Podikutty and Others vs N. Rahiath Beevi and Others

Srinivasan, J.—Defendants 1 and 3 to 7 are the appellants in this second appeal. The suit out of which this appeal arises was one for

redemption of a mortgage. A preliminary decree was passed on 13.10.1970. According to the preliminary decree, the plaintiff was to deposit a

sum of Rs. 96.25 as mortgage money. Alleging that by virtue of the provisions of Tamil Nadu Act IV of 1938 the mortgage money got scaled

down to zero, the plaintiff filed I.A.No. 1142 of 1980 for passing of final decree. In that application, the plaintiff stated as follows:

The preliminary decree directs the plaintiffs to deposit Rs. 96-25 as mortgage money. No money need be deposited now because the entire

mortgage money stands scaled down to zero under Act IV of 1938. I am filing another petition to amend the preliminary decree in this behalf.

The question of value of improvements has been, relegated to the final decree. If the defendants take out a commission and get the value of

improvements assessed and adjudged, I shall pay such amount as is adjudged payable.

During the pendency of the application, the plaintiff sold her interest to one Madhavan Nadar, who got impleaded as the second petitioner in the

said application.

As there was no dispute with regard to the entitlement of the defendants to the value of the improvements made by them, a Commissioner was

appointed by the trial Court to ascertain the value of the improvements. The Commissioner submitted a report in which he valued the buildings at

Rs. 3460-11 and the trees at Rs. 2,498-59. The trail Court accepted the report and fixed the total value of improvements at Rs. 5,958-70 p. The

plaintiff was directed to deposit the said amount. The mortgagees/defendants were not satisfied with the amount awarded by the trial Court. When

the appeal was heard by the learned Subordinate Judge, he set aside the report of the Commissioner on 6.7.1983 and appointed another

Commissioner to assess the value of improvements. The Commissioner appointed by the appellate Court submitted his report, marked as Ex. C2,

with a plan attached thereto, marked as Ex. C3. The second Commissioner valued the buildings at Rs. 6584-59 and the trees at Rs. 3537-20P.

The plaintiff and the purchaser from her filed objection to the Commissioner''s report. The main objection raised was that the Commissioner was

related to the mortgagees and that they came to know of the same only when the Commissioner visited the suit property. The plaintiff had. also

raised certain objections regarding the valuation made by the Commissioner.

The learned Subordinate Judge rejected the contention that the second Commissioner was related to the mortgagees and that his report was

vitiated on that account. The learned Subordinate Judge also rejected the other objection regarding the valuation of the trees and held that the value

fixed by him with reference to the buildings could be taken to be the correct value. Consequently, the learned Subordinate Judge adopted the.

value of the buildings fixed by the first Commissioner and the value of the trees fixed by the second Commissioner for the purpose of arriving at the

total value of the improvements made by the mortgagees. In the result, the learned Subordinate Judge directed the plaintifff to deposit a sum of Rs.

6997-31 as value of the improvements.

The mortgagees are aggrieved by the said judgment and decree of the learned Subordinate Judge and have preferred the present second

appeal. Learned Counsel for the appellants contended that the learned Subordinate Judge was wrong in adopting the value of the buildings as fixed

by the first Commissioner when he had already set aside the report of first Commissioner. It is pointed out by learned Counsel that in the order

setting aside the Commissioner''s report, there was no reservation to the effect that it was being set aside only partially with reference to the value

of the trees. Learned Counsel relies upon the decision in Kuthiravattath Kogasseri Mokshath Thottamma Alias Amma Neithiyar v. Csubramaniyan

And Anr. AIR 1922 Mad. 219 : I.L.R.(1922) Mad. 79, wherein jt has been held that once a report of a Commissioner is superseded, it cannot

thereafter be used as a basis for valuation. There can be no dispute that the said proposition applied to the present case.

