(1) The main point that arises for decision in the present appeal preferred by the defendant relates to limitation, as t the period for which the respondents (plaintiffs) are entitled to recover the income of the properties which were subject to a possessory mortgage. The plaintiffs in the suit are the successors-in-interest of the mortgagor, while the sole defendant is the successor-in-interest of the mortgagee. The possessory mortgage in question was executed in April 1924 and by January 1938 the defendant became the ultimate assignee of the mortgage. The plaintiffs filed O. P. 48 of 1950 on the file of the Sub Court, Dindigul under Secs. 9-A and 19-A of the Madras Agriculturists Debt Relief Act for a declaration of the amount due under the possessory mortgage, after invoking the benefit of scaling down and on 16-1-1951 the amount payable to the mortgagee was determined in the sum of Rs. 917. This amount was deposited into Court in O. P. 48 of 1950 and notice was also served upon the defendant. As the petition was not opposed the Court passed an order on 21-8-1951 granting the certificate that the mortgage debt had been fully discharged.
(2) The defendant preferred an appeal, C. M. A. 502 of 1951, to the High Court and the same was allowed by Mack J., by his judgment dated 2-5-1954. The plaintiffs preferred L.P.A. No. 150 of 1954 and the Bench of this Court by its judgment D/- 28-3-1958 allowed the appeal and restored the order of the Subordinate Judge. The defendant thereafter on 29-7-1959 surrendered possession of the properties covered by the possessory mortgage. The plaintiffs' attempt to recover rents and profits from the properties from the date of their deposit of the amount into Court till the mortgagee surrendered possession and the plaintiffs re-rendered proved futile resulting in the present suit O. S. 45 of 1960. The objection of the defendant that the claim for profits would be governed by Article 109 and therefore the plaintiffs should be restricted to a period of three years, was negatived by the trial Court, which held that the claim for the entire period from 16-1-1951 to 29-7-1959 was in time and passed a decree against the appellant for a sum of Rs. 12,750, on the basis that the total income for which the defendant would be liable would be 882 kalams of paddy at the rate of Rs. 15 per kalam.
Two points arise for decision (1) what is the proper article of the Limitation Act applicable to the claim made in the suit and (2) the quantum of mesne profits and the price of paddy per kalam. Sri A.V. Narayanswami Iyer, learned counsel for the appellant, urged that after the plaintiff deposited the amount as determined in the proceedings under the Debt Relief Act, the after the Court granted a certificate that the mortgage had been discharged after notice to the mortgagee, the latter ought to have re-delivered the mortgaged properties, the possession of the mortgagee thereafter was wrongful and unlawful as being that of a trespasser, that the claim for income from the properties was clearly a claim for mesne profits within the the meaning of Article 109 of the Limitation Act, 1908, and the plaintiffs cannot therefore recover for a period of more than three years. He urged that the relationship of mortgagor and mortgagee ceased and came to an end when the Court granted a certificate of discharge in O. P. 48 of 1950 and that thereafter, the only right of the plaintiffs was to recover possession of the properties from the mortgagee within the time limit allowed by law along with the mesne profits and that so far as the claim for mesne profits was concerned, the plaintiffs should life a suit every three years. He further urged that the fact arising out of the mortgage transaction, the law imposes a duty upon the mortgagee to surrender possession of the properties and to render an account for the rents and profits after the discharge of the mortgage would not make the possession of the mortgagee anything other than wrongful or as that of a trespasser, or alter the character of the claim of income other than one for mesne profits. The substance of his argument is that whatever may be the obligation of the mortgagee consequent upon the discharge of the mortgage, whether contractual or statutory, the claim for rents and profits would be governed only by Article 109 of the Limitation Act.
In the course of his arguments and when questions were put to him, learned counsel for the appellant took up the definite stand that after the mortgage was discharged, it was for the mortgagor to elect whether to sue for recovery of possession along with profits or to sue for recovery of possession along or to sue for profits alone subject to any bar under Order 2, Rule 2 Civil P. C., and that if the mortgagor elects to wait to recover possession taking advantage of the larger period of limitation to file a suit for recovery of possession the mortgagor would be exposed to the risk of a plea of limitation under Article 109 of the Limitation Act with respect to the income and that his peril, the mortgagor is bound to sue for recovery of the income every three years. He urged that this result necessarily flows from the language of Cols. 1 and 3 in Article 109 of the Limitation Act which is unqualified and absolute.
(3) Sri Rajah Aiyar, learned counsel for the respondents contended that the correct and appropriate Article applicable to the suit is Article 105 of the Limitation Act which provides for the suit by a mortgagor after the mortgage had been satisfied to recover surplus collections received by the mortgagee, the time limit is three years to commence from the date when the mortgagor re-enters on the mortgaged property. He contended that under the procedural law regarding litigation between mortgagor and mortgagee either in a 'suit for redemption or in a suit for foreclosure or for sale, there ought to be a final and complete settlement of all rights, equities, and accounts between the mortgagor and mortgagee right upto the moment of actual redemption, foreclosure or the sale as the case may be and that either by way of a claim or a defence or a set off or as a counter-claim of the defendant the parties ought to raise all pleas, legal and factual, and seek all the reliefs flowing from the relationship as mortgagor and mortgagee and that the law of procedure does not permit piecemeal and truncated litigations between them leaving some portion of the dispute and the awarding of reliefs thereto for future adjudication in some other proceeding, except under exceptional circumstances where the statute itself specifically provides for such piecemeal and plurality of litigations.
He also drew our attention to a recent decision of the Supreme Court reported in Gyarsibai v. Dhansukhlal, : 2SCR154 , in which this rule of the insistence of the finality of all disputes in one single litigation between the mortgagor and mortgagee was applied and was held, that at the time of the passing of the final decree, the Court must take into account the rents and profits received by the mortgagee between the date of the preliminary decree and the passing of the final decree. Mr. Rajah Iyer contended that Art. 105 of the Limitation Act embodies this procedural law governing suits between the mortgagor and the mortgagee and entitles the mortgagor to recover the surplus collections received by the mortgagee in a suit filed within three years after the mortgagor re-enters on the mortgaged property. He urged that the acceptance of the appellant's contention that the mortgagor should file a suit to recover surplus collections every three years while yet he had ample time (under the Limitation Act) either to file a suit for redemption or to file a suit for possession would be opposed to the basic principles of law of procedure and the mortgage law.
