(1) This second appeal and the memorandum of objections arise out of the decree and judgment of the learned Subordinate Judge of Ramanathapuram in A. S. No. 8 of 1954 modifying the decree and judgment of the learned District Munsif of Sattur in O. S. No. 209 of 1952.
(2) The facts are: Mussafar Rowther and his son Muhammad Sultan executed a mortgage in favour of Hameed Sultan executed a mortgage in favour of Hameed Rowther, father of defendants 1 to 3 for Rs. 272 on 1-8-1930; vide Ex A-1. The plaintiff has purchased the equity of redemption from the mortgagors under Ex A-4 dated 10-7-1952 for Rs. 300/- and filed the suit for redemption out of which this second appeal arises. Defendants 2 and 3 disclaimed any interest in the mortgaged property. It is unnecessary to go into the various points of controversy raised in the plaint and in the written statement because in this second appeal we are only concerned with the determination of the controversy whether the plaintiff is entitled to redeem the property for the amount mentioned in Ex. A-1 or whether he should also pay the mortgagee costs of repairs which have been assessed at Rs. 1000/- by the learned District Munsif and upheld by the learned Subordinate Judge.
(3) The point in controversy can be easily decided if we bear in mind the provisions of the Transfer of Property Act relating to (a) repairs and (b) improvements. For a thorough and lucid analysis of these sections (see AIR Commentaries, T. P. Act. Third Edition (1950) and Supplement brought upto 31-5-1954).
(4) Section 72 lays down that a mortgagee may spend such money as is necessary for the preservation of the mortgaged property from destruction and may, in the absence of a contract to the contrary and such money to the principal money. This head will include the cost of repairs of the mortgaged property: Arunachella v. Sithayee Ammal, ILR 19 Mad 327: Ibrahim v. Arumugathayee, AIR 1916 Mad 859. Section 76 states that when during the continuance of the mortgage the mortgagee takes possession of the mortgaged property, he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof after deducting from such rents and profits the payments mentioned in clause (c) of that section and the interest on the principal money: see clause (d).
This clause imposes on the mortgagee in possession the liability to make such necessary repairs of the mortgaged property as can be done out of the balance remaining after deducting from the rents and profits the payment mentioned in clause (c) and the interest on the principal money. To the extent of the balance his liability to make the necessary repairs is paramount: Shiva Devi v. Jaru Heggade, ILR 15 Mad 290. If loss is caused to the mortgagor by his failure to make such necessary repairs it may be debited against the mortgagee in the accounts to be taken in the settlement of the mortgage: (ibid).
He is, however, not bound to spend money any further than to keep the estate in necessary repairs. Nor is he bound, where the expenditure on the necessary repairs is likely to exceed the balance in his hands, to spend money out of his own pocket. If he does spend money out of his own pocket he cannot claim repayment from the mortgagor under this clause but will be allowed to add the expenditure to the principal money under S. 72, clause (b) if it is incurred for the preservation of the property from destruction: Sheo Nandan v. Mohammed Khalik : AIR1929All777 . The provisions of this clause are not absolute but are subject to a contract to the contrary.
(5) In regard to improvements S. 63A lays down that in order that a mortgagee may be entitled to the costs of an improvement made by him on the mortgaged property it must be shown that (1) it was necessary to preserve the property from destruction or deterioration, or (2) it was necessary to prevent the security from becoming insufficient, or (3) it was made in compliance with the lawful order of any public servant or public authority. The object of the restriction is to prevent the mortgagee from improving the property in such a way as to make it utterly impossible for the mortgagor with his means even to redeem it; in other words, from improving the mortgagor out of his estate; Per Lord Langdale in Sandon v. Hooper, (1843) 12 LJ Ch 309.
See for similar observations in Krishnamurthy Shetty v. Abdul Khadar, AIR 1956 Mys 14, wherein it has been said that the improvements must be reasonable having regard to the nature and value of the estate for if it were not so, a weapon would be put into the mortgagee's hands with which he might greatly clog the right of redemption. The right of the mortgagor to the improvement and the right of the mortgagee to the costs thereof are subject to any construct entered into by the parties in respect thereof: Sultan Khan v. Hari, AIR 1956 Bho 13; Chedilal v. Babu Nandan : AIR1944All204 . This, if a mortgagor has agreed to become liable for the costs of any improvement that the mortgagee might make, he would be so liable even though the improvements are not of the nature referred to in sub-s. (2) of S. 63A. The question whether there is a contract to the contrary and what is its nature depends on the facts and circumstances of each case. Where a mortgagee seeks to make the mortgagor liable for a large amount as cost of improvements it is his duty to establish by indubitable evidence the fact of the execution of such improvement and the actual expenses incurred: Sundaram v. Valia Mannadiar, AIR 1947 Mad 197.
