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Krishna Gopal Vs. Bachhulal (Deceased by L.Rs.) and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 1168 of 1974
Judge
Reported inAIR1985All327
ActsTransfer of Property Act, 1882 - Sections 76 and 77; Code of Civil Procedure (CPC) , 1908 - Sections 100 and 101
AppellantKrishna Gopal
RespondentBachhulal (Deceased by L.Rs.) and ors.
Appellant AdvocateGyan Prakash, Adv.
Respondent AdvocateMool Behari Saxena, Adv.
DispositionAppeal dismissed
Excerpt:
.....mortgagee bound to account at the time of redemption - liability of mortgagee - maintainance of account - held, section 77 not applicable. (ii) second appeal - sections 100 and 101 of code of civil procedure, 1908 - amount liquidated by the rent received by mortgagee during period of mortgage - held, binding in second appeal. - - the house mortgaged remained in good condition throughout the mortgage period. ws as well as amin's report da 6-12-1972, papers nos. it was clearly agreed between the mortgagee and themortgagor that there was to be no accountingat all. their statements were also not reliable as some constructions were done but it could not be proved as to how much was spent in those constructions......was averred that the terms of mortgage are unconscionable and a clog on equity of redemption. the house mortgaged remained in good condition throughout the mortgage period. the mortgage money stood paid up out of the rent realised by the mortgagee. thus, the prayer was for redemption without payment of any sum or on payment of such amount which might be found due.5. defendants contested the claim by filing three separate written statements. their ( contention was that the house in dispute has been extended and reconstructed. the first remodelling was done in 1916 at theexpense of rs. 1,000/- and the second construction took place in 1931 when a sum of rs. 5,000/-was spent. plaintiffs were not entitled to redemption without the said payment and interest thereon. terms of agreement were.....
Judgment:

N.N. Sharma, J.

1. This is a defendant's appeal directed against judgment and decree D/- 4-3-1974, recorded by Sri Prem Singh, learned Ist Temporary Civil & Sessions Judge, Gorakhpur in Civil Appeal No. 200 of 1973 by which he dismissed the appeal with costs and affirmed the judgment and decree DA 22-5-1973 recorded by Sri S. K. Saxena, learned IIIrd Additional Munsif, Gorakhpur in (Original Suit No. 178 of 1968) for redemption of a mortgage with possession.

2. On 23-10-1905, Ram Prasad, father of plaintiffs, executed a mortgage deed of disputed house detailed at the foot of plaint situate in Kazipur street of Gorakhpur City for a sum of Rs. 125A in favour of Baldeo, ancestor of defendant-appellant. It was a usufructuary mortgage for a period of sixty years on the terms and conditions as laid in para 2 of the plaint.

3. Mortgagee was free to repair and reconstruct the house and redemption wasmade subject to payment of the mortgage money, the costs of repairs and construction together with interest at the rate of two percent per month. Accounts were to be maintained by the mortgagor of the sum due under the mortgage deed, Ext. 2.

4. It was averred that the terms of mortgage are unconscionable and a clog on equity of redemption. The house mortgaged remained in good condition throughout the mortgage period. The mortgage money stood paid up out of the rent realised by the mortgagee. Thus, the prayer was for redemption without payment of any sum or on payment of such amount which might be found due.

5. Defendants contested the claim by filing three separate written statements. Their ( contention was that the house in dispute has been extended and reconstructed. The first remodelling was done in 1916 at theexpense of Rs. 1,000/- and the second construction took place in 1931 when a sum of Rs. 5,000/-was spent. Plaintiffs were not entitled to redemption without the said payment and interest thereon. Terms of agreement were reasonable and did not amount to a clog on equity of redemption. It was further pleaded that a sum of Rs. 25A per annum were spent on repairs of the house prior to 1942 and thereafter a sum of Rs. 50A per annum was spent on repairs of the house. The defendants claimed to be entitled to all these amounts. Other pleas of res judicata, undervaluation of the suit and insufficiency of courts-fees were also raised.

6. Both the Courts below found that the terms of mortgage were not a clog on equtiy of redemption. The claim was not barred by principles of res judicata; there had been no extension but some construction in the disputed house; the mortgage money stood paid up by the rents etc. realised from the tenants. So the redemption was allowed without payment of any money.