(4) Even at the outset, we may state that both on principle and on authority, the claim is governed by Art. 105 of the Limitation Act and time would commence to run only from 29-7-1959 when the appellant delivered possession of the property to the respondents. In Limitation Act of 1859 there was no provision for such suits and it was held that Sec. 1 Clause 16 of that Act would apply, six years from the time the cause of action arose. In the Act of 1871 a specific provision Art. 105 was made, columns 1 and 2 being the same as in the present Act, but the starting point of limitation in the third column was 'the date of receipt of such profits' Under the Act of 1877, Col. 3 was altered making the time to run from the date when the mortgagor re-entered on the mortgaged property. The same provision was continued in the Act of 1908 with which we are concerned as well as in the present Act of 1963, Article 61(c). Till 28-7-1959, i.e., to the day prior to the delivery of possession by the mortgagee, the mortgagor had the right to file a suit for redemption and as an essential part of the relief of redemption, obtain possession of the properties from the mortgagee and also ask for rendition of accounts for the rents and profits from the mortgaged properties under Section 76(1) of the Transfer of Property Act, the period of accounting commencing from 16-1-1951 when the sum of Rs. 917 was deposited into Court. For that period there is no question of any time limit and it is established law that all accounts and equities between the parties could and ought to be worked in the same suit.
(5) We must first refer to the classical statement of law by Stuart Vice Chancellor in the leading case, Hood v. Easton, (1856) 2 Jur NS 729. In that case, in a suit for redemption, as a part of the relief, the mortgagor made a claim asking for an account of the quantity and value of the coal wrought by certain persons with the permission of the mortgagee for a period, more than six years before the bill was laid and in repelling the plea of limitation, the law was stated by the Vice Chancellor in these terms--
'It is said, however, that length of time has deprived the plaintiff of any right to recover this value as against the Eastons, who obtained possession of it by the conversion of the property, for that the act complained of was completed in the year 1947, and this bill was not fled until more than six years after this act was committed. To apply the principles of the Statute of limitation to a case of this kind seems to me not only not without any authority but to contravene one of the plainest principles on which the Court deals with all matters between mortgagor and mortgage. The right of the mortgagor to get back the property pledged for its value is unquestionable. The account never could be taken without charging the mortgagee with all that has been properly received by him as the value of the mortgaged property. Suppose, instead of the value of this property being received by the persons dealing with him, it had been received by the mortgagee himself. Why, it is an item in the mortgage account, and if the mortgagor is entitled to any remedy in respect of this sort of dealing at all, it must be by having the value of the property allowed in taking the account of the mortgage. Therefore, to say that as to one large item you are to hold it is to be struck out, because that item might have been brought into credit, ten twenty or thirty years before, seems to me entirely beside the principle on which the Statute of Limitation proceeds. The simple question is, whether or not such an adverse title can be asserted by the Eastons, who wrought the coal, as that it can prevail against the mortgagor. It seems to me that if there ever was any right, as I apprehend there was unquestionably, a right, on the part of the mortgagor, during the progress of this transaction, to keep if after it was completed-to retain the value-the value must at all times be an item in the mortgaged account-must be subject to all those rights, in regard to the settling of the account, as any other part of the transaction between mortgagor and mortgagee. For that reason, I canoe see on what principle the statute of limitation can be set up here by the defendants the Eastons, who by their dealing with the mortgagee, entered upon the working of this mine, worked it, sold the mortgaged property and received the value'.
The account taken against mortgagee in possession is an unbroken and continuous account of a debtor and creditor. The mortgagee is debited with all sums which he has received or which he is to be treated as having received by virtue of the mortgage whether rents and profits and accidental payment such as proceeds of sale, he is also debited with the value of the damage and loss caused by him and every item of account is taken into account against him. Equally he is credited with the principal money with interest accruing due from time to time and with costs, charges and expenses, including all expenditure upon the mortgaged property which he is entitled to charge against the mortgagor. The nature of the account itself is that it is one single integrated account and should be taken without any restriction as to time limit; the notion of a piecemeal accounting at intervals has no place in such a relationship, (Vide 27 Halsbury's Laws of England, 3rd Edn. page 430 Para 859 and also 24 Halsbury's Laws of England, page 269, Para 524).
(6) This rule of mortgage law of insisting upon a complete and final settlement of all accounts between the mortgagor and mortgagee in one single action has been so strictly insisted upon so as to attract the principles of res judicata under Sec. 11 Civil P. C., and the splitting up of the cause of action and reliefs under Order 2, Rule 2 Civil C. P., the principle being, the mortgagor and mortgagee ought to claim in the same suit all the reliefs flowing out of the mortgage transaction. That being so the mortgagor cannot be expected to file a suit every three years for the rents and profits of the property from the date when the mortgage should he held or deemed to have been discharged. It is only to emphasise and give effect to this principle that till actual redemption, there ought to be no time limit for claims and cross-claims. In the Limitation Act, 1877 time was specifically made to commence to run from the date when the mortgagor re-entered on the mortgaged property, instead of the date of the receipt, under the earlier Act of 1871.
The significance of this amendment (in the Act of 1877) came up for special notice in an early Bench decision of the Allahabad High Court in Jaijitrai v. Gobind Tiwari ILR (1884) All 303. The purchaser of the equity of redemption filed a suit for redemption and recovery of possession of the mortgaged properties with an account for surplus profits alleging that the mortgagee had not paid any revenue, which the purchaser was compelled to pay, that out of the rents and profits, the mortgage debt has been discharged leaving a surplus year after year. One of the contentions raised was that the claim for surplus profits for more than three years was barred by limitation. Justice Mahmood delivering the judgment rejected this objection as to limitation in these terms at page 311 after referring to the significant change in the third column between the Act of 1871 and the Act of 1877:--
'The question of limitation applicable to such a claim was a matter of some doubt under the old law (Act XIV of 1859) till it was settled by the Full Bench ruling of the Calcutta High Court in Baboo Zall Dass v. Jamal Ally, (1868) 9 SWR 187, in which Peacock C. J., pointed out that the position of mortgagee after the mortgage debt has been liquidated by the usufruct, was not that of a trustee, and this view was subsequently adopted by the Legislature in Section 3 of the Limitation Act of 1871, and retained in the corresponding section of the present Limitation Act (XV of 1877). Article 105, schedule (ii) of the Limitation Act of 1871, rendered such claims subject to the limitation of three years, calculated from the date of the receipt of the surplus profits; but in the present Act the corresponding clause, whilst retaining the period, has introduced an important alteration by rendering the period of limitation computable from the date 'when the mortgagor re-enters on the mortgaged property'. It is therefore clear that in the present case the plaintiff's claim for surplus profits cannot be barred'.
(7) We may also refer to the leading decision in Hari v. Lakshman, ILR (1880) 5 Bom 614, in which this rule was laid down that litigation between mortgagor and mortgagee should comprise all the reliefs and should afford a ground for a final decision and that a suit for an account upon the mortgage cannot be maintained by the mortgagor unless he also sakes for redemption. This rule was applied even in case in which the mortgagor was entitled to relief under the Dekkhan Agriculturists Relief Act of 1879. Reference may be made to the following observation of Westropp, C.J. at p. 620:
'We can well understand why the Legislature should refrain from giving the mortgagors the power to harass their mortgagees in possession with suit de enso it annum to ascertain what those mortgagees annually received from the lands over and above their necessary expenses in relation to those lands, such suits being brought without any present intention on the part of the mortgagors to pay to the mortgagees the balance due upon the mortgage, and without liability to a decree therein either for foreclosure or sale.'