However, learned Counsel for the respondents contends that the value of the improvements should have been fixed with reference to the date

on which the mortgage money was paid or deemed to have been paid by virtue of the statutory provisions. Learned Counsel contends that in the

present case, the mortgage money was deemed to have been paid under the provisions of the Tamil Nadu Agriculturists'' Relief Act IV of 1938

and that when the plaintiff filed the application for passing a final decree, no amount was due to the mortgagees. It is, therefore, submitted that the

value of the improvements should have been fixed as in 1980 when the application for final decree was filed. Learned Counsel also submits that the

mortgagees will not be entitled to the value of any improvement made subsequent to the date on which the relationship of mortgager and mortgagee

ceased to exist. According to learned Counsel for the respondents, the relationship of mortgagor and mortgagee ceased to exist at any rate in 1980

at the time when the application for final decree was filed.

Reliance is placed upon the decision of a Full Bench of Kerala High Court in Varkey Paily v. Kurian Augusthy AIR 1967 Ker. 247 : 1967

K.L.T.189. It is, however, admitted that this aspect of the matter was not drawn to the attention of either of the Courts below. It is seen from the

application filed by the plaintiff for passing of final decree, that she has admitted her liability to pay the value of improvements and ~ invited the

Court to assess the same. In the application no reference has been made to any date with respect '' to which the value has to be assessed. Learned

Counsel, however, submits that this being a question of law, she should be allowed to rajse the same in the second appeal. I have allowed her to

do so.

I am of the opinion that the contention raised by learned Counsel for the respondents, though at first appears to be sound, is really without any

substance. In this case, it is seen that the preliminary decree is only for redemption, directing the plaintiff to deposit the mortgage money. When the

application for final decree is filed, the liability to pay the value of improvements is admitted by the mortgagor. The relevant provisions relating to

fixation of value of improvements and the entitlement of the mortgagee thereto are found in Travancore - Cochin Compensation for Tenants

Improvements Act, 1955 (Act X of 1965).

Section 2(d) of Act X of 1956 defines a ''tenant'' thus:

''tenant'' with its grammatical variations and cognate expressions, includes a person who, as lessee, sub-lessee, mortgagee or sub-mortgagee or in

good faith believing himself to be lessee, sub-lessee, mortgagee or sub-mortgagee of land, is in possession thereof or who, with the bona fide

intention of attorning and paying a reasonable rent to the person entitled to cultivate or let waste-land but without permission of such person, brings

such land under cultivation and is in occupation thereof as cultivator.

It is seen therefrom that a mortgagee is also considered to be a ''tenant'' for the purposes of this Act. Section 4 of the Act provides that every

tenant shall, on eviction, be entitled to compensation for improvements which were made by him, his predecessor-in-interest or by any person not

in occupation at the time of the eviction who derived title from either of them and for which compensation had not already been paid and that every

tenant to whom compensation is so due shall notwithstanding the determination of the tenancy or the payment or tender of the mortgage money or

premium, if any, be entitled to remain in possession until eviction in execution of a decree of order of court. Section 5 of the Act provides for

ascertainment of the value of improvements in accordance with Sections 7 to 16 of the Act and for passing of a decree declaring the amount so

found due and ordering that on payment by the plaintiff into Court of the. amount so found due in addition to the mortgage money or the premium,

as the case may be, the defendant shall put the plaintiff into possession of the land with the improvements thereon. A provision is also made u/s

5(3) of the Act for variation of the decree in cases where improvements were made subsequent to the date upto which compensation for

improvements had been adjudged in the decree and for revaluation of such improvements. Section 10 of the Act provides that the amount of

compensation to be awarded for an improvement shall be ascertained in the way prescribed by any of the Secs.7, 8 and 9 which is most

favourable to the tenant.

A reading of the above provisions will show that a mortgagee, who is defined as a ''tenant''for the purposes of the Act, will be entitled to claim

the value of improvements until an order of eviction is made against him. The order of eviction can be made only when the mortgage money and the

value of the improvements are deposited by the plaintiff. In the present case, the preliminary decree directed the plaintiff to deposit the morgage

money. The plaintiff herself admitted that she was liable to pay the value of improvements and she filed an application for passing of final decree.

