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Tadepalli Subba Rao Garu and ors. Vs. Sri Balusu Buchi Sarvarayudu and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1923)44MLJ534
AppellantTadepalli Subba Rao Garu and ors.
RespondentSri Balusu Buchi Sarvarayudu and ors.
Cases Referred and Rukmani Bai v. Venkatesh I.L.R.
Excerpt:
- - the plaintiff impugned the revenue sales and also contended that the purchases were made benami for the mortgagors, but the subordinate judge found that the plaintiff had failed to establish his case on those points and i agree with my learned brother that in the argument in the memorandum of objections we have not been shown any sufficient reason for differing from him n this point. on the principle of the greater including the less, omne majus continet in se minus, the tender was good even if they were entitled to tender a lesser sum, but in my opinion they were not, as the amount of the proportionate reduction in the mortgage-debt had not been ascertained either by agreement or by the court, and in these circumstances it cannot be said that there was any lesser sum which the.....wallis, c.j.1. these are appeals by the defendants from the preliminary decree and final decree in favour of the plaintiff against the defendants mortgagees who refused to restore the mortgaged property in spite of the mortgage; debt having been deposited by the plaintiff under section 83 of the transfer of property act. the plaintiff is the assignee of three-fourths of the mortgagor's interest in item one and the. mortgagees are also found to have become the owners of the equity of redemption in parts of the mortgaged property which were sold for arrears of revenue which had accrued on other property not the subject of the mortgage belonging to the heirs of the deceased mortgagor. the plaintiff impugned the revenue sales and also contended that the purchases were made benami for the.....
Judgment:

Wallis, C.J.

1. These are appeals by the defendants from the preliminary decree and final decree in favour of the plaintiff against the defendants mortgagees who refused to restore the mortgaged property in spite of the mortgage; debt having been deposited by the plaintiff under Section 83 of the Transfer of Property Act. The plaintiff is the assignee of three-fourths of the mortgagor's interest in item one and the. mortgagees are also found to have become the owners of the equity of redemption in parts of the mortgaged property which were sold for arrears of revenue which had accrued on other property not the subject of the mortgage belonging to the heirs of the deceased mortgagor. The plaintiff impugned the revenue sales and also contended that the purchases were made benami for the mortgagors, but the Subordinate Judge found that the plaintiff had failed to establish his case on those points and I agree with my learned brother that in the argument in the Memorandum of Objections we have not been shown any sufficient reason for differing from him n this point. The case must therefore be dealt with on this footing.

2. The first question that arises is, whether the plaintiff is entitled, as the Subordinate Judge has found, to make a deposit of the whole mortgage debt notwithstanding that the mortgagees have become the owners of part of the mortgaged property. On this question, I think the plaintiff was entitled to do so under the provisions of the Transfer of Property Act. They were undoubtedly persons entitled under Section 91 of the Transfer of Property Act to sue for redemption and consequently come within the words' or any other person entitled to institute such suit 'in Section 83 so as to entitle him to make a deposit under that section. These statutory rights are not taken away by the recognition in Section 60 of the right of partial redemption where the mortgagee has become the owner of part of the mortgaged property. It was no doubt held in Mamu v. Kuttu I.L.R.(1882) M. 61 that where the mortgagee had acquired a part of the mortgaged property, the mortgagors could not even sue for redemption until the mortgagor had obtained a decree for partition, but this decision was before the Transfer of Property Act and even then was of very questionable authority for reasons which will appear later.

3. In the present case the plaintiff tendered the whole amount of the mortgage debt without any proportionate reduction in respect of the part of the mortgaged property purchased by the mortgagee. On the principle of the greater including the less, omne majus continet in se minus, the tender was good even if they were entitled to tender a lesser sum, but in my opinion they were not, as the amount of the proportionate reduction in the mortgage-debt had not been ascertained either by agreement or by the Court, and in these circumstances it cannot be said that there was any lesser sum which the plaintiff was entitled to tender or the mortgagees were bound to accept.

4. The eftect of a lawful tender or deposit is to determine the mortgagee's rights as distinguished from his liabilities under the mortgage including his right to retain possession, and, where one of several mortgagors redeems the mortgage, to transfer such right of possession to the redeeming mortgagor who is in turn entitled to retain it until redeemed by the other mortgagors. This is the principle embodied in Section 95 which provides that, 'where one of several mortgagors redeems the mortgaged property and obtains possession thereof, he has a charge on the share of each of the other co-mortgagors in the property for his proportion of the expenses properly incurred in so redeeming and obtaining possession.' This principle is in my opinion equally applicable to a case where part of the mortgaged property has been purchased by the mortgagee. In such a case the mortgagee's right to possession as mortgagee is equally determined by the tender or deposit and transferred to the redeeming mortgagor. The question as to the proper form of decree to be passed when he refuses to accept the tender will be considered later.