The principle was applied in a later decision in Bhau Balaji v. Hari Nilkanthrao, ILR (1883) 7 Bom 377, in which it was held that when the mortgagor rightly or wrongly obtained a decree for accounts only, a subsequent suit by him for possession of property and payment of money declared to be due would be barred under the principles of Section 13 and Section 43, Civil P.C. of 1882, corresponding to Section 11 and O. 2, R. 2 of the Code of 1908. In Ghosh on Mortgages 5th Edn. at p. 593, the learned author observes:
'As a rule a mortgagee can be called upon to account only when the mortgagor seeks to redeem except where such redemption has become impossible.'
(Vide also the statement of law in Mullah's Transfer of Property Act, 5th Edn., P. 533.) In a Bench decision of this Court in Parasurama Pattar v. Venkatachalam Patta (1914) 25 MLJ 561 = AIR 1914 Mad 661, it was held that at the time of the redemption, the mortgagor is entitled to insist on credit being given for all the payments made by him without any time limit which payment the mortgagee defaulted as per the terms of the mortgage deed.
The same principle following ILR (1883) 7 Bom 377 that there is no time limit for the claims and cross-claims as between mortgagor and mortgagee and all the equities are to be taken into account in a suit for redemption was laid down again by a Bench of this Court in Thekkamannangath v. Kakkasseri Razhiyot Manakal, Karnavan, : AIR1915Mad1215 . We may also refer to the Bench decisions of the Allahabad High Court in Banwari v. Sakhraj : AIR1931All585 , in which it was held that in a suit for redemption the mortgagor is entitled to set off the yearly payment which the mortgagee is bound to pay to the mortgagor every year and that this sum for the whole of the period even beyond 12 years which the mortgagee has defaulted to pay, should be taken into account, there being no bar of limitation.
We may refer to the decision of Devadoss J. in Narasimha Rao Pantulu v. Seshayya, : AIR1925Mad825 , which was affirmed in Letters Patent Appeal in Immani Seshayya v. Dronamurraju Lakshmi Narasimha Rao Pantulu, : AIR1925Mad825 , by Venkatasubba Rao J. and Reilly J. The point relevant to note in that decision is that the usufructuary mortgage had fixed a period of 55 years with a stipulation that the mortgagee should make certain payments annually to the mortgagor and the suit for redemption was held to lie even before the expiry of the 55 years under the peculiar facts of that case. The argument before Devadoss J. was that when the mortgagee committed default, the right of the mortgagor was only to sue year after year for the recovery of the amount payable to him and that it was not a matter which would form part of the relief of redemption. This argument was rejected and it was held that the mortgagor could not be driven to file suits year after year for the recovery of the amount payable to him by the mortgagee nor the mortgagor was bound to pay beriz on the land year after year and bring a suit every year against the mortgagee for the recovery of the amount.
In this decision the decision in ILR (1884) All 303 already referred to was followed. We may also refer to the Bench decision of the Travancore-Cochin High Court in Kurien Chaco v. Ramakrishna, AIR 1952 Trav-Co. 552 in which following the Bench decision of this Court in 28 Mad LJ 184 = AIR 1915 Mad 1215, it was held that no question of limitation arises as between mortgagor and mortgagee when an account is taken at the time of redemption. The same view was taken by that Court in Raman Pillai v. Sultan, AIR 1956 Trav-Co. 49.
(8) Out attention was drawn to a decision in Rajmohan v. Sarada Charan, : AIR1936Cal200 . In that case the purchaser of an equity of redemption tendered and deposited, under S. 83 of the Transfer of Property Act, the amount due to the mortgagee in possession, but the latter, refused to accept the same. A suit for recovery of possession was filed and possession obtained from the mortgagee. Later on, a suit was filed for mesne profits from the mortgagee, from the date of service of notice of the deposit under S. 83 till the mortgagor got back possession. The High Court held the suit was not maintainable and barred by O. 2, R. 2, Civil P.C., in the view that the claim by the mortgagor for overpayment to the mortgagee or surplus or excess profit received by the mortgagee should all be included in the suit for recovery of possession or for redemption. It was also held that the relationship of mortgagor and mortgagee subsisted even on such tender or deposit and that the mortgagee does not become a trespasser from the moment of the deposit under Section 83 of the Transfer of Property Act. This decision emphasises that law discountenances multiplicity of proceedings between the mortgagor and the mortgagee and that any litigation between them and the reliefs prayed for therein should be such as to enable the Court to afford final and complete relief between the parties.
(9) We have no hesitation in holding that the plaintiffs could not have merely filed a suit for accounts for the receipt of the surplus profits under Sec. 76(i) of the Transfer of Property Act either year after year or for any period leaving outstanding the claim for redemption and for recovery of possession. It was perfectly competent to the mortgagor to wait and being a suit for redemption for recovery of possession within the time limit under Art. 148 of the Limitation Act and in that suit, claim all the reliefs he would be entitled to, including the claim for rendition of accounts from the mortgagee in terms of Sec. 76(i) of the Transfer of Property Act. The only time limit is that a suit for redemption or a suit for possession must not become time-barred.
(10) To sum up, the law does not permit the mortgagor to file separate suits against the mortgagee; the law does not compel him to file such suits. On the order hand, he ought to and is entitled to combine all the reliefs in the suit for possession without any time limit (Vide also Mullah's Transfer of Property Act, 5th Edn., p. 534, where the learned author has summed up this legal position).
(11) The next question arises as to how and on what principle of law this claim for rendition of accounts for the surplus profits of the property under Sec. 76(i) of the Transfer of Property Act for the entire period of 8 years which was subsisting on 28-7-1959, a day prior to the delivery of possession becomes barred by limitation for a period exceeding 3 years prior to the suit. IT is elementary that the mortgagee by delivering possession of the property cannot take away the right of the mortgagor which was then subsisting and alive. It is obvious and it lies on the surface to notice that it is only to provide for such a contingency that Art. 105 of the Limitation Act provides that time would commence to run only after the mortgagor re-enters upon the property.
(12) Learned counsel for the appellant urged that as the mortgage became discharged after the deposit and the certificate of discharge passed by the Court on 21-8-1951, the position of the mortgagee was only that of a wrong-doer not in the character of mortgagee and that the claim for profits of immovable properties belonging to the plaintiffs wrongfully received by the defendant is barred within the meaning of Art. 109. He would urge that from 31-8-1951 there is no question of redemption of the mortgage which has been discharged but that it was only a claim for recovery of possession wrongfully withheld by a trespasser without title coupled with the claim for mesne profits and that whatever it may be, when the wrong-doer handed over possession the claim for mesne profits for every year would get barred by the expiry of three years from the end of that year, under the third column of Art. 109. In support of his argument he relied upon the difference in the language of Section 60 in contrast to the language of Sec. 62 of the Transfer of Property Act. In order to get over Art. 105, he further urged that that Article would apply only to cases in which there is an express provision in the mortgage deed, that the mortgage would get discharged out of the rents and profits of the property within a particular period and that article would not apply to a case in which the rents and profits are to be appropriated by the mortgagee only towards interest on the loan and at any rate not to a case in which by the provisions of the special statute, the mortgage debt itself gets scaled down either in full or in part. Considerable portion of his argument was devoted on this aspect; it was utterly unintelligible besides being opposed to the plain language of the article. Further, the important limits in this argument are incorrect and unsound.
