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Judgment
K. Subba Rao, C.J.—These two Civil Miscellaneous Appeals arise out of I. A. No. 1397 of 1952, an application filed by the appellants in C. M. A. No. 434 of 1953 for ascertaining mesne profits for five years from 1945 to 1949 and for recovering the same.
The appeals have a long and complicated history. It would be enough if the relevant facts were briefly narrated. One Challa Venkataraghavayya, acting for himself and as a guardian of his undivided minor son, executed three mortgages in favour of Mattapalli Venkataratnam. The first mortgage was a simple mortgage and it was executed on 2-1-1914 for a sum of Rs. 30,000/- carrying interest at Rs. 1-0-6 per cent., per mensem with a default clause providing for a higher rate of interest.
Under that document, two villages Marripadi and Veeravaram were mortgaged. On 27-11-1915, the second mortgage was executed for a sum of Rs. 4,600/- repayable with interest at Rs. 1-0-6 per cent., per mensem. This was a mortgage with possession. Even prior to that mortgage, the mortgaged properties were in the possession of the lessees Tota Varahalayya and Thota Subba Rao under a lease for 15 years till the end of fasli 1334.
Under the second mortgage, the mortgagees were empowered to collect the rent from the lessees and, after deducting the taxes, to credit the same towards the interest due in respect of that document. It was also agreed that the mortgagees should take possession of the lands from the lessees on the termination of the lease and to credit the rent obtained towards the mortgage deed. On 31-7-1916, the third mortgage was executed for Rs. 4,000/- with interest at Rs. 1-4-6 per mensem.
Under this document, the mortgagors agreed to pay every year the interest which accrued due and also a sum of Rs. 4,000/- towards the principal. The mortgagors paid the rent to the mortgagees till 1922 but thereafter made default in the payment of rent. Indeed, after the expiry of the lease, instead of delivering possession to the mortgagees, the lease was renewed in favour of the mortgagors in the first instance for one year and thereafter for ten years-
The mortgagees filed O. S. No. 54 of 1926 against the lessees and the mortgagors for possession of the suit lands and for arrears of rent. The mortgagors, in their turn, filed a suit for redemption of the mortgages. The latter suit was dismissed on 7-11-1932. But on 4-8-1937, they filed another suit O. S. No. 11 of 1938 for redemption. On 2-2-1942, the Subordinate Judge disposed of the two suits.
In the suit for redemption, a preliminary decree for redemption was made and an amount of Rs. 2655-13-0 with interest at 6 1/4 per cent., per annum from 1-10-1937 till the date of repayment was fixed as the amount due to the mortgagees there under. In the suit for possession also, a similar decree was passed. The mortgagees preferred two appeals to the High. Court.
The High Court allowed both the appeals and held that the second suit for redemption was not maintainable and, as a result of that finding, they gave a decree for possession to the mortgagees in the other suit. The legal representatives of the mortgagors preferred appeals to the Federal Court against the judgment of the High Court. The Federal Court allowed the appeals and remitted them to the High Court with a direction to pass appropriate decrees.
On remand, the High Court held that the first mortgage of 1814 was discharged, that under the second mortgage, a sum of Rs. 1946-8-3 would be due from the mortgagors, and that, under the third mortgage, a sum of Rs. 3855-13-0 remained due to the mortgagors. It was represented to us by Mr. Somasundaram, learned counsel for the lessees who appeared in the earlier proceedings that those amounts were fixed as due to the mortgagees as on 2-2-1942 i.e. the date when the Subordinate Judge passed a preliminary decree for redemption.
In the appeal arising out of the suit for redemption, the High Court passed a preliminary decree for payment of the amount calculated according to the judgment and time for redemption was fixed at three months from the date of the passing of the decree. In the connected appeal arising out of the suit for possession, a similar decree was made. It was also represented to us that the amounts decreed by the High Court were paid and the mortgagors took delivery of possession of the mortgaged properties.
