Basmati Devi Vs. Chamroo Sao & Ors
 INSC 111 (3 April 1964)
03/04/1964 GUPTA, K.C. DAS GUPTA, K.C. DAS
CITATION: 1964 AIR 1707 1964 SCR (7) 633
RF 1966 SC 126 (7)
Mortgage--Execution of mortgage bonds--Liability
to pay rent to both mortgagor and mortgagees-Mortgaged lands sold for default
of payment of rent-Purchase by mortgagees-If the -right to redeem exists-If the
principle of s. 90 Trusts Act applies -Trusts Act, s. 90.
The plaintiff brought a suit for redemption
of a large num- ber of usufructuary mortgages in favour of the defendants.
The case of the plaintiff was that under the
terms of the mortgage bonds the mortgagees were liable to pay rent to the land
lord. The mortgagees, however, defaulted in the payment of rent for some years.
A suit for arrears of rent was brought by the land lord and a decree obtained.
In execution of the decree the lands were sold. According to the plaintiff, the
purchasers of the mortgaged lands were only benamidars of defendants 1 and 2
and other mortgagees.
The plaintiff claimed that the right of
redemption was not affected by the Court sale because the purchase was for the
benefit of the plaintiff. The suit was contested by defendants 1 and 2 only. Their
case was that the right of redemption had been extinguished by the court sale;
that the purchasers were not the benamidars of the defendants. The Trial -Court
dismissed the suit. On appeal, the Additional District Judge set aside the
judgment of the Trial Court and passed a preliminary decree for redemption.
Against this decree the two defendants
appealed to the High Court. The appeal was heard by the Division Bench.
The High Court held that in the present case
s. 90 of the Trusts Act did not apply because the court sale took place due to
the default of the mortgagor as well as the mortgagees. In this view the High
Court set aside the decree of the first Appellate Court and restored the decree
of the trial court.
Held: The fact that the mortgagor had made a
default, does not alter the position that the mortgagee had also defaulted in
paying the rent he was liable to pay. By his default he has contributed, to the
position that a suit had to be brought for arrears of rent and ultimately to
the position that the property was put to sale in execution of the decree
obtained in the suit. This contribution to the bringing about of the sale was a
direct result of his position as a mortgagee. When therefore he purchased the
property himself at the sale in execution of the rent decree he clearly gained
an advantage by availing himself of his position as a mortgagee. This is the
position of law even if the mortgagee's liability was to pay less than the
major portion of the rent of the holdings. In this view s. 90 of the Trusts Act
applies to the facts of this case.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No.241 of 1961.
Appeal from the judgment and decree dated
March 4, 1958, of the Patna High Court in Appeal from Appellate Decree No. 1335
634 R.S. Sinha and R.C. Prasad, for the
Sarjoo Prasad and B. P. Jha, for the
respondents nos. 1 and 2.
April 3, 1964. The judgment of the Court was
delivered by DAS GUPTA, J.-This appeal arises out of a suit for re- demption of
a large number of usufructuary mortgages in favour of the defendants. The
plaintiff who owned 1.67 acres. of lands which were recorded in Khata 56 and
10.56 acres in Khata 57 in village Sarifabad gave 1.27 acres out of Khata 56
and 8.24 acres out of Khata 57 lands in mortgage to the several defendants by
separate mortgage bonds. Part of the remaining land was sold by him and the
rest settled by him with the first defendant on Batai terms.
The plaintiff's case is that under the terms
of the mortgage bonds the mortgagees were liable to pay rent to the landlord.
The mortgagees however defaulted in the payment of rent for some years. A suit
for the arrears of rent was brought by the landlord and a decree obtained. In
execution of the decree the lands were sold. The purchasers were one Besolal
and Mst. Kirti Kuer, who according to the plaintiff, were only benamidars of
defendants 1 and 2 and other mortgagees. It is his case that this purchase
enured for the benefit of the mortgagor, that is, the plaintiff, and so the
right of redemption of the mortgagees has not been affected. The prayers were for
declarations that the purchase was for the benefit of the plaintiff and for
redemption of the mortgagees.
