1. This is a second appeal by the defendants against concurring decrees the two lower Courts decreeing redemption in favour of the plaintiff of a certain usufructuary mortgage and under Order 34, Rule 9 a payment by the defendants to the plaintiffs of Rs. 137 with interest. The mortgage in question was executed on 24th April 1917 by Umrao Singh in favour of the plaintiffs. The principal sum secured under the mortgage was Rs. 4,500 and the plaint states that the mortgage deed in question is a possessory mortgage deed and the profits arising from the mortgaged property have been agreed to be set off against the interest on the mortgage money. In Paras. 4 and 5 it was alleged that most of the items entered in the mortgage deed were fictitious and that for that reason the mortgagees had only paid Rs. 2,136-3-6 of the mortgage money, and in Para. 6:
Although the mortgagees did not pay the entire mortgage money, yet they all along realised the profits arising from the mortgaged property.
2. There was no rate of interest specified in the mortgage but in a tabular statement, List B attached to the plaint, the plaintiffs with some ingenuity have assumed a rate of 8 per cent, interest without stating that figure. This rate of interest is arrived at by calculating the profits as Rs. 360 per annum and ascertaining that that amount of profits on the total mortgage amount of Rs. 4,500 would be 8 per cent. As a matter of fact on the allegations of the plaint that the mortgagees paid only something less than half of the Rs. 4,500 the interest if it was calculated would come to about double 8 per cent, and logically therefore on the plaint the calculation of interest is incorrect. The basis of the claim is that the profits amounted in the first year to Rs. 360 and interest amounted to Rs. 171 and therefore the debt should have gone in reduction of the capital amount. As indicated there is no ground whatever for assuming that 8 per cent, should be the rate of interest and the assumption that a rate of interest should be taken on a fictitious total seems unsound. This point has not been noticed by the Courts below and no attention whatever has been directed by either Court to what is the rate of interest. The defence was that the entire amount had been paid. In this mortgage no cash consideration was paid but about 20 debts were included which totalled Rs. 4,500. In regard to these debts the finding of the Courts below is that items on p. 25 totalling Rs.7,51-6-0 were fictitious and three other items totalling Rs. 895-11-6 were genuine but were not paid. Now the rights of the plaintiffs arose as follows:
Umrao Singh filed a petition in insolvency after executing the mortgage deed in question and in his schedule of debts he mentioned this mortgage. Umrao Singh was adjudicated an insolvent. The equity of redemption of Umrao Singh was put up to auction by the receiver and purchased by the plaintiffs for Rs. 50. This sum appears small but at the time there was a mortgage deed dated 6th January 1914 in favour of plaintiff 1; the original amount of the consideration was Rs. 428-8-0, but at the time of the auction purchase the amount had considerably increased owing to interest. On 25th May 1924 the receiver executed a sale deed in favour of the plaintiffs of the equity of redemption and it is under this sale deed that the present plaintiffs have sued as transferees from Umrao Singh. The position of the plaintiffs therefore is not precisely the same as would be the position of a mortgagor who was suing for redemption. Now the genuine items which have not been paid are as follows:Decree No. 515 of 1916 of MakundRam against Umrao Singh for Rs. 300-0-0Decree No. 784 of 1914 of GaneshDatt against Umrao Singh for Rs. 167-8-6Mortgage deed dated 6th January1914 of Mukat Manohar,plaintiff 1, executed by UmraoSingh on the property in suitfor Rs. 428-8-0-------------Total Rs. 895-11-6
3. Now the question around which argument chiefly centres is whether the defendants mortgagees in possession are bound to render accounts under Section 76 to the plaintiffs on redemption of this mortgage, or whether Section 77, T.P. Act, applies to the case and the defendants as mortgagees in possession are not bound to account. Section 77 provides as follows:
Nothing in Section 76, Clauses (b), (d), (g) and (h), applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal.
4. The wording of this section applies to the mortgage deed as it is stated in the plaint that it is a possessory mortgage deed in which the profits arising from the mortgaged property have been agreed to be set off against the interest on the mortgage money, and there is no contest that those terms do not correctly describe the provisions in the deed. As compared with other deeds this deed is peculiar in the fact that no rate of interest is provided for the mortgage money. It is merely stated that the mortgagees are to hold possession in lieu of interest. Now on appeal it has been contended in ground No. 4 that on account of this provision the defendants were not liable to account. On the other hand learned Counsel for the plaintiffs-respondents argues that because all of the genuine items in the mortgage deed have not been paid by the mortgagees therefore Section 77 will not apply. He further develops his argument that because Section 77 does not apply therefore the defendants are bound to account for profits, as they are no longer exempt from the provisions of Section 76(g).
