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Bomma Naicker Vs. Mariayayye Ammal and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1971)1MLJ345
AppellantBomma Naicker
RespondentMariayayye Ammal and ors.
Cases ReferredRamsdon v. Dyson
Excerpt:
- - , as he then was, on 25th april, 1962. in the second appeal, a further question arose as to the right to recover the value of the improvement said to have been effected in the form of digging a well in the property by the predecessors-in-interest of the respondents herein. with regard to the value of the said improvement as well the liability to pay the same by the present appellant, the matter was remanded. the first court will now specifically consider whether there is a well in the said items, which was not in existence at the time of the original transaction, and whether defendants are not entitled to the value of the well on the ordinary presumption that, since it is an artificial construction which came into existence during the period of the mortgage it must have been.....m.m. ismail, j.1. the appellant herein was the second plaintiff in o.s. no. 525 of 1957 on the file of the court of the district munsif of kulitalai and the second respondent in i.a. no. 114 of 1963 therein. the suit itself was one for redemption of the mortgage instituted by the first plaintiff, who is dead, on the basis of a document dated 4th august, 1930, executed by the first plaintiff's predecessors-in-interest in favour of the respondents' predecessor-in-interest. that document was in the form of an absolute sale with a condition that the vendee should recovery the property, whenever the vendor paid the consideration. in the suit for redemption that document was construed as a mortgage by conditional sale and the suit for redemption was decreed. the conclusion that the transaction.....
Judgment:

M.M. Ismail, J.

1. The appellant herein was the second plaintiff in O.S. No. 525 of 1957 on the file of the Court of the District Munsif of Kulitalai and the second respondent in I.A. No. 114 of 1963 therein. The suit itself was one for redemption of the mortgage instituted by the first plaintiff, who is dead, on the basis of a document dated 4th August, 1930, executed by the first plaintiff's predecessors-in-interest in favour of the respondents' predecessor-in-interest. That document was in the form of an absolute sale with a condition that the vendee should recovery the property, whenever the vendor paid the consideration. In the suit for redemption that document was construed as a mortgage by conditional sale and the suit for redemption was decreed. The conclusion that the transaction constituted a mortgage by conditional sale was confirmed by the first appellate Court and by this Court in Mariyayi Ammal and 4 Ors. v. Family Manager, Rengappa Maicker S.A. No. 405 of 1960, disposed of by Anantanarayanan, J., as he then was, on 25th April, 1962. In the second appeal, a further question arose as to the right to recover the value of the improvement said to have been effected in the form of digging a well in the property by the predecessors-in-interest of the respondents herein. With regard to the value of the said improvement as well the liability to pay the same by the present appellant, the matter was remanded. This is what this Court stated on that occasion:

The first Court will now specifically consider whether there is a well in the said items, which was not in existence at the time of the original transaction, and whether defendants are not entitled to the value of the well on the ordinary presumption that, since it is an artificial construction which came into existence during the period of the mortgage it must have been constructed only by them. The question whether, under law, the defendants are entitled to the entire value of that improvement, will, of course, also have to be gone into by the trial Court and embodied in the final decree.

It is thereafter, I.A. No. 114 of 1963 wag filed by the respondents herein under Order 34, Rule 8, Code of Civil Procedure, to direct the appellant herein to pay the respondents a sum of Rs. 2,000 by way of compensation for improvement said to have been effected in respect of item 1 of the suit property. In this interlocutory application, two questions arose. One was the fact and value of the improvement and the second was the liability of the appellant to pay the said value. As far as the fact and the value of the improvement was concerned, the learned District Munsif came to the conclusion that the well was dug by the mortgagee and its value was Rs. 1,000. With regard to the liability of the appellant to pay the said value, the learned District Munsif negatived the same. Before the learned District Munsif and in the affidavit filed in support of the said interlocutory application, the claim was made on the basis of Section 63-A of the Transfer of Property Act, hereinafter called the Act, and the learned District Munsif pointed out that no case had been put forward, nor had it been proved so as to invoke Section 63-A(2) of the Act. With reference to Section 63-A(1) of the Act, the learned District Munsif pointed out that there was no contract between the parties to pay the value of the improvement by the mortgagor and therefore the respondents herein were not entitled to the same. An argument was advanced that the respondents herein would be entitled to the said value under Section 51 of the Act and that claim also was negatived by the learned District Munsif. In this view, the said Interlocutory application was dismissed by the learned District Munsif on 17th December, 1964. Against the said dismissal, the respondents herein preferred an appeal to the learned District Judge of Tiruchirappali, who, on 7th December, 1965, allowed the appeal. The learned District Judge confirmed the conclusion of the learned District Munsif, on the value of the improvement, but he differed with regard to the right of the respondents herein to receive the said value. He pointed out that the construction of the well in a pucca way had been done 12 years after the document, dated 4th August, 1930, and under Section 51 of the Act, the respondents would be entitled to the said value. For the purpose of coming to this conclusion, he primarily relied on a decision of this Court in Pandiyan Pillai v. K.V. Vellayappa Rowther and Anr. : AIR1918Mad572 . It is against the judgment and decree of the learned District Judge that the present second appeal has been preferred by the second respondent in the interlocutory application who was the second plaintiff in the suit.