5. Another question which arises in these appeals is as to the extent of the liability of a mortgagee remaining in possession after a lawful tender or deposit to account for the gross receipts of the mortgaged property under Section 76(1). On this clause the Subordinate Judge has held that the mortgagees are not entitled to credit for amounts which they paid after the tender to meet the revenue demands on the mortgaged property, and for necessary repairs and collection charges and the commentaries and one or two cases bear out this view, but in none of them has the clause been very fully considered. Such a rule would involve a great hardship to a mortgagee who refused to accept the tender under a bona fide claim of right. It is often exceedingly difficult under the existing law to say whether a transaction amounts to a mortgage or a sale, and where it is ultimately found to be a mortgage, it would be very hard to refuse the mortgagee credit for all the necessary expenses incurred by him whilst contesting the right to redeem. As observed in argument it would put him in a worse position than a trespasser, and there seems no need for so stringent a rule. There is nothing like it in England where a mortgagee who refuses to accept the tender may have to bear the costs of the suit for redemption necessitated by his refusal and also loss of interest from the date of the tender, a provision now embodied in Section 84 of the Transfer of Property Act, Bank of New South Wales v. O'Connor (1889) L.R. 14 A.C. 273 . In the case of his being in possession such a mortgagee would also have to account for the gross profits; but there is no authority for saying that he would not be entitled to all due allowances. I do not think that Clause (1) when properly understood imposes any larger liability than would be incurred by a mortgagee in England. All that it says is that he, that is, the mortgagee, must notwithstanding the provisions in the other clauses of this section, account for the gross receipts from the mortgaged property from the date of the tender or the earliest occasion when he could draw the money out of Court. He does so account in legal parlance when he brings the whole gross receipts into account, but the section does not say that when he brings the whole gross receipts into account he is not to have the benefit of the same allowances as a trespasser. If the legislature had intended to enact in this matter a novel rule of drastic character I think they would have used clearer language and would at least have said ' notwithstanding anything in Section 72 as well as notwithstanding anything in the other provisions of Section 76, ' because it is in Section 72 which deals with the credit side of a mortgagee's account and Section 76 deals mainly with the debit side. Further, there is nothing in the history of the clause to suggest that they had any such intention. It is not to be found in the rules as to transfer of property appended to the Sixth Report of the Indian Law Commission, 1870, or in the Transfer of Property Bill based on those rules which was introduced in 1877, but was inserted by the Select Committee who re-drafted the bill with express reference to the case of Mussammat Asima Beebee v. Sheik Ahmudee and Ors. 9 N.W.P.S.D. 1, as cited in Macpherson on Mortgages which was then the accepted text book on mortgages in India. It was there held that after a lawful tender a mortgagee continuing in possession was not entitled in accounting for the profits accruing subsequently to the tender to the benefit of the stipulations in the mortgage deed. The mortgage deed had made the mortgagor responsible for any balances due from farmers and cultivators of the land and contained other stipulations as to the way in which the profits should be estimated. The Court held that the effect of the tender was to render the mortgage deed of no effect from the date of the tender and to put an end to the mortgagor's liability for the balances in question and observed ' Upon the same principle, the appellant is entitled to the benefit of the tender in the mode of calculating the claim, the proceeds of the estate being estimated according to the gross jamabandi for 1252 falsi without reference to the terms stipulated in the deed.'

6. But for the words ' notwithstanding the provisions in the other clauses of this section' Clause (1) might be regarded as merely giving statutory effect to this decision. These words apparently were inserted in the clause ex abundante cautela to meet any possible contentions that might be based on the other clauses of the section and especially on clause (h) read with Section 77. However this may be, they are not in my opinion sufficient, especially having regard to the omission of any reference to Section 72, to put the mortgagee in accounting for the gross receipts of the property in a worse position than a trespasser; and I think the Subordinate Judge was wrong in disallowing the items claimed by the mortgagees on this head:

7. The Subordinate Judge has held that the plaintiff was entitled on the tender to take possession of the whole of the mortgaged properties, and has left the rights of the owners of the equity of redemption including the mortgagees to be adjusted in other proceedings. It is no doubt the practice in England to pass such redemption decrees subject to the rights of other persons interested. The appellants contended in the lower Court and here that the Subordinate Judge should have left them in possession of the items of mortgaged property purchased by them and allowed the plaintiff to redeem the remaining properties at a proportionate reduction instead of driving them to a fresh suit. It is of course true that the appellants had no right to retain possession after the tender and should be made accountable on that basis, but having regard to practical convenience and the scheme of the Transfer of Property Act I think the proper course in a case like this would have been to determine the amount of the mortgage-debt for which the properties purchased by the appellants were liable and to have finally settled the questions arising between the parties so as to obviate the necessity for a fresh suit. I concur with the order proposed by my learned brother.