(13) The possession of the mortgagee after tender and deposit of the mortgage money is not that of a trespasser even though his possession thereafter is wrongful. A claim against him for rents and profits is not a claim for mesne profits; he is under a statutory liability to render accounts under Section 76(i) of the Transfer of Property Act. Before the amendment in Sec. 76(i) under the amending Act 20 of 1929, a Bench of this Court in Subbarao v. Sarvarayudu ILR (1923) Mad 7 = AIR 1923 Mad 533, had to consider whether the mortgagee in possession after the deposit under S. 83 of the Transfer of Property Act was entitled to credit the just allowances towards payment of land revenue, and it was held that the mortgagee in possession who wrongly refused to accept the tender or deposit did not thereby become a trespasser and cease to be a mortgagee. This decision followed the Bench decision of the Calcutta High Court in Satyabadi Behara v. Harabati, ILR (1907) Cal 223, where the law was stated in these terms:
'It is necessary to add, that there is nothing in these sections to indicate, that upon improper refusal of a valid tender, a mortgagee ceases to be a mortgagee and becomes a trespasser; on the other hand, the fact that the accounts are to be taken, either up to the date of the decree or upto the date fixed for redemption, indicates that he continues to be a mortgagee, although a heavier liability is imposed upon him, inasmuch as he loses interest after the date of tender and has to account for his gross receipts from the mortgaged property. It may also be noticed, that the Transfer of Property Act indicates, in other places, the circumstances under which a security is extinguished; see, for instance, Sec. 83 which provides that upon actual sale under a decree for sale, the security is extinguished, and Sec. 92, which provides that upon payment of the sum due under a redemption decree a mortgagor is entitled to get back his property free from the mortgage. It is nowhere stated, however, that a valid tender by itself, is sufficient to extinguish a mortgage. Reliance, however, need not be placed upon this circumstance, as the Transfer of Property Act does not profess to be a complete Code. But as we have indicated, the sections to which reference has been already made, appear to support the view, that though a mortgagee refuses a valid tender at his risk he does not thereby cease to be a mortgagee, and that, whatever is due to and from him after the date of the tender, should be included in the accounts taken in a subsequent suit for redemption. This view is supported by high authority to which we shall presently refer.'
(14) The same view was taken in a recent Bench decision of the Patna High Court in Harbans v. Ramdhari, : AIR1960Pat51 , in which it was held that after a deposit under Sec. 83 of the Transfer of Property Act, the mortgagee does not become a mere trespasser but that he is a mortgagee still holding the property as a kind of trustee for the mortgagor with a statutory liability to render account for the rents and profits received by him from the date of the deposit (vide also Mullah's Transfer of Property Act, 5th Edn., p. 536, where the learned author has summed up the position)
(15) We may at this stage refer to the decision of the Nagpur High Court in Mulchand v. Ganga, AIR 1951 Nag 366, which had to consider the effect of the discharge of a debt by the operation of a statute under the relevant provision of the Debt Conciliation Act. The case effectively answers the point stressed by learned counsel for the appellant as to the effect of the certificate of discharge granted by the Sub-Court on 21-8-1951, under Sec. 19-A of the Madras Agriculturists Relief Act. Mudholkar J. (as he then was) held that by the mere fact that the Debt Conciliation Board passed an order that the mortgagee's claim must be deemed to have been discharged under Sec. 82(2)(b) of the Debt Conciliation Act, the possession of the mortgagee did not become adverse to the mortgagor and the mortgagee could not be said to have excluded the mortgagor from possession from the date of the satisfaction of the mortgage. The C.P. Tenancy Act contained a special provision of a period of 3 years for a suit for possession of tenancy lands, the time to commence from the date of dispossession of exclusion. In that case the mortgagor filed a suit more than three years after the award of the Debt Conciliation Board, the argument was that from that date onwards, the mortgagee was in possession in his own right to the exclusion of the mortgagor for more than three years but it was held that it was a suit for redemption and would be governed by Art. 148, the mortgagor's possession not being adverse. The law was stated in these terms at page 368:
'Even if we take into consideration the effect of Sec. 8(2) of the Debt Conciliation Act, the position of the defendant does not become different. The discharge of a debt by the operation of a statute does not amount to redemption of the mortgage. A similar argument based on Sec. 10 of the Bengal Regulation 15 of 1793 which was addressed before the Allahabad High Court was repelled in Sudarsan Sastri v. Ramprasad, (1911) 33 All 97 = 7 Ind Cas 385, and it was observed that 'so long as the property remains in the hands of the mortgagee, it cannot be said that the mortgage has been redeemed--'
This decision was later approved in Habibullah v. Abdul Hamid, ILR (1912) All 261 = 14 Ind Cas 963.
Article 109 in its terms would apply only to a claim for mesne profits against a trespasser. The nature of the relief that would be granted in a suit under Art. 109 has got its own special incidents. The burden of proof is upon the plaintiff as to the quantum of profits. The defendant who is liable for mesne profits is entitled to certain allowances and deductions such as public charges as Government rent, revenues or cess. The measure of liability for mesne profits in a suit under Art. 109 is not the actual loss sustained by the plaintiff who has been kept out of possession and deprived of the profits from the property. There the test is not what is lost to the plaintiff as a result of exclusion but what the defendant has or might with due diligence reasonably have realised by his wrongful possession. The liability sought to be enforced against the mortgagee for surplus profits received under Sec. 76(1) of the Transfer of Property Act is a statutory liability imposed by the statute to render an account and the incidents of that liability cannot be equated to that of a liability of a mere trespasser-wrong-doer under Art. 109 of the Limitation Act. The nature and character of this liability, its measure, the burden of proof are all totally different and would not come under Art. 109 of the Limitation Act, which merely deals with tortious liability and liability under common law. The statute (Transfer of Property Act) declares that the relationship between the parties is such that one is bound to render an account to the other. A claim for mesne profits simpliciter on the basis of wrongful possession is not a claim for accounts as there is no accountable relationship in the legal sense of the term though to ascertain the mesne profits some accounts and calculations may have to be taken. The mortgagee under Sec. 76(1) of the Transfer of Property Act is liable not only for the rents and profits which he actually receives, but also for the rents and profits, which, but for his wilful default or neglect, he might have received, i.e., for everything he has received, or might or ought to have received while he continued in possession (vide 27 Halsbury, p. 287, para 539). It is this principle of English law which has been embodied in S. 76(1) of the Transfer of Property Act.
