Seeranga Goundan vs Saranga Goundan

Chandra Reddi, J.—This second appeal has been placed before a Bench at the instance of Satyanarayana Rao J. who thought that it should

be heard by a Bench as the correctness of the statement of law relating to improvements Dy a mortgagee in possession under anomalous mortgage

in -- Pandiyan Pillai Vs. K.V. Vellayappa Rowther and Another, , was canvassed before him. The facts giving rise to this question may be briefly

set out. The plaintiff created a mortgage over the suit properties on 20-11-1930, to secure a sum of Rs. 3400 under Ex. D-1. The mortgagee was

put in possession of the property on the understanding that he should enjoy the income of the property in lieu of interest for a period of two years.

Under the terms of Ex. D-1, the mortgagor could redeem the mortgage within a period of two years. In default thereof it was stipulated that the

mortgagee could hold and enjoy all the properties with powers of alienation such as gifts, sale, etc. The mortgagor failed to pay the principal

amount within the period of two years and take possession of the property as provided for in the document. Consequently the mortgagee

continued to be in possession of the property and treated himself as the owner thereof. The mortgagor filed a suit on 14-10-4945 for the

redemption of the mortgage and deposited the principal amount into Court.

The main defence to the suit was that the defendant being under a ''bona fide'' belief that he became the owner of the property by virtue of the

failure of the mortgagor to redeem the mortgage within the period of two years as stipulated in Ex. D-l effected improvements to the property and

the plaintiff was not entitled to redeem the mortgage without paying the improvements also. The trial Court decreed the suit for redemption of the

mortgage holding that the defendant was entitled to the principal amount and not to the improvements as this case did not fall within Section 63-A,

T. P. Act.

On appeal the District Judge considered that although the case was not covered by Section 63-A, T. P. Act, still the mortgagee could get that

relief by invoking Section 51, T. P. Act in his favour in view of the terms of the mortgage and the belief induced in the mortgagee that he had

become the owner of the properly by the omission of the mortgagor to redeem the mortgage within two years. In that view he called for a finding

as to the value of the improvements from the trial Court. On the finding that the improvements could be estimated at Rs. 1,000. the lower appellate

Court modified, the decree of the trial Court by granting the mortgagee the relief for improvements.

The aggrieved plaintiff preferred the second appeal to this Court against that judgment of the learned District Judge contending that the

mortgagee could not claim the value of the improvements for the reasons contained in the Memorandum of grounds of appeal.

Pending this appeal Act 23 of 1948 was passed which ''inter alia'', amended Section 9, Madras Agriculturists Relief Act, 1938, by inserting

some provisions to give relief to the debtors in respect of usufructuary mortgages also. This was numbered as Section 9(A). But it is not necessary

to advert w this section as it was replaced in 1950 by Amending Act 24 of 1950 which came into force on 31-10-1950. The provisions of Section

9-A (as amended in 1950) so far as they are material to this case may be set out here:

9-A(1) This section applies to all mortgages executed at any time before 30-9-1947, and by virtue of which the mortgagee is in possession of the

property mortgaged to him or any portion thereof (a) where no rate of interest is stipulated for as due to the mortgagee or (b) where a rate of

interest is stipulated for as due to the mortgagee in respect of the principal amount secured by the mortgage or any portion thereof, in addition to

the usufruct from the property, or in respect of any other sum payable to the mortgagee by the mortgagor in his capacity as such. Explanation : A

mortgagee shall be deemed to be in possession of the property mortgaged to him or any portion thereof, notwithstanding that he has leased it to the

mortgagor or any other person .....

(3) Where the mortgagee has been in possession of the whole of the property mortgaged to him for an aggregate period of less than thirty years,

the mortgagor shall not be entitled to redeem the mortgage, unless he pays to the mortgagee (i) the difference between the principal amount

secured by the mortgage and an amount bearing to the principal amount the same proportion as the period during which the mortgagee has been in

possession bears to thirty years.

(ii) .....

(iii) .....

(8) The mortgagor shall not be entitled to redeem a mortgage under Sub-section (2) or obtain possession of the mortgaged property by virtue of

Sub-section (5) (a), unless he pays to the mortgagee the cost of the improvements, if any, effected by him to the mortgaged property.

There is another section of that Amending Act which has to be alluded to in this connection. Section 9 of the Amending Act 24 of 1950 is made

applicable to

(i) all suits and proceedings instituted after the commencement of this Act;

(ii) all suits and proceedings instituted before the commencement of this Act in which no decree or order passed has not become final, before such

commencement;

(iii) all suits and proceedings in which the decree or order passed has not been executed or satisfied in full before the commencement of this Act;

Provided that no creditor shall be required to refund any sum which has been paid to or realised by him before the commencement of this Act.

After this Act came into force the appellant claimed relief under this Act. If the appellant is to get benefits of this section ha would be liable to

pay only half the principal in view of the provisions of Section 9-A(3), Madras Agriculturists Relief Act, 1938, as the mortgages was in possession

of the property for nearly 15 years. In fact it was contended before Satyanarayana Rao J. that even if Section 63-A, T. P. Act applied to the case,

the mortgagee was entitled to rely upon the provisions of Act 4 of 1938, which were introduced in 1950. The learned Judge in the order of

reference has also set out this contention and stated that the amount due on that basis also had to be determined.