Krishnan, J.

8. In Appeal No. 352 of 1918: The suit from which this and the connected appeal arise was one brought to redeem an usufructuary mortgage executed in 1896 by the fete Ex-Nawab of Masulipatam in favour of one Tadepalli Purushottam, now deceased, the then manager of the joint Hindu family of defendants 1 to 15, 18 to 34 and 38, for one lakh of rupees with the condition inter alia that the usufruct was to be taken in lieu of interest. The properties mortgaged consisted of 9 items. Plaintiff is the purchaser of a three-fourth share in item 1 subject to the mortgage. Defendants 16, 17 and 35 to 38 are stated to be assignees of the shares in the mortgage of two of the members of the mortgagee's family and defendants 39 to 53 are the heirs, or assignees from the heirs, of the original mortgagor the Nawab who died in 1898., Defendants 54 to 61 claim to be purchasers of the equity of redemption in some of the items mortgaged. These defendants 39 to 61 were added as parties as persons interested or claiming to be interested in the equity of redemption. The plaintiff deposited in Court the whole of the mortgage money Rs. One lakh under Section 83 of the Transfer of Property Act in April 1916 but the mortgagees refused to receive it unconditionally and be redeemed. Hence this suit.

9. The lower Court passed a preliminary decree for redemption in plaintiff's favour directing the mortgagees to take the money deposited in Court and to deliver up possession of all the 9 items to him; and it also directed that he was to get the rents and profits of the mortgaged properties from the date of suit to date of delivery or for 3 years whichever was the shorter period at a rate to be determined subsequently. Appeal No. 352 is the appeal against the decree by the mortgagee; two memoranda of objections have also been filed against the decree one by plaintiff and the other by two of the heirs of the late Nawab, challenging the finding of the learned Subordinate Judge that the equity of redemption of items 6 and 9 had been validly sold in a Revenue sale and had passed from the mortgagors, but raising no other objections. A final decree was subsequently passed settling the amount of mesne profits which the defendants were to pay to the plaintiff, disallowing.their claim to deduct the Government revenue paid and the charges said to have been incurred for repairs and for collection. The connected Appeal No. 222 is by the mort gagees against that final decree and plaintiff has filed, a memo of objections in it claiming his costs which had been disallowed.

10. Several important questions have been raised in these appeals. It will however be convenient to dispose of the Memoranda of Objections in Appeal No. 352 first as they raise the question whether the finding that the equity of redemption became vested in part in the mortgagees is correct or not, as much of the argument in the case depends on it. There is no real dispute about the facts regarding it. Arrears of Government revenue became due by the mortgagor's heirs on certain properties belonging to them in the Cuddapah District. For the realisation of these arrears the equity of redemption of items 6 and 9 was attached though they were situated in a different district and was sold in revenue sale and purchased, the latter by 54th defendant, a clerk of the mortgagees, and the former by the 55th defendant, his brother-in-law. The attempts of the mortgagor to get these sales set aside failed and the sales were confirmed. It is the mortgagor's case that these purchases were benami for the benefit ofthe mortgagor and it is contended that under Section 90 of the Indian Trusts Act the mortgagees should be treated as having made the purchases and as holding the properties for the benefit of the mortgagor. The argument however fails as it is not shown that the mortgagees availed themselves of their position as such in getting the properties sold or in buying them, even if we assume that the purchases by 54th and 55th defendants were really benami for them. The sale was not for arrears of revenue due on the mortgaged properties and the mortgagees were under no obligation to pay the revenue on the mortgagor's other properties. It cannot therefore be said that they committed any default in allowing the equity of redemption to be sold for such arrears. It was however urged that as a sum of Rs. 2,500 had been left with the mortgagees by the mortgagor and that they should have paid the arrears out of it when the mortgaged properties were attached, to save them from being sold. But the evidence is that this money was left with the mortgagees for the express purpose of effecting repairs to the mortgaged properties and it could not therefore be properly used by them for paying any arrears of revenue. No other objection has been urged before us regarding these sales and we must therefore accept the finding of the Subordinate Judge on issue 3 that the revenue sales are valid and binding on the mortgagor. The further plea that the purchases were benaml for the mortgagor is not raised now and is not supported by any evidence. The Memoranda of Objections must therefore both be dismissed with costs.'

