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Gopi Lal and ors. Vs. Abdul Hamid and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1928All381
AppellantGopi Lal and ors.
RespondentAbdul Hamid and ors.
Excerpt:
.....he had become the absolute owner of the property, he believed in good faith that he was absolutely entitled to the property. we shall consider presently how far the finding of good faith arrived at by the court below is binding on us. it was found that the lessor knew perfectly well that the defendants were using the property for erecting permanent structures. their lordships of the privy council had no hesitation in setting aside the decrees passed by the courts in india and in holding that when the parties knew perfectly well the terms on which they held no question of acquiescence could arise. the mortgagee took the property under certain terms which were well defined and he should not be allowed to say that he misunderstood the terms of the mortgage and believed that he was the..........to make.16. the finding, as we have already stated, is that the katcha house, which stood, on the site mortgaged, fell and the mortgagees put up a valuable building on the land. the building that exists on the land is in the nature of an accession within the meaning of section 64, t.p. act. it was acquired at the expense of the mortgagee. the question is whether it is capable of separate enjoyment without detriment to the principal property. when the building was erected, we must take it, there was nothing on the site because the katcha house that stood on the site had already fallen. the only security, therefore, that the mortgagees possessed, after the katcha house fell down, was the site. if the mortgagees had not built on the site the only thing that the plaintiffs could get back.....
Judgment:

1. This second appeal arises out of a suit for redemption and is on behalf of the principal defendants, the mortgagees. There were many defendants, out of whom defendants 1 to 9 are parties as the legal representatives of the mortgagees. They have acquired the rights of the mortgagors in a fractional share in the mortgaged property. The plaintiffs represent the mortgagors' interest in a fractional share and the remaining defendants represent the mortgagors' interest in the balance of the property. The plaintiffs' share in the mortgaged property has been found to be, roughly, seven-sixteenths.

2. The mortgage was made in 1859 and was in respect of a piece of land with a katcha house over it. The amount of the mortgage money was Rs. 400. The principal amount was to be paid within two-and-half years and in default of payment the mortgagees were to be treated as the owners of the property. In other words, the mortgage was one by conditional sale.

3. The suit was instituted almost at the end of 60 years from the due date. It was resisted on the ground that the defendants had spent a large amount of money on building on the land and the plaintiffs could not succeed without paying compensation for the improvements made. The Court of first instance decreed the suit for the share found by it as due to the plaintiffs on payment of a proportionate portion of the original mortgage money. There was an appeal and the learned Subordinate Judge who heard the appeal in the first instance remanded the suit to the Court of first instance for an estimate of 'the value of the improvements proportionate to the share of the plaintiffs.' The learned Judge was of opinion that the plaintiffs were bound either to pay their proportionate share of the improvements or to sell their own interest in the mortgaged property. He was of opinion that Section 51, T.P. Act, was applicable to the case. The remand was, by a subsequent order, to be treated as one under Order 41, Rule 25, Civil P.C. The learned Munsif recorded a finding and, then, the case was reheard by the successor in office of the Subordinate Judge who had heard that appeal in the first instance. The second officer found, agreeing with the Court of first instance, that the entire value of the buildings that stood on the land was Rs. 8,000. It was found as a fact that the mud building that stood on the site at the date of the mortgage fell down shortly after the mortgage, and the mortgagees built on the site at the expense of the amount already mentioned. On this finding the learned Subordinate Judge passed an elaborate decree the main feature of which was that defendants 1 to 9 were to receive, besides a proportionate amount of the mortgage money, a sum of Rs. 3,799-5-6. In case the plaintiffs failed to pay the said amount of Rs. 3,000 odd, being the amount of compensation, the defendants were to pay a sum of Rs. 5,000 odd to the plaintiffs as the price of the share of the plaintiffs in the site. The decree further directed that in the case of the mortgagees failing to pay certain other rules would apply. These rules related to payment of rent and other matters.

4. The parties are dissatisfied with the decree passed by the learned Subordinate Judge and while the defendants have appealed the plaintiffs have filed cross-objections.

5. The plaintiffs case in this Court is that Section 51, T.P. Act, did not apply to the circumstances of the case and that there was no evidence to prove the good faith and belief of the mortgagees as found by the lower appellate Court. Their contention is that they should not be called upon to pay anything for the improvements.