5. Learned Counsel for the respondents has failed to show any ruling which indicates that in the circumstances of the present case Section 77 would not apply. He has shown a number of rulings which are to be distinguished on various grounds. In some of these rulings there is a suit brought by the mortgagor to whom the mortgagee had agreed to pay certain fixed sums and in other cases there are stipulations in the mortgage deed that part of the profits are to be used for the payment of land revenue and those payments either to the mortgagor or of land revenue have not been made. It is under such circumstances that the Courts have held that the accounts of profits and payments can be gone into by the Court in a suit for redemption. There are other cases in which it has been held that where a mortgagee in a mortgage similar to the present has failed to carry out his undertaking to discharge the previous debts, then the mortgagor is permitted to sue for redemption before the period fixed for redemption in the mortgage deed. One of these latter rulings is reported in Chhatku Rai v. Baldeo Shukul (1912) 34 All. 659 and in that case the principal amount was Rs. 599-15-0 and the mortgagee bad paid an amount of Rs. 50-15 only. The plaintiff brought a suit for redemption of the mortgage and redemption was decreed upon payment of the sum of Rs. 50-15-0; that is, there was no such accounting gone into such as the plaintiffs claim in the present case, and that point was not claimed in that particular case. The ruling therefore is no authority in favour of the plaintiffs.
6. In Seshayya v. Lakshminarasinha Rao Panntulu A.I.R. 1930 Mad. 160 there was a case where the mortgagee had under, taken to make a payment of Rs. 60 per annum to the mortgagor and this particular payment was not made. This payment was to be made out of the profits. It was held therefore that if this payment was not made the Court could direct that an account of profits should be taken. The ruling reported in Narasimha Rao Pantulu v. Immani Seshayya A.I.R. 1925 Mad. 825 was similar. It appears to us that in the present case the plaintiffs have failed to show that Section 77 will not apply. A considerable amount of argument has been made in regard to the different items which have not been paid. In the case of the decree of Makund Ram for Rs. 300 the Court below finds that Umrao Singh was arrested and had to pay this money himself. Now under these circumstances we are of opinion that Umrao Singh would have had a right of suit against the defendants for damages for breach of contract and in such a suit he could have claimed not only the personal damages which he suffered on account of the arrest but also the principal amount of Rupees 300 which he had paid and the interest on that amount. Now as Umrao Singh was entitled to bring such a claim it appears to us that the plaintiffs cannot also have a legal right to deduct the interest on this Rs. 300 from the profits due to the defendants; otherwise the defendants would have to pay interest on this sum of Rs. 300 twice over. A similar argument applies to the decree of Ganesh Datt for Rs. 167 odd. Now in regard to the mortgage deed of Mukat Manohar, plaintiff 1, for Rs. 428-8-0, if this mortgage deed is not now time-barred it would be open to the plaintiffs to sue on their mortgage deed, and in such a suit they could claim not only the principal money but also the interest on their mortgage money.
7. Under these circumstances it would not be correct to allow a deduction from the profits of the defendants on account of the interest of this amount. This therefore disposes of these three amounts. We consider therefore that this present suit is to be distinguished from any of the rulings on which the plaintiffs rely because in those rulings the plaintiffs were the mortgagors themselves to whom the mortgagees had contracted to make certain payments, or the heirs of the mortgagors. In the present case the suit is different because under the terms of the mortgage deed the mortgagees have contracted to make certain payments on behalf of the mortgagor. To a certain extent the present case may be stated to be a case in which there is not only a transfer of immovable property by the mortgage deed in suit, but that deed also contains certain provisions by way of contract between the mortgagor and the mortgagees. Now so far as there I was a transfer of property under the Provincial Insolvency Act, there is a provision in Section 28 that on the making of an order of adjudication the whole of the property of the insolvent shall vest in the Court or in the receiver. 'Property' is denned by Section 2(d) of that Act as including any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit. It is clear that this definition of property will not include the right to sue for breach of contract and such a right would remain with Umrao Singh and would not pass to the official receiver. Moreover the mere right to sue is not property as provided in Section 6(e), T.P. Act and cannot be transferred and therefore the sale deed from the receiver to the plaintiffs would not convey such a right to sue. These parts of the contract are not contracts which run with the land but they are contracts which were made for the benefit of Umrao Singh personally.
8. Another point which is set forward in ground No. 6 is that plaintiff 1 is the lambardar who has actually been collecting the profits since 1924 and he has been paying those profits to the defendants. The plaintiffs therefore are in the position of a person who has made certain payments and is now in the civil Court claiming an adjudication that the payments which he made should not have been made. For these reasons we allow this appeal to the extent indicated below and we set aside the decrees of the two lower Courts. In our opinion the plaintiffs are entitled to redeem the property on payment of the amount Which the Courts below have found that the defendants have actually paid, that is Rupees 2,852-14-6. Accordingly therefore we grant a decree of redemption for the plaintiffs in the terms of Order 34, Rule 7 on the payment of Rs. 2,852-14-6 within six months from the date of this order. The parties will pay their own costs throughout.