11. Turning now to the Appeal No. 352 before us the main points argued were those raised (1) in issues 1 and 2 and (2) in issue 8, namely, whether plaintiff is entitled to get possession of all the properties including items 6 and 9 on redemption and whether the payment into Court under Section 83 of the Act was a valid deposit in law. Taking the first question first there can be no doubt that under Section 60 of the Transfer of Property Act a person entitled to a share only of a mortgaged property cannot redeem his share only on payment of his proportionate share of the mortgage money except in the only case where the mortgagee or when there are more mortgagees than one, all of them has or have acquired in whole or in part the share of a mortgagor. In fact the rule is that a mortgage should be redeemed as a whole; the right to redeem in part is given to a mortgagor as a privilege in the exceptional case noted above to avoid multiplicity of suits and in none else. Now in the present case the plaintiff has sued to redeem the whole mortgage. I think he was bound to do so for he could not take advantage of the exception because the equity of redemption in items 6 and 9 is not shown to have passed to all the mortgagees as a body but only to some of them as shown by the Subordinate Judge in paras 14 and 15 of his Judgment. Plaintiff was therefore clearly entitled to redeem the whole mortgage. Nevertheless I agree with the learned Chief Justice that the more convenient course here is to decide in this case itself, as all the parties are before us, the question how much of the mortgage money should be taken as proportionately chargeable on items 6 and 9 and to allow redemption of the rest of the items only on payment of that proportionate amount. This can be done without prejudice to plaintiff's claim to mesne profits and without deciding between the several persons entitled to the mortgagee's interest their rights inter se. I would therefore call for a finding on this question on fresh evidence.

12. On the next question as to the validity of the deposit in Court, I agree with the learned Chief Justice that under Section 83 the right to deposit the mortgage money in Court is co-extensive with the right to institute a suit for redemption as is apparent from the wording of the section. A person who owns a share only of the equity of redemption is thus in my opinion as much entitled as a person owning the whole of it to take advantage of Section 83 by depositing the amount due on the mortgage and as in this case 1 have held that the plaintiff is entitled to redeem the whole mortgage he was clearly entitled to deposit the whole mortgage money in Court as he did. In my opinion the section ' applies equally to cases where the mortgagee has obtained a share of the equity of redemption for there is no limitation in its language. It is not necessary in this case to consider whether in such circumstances the mortgagor should deposit the whole mortgage amount due into Court, or only that portion of it which he would have to pay if he were taking advantage of the exception in the last clause of Section 60; for the mortgagor in this case has paid the whole mortgage money. The objection that the plaintiff could not make a valid deposit because he 'was only the owner of a share of the equity of redemption and because some of the mortgagees had also become entitled to a share in it must thus be over-ruled.

13. A further objection was raised that the deposit ceased to be a valid one when the plaintiff through his vakil opposed the application of the defendants under Exhibit IV, to be paid the amount deposited and got it dismissed. If he improperly prevented the mortgagees from drawing out the money the tender may become bad under Section 84 of the Act but what happened here was the defendants wanted to take the money without prejudice to certain contentions they were raising and they asked for an order of Court to that effect. This appears from Exhibit IV itself. Plaintiff objected to the Court making any such order, as, I think, he was perfectly entitled to do; he did not object, so far as I can see, to the money being drawn out by them and I do, not think his action affected the validity of his tender in any way. I therefore agree that plaintiff is entitled to the advantages flowing from such a deposit. What those advantages are, in this case, form the subject of the connected Appeal No. 222 and I shall consider the question there.

14. In this appeal one further argument raised by the respondent remains to be considered. It was contended that because the defendant drew. out the money deposited in Court after the decree of the lower Court and pending the appeal to this Court, they must be taken to have acquiesced in that decree and their appeal is therefore incompetent. The facts bearing on this objection are not clear. Some of the money seems to have been taken away not by the defendants but by their attaching creditors and that can imply no acquiescence at all on defendants' part. Whatever they drew out themselves they seem to have drawn out in execution of the decree in this case. Execution of a decree has never been held to estop the decree-holder from appealing from it so far as it is against him.

15. Reliance was however placed by the learned vakil for the 1st respondent for his objection, on the ruling in Ramachandra Marwari v. Rani Keshobati Kumari L.R. 38 IndAp 85. On examining that case it will be found to be entirely distinguishable. Their Lordships were considering the effect under the 2nd clause of Section 83 of a withdrawal of money which had been deposited in Court in full discharge of the mortgage debt. There was no decree in that case prior to the withdrawal. The case reported in Dal Singh v. Pitam Singh I.L.R. 25 A 179 was also relied on. In that case no doubt the money was taken out of Court after the decree of the Appellate Court and pending a Second appeal. The facts of that case however are not very clear, for in meeting the argument that the money shoul be deemed to have been taken out in execution of the redemption decree, the learned Judges say that the appellants as defendants against whom the decree for redemption had been passed, were not the parties to apply for execution and that in the application they made to have the money paid out it was distinctly stated that it was lying in deposit under Section 83 Transfer of Property Act. In the present case there is a clear order in the decree that the defendants were to take out the money in Court and it would therefore seem to be distinguishable from the Allahabad case. Otherwise with all respect to the learned Judges I would have been unable to follow their ruling. Once a decree is passed settling the rights of parties on redemption, what is thereafter done should be referred to that decree. The payment of the mortgage-money can only be under that decree and not under Section 83, Transfer of Property Act, which no longer applies. This objection must also be over-ruled.