(6) There can be no dispute in this case regarding the nature of the work done in regard to the hypotheca which has been mentioned as a house. The plan Ex. B-6 shows that the existing walls were raised and other repairs have been done and flooring had been done with cement concrete. In addition we have Ex. B-35, the account of the expenses incurred and Exs. B-36 and B-37 the bills for the purchase of building material. D. W. 5, a mason, has been examined. These works have been done under the Municipal license: vide Ex. B-3. The value of the property which was a dilapidated and practically ruined building, has been greatly enhanced by this expenditure estimated at Rs. 1000/- by D. W. 4, the Municipal Engineer and as the property-tax demand notices, receipts, registered rent deed, Exs. B-7 to B-34 show. The case for the mortgagee first defendant is that this expenditure had been incurred and the works carried out under the covenant in Ex. A-1 which is to the following effect:
'I shall myself carry out the repairs if any of schedule house after incurring expenditure. I shall myself pay the municipal tax. You yourself shall effect repairs at your expense and I shall pay the sum as per repair accounts when I pay the usufructuary mortgage amount at the expiry of the period and shall redeem the property.'
(7) Therefore, the next point for consideration is whether these works carried out by the mortgagee first defendant constitute repairs or improvements. In order to gather the meaning of the terms 'repair' and 'improvements' we must turn to (a) Standard Lexicons and (b) case-law on the subject; (c) and the classical treatise, Ghose, Law of Mortgages in India (T. L. L.).
Webstar's International Dictionary of the English Language (2 Vols).
Repair: Act of repairing: restoration, or state of being restored, to a sound or good state after decay, waste, injury, etc: supply of loss; reparation; mending. Also, an instance or result of such restoration--often in plural, as, the repairs to the house are extensive. Condition with respect to soundness need of repairing etc., as, a house in good, or bad, repair, or out of repair.
Improvement: A valuable addition, or betterment, as a building, clearing, drain, fence etc., on land.
Murray: New English Dictionary (10 Vols.).
Repair: The act of restoring to a sound or unimpaired condition; the process by which this is accomplished; the result attained.
Relative state or condition of something admitting or susceptible of restoration in event of actual or possible damage or decay; chiefly of buildings or other composite structures and in phrase, in good (or bad) repair.
Improvement: The action or process of making or becoming better; Advance or increase in value or excellence; betterment; amelioration. Act of making or becoming better; a process, change or addition, by which the value or excellence of a thing is increased; that in which such addition consists or by which anything is made better.
Funk and Wagnalls: New Standard Dictionary of English Language (1953).
Repair: To mend, add to, or make over; as, to repair a building.
The process or repairing; restoration after decay, waste, injury, or partial destruction; supply of loss; reparation; as, the repair of a building; often in the plural; as, to make repairs on a roof;
Condition after use, especially, good condition; condition after repairing as, in what repair is the house?
Improvement: A valuable or useful addition to or modification of something; as, buildings, fences, etc., are improvements of real estate; repairs or additions are improvements of buildings;
Ballantine: Law Dictionary (1954) (O. S. A.)
Repair: Under statutes authorizing special assessments for the reconstruction of street improvements, but not for the repair thereof, the work 'repair' contemplates an existing structure or thing which has become imperfect by reason of the action of the elements, or otherwise. Work done on a structure which has not been demolished, but which has been demaged. The word is to be distinguished from reconstruction which properly applies only to work done upon a structure which had been demolished in whole or in part.
It would be in violation of a proper construction of the term 'repair' to hold that it included an original improvement, or work of a different character from that previously done.
(48 Am Jur 604: Good Year Shoemachinery Co. v. Jackson, 60 C. C. A. (V.S.) 159; Vincent v. Froelich, (1898) 69 Am. St. Rep. 436, Santacruz v. Brodrick, (1896) 113 Cal 628).
Improvement: A word that includes everything that enhances the value of premises permanently for general uses. The erection of a building, making substantial changes or additions in existing buildings the laying of necessary side-walks and the digging of wells, are common illustrations. (27 Am. Jur. 260; 36 Am. Jur. 42).
Stroud's Judicial Dictionary. (Third edition) (1952).
Repair: To repair means to make good defects, including renewal where that is necessary, i.e., patching, where patching is reasonably practicable and, where it is not, you must put in a new piece.
....... But 'repair' does not connote a total reconstruction. (Inglis v. Buttery, (1878) 3 A. C. 552; Creg v. Planque, (1936) 1 K. B. 669; R. v. Epsom, (1863) 8 LT 383).
By an agreement to 'keep in repair' a house out of repair means that the contracting party is first of all to put it in good repair having regard to its age and its class......... semble, you are to take into consideration the condition of the premises at the time of the contract. (Lister v. Lane and Nesham, (1893) 2 QB 212.
