1. Choudhri Tikam Singh, the father of the plaintiff-respondents executed a deed of usufructuary mortgage on 10th July 1928 in favour of the appellant, Ganga Sahai in order to secure the payment of a sum of Rs. 6337 due upon a decree. He made an application under the Encumbered Estates Act on 29th August 1935 and, therein made the necessary statement that he had disrupted the joint family of which he and the respondents were members. The special Judge in accordance with the provisions of the Encumbered Estates Act apportioned the debts and property of the family between the applicant andh is sons. He found that the liability of Chaudhri Tikam Singh under the mortgage was to pay a sum of Rs. 1267-6-5 and the liability of the sons was to pay a sum of Rs. 5069-9-7, that is, he held that Chaudhri Tikam Singh was liable for 1/5th of the debt and the sons for 4/5ths of it. Then the respondents, on 24th May 1941, made an application under Section 12, Agriculturists' Relief Act, for the redemption of the mortgage on the allegation that the whole debt had been satisfied from the usufruct and that nothing remained to be paid by them on the basis of the mortgage. The learned Judge of the Court below found in their favour and directed that the property should be delivered to them. The mortgagee, Ganga Sahai has instituted this appeal.
2. It has been argued, in the first place, on his behalf that the respondents were bound by the decree of the Court of the special Judge by which they were liable to pay a sum of Rs. 5069-9-7 and that it was not open to them to plead that no sum of money ,was due when they made their application under the Agriculturists' Relief Act. In our judgment, there is no force in this argument. The proceedings under the Encumbered Estates Act may, in-one sense, be deemed to be one proceeding but, in another sense, they amount to a set of proceedings in which the liabilities of the applicant and joint debtors or joint owners of property are apportioned in which the amount due to each creditor from the applicant under the Act is determined and in which any disputes which may arise about the applicant's property are made the subject of decrees. In so far as the debts are concerned, the decision is one between the creditors and the' applicant and cannot bind any person from whom money may be due but who is not an applicant under the Act. The whole purpose of the Act is to place the property of the applicant in the hands of the Collector who must realise the assets under the provisions of the Act and apply them for the purpose of discharging, as far as possible, the liabilities of the applicant. There is no method by which any decree passed by the special Judge against a person who is not an applicant could be executed under the terms of the Act and it is obvious that the special Judge has no jurisdiction to pass a decree against any such person. In apportioning the liabilities ho may incidentally have to come to a conclusion about the liabilities of persons other than the applicant but those liabilities cannot be made the subject of a decree in his Court against those persons. It has also been suggested that Chaudhri Tikam Singh should be deemed to have made his application under the Encumbered Estates Act on behalf not Only of himself but also of his sons. This argument is contrary to the terms of the application. Chaudhri Tikam Singh was not bound to apply on behalf of his sons and he did not purport to do so. He applied entirely on his own behalf and, as we have already said, made a statement that the family had been disrupted.
3. Learned Counsel for the appellant has also referred us to the provisions of Section 60, T.P. Act. He points out that these provisions are not affected by the provisions of the Agriculturists' Relief Act or the Debt Redemption Act, which was in force at the date of the lower Court's decree and in accordance with which the calculations affecting the liabilities of the parties were made. Learned Counsel contends that the respondents ought to redeem the whole mortgage and not only that part of it which affected them. It seems to us that he has overlooked the fact that Section 60, T. P. Act, when it speaks of a mortgage debt means that portion of the amount secured by the mortgage which is still due. Under the provisions of the Encumbered Estates Act, the mortgage on Chaudhri Tikam Singh's share of the property was discharged and in place of the mortgage debt there was substituted a simple debt which was to be discharged by the Collector. It was only 4/5ths of the original mortgage debt which remained to be secured by the mortgage deed and only 4/5ths of the property could be applied to the payment of that debt. The respondents were willing to pay the whole amount still secured by the mortgage and sought the redemption of the whole of the property which was still the subject of the mortgage. They were, therefore, not barred, in any way, by the provisions of Section 60, T.P. Act.
