A mortgagee is entitled to be paid the cost of repairs and improvements made to the mortgaged property, as per the covenant in the mortgage deed.

JUDGMENT : This second appeal and the memorandum of objections arise out of the decree and judgment of the learned Subordinate Judge of Ramanathapuram in A. S. No. 8 of 1954 modifying the decree and judgment of the learned District Munsif of Satlur in O. S. No. 209 of 1952.

2. The facts are: Mussafar Rowther and his son Muhammad Sultan executed a mortgage in favour of Hameed Rowther, father of defendants 1 to 3 for Rs. 272 on 1-8-1930; vide Ex. A-1. The plaintiff has purchased the equity of redemption from the mortgagors under Ex. A-4 dated 10-7-1952 for Rs. 300/- and filed the suit for redemption out of which this second appeal arises. Defendants 2 and 3 disclaimed any interest in the mortgaged property. It is unnecessary to go into the various points of controversy raised in the plaint and in the written statement because in this second appeal we are only concerned with the determination of the controversy whether the plaintiff is entitled to redeem the property for the amount mentioned in Ex. A-1 or whether he should also pay the mortgagee costs of repairs which have been assessed at Rs. 1000/- by the learned District Munsif and upheld by the learned Subordinate Judge.

3. The point in controversy can be easily decided if we bear in mind the provisions of the Transfer of Property Act relating to (a) repairs and (b) improvements. For a thorough and lucid analysis of these sections (see AIR Commentaries, T. P. Act, Third edition (1950) and Supplement brought upto 31-5-1954).

4. Section 72 lays down that a mortgagee may spend such money as is necessary for the preservation of the mortgaged properly from destruction and may, in the absence of a contract to the contrary add such money to the principal money. This head will include the cost of repairs of the mortgaged property: Arunachella v. Sithayee Ammal, ILR 19 Mad 327 : Ibrahim v. Arumugathayee, AIR 1916 Mad 859. Section 76 states that when during the continuance of the mortgage the mortgagee takes possession of the mortgaged properly, he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof after deducting from such rents and profits the payments mentioned in clause (c) of that section and the interest on the principal money: see clause (d).

This clause imposes on the mortgagee in possession the liability to make such necessary repairs of the mortgaged property as can be done out of the balance remaining after deducting from the rents -and profits the payment mentioned in clause (c) and the interest on the principal money. To the extent of the balance his liability to make the necessary repairs is paramount: Shiva Devi v. Jaru Heggade, ILR 15 Mad 290. If loss is caused to the mortgagor by his failure to make such necessary repairs it may be debited against the mortgagee in the accounts to be taken in the settlement of the mortgage: (ibid).

He is, however, not bound to spend money any further than to keep the estate in necessary repairs. Nor is he bound, where the expenditure on the necessary repairs is likely to exceed the balance in his hands, to spend money out of his own pocket. If he does spend money out of his own pocket he cannot claim repayment from the mortgagor under this clause but will be allowed to add the expenditure to the principal money under S. 72, clause (b) if it is incurred for the preservation of the properly from destruction: Sheo Nandan v. Mohammed Khalik, AIR 1929 All 777. The provisions of this clause are not absolute but are subject to a contract to the contrary.

5. In regard to improvements S. 63A lays down that in order that a mortgagee may be entitled to the costs of an improvement made by him on the mortgaged property it must be shown that (1) it was necessary to preserve the property from destruction or deterioration, or (2) it was necessary to prevent the security from becoming insufficient, or (3) it was made in compliance with the lawful order