16. Before disposing of this appeal it is necessary to call for a finding on the question ' What are the proportionate amounts of the mortgage-debt chargeable upon item 6 and item 9? ' The finding must be arrived at in the manner explained in Ponnambala Filial v. Annamalai Chettiar, 38 M.L.J. 239 . Fresh evidence will be allowed. Finding in 2 months after the re-opening. Objections 10 days. In A.S. No. 222 of 1919.

17. The question in this appeal turns on the meaning to be given to the expression ' account for the gross receipts 'in Section 76(1) of the Transfer of property Act. The mortgagees claimed to deduct from the rents received by them certain sums of money for (1) revenue paid to Government On the mortgaged properties (2) repairs effected to them and (3) collection charges for collecting the rents and profits. The learned Subordinate Judge has disallowed the whole of these three items. It is contended in appeal that all these should be allowed in favour of the mortgagees.

18. As found in the connected appeal, the mortgage money was properly deposited in Court by the plaintiff under Section 83 and if the mortgage was one which provided for a rate of interest, that interest would have ceased to run under Section 84. But in this case we have a mortgage with possession with the condition that the usufruct was to be taken in lieu of interest; Section 76(1) therefore applies. The Subordinate Judge construes the words 'account for gross receipts 'as meaning' account to the mortgagor for the total receipts from the mortgaged properties without any deductions whatsoever 'and he relies on Bent Prasad v. Narain Das (1909) 5 I.C. 529 Satyabadi Behara v. Harabati I.L.R. (1907) C. 223, and Shephard and Brown's Commentary on the Transfer of Property Act. There is no authority cited by the commentators for their opinion; and there is nothing in Satyabadi Behdri v. Harabati I.L.R. (1907) C. 223 which supports the Subordinate Judge's view. In Bent Prasad v. Narain Das (1909) 5 I.C. 529, no doubt collection charges were disallowed but there is no discussion of the meaning of the words in question, in the judgment. There is thus no real authority on the point.

19. To take the meaning that the Subordinate Judge has given to the words would, as pointed out by the learned Chief Justice, impose an unduly excessive burden upon a mortgagee in possession who fails to accept a valid tender or deposit. Section 84 imposes on the mortgagee in such circumstances, only the liability of interest ceasing to run; and in the case of a mortgagee in possession who takes his interest from the usu. fruct, the application of that rule would only result in his having to account for the whole of the usufruct without deducting anything for interest but it would not affect in any way his right to any other deductions he may be entitled to. Should we then construe the words of Section 76(1) as imposing a much larger liability by taking away from him all rights of deduction? There is no reason why a mortgagee in possession should be treated by the legislature in a more stringent manner than any other mortgagee committing the same default. I think full effect can be given to the words 'account for gross recepits' by holding that in the mortgage account to be made up for redemption, the mortgagor should be debited with the total receipts from the mortgaged property without reference to any covenants between the parties in the mortgage deed to take any particular amount as representing such receipts or to appropriate anything for himself towards his interest or otherwise. The words will then have no bearing on the question of deductions claimed under the provisions of the statute. The history of the provision as set out by the learned Chief Justice shows that this is the proper meaning to be attached to them. The words were introduced for the first time by the Select Commitee on the Transfer of Property Bill and their report shows that the provision was taken from the case of Asima Bebee v. Sheik Ahmudee and Ors. 9 N.W.P.S.D. 1 . In that case the tender by the mortgagor was found to be valid and legal and the question was what surplus profits alleged to have been realised by the mortgagees in possession, the mortgagor was entitled to. The learned Judges held that on the tender being made the conditions and stipulations in the deed in favour of the mortgagees ceased to be in force and therefore they were not entitled to interest there after and that they could not rely on an express stipulation in the deed which made the mortgagor answerable for balances due from farmers and cutivators from fasli 1252 and that the proceeds of the estate should be estimated according to the gross jamabandi without reference to the terms stipulated for in the deed. They however allowed the mortgagees credit for collection expenses. It would thus seem that the term ' gross receipts ' has no reference to statutory deductions but only to the stipulations in the deed. A mortgagee in possession who wrongly refuses to accept a tender or deposit does not thereby become a trespasser and cease to be a mortgagee. See Satyabadi Behara v. Harabati I.L.R. (1907) C. 223 and Rukmani Bai v. Venkatesh I.L.R. (1907) Bom. 527. The duties imposed on him by Section 76 continue in force against him and it will be very strange to hold that though he is compelleed by law to make certain payments such as the Government revenue, he is not to get them repaid. I think the words in Section 76(1) do not necessitate such a construction and that they only mean that the mortgagor should be debited in the account with the total receipts from the mortgaged property without reference to the stipulations in the mortgagee's favour in the deed. If the mortgagee proves that he has made payments from the income validly under Clauses (c) and (d), to that extent I would hold that he has accounted for the receipts. It seems to me that the words 'notwithstanding the provisions in the other clauses of this section' have been added to Clause (1) out of abundant caution as the learned Chief Justice has pointed out, to make it clear that the special rule in that clause is to prevail against the general rule embodied in Clause (h) which enables the mortgagee to appropriate the receipts himself towards his interest and principal. They cannot be read as extending the scope of the words 'account for gross receipts.'