7. Aggrieved by it, defendant Krishna Gopal has filed this appeal.

8. I have heard learned counsel for parties and perused the record.

9. On behalf of appellant, it was argued that even though the extension of the housewas not proved but there was evidence of D.Ws as well as Amin's report DA 6-12-1972, papers Nos. 71 -C and 72-C and statement of Baldeo in earlier Suit No. 9 of 1954 of the Court of Munsif, Gorakhpur in Bachhu v. Baldeo Ext. 1 which supported the .contention of appellant that the house has been newly built and so the redemption should not have been allowed without indemnifying the mortgagee for this outlay.

10. At least, a sum of Rs. 6, 193/- which was found as the valuation of the house by Amin, should have been awarded to the appellant along with interest as stipulated in the mortgage deed, Ext. 2, learned Courts below wrongly disentitled the defendants from getting this amount as they did not submit the accounts of expenses incurred by them in 1916 and in 1931. It was a ease in which mortgagees were not accountable to the mortgagor as the mortgage deed disclosed that the receipts from the mortgage property were in lieu of interest on the principal amount. Under such circumstances, Section 77 of T.P. Act was applicable and is an exception to Section 76, Clauses (g) and (h) which laid an obligation on the mortgagee to maintain clear, full and accurate accounts of all the amount received and spent by them as mortgagees.

11. In this connection, reliance was placed upon Ramdhan Puri v. Bankey Bihari Saran, reported in AIR 1958 SC 941 which posited (at p. 945) :--

'Every mortgagee in possession is bound to keep clear, full and accurate accounts and to render the accounts to the mortgagor in the manner prescribed in Clause (h), Section 76. But Section 77 enacts an exception to the mortgagee's liability under Clauses (g) and (h) of Section 76. Under that Section (Section 77), if there is a contract between the mortgagor and the mortgagee, whereunder it is agreed that the receipts of the mortgaged property should, so long as the mortgagee is in possession of the property, be taken in lieu of interest and a defined portion of the principal, the mortgagee is freed from the statutory liability to keep accounts or to render accounts to the mortgagor in the manner prescribed under Clauses (g) and (h) of Section 76 of the Act. This is so because, the receipts are set off against the interest, there is nothing to account for. The essential condition for the application of this section is that the receipts of the propertyshould be taken in lieu of interest or in lieu of interest and a defined portion of the principal.'

12. Reliance was next placed upon Thakur Singh v. Ram Baran Singh, reported in : [1973]1SCR1016 . It was observed :--

'(A) Where in a suit for redemption of the mortgage it was found that the deposit was less than the amount actually due as the mortgagee had paid the Government cess which was agreed to be paid by t he mortgagor and he was entitled to add that amount to the mortgage amount and the same was not deposited by the mortgagor it was held that the mortgagor was not entitled to the mesne profits on the amount deposited.'

13. Reliance was further placed upon Ganga Sahai v. Tejpal Singh, reported in : AIR1944All232 , which posited : --

'Where the mortgagee was with possession and one of the terms was that the usufruct should be set off against the interest, no burden was thrown upon the mortgagee to keep any accounts. 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 as might have been recovered if the mortgagee had not been guilty of negligence. 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.'

14. Reliance was further placed upon Mahniood Ali Khan v. Ali Mirza Khan, reported in AIR 1934 Oudh 220. The facts of that cast; were as below : --

'The sub-mortgagor borrowed a sum of Rupees 773 and agreed to pay the amount with interest at 10 annas percent per mensem. The sub-mortgagee was put in possession, and after payment of Government Revenue yearly, out of the profits, he was to appropriate the balance in payment of interest. Both the sub-mortgagor and the mortgagor were to have a right to redeem the mortgage under the terms of the original mortgage deed. It was clearly agreed between the mortgagee and themortgagor that there was to be no accountingat all.'

It was held : --

'That under the terms of the sub-mortgage the sub-mortgagor was not entitled to ask for an account.'

15. On behalf of respondents, reliance was placed upon Mahadeo Tamoli v. Mohammad Siddiq reported in AIR 1949 Ail 189 which laid :-

'Section 76 applies to the case of a usufructuary mortgage and if possession is delivered to the mortgagee on the execution of the mortgage deed in pursuance of its terms, the mortgagee can be said to have taken possession during the continuance of the mortgage. Every moment in between the time of the mortgage deed coming into operation and its discharge would be a part of the period during which the mortgage continues. The mortgagee is, therefore, in such a case under a statutory liability to maintain accounts of the income from the usufruct of the property mortgaged. Even if there is an express covenant to the contrary the mortgagee cannot avail himself of it. If the mortgagee fails to keep accounts he cannot claim interest agreed upon in the mortgage deed.'

