1. We are unable to agree with either of the Lower Courts that there is anything in the language of the mortgage instrument or exhibit A to indicate that the intention of the parties was that the mortgagee should forego any claim to the value of improvements, if he was entitled thereto by the customary law. The 5th issue seems to have been raised to try the question whether there was a custom in South Canara by which usufructuary mortgagees were entitled to the value of their improvements. No finding has been come to as to the existence or non-existence of this custom, and the question must now be tried, as we find that, the parties did not contract themselves out of the custom, if it existed. The question will be whether there is a custom in South Canara entitling a usufructuary mortgagee to the value of improvements effected by him; and if so, what are treated as improvements to be paid for under the custom. In trying this question the Judge should take not only the evidence adduced before himself, but he should issue commissions to the several Munsifs in his District also to take evidence on the point. He must then come to a finding upon the whole of the evidence so taken and submit it to this Court within two months from the date of the receipt of this order. Seven days will be allowed for filing objections after the finding has been posted up in this Court. The further question as to the value of the improvements in this case will be reserved.
In accordance with the above order the District Judge submitted the following
Finding:- With reference to the order dated 19th October 1896 of the High Court calling for a finding in S.A. No. 742 of 1894, I have the honour to state as follows:
The remand order recites that 'the Vth issue in the suit'--which runs thus:
What is the value of improvements, if any, effected on the mortgaged properties? and is the same recoverable in addition to the mortgage amount?
seems to have been raised to try the question whether there was a custom in South Canara, by which usufructuary mortgagees are entitled to the value of their improvements-
and proceeds that, as no finding has been come to as to the existence or non-existence of this custom, ' the question' must now be tried.
The question' resolving itself in 2 heads:
(1) Whether there is a custom in South Canara entitling a usufructuary mortgagee to the value of improvements worked by him,
(2) What are the 'improvements' to the value of which he is entitled under such custom.
2. As matter on which my finding on these questions is to test, I am directed, besides the evidence adduced before this Court, also to issue commissions to the several Munsifs in the district to take evidence.
The 5 Munsifs have submitted the evidence offered before them, oral and documentary (with their opinions on its value and effect) : before this Court no evidence is offered.
For appellants Mr. T. Bhavani Rao appeared and argued that
(1) the custom is established by the evidence;
(2) there is no limitation as to the character of the improvements, the value of which the mortgagee is entitled to recover.
For respondents there is no appearance.
3. The evidence so collected is almost entirely in favour of the existence of such a custom, viz., 'that the usufructuary mortgagee at the termination of his occupation has a valid claim (in default of any special agreement on the subject) to compensation on account of improvements worked by him daring his term of occupation on the lands held under his usufructuary mortgage.'
The weight of evidence on this point is so overwhelming that very little discussion of it is necessary. Of the 6 Munsifs, 4 (Kundapur, Karkal, Puttur and Mangalore) give their opinion unhesitatingly in favor of the custom : the 5th (Udipi) says that the evidence given before him does not establish the custom, but he does not consider the evidence against the custom so given satisfactory : and the 6th (Kassargode) reports that no evidence was produced before him on which any conclusion could be based.
4. The documentary evidence is (as was naturally to be expected) principally in the shape of original decisions on the point in the Courts of this district and appeals from them.
The oral evidence given before the Kundapur Court in favor of the custom seems to me to carry weight (and the oral evidence of the witnesses for plaintiffs--respondents before the Mangalore Munsif to show that the documents which they produced are of no avail to disprove the custom).
The most important judgments are those marked as exhibits XLVII, XLVIII and XLIX.
This is a case before the late Barkur District Munsif, in whicha very heavy claim for improvements (the level of the lands, whichabutted on a river, had been raised; wells and tanks formed; expen-sive buildings erected; trees planted, &c;) were disallowed in part :on appeal before the Principal Sadar Amin, the claim for improve-ments was altogether disallowed on the ground of absence of either(1) contract or (2) consent on the other part : in special appeal tothe High Court, the claim for compensation was decreed--the learnedJudges Holloway (at that time acting as Chief Justice) and Kinders-ley (who bad served in this district as Sub-* For estimation of Judge) remarking in their order of * remandthe value of improve 'It is certainly the customary law of Mala-ments. bar' (this is the voice of Mr. Holloway whohad experience of Malabar and generallyexpressed his views positively) 'and we are disposed from a numberof precedents to believe it to be that of Canara also' (here the utter-ance is tempered by the more careful expression and less ample ex-perience of Mr. Kindersley in Canara) 'that the evicting landlordshall pay the value of the permanent improvements to the tenant.
