Kishanlal and Others vs Hargovind

T.N. Singh, J.

This is plaintiffs'' appeal arising out of a suit for redemption of the mortgage evidenced by the Deed dated 21-2-1947. Learned District Judge, Morena, having dismissed the suit, the plaintiffs are in this Court.

Needless to say that the plaintiffs based their claim on the mortgage-deed Ex. P/3 to enforce their right of redemption of the mortgage ensured u/s 60 of the Transfer of Property Act, for short T.P. Act''. The plaintiffs claimed that as per terms of the mortgage they were prepared to repay the : entire loan of Rs. 15,000/- and had served notice on the defendant who did not respond. Because the defendant was illegally enjoying the usufruct of the property, they were obliged to institute the suit. The claim was opposed by the defendant mainly on the ground that the right of the plaintiffs to redeem the mortgage had been extinguished as a result of his purchase in Court-sale of the property mortgaged. Although in para 3 of his written statement, the mortgagee admitted execution of the usufructuary mortgage, the specific plea set up in para 11 was that because of a rent-note executed by the mortgagors, their interest in the mortgaged property was that of a tenant only. Indeed, it was his further case that on the basis of the rent-note he had obtained successive decrees against the mortgagors for arrear of rent and the property was sold for Rs. 200/- to him in Court-sale, in execution of those decrees.

Although several issues were framed the decision in this appeal requires consideration only of the three-fold contention pressed by Shri R. D. Jain, learned counsel appearing in support of the appeal. Counsel relied squarely on the terms of Proviso to Section 60 aforesaid to submit that the right conferred u/s 60 can be extinguished only "by act of the parties or by decree of a Court" in terms of the Proviso. It is counsel''s contention that only when a decree is passed in favour of the mortgagee enforcing his right of foreclosure or of putting the mortgaged property to sale in terms of the mortgage-deed, that the mortgagors'' right to redemption is lost. No other "decree", passed in any suit enforcing any right of the mortgagee dehors the mortgage, would extinguish mortgagor''s right of redemption ensured u/s 60. Learned counsel also relied on the provisions of Order 34, C.P.C. and indeed, placed implicit reliance on Rule 14(1) thereof, which may be profitably extracted :.

"14. Suit for sale necessary for bringing mortgaged property to sale. -- (1) Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage, and he may institute such suit notwithstanding anything contained in Order 11m Rule 2".

Because counsel''s third contention is based oh Section 90 of the Trusts Act, the same may also be extracted :

"90. Advantage gained by qualified owner. -- 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 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 the persons so interested, the advantage so gained, but subject to repayment of 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."

Respondents counsel Shri Lahoti, while refuting the contentions pressed by Shri Jain, has cited decisions, to which I shall advert in due course, but I consider it most appropriate, at this stage, to extract relevant portions of the mortgage-deed (Ex. P/3) which are crucial and pivotal for the decision of the appeal:

"Hence our shop No. 151 shown in the enclosed map is mortgaged with possession for an amount of Rs. 15,000/-, half of which is 7500/- in favour of Gajadhar s/o Laljit and Hargovind s/o Gajadhar, Proprietor of firm Gajadhar Hargovind Vaishya Agrawal, R/o Padrail Karoli for indefinite terms with condition that we shall not charge rent of our shop while the mortgagee shall not charge interest on his money, that is to say, that the rent and interest shall be equal. When full mortgage money is paid in one instalment, he will get back the mortgaged shop. Possession is delivered today to the mortgagees by executing a rent note which will form part of the mortgage deed." (Extracted from the agreed translation, filed by counsel in this Court).

At this stage, however, I may appropriately note another objection of Shri Jain to the finding and conclusion of the trial Court. The defendant proved the ex parte decree Ex. D/6 and also the judgments rendered ex parte subsequently in other cases, in his favour, vide Exs. D/7 and D/8, decreeing the claim of arrear-rent. But counsel contends, he took no care to prove the Court-sale of the property made in his favour. Indeed, from Ex. D/8, it only appears that on 18-3-1953, learned Civil Judge, Class I, Morena, passed order confirming ex parte, against the plaintiffs/appellants (the mortgagors), the sale made for Rs. 200/-, albeit without giving in the order any description of the property sold. It may also be mentioned in this connection that the rent-note on the basis of which the decrees were obtained by the defendant was neither produced, nor proved by him in the case.