4. There remains, however, the question whether the learned Judge has applied the proper principle in coming to the conclusion that the whole of the mortgage debt had been discharged out of the usufruct of the property in the possession of the appellant. He has thrown the whole burden upon the defendant mortgagee to show what profits were received by him from the mortgaged property. It seems to us that this is unfair to the mortgagee. The mortgage was with possession and one of the terms was that the usufruct should be set off against the interest. In these circumstances, no burden was thrown upon the defendant-appellant to keep any accounts. Learned Counsel for the respondents has urged that there was a term in the mortgage which would require the defendant-appellant to keep accounts, namely, the term that the mortgagee should be liable for the payment of the revenue then assessed upon the property but that the mortgagor would be liable for any further assessment which was made during period when the mortgage was in force.
5. It seems quite clear to us that this term did not require the mortgagee to keep accounts because the amount due on account of revenue could be discovered from the Government records without any reference to any accounts which the mortgagee might keep. Even under the Agriculturists' Relief Act there was no question of the mortgagee accounting for his profits. The question only arose when the Debt Redemption Act came into force because under the terms of that Act the profits included not only the sums actually recovered but such sums as1 might have been recovered if the mortgagee had not been guilty of negligence. It has been alleged on behalf of the respondents on the analogy of certain decisions in cases for profits instituted by cosharers against a lambardar that a presumption should be made that the mortgagee had collected the full amount of profits. We may observe that even in profits cases the use of the convenient terms 'gross rental' and 'collections' has given rise to a certain amount of misconception. A lambardar is bound to pay to cosharers--their shares of the profits actually recovered by him and such further amounts which could have been recovered by him--if he had been diligent. A lambardar is in a fiduciary position and is bound to recover the profits of the mahal for the benefit of the cosharers. In these circumstances, the burden was naturally thrown upon him to show what profits he had in fact received. If his evidence was unsatisfactory it was open to the Court either to assume that he had recovered a reasonable amount of profits or, in the alternative, if he had not recovered the amount which a diligent lambardar could reasonably be expected to have recovered, to presume that he had been guilty of negligence in failing to recover the difference between the amount which he had admitted having received and the amount which a diligent lambardar would have recovered. The alternatives are based on entirely different principles but the practical result is the same and it is for this reason that the Courts have found it possible to pass a decree against the lambardar either on the basis of the amounts which he admits having recovered or on the basis of the gross assets of the village, subject to an allowance on the ground that no lambardar, however diligent, could be expected to recover in any year the total amount for that year.
6. It must, however, be remembered that a lambardar is liable only for the amount which he has recovered or for the amount which he ought to have recovered if he had not been negligent, and it would only be in the most exceptional circumstances that one could assume that the whole amount either had been recovered or ought to have been recovered if no negligence had been displayed. The case before us is even a stronger one because the mortgagee was under no obligation at least till the Debt Redemption Act came into force to recover any sum on behalf of the respondents. It is no doubt true that the defendant-appellant was the person who had particular knowledge of the amounts of profits which had come into his hands and for this reason some initial burden was thrown -upon him but we do not see why he should be penalised for failure to keep regular accounts when for the greater part of the relevant period he had no notice that such accounts were necessary. He has produced his counterfoils of receipts and his son has gone into the witness-box and made a statement. We may add that there is undoubted evidence that a part of the profits were never recovered and were irrecoverable. There were, for instance, decrees against three tenants who were ejected for failure to pay their rents. Under the terms of the Tenancy Act, the amounts due from them, once they were ejected, could no longer be recovered. Then there is the admitted fact that a certain part of the mortgaged property was re-transferred to Chaudhri Tikam Singh on the basis of a Theka which he accepted on 10th July 1928 and that the amounts due from Chaudhri Tikam Singh on account of rent were not paid in spite of the fact that decrees were obtained against him. Learned Counsel for the respondents has urged that this Theka was in favour of Tikam Singh alone but, on a construction of the document, we consider that it was a Theka given to the joint family of which Tikam Singh was at that time the head.