2. The contention of the learned Counsel for the appellant is that Section 51 of the Act has no application to the case of mortgage, since it is Section 63-A of the Act that is exclusively applicable and also on the facts and circumstances of this case, Section 51 of the Act cannot be applied. The learned Counsel for the respondents counters this contention. Therefore, the question for consideration is whether the view of the learned District Judge is correct.

3. For the purpose of considering this question, it is desirable to refer to the statutory provisions themselves. In the first place, Section 51 of the Act is as follows:

Section 51. When the transferee of immovable property makes any improvement on the property believing in good faith that he is absolutely entitled thereto, and he is subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell his interest in the property to the transferee at the then market value thereof, irrespective of the value of such improvement.

The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction.

When, under the circumstances aforesaid, the transferee has planted or sown on the property crops which are growing when he is evicted therefrom he is entitled to such crops and to free ingress and egress to gather and carry them.

This section (Section 51) occurs in Chapter II of the Act under the heading 'of Transfers of property by act of parties'. Chapter IV of the Act deals with mortgages of immovable property and charges. Section 63 dealt with accession to mortgaged property. It provided that where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, received any accession, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession; where such accession has been acquired at the expense of the mortgagee and is capable of separate possession or enjoyment without detriment to the principal property, the mortgagor desiring to take the accession must pay to the mortgagee the expense of acquiring it; if such separate possession or enjoyment is not possible, the accession must be delivered with the property and the mortgagor is liable, in the case of an acquisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal money with interest. Section 72 of the Act dealt with the rights of mortgagee in possession and Section 72(b) provided that a mortgagee may spend such money as is necessary for the preservation of the mortgaged property from destruction, forfeiture or sale, and may, in the absence of a contract to the contrary, add such money to the principal money, with interest. Thus, it will be seen that there was no specific provision in Chapter IV of the Act dealing with mortgages to cover a case where a mortgagee in possession effects improvements. It is in this situation there was a conflict of decisions by the Courts in India with regard to the right of a mortgagee in possession to recover the value of improvements effected by him.

4. In Arunachala Chetti v. Sithayi Ammal and Anr. I.L.R.(1896) Mad. 327, a Bench of this Court held that in view of Section 72(b) of the Act, if the expenditure incurred was not necessary to preserve the house from destruction, the mortgagee was not at liberty to effect improvements and charge the mortgagor therewith. This decision was followed by a Bench of the Allahabad High Court in Rupan Singh v. Champalal I.L.R.(1915) All. 81. That case dealt with a mortgage of a house, the mortgagee being in possession. A portion of the house consisting of a kachcha room fell down. The mortgagee replaced this at a cost of Rs. 147-6-0, making it pucca. But he then proceeded to add without the consent of the mortgagor an upper storey at a cost of Rs. 113 and a stair-case costing Rs. 46-8-6, and on suit by the mortgagor for redemption, he claimed a right to add the various sums so spent to the principal mortgage money. The Allahabad High Court agreed with the District Judge and allowed the cost of a new room which was put up in replacement of the kachcha room that fell down, but disallowed the claims in respect of the other two items. With regard to those two items, the learned Judges pointed out that they altered the whole character of the house and were certainly not covered by any of the provisions of Section 72 of the Act and if regarded as accessions to the property acquired at the expense of the mortgagee, they were not necessary to preserve the property from destruction or made with the consent of the mortgagor, and as they could not be separated from the rest of the property without detriment to it, the mortgagor was not bound to pay the cost of them under Section 63 of the Act. The contention of the mortgagee was that Section 63 was inapplicable and that apart from Section 72 or any other provision of the Act, he was entitled to be recouped the cost of the upper storey and stair-case on the ground that they were lasting improvements reasonably made for the benefit of the property which added to the selling value thereof and for this purpose relied on another decision of the Allahabad High Court, which followed and applied the decision of the Court of Appeal in Shepard v. Jones (1882) 21 Ch.D. 469. The learned Judges pointed out that even assuming for the moment that the Court was entitled to go outside Section 72 of the Act and apply the decision in Shepard v. Jones (1882) 21 Ch.D. 469, to the case before them, they found nothing in that decision which in any way helped the appellant mortgagee and in their opinion the mortgagee had no right whatever to add an upper storey to the house for his own benefit and at the expense of the mortgagor, and considering the value of the original house, they could not hold that the expenditure incurred was reasonable. The following observations of the learned Judges are significant:

Nothing is said in the Act about compensation for improvements and we think that the Legislature advisedly refrained from including in the Act any provision which would enable a mortgagee, without consent of the mortgagor, to add to and improve, or alter the property. Such a power in the hands of the ordinary mortgagee in this country would obviously lead to much litigation, and the Legislature was, we think, well advised in restricting the powers of the mortgagee within narrow limits.

