XAVIER Vs. ANTHA

JUDGEMENT

(1.) The plaintiffs are the appellants. The suit was to redeem Ext. 4, usufructuary mortgage deed executed by Augustingu in favour of the first defendant Anthugustingu died in 1118; and the plaintiffs are his legal representatives. The mortgage was executed on 16-8-1108 for Rs. 820/-. The mortgagee had been allowed to appropriate the pattom towards a portion of the interest on the mortgage amount. As the pattern was not sufficient to meet the interest, the mortgagor had agreed to pay the mortgagee at the rate of Rs. 26-10-0 a year in two equal instalments. Augustingu and Antha were joint debtors to the People's Cooperative Bank at Tripunithura. Augustingu was the principal debtor and Antha was his surety. The Bank obtained a decree in C. O. S. 564/1108 for the money due to it and in execution of that decree, attached Augustingu's rights over the plaint property on 16-12-1113. Pursuant to this attachment, the property was sold and purchased by the Bank itself. Ext. 1, dated 2-11- 1115, is the sale sannad. Antha put in a petition, Ext. B, before the Bank to give him an assignment of the sannad rights obtained by the Bank. Accordingly, the Bank assigned its rights on receipt of the amounts due to it. Pursuant to this assignment, Antha applied in the execution court for delivery of possession of the property, Ext. 11 is copy of that petition. On 8-5-1116, he was put in possession of the property; and Ext. 13 is the certified copy of the delivery receipt, The appellants' case was that this assignment in favour of Antha was in pursuance of an agreement between Augustingu, the Bank, and Antha; and that by this agreement the Bank was to transfer its rights to Antha and Antha was to surrender the property to Augustingu when the money due to him was paid. The suit was, therefore, to redeem Ext. 4 mortgage on payment of the amount due thereunder and also the sum spent by Antha for obtaining the assignment of the sannad rights. Antha contested the claim and stated that the alleged agreement was not true and that by taking the assignment, he had become the full owner of the property, so that he was not liable to be redeemed. The courts below had concurrently found against the agreement set up by the plaintiffs; and that question was not argued before me. Two points were pressed before me for consideration One was that, under S.90 of the Trusts Act, Antha was only a trustee for Augustingu so far as the sannad rights were concerned as he was the mortgagee of the property and that he could not, therefore, keep the benefit, obtained by the assignment, for himself The second argument was based on S.60 of the Transfer of Property Act, which provided that a right to redeem would be lost only by an act of the parties or by a decree of court. So far as the mortgagees are concerned, what S.90 of the Trusts Act lays down is that, if the mortgagee by availing himself of his position as such gains an advantage in derogation of the rights of the other persons interested in the property, he is to hold, for the benefit of the persons interested in the property, the advantage so gained; but subject to repayment, by the owners, of the expenses properly incurred in gaining such advantage The principle underlying this section is that no person, who is in a fiduciary capacity or position, can make a profit out of that position to the detriment of persons who are actually interested with himself in the property held by them all. In other words, a person who is a limited owner, by reason of his position, must not utilise that position to obtain an advantage to the detriment of his coowners. Thus, before the benefit of this section is invoked, it must be shown that the party, against whom relief is sought availed himself of his position, that he gained an advantage by doing so, and that the advantage was gained in derogation of the rights of the person interested in the property (vide the decision in Govindarajan Pillai v. Alagappa Chettiar AIR 1913 Mad. 202 ). It was, therefore, to be examined whether these three conditions were satisfied in the present case. The debt, for which the Cooperative Bank obtained the decree, was a loan taken by Augustingu on the surety ship of Antha. The Bank obtained a decree against both the persons and, in execution of that decree, purchased Augustingu's rights over the property. The sale sannad, Ext. K clearly showed that it was the first defendant's rights over the property that was proclaimed and sold, so that Antha's mortgage right was left intact. Augustingu thereby lost all his rights in the property. Neither Augustingu nor his legal representatives could have put forward a case based under S.90 against the Cooperative Bank. The Bank transferred its rights to Antha. It was true that Antha was a mortgagee of the property. He was safe so far as his mortgage right was concerned, because that right bad not been sold in execution of the decree. It could not, therefore, be taken that the assignment was obtained by Antha because of his fiduciary relationship with the mortgagor. The Bank was prepared to sell its sannad rights to any one who paid the amount due to the Bank. It was mentioned that Antha got a reduction of 12 1/2 per cent and that it was an indication that he must have taken the assignment on behalf of Augustingu, for the rules of the Bank provided for such a concession. The officers of the Bank had been examined in this case; and it was stated by them that this concession could be allowed to others as well, provided that there was a resolution of the Bank to that effect. The petition, Ext. B, filed by Antha before the Back, did not also indicate that he was applying for the assignment of the sannad right for the benefit of the mortgagor. The subsequent conduct of Antha also would show that he had no such intention. After obtaining the assignment, he applied to the court to put him in possession of Augustingu's rights over the property. That was allowed; and he was really put in possession of the same. This took place in a proceeding to which both the mortgagor and the mortgagee were parties. The mortgagor, first defendant in the decree obtained by the Bank, could not have claimed back the property after such delivery, on the assumption that he still retained some right over the same. The facts proved in this case would not, therefore, bring the present case under S.90 of the Trusts Act.

