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PATNA HIGH COURT
V.Ramaswami and Sarjoo Prasad JJ.
Satdeo Singh
Versus
Kamal Singh
Appeal From Appellate Decree No. 494 of 1948 ;
Decided On : APRIL 02, 1952
REDEMPTION - MORTGAGE - STATUTORY MORTGAGE - DEPOSIT UNDER SECTION 171, BIHAR TENANCY ACT - EQUITABLE PRINCIPLE - FIDUCIARY RELATIONSHIP - ACCOUNTING - SECTION 76(G), TRANSFER OF PROPERTY ACT - LIEN - MORTGAGEE IN POSSESSION - RIGHTS AND OBLIGATIONS.
Fact of the Case:
The plaintiffs purchased land from Nezamuddin, who had mortgaged it to Latafat Hussain and Nezamuddin. The defendants, who were the mortgagees, had made a deposit under Section 171 of the Bihar Tenancy Act to prevent the sale of the land for arrears of rent. The plaintiffs brought a suit for redemption and accounts, claiming that the defendants were benamidars for Latafat Hussain and Nezamuddin and that the purchase of the land by the defendants in execution of a rent decree was for the benefit of the mortgagors. The lower courts decreed the suit.
Finding of the Court:
The High Court held that the defendants were indeed benamidars for Latafat Hussain and Nezamuddin, and that the purchase of the land by the defendants in execution of the rent decree was for the benefit of the mortgagors. The court also held that the defendants were liable to account for the produce of the land from the date they took possession until the date they made over possession to the plaintiffs.
Issues: 1. Whether the purchase made by the defendants in execution of the rent decree was for the benefit of the mortgagors and whether the plaintiffs were entitled to a decree for redemption. 2. Whether the lower courts were right in appointing a commissioner for taking account from the defendants with respect to the produce of the land in dispute.
Ratio Decidendi: 1. The court held that the purchase made by the defendants in execution of the rent decree was for the benefit of the mortgagors, as the defendants were benamidars for Latafat Hussain and Nezamuddin. The court relied on the principle of equity that a mortgagee cannot take advantage of his own default to acquire the mortgaged property for his own benefit. The court also relied on the decision of the Judicial Committee in Deo-nandan Prashad v. Janki Singh, where it was held that there is a fiduciary relationship between a mortgagee and a co-sharer in the mortgaged property, and that the mortgagee cannot derive any benefit from a breach of trust committed by him. 2. The court held that the lower courts were right in appointing a commissioner for taking account from the defendants with respect to the produce of the land in dispute. The court held that Section 171(1)(c) of the Bihar Tenancy Act, which provides that the person making the deposit shall be entitled to possession of the tenure or holding as mortgagee of the tenant, does not exempt the defendants from the liability to account imposed by Section 76(g) of the Transfer of Property Act. The court also held that the defendants were not entitled to a lien on the land for the amount of the deposit, as Section 171 of the Bihar Tenancy Act creates a statutory mortgage in favor of the person making the deposit.
Final Decision: The High Court dismissed the appeal and affirmed the decree of the lower appellate court.
Ramaswami, J.
1. The question that arises in this appeal is whether the plaintiffs ought to be granted a decree for redemption and accounts with respect to the properties described in schedule 4 of the plaint.
2. The dispute relates to khata No. 7, mouza Abdulpur Bujurg which is recorded in the name of Latafat Hussain and Nezamuddin. On 4-1-1923 Latafat executed an ijara deed with respect to 2 bighas 8 kathas 12 dhurs in the name of Lochan Mahto, who was karta of the joint family, which the defendants first party constitute. In 1934 or sometime before 1934 a rent suit was brought on behalf of the landlords against Latafat and Nezamuddin and in course of the execution of the decree Lochan Mahto made a deposit of the entire decretal amount under the provisions of Sec.171, Bihar Tenancy Act. The deposit was made on 21-7-1937 and possession was given to Lochan of the entire holding No. 7 on 20-12-1937. A second rent suit was brought in 1937 by the landlords and in execution of the decree defendants 1st party purchased plots 140, 326 and 125 in the name of Sahdeo Singh. On 23-11-1941 the plaintiffs purchased the land described in Schedule 4 of the plaint from Nezamuddin. The property purchased included plots 140 and 328 which Sahdeo had purchased in execution of the rent decree in the year 1939. The plaintiffs brought the suit alleging that Sahdeo was the benami-dar of defendants 1st party and that the purchase of plots 140, 326 and 125 was really on behalf of the latter. It was said that defendants 1st party committed deliberate default in payment of rent, on account of which the rent suit was brought and the holding was put to sale in the execution case. The plaintiffs claimed that the purchase made by Sahdeo in 1939 must be deemed to be for the benefit of the mortgagors and the equity of redemption was not extinguished. The plaintiffs asked that on payment of money which the defendants 1st party had deposited under Sec.171, Bihar Tenancy Act, a decree for redemption ought to be granted by the court and the plaintiffs should be placed in possession of the plots which they had purchased. The plaintiffs also claimed that defendants 1st party should render accounts of the produce of the land in dispute. The substantial ground of defence was that there was no fraud on the part of the defendants 1st party, that Lochan had advanced the money for deposit from his personal account, that Sahdeo was not benamidar of defendants 1st party and that the plaintiffs were not entitled to a decree for redemption or to rendition of accounts. Upon a consideration of the evidence the Munsif held that defendants first party had really taken ijara in 1923 from Latafat; the purchase in the name of Sahdeo was made on be-half of the defendants 1st party and that the plaintiffs were entitled to redeem the properties which they had purchased. The Munsif directed that a commissioner will be appointed for taking account of the produce of the land from defendants first party and if any balance is struck in favour of the defendants first party, the plaintiffs will have to deposit that amount and the defendants first party will deliver possession of the mortgaged lands to the plaintiffs. But if any balance is struck in favour of the plaintiffs the defendants first party will have to pay that amount also. The defendants first party will be entitled to claim set-off of Rs. 106/- with the statutory rate of interest from 21-7-1937, which is the date of deposit.
3. The decision of Munsif has been affirmed by the learned Subordinate Judge in appeal.
4. The principal questions argued are : (1) whether the purchase made by Sahdeo in 1939 of plots 140, 326 and 125 in the execution case must be deemed to be for the benefit of the mortgagor on equitable principle and whether the plaintiffs are entitled to be granted a decree for redemption with respect to plots 140 and 326 which they had purchased in the year 1941 and (2) whether the lower Courts were right in appo
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