(16) Mr. Rajah Aiyar, therefore, urged that such a suit would be governed either by Art. 105 or in any event by Art. 120 and not Art. 109. It is unnecessary to consider the applicability of Art. 120 as we are clear in our minds that Art. 105 would apply to the instant case. At this stage, it is necessary to refer to two recent decisions of the Supreme Court, both reported in the same volume: Suraj Ahir v. Prithinatha Singh, : 3SCR290 and Prithinath v. Suraj Ahir, : 3SCR302 , in which the scope of the provisions of Sec. 6 of the Bihar Land Reforms Act (30 of 1950), as amended by Act 16 of 1959, came up for consideration. In that case, the mortgage money was paid by the mortgagor to the mortgagee, but the mortgagee still continued in possession. The purchaser of the equity of redemption wanted to recover possession of the property and the question arose whether he is entitled to the benefits of Sec. 6(c) of the Bihar Land Reforms Act of 1950, as amended by Act 16 of 1959, which was to the following effect:--
'(c) lands used for agricultural or horticultural purposes forming the subject-matter of a subsisting mortgage on the redemption of which the intermediary is entitled to recover khas possession thereof.'
(17) The Supreme Court held that this enabling provisions would not help the plaintiff as on that date there was no subsisting mortgage, as the same had been discharged by payment of the money by the mortgagor to the mortgagee. The Supreme Court took the view that as the mortgagee received the payment resulting in the discharge of the mortgage and there being no subsisting mortgage on the date of the vesting, the possession was not as mortgagee. The same aspect was stressed in the latter decision in : 3SCR302 , to the effect that when the mortgage money had been paid, thereafter there was no question of appropriating of rents and the profits accruing from the property towards interest on mortgage money and that, therefore, the mortgage and the right of the mortgagee to remain in possession came to an end Dealing with the incidents of the right of redemption, the law was stated in these terms at p. 1042
'It is to be noted that these provisions do not state when a mortgage ceased to be a mortgage to redeem. Now what is this right and in what circumstances does it arise? The right arises on the principal money, payment of which is secured by the mortgage deed, becoming due. The right entitles the mortgagor, on his paying or tendering to the mortgagee the mortgage money to ask him (i) to deliver to him the mortgage deed and other documents relating to the mortgaged property; (ii) to deliver possession to the mortgagor, if the mortgagee is in possession; and (iii) to transfer the mortgaged property in accordance with the desire of the mortgagor. If the mortgagee receives the money and does not perform any of the three acts required of him to be done, the question arises whether this non-compliance with the demands will make the mortgage continue. The provisions of the section do not say so and there appears no good reason why the mortgage should continue. If the mortgagee is not to perform these acts, the mortgagor is not to pay the amount. If, however, the mortgage money has been received by the mortgagee and thereafter he refuses to perform the acts he is bound to do, the mortgagor can enforce his right to get back the mortgage document, the possession of the mortgaged property and the reconveyance of that property through Court. A new right to get his demands enforced through the Court thus arises as a result of the provision of Sec. 60 of the Act.'
The observations in the aforesaid two decision of the Supreme Court could be understood in their proper context with reference to the applicability of the particular provision of the particular statute, the Bihar Land Reforms Act. Further, that case was one in which the mortgagor had made payment to the mortgagee direct. But what is relevant to notice in that decision is the statement that after the discharge of the mortgage, a fresh statutory liability and a new right to get his demands accrued in favour of the mortgagor to be enforced under either Sec. 60 of that Act or Sec. 76(1) of the Transfer of Property Act or Sec. (though the later provision was not referred to). Further, that case did not deal with the precise nature or character of the liability of the mortgagee under Sec. 76(1) of the Transfer of Property Act. We are not prepared to hold that this decision of the Supreme Court warrants the view that the liability of a mortgagee in wrongful possession after the deposit of the mortgagee amount is merely that of a trespasser simpliciter.
(18) Even assuming that the mortgagee should thereafter to treated only as a trespasser, Art. 109 being the general article, will not apply in the case of a special particular situation specifically provided for under Art. 105 of the Limitation Act.
(19) The principle of maxim generalia specialibus non derogant specialia derogant generalibus that, when there is a particular provision and a general provision in the same statute, the particular would be operative and override the general provision, the latter taking effect only with respect to the other portions of the statute to which it may properly apply, would govern the instant case. This rule has been applied in numerous cases in the matter of the proper interpretation and application of the several articles in the Limitation Act and it will be sufficient to refer to some of the leading decisions.
(20) In Natesan Chetti v. Sundararaja Aiyangar, ILR (1898) Mad 141, the vendor filed a suit to recover unpaid purchase money by enforcement of the vendor's lien (claiming a charge upon the property sold) eight years after the sale but within 12 years of the same. Article 111 of the Act of 1877 provided a time limit of three years for a suit by a vendor of immovable property to enforce his lien for unpaid purchase money, while Art. 132 of the same Act provided a time limit of twelve years, to enforce payment of money charged upon immovable property. The lower Court applied Art. 132 but the Bench consisting of Subramania Aiyar and Davies JJ. reversed the decision observing as follows:--
'Now Art. 111 refers solely and in unmistakable terms to suits such as the present, while Art. 132 deals with suits for money charged upon immovable property generally. In the case cited above, no reasons were stated as to why the learned Judges arrived at the conclusion that Art. 111 was inapplicable to cases similar to this, and that conclusion is opposed to the well-established canon of interpretation that as a rule, general provisions do not derogate from special provisions, but that the latter do derogate from the former. Generalia specialibus non derogant, specialia derogant generalibus. It is scarcely necessary to observe that, if Art. 111 does not apply to such suits as the present, it is impossible to see to what suits it would apply.'
Under the Act of 1908, Art. 111 has been amended so as to restrict it to a suit by an unpaid vendor for personal payment of the unpaid purchase money, and all suits for the enforcement of the payment of money charged upon an immovable property are now governed by Art. 132.
(21) We may next refer to the Bench decision in Naramadabai v. Bhavanisankar, ILR (1902) 26 Bom 430, in which this well-established rule that 'if there be two articles which may cover the case, the one, however more general and the other more particular or specific, as a principle of construction the more particular and specific article ought to be regarded as the one governing the case' was applied. This case too arose under the Limitation Act of 1877. The mother of the plaintiff in that case has (in 1897) deposited some ornaments, clothes and money with the defendant for safe custody and money with the defendant for safe custody and made a demand for the return of the same in 1898 which was refused. After her death and more than three years after the demand and refusal, the plaintiff sued to recover the property or its value as an alternative, and the question arose whether the suit was barred under Art. 48 or 49 of the Act of 1877 or was within time being governed by Art. 145 of the Act. Art. 48 provided a time limit of 3 years for recovery of specific movable property acquired by theft, extortion, cheating or dishonest misappropriation. Art. 49 provided the same time limit of three years for recovery of the movable property wrongfully taken or wrongful detaining of the same. Art. 145 of that Act fixed a time limit of 30 years for a suit against depositary or a pawneee to recover movable property deposited or pawned.