20. One other question has been raised on the construction of Section 76, Clause (1), namely, that the mortgagees are liable only for the total receipts or in other words for the total amount of rents and profits actually collected by them and not for those left uncollected'.' Section 76(1) no doubt speaks only of receipts and under that section it will be difficult to make the mortgagees liable for uncollected rents and profits as the Subordinate Judge has done. But Section 76(b) imposes on the mortgagee in possession the duty of collecting the rents and profits and the last clause of the section makes them liable for any loss resulting from their failure to perform that duty. Their liability for uncollected rents and profits extends therefore only to the extent to which it can be brought within those provisions and does not depend on Section 76(1). No doubt Section 77 provides that Clauses (b), (d), (g) and (h) of Section 76 shall not apply to cases where by the contract between the parties the mortgagees are to take the receipts from the mortgaged property towards interest as was the covenant in the contract before us. But when on deposit of the mortgage money in Court that covenant ceased to be in force, the excepted clauses became applicable to the mortgagees.

21. We have now to consider what deductions the mortgagees are entitled to. As regards the Government revenue alleged to have been paid, it seems clear they were entitled to pay it under Section 76(c) and on the view I have taken, they are entitled to credit for it in the mortgage account. Collection charges were also properly incurred by them under Section 72(a) and they are entitled to credit for them also. The last item is the charge for repairs. This seems to stand on much the same footing. After the deposit was made in Court and the covenant for taking the usufruct for interest ceased to be in force, Section 77 ceased to apply and Section 76(d) became applicable thereafter. The mortgagees were therefore entitled to pay the charges for any necessary repairs from the rents and profits and claim credit in the account.

22. No other question has been argued in this appeal. A fresh finding must be called for from the Subordinate Judge as to the proper amount payable by the mortgagees to the plaintiff for the faslis in question and subsequent faslis so far as necessary in the light of the above observations. In talcing the account items 6 and 9 will also be included. Fresh evidence may be taken and the finding returned at the same time as the finding in the connected appeal and ten days will be allowed for objections as in that case.

23. The Memorandum of Objections as to costs will stand over for disposal with the appeal.

24. In pursuance of the order contained in the above judgment, the Subordinate Judge of Rajahmundry found in A.S. No. 352 of 1918 that the proportionate amount of the mortgagedebt chargeable upon items 6 and 9 was Rs. 17,272; and in A.S. No. 222 of 1919 that the mesne profits which the plaintiff was entitled to get from the several items for faslis 1326 to 1330, i.e., for 3 years from the date of the preliminary decree, for which period it was that under the terms of that decree the plaintiff would be entitled to recover mesne profits were as follows:

Amount.

No. of item. Rs. A. P.

Item 1 .. .. 15,366 0 0

Item 2 .. .. 1,375 0 0

Items 3 to 5 270 0 0

Item 6 .. .. 462 12 0

Item 7 .. .. 1,525 12 10

Item 8 .. .. 85 9 0

Item 9 .. .. 12,168 1 9

Total.. 31,254 3 7

25. In Appeal No. 352 of 1918: This is an appeal against the preliminary decree in Original Suit No. 4 of 1917 on the file of the Court of the Temporary Subordinate Judge of Rajahmundry. The learned Subordinate Judge has now returned the finding that the amount of the mortgage debt proportionately chargeable on items Nos. 6 and 9 is Rs. 17,272. Neither party has objected to this finding. The total amount of Rupees one lakh paid into Court having been withdrawn by the mortgagees they must refund the above amount (Rs. 17,272) on their being allowed to retain possession of items Nos. 6 and 9 without those items being included in the redemption decree. To avoid any further complications we direct the mortgagees, defendants Nos. 1 to 38, to pay into the lower Court the abovementioned amount within a fortnight from this day. We make this order as the parties agree to it without prejudice to their contentions. The appeal is adjourned to 21st August, 1922 for final orders.