Relying on the terms of the mortgagedeed which has been extracted above, Shri Jain contended that the "rent note" having been specifically referred to in the mortgage-deed itself and it being also explicitly stipulated categorically that the said rent-note shall form a part of the mortgage-decree, the defendant could not escape the applicability of the provision of Rule 14(1) of Order 34, C.P.C. afore-quoted. However, according to me, the "rent-note" mentioned in the mortgage-deed was obviously executed by the mortgagee who had been given possession thereunder of the mortgaged property. That "rent-note" could not obviously saddle liability on the plaintiffs; the defendant having executed the same for payment of rent liability thereunder attached to the defendant. The stipulation in the mortgage-deed that rent due to the plaintiffs shall be adjusted against interest due payable by them to the defendant makes this position clear. The question still would be, as to whether the other rent-note, on the basis of which defendant obtained the decree against the plaintiffs would attract. Rule 14(1) aforequoted. The answer to this question is not supplied fully and completely by the mortgage-deed but also partly by Section 90 of the Trusts Act and partly by a decision of this Court in Dhannobai (Second Appeal No. 216 of 1978, decided on 19-9-1986), on which also counsel has placed reliance.

Section 90 of the Trusts Act is relevant because, in violation of the express stipulation in the mortgage-deed that the plaintiffs/ mortgagors shall have no liability for payment of interest, the defendant proceeded to enforce his right to recover rent due payable by the plaintiffs under the "rent-note" which they had executed. Thus, the decree for rent obtained by the defendant mortgagee was in derogation of the right of the plaintiffs/ appellants reserved under the mortgage-deed to exemption of interest and the undue advantage which the defendant/ mortgagee gained under the decree was evidently nullified by Section 90. Indeed, the operation of Section 90 did not kill the right of the defendant/ mortgagee to recover arrear rent due under the "rent-note" said to have been executed by the plaintiffs/mortgagors, but it only disqualified him from purchasing the equity of redemption of the plaintiffs. In Dhannobai (1986 MPRCJ 275) (supra), this Court held that to unravel the true nature of a mortgage transaction, not only the mortgage-deed, but other contemporaneous documents executed by parties must be taken into consideration. Indeed, the Court is bound, I would add, to invalidate any device which creates any clog on the right of redemption. Indeed, when a complaint is made that the real nature of the transaction is clouded by other instruments and the object thereof is to defeat the right of redemption, an investigation into the legal effect of execution of such instrument must be considered an imperative necessity. In Dhannobai (supra), as in this case, there was a "rent-note" and two other documents described as "sale-deeds", but this Court held that the transactions evidenced by those documents reflected nothing but successive mortgages of the same property notwithstanding the "rent-note" and mortgagee''s right thereunder to enforce the same against the executant -- mortgagor. I have no hesitation to hold, therefore, that in the instant case, the other "rent-note", on the basis of which defendant/mortgagee obtained decree against the plaintiffs/mortgagors, was a device to block redemption by the plaintiffs of the mortgage by purporting to reduce their interest in the said property to that of a tenant. Accordingly, the claim under the said "rent-note" would also be a "claim arising under the mortgage" and Rule 14(1) of Order 34, C.P.C. would be attracted to the facts of the instant case.