The Bench held that Art. 145 which dealt with case of a deposit and entrustment, being a particular Article, would apply and the suit was in time. In Rameswar Narain Singh v. Mahabir Prasad, : AIR1926Pat401 , the plaintiff filed a suit to set aside rent sale under the Chota Nagpur Tenancy Act, 1908, on the ground of fraud and the question arose whether the suit would be barred by limitation under Art. 12, which provided a time limit of one year for setting aside of a sale in execution of a decree of a Civil Court or sale for arrears of Government revenue or sale in pursuance of an order of a Collector or within time under Art. 95 of the Limitation Act which specifies a period of three years as time limit to set aside a decree obtained by fraud or for other reliefs on the ground of fraud. It was held that Art. 95 was a special provision providing for relief on the ground of fraud and would prevail over Art. 12 the general provision.
(22) Lastly, we may refer to the Bench decision in Ramiah and Co. v. Sadasiva Mudaliar, ILR (1925) Mad 925 = AIR 1925 Mad 1255, in which the same rule that the special article would override the provisions of a general article was applied. There the plaintiff purchased certain bales of shirtings from the defendant in August 1918 and sold these bales to his customers. In April 1919, the plaintiff discovered that there was a shortage or deficiency in the number of pieces in the bales and he filed the suit in February 1922 against the defendant for damages for short delivery. The suit was resisted inter alia on the ground that the claim was barred by limitation under Art. 62 being essentially in the nature of a claim for money had and received, the time commencing to run from the date of the receipt, but this argument was rejected on the ground that Art. 96 which deals with a special kind of suits for relief on the ground of mistake would apply, time commencing to run from the date when the mistake became known to the plaintiff.
(23) The question now arises for our consideration, whether the present claim is governed by the special provision, Art. 105 so as to exclude Art 109. On this portion of the case, we have not the slightest hesitation in holding that there is no substance whatsoever in the arguments of the appellant. The words 'mortgagor, mortgage and mortgagee are general and unqualified; we see no warrant and nothing in the compelling context of the article for restricting its scope to any particular type of mortgage. Only two conditions should be complied with (1) the mortgage must have been satisfied and (2) the mortgagor must have re-entered on the mortgaged property so as to start the running of time. The discharge or the satisfaction of the mortgage may arise in any number of ways, either by the terms and conditions of the contract or by operation of law or by the provisions of any pre-existing or supervening statute. Indeed, learned counsel for the appellant could not logically develop the argument, that the article should be restricted only to mortgages which contain a provision for the discharge of the interest and the principal from out of the rents and profits of the property.
It is unnecessary to express an opinion as to whether the possession of the mortgagee after the discharge of the mortgage is purely that of a trespasser, or, the possession is a wrongful possession, but at the same time the mortgagee occupying a fiduciary position to protect the rights and interests of the mortgagor not allowing the property to be sold for arrears of revenue, protecting it from committing acts of waste or damage and also take necessary steps as may be required to safeguard and protect the interests of the mortgagor; because, in our opinion, even assuming that the possession of the mortgagee is that of a trespasser simpliciter, Art. 105 would still apply. By the terms of Art. 105 as well as ex concessio Art. 105 postulates a stage when the mortgage has been satisfied or discharged, the relationship of the mortgagor and the mortgagee having come to an end. For Art. 105 to apply it is not necessary that the relationship of mortgagor and mortgagee should continue. Under the third column, time would commence to run only after the mortgagor re-enters on the property. It is obvious, indeed, the matter is not open to any argument contra, that Art. 105 is intended to cover a suit for working out the rights of a mortgagor and the obligations of the mortgagee during the period when the mortgagee continued in possession after the satisfaction of the mortgage. We are of the clear view that Art. 105 would govern every case of a suit by a quondam mortgagor against the quondam mortgagee and including suits for rendition of accounts under Sec. 76(1) of the Transfer of Property Act. The fact that at some point of time, the legal relationship came to an end and the mortgagor re-entered possession of the property thereafter would not affect the applicability of Art. 105. This view of ours is supported by ample authorities.
(24) We must first refer to the Bench decision of the Allahabad High Court in Muhammad Fayaz Ali Khan v. Kallu Singh, ILR (1911) All 244, in which it was held that a suit by the mortgagor after the mortgage had been satisfied, to recover surplus collections received by the mortgagee may be brought within 3 years from the time when the mortgagor re-entered on the mortgaged property under Art. 105 of the Limitation Act of 1877, corresponding to Art. 105 in Act 9 of 1908. In that case, the mortgagor first obtained a decree for redemption and possession and instituted the suit for recovery of surplus proceeds in pursuance of the liberty reserved to institute such a suit. The Bench took the view that the scope of Art. 105 was unrestricted and that it did not matter how the mortgagor re-entered or obtained possession of the property. This judgment refers to the previous legislative history of Art. 105, the change in column 3, between the Act of 1871 and the Act of 1877. The Bench was not inclined to accept the obiter dictum in an earlier Bench decision in Ramadin v. Bhup Singh ILR (1908) All 225, that Art. 105 must be restricted to cases where the mortgagor got possession of the mortgaged property, otherwise than by means of a suit for redemption. The relevant aspect to be noted for the purpose of the present discussion is that the Bench held that the only article that would apply to a case was Art. 105 and that Art. 109 would apply only to suits other than a suit by a mortgagor for surplus collections.
(25) Reference may next be made to the Bench decisions of the Calcutta High Court in Prasanna Kumar v. Nulambar, : AIR1922Cal189 . There in a suit for redemption of a usufructuary mortgage, the mortgagors claimed that if proper accounts were taken, large sums would be found due from the mortgagee. The mortgagee contended that such a claim for recovery of surplus profits would be barred under Art. 120 of the Limitation Act. The Bench overruled this objection holding that in a suit for redemption, there was not time limit so far as the recovery of the surplus collections was concerned, provided, however, the suit for redemption was in time under Art. 148, the reasoning being that in a suit for redemption, all equities ought to be adjusted between the parties. It is in connection with this that the Bench had to deal with the relative applicability of Art. 105 and it was held that Art. 105 was intended to cover cases where after the mortgage has been satisfied, the mortgagor has re-entered on the mortgaged property otherwise than by means of a suit for redemption. In this Bench decision too, reference is made to the prior legislative history of the difference in the nature of the provisions in the Act of 1859 and the Act of 1908.