The contention that the relationship of mortgagor and mortgagee should exist when the mortgage money was deemed to have been paid under the

provisions of Act IV of 1938 cannot be accepted for the simple reason that when the mortgage money was deemed to have been paid, it is only

the liability of the mortgagor that ceased to exist and not the relationship. In fact the provisions of Section 9-A of the Tamil Nadu Act IV of 1938

speak only of the right of the mortgagor to redeem the mortgage on the scaling down of the debt. A reading of Order 34, Rule 9 CPC would also

show that if the Court finds after the passing of a preliminary decree that no amount is due to the mortgagee it shall pass a Secree directing the

defendant to retransfer the property to the plaintiff. It is only thereafter the relationship of mortgagor and mortgagee would cease. The provisions of

Travancore Act X of 1955 are unambiguous in the matter of the mort-1 gagee''s right to the value of improvements made by him.

The decision in Varkey Paily v. Kurian Augusthy AIR 1967 Ker. 247 : 1967 K.L.T. 189, on which strong reliance is placed by learned

Counsel for the respondents, does not really support her. It will be useful to refer to the facts of that case before considering the principle laid

down by the Full Bench. In that case, the appellant had obtained a preliminary decree for partition, redemption and separate possession of his half

share of the mortgaged property from the hands of his co-owner, the predecessor of the respondents who, having redeemed the mortgage money

at Rs. 31/- and odd and required him to deposit this amount before seeking possession. It also provided that he would be entitled to mesne profits

in respect of his half share at a specified rate from the date of the deposit until delivery of possession or until three years -after the passing of the

final decree, whichever event happened earlier. The appellant made the deposit on 23.10.1954. Sometime after the deposit, the predecessor of the

respondents effected an improvement in the property in the shape of a bund. It is not clear whether the said improvement was made before or after

the passing of the final decree on 29.8.1956. On 23.9.1957, the appellant sought to execute the decree obtained by him and take delivery. At that

time, the respondents filed an application u/s 5(3) of Act 10 of 1956 for a variation of the decree by awarding compensation for the improvement

made by them. That application was allowed on 20.8.1959 by which date, (Kerala) Act 29/58 had replaced Travancore Act 10 of 1956. The

improvement was valued at Rs. 103.62 and the final decree was varied by requiring the appellant to make a further deposit of this sum before

taking possession. However, the decree for mesne profits made on 23.10.1954 was left undisturbed. On 4.9.1959 the appellant made a further

deposit and he obtained delivery on 18.9. 1959. Then, in execution of his decree for mesne profits, he attached the amount in deposit whereupon

the respondents filed an application for raising the attachment on the ground that by virtue of the provisions of Kerala Act 29 of 1958, they were

under no liability to pay the mesne profits until the further deposit was made on 4.9.1959 and their possession till that date was not wrongful

possession. The trial Court dismissed the application on the ground that an improvement effected after a decree for possession was passed, could

not have the effect of making possession prior to the improvement rightful possession. The appellate Court thought otherwise and allowed the

application made by the respondents. An appeal against that order of the appellate Court came before the Full Bench which reversed the decision

of the appellate Court and held that the respondents before them did not have any right to claim the value of improvements.

It will be seen from the facts, of that case, that it was not a dispute between the mortgagor and mortgagee as such. It was a case where one

coowner had already redeemed the mortgage and claimed a right of subrogation. In the preliminary decreed passed in the said case, there was a

provision for payment of mortgage money and for mesne profits in favour of the plaintiff from the date of making deposit of the mortgage money.

That itself proved that the mortgagee had no right to the value of improvements even if he had made any before that date. When once there was a

decree for mesne profits in favour of the plaintiff from the date of the deposit of the mortgage money by the plaintiff and when such a deposit was

made in fact the possession of the mortgagee after the date of such deposit was treated as unlawful by that decree. Hence the Full Bench held that

after the date of deposit of the mortgage money by the plaintiff in that case in accordance with the preliminary decree, the respondent before the

Full Bench was not entitled to claim the value of improvements as a mortgagee. In that case it was also found that the improvement was actually

made long after the passing of the preliminary decree, though it was not clear whether it was before or after the passing of the final decree. In such

a situation, the Full Bench had to consider the provision of Section 5(3) of Act 10 of 1956.