For the foregoing reasons, I do not find any difficulty in holding that the combined effect of Section 90 of the Trust Act and Order 34 Rule 14(1), C.P.C. effectively prevents the defendant/mortgagee from obstructing the plaintiffs/mortgagors from enforcing their right of redemption u/s 60 of the T.P. Act, However, because counsels have cited decision in support of their rival contentions, for due performance of my judicial duties, it behoves me to examine the same. I would at once say that Jayasingh Dnyanu Mhoprekar and Another Vs. Krishna Babaji Patil and Another, supports the view taken by me. Therein, Lordships, in construing the provisions of Section 60 of the T.P. Act and Section 90 of the Trust Act, recalled the legal adage "once a mortgage, always a mortgage" to hold that the grant of right made in favour of the mortgagee by the Government under Bombay Act No. 50 of 1950, would enure to the benefit of the mortgagor despite the fact that the mortgagee was in possession of the land in question and he was entitled to the grant in virtue of his possession of the suit land. The decision evidently manifests that the "advantage" which a mortgagee gained during the subsistence of the mortgage need not necessarily be an undue advantage, as contended by Shri Lahoti. The decision in Mritunjoy Pani and Another Vs. Narmanda Bala Sasmal and Another, is also to the same effect though it deals with another dimension of the legal principle underlying Section 90, Trusts Act. In reference to Illustration (c) to Section 90, it was held that the provision of Section 90 was also founded on the principle that no one can be allowed to benefit from his own wrongful act, while the three conditions necessary to attract the provisions were still stated, as follows : (1) the mortgagee avails himself of his position as mortgagee; (2) he gains an advantage; and (3) the gain is in derogation of the right of other persons interested in the property. Their Lordships also approved and reiterated the law stated in Sidhakamal Nayan Ramanuj Das Vs. Bira Naik and Others, wherein applicability of Section 90, Trusts Act was held legitimate in a suit for redemption u/s 60, T.P. Act to refute the claim that right of redemption was extinguished as a result of merger, holding that there could be no question of merger of a lower estate in a higher.

Respondent''s counsel, Shri Lahoti, took great pains to cite a host of decisions on the question of merger and also to support his other contentions. Learned counsel pressed the theory that in virtue of purchase of the property by the defendant/mortgagee in Court-sale, there was merger in the defendant/ mortgagee of two rights, extinguishing the mortgagee. Because, the right of redemption could be enforced by the plaintiffs/ mortgagors only against him, while as a result of his purchase he having acquired a superior right, the inferior right of redemption merged in him. This argument is obviously fallacious and does not deserve any consideration because what the Proviso to Section 60 evidently contemplates is merger by act or parties. Indeed, if there be any decree of a court, that could only be a decree either for foreclosure or for putting the mortgaged property to sale, indeed in accordance with the provisions of Order 34, C.P.C. Counsel''s reliance, therefore on Trustees of Motidas Beragi Sadhu Ratlam Trust Board and Others Vs. Ramjatan Ramprasad Sonar and Others, or even on Mathuralal 1961 M.P.L.J. (S.N.) 299 would not avail the respondent.

Learned counsel also placed reliance on Sachidanand Prasad Vs. Babu Sheo Prasad Singh, wherein mortgagor''s suit for redemption was dismissed any application of Illustration (c) to the case was not accepted. However, it must be noted, that was a case of purchase by a usufructuary mortgagee who was liable for a portion of the rent payable for the entire holding and the mortgagor had agreed to pay balance rent payable in respect of the property. On mortgagor''s default in payment of rent due payable by him, the property was put to sale. It was held that the mortgagor''s default alone was the "real effective cause" for the Court-sale and in that view of the matter it was held that right of redemption was extinguished by mortgagor''s own default of the terms of the mortgage. In the instant case, on the other hand, the material question is, whether there could be any default at all by the mortgagor for non-payment of rent due under the "rent-note" mentioned in the mortgage-deed. Indeed, because, as earlier observed, it did not saddle liability under the mortgage-deed, on the plaintiffs but rather on the defendant-mortgagee. While no advantage was gained by the mortgagee in that case because of the very fact that the mortgaged property was put to Court-sale, not for any default of the mortgagee. It passes my comprehension, therefore, how ratio of the decision cited at all applies to the case in hand, defendant-mortgagee''s design in the instant case being very much projected on the other "rent-note" which he got executed in his favour by the plaintiffs/mortgagors.