5. Another Bench of the same High Court in Gopi Lal and Ors. v. Abdul Hamid and Ors. : AIR1928All381 , pointed out:

Section 51, Transfer of Property Act, is to be found in Chapter II of the Act which deals with general principles. It has not found place in Chapter 4 which deals with mortgages. Section 63, Transfer of Property Act, deals with cases like the one before us. Under Section 63, when a mortgaged property receives an accession and that accession is acquired at the expense of the mortgagee, certain rights and liabilities follow. We find, therefore, that a specific rule of law has been enacted for the purposes of guiding the Courts where the mortgagor and the mortgagee are concerned. Only when special rules are not available it would be necessary to fall back on general rules. In this view, Section 51, Transfer of Property Act, should have no application to the present case.

It may be mentioned that that decision also dealt with a case of improvements by a mortgagee and the learned Judges have taken a rather extreme view, since Section 63 of the Act dealt with a case of accession, while Section 51 of the Act dealt with a case of improvement and therefore it could not have been stated that both the sections dealt with the same subject-matter, one being general and the other being special and the special excluded the applicability of the general.

6. The decisions on the other side were mostly those of the High Court of Bombay. Nijalingappa Nijappa Halagatti v. Chanbasawa Kom Satavirappa Nesari and Anr. I.L.R.(1919) 43 Bom. 69, was a case relating to a suit for redemption in which the mortgagee claimed that he had improved the property by sinking a well at a cost of Rs. 1,300 and he must be paid the same. Batchelor, Acting C.J. stated:

The point is not perfectly clear by reason of the silence of the Transfer of Property Act upon the question of the mortgagee's rights to recover from his mortgagor the reasonable and proper costs of lasting improvements. It is consequently contended on behalf of the Respondents that a mortgagee in India is not entitled to make any such claim. In support of that argument Counsel cited the decision of the Madras High Court in Arunachalla Chetty v. Sithayi Animal I.L.R.(1896) Mad. 327. No doubt if reference be made to the phraseology of Section 72 of the Transfer of Property Act, there is room for the contention that the mortgagee is not entitled to improve the property, though he may spend money in preserving it, and in managing it, as a person of ordinary prudence would manage it, as he is required to do under, Section 76. I am also bound to admit that I do not think that the case before us can fairly be brought within the purview of Section 63 of the Act, which makes provision for accessions to mortgaged property.

I think we are confronted with the plain question whether silence of the Transfer of Property Act upon this point should lead the Court to decide that a mortgagee in India is never entitled to recover from his mortgagor the reasonable costs incurred in lasting improvements. In my opinion this question should be answered in favour of the mortgagee. If the Indian Statute had expressly deprived the mortgagee of this right, there would of course be an end of the matter. But the Statute has not done so, and from its mere silence I am not prepared to infer that the intention of the Legislature was that this right should never be recognised.

Marten, J., who constituted the other learned Judge of the Bench, stated:

As regards the 'point under the Transfer of Property Act, I think that the silence of the Act does not prevent us from doing what is spoken of by their Lordships of the Privy Council in Henderson v. Astwood L.R. (1894) A.C. 150 , as common justice, namely, in a proper case to allow a mortgagee the benefit of money laid out by him so far as it has enhanced the value of the mortgaged property.

However, the learned Judge added the following caution, namely, 'that in allowing the costs of improvements, the Court must naturally be on its guard against extravagant or unfounded claims. It was said in argument that if we were to allow a mortgagee to charge for improvements, the Courts might be exposed to all sorts of extravagant demands on the part of the mortgagees. The answer is that the Court should inquire strictly into the bona fides and fairness of the claim in each particular case.'

7. The next decision of the Bombay High Court is that rendered in Dnyanu Laxuman Gaikwad v. Pakira Waled Ebram Lohar I.L.R.(1921) 45 Bom. 1301. That case also dealt with a claim of the mortgagee, in a suit for redemption, for the value of the improvements. The learned Judges in that case, did not actually decide the question in terms of the provisions contained in the Transfer of Property Act and were more guided by the general sense of equity, to allow a reasonable value of improvements effected by the mortgagee. Macleod, C.J., pointed out:

Assuming for the purpose of argument that the decision in Nijalingappa v. Chanbasawa I.L.R.(1919) 43 Bom. 69, is corect and that the mortgagee was a bona fide purchaser and therefore he is entitled to what has been spent on reasonable lasting improvements apart from the provisions of Section 72 of the Transfer of Property Act, it becomes a question what are reasonable improvements. To begin with, there is the principle of equity that the mortgagee should not be allowed to improve the property to such an extent as to deprive the mortgagor, in effect of the right to redeem. In the case referred to, the improvement which the mortgagee asked for was less than the value of the mortgage and in the case of Shepard v. Jones (1882) 21 Ch.D. 469, the case relied upon in Henderson v. Astwood L.R. (1894) A.C. 150, the cost of the improvements asked for was 83 on a mortgage of 4,000. I do not think that this aspect of the question was properly considered by the Court below. We have no doubt that it is unreasonable that a mortgagee could ever be allowed to improve the mortgaged property to the extent of twenty or twenty-three times the mortgage amount, which would have the result in most cases of depriving the mortgagor of his right to redeem.

