SUBEDAR RAI Vs. BACHAI PANDEY

JUDGEMENT

(1.) Plaintiff, who is the appellant, brought a suit for redemption of a mortgage executed in favour of the father of the defendant in 1895 (Exhibit 1) in respect of 1 bigha 15 kathas of land. It was pleaded in defence that the mortgage security had been sold in a court sale in execution of a rent decree in January, 1903 and was purchased and taken possession by the landlord, who, on 7-6-1905, settled the land with the defendant. The area settled with the defendant was 1 bigha 15 kathas, being identical with that of the mortgage security. The sale in execution of rent decree was in respect of 2 bighas 1 katha 14 dhurs including this land. The trial court held that the rent sale was due to the default of the mortgagee, inasmuch as, he failed to pay the rent, which he was under an obligation to do, and, therefore, the subsequent settlement taken by him from the landlord after the rent sale, will be for the benefit of the mortgagor, namely, the plaintiff, under Section 90 of the Trusts Act, but dismissed the plaintiffs suit on the ground that the defendant, having been recorded as a tenant in the revisional settlement khatian, had established his title by adverse possession against the plaintiff. The court of appeal, on an appeal by the plaintiff, has held that there was no adverse possession in favour of the defendant and the rent sale was not due to the default of the mortgagee, as he was not bound to pay the rent for the land in question. The mortgage came to an end by the rent sale and the settlement taken by the defendant created new rights different from that of the mortgagee. In that view, the plaintiff's suit has also been dismissed and he has been refused the equitable right of redemption.

(2.) In the present second appeal, it is contended, no doubt, that the proportionate rent in respect of the mortgage security was Rs. 3/8/-, against Rs. 8/2/- payable for the entire holding, which contained larger area; the balance of the rent payable for the portion not mortgaged to the defendant, was undoubtedly on the mortgagor to pay to the landlord. The rent decree and the sale following that, were the result of the non-payment both by the plaintiff mortgagor and the defendant mortgagee. Still the mortgagee having defaulted to discharge his part of the trust imposed upon him under the terms of the mortgage deed, the dispossession of the mortgagee, if at all, must be held to have been brought about by his own wrong and, therefore, any benefit or advantage that he has gained thereafter will enure to the benefit of the mortgagor, because, he cannot take advantage of his own wrong. The equitable principles laid under Section 90 of the Trusts Act are well known. It is well settled that if a mortgagee, like a co-owner, acts in a manner, which is repugnant to the obligations of a trustee and if he later on, as a result following from, his own action, gains an advantage, that will not be in derogation of the mortgagor. In cases, where on account of the default committed by the mortgagee, the mortgage security was brought to sale and was, purchased by the mortgagee either in his own name or in the name of his benamdar, the courts have consistently held, following the dictum laid down by the Privy Council in similar cases, that the mortgagor will still continue to have his right to redeem the mortgage and the possession or the rights acquired by the mortgagee in such sale will not be taken to have broken the mortgagee's position or the status of the mortgagee involving the rights of the mortgagor to redeem the mortgage. There is another line of cases in which the mortgagee does not appear on the surface to be either a direct purchaser or a purchaser through a benamdar, but the landlord purchases in the court auction sale, in execution of rent decree and later on, settles the land with or sells the land to the mortgagee. In such cases there appears to have been some conflict in the expression of opinion by the Courts. Where fraud or collusion is established on evidence between the mortgagee and the landlord, either in the matter of bringing about the rent sale or in the matter of default, committed in payment of rent, the Courts have not made any distinction between the mortgagee or the landlord as the purchaser. In such cases, even if the landlord was the purchaser and the settlement or the sale was effected in favour of the mortgagee after the landlord took possession in execution of the rent decree, the Courts have held that on account of such collusion the advantage will not be allowed to be taken and appropriated by the mortgagee to the exclusion of the mortgagor. The mortgagor in such cases has the right to redeem the mortgage. But in those cases, where there is no fraud or collusion established, but only for the mere default of payment of rent by the mortgagee, the rent sale is brought about and the landlord purchases the land and settles it, later on, with the mortgagee, Courts have held the view in some cases that the mortgagee acquires new right and the mortgage comes to an end by the rent sale. It is, however, to be borne in mind that the underlying principles of Section 90 of the Trusts Act are that the mortgagee, availing himself of his position as a mortgagee, does something to gain an advantage in his own favour. In other words, the default committed by him must be with an intention to gaining certain advantage for himself either directly by being purchaser in court sale or by taking settlement from the auction purchaser later on. Commissions or/and omissions with mala fide intention are therefore necessary elements, though not directly connected with the ultimate result brought about. But those elements must be shown to be present at the time when the default is made. Such elements may also appear from the subsequent conduct of the mortgagee after the rent sale is brought about. In cases, where in spite of the rent sale, the mortgagee continues in possession, that will be indicative of an intention to take advantage of one's possession and create a situation by one's default and then utilise that for his own benefit later.

(3.) In the present case there is no dispute over the fact that there was liability on the mortgagor to pay a certain portion of the rent of the entire holding and the mortgagee had the obligation to pay Rs. 3/8/- towards the rent in proportion to the extent of land given in mortgage. A contention was raised on behalf of the defendant-respondent that in absence of an obligation to pay the entire rent for the entire holding, the rent sale cannot be said to have been brought about by the default committed by the mortgagee. Where the rent has not been split up in proportion to the mortgage security with the consent of the landlord, the landlord will not be bound to receive rent, except for the entire holding. If in this case it would have been shown that the defendant made an attempt to pay his proportionate rent either to the plaintiff mortgagor or to the landlord, but such rent was not accepted for the default committed by the mortgagor in paying his own share, the consideration would have been entirely different and in favour of the defendant's contention. On facts, therefore, there is no escape from the conclusion that the rent sale in the present case was due also to the default committed by the mortgagee.