1. F.A. No. 281 of 1924 and F.A. No. 232 of 1925 arise out of two separate suits Nos. 156 and 153 of 1922 respectively. These were suits brought by Ratan Dei Kunwar and by Kishan Kunwar and Bishun Kunwar for redemption of two separate villages, Lodhipur and Niamatullah Nagar. It is necessary to bear in mind that the suits were brought for redemption of single villages, although altogether 14 villages had been mortgaged under a deed dated 16th November 1869 by the plaintiffs predecessor, Sheo Raj Singh, to the defendants predecessor, Usman Khan, for a sum of Rs. 1,00,000. The mortgagee rights were transferred by the heirs of Usman Khan on 27th October 1889 to Darbari Mal and Nath Mal Das in this way that Darbari Mal was given 2/3rds share in the mortgagee rights and Sher Singh and his colleague were given 1/3rd share. Sher Singh and this man are defendants 1 and 2 in the suit, who are the principal contesting respondents in both the appeals before us. They will hereinafter be described as the contesting mortgagees.
2. By various transfers the equities of redemption of the various villages were transferred to a number of people. Briefly speaking it may be stated that by the year 1890 property No. 1 came to Badri Prasad, the grandson of the mortgagee Darbari Mal, Nos. 2-8 went to Nath Mal Das, who is now stated to have been a benamidar for Darbari Mal, No. 9 went to Sher Singh and another, the contesting mortgagees, and Nos. 10-14 were acquired by one Sher Singh of Kant.
3. It is an admitted fact that Sher Singh of Kant on 2nd July 1898 was allowed to pay off Darbari Mal and redeem the 2/3rds share of the mortgage from him. In his finding on issue No. 6 the learned Subordinate Judge at page 18(P.A. 232 of 1925) has said that
there is no dispute about the redemption of 2/3rds share held by Nath Mal Das and Lakhpat Rai, that portion of the mortgage is redeemed.
4. So far as item No. 9 is concerned, Darbari's share of the charge undoubtedly subsists. The 1/3rd of the mortgagee rights west in Sher Singh and his colleague, the contesting mortgagees, in all the 14 villages. On 30th June 1914 item No. 14, namely Niamatullah Nagar, was transferred to Kishun Kunwar and Bishun Kunwar by Sher Singh of Kant, and on 19th July 1914 item No. 12, Lodhipur, was transferred to Ratan Dei Kunwar by the heirs of Sher Singh of Kant.
5. A circumstance which has caused considerable complexity and difficulty in the making up of the accounts is the fact that Darbari Mal became lambardar in 6 villages, Sher Singh of Kant became lambardar of 5 villages and Sher Singh and his colleague, the contesting mortgagees, became lambardars of three villages. Account books have not been filed to show how these lambardars adjusted their accounts. We have however, a suspicion that amounts due by these lambardars to each other might not have been paid in full and might have been set off against each other.
6. In the Court below there were altogether four suits, two of which have now come up in appeal before us. Those other suits were also suits for redemption of particular villages. 'The contesting mortgagees did no doubt plead that the plaintiffs in the various suits were not entitled to redeem their respective villages only, but they never in so many words put forward the plea that the integrity of the mortgage of 1869 has remained intact and the plaintiffs must offer to pay the whole amount of the mortgage money due, and redeem all the mortgaged properties at one and the same time. But an issue was framed by the Court below which was numbered as issue No. (2) and was to the effect whether the plaintiffs were entitled to redeem part of the disputed mortgaged property. The learned Subordinate Judge in his finding on this issue held that the plaintiffs were entitled to redeem different properties individually. He in so many words held that the integrity of the mortgage was broken and that the mortgaged property was held by different persons and by the mortgagees, so that different owners could redeem their property in part. He found the issue in favour of the plaintiffs. We have already referred to his remarks in his finding on issue No. 6 that there is no dispute about the redemption of the 2/3rds share in the mortgagee rights. In disposing of certain objections on page 190(P.A. 281 of 1924) the learned Subordinate Judge again repeated his finding that the identity of the mortgage was no doubt broken.
7. In the Court below a commissioner was appointed twice to prepare accounts on the lines suggested by the learned Subordinate Judge. Although the learned Subordinate Judge held that different villages could be redeemed separately and that only proportionate amounts of the mortgage money were payable, he directed that the profits of all the 14 villages should be taken as a lump sum and from those profits the total amount of expenses should be deducted and interest charged on the whole amount, and after the total was arrived at there should be a proportionate distribution. A preliminary decree was prepared in the terms of the second report of the commissioner.
8. It is conceded now even by the learned advocate for the respondents that the decree on the basis of this report is to some extent unjust inasmuch as about six villages are shown in the account to have yielded no income whatsoever for a long number of years. This will be apparent from a perusal of pages 140 onwards. This result has been arrived at by the commissioner on the supposition that Sher Singh of Kant and Darbari Mal were lambardars of these villages and they did not pay the due share of the profits of these villages to the contesting mortgagees.