After referring to the facts that the defendants in that case had the advantage of their improvements for a considerable number of years and to some extent they must have been paid for the cost of their improvements, the learned Judges allowed a sum of Rs. 1,200 by way of value of the improvements to the defendants-mortgagees. Thus, though the learned Judges did allow a sum of Rs. 1,200 for the value of improvements, it cannot be said that they have decided that case specifically on the basis of the liability of the mortgagor to pay the same, either under Section 51 or under any other particular principle of law.

8. It is in this state of conflicting decisions, the Transfer of Property (Amendment) Act (XX of 1929), introduced Section 63-A of the Act, which is as follows:

63-A. (1) Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement; and the mortgagor shall not, save only in cases provided for in Sub-section (2), be liable to pay the cost thereof.

(2) Where any such improvement was effected at the cost of the mortgagee and was necessary to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient or was made in compliance with the lawful order of any public servant or public authority, the mortgagor shall, in the absence of a contract to the contrary, be liable to pay the proper cost thereof as an addition to the principal money with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent, per annum, and the profits, if any, accruing by reason of the improvement shall be credited to the mortgagor.

The relevant notes on clauses, which was annexed as an appendix to the Report of the Special Committee, to which the Bill drafted by the Legislative Department of the Government of India was submitted for scrutiny states:

Section 63 applies to accessions only; There is no express provision in the Act allowing a mortgagee to make improvements to the mortgaged property. In the absence of such express provision it has been held in some cases that a mortgagee is not entitled to charge or obtain any compensation for improvements made in Arunachala Chetty's case I.L.R.(1896) Mad. 327 : I.L.R.(1915) All. 81. On the other hand, some Courts following the English decisions in Shepard v. Jones 21 Ch.D. 469, Sandon v. Hooper 6 Beav. 246, Henderson v. Astwood L.R. (1894) A.C. 150 have held that a mortgagee should have a charge for improvements if they are reasonable. According to the English Law, as summarised by Fisher on Mortgage (Article 1782, 6th edition), 'the improvements must always be reasonable having regard to the nature and value of the estate; for, if it were not so, a weapon would be put in the mortgagee's hands with which he might greatly clog the right of redemption; which he has no right to make more expensive than is necessary to keep the estate in good repair and working order and to protect the title.' The English cases on the subject are also reviewed in Coote on Mortgage, where it is pointed out that the later decisions are more favourable to the mortgagee than the older authorities. In the 8th Edition of Coote on Mortgage, the law is thus expounded (p. 1232):

Unless the sanction of the mortgagor has been obtained, the mortgagee will not be allowed for substantial repairs, not being strictly necessary, or for improvements, unless the value of the property has been increased there by.... Indeed, according to some older cases, even substantial improvements have been disallowed, unless done with the consent of, or acquiescence after notice by, the mortgagor. A mortgagee can hardly be said to be safe in making improvements in the mortgaged property without such consent or acquiescence. But the tendency of later decisions appears to be more favourable to the mortgagee in this respect and it has been laid down that, prima facie, a mortgagee who had expended money in improvements is entitled to an enquiry whether the outlay has increased the value of the property, and to be allowed such, outlay so far as the value is proved to have been increased thereby.

We prefer to adopt in India the view summarised in Fisher on Mortgage except that we do not consider it desirable to leave it to the Court to determine in each case what improvements are reasonable and what not. We accordingly propose to have a uniform and definite rule, namely, that no mortgagee shall be entitled! to charge for any improvements unless they are made to preserve the property from destruction or deterioration or unless they are necessary to prevent the security from becoming insufficient or made in compliance with the lawful' order of any public servant or public authority. We accordingly propose to add a new Section 63-A dealing with improvements. We have throughout guarded the right of private contract.

Fort St. George Gazette - Part III dated 7th May, 1929 - pages 42 to 133 : at 73.

9. The following significant features can be noticed in Section 63-A of the Act: (1) This section expressly and specifically deals with improvements made by, a mortgagee in possession to the mortgaged property. (2) Under Sub-section (1) the Mortgagor will be entitled to the improvement, in the absence of a contract to the contrary and this sub section does not restrict the nature or the purpose of the improvement. (3) Sub-section (2) deals with improvement which is necessary to preserve the property from destruction or deterioration or which is necessary to prevent the security from becoming insufficient or which is made in compliance of the lawful order of any public servant or public authority. In such cases, the mortgagor is liable to pay the proper costs of such improvement, in the absence of a contract to the contrary.

10.In view of the existence of this specific provision dealing with improvements effected by a mortgagee in possession to the mortgaged property, the question for consideration is whether any reliance can be placed upon Section 51 of the Act for allowing the cost of improvements to a mortgagee. This question arises in this form, because in the present case, it is admitted before me that it does not come under Section 63-A of the Act; the improvement in the present case was not effected for one or more of the purposes mentioned in Sub-section (2) of Section 63-A of the Act and there fore the case does not fall within the said sub-section. There was no case that there was a contract to the contrary as contemplated by Sub-section (1) of Section 63-A of the Act and consequently Sub-section (1) also is not attracted.