(2.) S.60 of the Transfer of Property Act deals with the right of the mortgagor to redeem the mortgage at any time during the subsistence of the same, provided that the right conferred by that section must not have been extinguished by the act of the parties or by a decree of court. Commenting on this section, the several decisions on the subject had been analysed by Mulla in the 1949 edition of his commentary on the Transfer of Property Act. At page 415, it is mentioned that, if the mortgagee purchases at a sale in execution of a decree, obtained by a third person, he gets an irredeemable title; and the equity of redemption is extinguished. In this case, the mortgagee had not even purchased the equity of redemption in execution of the decree. The equity of redemption was proclaimed for sale and it was open for any one to bid it in the public court auction, The decree holder himself purchased the right; and it was from that purchaser that the mortgagee took an assignment, So long as that sale remained, the mortgagor could not retain any right of redemption over the property. In Kunhitti v. Joseph (XL C. L. R. 412), it was held that, where the mortgaged properties were the subject of a suit on a prior mortgage, to which suit both the mortgagor and the subsequent mortgagee were parties, the mortgagor would cease to have further right of redemption till the sale in the prior suit was set aside. Once the equity of redemption is sold, the mortgagor has to avoid the sale before he claims redemption. It was to overcome this difficulty that the plaintiffs had set up a case of agreement between Augustingu and Antha to surrender possession of the property on payment of the consideration for the assignment. This agreement had been found against concurrently; and that finding was not questioned before me also. Augustingu had lost his right over the property. The appellants' learned advocate referred to several decisions to show that, if the mortgagee was the purchaser of the equity of redemption, he could hold that only subject to the mortgagor's right to redeem. Reference was made mainly to Kannan v. Kombi Achan (ILR 1947 Madras 616 : AIR 1947 Mad. 209 ). In that case, the karnavan of a family had executed a usufructuary mortgage; and the mortgagee was required to pay to a previous karnavan certain quantity of paddy annually as maintenance and also to pay off a prior mortgage debt. The usufructuary mortgagee did not pay off the prior mortgage debt. Hence the prior mortgagee brought a suit and sold the properties in execution. The properties were purchased by the subsequent mortgagee. He did not pay the paddy due to the maintenance holder who, therefore, brought a suit for the same. The subsequent usufructuary mortgagee purchaser in court auction contended that he was not liable to pay the maintenance, as the property itself had been sold in execution of a prior mortgage decree, thereby extinguishing the rights of the family. The rights of the family to hold the property were put forward as the basis for the maintenance holder to claim the maintenance. It was held in that case that the subsequent mortgagee had refrained from paying off the prior mortgage debt, with a view to gain an advantage by the purchase of the property at the execution sale, that S.90 of the Trusts Act applied, that the usufructuary mortgage was not extinguished and the mortgagee held the property for the mortgagors, subject to the same rights and liabilities as obtained at the date of the sale except for the obligation on the part of the mortgagors to pay the expenses, if any, properly incurred by him, and that the liability of the mortgagee to pay the plaintiff under the usufructuary mortgage, therefore, continued even after the execution sale. It would be seen that the second mortgagee, while he had taken the liability to discharge the prior mortgage debt, did not do so and thereby caused the property to be sold by his own default. He could not take advantage of a benefit obtained by him purely by his default in not meeting the obligation which be had undertaken to discharge. There is no doubt that S.90 of the Trusts Act will apply in such cases. The decision in Rajaram v. Ramachandra (AIR 1948 Bombay 226) had only laid down that, if a first suit for redemption had abated because of the death of the mortgagor after the institution of the suit, his legal representatives were not barred under S.60 of the Transfer of Property Act from filing a second suit for redemption. That is practically the principle laid down in Subba Rao v. Raju (AIR 1950 Federal Court 1). This Federal Court decision had followed an early decision of the Privy Council in Raghunath Singh v. Hansraj Kunwar (AIR 1934 Privy Council 205) These cases have no application to the facts of the present case. The cases cited by the appellants' learned advocate are easily distinguishable; and I do not think that he has made out a case to support the appeal on any of the two grounds taken by him In confirmation, therefore, of the decree of the lower court, this second appeal is dismissed with costs.