But meanwhile, pursuant to the decree of the High Court directing delivery of possession to the mortgagees which was later reversed by the Federal Court, the mortgagees took possession of the Veeravafam property and they had been in possession for five years from 1945 to 1949. After the mortgages were redeemed, the lessees and the mortgagors filed the aforesaid application in the Court of the Subordinate Judge, Kakinada. for ascertaining the net mesne profits for the said five years and for recovery of the same on the ground that the mortgagees were in possession of the lands under a wrong decree of the High Court which was subsequently reversed by the Federal Court.
It was contended that the application was not maintainable and that the question of profits should have been an item of account in the final decree proceedings. The learned Subordinate Judge held that the application was maintainable and found that the mortgagee''s liability would be Rs. 4,000/- per year fixed, under the mortgage deed deducting there from the tax paid by them. He appointed a Commissioner ascertain the amount as per the directions given by him.
The mortgagees filed C. M. A. No. 298 of 1953 against the order of the lower court in(sic) far as it was against them and the lessees file in C. M. A. No. 434 of 1953 against the order they was made against them.
Mr. Kotiah, the learned counsel for the mortgagees contends that, though the mortgagees came into possession under the decision made by the High Court, which was later vari(sic) by the Federal Court, their possession was c(sic) mortgagees and therefore the said liability should have been taken as an item in fixing the(sic) demption amount and that, as the lessees fai(sic) to raise that question at the time the s(sic) amount was fixed, they are now precluded from doing so.
Mr. Somasundaram, learned counsel for (sic) lessees, on the other hand, contends that(sic) mortgagees were in possession under a wrong decree which was reversed by the Federal Company and, therefore, their possession during the ye(sic) in question was that of trespassers and that would be liable to pay to the lessees the pro(sic) which the lessees would have earned if they was not dispossessed by the wrong decree.
The first question, therefore, that (sic) to be considered is whether the application(sic) restitution is maintainable. From the aforesaid narration of facts, it is clear that the mortga(sic) took possession under a decree of the high Court. The High Court held that the redemption suit was; not maintainable and, on that be gave a decree for possession in the other suit filed the mortgagees for possession.
But the Federal Court found that the(sic) for redemption was maintainable and dire(sic) the High Court to determine "whether the mortgagees had any right now to the possession the lands or the payment of the rents or m(sic) profit''s" and "if they were held entitled to receive any money from the lessees how they (sic) to account for the same in the account between themselves and the mortgagor."
On remand, the High Court, after fixing amount due gave a decree for redemption both the suits. It is, therefore, manifest the decree where under the High Court original gave possession to the mortgagees was vacancy and instead a decree for redemption was (sic) ed. The case is, therefore, directly covered the express provisions of S. 144, C. P. C., was says:
Where and in so far as a decree is (sic) or reversed the Court of first instance shall the application of any party entitled to(sic) benefit by way of restitution or otherwise, (sic) such restitution to be made as will, so fa(sic) may be, place the parties in the position v(sic) they would have occupied but for such d(sic) or such part thereof as has been varied o(sic) versed; and, for this purpose, the Court(sic) make any orders, including orders for the re(sic) of costs and for the payment of interest, c(sic) (sic)ges, compensation and mesne profits, which are properly consequential on such variation or re�(sic)versal.
The decree of the High Court was reversed with-(sic) the meaning of the said section and the (sic)ssees are, therefore, entitled to the relief''s mentioned in that section.
Reliance is placed by the learned counsel for the mortgagees on the decision of a Division bench of the Madras High Court in Tatanagowdra Bhimana Gowd and Others Vs. Patel Siddalingana Gowd, . There, the mortgagee was obtained a decree for sale against the petitioners herein and, in execution of that decree, brought (sic)e properties to sale and purchased the same.
When the mortgagee-purchaser sought to (sic)ke delivery of the properties, the petitioners (sic)0 were the brothers of the mortgagor, ob-(sic)ucted and, on a petition filed by the mort-(sic)gee, the obstruction was removed. Thereafter, (sic)e petitioners filed a suit in the District Mun�(sic)''s Court for vacating the order, for partition (sic)d for delivery to them of 5/7th share in the (sic)d. In that suit, they did not ask for mesne profits.