11. For more than one reason, I am of the view that Section 51 of the Act cannot be invoked by the respondents (in the present case. In the first place Section 51 is a general provision dealing with improvements effected by a transferee to the transferred property, while Section 63-A is a special provision dealing with improvements effected by a mortgagee in possession. It is well settled that a special provision excludes the applicability of a general provision. It is in this context, I shall have now to examine the decision of this Court in Pandiyan Pillai v. K.V. Vellayappa Rowther and Anr. : AIR1918Mad572 , on which reliance is placed by the learned District Judge a3 well as by the learned Counsel for the respondents before me. That case dealt with a suit for a declaration that the property in the suit was liable to be attached in execution of a decree obtained by the plaintiff against the second defendant. The second defendant had mortgaged the property in 1894 to the first defendant. But in 1901, the second defendant had transferred the patta to the first defendant. In October, 1912, the plaintiff attached the property in execution of his decree. The first defendant preferred a claim which was allowed. Thereupon, the plaintiff instituted the suit. The contention advanced on behalf of the first defendant was that the mortgage was an anomalous one, that the condition for converting it into an absolute sale after four years worked itself out, and that the first defendant became the absolute owner. The learned Judges of this Court did not accept that contention and they found that it was a combination of a usufructuary and simple mortgage and as such is covered by the exception mentioned in Section 98 of the Act. They also added that in that view, the condition for converting the mortgage into a sale was a clog on the equity of redemption which should be relieved against. Rejecting the other case that the mortgagee acquired title by prescription to the property, the learned Judges held that the plaintiff had a right to attach the property. Thereafter the following passage occurs in the judgment:

The last question relates to improvements. We are not determining their value. But as the decree of the District Judge says that the plaintiff should sell the property subject only to the mortgage, it is necessary to point out that the sale should be subject to the value of the improvements if any, as well. No doubt it is only when the 1st defendant is evicted that he can claim to be paid their value; but nonetheless, the decree should make it clear that the sale is subject to the value of improvements and that the 1st defendant is entitled to be paid their value before eviction.

We feel no doubt that the 1st defendant was a bona fide transferee. We think that all that the Courts should require of him is proof that he made the improvements honestly believing that he was the owner of the property.

After referring to a few decisions, the learned Judges proceeded to state as follows:

The principle of Section 51 of the Transfer of Property Act is applicable to this case. See also Henderson v. Astwood (1894) A.C. 150, Mr. Krishnaswami Aiyar, vakil for the respondent, contended that as the document is incapable of conferring title as owner, there can be no question of bona fides in making improvements. If the transferee acted recklessly and in utter disregard of obvious facts, he could not be said to be acting bona fide. That was all that was laid down in Maddusami Siddappa v. Bhaskara Lakshmi Narasappa (1915) 29 M.L.J. 357. In the present case, the form of the document and the conduct of the mortgagor and of the mortgagee show that the first defendant honestly believed himself to be the owner of the property.

12. In my opinion, this decision does not in any way help the case of the respondents. In the first place, this decision was rendered before the introduction of Section 63-A of the Act by the Amendment Act XX of 1929. Consequently, this cannot be authority for the proposition that Section 51 applies to such cases even after the enactment of Section 63-A. Secondly, there is absolutely no discussion whatever in the judgment as to the language of Section 51. The judgment merely refers to the argument of the Counsel for the respondent that the document being a mortgage, it was incapable of conferring the title as owner, but does not deal with that argument. Lastly, the whole decision can be distinguished, as has been done by the Allahabad High Court in Gopi Lal and Ors. v. Abdul Hamid and Ors. : AIR1928All381 , referred to already This is what the learned Judges of the Allahabad High Court say with reference to this decision, namely Pandiyan Pillal v. K. V. Vellqyappa Rowther and Anr. : AIR1918Mad572

It does not discuss the law and makes no reference to Section 63, Transfer of Property Act. Their Lordships were of opinion that the mortgage was an anomalous one under Section 98, Transfer of Property Act, and that fact, partially at least, influenced their judgment. Further, if we look to the facts of the case, we shall find that it was not a suit for redemption at all. It appears that a mortgagee executed certain improvements on the mortgagor's property and then the mortgaged property was attached at the instance of a simple money decree-holder who held the decree against the mortgagor. The mortgagee, thereupon preferred a claim which was allowed. Thereupon the decree-holder brought the suit in order to obtain a declaration that the property was liable to be sold and the question arose whether the amount of the mortgage money alone should be notified as a charge on the property or also the value of the improvements. It will be noticed that the case was somewhat similar to English cases cited above. If the decree-holder was going to sell the property with the improvements and if he was going to enjoy the benefit of a larger value due to the execution of the improvements, it was not fair that the party who made the improvements should have H his costs of the improvements paid to him. These were the facts of the case, and, on right principles the case is no authority for what we should do in a suit for redemption.

The English cases referred to are the same, namely, Shepard v. Jones (1883) 21 Ch.D. 469 and Henderson v. Astwood L.R. (1894) A.C. 150.

13. I asked the learned Counsel for the respondents to bring to my notice any decision of any Court in this country applying Section 51 of the Act to a case of improvement effected by a mortgagee in possession, after Section 63-A of the Act was introduced into the statute. Learned Counsel after taking time for the purpose confessed that he was not able to place his hands on any such decision.