26. In Appeal No. 222 of 1919: This is an appeal against the final decree passed in O.S. No. 4 of 1917. In that suit this Court called for a fresh finding from the Subordinate Judge as to the proper amount payable by the mortgagees to the plaintiff for the faslis in question and subsequent faslis from 1326 to 1330 taking into consideration the deductions to be allowed to the mortgagees. The Subordinate Judge has now returned his findings as regards the profits the mortgagees are in his opinion accountable to the mortgagor for the faslis in question.

27. As regards items 2, 3, 4, 5, 7 and 8 there is no dispute raised by the defendants (mortgagees) or by the mortgagor. The dispute is confined to item 1 and items 6 and 9. As regards item 1, the first objection taken is that the estimate' of the Subordinate Judge of the profits payable for faslis 1326 and 1327 by the mortgagees is excessive. It seems to have been argued in the lower Court that it was not open to the mortgagees to raise the question as the previous proceedings barred them from doing so, but we think it is not necessary in the circumstances to go into that question, for it is sufficient to find on the mortgagor's second contention that there was no true deficit in the collection in those faslis. The Subordinate Judge has discussed the evidence bearing upon this point at some length. We entirely agree with him that the evidence is quite inadequate to establish that there was any deficiency whatever and that any tenant had failed to pay his rent for those faslis. The evidence of D.W. 6, as the Subordinate Judge points out, is practically mere hearsay evidence. It is, Strictly speaking, not admissible. The evidence of. D. W. 7 is quite indefinite and inconclusive, and not supported by any accounts. Although it is admitted that there were Chittas and Averjas for those faslis, none of them has been put into Court and proved. Furthermore, as we have already held in our previous judgment, the mortgagees would be liable-to account even for the amount that he has failed to collect if the failure was due to his failure to use his best endeavours to collect them; and there is evidence on record to show that, if there was any failure to collect the whole of the rent, that must have been due either to indifference or negligence on the part of the mortgagees to collect. In these circumstances we agree with the Subordinate Judge that the mortgagees were rightly debited with the total amount of rent payable upon these lands for the faslis in question by the tenants in occupation.

28. There is a second point raised with reference to item I and that refers to the complaint made by the plaintiff that he did not get possession of 19 acres and odd cents in item 1 when he got possession thereof. The Subordinate Judge has found it proved on this point that the 19 acres and odd were not really put in possession of the mortgagor. So far we are in agreement with him, for there is no contradiction of what the witness D.W. 7 says on the point; but on the question whether the mortgagees (defendants) are liable to account for the profits of these 19 acres for the faslis in question, we regret we are unable to accept the Sub-Judge's view. There is nothing on record to show that the failure to obtain possession of these 19 acres was due to any default on the part of the mortgagees. The Court directed the whole of the item to be put in possession of the mortgagor. If he had not been so put in possession, it was his duty to complain to the Court and point out that he had not been so put in possession and ask the Court to direct the judgment-debtors (the mortgagees) to so put him in possession but he did not do any such thing. He seems, according to the evidence of the mortgagees, to have been obstructed by somebody in actual possession of the land against whom it is said he Had taken proceedings to clear the obstruction and has now brought a suit. There was no complaint to the Court of any short delivery, as the Subordinate judge points out, nor was any intimation given to the defendants that there was any difficulty on account of short delivery. The evidence seems to indicate that the plaintiff had adopted the method of suing the party in possession and recovering the property from him with mesne profits. That assumes that the property is not held by the person in possession at the instance of, or under, the judgment-debtors. There is also no direct proof thru the abstractors were put in possession by the judgment-debtor or that they were holding it for the benefit of the judgment-debtors. If they were either trespassers or were persons who were already Buchi Sarva-in possession before the mortgage was created, the mortgagees would not be under any obligation to give vacant possession to the plaintiff. They were bound to give such possession as the mortgagor gave to them. In these circumstances, considering that the plaintiff has chosen to seek other means to get profits from the party in possession, it is not right to make the defendants liable for such profits of the 19 and odd acres included in item 1 and we disallow that. In this view it is 'not necessary to go into the question of quantum of profits of these 19 acres.

