T.K. Joseph, J.
1. This Second Appeal is by the first defendant and it arises out of a suit for redemption of a mortgage, Ext. A dated 6-10-1006. Out of the total consideration of 13300 fanams under Ext. A, a sum of 3500 fanams was reserved with the mortgagee to be paid to the mortgagor later. It was provided in the mortgage deed that the mortgagee should pay to the mortgagor interest at the rate of 101 per cent per annum on this sum till it was paid. The mortgage right vested in defendants 1 and 2 on the date of suit
There was a partition in the mortgagor's family and the plaintiff acquired under Exts. B, C and E to K the equity of redemption from the several members who got the same. According to the plaintiff, neither the principal nor interest on the sum of 3500 fanams was paid by the mortgagees and he claimed that interest on the unpaid mortgage money being in excess of the amount actually paid under the mortgage, he was entitled to redeem and obtain possession without making any payment to the defendants. He also claimed mesne profits at the rate of 200 paras of paddy per annum.
The first defendant resisted the suit denying the plaintiff's title to redeem and contending that interest on 3500 fanams was being regularly paid and that the plaintiff was liable to pay 9800 fanams as mortgage money in 'addition to the value of improvements effected by the mortgagees. The right to set off interest on 3500 fanams against the mortgage money was also repudiated. The trial court upheld the defendant's contention except as regards payment of interest and allowed the plaintiff to redeem the mortgage on payment of 9800 fanams as mortgage money and Rs. 324-12-0 as value of improvements.
The plaintiff preferred an appeal to the District Court and the learned District Judge held that the plaintiff was entitled to set off interest on 3500 fanams against the mortgage money actually paid and value of improvements. The plaintiff was accordingly given a decree for redemption without payment of any sum. The plaintiff was also allowed to recover interest on 3500 fanams at 6 per cent per annum front 27-7-1953, the date on which the mortgage money and value of improvements were extinguished in full by setting off the interest. The first defendant has therefore preferred this Second Appeal.
2. The only question raised in Second Appeal is whether the plaintiff is entitled to set off interest on the sum of 3500 fanams against the sum due to the mortgagees. The trial court found that the defence plea that interest was being paid on this sum was not true and that finding has become final. It was urged on behalf of the appellant that the unpaid mortgage money and interest should have been treated as an independent transaction which could not be taken in the accounting and further that it was a personal right of the mortgagor which could not and was not conveyed to the plaintiff.
3. The nature of the mortgage transaction shows that the profits of the mortgaged properties were to be appropriated by the mortgagee towards interest on the sum of 13300 fanams and that so long as the sum of 3500 fanams remained unpaid, the mortgagee was to pay interest thereon at 10 1/2 per cent per annum. Thus the arrangement was that out of the profits of the properties interest on 3500 fanams was to be paid to the mortgagor until the said sum was paid and that till then the motgagee was to be satisfied with the rest of the profits of the properties.
It has been found that the sum of 3500 fanams has not been paid by the mortgagee. This case is thus analogous to cases in which the mortgagee is directed by the contract of mortgage to pay a fixed sum out of the profits to the mortgagor. The decisions relied on by the appellant in support of his contentions do not apply to the facts of this case. Raghubar Narayanan v. Mohit Narayanan, AIR 1929 Pat 37, was a case in which the question was whether the mortgagee was liable to account for Malikana which he was directed to pay to strangers and which he had not paid.
It was held that he was not. It was also pointed out that the position would have been different if the Malikana was payable to the mortgagors. The same view was held oy the Travancore-Cochin High Court in Kachukunju v. Sankara Pillai, AIR 1954 Trav-Co. 53, and by the Madras High Court in Paru Amma v. Kelu Kurup AIR 1941 Mad 549. What was held in Wahid Ali v. Biptu Chamar, AIR 1935 Pat 125, was that in the case of usufructuary mortgage, if the mortgagor has not received full consideration, he cannot if he has parted with possession claim a return of the proportionate extent of land and mesne profits accruing thereon.
Another decision relied on by the appellant is Sundaram Aiyar v. Mannadiar, AIR 1947 Mad 197. The mortgage in that case was not fully supported by consideration and the plaintiff who sued for redemption contended that in taking of accounts the mortgagee should be compelled to credit towards the principal the proportionate share of the rents and profits in view of the fact that the whole consideration under the mortgage had not been paid.
No rate of interest was mentioned in the mortgage deed and it was held that it was not. possible to say that any particular sum was due as interest. It was further held that the transaction was one under Section 77 and not Section 76 of the T. P. Act. The case was however decided on another point, namely, that the plaintiff who had purchased the equity of redemption in court sale could not be deemed to have acquired the rights of the mortgagor to recover damages for non-payment of the mortgage money in full. The learned Judges observed :
'We, however, do not think it necessary to finally decide the right of a mortgagor himself in such a case. It may be that the equitable principle applied in Ranganatha Pillai v. Paripurnam, 16 Ind Cas 217 (Mad) may have to be applied and it may be possible to support the claim of the mortgagor as a claim by way of compensation or damages; or it might be that the mortgagee, in such cases, stands in the position of a trustee in respect of the surplus. In any event, we are clearly of opinion that such rights of the mortgagor will not pass to a purchaser of the mortgaged property at a sale in execution of the decree obtained againsb the mortgagor. The plaintiff is such a purchaser and therefore will not be entitled to demand an account from the mortgagee of the rents and profits of the land.'
The decisions relied on are therefore of no help to the appellant. In Parasurama Pattar v. Venkatachala Pattar, 25 Mad LJ 561; the principle applicable to a case of this kind was stated in the following terms ; .
'At the time of redemption when the mortgagor is required to pay the amount due by him under the mortgage, the mortgagee is also bound to give him credit for all payments which he is bound to make under it. The rule of course will not apply to any payment that the mortgagee is liable to make to the mortgagor otherwise than under the contract of mortgage.'
This view was followed by the Travancore-Cochin High Court in Kesava Pillai Madhavan Pillai v. Narayanaru Sankararu, 1950 Ker L.T. 356. As pointed out earlier, the mortgagee was liable under Ext. A to pay interest at 10 1/2 % per annum on 3500 fanams till the mortgage money was paid in full and it is such interest due to the mortgagor that is sought to be credited in the taking of accounts. We are unable to uphold the contention that the provision in Ext. A for payment of interest has to be treated as an independent transaction and we hold that the claim for interest on the unpaid portion of the mortgage money has to be treated as an item to be included in the settlement of accounts.
4. The other ground on which the right to set off was denied was that the right was not one which could be transferred and that even if it could be, it was not actually transferred. We do not think that the right to recover interest as provided in Ext. A can be treated as a mere right to sue or a right to recover damages for breach of a contract. Ext. F to K make it clear that this right of the mortgagor was conveyed to the plaintiff. This ground also must therefore fail.
In the result we confirm the decree of the lowerappellate court and dismiss the second appeal withcosts.