14. Even assuming that Section 63-A of the Act does not exclude the application of Section 51 of the Act to the case of improvements effected by a mortgagee in possession, still in my view, the said Section 51 in terms has no application. Section 51 refers to a transferee of immovable property being evicted therefrom by any person having a better title. The mortgagor suing for redemption or recovery of possession cannot be said to be a person having a better title, evicting the person in occupation. When the section uses the expression 'any person having a better title.' it contemplates a person other than the transferor and from the very nature of the case it cannot refer to the transferor himself. The expression, 'a better title' must necessarily mean title better than that of the transferor because the section assumes that the transferee acquires title from the transferor and therefore the title of the transferor and the transferee are one and the same. Further, if the transferor happens to be the evictor asserting a better title, other considerations such as ithe transferor being estopped from derogating from his own grant will arise. No doubt there is a stray sentence in the judgment of the Bombay High Court in Harilal Ranchod and Ors. v. Gordhan Keshav and Ors. : AIR1927Bom611 , wherein it is stated:

It is argued for the appellants that that section only applies, if the transferor is not the evictor. But in our judgment that is not the true view of the section, and we see no reason why its operation should be cut down in the way suggested. On the contrary, in Durgozi Row v. Fakeer Sahib I.L.R.(1906) mad. 197 : 1906 17 M.L.J. 9, a case of Mohammedans, where a mother, purporting to act as de facto guardian of her minor son, sold property and it was held that the sale was not binding. Sir Arnold White and Mr. Justice Subrahmanya Ayyar held that Section 51, Transfer of property Act, applied. Accordingly the transferee from the mother was held entitled to have an account taken of the improvements effected by him.

There is no reason given in the judgment for coming to the conclusion that the section contemplates the evictor being the transferor. Secondly such a conclusion was not necessary for the disposal of the case, because that was a case in which the mortgage was executed by the father on behalf of the minor son in 1901 and subsequently the uncle of the minor, purporting to act as his guardian redeemed the mortgage and sold the property and it is after all these in 1921, the son instituted the suit for redemption of the mortgage. Certainly, the son (assuming that he could be properly termed as an evictor) was not the transferor, since it was his father who mortgaged the property. Thirdly, the decision of the Madras High Court referred to therein dealt with the case of a sale effected by a Muhammadan mother as de facto guardian of the minor son, where subsequently the minor son sought to recover possession of the property on the ground that the sale was not valid. Hence the evictor was different from the transferor and therefore the decision could not have been an authority for holding that under Section 51 of the Act, the transferor himself can be evictor. Even the expression, 'evicted' occurring in Section 51 does not appear to be appropriate or apposite to the recovery of possession of the property by a mortgagor from the mortgagee. Section 60 of the Act dealing with the right of the mortgagor to redeem merely refers to the mortgagor requiring the mortgagee, where the mortgagee is in possession of the mortgaged property, to delivery possession thereof to the mortgagor. Article 148 of First Schedule to the Limitation Act, 1908 and Article 61(a) of the Schedule to the Limitation Act, 1963, also contemplate a mortgagor redeeming the mortgage or; recovering possession of the immovable property mortgaged. Hence the expression, 'evicted by any person having better title' occurring in Section 51 of, the Act will be totally inappropriate and; inapposite to the mortgagor recovering; from the mortgagee possession of the mortgaged property and therefore Section 51 of the Act can have no application to a case of improvements effected by the mortgagee in possession. 15. There is one decision of this Court which, though not elaborate, is conclusive on this point and binding on me, namely, P. Subbiah Iyer and Anr. v. Pichiah Pillai and Ors. : (1970)1MLJ132 . In that case there was an othi with a condition that if the othi was not redeemed within 7 years, the mortgagee would become absolutely entitled to the property on the expiry of the said period of 7 years. The mortgagee subsequently alienated the property and the mortgagor's representatives filed a suit for redemption. The defence was that the defendants became absolutely entitled to the property and alternatively they contended that they had spent a sum of Rs. 4,500 by way of improving the property and claimed the same. A Bench of this Court held that the clause in the othi giving the mortgagee the absolute title to the mortgaged property, if the mortgagor failed to redeem within a period of 7 years would be a clog on the equity of redemption. With regard to the question of improvements, after referring to the decisions of this Court in Arunachala Chetti v. Sithayi Animal I.L.R.(1896) mad. 327 and Pandian Pillai v. Vellayappa Rowther : AIR1918Mad572 and that of the Allahabad High Court in Gopilal v. Abdul Hamid : AIR1928All381 , this Court pointed out that there is a distinction between a suit against a mortgagee and the one against an absolute transferee from the mortgagee and a mortgagee as a mortgagee cannot claim for the value of improvements under Section 51 of the Act. The Court also pointed out that a suit for redemption against a mortgagee in possession would fall under Article 148 of Schedule I of the Limitation Act, 1908 while a suit for recovery of possession of the property which has been mortgaged but subsequently transferred by the mortgagee for valuable consideration is governed by Article 134 of Schedule I of the Limitation Act, 1908 and Section 63-A of the Act will apply to a case of the mortgagee claiming the value of improvements and a transferee of the mortgaged property as such from a mortgagee as distinguished from an assignee from a mortgagee will be entitled to claim the value of improvements only under Section 51 of the Act. The learned Judges stated:

It is true a mortgagee as a mortgagee cannot claim for the value of improvements under Section 51 of the Transfer of Property Act as his claim would be governed by Section 63-A Thus if a mortgagee transfers or assigns his mortgage right to another, the transferee would also be a mortgagee, whose claim for improvements would fall under Section 63-A of the Transfer of Property Act. The claim of the first defendant in this case which is governed by Article 134 of the Limitation Act clearly falls within the terms of Section 51 of the Transfer of Property Act and there is nothing on principle to deprive him of the benefits of that section.