......... It was held that though the covenant 'well and substantially repair..... and keep in thorough repair and good condition' the demised premises, did not involve the liability to create an entirely new subject matter, or an entire renewal from top to bottom, yet that the covenantor was bound to renew and rebuild any subsidiary part (e.g. the front all of the house demised) which was past ordinary repair (Lurcott v. Wakely (1911) 1 K. B. 905; London Corporation v. Great Western and Metropolitan Rly. Co., (1910) 2 Ch. 314; Hewitt v. Rowlands, (1924) 93 L. J. K. B. 1080).
To put premises in 'habitual repair' means to improve the state of repair, and render the premises reasonably fit for an ordinary occupier of such premises. (Belcher v. M'Intosh (1839) 8 C and P 720).
Improvement: A lease which expressly or impliedly empowers the making of 'improvements' probably justifies the conversion of the premises from a useless storehouse into useful dwellinghouses, especially if the term be a long one and the external walls be not interfered with. (Doherty v Allman (1878) 3 A. C. 709. Corpus Juris (U. S. A.): To sum up Repairing is in the language of 'the restoring of a decayed injured dilapidated or partially destroyed building to a more or less sound substantial state....... The word repairing has been distinguished from improvement.................. Repairs often used in the plural is not a technical suppression and invokes the idea of something pre-existing, the condition of which has been affected in one of the modes suggested and presupposes something in existence to be repaired or the existence of the thing to be repaired............ The term has been held to embrace rebuilding and to include improvements. (Pages 393-400--Topic--'Repair'.
In Nijalingappa v. Chanbasawa, : AIR1918Bom84 it was held that in a redemption suit, a mortgagee is entitled to recover from his mortgagor the reasonable and proper costs incurred in making lasting improvements viz., making he property more productive; and that in allowing costs of improvements the Court must naturally be on its guard against extravagant or unfounded claims and that it should inquire strictly into the bona fides and fairness of the claim in each particular case.
In Ramappa v. Yellappa, : AIR1928Bom150 , where the amount spent on improvements was five times the mortgage amount, the claim was not allowed, following Dnyanu Laxman v. Fakira Ebram, : AIR1921Bom250 . But the grounds on which this conclusion was arrived at are not indicated in the judgment. So this decision is not very helpful.
In Ram Asray v. Hira Lal : AIR1949All681 , it was held that where the mortgagee in possession of the mortgaged property which is a kuchcha building, demolishes the building and constructs a new pacca building without the consent of the mortgagor, the new construction is an improvement and cannot be described as an accession and that in the absence of any contract to the contrary, the mortgagor upon redemption is entitled to the improvement and shall not, save in cases provided for in S. 63A(2) of the Transfer of Property Act be liable to pay the cost thereof. See also Kukaji v. Misrilal, AIR 1952 Madh Bha 6 and Mahomeed Baba v. Mukhti, AIR 1953 J & K 14 ; AIR 1956 Mys 14, Hamappa v. Raman Gouda : AIR1956Bom575 .
(c) The following passage from Sir Rashbehary Ghose's Law of Mortgage in India (Tagore law Lectures) Fifth Edition, page 577 is apposite:
'................ There is an idea, erroneous, I take leave to think, that under the Transfer of Property Act, the mortgagee is not entitled to any allowance under the head of repairs except such as are absolutely necessary. It is thought that the mortgagee should merely preserve the estate in as good a condition as that in which he received it; and if he does more, he does so at his own risk. But surely the words of the Act 'the due management of the property' are wide enough to include all expenses which a prudent owner would incur for the profitable enjoyment of the land; as, for instance, money spent in repairing a well which has been rendered useless from natural causes or in constructing a substantial embankment in the place of an inferior structure for the better protection of the estate. Of course, if a mortgagee chooses to speculate and spend money in the hope that he would be able to improve the property, he must do so at his own risk. But it would seriously hamper the mortgagee and in the end might also be hurtful to the interest of the mortgagor himself, if the whole duty of the former was to restore the properly merely in the condition in which it was, when he assumed possession. 'I have no difficulty in saying', observed the Master of the Rolls in Hardy v. Reeves, (1799), 4 Ves. 466, 'that a mortgagee of a copy hold may pull down ruinous houses and build much better ones'; a remark the application of which, I may mention in passing, is not confined to cottages on a copyhold.'
(8) Bearing these principles in mind, if we examine the facts of this case, we find that by reason of the Covenant specifically entered into under the mortgage Ex. A-1, the works done by the mortgagee, the first defendant, at a cost estimated at Rs. 1000/-, whether looked upon as repairs or as improvements--all repairs are improvements, though all improvements are not repairs as the extracts given above show--should be taken into account and the mortgagee is entitled to be paid by cost of such works along with the mortgage money before being redeemed.
(9) I am not further discussing the points raised in the memorandum of objections, in view of the concurrent findings of the Courts below. The contention of the cross-objector is devoid of merits.
(10) In the result, both the second appeal and the memorandum of objections are dismissed and in the circumstances the parties will bear their own costs.
(11) No leave.
(12) Appeal dismissed.