9. The two sets of plaintiffs Ratan Dei Kunwar and Kishun Kunwar and Bishun Kunwar preferred appeals from the preliminary decrees to this Court. The contesting mortgagees have filed cross-objections, but in their cross-objections they did not raise the point that the suit for redemption of separate villages should stand dismissed. Their complaint is that the amount awarded by the Court below, is inadequate. The position before us, therefore, is that out of four separate suits for redemption which were brought in the Court below two decrees for separate redemption of two sets of villages have become absolutely final and no appeal has been preferred from those decrees. In the two appeals which are before us the contesting mortgagees do not urge that the plaintiffs are not entitled to redeem their villages separately. As a result of the decrees in the other two suits having become final the present contesting mortgagees are not now in a position to submit themselves to a redemption of all the villages, having themselves allowed some villages to be redeemed by the other plaintiffs piecemeal. Having regard to all these circumstances, we are of opinion that it must be assumed for the purposes of these two appeals that the integrity of the mortgage has been Broken and that piecemeal redemption should be allowed. The learned advocate for the respondents has contended before us that although he is not in a position to attack the decree for the redemption of different villages separately, he is still entitled to ask this Court to allow him the amount which would be found due on the basis of the integrity of the mortgage not having been broken. He has advanced this argument on the ground that he is entitled under Order 41, Rule 22, Civil P.C., to support the decree of the Court below on a finding different from that on which it is based. We are, however, of opinion that this contention cannot be accepted. If the decrees for redemption of individual villages have to be maintained and cannot be touched, and we must call upon the plaintiffs to pay only the proportionate amount of the mortgage money due on these villages, we must treat the case as if redemption is sought on the footing of the integrity of the mortgage being broken. We have, therefore, to determine the individual liabilities of the villages which are sought to be redeemed in these two appeals.
10. The method adopted by the Court below is complex and difficult. We, however, think that in the view which we have taken of the legal position of the parties the making of accounts can be considerably simplified, and it is now necessary to direct an enquiry into the total amount of income and expenses in respect of the entire mortgaged property.
11. Before we proceed to consider what would be the just basis for directing accounts to be taken we must dispose of one objection which has been strongly urged on behalf of the contesting mortgagees. Their contention is that Sher Singh of Kant having been the lambardar of five villages has in fact not made any payments of the contesting mortgagees' share of the profits for certain specific years and that only a small share of the profits was paid to the contesting mortgagees in certain years. The contention of the contesting mortgagees is that they should be debited only to the extent of the amount which they received from Sher Singh of Kant or his heirs. The contention is that Sher Singh, of Kant became one of the mortgagors through whom the present plaintiffs are claiming and that if Sher Singh of Kant had appropriated some amounts as lambardar, it must be assumed that there was a deficit in the income of the mortgaged property.
12. We think that we cannot accept this contention. Sher Singh of Kant had no right in law to obtain possession of the mortgaged properties or retain possession of them. Having acquired the equity of redemption, which merely gave him the right to redeem the mortgage on payment of the mortgage money, he acquired no more than a mere interest of a mortgagor. It did, however, happen that the Board of Revenue appointed him lambardar in preference to those who were in possession. But the position of a lambardar is that of an agent for the cosharers who are entitled to make realizations and collect rents. The amount which was appropriated by Sher Singh of Kant was not appropriated by him in the capacity of a mortgagor, but was appropriated or realized in the capacity of an agent of the persons entitled to possession. If the mortgagees have for all these years remained quiet and never claimed their shares from their agent, the lambardar, it seems to us unjust and unfair that they should now make the plaintiffs suffer for their own negligence and default. It has been pointed out to us that in some years decrees have been actually obtained against the lambardars. If the mortgagees did not recover the balance of their share of the profits that was due to their own negligence and carelessness, and it seems to us that in a suit for redemption of the separate villages we should not go into the question why the mortgagees did or did not sue the lambardar for the recovery of their share of the profits. The mortgagor had put the mortgagees in effective possession of the mortgaged property, and it cannot be asserted for a moment that if the mortgagees had bestirred themselves they would have been entitled through the revenue Court to recover their profits from year to year. If there was some sort of private adjustment on account of the fact that three sets of persons were lambardars of three groups of villages, or if it was due to negligence and carelessness on the part of the mortgagees that they did not recover any share of the profits which they were legally entitled to recover from their agent and lambardar, we think that the present plaintiffs cannot be made to suffer for that. The stipulation in the mortgage-deed that if the profits of the property mortgaged be found to be insufficient, the mortgagor shall pay the deficiency in interest from year to year cannot apply to a case where the profits have not in fact decreased, but the mortgagees have, owing to their own default, failed to recover them from the lambardar. We are, therefore, of opinion that in these appeals we should not go into the question whether or not the contesting mortgagees were able to recover the amounts of the profits from their agent, the lambardar.