Although the customary law here stated to exist refers to an evicting landlord and tenant--the case in which the order was passed was one of a mortgage in usufructuary possession, and I think there can belittle doubt that this decision (passed in 1871) has gone far to create more 'precedents' to establish the same custom with regard to mortgagees. That decision was passed 25 years ago and probably has created a 'custom' by dint of precedent by this time, even if there was none before. On this point--the existence of such a custom previously--there is no evidence before me. That it exists in Malabar under the Kanom tenure is well established--and this should have been in Mr. Justice Holloway's time when he referred to the 'Malabar Customary Law' : but whether such a custom--as between usufructuary mortgagees and other parties recovering the land from them--previously existed in South Canara, there is nothing to show.
Since then (as shown by the exhibits produced in this enquiry) the Courts of this district have obviously followed the dictum above given and applied it to cases similar to the one in which it was given.
My opinion on the first point, therefore, is that the custom as above described (para 3) is now established.
5. It now remains to consider what is the nature of the improvements to compensation (value) for which the outgoing mortgagee is entitled.
Are there any limitations or exceptions?
As noted above, the Vakil for appellants claims that there were none and I cannot say that, on the evidence directly given, there are any exceptions established. But there are considerations which have clearly gone to the establishment of the custom--it is one which approves itself in equity to the human mind and is adopted into the equitable law of England (and most other countries)--which suggest the lines on which the claim to value for improvements in such cases should fairly be--and has, in the former cases, which create precedents, which create custom, been--awarded.
6. The grounds on which an allowance is made to the occupier for time or money which he expends in improving the property in his occupation are:
(1) that the other party agreed to compensate him for results so achieved;
(2) that 'consent' was given to the improvements worked;
(3) that there are fair grounds for presuming that consent would have bean given if it had been asked.
That District Munsifs in their reports give lists of certain classes of work which have been accepted by the Courts and others in various cases as forming ground for valid claims under this head; and we have the word permanent 'improvements' are used in the order above referred to (para. 4).
But to compile a list of particular classes of work which are to be considered 'established as claims for compensation by custom,' is to run the risk of excluding some which have been overlooked, simply because they do not happen to have come before the Courts in the cases which are produced in this enquiry as precedents showing the custom; and the term 'permanent' is too vague to be of much use.
7. I think, therefore, the best finding that I can give on the second point in the question raised in this order of remand is-
That compensation has in the past been awarded in cases where the improvements effected have been such that the consent of the other party to the making of such improvements may fairly be presumed-
And that the 'custom' has been created by a series of such 'awards'--and may best be defined in the same words--This also is in accord with the principles of equity.
This second appeal coming on for hearing on 26th day of April 1897, after the return of the above finding from the Lower Appellate Court, the Court delivered the following)
8. We accept the findings of the Judge, the objections to which are not seriously pressed, and in accordance therewith declare that the mortgagees (the defendants) are entitled to the value of the improvements effected by them, and by 'improvements' we understand any work beneficial to the property, or, in other words, to which a reasonable owner would have consented.
9. A finding must therefore now be come to and reported to this Court as to the value of such improvements. Further evidence may be taken if the Judge considers it necessary. The finding must be submitted within a month after the re-opening of Court after the recess. Seven days will be allowed for filing objections after the finding has been posted up in this Court.
10. Before receipt of the finding in accordance with the above judgment and order, the parties put in Civil Miscellaneous Petition No. 91 of 1898 praying that the question of the value of improvements may be reserved for determination in any future suit which may be brought for possession and that the order calling for finding may be cancelled.
11. This petition and the second appeal coming on for hearing the Court delivered the following
12. As both parties desire it, we cancel our order calling for a finding as to the value of improvements which we leave to be determined in a suit brought for recovery of possession.
13. The decree in this Second Appeal No. 742 of 1894 can now be drawn up declaring that the defendants are entitled to the value of improvements effected by them, as explained in the judgment. We make no order as to costs.