Uchit Mandar vs Gosain Singh Baid

Sir Thomas Fredrick Dawson Miller, Kt., C.J.—This is an appeal by the plaintiffs under clause 10 of the Letters Patent from a judgment of Mullick, J., dated the 18th May 1917, affirming a decree of the Subordinate Judge. In July 1898 the plaintiffs'' predecessors-in-title took a usufructuary mortgage from the father of the defendants first party of the occupancy rights in a holding belonging to the mortgagor to secure an advance of a sum of Rs. 498. The mortgage stipulated for re payment in the following year, failing which the mortgagee was to remain in possession, until the principal sum and interest at 2 per cent per mensem should be paid off. The mortgagee entered into possession, but he was dispossessed of half the property by the nephew of the mortgagor, who brought a suit claiming half the property as his own and obtained a decree declaring his title and awarding him possession. He is the defendant 3rd party in the present suit. The defendant 2nd party subsequently purchased the equity of redemption of the mortgagor in the remaining half which had remained in possession of the plaintiffs, and on the 4th April 1915 forcibly dispossessed the plaintiffs. In May 1915 the plaintiffs, instituted the present suit to recover the principal sum advanced, namely, Rs. 498, together with interest at 2 per cent, per mensem on half that sum between April 1902, when they were dispossessed of half the property and April 1915, when they were dispossessed of the remainder. The interest thus calculated amounts to Rs. 785, but the plaintiffs remitted Rs. 408 of this amount as they say the property is of insufficient value to enable them to realise the whole claim. The claim for interest is, therefore, reduced to Rs. 377 making with the principal a sum of Rs. 875 as the amount claimed.

The mortgage contains the following stipulation:--

If on account of default in payment of rent due to the proprietor or on account of my wrongful act (that is wrongful act of the mortgagor) or for any other reason, the said Mahajan (that is the mortgagee) be dispossessed of the land, then I shall pay damages on account of dispossession at the rate of 13 maunds of paddy per bigha or I shall pay interest at the rate above mentioned either amicably or by suit.

It is only necessary to state further with regard to the mortgage bond that whilst it is what is known as a usufructuary mortgage whereby the mortgagee is pot in possession in order to cultivate the land and appropriate the entire proceeds thereof in lien of interest, it is also a simple mortgage in that the property mortgaged is charged with the repayment of the principal sum advanced. When this suit was instituted, the principal sum of Rs. 498 was tendered in full satisfaction and paid into Court by the defendants. The only question for determination is as to the right to claim half the interest stipulated in the mortgage during the period when the plaintiffs were out of possession of half the property. The main defense was that the plaintiffs had by their conduct acquiesced in the diminution of the security to the extent of one half of the original holding and had so waived any rights they might have had under the bond.

The Munsif found in favour of the plaintiffs and decreed them interest as well as the principal sum claimed. On appeal the Subordinate Judge took a different view and found that the mortgagees, having taken no step for over 12 years to all on the mortgagor to recoup him for the loss of half the security, must be presumed to have acquiesced in the loss and to have remained satisfied with the diminished security. When the case came before this Court on appeal, it was contended that the question was one of fact which had been determined by the lower Court and that the facts were not open to review by a Court of second appeal. It is quite true that the question of acquiescence is in a sense a question of fact, but it is only so in so far as it is a question of the proper inference to be drawn from proved or admitted facts. That proposition was considered by their Lordships of the Privy Council in the case of 3 CWN 502 (Privy Council) , where it was laid down that the question of acquiescence is not purely a question of fact but of legal inference from facts found. The learned Judge of this Court accepting that view came to the conclusion that, on the facts found by the Subordinate Judge, the finding that there had been acquiescence on the part of the plaintiffs which would estop them now from contending that they were entitled to interest had been sufficiently made out and he dismissed the appeal.

A number of oases have been referred to in argument before us dealing not only with the principle just mentioned but with the class of oases in which the Court will hold that the facts have been sufficiently proved to enable it to come to the conclusion that there has been acquiescence in the sense named. The case of 3 CWN 502 (Privy Council) was one where a tenant the term of whose lease had expired resisted eviction on the ground that he had, with the knowledge of the lessor, erected permanent buildings on the land leased daring the term. He contended that there was an equitable estoppel against the lessor precluding him from denying that the tenancy had been changed into a permanent occupancy. The lease was granted for the purpose of erecting a saltpetre factory. The factory, it appears, had ceased to be worked after a time and shops and other buildings were erected on the land by the tenant. The landlord, although he was aware of what was going on, did nothing. Now, it is well established in England that if a tenant builds on land held by him under a lease he does not, apart from special circumstances, acquire any right to prevent the lessor from taking possession of the land and the buildings on the expiry of the term. That doctrine was laid down many years ago in the well known case of Ramsden v. Byson (1866) 1 H.L. 129 : 12 Jur. (N.S.) 506 : 14 W.R. 926. The only difference in India is that the tenant may remove during the continuance of the lease anything which he has attached to the land provided he leaves the property in the state in which he received it. It is quite clear, therefore, that in the case quoted there was no estoppel whatever against the lessor and although the High Court decided that there was, misapplying the principle laid down in an earlier case, their Lordships of the Privy Council pointed out that there were no facts proved in that case from which an estoppel by acquiescence could be inferred.

