possession of the suit properties. The respondents-plaintiffs are entitled to take possession of the suit properties from him as provided in the decree of the trial Court which has been confirmed by the lower appellate Court. The trial Court is authorised to discharge the Receiver after being satisfied with regard to the accounts which shall be rendered to it by the Receiver.
19. This appeal is dismissed with costs.
20. Appea1 dismissed.