The suit was contested by defendants 1 and 2
only. Of these defendants, Chamroo Sao is the purchaser, and Besolal, defendant
2 is the son of the other purchaser Mst. Kirti Kuer. They denied the allegation
that Besolal and Mst.
Kirti Kuer were their benamidars and
contended that the right of redemption has been extinguished by the court sale.
The Trial Court held that the plaintiff had
failed to show that the auction purchasers were benamidars of the mortga- gees
and in that view dismissed the suit.
On appeal, the Additional District Judge,
Patna, came to a contrary conclusion. He held that the put-chase, though in the
name of Besolal and Mst. Kirti Kuer was really by the, first and the second
defendants. He also accepted the plaintiff's case that under the terms of the
mortgage bonds the mortgagees were liable to pay the rent and the rent sale
having been brought about due to the default of the mortgagor and the mortgagee
they could not be allowed to take advantage of the sale. So, according to the
learned Judge, the equity of 635 redemption in favour of the plaintiff still
subsisted and that he was entitled to redeem the mortgaged property.
Accordingly, he set aside the judgment of the
Trial Court and passed a preliminary decree for redemption.
Against this decree the two defendants
appealed to the High Court of Patna. The appeal came up for hearing in the
first instance before a Single Judge (Mr. justice Sahai). On a consideration of
the evidence, he was of opinion that the liability of rent of 2.67 acres was
upon defendant I and that payment of rent of 87 acres which was purchased and
1.76 acres which was taken in ijra, the total being 2.43 acres, was upon
defendant 2, that for payment of rent of 3.83 acres was upon the other
defendants, and the plaintiff was liable to pay the rent of only about 3.39
acres out of the entire area of 1.67 acres of Khata no. 56 and 10.65 acres of
Khata no. 57. The question which therefore arose was whether s. 90 of the
Trusts Act would operate to keep the equity of redemption alive in cases where
the sale took place due to the default of the mortgagor as well as the
mortgagees, the default on the part of the mortgagees, who purchased the
properties at the sale being also substantial.
The learned Judge referred this point for
decision to a Division Bench.
The Division Bench of the High Court held
that s. 90 of the Trusts Act did not apply to these circumstances. In this view
the High Court allowed the appeal, set aside the decree of the first appellate
court and restored the decree of the Trial Court.
The present appeal by Mst. Basmati Devi, who
is the legal representative of the original plaintiff who was substituted in
his place, is against the High Court's decision dismissing the suit.
In coming to a conclusion that s. 90 of the
Trusts Act did not apply to cases where the sale took place due to the default
of the mortgagor as well as the mortgagee, the High Court appears to have
followed a number of previous decisions of the same High Court.
In support of the appeal it is urged that the
view taken by the High Court in the present case as well as the previous
decisions of the Patna High Court is incorrect and defeats the very object of
s. 90 of the Indian Trusts Act. Section 90 of the Indian Trusts Act is in these
words: - "Where a tenant for life, co-owner, mortgagee or other qualified
owner of any property, by availing himself of his position as such, gains an
advantage in 636 derogation of the rights of the other persons interested in
the property, or where any such owner, as representing all persons interested
in such property, gains any advantage, he must hold, for the benefit. of all
persons so interested, the advantage so gained but subject to repayment by such
persons of their due share of the expenses properly incurred, and to, an
indemnity by the same persons against liabilities properly contracted, in
gaining such advantage." The question for consideration is whether in
circumstances like the present where the decree and the sale in execution of it
are brought about by the default of both the mortgagor and the mortgagee, the
mortgagee can be said to have taken advantage of his position by purchasing the
property at the sale. The High Court appears to think that unless the sale was
brought about by the default of the mortgagee alone the mortgagee cannot be
said to have taken advantage of his position in making the purchases. What
seems to have weighed with the learned Judges is that even if the mortgagee had
done his duty by paying the rent he was liable to pay, the sale would still
have taken place as the mortgagor did not pay that portion of the rent which he
was liable to pay. So, they thought that the mortgagees, though they took
advantage of the fact that the property had been brought to sale, could not be
said to have taken advantage of their position as mortgagees.
