Report No. 70
74.21. Recommendation as to last paragraph.-
So far as the language of the last paragraph of section 76 at present goes, there is, in our opinion, support for the Bombay view in the words-"when account are taken in pursuance of the decree made under this chapter." Adopting the Bombay view, which we find sound on principle and in conformity with the wording of the section, and to avoid any controversy, we recommend that at the end of the last paragraph, the words "nothing in this section shall entitle the mortgagor to institute a separate suit in respect of such loss" should be added.
74.22. Section 76(i).-
Under section 76(i), when the mortgagor tenders, or deposits in the manner hereinafter provided, the amount for the time being due on the mortgage, the mortgagee must, notwithstanding the provisions in other clauses of this section, account for his receipts from the mortgaged property from the date of the tender or from the earliest time when he could take such amount out of a court, as the case may be, and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property. This clause also needs no comments.
We may close this discussion of section 76 by observing that the paramount duty of the mortgage is to spend money in the due management of the property with the right to claim an allowance for the money spent by him where the law so permits. The distinction between repairs or moneys spent for the preservation of the property-which are the main heads in section 76-on the one hand, and improvements and accessions to the property on the other hand, may often turn out to be a fine one and not easy of application in a particular case. In general, "due management" of the property means management in the same way as person of ordinary prudence in the management of his own property-compare section 76(a).
As Ghose has pointed out,1 an owner who does not venture to make an immediate outlay on permanent repairs is not generally regarded as an ideally prudent man. He has also pointed out that undue emphasis on a distinction between improvements and repairs may paralyse the management of all estates in the possession of the mortgagee. This comment is 'made by him in the context of his criticism of a Madras case.2
In that case, the judges laid down without any reservation that unless the expenditure was necessary to preserve the property from destruction no allowance whatever should be made to the mortgagee for his outlay. In the Madras case, the repairs effected were-raising a wall, renewal of tiling, putting up a tiled verandah for a thatched one, and building some "pials" for the protection of the house.
The Subordinate Judge was of the view that these were necessary for the preservation of the house, but the High Court held that the mortgagee was not entitled to the benefit of the expenditure unless it was necessarily incurred for the preservation of the property.
We are mentioning this case to show how fine is the line of distinction between necessary repairs substantial repairs, improvements and more decorations.
We have no change to recommend in section 76 on this point.
1. Ghose Law of Mortgage in India, (1902), p. 644.
2. Arunachella Chetty v. Sithayi Ammal, 1896 ILR 19 Mad 327.
Appendix to Chapter 74
Select Cases on Section 76(A)
1. Sachalmal Parasram v. Ratanbai, AIR 1972 SC 637: (1972) 1 SCA 527.
2. All India Film Corporation Ltd. v. Sri Raja Gyan Nath, AIR 1969 NSC 185: (1969) 3 SCC 79.
3. Prabhu v. Ram Deo, AIR 1966 SC 1721: (1966) 3 SCR 676.
4. Asa Ram v. Ram Kail (Mst.), AIR 1958 SC 183: (1958) Bom SCR 986.
5. Harihar Prasad Sirtgh v. Deonarain Prasad, AIR 1958 Born 53.
6. Mahabir Gope v. Harbans Narain Singh, AIR 1952 SC 206: (1952) SCR 775.
7. Tajammul Hussain v. Mirkhan, AIR 1974 All 234 (FB).
8. Kamlakar and Co. v. Gulaamshafi, AIR 1963 Born 42.
9. Bhanshali Kheshal Chand Raniji v. Shamji Jivaraja, AIR 1958 Born 53.