If the contention of the appellant that he is entitled to the benefit of the provisions of the Amending Act 21 of 1950 is to be accepted it will be

unnecessary for us to consider the provisions of the Transfer of Property Act bearing on the question of improvements. u/s 9-A(8) as amended by

this Amending Act 24 of 1950 if the mortgagor could claim relief under that section he is liable to pay the improvements to the mortgagee. So if we

should come to the conclusion that the Amending Act is applicable to this case ''ipso facto'' the mortgagee would be entitled to the improvements

effected by him.

As the question whether the plaintiff is an agriculturist or not was not gone into by the trial Court since it did not arise then, we called for a

finding as to whether the plaintiff is an agriculturist within the meaning of the Madras Agriculturists Relief Act. The finding submitted is that he is an

agriculturist.

On this the first question that arises for consideration is whether he could claim the benefit of the Amending Act 24 of 1950. Mr. Subramania

Pillai appearing for the respondent contends that the Amending Act has no application to this case for the reason that the decree for redemption

was passed long before the Act came into force, that the respondent had withdrawn the amount deposited into Court and even possession was

delivered to the appellant and that there was nothing pending so far as the suit for redemption was concerned at the commencement of the Act.

We do not think we can agree with this argument. This argument overlooks the provisions of Section 9 of the Amending Act which makes the Act

applicable, ''inter alia'', to ail suits in which the decree had not become final. Could it be said that the decree had become final when it is the

subject-matter of the second appeal merely because the decree for redemption was passed by the trial Court? The defendant filed an appeal

against the decree granting the redemption claiming a further sum of Rs. 1000 as part of the decree directing the redemption of the mortgage. As

already stated above, this appeal was allowed and the decree of the trial Court was modified by allowing the claim of the mortgagee for

improvements effected by him. The modified decree is the subject-matter of the second appeal and the question is still pending whether the

judgment and decree of the lower appellate Court are correct or not. Bo we cannot see how it could be said that the decree in the suit had

become final. We cannot subscribe to the proposition stated by the counsel for the respondent that merely because the right of the mortgagor for

redemption of the mortgage has not been questioned either in the lower appellate Court or before us the decree should be considered to have

become final. The decree contemplated u/s 9 of the Amending Act is the whole decree and not portions of it. It follows that at the commencement

of the Amending Act 24 of 1950 the decree in the suit had not become final with the consequence that the plaintiff is entitled to the benefits of the

Act.

A further point that arises for determination in this case is whether the plaintiff is entitled to call upon the mortgagee defendant to bring back the

amount which was withdrawn by him. What is contended by Mr. Chanipakesa Ayyangar learned counsel for the appellant is that his client is liable

to pay only Rs. 1700 in view of the provisions of Section 9A(3) as amended by the Amending Act having regard to the fact that the mortgagee

was in possession of the property for nearly 15 years and that as more than this amount was deposited into Court to the credit of the suit and was

withdrawn by the respondent, he is bound to refund the excess amount. We do not think we can give effect to this contention either. The proviso

to Section 9 of the Amending Act 24 of 1950 makes it clear that a creditor shall not be required to refund any amount which has been paid to him

before the commencement of this Act. There might have been force in the argument, if the amount was deposited into Court subject to the result of

the suit. It has no substance at all when the deposit was made unconditionally and without any reservation. According to the plaintiff, this was the

only amount that was due and payable to him as condition precedent to his redeeming the mortgage while the contention of the respondent was

that the plaintiff was liable to pay a further sum of Rs. 1000 before he could ask for redemption. No issue was raised by the plaintiff as to his

liability to pay the principal amount, the only point at issue between the two parties being whether the mortgagee could claim the value of the

improvements effected by him. The deposit into Court was made by the plaintiff as the mortgagee refused to receive the amount and redeliver

possession of the property and the necessary documents. So this admitted amount was deposited into Court to be paid to the mortgagee and there

was no question of requiring the mortgagee to bring back the money to Court in the event of an adverse decision against him. We think it is an

obvious case which is covered by the proviso to Section 9 of the Amending Act 24 of 1950'' and hence the mortgagee-respondent cannot be

required to refund any amount which he had already withdrawn although it is in excess of the sum due to him calculated with reference to Section 9

(A) (3). Agriculturists Relief Act and the value of the improvements. The sum of Rs. 3400 withdrawn by the respondent must be deemed to

Include the cost of improvements. Hence the appellant will not be required to pay the value of improvements separately. The result is that the

plaintiff is under no obligation to pay anything more to the respondent and the latter will not be required to pay back any portion of the amount

which he drew out from the Court.

In the result the second appeal is allowed as indicated above. In view of the fact that the plaintiff is getting relief under an enactment which was

passed since the filing of the second appeal, we do not think it necessary to direct the respondent to pay the costs of the appellant. The parties will

bear their own costs in the Courts below also.