The following observations made by the Full Bench make the position clear:

Section 4(1) begins by saying that every tenant shall, on eviction, be entitled to compensation for improvements which were made by him. This

does not mean that the right to compensation springs from eviction. The right to compensation is always there; and if not already paid (which

means that there can be an earlier payment and that the right accrues when the improvement is made) it is payable on eviction. But, it seems to us

clear, that the improvements must have been made while the person concerned was a tenant within the meaning of the Act (whether by definition or

by reason of Sub-section (2) of Section 4, not after he had ceased to be a tenant and that the words, ""on eviction"" are not to be read as meaning

that compensation is to be paid for improvements effected right up to the time of eviction, even for improvements effected after the person had

ceased to be a tenant. Those would not be improvements made by a tenant within the meaning of the Act but by a quondam tenant and the words,

which have been made by him"" surely mean that the improvements must have been made by him as a tenant. Thus, if a tenant has effected

improvements during the currency of his tenancy, he is entitled to compensation for the improvements. If such compensation has not already been

paid before the determination of the tenancy, or the payment or tender of the mortgage money, the tenant is under the latter part of Sub-seed) of

Section 4 entitled to remain in possession until eviction in execution of'''' a decree or order of the Court. (It is important to note that the sub-section

proceeds on the footing that what we have called a mortgage tenancy is determined by the payment or tender of mortgage money-and this is in

keeping with what is laid down in Prithi Nath Singh and Others Vs. Suraj Ahir and Others, . It is also to be noted that the sub-section does not

make the compensation part of the mortgage money-see also Sub-section (1) of Section 5 which speaks of the payment into Court by the plaintiff

of the amount found due by way of compensation for improvements and also the mortgage money). Sub-section (2) of the section provides that a

tenant so continuing in possession shall, during such continuance, hold as a tenant subject to the terms of his lease or mortgage, if any. In Other

Words, The Combined Effect Of The Two Sub-Sections Is That A Tenant To Whom Compensation Is Due Under Sub-Section (1) at The Time

Of The Determination Of The Tenancy Is Entitled, Notwithstanding Such Determination to continue in possession as a tenant. He becomes a

statutory tenant notwithstanding that the contractual tenancy which terms we shall use to denote a tenancy as defined in Section 2(d) and as

including a mortgage tenancy) was determined. If, thereafter, he effects improvements, he would be entitled to compensation for such

improvements for they would be improvements effected by him while he was a (statutory) tenant. But, a person to whom no compensation is due

under Sub-section (1) at the time of the determination of his (contractual) tenancy is not entitled to remain in possession under that sub-section and

does not if he continues in possession, held as a tenant under Sub-section (2) (emphasis supplied),

Any improvements effected by him after the determination would not be improvements made by a tenant and therefore he would not be entitled to

any compensation under Sub-section(1). No doubt the words, ""has not already been paid"" occurring in the first part of the sub-section relate in

point of time to the eviction; but, equally, so the words, ""to whom compensation is so due"" occurring in the second part relate to the determination

of the (contractual) tenancy. If, at that time, compensation is due under the first part of the sub-section, in other words, if the tenant has effected

improvements but has not already been paid compensation for them, then, notwithstanding the determination of his (contractual) tenancy, he is

under the second part entitled to remain in possession until eviction in execution. But not if compensation is not due at the time of the determination

of the contractual tenancy. If compensation is due and he continues in possession, and he is entitled to, his continuance, is as a statutory tenant

under Sub-section (2), and by reason, of Sub-section (1), he would be entitled also to compensation for improvements effected by him as such

tenant till the determination of this statutory tenancy by eviction in execution; and this additional compensation would also be payable on eviction.

