(1) These second appeals by the defendant arise out of two suits. O. S. No. 289 of 1955 was to recover a certain sum of money with interest said to he due on a usufructuary mortgage dated July 10, 1948 executed by the defendant. O. S. No. 492 of 1955 was for a declaration of the respondent's title to the suit property and injunction restraining the appellant from interfering with his possession thereof. The circumstances in which the suits were brought were these. Originally the property admittedly belonged to the appellant. In execution of a small cause decree obtained against him the assignee-decree-holder one Krishnaswami Iyer purchased the suit property and obtained a sale certificate in his favour dated August 25, 1941. On July 10, 1948 under the terms of an arrangement under Ex. B.3, which is styled as an unregistered release deed executed by Krishnaswami Iyer in favour of the appellant the former relinquished his interest in the property in favour of the latter for consideration. On the same date, i.e., July 10, 1948 the appellant executed the usufructuary mortgage which is the subject-matter of. O. S. No. 289 of 1955. On July 12, 19511, the respondent obtained a sale of the property from Krishnaswami Iyer presumably in the view that Ext. B-3 was ineffective as a conveyance in favour of the defendant. On, the strength of the sale deed so obtained by him from Krishnaswami Iyer, the respondent sued for a declaration of his title to the suit property and for an injunction in O. S. No. 402 of 1955.
He also instituted 0. S. No. 289 of 1956 for recovery of the money advanced under the usufructuary mortgagee on the ground of failure of consideration because according to the respondent, the appellant had no title to the property. Both the suits were tried together and were disposed of by a common judgment. The trial court decreed O. S. No. 289 of, 1956 by directing the appellant to pay the respondent the sum of Rs. 800 with interest at the rate of 51/2 per cent per annum from the date of the plaint to the date of payment. O. S. No. 492 of 1955 was, however, dismissed on a finding that Ex. B-3 had conveyed title to the property. to the appellant. The respondent preferred appeals against both the decrees. The lower appellate court was of the opinion that Ex. J3-3, inasmuch as it was not registered was not valid as a conveyance of the suit property in favour of the appellant and that by virtue of the sale deed executed by Krishnaswami Iyer in favour of the respondent the latter had title to the suit property. It was also of the view that on the strength of a decision of Krishnaswami Nayudu, j., in Arumugha Thevar v. Chella Thevar, 1955 2 MLJ. 14, that the respondent was not estopped from denying the title of the appellant. In the result, the lower appellate court allowed the appeal arising out of O. S. No. 492 of 1955 and decreed the same. As regards the appeal arising out of the other suit, the lower appellate court on the basis of an endorsement of consent made by the respondent directed that he would be entitled to interest on the amount decreed only from the date of the trial courts decree. It is against these decrees the defendant has come up to this court, in second appeals.
(2) So far as the second appeal No. 348 of 1959 which arises out of O. S. NO. 289 of 1956 is concerned, it is convenient to dispose of it first. The only question in this appeal pertains to the interest allowed by the lower appellate court as aforesaid. The contention on behalf of the appellant is that inasmuch as the respondent is in possession of the property lie cannot be allowed any interest for the period of his possession. I think there is force in this contention. Both the courts below have found that the respondent was put in possession by the appellant pursuant to the Usufructuary mortgage. It is but right that although the respondent is entitled to a decree, as has been held by the courts below to recover the money due under the mortgage on the basis of the personal covenant contained therein, as he continues to be in possession, so long he will not be entitled to interest on the amount decreed. S. A. No. 348 of 1959 is allowed to that extent, and in other respects it will stand dismissed.
(3) In S. A. No. 349 of 1959. the main question is whether the respondent was not estopped from denying the title of the appellant so long as the relationship of mortgagor and mortgagee continued as between themselves. It is well established that a mortgagee who has been put in possession by the mortgagor pursuant to a mortgage is estopped so long as that relationship continues between them from denying the mortgagor's title to the property. The lower appellate court was well aware of this. But it considered that in the circumstances the rule of estoppel was not applicable to it. This is what the lower appellate court stated,
'The general rule is that the mortgagee cannot deny the right of the mortgagor but in extraordinary circumstances it can he done and authority if need be, can be found in 1955 2 MLJ 14. The said ruling would provide an effective answer to the contentions raised by the respondent and it would set the matter at rest. In this case the events that have happened subsequently do not warrant the application of the doctrine of estoppel. On the date of the execution of the othi deed the respondent had no title to the properties and if in spite of that he had deemed it fit to execute it he cannot rely upon it to non-suit the appellant.'
(4) It seems to me that the lower appellate court was in error in thinking that the said decision of this court has any application to the facts of this case. In 1955 2 MLJ 14, the mortgagor himself admitted that he had 110 title, that he was only a lessee and that the title was with his sister. In view of this admission Krishnaswami Nayudu, J. held that the rule of estoppel generally applicable to a mortgagor would not hold good. In this case there is no such admission. In fact, it was the case of the defendant that he was en-titled to the suit property by virtue of Ex. B 3. The trial curt upheld that contention, though the lower appellate court took a different view. Clearly, therefore, that decision does not help the respondent. Nor is the lower appellate court right in its view that because on the date of the execution of the deed the respondent had no tile to the properties, he could not, therefore, rely upon it to non-suit the appellant. This is obviously a wrong approach. It is only where the mortgagor's title is in doubt that there is any scone at all for Invoking the aid of the rule of estoppel. That role prevents the mortgagee from disputing the title of the mortgagor and its application cannot be avoided by going into the very question and finding that the mortgagor had no title on the date of the execution of the mortgage.
(5) The result is, the judgment and decree of the lower appellate court are set aside. S. A. No. 349 of 1959 is allowed. The decree of the trial court is restored. Tile appellant will have his costs in 8. A. No. 349 of 1959. There will be no order as to. costs in the other second appeal. No leave.
(6) Appeal partly allowed.