After they succeeded in that suit, they ob-(sic)ued delivery of possession and thereafter they (sic)d an application for mesne profits for the (sic)od during which they were kept out of possession by the order and decree passed against (sic)m. The learned Judges held that the case was not fall within the four comers, of S. 144, C. P. C. and they refused to invoke the provisions of S. 151, C. P. C, mainly on the ground (sic)t they should have asked for mesne profits in (sic)suit itself.
This case, therefore, is not an authority for (sic)position that, in the circumstances of the (sic)ent case, an application for restitution will (sic)lie, for the facts directly come under the (sic)sions of S. 144, C. P. C.
That apart, the question may be looked from a different perspective. As aforesaid, the (sic) Court decree fixed the redemption amount (sic)n 2-2-1942. The amounts realized by the mort-(sic)es could not have formed an item in the (sic)anting under S. 76 of the Transfer of Property Act as they were realised only subsequent (sic)e fixing of the said amount. They should have be taken as amounts that were paid or realised (sic)ds the decree amount.
But, by mistake or otherwise, the entire (sic)nption amount was paid by the mortgagors (sic)ut taking into account the amounts re�(sic)ed by the mortgagees subsequent to the de-(sic). The amounts now claimed, were the (sic)nts recovered by the mortgagees in excess (sic)at which they were entitled to under the (sic). The application, therefore, may also be (sic)d as one for recovery of the amount paid mistake in excess of the decree amount.
The next question is what is the basis (sic)scertaining the profits recoverable by the (sic). That turns upon the question whether mortgagees were in possession under the (sic)of the mortgage deed or as trespassers. It (sic)be gainsaid that the relationship of mort-(sic) and mortgagee continues till the mortgage (sic)emed or the relationship is put an end to (sic)one or other of the ways known to law. (sic)the present case, the mortgagees got into (sic)on before the mortgage was redeemed indeed before the High Court passed a de-(sic)or redemption pursuant to the directions given by the Federal Court. Therefore, though the mortgagees got possession which they were entitled to under the mortgage deed pursuant to the decree of the High Court which was later on reversed, their possession was only qua mortgagees.
Under the second mortgage deed, it was clearly provided that the mortgagee was entitled to take possession of the land from the lessees on the termination of the lease. Therefore, though they took possession under a wrong decree they held it in their capacity as mortgagees S. 76 of the Transfer of Property Act says that where, during the continuance of the mortgage, the mortgagee takes possession of the mortgage property, be would be liable to account for the profits.
In this case, the method of accounting is, prescribed by the mortgage document itself. The relevant provision in the mortgage deed reads:
as regards the quit rent inam lands of the extent of 51 acres 20 cents consisting of two plots and situate in Veeravaram village, also, it is settled by us that you shall take possession of the said lands after the termination of the cowle granted to Thota Varahalayya and Thota Subba Rao to run till the fasli 1334 and that a kist of Rs, 4,000/- per annum shall be paid for the said pampus (Plots of land) from the fasli 1335.
Therefore by the end of the month of March every year, you shall, after deducting the taxes payable in respect of the pampus, apply the remaining sum in discharge, of the amount remaining due after deducting payments made in respect of the deed of mortgage executed and delivered by us in your favour on 27-11-1915 and afterwards in discharge of the amount of principal and interest in respect of this bond and thenceforward you shall credit towards the interest due in respect of the debt under the deed of mortgage executed and delivered by us in your favour on 2-1-1914.
The above clauses give the basis and the measure for rendition of accounts by the mortgagees. So long as the mortgage was subsisting the mortgagees, after deducting the taxes, had to adjust the balance out of the sum of Rs. 4,000/- fixed as rent every year towards the mortgage. They cannot, therefore, be compelled to pay more than that amount for the period of their possession either to the mortgagors or to the lessees claiming under the mortgagors.
We, therefore, agree with the learned Subordinate Judge that the maximum limit of the mortgagees'' liability for each of the years would be Rs. 4000/-% minus the taxes paid by them and that the mortgagees were at liberty to show, for reasons mentioned by the learned Judge, that they actually received less than that amount as rent in any particular year.
In the result, both the appeals fail and are dismissed with costs.