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Report No. 70

70.8. Accession by mortgagor's representatives.-

Section 70 is silent as to the person by whom the accession is made. The accession may be made-(a) by natural causes, such as alluvion, or (b) by the mortgagor, or (c) by any other person. A building or other structure erected by the owner on his own land will be an accession as is shown by illustration (b) to the section. The words "mortgagor" and "mortgagee" in this section as well as in section 63 will include their representatives, and the principles applicable to buildings erected on mortgaged land by a mortgagor or a mortgagee will apply equally to their representatives.1

The improvements effected, and new buildings constructed, on the properties which have fallen to the share of the mortgagor or his transferee must be treated as accessions to the mortgaged property and, as such, available for the satisfaction of the mortgage debt.2 Thus, the auction-purchaser in execution of a prior mortgage decree will be a representative of the mortgagor and a building erected by him on the land will be an accession to the property to the security of which the mortgagee would be entitled.3

1. AIR 1931 All 277 (286).

2. AIR 1933 Lah 771 (773).

3. AIR 1931 All 277 (286).

70.9. Case law.-

At this stage, it may be helpful to refer to a few illustrative cases in India. In a Bombay case,1 the High Court has held as follows:,-

"On the principle of the maxim quibuid plantatur solo cedit (whatever is attached to the earth becomes part of it), any building constructed on the mortgaged plot becomes a part of that, and an accession to it. If a mortgagor mortgages a house and thereafter makes an addition to the house--e.g. by enlarging the bathroom-all these additions would go as security to the mortgagee. Therefore, where a shop is mortgaged with the site on which it was standing and the shop is subsequently destroyed by fire and a new shop is constructed in its place, the new shop must be deemed to be an "accession" to the mortgaged property within the meaning of section 70"

In one Calcutta case2 after execution of the simultaneous mortgages in respect of a house and certain lands appurtenant thereto, the mortgagor erected two other houses on the lands, and subsequently executed various mortgages in respect of the several houses. The decree in the suit by the fourth mortgagee directed that the whole of the property should be sold free of encumbrances in separate lots, and the sale proceeds should be distributed among the various mortgages in accordance with their priorities. The property more or less pledged by each mortgage and their sale-proceeds were insufficient to pay off the mortgages.

It was held that for the purpose of the security of the two prior mortgages, the two new houses were "accessions" to the mortgaged property and became incorporated with the original subject of the security, as though they had been in existence at the time when the original security was given.

In one case,3 the Allahabad High Court has held that a condition in a mortgage that if the mortgagee constructed a new building by demolition of the mortgaged property which was a katcha structure, the mortgagor would pay the cost of construction at the time of redemption was not, in the circumstances of the case, a clog on the equity of redemption.

1. Shripad Laxman v. Kashibai, AIR 1945 Born 248 (DB).

2. Krishna Gopal v. Miller, (1902) 29 ILR 803 (Cal).

3. Chhedi Lal v. Babu Nandan, AIR 1944 All 205 (DB).

70.10. Substituted property.-

On the question whether the right of redemption of the mortgagor goes to the extent of covering property which has been substituted, a Privy Council case1 is of interest. An Oudh talukdar granted an usufructuary mortgage of a portion of his taluk, in respect of which there existed certain subordinate birt tenures. The mortgagee having subsequently acquired these birt tenures by purchase did not, as he might have done, keep them alive as distinct sub-tenures, but treated them as merged in the taluk.

The mortgagor, many years after, brought a suit for redemption, when the question arose, whether, upon repaying the sum expended by the mortgagee in the purchase of the birts, in addition to the amount due on the face of the mortgage-deed, the plaintiff was entitled to the possession of the estate as then enjoyed by the mortgagee, or whether the mortgagee was entitled to retain the birt rights and interests purchased by him as an absolute under-proprietary tenure in subordination to the talukdar, and to have a sub-settlement on that basis.

It was held by the Privy Council that the plaintiff on repayment of the original mortgage debt, and on reimbursing the defendant the sum expended in purchasing the birt, was entitled to re-enter on the estate with all the rights and privileges enjoyed by the latter.

1. Kishen Datt v. Mumtaz Ali, 1878 ILR 5 Cal 198 (PC).

70.11. In a Nagpur case,1 a proprietary share in a village was mortgaged along with some air fields "with reservation of occupancy rights of cultivating these air fields". Later on, the mortgagor sold his equity of redemption and then surrendered his tenancy rights in the sir fields to the transferee. In his suit on the mortgage, the mortgagee contended that with the possession of both proprietary and tenancy rights by the transferee the tenancy rights disappeared and that improved the security of the mortgagee and should be regarded as an accession within the meaning of this section.

It was held that this was not a case of accession. It was a case of construction of the mortgage deed. The mortgagee was taking as his security the proprietary right in certain indicated fields, i.e., the right to receive rent in respect of the land, and not the land itself. That subsequently his mortgagor transferred the land to another, did not make any difference.

The question has arisen with reference to movables also.

1. (1941) Nag LJ 35 (36) (DB) (Yearly Digest).

70.12. Comparison with section 63.-

Both sections 63 and 70 are based on the principle that the accessory follows the principal. But under section 70, the mortgagee is entitled to the security of the accession, whether acquired by himself or by the mortgagor. If it is acquired by the mortgagor, the mortgagee is not bound to bear any portion of the expenses incurred by the mortgagor in acquiring such accession. Under section 63, however, the mortgagor is not entitled to certain accessions acquired at the expense of the mortgagee, unless he pays the expenses.

70.13. Duration.-

Section 63 provides that the accession should be received during the continuance of the mortgage. Section 70, while stating the fact that the accession should have been received "after the date of a mortgage" does not expressly state whether it should have been received during the continuance of the mortgage. But this position is implicit in the words "for the purposes of security".

It has been held by the High Court of Madras1 that even for the purposes of section 70, the accession must have been received before the mortgage becomes extinguished. Accordingly, the acquisition by the mortgagor, after the mortgaged property has been sold in execution of the mortgaged property has been sold in execution of the mortgage decree, cannot be considered as an "accession" to the mortgaged property within section 70.

1. AIR 1921 Mad 627 (628, 639).

70.14. No change.-

The subject being of an abstruse character, we have discussed the section in its theoretical and practical aspects, but no change is required.

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