7. It has been admitted by the respondents, and indeed, it is the basis of their case, that the mortgage was made on behalf of the whole family. Chaudhri Tikam Singh took his theka on the allegation that he had mortgaged the property and there can be no doubt that it was intended to be a theka in favour of the mortgagors, that is, the whole family. There was a covenant in the theka that the mortgaged property was further to be hypothecated to secure the payment of the rent. In these circumstances, we cannot see how the mortgagee can be deemed to have recovered that part of the profit which consisted of the rent on the basis of the theka.
8. The argument of the learned judge of the Court below, which has also been pressed before us on behalf of the respondents, is that the mortgagor was not entitled to recover the rent on the basis of the theka at the time when the mortgage was redeemed. The learned Judge has referred to certain rulings but he has overlooked the fact, that they apply only to cases where some amounts were claimed over and above the amount originally secured by the mortgage. It is true that the appellant, in his written statement, alleged that he was entitled to recover certain sums due on account of arrears of rent and it may be that he was putting forward the alternative plea that these sums were due over and above the amount of the original sums secured but that was only an alternative plea which has not been pressed before us. The question with which we are concerned is whether the amount originally secured should be reduced on the assumption that these amounts due on account of rent had either in fact been received or should have been received if the mortgagee had displayed due diligence. It is not that the mortgagee is claiming something over and above the amount secured but that the mortgagors are alleging that the amount secured should be reduced upon the ground that these sums due as arrears of rent were or should have been recovered by the mortgagee.
9. It has been argued by the respondents that the mortgagee, if he had taken all the necessary precautions, could have recovered these sums but this is a question of fact which would have to be decided upon the evidence. There can be no assumption upon the point. The mortgagee obtained these decrees and he was not compelled to throw good money after bad by attempting execution if there was no prospect of recovering the amounts decreed. In respect of the theka, once it is held that the respondents are themselves the Thekadars, it is surely impossible for them to allege that the mortgagee should in effect pay them a share of the theka rent on the ground that he was negligent in failing to recover it. It is not alleged that the money was paid. The respondents cannot be allowed to base a claim upon their own negligence in not paying the amount decreed against them-a negligence which was very much greater than any possible negligence which the appellant may have displayed. If a co-sharer in a revenue mahal had accepted a lease from the body of proprietors and had not paid the rent it would surely not be open to him to claim a share of his own rent over again from the zemindar on the ground that the zemindar had been negligent in failing to force him to pay the money which he was bound to pay under a decree against him. The proposition has only to be stated to be rejected. We are reluctant to delay the proceedings in this case further but we feel that we have not the materials before us to enable us to decide the case. We might remit an issue but it would still be necessary, in the event of a finding that the whole amount of the mortgage debt had not been paid, to take further proceedings in the Court below. We, therefore, think that the only course is to remand the case for decision upon the merits. The learned Judge will reopen the transactions as has already been done by the Court below and will calculate the amount due on the mortgage at the date when the application under Section 12, Agriculturists' Relief Act, was made. He will set off against that sum the amount of profits which he considers that the mortgagee has in fact recovered or might have recovered if he had not been negligent. If he is dissatisfied with the information given by the mortgagee and thinks that any profits have not been disclosed he may make all reasonable assumptions against the mortgagee. The question whether any sum of money which has not been recovered should have been recovered if proper diligence had been displayed must be decided as a question of fact. In no case, will the learned Judge make allowance against the mortgagee for any sum which was due as rent upon the theka and which has not been recovered. Having made these observations, we set aside the decree of the learned Judge of the Court below and remand the case for disposal according to its merits. The learned Judge may allow the parties to produce further evidence if they wish to do so. The costs in this Court will abide the result.