29. These are the only objections with reference to item 1. Now as regards items 6 and 9 it is contended before us that, some of the mortgagees having purchased the equity of redemption of those items, they are not bound to give the profits of those lands to the plaintiff. Some question was raised whether this point was not covered by our previous judgment but assuming that we did not expressly decide the question though our observations would seem to indicate that we were rather inclined to think that the defendants would be liable for such profits, we have come to the same conclusion now and hold that the defendants are liable to make good to the plaintiff the profits of these lands as well. The plaintiff had paid info Court one lakh of rupees, the total of the mortgage amount and the plaintiff was entitled therefore, as we have already held, to get possession of the whole of the lands, and of course he would have then been able to collect the profits of all the lands. It is only as a matter of convenience and concession to the defendants we have allowed them in this suit itself to retain items 6 and 9 on payment of the proportionate amount of the mortgage debt chargeable on those items. Strictly they were bound to hand over possession of the mortgaged properties on payment of the lakh of rupees into the Court. If they did not draw out the money it was their own fault. In those circumstances' it is clear that the plaintiff is entitled to the profits on these items up to the date when the defendants pay back into Court the Rs. 17,000 and odd the debt chargeable upon these two items.

30. As regards item 6 there is no dispute as to the amount of profits. But as regards item 9 a dispute has been raised by the defendants (mortgagees) as to the quantum of profits charged against them for faslis 1328, 1329 and 1330. It is admitted the charges are correct for faslis 1326 and 1327. The contention here is very much like the contention as regards item 1. What the mortgagees say is that they were not able to collect the whole of the rents payable by the tenants according to their engagements, and that there was a deficiency in fasli 1328 of about 16 puttis, in fasli 1329 of about 12 puttis and in fasli 1330 of about 7 puttis, the normal rent payable being 44 puttis and a sum of Rs. 100. As regards the deficiency alleged, the Subordinate Judge has found that such an allegation has not been proved and, on a consideration of the whole of the evidence bearing upon it, we are not prepared to say that the evidence is such as to justify us in reversing that finding. No evidence on the point has been given by the persons who actually collected the rents. Certain books are produced which were books kept in the head office in Masulipatam, but they were books written up from chittas and other notes which had been sent by the persons who collected rents. Such chittas are not produced, nor are those accounts of the actual collections proved. In those circumstances it is difficult to say that the defendants have discharged their burden of proof that there was really a deficit in collection in spite of their best endeavours. They were certainly under a duty to keep proper accounts and if they have not done so and are put to any loss in consequence, it is their own fault. We accept the Sub Judge's finding that for these faslis also the rent collected should be taken to be the same as the rent collected for the two previous faslis.

31. There is further, as We have already pointed out, in respect of item (1) the fact that on the evidence of the defendants themselves it would seem that they did not use their best endeavours to collect the rents, that they did not effect the necessary repairs and that they somewhat neglected the collection because of the pendency of this suit. The difference in the amount as expressed in rupees of the rent of these lands in the plaintiffs account is due to the fact that the price of the paddy was different in the different years but they all represent the value of 44 puttis of paddy and the Rs. 100 tent payable each year. In these circumstances, we accept the Subordinate Judge's finding that on item 9 the amount of profits payable by the mortgagees to the mortgagor is what he finds it to be, namely, Rs. 12,168-1-9.

32. These are the objections raised by the defendants in this Court. The plaintiff has also filed objections claiming that he should be granted interest on the profits from the date of collection. We think he has not established that claim. After all, what he was entitled to under Section 76, Clause (1) of the Transfer of Property Act is the gross receipts by the mortgagees from the date when he had paid the money into Court. We could not construe that as meaning that interest is also payable upon the amouts collected.

33. As regards the deductions made on account of Government revenue and other charges there is no dispute between the parties. Those items are accepted by them both.

34. Now a further claim has arisen in favour of the plaintiff (mortgagor) on account of the lapse of time, for at the time when the Subordinate Judge estimated the amounts payable by the defendants to the plaintiff fasli 1330 had come to an end and fasli 1331 was beginning; now that fasli has also come to an end. The plaintiff is therefore entitled to. get added on to the figures found by the Subordinate Judge the rents and profits for fasli 1331 so far as lands which were not given possession of with crops standing on them before the end of fasli. That is a matter which we cannot dispose of at this moment but the parties have stated before us that, if they are given a little time, they would file statements and that possibly they could agree as to the amounts to be added and there would be no necessity to keep this suit on the file of Court any further; for this purpose alone we shall give them a short adjournment. The plaintiff would file a statement and give a copy of it to the other side in ten days' time. The defendants will then have a week to say whether they agree to it or if they disagree, to file a statement. We will defer passing final orders till the case is heard again on the 21st August.

35. There remains the question of costs raised in the Memorandum of Objections. The first Court gave the plaintiff costs of the preliminary decree, but as regards the final decree it made each party bear its own costs. On hearing both sides we are inclined to think that there is no sufficient cause for interfering with the discretion exercised by the Court in that matter except as regards the stamp duty payable on the amount which should have been decreed to the plaintiff by the lower Court according to the views we have now expressed.

36. As regards the costs of this Appeal No. 222, we direct each party to bear its own costs.


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