The next case referred to was that of 7 CWN 97 (Privy Council) . In that case there was a stipulation for payment of interest until delivery of possession. There was no express stipulation for interest in case of dispossession. The mortgagee was dispossessed of about half the villages mortgaged and be took no action to recover the mortgage money for about 30 years but remained satisfied with the diminished security. When he brought a suit claiming interest in respect to that half of the property from which he had been dispossessed, their Lordships of the Privy Council came to the conclusion that as he had taken no steps for so long either to get additional security or to get the rent of the villages which were left with him enhanced, it must be taken that he had acquiesced in his dispossession and had consented to go on with the diminished security as if he had everything that he was entitled to. It is quite true that in that case there was no stipulation for interest in the case of dispossession. But the decision does not seem to have depended upon that fact, and in spite of the absence of such a stipulation it seems pretty clear that had their Lordships come to the conclusion that there had been no acquiescence, they would have awarded interest or something in lieu of interest in the nature of damages to the plaintiff in that suit.

I do not think that this case is absolutely concluded by the decisions which I have referred to. It must, in my opinion, be a question of fact in each of these cases whether there was such conduct on the part of the plaintiff that he must be taken to have acquiesced in the changed state of affairs so as to bring into operation the equitable doctrine of estoppel. The learned Subordinate Judge as well as the Judge of this Court came to the conclusion that the facts in this case were sufficient to prove acquiescence and I have arrived at the same conclusion. The reasons which induce me to support the view taken by the lower Court on this question are these. The plaintiffs, having been dispossessed for 12 years before they brought any suit, took no action whatever during that time either to obtain compensation from the mortgagor or to realise from the mortgagor or from the property his mortgage-debt. They did absolutely nothing which would induce the mortgagor to come to any other conclusion than that they were quite satisfied to go on accepting the diminished security in lien of the payment of interest. But that alone would not, in my opinion, be sufficient to justify the Court in coming to the conclusion that they meant to forego their rights. There is another element in this case which must not be lost sight of, and that is this. This was a mortgage for a period of about a year or a little over. At the end of that time the mortgagor had the right to redeem the property by paying the amount of the advance, a sum of something under Rs. 500. If he did not choose to do so, then the mortgagees were entitled to remain in possession satisfying themselves out of the proceeds for the interest which the mortgagor had undertaken to pay and accepting those proceeds in lieu of interest. Whether they would amount to more or whether they would amount to less than 2 per cent per mensem on the capital sum advanced was a matter of no materiality. The mortgagees took the risk of that. They might either get more by cultivating the land and appropriating the proceeds or they might get less. When they were dispossessed in the year 1902, several courses were open to them. Either they could go on accepting in lien of interest the proceeds in the diminished security or they could demand half the rate of interest or they could apply for farther security for the interest. They could also, of course, bring a suit against the mortgagor to realise the amount of the loan and if they succeeded, and it is difficult to see how they could have failed, they would be entitled to recover the principal sum and when they had done so, the right to interest would naturally come to an end. But by not taking that course or applying for further security or demanding interest I think that it is clear that they must have induced in the mind of the mortgagor a not unreasonable impression that they were content to go on accepting the diminished security, Had the mortgagor thought that the plaintiffs were not content to accept the diminished security but would, when the mortgage was finally put an end to which might be many years hence, endeavour to recover from him interest in respect to half the property of which he was dispossessed in addition to the proceeds which they would in the meantime be getting from that property, it would have been open to the mortgagor at once to pay off the mortgage and so get rid of the whole matter, as in fact he did as soon as the mortgagees brought an action to realise their loan and recover interest. It seems to me that in these circumstances the mortgagees, by their conduct in failing to claim additional security or to enforce payment of interest in lieu of the proceeds of the land from which they were dispossessed or to take any other steps for 12 years, must be taken to have induced the belief in the mind of the mortgagor that they were content to accept the diminished security and, therefore, that by allowing them to remain in possession, instead of by paying the mortgage-debt and redeeming the property, he was incurring no risk of having to pay interest when the property should ultimately he redeemed. Therefore, it seems to me that by their conduct the mortgagees did in fact put the mortgagor in a worse position and they ought not now after this lapse of time to be entitled to claim that interest about which they have been silent for so many years. In my opinion this appeal must be dismissed with costs.

Adami, J.

I agree.