Chellasivalingam Nadar vs Aruldas and Others

Sethuraman, J.—The Second Appeal has been filed by the plaintiff in the Court of the learned Additional District Munsif, Nager-coil. The

plaintiff''s father was one Swamikkannu Nadar and the family owned the suit property. Swamikkannu Nadar, died in 1952. During his life time, he

was interested in toddy business. The plaintiff, the son of Swamikkannu, was then working in the Excise Department. Swamikkannu committed--

default in payment of amounts due to the Government with regard to the toddy contract.

The father and the son had executed a mortgage in favour of one Narayana Perumal Nadar on 29th February, 1934 with regard to the suit

property under Exhibit A-l. This property was sold in auction under the Revenue Recovery Act and Narayana Perumal purchased the entire

property of 1 acre and 87 cents in the revenue sale. A certificate under Exhibit B-1, dated 25th November, 1938 was granted to him and

thereafter, the property was in the possession of the said Narayana Perumal or his sons or assignees. The plaintiff sought to redeem the mortgage

executed on 29th February, 1934 and he was met with the plea that the property having been purchased in the revenue sale by the mortgagee,

there was no scope for redeeming the mortgage. The plaintiff, thereafter, filed the suit and in the trial Court there were mainly two points in dispute,

namely, (1) whether there was a valid revenue sale which was binding on the plaintiff and (2) whether the suit was barred by time as the defendants

had been in possession of the property adversely for more than the statutory period. The learned District Munsif held that in regard to the half

share in the property belonging to Swamikkannu, the father of the plaintiff, the mortgage had been extinguished by the mortgagee becoming the

owner of the equity of redemption under the revenue sale and that in regard to the other half share in the property belonging to the plaintiff, as the

mortgage rights subsisted the suit was not barred by limitation. He held also that there was no question of perfecting title by adverse possession as

the mortgage still subsisted in regard to the half share of the property.

The defendants appealed and in the appellate Court, the following points came up for determination, namely, whether the plaintiff was entitled to

redeem one half share of the suit property and whether the suit was barred by time. The decree, in so far as it related to Swamikkannu''s share, has

become final. The learned Subordinate Judge held that Exhibit B-1, the sale certificate, clearly showed that the sale was conducted as per rules,

that it was valid as held by the lower Court and that that finding had become final. In paragraph 14 of his judgment he observed that it was not

disputed that the plaintiff and his father were members of a joint family, that the mortgage deed, Exhibit A-1, showed that they were members of a

joint family and that the plaintiff could not impeach the revenue sale. On the point regarding limitation, the learned Judge held that the revenue sale

took place more than thirty years ago and that subsequently, the record stood in the name of the mortgagee. He thus held that the suit was, barred

by limitation.

In the present appeal, learned Counsel for the appellants submitted that the purchase by the mortgagee enured for the benefit of the mortgagor

and for this purpose, he relied on Section 90 of the Indian Trusts Act and Section 72 (b) of the Transfer of Property Act. He relied also on a

decision in Venkata Narasimha Raju Garu and Another Vs. Kuppu Chetti and Others, . For the respondent, learned Counsel argued that the

statutory provisions relied on did not apply here that the mortgagee had not availed himself of his position as such in effecting the purchase and that

the mortgagee stood in the same position as a stranger in an auction purchase. He relied on Mritunjoy Pani and Another Vs. Narmanda Bala

Sasmal and Another, and Umraon Singh and Others Vs. Chakauri Singh and Others, . Learned Counsel also submitted that the suit was barred by

limitation.

Two points arise for determination-by me. The first is whether the auction purchase by the mortgagee has extinguished the mortgage even in

respect of the half share of the plaintiff in the suit properties. It is not disputed that the plaintiff and his father constituted a joint family. There is no

evidence to show that the business was the separate business of Swamikkannu. There is not even an averment that the debts are of such a

character as not to bind the plaintiff. I am unable to believe that the plaintiff did not have any knowledge of the sale in auction all those years. The

debts were binding on the plaintiff also and his share was equally liable.

Section 90 of the Indian Trusts Ac would apply only where a mortgagee, by availing himself of his position as such, gains an advantage in

derogation of the rights of the other persons interested in the property. The decision in Mritunjoy Pani and Another Vs. Narmanda Bala Sasmal

and Another, , shows the circumstances under which this provision can be applied. In that case, the mortgaged property belonged to one

Bhagaban. Parida who executed a registered kabala for a consideration of Rs. 2,000 in favour of one Priyanath Sasmal. Sasmal executed a

usufructuary mortgage and, under the terms of the mortgage, the initial responsibility for payment of rent was, that of the mortgagor. If, for any

reason, he did not pay the arrears of rent, the mortgagee was under an obligation to pay off the arrears and to obtain a receipt from the landlord

acknowledging payment. The mortgagee did not pay the arrears of rent with the result that the property was brought to sale and ultimately

purchased by the mortgagee. This sale was confirmed and the mortgagee took possession through Court in, 1938. The mortgagor, thereafter, filed

a suit for redemption of the mortgage. The Supreme Court held that when the sale was brought about by the default of the mortgagee, the

mortgage was not extinguished and that the relationship of mortgagor and mortgagee continued to exist. The right to redeem the mortgage, it was

held, had not been extinguished and the suit for redemption was held to be maintainable. The following proposition was laid down at page 296 of

Mritunjoy Pani and Another Vs. Narmanda Bala Sasmal and Another, :

Where a mortgagee purchases the equity of redemption in execution of his mortgage decree with the leave of Court or in execution of a mortgage

or money decree obtained by a third party, the equity of redemption may be extinguished.