Thus, this decision is an authority for the proposition that the claim for improvements effected by a mortgagee in possession is solely governed by Section 63-A of the Act and not by Section 51 of the Act.

16. There remains only the last consideration with regard to the applicability of Section 51 of the Act. One of the conditions for the application of Section 51 is that the transferee must make an improvement on the property 'believing in good faith that he is absolutely entitled thereto.' In the case of ordinary mortgage, it is impossible to hold that the mortgagee can ever believe in good faith that he is absolutely entitled thereto. Even assuming that in certain circumstances and in view of the special features, a mortgagee may be held to have believed in good faith that he was absolutely entitled thereto, no such thing has been established in the present case. As a matter of fact, the learned District Judge does not find as a fact that the predecessor-in-title of the respondents in the present case believed in good faith that he was absolutely entitled thereto. As pointed out by this Court in Durgazi Row and Anr. v. Fakeer Sahib and Ors. (1907) 17 M.L.J. 9 : I.L.R. Mad. 197, the question whether a transferee of immovable property believes in good faith that he is absolutely entitled thereto is a question of fact. All that the learned District Judge appears to hold is that in this case the improvement has been done 12 years after the document dated 4th August, 1930, and therefore if really the document was an outright sale with condition to repurchase, such a condition could not have been in force after the period of 12 years' of the document and so, after the period of 12 years, if the mortgagee has effected improvements over the property, it cannot be stated that he was not acting under bona fide belief that he was the owner of the property. I am of the opinion that this is approaching the question from the wrong end. Simply because the well was dug after a period of 12 years from the date of the mortgage, it cannot be assumed that the improvement was effected by the mortgagee believing in good faith that he was absolutely entitled to the property. It may be mentioned here that the document itself did not prescribe a period of 12 years for repurchase. On the other hand, it provided that the vendee should resell the property whenever the vendor paid the consideration. Therefore, so long as that condition was present, prima facie, the predecessor-in-title of the respondents could not have believed, in good faith that he was absolutely entitled to the property. It is this Court, (Ahantanarayanan, J., as he then was) in S.A. No. 4.05 of i960 which pointed out:

Ordinarily, the limitation would appear to be three years, for the enforcement of an agreement to recovery property sold. In any event, it is indisputable that such an agreement should be enforced within 12 years, which is the maximum period within which property absolutely conveyed to another could be got back, without any question of adverse possession.

It is this observation which has been relied upon by the learned District Judge. However, in my opinion, the said observation of this Court, cannot retrospectively render the improvement effected, as one effected by the mortgagee believing in good faith that he was absolutely entitled to the property. It was not the case of the respondents that their predecessor-in-interest waited for a period of 12 years from the date of the mortgage for the repurchase of the property by the mortgagor and on the expiry of the said period of 12 years he honestly believed that the right of repurchase had become barred and therefore he had become absolutely entitled to the property and thereafter effected the improvement. The evidence in this case is not clear and specific. Exhibits A-1 and A-2 show that some sort of improvement was started in. 1939 and it was carried on till 1943. On the other hand, P.W. 1 had stated that 8 or 9 years after the purchase, his father dug the well and P.W. 5 had stated that 7 or 8 years after the purchase, the purchaser made improvements and then constructed the well. In view of these features, it is impossible to hold that when the predecessor-in-interest of the respondents improved or dug the well, he in good faith believed that he was absolutely entitled to the property.

17. On behalf of the Respondents, reliance has been placed on a few decisions, which, in my opinion, do not have any bearing on the present case. The first decision on which reliance has been placed is that on the Bombay High Court in Shiddappa Bin Mahalingappa and Anr. v. Pandurang Vasudev Chate I.L.R.(1923) 47 Bom. 696. That case related to a suit filed by a reversioner to recover the property mortgaged by a widow. The question for consideration was whether he could be held entitled to recover the property in the condition in which it was when the widow died. The learned Judges of the Bombay High Court pointed out that if the widow had sold the property, that sale would be voidable against the reversioner and the reversioner would be bound to pay the purchaser the amount by which the value of the property had been enhanced by the improvements effected by him and the position of the mortgagee who improves the property with the consent of the widow cannot be distinguished so as to prevent an equity in his favour from arising. Therefore, die learned Judges held that the reversioner was bound to compensate the mortgagee for what he spent, on the property, and if he was not prepared, the mortgagee was entitled to remove what he had placed on the property at his own expense. I am of opinion that this decision can have no bearing on the present question. That decision does not refer to or invoke Section 51 of the Act at all.