At this stage, we may refer to the Bench decision of the Bombay High Court reported in Rukmini Bai v. Venkatesh, ILR (1904) 31 Bom 527, judgment of Chandavarkar and Heaton JJ. There the plaintiff the mortgagor, filed s suit under Sec. 62 of the Transfer of Property Act, to recover possession of the mortgaged property and also deposited the amount due to the mortgagee. The Court passed a decree for possession and the mortgagor also recovered possession from the mortgagee. Thereafter, the mortgagor filed another suit to recover mesne profits from the defendant from the date of the deposit upto the date when the mortgagor recovered possession of the mortgaged property. The suit was dismissed on the ground that it was barred by Sec. 13 or Sec. 43 of the C.P. Code of 1882 corresponding to Sec. 11 and O. 2, R. 2 of the Code of 1908, respectively. Chandavarkar J. delivering the judgment of the Bench, observed that after the date of the tender of the deposit the mortgagee continued as mortgagee with a statutory liability to account for the profits received by him from that date, that the mortgagee was not then a mere trespasser but a mortgagee still holding the property as a kind of trustee for the mortgagor. The learned Judge had also observed that there is nothing in the Transfer of Property Act to warrant the inference that after a proper deposit the mortgage has become extinguished so as to make the possession of the mortgagee that of a mere trespasser. We are making reference to this decision only to indicate the rival point of view that even if the mortgagee had been paid, he is not trespasser for all purposes.
Reference may be made to the statement in Ashburner's Principles of Equity, 2nd Edn., p. 191, that a mortgagee only becomes a trustee for the mortgagor only becomes a trustee for the mortgagor after he has been paid' (vide also Halsbury's Laws of England, Vol. 27, p. 412, para 800, that when a mortgage has been paid off, the mortgagee is a trustee for the mortgagor). Even if the decision of the Supreme Court in : 3SCR302 , should be understood as indicating a different point of view (we do not think so), that does not in any way affect the applicability of Art. 105. To conclude, whether the mortgagee after satisfaction of the mortgage still continues to be mortgagee or a quasi-trustee (see Jagannath v. Sripathibabu Naidu, AIR 1945 Mad 297 with certain fiduciary obligation or a mere trespasser, a suit for recovery of the surplus profits has been carved out as a special category of suits and provided for under Art. 105.
(26) On behalf of the appellant, reliance was placed upon an early Bench decision of the Calcutta High Court in Sakari Dutta v. Ainuddy, (1910) 10 Cal LJ 620. There the mortgagor in pursuance of a decree for redemption deposited the amount but the mortgagee did not deliver possession of the property but continued in possession, for over a period of one year. The mortgagor, after having obtained possession of the property, filed a fresh suit for recovery of the mesne profits due on account of the wrongful possession, the trial Court dismissed the suit on the ground that the prior proceedings operated as a bar. The plaintiff took up the matter to the High Court. On behalf of the defendant, a further objection was raised that the suit was not maintainable in any event in a Court of Small Causes. Art. 31 of Schedule II of the Provincial Small Cause Courts Act provides that any other suit for account including a suit by a mortgagor, after the mortgage has been satisfied, to recover surplus collections received by the mortgagee is not maintainable in a Court of Small Causes. The Bench took the view that Art. 31 would not apply to the case on the ground that after the mortgage has been satisfied, the defendant ceased to be a mortgagee. It is true that the language in Art. 31 of the Small Cause Courts Act is the same as the language in column 1 of Art. 105. The principle of this decision is not of much relevance to the instant case where the crucial question is, as to what extent, a special article in the Limitation Act would override a general provision.
(27) On this ground alone, the decision of the Calcutta High Court is distinguishable. But with great respect to the learned Judges, it has to be pointed out that Art. 31 of Schedule II of the Provincial Small Cause Courts Act specifically covers suit be a mortgagor after the satisfaction or discharge of the mortgage and when the defendant has ceased to be a mortgagee. It is explicit in that Article that it deals with the precise situation after the defendant had ceased to be a mortgagee and the Article in its express language cannot apply to a situation of the defendant still retaining his character as a mortgagee.
(28) For all these reasons, we hold that the entire claim in this suit is in time under Article 105 of the Limitation Act.
(29) As regards the quantum, the learned Subordinate Judge has committed a mistake in doubling the produce which the defendant had realised, the landlord's share even according to him i.e., 441 kalams for 71/2 years. The account books, Exs. B-2 and B-3, of the defendant have been filed, which are maintained in the regular course of business. They are genuine accounts. It cannot be seriously urged that the defendant fabricated the accounts for the purposes of this suit. A statement appears to have been filed in the trial Court, culling out the entries from these account books as a result of which the figure of 441 kalams was arrived at as the total quantity of paddy actually realised by the defendant. If the defendant himself had personally cultivated the lands, allowance will have to be made for cultivation expenses.
(30) There is no evidence that the defendant was guilty of any negligence or wilful default and that he could or ought to have realised more than 441 kalams.
(31) As regards the price of the paddy, the account books produced by the defendant themselves show that during the relevant period, he has been selling the paddy at the rate of Rs. 20 on an average, per kalam. The fact that in the plaint, the plaintiffs claimed the price of paddy at Rs. 15 per kalam cannot be used against the plaintiffs as they claimed 850 kalams, valued at Rs. 17000 but restricted their claim to a sum of Rs. 12750. The plaintiffs were naturally ignorant of the actual price for which the defendant had sold the paddy. We do not see any reason why the defendant should not be held liable for the price he had actually realised, viz., Rs. 20 per kalam, which is proved from the entries of his own account books. The plaintiffs therefore would be entitled to the value of 441 kalams of Rs. 20 per kalam. From this calculation there will be some reduction in the amount actually decreed. But, in determining the defendant's liability, the trial Court ought to have awarded interest with annual rests on the surplus collections made by the defendant and wrongfully retained by him for over 71/2years. The fact that the plaintiffs have not preferred a memorandum of cross-objections either in relation to the price of paddy or their right in interest with annual rests does not matter; they will be entitled to sustain the decree as passed by the trial Court on any point or points open to them.
It is well settled, that when an item in an account appearing in the decree of the lower Court is reduced by the appellate Court, the respondent without filing any memorandum of cross objections can support the decree passed by the trial Court, by showing that it had wrongly decided against him (respondent) on other items. In several decisions, in a suit for sale or suit for redemption or claim for mesne profits, this principle had been applied, and the amount decreed in favour of the successful party has been sustained by the appellate Court, though the appellate Court took a different view from that of the trial Court in respect of some of the items which made up the total liability of the defeated party.
We may refer to an early decision of the Allahabad High Court in Shankarlal v. Madari Singh (1910) 7 Ind Cas 484, where the plaintiff filed a suit on a mortgage and gave credit to the defendant for a sum of Rs. 245, as the value of certain grain and cattle delivered to the mortgagee by the mortgagor. The defendant pleaded that he had made some other part payments in cash and that the value of the grain and cattle was Rs. 350 and not Rs. 245. The trial Court held that the value of the grain and cattle was only Rs. 245. It also held that the plaintiff was not entitled to compound interest but on appeal to the lower appellate Court it was held, the plaintiff was entitled to compound interest, that he had also received from the defendant a sum of Rs. 320 and that the value of the grain and cattle delivered to the plaintiff was Rs. 350 and not Rs. 245 and on this calculation, a decree was passed against the defendant for Rs. 741. On appeal to High Court, the plaintiff contended that in as much as the defendant had not preferred any cross appeal in the lower appellate Court, as regards the value of the grain, it had no jurisdiction to enhance the value in favour of the defendant from Rs. 245 to Rs. 350. This argument was not accepted and it was held that it was quite competent to the defendant to raise all objections concerning the several items which made up his liability so long as he did not dispute the liability for the amount decreed against him by the trial Court.