With this view we are unable to agree. In our
opinion, the fact that the mortgagor had made a default, does not alter the
position that the mortgagee had also defaulted in paying the rent he was liable
to pay. By his default he has contributed to the position that a suit had to be
brought for arrears of rent and ultimately to the position that the property
was put to sale in execution of the decree obtained in the suit. This
contribution to the bringing about of the sale was a. direct result of his
position as a mortgagee.
When therefore he purchased the property
himself at the sale in execution of the rent decree he clearly gained an
advantage by availing himself of his position as a mortgagee.
This, in our opinion, is the position in law
even if the mortgagee's liability was to pay less than the major portion of the
rent of the holdings. Whether this would be true even where the portion which
the mortgagee is liable to pay is so very small that the property is not
ordinarily likely to be brought to sale for that amount, it is unnecessary for
us to decide in the present case.
In the present case, the finding is that the
liability of the defendants 1 and 2 was to pay a substantial portion of the
rent. To say in such circumstances that they did not take 637 advantage of
their position as mortgagees is entirely unrealistic Such a construction would
put a premium on dishonesty on the part of mortgagees whenever the entire
burden of payment of rent was not left squarely on the mortgagee as under the
provision of s.76 of the Transfer of Property Act.
Mr. Sarjoo Prasad, who appeared before us on
behalf of the respondents, tried to persuade us that in any case the
plaintiff's suit should fail as regards the lands recorded in Khata No. 57. As,
according to him, these mortgagees were not at all liable to pay any portion of
the rent of this holding. He drew our attention in this connection to Ex. 2,
the mortgage bond executed in favour of Chamroo Sao, and to the statement made
therein: "Annual rent payable to the zamindar is the concern of me, the
executant". This argument proceeds on the basis that the holding recorded
in Khata No. 57 continued to be separate and distinct from the Khata No. 56. It
is thus in direct conflict with the plea of these very defendants in their
written statement that the two holdings had been consolidated into one holding
with one rental. As the oral and documentary evidence on the Paper Book
prepared in the appeal did not clearly show whether or not these two holdings
had become one, we called for one of the documents, Ex. B which seemed likely
to throw some light on the matter. The document has now been received. It is
the copy of a judgment of a suit between these parties in which this very
question, viz., whether the two holdings had been consolidated into one or not,
was raised. It was decided hat such consolidation had taken place. It is clear
that it was after such consolidation that the second rent suit was brought in
respect of that consolidated holding and it was that consolidated holding which
was sold in execution of the decree. It is clear therefore that the mortgage
bond Ex.2 in which the mortgagor accepted liability to pay rent to the zamindar
in respect of the mortgaged land in Khata No. 57 does not affect the
correctness of the High Court's finding that the liability to pay rent of the
holding that was sold was partly of the mortgagor and partly of the mortgagees
and, that it was the default of both the mortgagor and the mortgagees that
brought about the sale.
Accordingly, we allow the appeal, set aside
the judgment and decree of the High Court and restore the decree made by the
Additional District Judge, Patna. A Pleader Commissioner shall be appointed by
the trial court on a deposit of Rs.
50/- as his fees by the present appellant
within two months from this date for taking accounts as to the amount due to
the defendants on the date of the decree. A preliminary decree for redemption
shall be passed in the usual terms.
As the suit as also the appeal before the
District Judge had been brought in forma pauperis the High Court made an order-
638 directing the plaintiff to pay the court-fee on the plaint as well as on
the memorandum of appeal. That order is set aside. Instead, we order the first
and the second defendants in the suit to pay the court-fee payable on the
plaint as also on the memorandum of appeal. The present appeal to this Court
has also been brought by the appellant as a pauper. As she has succeeded in the
appeal, we order the contesting respondents, i.e., the first and the second
defendants, to pay the court fee payable on the memorandum of appeal to this
court. The appellant will get her costs from the first and the second
defendants through out.