6. The defendants' case is that the Court below should have directed the plaintiffs to sell their share of the site to the defendants and that the order which directed the plaintiffs to pay for the improvements was wrong. It was further urged, in the course of the argument, that, in any case, the defendants may be allowed to remove the materials from the site.

7. The main question that has been argued in the appeal and in the cross-objection was whether Section 51, T.P. Act, had any application to the case, and if not, what should be the nature of the order to be passed by the Court.

8. On behalf of the defendants the case in Rahmatullah Beg v. Yusuf Ali [1912] 10 A.L.J. 124 and the English case of Henderson v. Astwood [1894] A.C. 150 have been relied on. Another case decided by a single Judge of the Lahore Chief Court, Ram Kaur v. Patab Singh [1919] 58 P.R. 1919, has also been produced as authority in the case. Before we, proceed to examine these cases and the cases cited on behalf of the plaintiffs, it will be necessary to examine the statute itself.

9. It will be remembered that the Transfer of Property Act was not in force at the date of the mortgage. The questions that we have to deal with are questions of substantive law and are not merely matters of procedure. It cannot, therefore, be urged that the rights of the parties can very well be regulated by the provisions of the Transfer of Property Act, which came into force many years after the mortgage. On the other hand, we have not been shown any rule of law that prevailed in the year 1859, nor has it been established that whatever was the rule of law that prevailed in 1859 it was in conflict with the present day law. In the absence of any direct guide as to the rule of law that prevailed in 1889, it in will be safe to accept the rules prevailing at the present day, as a sure guide.

10. Section 51, T.P. Act, is to be found in Chap. 11 of the Act which deals with general principles. It has not found place in Chap. 4 which deals with mortgages. Section 63, T.P. Act, deals with cases like the one before us. Under Section 63, when a mortgaged property receives an accession and that accession is acquired at the expense of the mortgagee, certain rights and liabilities follow. We find therefore, that a specific rule of law has been enacted for the purposes of guiding the Courts where the mortgagor and the mortgagee are concerned. Only when special rules are not available it would be necessary to fall back on general rules. In this view, Section 51, T.P. Act, should have no application to the present case. Section 51, reads as follows:

When the transferee of an immovable property makes an improvement on the property believing in good faith that he is absolutely entitled thereto and he is subsequently evicted therefrom by any person having a better title the transferee has a right to require the person causing the eviction....

11. It appears to us that this language was never meant to apply to a case of a mortgagor and a mortgagee. In this case the mortgagee obtained possession of the property not as a person who was absolutely entitled to it, but as a 'person who was entitled to hold possession, temporarily, namely, till his mortgage money was paid. It is argued that the condition, that after the lapse, of two-and-half years, if the mortgage money was not paid, the mortgagee would be entitled absolutely to the property was a provision which fell within the purview of Section 51, T.P. Act. We cannot agree with this contention. The mortgagee obtained the property under certain defined conditions. The law in 1859 was as clear as it is to-day. The mortgagee by conditional sale could not acquire a title to the property without going through certain formalities. It cannot, therefore, be said that, if he assumed, on the expiry of the term of the mortgage, that he had become the absolute owner of the property, he believed in good faith that he was absolutely entitled to the property. We shall consider presently how far the finding of good faith arrived at by the Court below is binding on us. For the present it is sufficient to say that it is impossible to apply the rule contained in Section 51 to the case of the mortgagee. The principle on which Section 51 is based is one of equity and rules of equity can have no application where there are clear rules of statute. The case of Beni Ram v. Kundan Lal [1899] 21 All, 496 may be cited as, to some extent at least, appropriate. In that case there was a lease for a term and the lessees, after a few years, began to construct valuable buildings on the land. The question arose whether, after the expiry of the term of the lease, the lessor could re-cover the property. It was found that the lessor knew perfectly well that the defendants were using the property for erecting permanent structures. The Courts in India were of opinion that in the circumstances of the case the lessor could not recover and that he was estopped by the principle of acquiescence. Their Lordships of the Privy Council had no hesitation in setting aside the decrees passed by the Courts in India and in holding that when the parties knew perfectly well the terms on which they held no question of acquiescence could arise. The terms there were in writing and the parties were bound by those terms. The same principle applies to this case. The mortgagee took the property under certain terms which were well defined and he should not be allowed to say that he misunderstood the terms of the mortgage and believed that he was the absolute owner of the property.