In a later decision reported in Sachidanand Prasad Vs. Babu Sheo Prasad Singh, , the mortgagor had defaulted in payment of rent. The mortgagee

paid almost the entire amount of rent payable by him, but defaulted in payment of a trifling sum. In the Court sale the mortgagee purchased the

property. The Supreme Court held that the right of redemption was extinguished, as the mortgagee did not gain any advantage by availing himself

of his position as such or of a situation brought about by his own default. This principle applicable in such cases has also been stated in a Bench

decision of this Court in Raju Pillai Vs. Palanisami Pillai and Others, , as follows:

Before the benefit of Section 90 can be demanded it must be shown that the party against whom relief is sought availed himself of his fiduciary

position, gained an advantage by so doing and that the advantage was gained in derogation of the rights of the person interested in the property.

In the present case, the mortgagee has not utilised his position as a mortgagee or taken advantage of his position as a mortgagee in effecting the

purchase. He was under no obligation to avert the sale. He purchased the property in Court auction just as any other person could have done. I

am therefore unable to hold that Section 90 of the Indian Trusts Act has any application to the facts.

Section 72 (b) of the Transfer of Property Act is an enabling provision enabling a mortgagee to spend such money as is necessary for the

preservation of the mortgaged property from destruction, forfeiture or sale. In such a case, in the absence of a contract to the contrary, he could

add such money with the principal money and recover it with interest. It is this aspect which was the subject in discussion in Venkata Narasimha

Raju Garu and Another Vs. Kuppu Chetti and Others, . In that case, the mortgagee made payments to save the property from sale in a civil Court.

The question was whether they could add the amount paid to avert the sale. It was held that the mortgagee was entitled, u/s 72 (b) of the Transfer

of Property Act, to a charge in respect of the decree amount paid by him to avert the execution sale. There is nothing in that case which supports

the proposition that a mortgagee, in purchasing the property in such an auction, holds the property for the benefit of the mortgagor, or that the

mortgagee has to stand by and allow the property to be purchased by a stranger. In that case, the merger or fusion of the interests of the

mortgagor and the mortgagee by the purchase by the mortgagee was not in issue.

8-A. The real question that has to be considered is whether the purchase by the mortgage enures for the benefit of the mortgagor. I am inclined to

agree with the proposition that the mortgagee has not utilised his position as such in order to acquire this property so that the purchase would stand

for the benefit of the mortgagor. The mortgagee purchased this property just as a stranger would have done and, in the circumstances, the plaintiff,

in my opinion, lost the right to redeem the one half of the suit property as early as 29th February, 1934. There was some suggestion of irregularity

in the auction sale. This was not even pleaded properly and there is no proof of any irregularity.

Learned Counsel, during the course of the arguments, referred me to an unreported judgment of V. Ramaswami, J., dated 24th January, 1974

in Umraon Singh and Others Vs. Chakauri Singh and Others, of this Court. I have carefully gone through the judgment and I am unable to find that

it is helpful on the facts here. That was a case where the suit property, a house, belonging to one Abdul Hameed was mortgaged in favour of a Co-

operative Society. In enforcement of the mortgage, the Society obtained a decree and in execution of the decree, the property was purchased by

the Society itself. This property was subs quently purchased by the plaintiff in the said proceedings, from the Co-operative Society. Subsequent to

the mortgage in favour of the Co-operative Society, for realisation of arrears of excise duty the property was brought to sale and it was purchased

by the first defendant in the said proceedings. The sale was confirmed and the first defendant obtained delivery of possession. The first defendant in

the said proceedings claimed that he had purchased the property in the revenue sale free from all encumbrances and that therefore, the sale in

favour of the Cooperative Society did not confer any title to the property on the Society or its successor-in-interest, the plaintiff. The question for

consideration was whether the sale in favour of the first defendant in the said proceedings conferred an absolute title in the properly free from all

encumbrances. It was held that there was no charge created by the statute on the property for payment of excise duty and that the purchaser in the

sale, on the facts there, could not get a title free from all encumbrances. The point in issue before me is not whether the purchase by the mortgagee

in the present appeal was free from all encumbrances. As mentioned earlier, the real question is whether the mortgagee purchased the property for

the benefit of the mortgagor. As this point was not under consideration in Umraon Singh and Others Vs. Chakauri Singh and Others, , there is no

scope for applying the principle laid down in the said decision. In the view taken by me, there is no need to discuss the decision in Umraon Singh

and Others Vs. Chakauri Singh and Others, , which incidentally arose u/s 63 of the Transfer of Property Act, which is not relevant here.

The next point is one of limitation. Unless the position of mortgagor and mortgagee continued, the process of limitation cannot be stopped. The

purchase by the mortgagee has extinguished the mortgage. The property having been enjoyed adversely right from 1934, the plaintiff has lost the

right to redeem the property on that ground also.

The appeal is dismissed with costs. Leave granted.