16. Reliance was next placed upon Shadi Lal v. Lal Bahadur, which posited : --

'A mortgagee in possession 'must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee', and if no such accounts are kept by the mortgagee nor are any such filed in the Court, the Court is right in disallowing the mortgagee's claim for interest.'

17. I have carefully perused the facts and the law enunciated in the aforesaid authorities.

18. It is significant to note that no plea about Section 77 of T.P. Act was raised in the written statement filed by defendants. No issue was drawn on this point nor this contention was ever raised before the Courts below. Under the terms of mortgage deed, the mortgagees were not absolved of maintaining the accounts. There was no stipulation in the mortgage deed that possession of the house was being delivered in lieu of interest and the mortgageeswill not be accountable to the mortgagor at the time of redemption as receipts of the mortgaged property shall be taken in lieu of interest. No argument was raised before me on behalf of appellant to show that the mortgagees were entitled to recover the mortgage money. The main contention was that they were entitled to recover Rs. 6,000/-and interest thereon as pleaded in the written statements.

19. Amin's report D/-6-12-1972 (papers 71-C and 72-C) did not specify the value of each portion of the house at the time of his visit. He did not mention the value of each portion of the house which was newly built and the value of portion of the house which was old. So it is not possible to work out the value of the new construction with the help of the report of Amin.

20. As regards, the statement of Vakil Commissioner and his report in Suit No. 9 of 1954, Bachhu v. Baldeo, statement, Ext. 4 did not mention about the sum spent in the construction of the house.

21. In his statement Ex. I late Baldeo alleged that first time, the constructions were made in 1916 and in second time, constructions were made in 1926. Obviously, he did not know about the accounts of expenses which were maintained by his brother. There is no plea in the written statement that any constructions were made in 1926 also. On the other hand, in the written statement, it was alleged that some constructions were raised in 1916 and some were in 1931. It was conceded by Baldeo that all the expenses in 1916 were incurred by his brother and not by him. There is no statement of that brother on record nor there are any accounts.

22. Learned courts below found the statement of Sukhraj (D.W. 1) to be unhelpful as he did not testify about the money spent on constructions. Punni Lal (D.W. 2) conceded that he had no knowledge about the sum of Rs. 1,000/- spent on construction in 1916. His statement was rightly ruled out as hearsay.

23. As regards the sum of Rs. 5,000/- he could not testify about any detail of those expenses. So this evidence was disbelieved. On the other hand, Mahangu (P.W. 1) and Bachnu Lal (P.W. 2) testified that noconstruction took place in the house. Their statements were also not reliable as some constructions were done but it could not be proved as to how much was spent in those constructions. The mere ipse dixit of a defendant about the amount spent in repairs is not sufficient to establish the amount so spent which has to be legally proved. Under Section 3 of Evidence Act, 1872 (Act 1 of 1872), a fact is said to be proved when after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.

24. A mere look at Section 76(g) and (h) of Transfer of Property Act shall go to disclose that the liability of the mortgagee to maintain accounts of such expenses was clear and absolute. Accounts have to be full, accurate and supported by vouchers. This is a statutory liability. Clauses (g) and (h) are not qualified by any proviso. A mere look at mortgage deed Ext. 2 shall go to disclose that it was not stipulated in the mortgage deed that mortgagee was placed in possession over this property in lieu of interest only and was not accountable. On the other hand, he was bound to account at the time of redemption. So Section 77 of T.P. Act or the rulings relied upon by learned Advocate for appellant, did not apply nor absolve him from the liability to maintain the accounts fastened on him under the terms of mortgage deed also.

25. Learned Advocate for appellant also tried to assail the findings of fact recorded by Courts below on the point that the entire amount stood liquidated by the rent received by the mortgagee during the period of mortgage. Such successive findings of courts below on a point of fact are binding on me in second appeal. It was held in Bithal Das Khanna v. Hafiz Abdul Hai reported in 1969 Rev Dec 295 (SC) :--

'Even if the appreciation of evidence made by the lower appellate Court is patently erroneous and the finding of fact is grossly wrong that cannot be said to introduce a substantial error or defect in the procedure which would justify interference under Section 100(1)(c) of the Code.'

26. Thus, I do not find any force in this appeal which is dismissed with costs.


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