When then does this statutory tenancy determine so as to disentitle the tenant to remain in possession and to compensation for improvements

effected thereafter? According to the second part of Sub-section (1) of Section 4 read with Sub-section (2) of the section, ""until eviction in

execution of a decree or order of Court"". The tenancy is not determined by a decree for eviction; there must be eviction in execution. And since,

eviction"" means the recovery of possession of land from a tenant, in other words, actual delivery; an over-literal construction would lead to thfe

absurdity that the statutory tenancy can never determine and that the tenant can never be evicted. For, how can a tenant whose tenancy has not

determined be evicted? And how can his tenancy be over determined if actual delivery is necessary to effect a determination? We should think that

what the second part of Sub-section (1) of Section 4 really means is that the tenant ""to whom compensation is so due"" is entitled to remain in

possession until eviction (in other words, delivery of the property) is ordered in execution of a decree or order of Court. The executing Court is

empowered to determine the statutory tenancy by making such an order and Sub-section (3) of Section 5 ensures that, not-standing a decree for

eviction made under Sub-section (1), it will do so only after the entire compensation due to the tenant under Sub-section (1) of Section 4 for

improvements effected during the continuance of his tenancy (contractual and statutory) is paid into Court. For that purpose it is empowered to

vary the decree already made - to go behind that decree as it were by-ordering that the defendant shall put the plaintiff into possession on the latter

paying into Court compensation as re-assessed under Sub-section (3) of Section 5. (This it may be noted, can conceivably lead to a reduction of

the amount payable owing to a set off of rent subsequently accrued or a deterioration in the condition of the improvements). Once an order for

delivery is made in execution and the statutory tenancy determined, there can be no question of the defendant being entitled to remain in possession

as a tenant by effecting improvements thereafter (for which again compensation has to be determined and paid) and thus, by a repetition of the

process, indefinitely postponing eviction. And should the defendant be disposed continually to effect fresh improvements after compensation has

been assessed, solely with a view to make reassessments and consequent variations of the decree necessary, thus involving an indefinite

postponement of the order for delivery, that would be an abuse of the process of the Court which the Court would probably meet by the

appointment of a receiver or by the issue of an injunction. (See Columbus v. Narayanan 1954 K.L.T. 518 and Kanakku Kumara Pillai Thanu Pillai

Vs. Mathevan Mathevan of Aravamkadu Karakkattu Madathu Veedu and Another,

While referring to the provisions of Section 5 of the Act, the Full Bench observes that a decree under Sub-section (1) is not a mere decree for

possession but is a decree to be passed when ""the defendant establishes a claim for compensation due u/s 4 of improvements"".1 In that case, the

decree which was passed by the Court was a mere decree for possession and such possession could be obtained by the plaintiff on depositing the

amount determined already. There was no question of any improvements at the time when the decree was passed. But in the present case, the

plaintiff herself admitted that she was liable to pay the value of improvements when she filed an application for passing of final decree. The principle

laid down by the Full Bench referred to above, will only be against the contention raised by learned Counsel for the respondents in the present

case. Hence, the same is rejected. The appellants will be entitled to the value or improvements claimed by them.

What remains to be done is to fix the quantum. The learned Subordinate Judge is clearly wrong in relying upon the report of the first

Commissioner when he had already by his own order dated 6.7.1983 set aside the said report. Having set aside that report, it is not open to the

learned Subordinate Judge to have taken one part of the same to be valid and adopting the same for fixing the value of the buildings. The

objections raised by the plaintiff to the report of the Commissioner with regard to the valuation of the buildings as well as the trees are not of any

substance. The evidence of the witness for the plaintiff does not improve the case of the plaintiff with regard to the value of the buildings or the

trees. The only course open to the Court is to accept the report of the second Commissioner with regard to the value of the buildings and the trees.

In the result, the report of the second Commissioner appointed by the lower appellate Court fixing the value of the trees and building at Rs.

3,537.20 P., and Rs. 6,584.59 P. respectively is accepted. The total value of the improvements comes to Rs. 10,121.79 P. Respondents 1 and 2

are directed to deposit the said sum of Rs. 10,121.79 P. into Court towards the value of improvements.

In the result, the second appeal is allowed. In the circumstances of the case, there will be no order as to costs.