13. Under Section 76(g), T.P. Act, the contesting mortgagees were bound to keep, clear, full and accurate accounts of all sums received and spent by them as mortgagees together with vouchers by which the accounts were supported. Admittedly no attempt has been made to produce any such accounts. The learned Subordinate Judge has commented strongly on the non-production of such accounts and has in fact in his finding on issue 6 concluded that, having got accounts, the contesting mortgagees have not produced them although the Court demanded their production. Thus, they have deliberately withheld the accounts. Prima facie, therefore, they would be liable to be debited with the total amount which ought to have been recovered on the basis of the gross rental after deducting the necessary expenses and land revenue, etc. But inasmuch as the contesting mortgagees were not themselves the lambardars of villages Lodhipur and Niamatullah Nagar and had not the right to make direct collections from the tenants, these villages being under the lambardarship of Sher Singh of Kant, we think that it would be equitable and just to make the defendants liable for the proportionate share of profits which they would have got on the basis of actual collections made by the lambardar, provided that can be established. The true position, in our opinion, is that on account of the non-production of complete accounts the presumption would be against the contesting mortgagees that they had realized their due share of the gross rental after making the necessary deductions. In particular years, however, if they succeed in establishing that the total amount collected by the lambardar from the tenants was smaller, we think that it will be just and equitable to make them liable for the proportionate share of the amounts so collected and realized, and not hold them liable for the amounts which remain unrealized by the lambardar. In our opinion, this is the only correct basis of accounting as the position now stands. Fortunately the proportionate liability on the villages before us on account of the principal mortgage-money is not now disputed. The table at p. 26 (F.A. 281 of 1924) shows the proportionate liability on Lodhipur and Salimpur, which is now admitted.
14. In the absence of any accounts or documentary evidence the Court below has assumed that up to 27th October 1889 the profits of the mortgaged property were just sufficient to pay the amount of the interest, and that on that date the whole sum of Rs. 1,00,000, neither more nor less, was due. This position has not been challenged by either party before us. It has to be noted that the proportionate liability on the villages shown at p. 26 represents the entire share of the mortgagees. The contesting mortgagees are entitled only to one-third of this mortgage-money.
15. The mortgage-deed of 1869 does not contain any clear stipulation that the mortgagee is to take the entire profits in lieu of interest. It is entirely silent as regards the surplus. On the other hand, it does contain a covenant that if the profits are short, the deficiency will be paid by the mortgagor together with interest. Mr. Piare Lal Banerji, on behalf of the two plaintiffs, offered to pay the proportionate amount of the mortgage money without any deductions if the respondents would accept his offer. That offer was not Accepted. The contesting mortgagees insist on an account being taken and on their being credited with the shortage in the amount of profits as compared with the amount of interest. When accounts have to be gone into, we think it just and equitable that if in any particular year there was a surplus that should be credited to the account of the mortgagor.
16. The mortgage-deed mentioned the various villages by name and did not exclude any interest in those villages. It must, therefore, be taken that the entire proprietary interest of Sheoraj Singh in those villages was mortgaged. Of course if there were any proprietary interests belonging to other persons they would not be deemed to have been mortgaged and in calculating the amount of profits the share of profits in respect of such proprietary interest would have to be excluded.
17. We, therefore, think that it is necessary to call upon the Court below to get a fresh account prepared on the following lines:
(1) The account of villages Lodhipur and Niamatullah Nagar should be prepared separately.
(2) The proportionate liability of the mortgage money on 27th October 1889 should be taken as given on p. 26 (F.A. No. 281 of 1924).
(3) In all years the presumption should be that the amount of the profits on the basis of gross rental were realized as shown by the khatauni for those years.
(4) If in any one year the contesting mortgagees prove that the amount actually collected by the lambardar was less than the gross rental, the actual collections should be taken to represent the profits for those years. These figures will of course include any decretal amount that might have been realized subsequently.
(5) If no other convincing documentary evidence is produced by the contesting respondents, the learned advocate for the appellants concedes that the amounts shown in the khataunis as having been realized during particular years should be accepted as representing the total collections made by the lambardar. In the absence of any more satisfactory evidence the figures is the khataunis for those years may be accepted as showing the actual collections.
(6) The account should start with the proportionate amount of the principal sum as the amount due on 27th October 1889 to which should be added the interest from year to year and from which should be deducted the proportionate amount received as profits from year to year. If in any one year the proportionate amount of the profits is less than the proportionate amount of the interest at the contractual rate the interest on the deficiency is to be calculated at one per cent per mensem simple interest, and the amount of the deficiency is to be debited to the mortgagors. If, on the other hand, there is a surplus, that should be credited to the account of the mortgagor and would go to reduce the amount due for the next year.
(7) The amounts to be deducted from the profits will be those mentioned in para. (1) of the mortgage-deed of 1869.
18. This, in our opinion, disposes of the whole appeal and the cross-objections except with regard to the exclusion of certain milak land. Neither party is entitled as of right to produce any fresh evidence in this case. We, however, direct that they be allowed to produce documentary evidence only and such formal oral evidence as may be required for the purpose of proving documentary evidence.
19. Lakhpat Rai one of the respondents, is dead, but two brothers, who are admitted by Mr. Mital to be members of a joint Hindu family, are on the record. Under the circumstances the appeal has not technically abated. Mr. Mital claims that be should be awarded separate costs for Badri Prasad and others. They were only pro forma respondents and were not interested in the redemption of one-third of the mortgaged properties. We do not think that they are entitled to any costs. They need not appear in the enquiry that is to be made in the Court below. The usual ten days will be allowed for filing objections, if any.