Because Shri Lahoti also relied on a Bench decision of this Court in Dayal Chand and Another Vs. Gajraj Singh and Another, I am bound to examine that. Evidently, however, no assistance from the decision can at all be invoked by the respondent/ mortgagee because it was rendered on Order 21, Rule 92, C.P.C. only; as also indeed Section 11, C.P.C. It does not deal with the mortgagor''s right either u/s 60, T.P. Act or Section 90, Trusts Act, and the question of extinguishment of the right of redemption did not at all arise in that case. Reliance on Mahabir Singh and Others Vs. Rameshwar Singh and Others, is also inapposite in my view. Because, as I have earlier held, it is not only on the ground simply of collusion that Section 90, Trusts Act, can be invoked; though it may be one of the grounds to do so. Similarly, I see no substance in counsel''s reliance on Balakrishnan and Others Vs. Makkam and Others, though it was held in that case that benefit of Section 90 must be specifically pleaded. I do not read anything in the decision to hold that an explicit reference to the statutory provision must appear in the plaint and the Court is not authorised to consider the facts pleaded and proved by parties to see whether a plea founded on Section 90 could be available to any party.

Some ancient decisions were also cited by learned counsel, to which I may now advert. The Full Bench decision in Manorath Choube and Others Vs. Musammat Sumera and Others, merely holds that Rule 14 of Order 34 CPC, enacted to replace Section 99, T. P. Act (since repealed) did not make a sale in violation thereof void, but only voidable. I wonder how this decision at all helps the respondent/ mortgagee because the option, evidently, to avoid the sale, being of the mortgagor, he is not debarred from raising objection to the sale even in his suit for redemption. Another Full Bench decision in Uttam Chandra AIR 1920 Cal 363 is also cited. But, that was a decision rendered on the provision only of Section 99, T.P. Act, which has since been repealed. The decision in Arjuna AIR 1917 Mad 592 being also to the same effect, reliance thereon, is evidently misconceived. Although reliance on Raja Jagadish Chandra Deo Dhabal Deb Vs. Bhubaneswar Mitra and Others, is appropriate, on facts, the decision is evidently distinguishable. Indeed, because, in the instant case, the sale of the mortgaged property by the respondent/mortgagee, has been held to be founded upon a claim arising under the mortgage, which was not the case in Jagadish Chandra Deo (supra).

None of the decision cited by Shri Lahoti, I am constrained to observe, has indented in any manner the view taken by me. On the other hand, as earlier observed, Apex Court''s decisions in Jayasingh (AIR 1985 SC 1946) (supra), Mritunjoy Pani and Another Vs. Narmanda Bala Sasmal and Another, and Sidhakamal Nayan Ramanuj Das Vs. Bira Naik and Others, , besides Lal Bahadur Singh (AIR 1915 AH 70) (FB) (supra) cited by Shri Lahoti, support my view.

The only conclusion which I am obliged to reach on the basis of discussion aforesaid, is that purchase of the property by the defendant/mortgagee (respondent herein), cannot, and has not, extinguished the right of redemption of the plaintiffs/ mortgagors. As such, the suit could not have been dismissed. Indeed, because, it is open in this suit, for the plaintiffs, to assail the sale in virtue of Section 90, Trusts Act, as also Order 34, Rule 14 C.P.C. The sale is accordingly held void for reasons earlier alluded. However, the right of the defendant/mortgagee to recover the amount paid by him in Court-sale, from the plaintiffs/mortgagors, remains unimpaired; he shall be entitled in this suit itself to enforce that right. Indeed, because Section 90, Trusts Act, saves his claim in that regard, on equitable consideration.

In the result, the appeal succeeds and is allowed with costs. The judgment and decree passed by the Court below are set aside. The plaintiffs/appellants are held entitled to a decree for redemption of the mortgaged property and also to costs of the suit. An account shall be taken of the amount due to the defendant/respondent for the principal loan advanced on the mortgage and for his other dues, costs and expenses, due payable to him in accordance with the terms and conditions of the mortgage deed besides the sum of Rs. 200/- for reimbursement of the amount paid by him in Court-sale. Parties shall take necessary steps in the matter to file their respective claims within a month so that the amount payable to the defendant/ respondent may be declared and other necessary directions may be made in accordance with the provisions of Rule 7, Order 34, C.P.C. to enable office to prepare a preliminary decree in terms thereof.