18. The next decision relied on is that of the Allahabad High Court in Kalyan Das v. Jan Bibi : AIR1929All12 . The facts in that case are somewhat complicated. But for our present purpose, it is enough to state that the mortgagor's sons sold the property absolutely without disclosing the mortgage and thereafter the mortgagee instituted a suit on his mortgage. The purchaser of the property had incurred expenses in rebuilding and improving the house. The question was whether the purchaser was entitled to the benefit of Section 51 of the Act. The learned Judges pointed out:

The crucial question in the case, is : Did the defendant reasonably and honestly believe that she was absolutely entitled to the property at the time when she put up the new building? If the defendant erroneously but honestly believed that she was absolutely entitled, to the property conveyed to her by Sri Kishan and that she was not a trespasser or an assignee from a trespasser and that she had not a limited interest in the property and was not a tenant, she was justified in spending money upon improvements by reason of the principle underlying Section 51, Transfer of Property Act. The Transfer of Property Act is not exhaustive and does not exclude any equitable principle such as may regulate the rights and liabilities of the parties in a case not specifically provided by the Legislature. It is doubtful how far Section 51, Transfer of Property Act, is in terms applicable to the facts of the present case. Mt. Jan Bibi has not been evicted from the premises by a person having a better title. It cannot be said that a prior simple mortgagee seeking to enforce the mortgage has a better title to the property. Nor can it be said that Mt. Jan Bibi is a person evicted from the premises by reason of the institution of the suit although she might ultimately be evicted at the instances of the auction-purchaser.' In construing Section 51, Transfer of Property Act, this Court has to adhere to the natural and etymological meaning, which can be assigned to the words ' evicted therefrom, by any person having a better title.' Mt. Jan Bibi not being a person evicted and, the plaintiff as prior simple mortgagee, having only a right to sell the property for the recovery of his mortgage dues, not being a person having a better title, Section 51, Transfer of Property Act, does not in terms apply, but, the rule of equity upon which Section 51 is based may very well be extended to the case of Mt. Jan Bibi and upon that basis the decree of the Court below may very well be affirmed.

I may mention that the decree passed in that case was that the defendant (purchaser) was entitled to recover Rs. 800 from the sale proceeds and the plaintiff was entitled to sell the property, conditional on payment of Rs. 800 to the purchaser. With regard to the application of Section 51 of the Act, this decision, far from helping the respondents, is against them. This decision bargained for the security as it was he was not entitled to take advantage of the subsequent improvement effected to the security and if he wants to bring the property to sale, as it is on the date of the sale, to realise his debt, he must give credit for the improvement to the person who effected it and he cannot have the benefit of that improvement.

19. The next decision relied on by the learned Counsel is Alagirisami Kone v. T. J. Andhoni : AIR1961Mad293 . That was a case in which a tenant made a claim for compensation for improvements effected by him, Jagadisan, J., after holding that Section 51 of the Act can have no application to such a case referred to the principle of equitable estoppel and the rule in Ramsdon v. Dyson (1866) L.R. 1 H.L. 129, and on the basis of that rule held that the tenant was entitled to compensation on the particular facts of that case. The learned Judge stated:

The tenant put up the superstructure in pursuance of an agreement with the landlord Subramania Iyer, that he will not be evicted, and that he will also have a right of pre-emption, namely, the first option to purchase the property from the landlord if and when he was inclined to sell. It is implicit in this agreement which has now been found as a1 fact by the Court below that the tenant will not lose the value of the superstructure in any event.

In view of this circumstance and the conclusion, that decision, in my opinion, has no relevancy to the present case.

20. Then, there remains the last argument advanced by the learned Counsel for the respondents, and that is, outside the provisions of the Act, the respondents herein will be entitled to the value of the improvements, on general grounds of equity. I am unable to see how much considerations can apply to the facts of the present case. In the first place, I have already held that in view of the presence of the clause providing for repurchase, whenever the consideration is repaid, in the original document, the predecessor-in-interest of the respondents would not have honestly believed that he was absolutely entitled to the property. Secondly, there is no case that the well was dug with the consent of the mortgagor. Such a case will be totally inconsistent with the actual case put forward by the respondents herein that the original transaction really amounted to an absolute sale. Thirdly, the respondents themselves and their predecessor-in-interest must have derived considerable advantage by the digging of the well and would have been paid more than what they actually spent during all these years. P.W. 1 himself in his evidence stated that they made improvements to the lands to deprive good income from the lands. There was no accountability on the part of the respondents with reference to the income derived from the mortgaged property and therefore for all these years they have enjoyed the benefit of the improvement in the shape of higher yield and income from the lands. Under these circumstances, I am unable to hold that the respondents herein are entitled to the value of improvements on any general considerations of equity.

21. Hence, the decision of the learned District Judge holding that the respondents herein are entitled to the value of improvements is incorrect in law. Accordingly, the second appeal is allowed and the judgment and decree of the learned District Judge are set aside and those of the learned District Munsif are restored. There will be no order as to costs.


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