12. The case of Rahmatullah Beg v. Yusuf Ali [1912] 10 A.L.J. 124 followed the English case of Shephard v. Jones [1883] 21 Ch. D. 469. This English case was approved by the House of Lords in Henderson v. Astwood [1894] A.C. 150. These cases have no application whatsoever to the facts of the present case. Those were cases in which the mortgagee had lawfully exercised his right of sale given to him by the mortgages. Having exercised the right of sale he was bound to account for the sale proceeds. He had to hand over the balance of the sale proceeds to the mortgagor. The question was whether, in accounting for the sale proceeds, he was entitled to be credited with the money he had spent on the improvement of the property. It was said, and if we may say so with respect, it was rightly said, that he was. Suppose, for the sake of example, that the mortgagee spent Rs. 1,500 in adding two rooms to the mortgaged premises. If by the addition of the two rooms the property fetched an extra value of Rs. 2,000, it was not fair that the mortgagor should have the benefit of the extra sum of Rs. 2,000 without making good the sum of Rs. 1,500 spent by the mortgagor on the improvement of the property. These English cases, therefore, are no sure guide in a suit for redemption. This was pointed out in the case of Rupan Singh v. Champa Lal [1915] 37 All. 81 by two learned Judges of this Court who found it difficult to follow the ruling of Banerji, J., in Rahmatallah Beg v. Yusuf Ali [1912] 10 A.L.J. 124

13. The case in Ram Kaur v. Partab Singh [1919] 58 P.R. 1919 is by a learned single Judge or the Punjab Chief Court and is based on the case of Shephard v. Jones [1883] 21 Ch. D. 469 already discussed. We have shown that the of case Shephard v. Jones was distinguished in this Court in Rupan Singh v. Champa Lal [1915] 37 All. 81 and is no authority for the question which we have to decide. We may further point out that the learned Judge had not had the Transfer of Property Act to guide him because, we understand, the Act did not apply to the Punjab. The case of Pandiyan Pillai v. Vellayappa Rowther : AIR1918Mad572 , decided by the Madras High Court, no doubt, to some extent, supports the defendants. The relevant portion appears at p. 440 of the report and is very short. It does not discuss the law and makes no reference to Section 63, T.P. Act. Their Lordships were of opinion that the mortgage was an anomalous one under Section 98, T.P., Act, and that fact, partially at least, influenced their judgment. Further, if we look to the facts of the case, we shall find that it was not a suit for redemption at all. It appears that a mortgagee executed certain improvements on the mortgagor's property and then the mortgaged property was attached at the instance of a simple money decree-holder who held the decree against the mortgager. The mortgagee, thereupon, preferred a claim which was allowed. Thereupon the decree-holder brought the suit in order to obtain a declaration that the property was liable to be sold and the question arose whether the amount of the mortgage money alone should be notified as a charge on the property or also the value of the improvements. It will be noticed that the case was somewhat similar to the English cases cited above. If the decree-holder was going to sell the property with the improvements and if he was going to enjoy the benefit of a larger value due to the execution of the improvements, it was not fair that the party who made the improvements should have his costs of the improvements paid to him. These wore the facts of the case, and, on right principles, the case is no authority for what we should do in a suit for redemption. On principle and authority, therefore, we are of opinion that Section 51, T.P. Act, has no application.

14. In the view which we have taken of Section 51, T.P. Act, it is not necessary for us to decide whether we are bound or not by the finding of the lower appellate Court that the defendants believed in good faith that they were absolutely entitled to the property in suit. We may, however, point out that this finding is not binding on us. The learned Judge who arrived at the finding himself confesses that he had no material before him on which to come to a conclusion as to good faith. He, however, thought that the fact that the mortgagees had spent money over the property was alone sufficient to enable him to draw the inference that the mortgagees believed in good faith that they were absolutely entitled to the property. The learned Judge's language is as follows:

There is no evidence on this point on the record and it is impossible for the appellants to adduce any such evidence as both mortgagees are dead. I am inclined to the opinion that unless such a belief existed in the minds of the mortgagees they would have never converted the katcha mortgaged property into a pakka one.

15. An inference from admitted or proved facts is a question of law. This was held by the Privy Council in Dhanna Mal v. Moti Sagar . We are, therefore, entitled to see, in second appeal, whether the inference drawn from the admitted facts was a right inference or not. We are of opinion that from the mere fact that the mortgagees had spent money over the property, it is impossible to draw an inference that they acted in good faith and that they believed that they were absolutely entitled to the property. If we were to hold that in every case of mortgagee by conditional sale, where the mortgagee spends money on improvement, he must be deemed to have acted in good faith and in the belief that he was the absolute owner of the property, we shall be legislating and not arriving at a finding of fact on which the law has to be applied. Now the question is, having regard to the provisions Section 63, T.P. Act, what is the right decree to make.