(32) We may next refer to the Bench decision of this Court in the Receiver of Nidadavole Estate v. Vegasena Subbaraju, ILR (1905) Mad 427, in which the landlord had filed a suit for enhancement of rent as against the tenant and the question directly arose whether it would be competent to the lower appellate Court to award relief to the ryot when there has been no cross-appeal with regard to the disallowance of certain amounts. The Bench held that the appellate Court may uphold the decree of the lower Court on any ground warranted by law, though such a ground may not have been referred to or even disallowed by the lower Court. The same principle was laid down in the Bench decision in Mahomed Ali v. Parmanand, AIR 1918 Lah 129, which related to a suit on a registered bond comprising several items and on some of which there was difference of view between the trial Court and the lower appellate Court. It was held that a party who was content to accept the lower Court's decision would be entitled to resist the appeal from that decision on the ground that the decree has erred in favour of the appellant. It was also observed that the respondent not having appealed nor filed cross objections, could not ask that the decree should be altered in his favour but that he would certainly be entitled to urge and show that the decree erred in favour of the appellant and therefore ought not to be disturbed.
These two cases were referred to with approval by a Bench of this Court in Sri Ranga Thathachariar v. Srinivasa Thathachariar, ILR (1927) Mad 866 = AIR 1927 Mad 801, which dealt with a suit for partition where it was observed that 'though one item in an account may be found by the Court of appeal against the respondent and on that footing the amount for which a decree has been granted by the lower Court may have to be reduced, still the decree might be supported by showing that in respect of some other item the Court below made a mistake'. On the facts in that case it was held that that rule will not apply to reliefs based upon totally different causes of action.
(33) Lastly we may refer to the Bench decision of Calcutta High Court in Rajendra Narayan v. Bhairabendra Narayan, : AIR1938Cal563 , where in a suit for mesne profits this principle that the amount decree could be sustain don a calculation different from that adopted in the lower Court was applied. This Bench decision referred to with approval the statement of law in ILR (1927) Mad 866 = AIR 1927 Mad 801, referred to earlier. The matter was put thus at p. 569--
'This raises the question whether they are entitled to have these modifications in the rate of interest made in their favour in the absence of any memoranda of appeals or of cross-objections by them. One fact is clear that a decision by us in their favour would not increase the total amount of mesne profits decreed in their favour by the lower Court. Subject to this, were are of opinion they can attack the judgment relating to their claim for interest without filing memoranda of cross-objections. The principle has been thus formulated by Srinivasa Aiyar J., in 50 Mad 866. When an item in an account appearing in the decree of the lower Court is reduced by the appeal succeeding, the respondent without filing any memorandum of cross objection can support the said decree by showing that the lower Court has wrongly decided against him on other items, but it is not open to the respondent to have adjudicated by the appellate Court rights or causes of action which have been decided against him in the lower Court without filing an appeal or memorandum of cross objections. As interest is an integral part of mesne profits, the plaintiff-respondents are entitled on the said principle to maintain the amount of mesne profits decreed to them by the lower Court by a relative variation of the constituent elements without filing memorandum of cross objections. They are entitled to urge that if interest be reduced by the appellate Court the profits may be assessed at a higher figure if the evidence supports it, provided that the total does not exceed the amount decreed as mesne profits by the lower Court, and vice versa. This involves no challenge to a difference right or a different cause of action adjudicated against them by the lower Court which is not under challenge in the appeal at the instance of the appellant'. It is unnecessary to refer to further cases on this aspect.
(34) In a suit for account of surplus collections made after the date when the mortgage has been completely discharged and satisfied, the usual rule is to award to the mortgagor interest with annual rests as against the accounting party (Vide 27 Halsbury's Laws of England, page 431, Para 853). We may refer to the leading English decision in Ashowrth v. Lord, (1887) 36 Ch D. 545, in which in an action for redemption, it was held that the accounts must be taken against the defendant with annual rests from the date at which the mortgage debt was fully paid, and that annual rests is a matter of course. Reference may be made to the following statement of law at p. 550--
'The principle on which annual rests are nor ordered as against mortgagees in possession, whose interest was in arrear at the time when they entered into possession, is that it cannot be considered that, in so doing, they elected to receive their capital by driblets. They are entitled, in the absence of any bargain to the contrary, to have their whole capital paid off at once, and the taking of possession is not evidence of such a bargain. But, after they have been paid in full, they are, as was pointed out by the Master of the Rolls in Wilson v. Metcalfe, (1826) 1 Russ 530, persons who are, in receiving the rents after their debt has been fully paid, availing themselves of another man's money for their own use and benefit, and they ought to be charged with interest. In that case annual rests were directed to be made from the time at which the mortgage debt was fully paid, and that is what I have always understood to be the practise in the few cases in which the point has arisen. it seems to me that annual rests are in the present case a matter of course'. In Nagayya v. Venkatasubbarayadu, AIR 1913 Mad 807, a Bench of this Court while pointing out the difference between the case of a mortgagee in possession and a trustee as regards liability for interest observed at page 810 as follows-- 'A mortgagee in possession, as soon as his debt is paid off, will be bound to pay interest on any money which he may retain thereafter, while the liability of a trustee would depend on whether he is guilty of a breach of trust; see (1826) 1 Russ 530 = 38 ER 204; (1887) 36 Ch D 545 = 57 LJ Ch 230, and compare Section 23. Trusts Act.'
On this matter it is sufficient to refer to the Bench decision of this Court in AIR 1945 Mad 296, in which it was held that under Section 76 of the Transfer of Property Act, a mortgagee in possession though not a trustee in the strict sense of the term holds a fiduciary character and that on equitable principles, the Court had full power to direct interest to be paid on collections which have been wrongfully withheld by the mortgagee in possession. On the facts of that case an award of 15 per cent per annum was upheld as reasonable.
In the instant case, the period is fairly long and we think, an award of six per cent simple interest would be reasonable and just. Calculating at 6 per cent per annum, the interest works out to Rs. 1728.72 and adding the principle of Rs. 8820 the amount due to the plaintiffs would be Rs. 10548.72. The appeal therefore is allowed in part and the decree of the trial Court is modified to one for Rupees 10548.72 with subsequent interest. The plaintiffs would be entitled to their costs in the trial Court on the amount decreed. The defendant will bear his own costs in the trial Court. In the appeal, the parties will pay and receive costs in proportion to their failure and success.
35. Appeal partly allowed.