16. The finding, as we have already stated, is that the katcha house, which stood, on the site mortgaged, fell and the mortgagees put up a valuable building on the land. The building that exists on the land is in the nature of an accession within the meaning of Section 64, T.P. Act. It was acquired at the expense of the mortgagee. The question is whether it is capable of separate enjoyment without detriment to the principal property. When the building was erected, we must take it, there was nothing on the site because the katcha house that stood on the site had already fallen. The only security, therefore, that the mortgagees possessed, after the katcha house fell down, was the site. If the mortgagees had not built on the site the only thing that the plaintiffs could get back from mortgagees was the site. The question then is whether they are entitled also to the building because the mortgagees have erected one. This case is not at all similar to cases where a building existed and some additions were made to the existing building in the shape of say an additional storey or additional rooms.

17. If the mortgagees remove the building and leave the site in the same condition in which it was when the old building fell, the mortgagors could have, possibly, no ground for complaint. The question, whether the building or the materials which constitute the building are capable of separate enjoyment is easy to answer, in the circumstances of the present case.

18. Where the accession is in the shape of an additional storey to an existing building it would be difficult to say that the upper storey is capable of separate enjoyment or that it could be separately enjoyed by the removal of the materials. The removal of the added storey is more likely than not to injure the lower storey. The question of separate enjoyment arose in some cases in this Court. The earliest case that has been brought to our notice is that of Raghunandan Rai v. Raghunandan Pande A.I.R. 1921 All. 353. It was a case decided by three learned Judges of this Court and was one in which the mortgagee, during the continuance of the mortgage, had planted a grove on the mortgaged property. The learned Judges expressed the opinion that there was no bar to the mortgagees on redemption removing the trees. The same question arose in Nageshwar Bai v. Nand Lal : AIR1926All67 . In that case two learned Judges of this Court were of opinion that the trees could not be removed. In that case there was the express finding that the removal of the trees would injure the land. In second appeal the learned Judges were bound by the finding and in the circumstances the opinion expressed that the trees could not be removed was not to be applied in all cases. A similar question arose in Parmanand Pandit v. Mata Din Rai : AIR1925All427 . In that case the Judges who composed the Bench differed in opinion. Considering that the majority of the learned Judges before whom the question came, in this Court, were of opinion that the trees could be removed, we find ourselves fortified in our opinion that, in the circumstances of the present case, the materials of the building can be removed by the mortgagees.

19. The decree of the Court below directing the payment of rent, etc., in certain cases goes beyond the purview of Section 63, T.P. Act. As we have already mentioned, the parties are dissatisfied with this decree. It cannot stand.

20. The result is that we dismiss the defendants' appeal with costs. We allow the cross-objections of the plaintiffs-respondents and, modifying the decrees of the Courts below substitute the following decree therefor: The plaintiffs, on payment of the sum of Rs. 189-15-6, will be entitled to joint possession with the defendants mortgagees over the share found by the Court below. The share as found by the lower appellate Court is 63829/1,34,400. The plaintiffs will be entitled to joint possession ever this share in the site alone. The payment must be made within six months of this date. On payment being made, the plaintiffs will be put in joint possession of the site with the defendants. If the payment is made the defendants in order to be able to remove the materials, must institute a suit for partition, within three months of the expiry of the period of six months, granted to the plaintiffs to pay. On the separation in plaintiffs' favour of the share decreed to them the defendants will be entitled to remove the materials from the site allotted to the plaintiffs, within the space of three months of the decree in the suit for partition becoming final. In case the defendants fail to remove the materials from the portion of the site allotted to the plaintiffs on partition, the plaintiffs will be entitled to take possession, not only of the site, but also of the materials on the site, without any extra payment. To start with, the materials on the site allotted to the plaintiffs will be treated as the property of the defendants and the defendants will be allowed, as already stated, to remove those materials. It will be only on their failure to remove the materials that the plaintiffs will be entitled to take possession of them. In case of failure on the part of the plaintiffs to pay the sum of Rs. 189-15-6 within the period of six months mentioned above, the plaintiffs' right to redeem will be barred for all times. In the peculiar circumstances of the case, we order the parties to pay their own costs.


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