K B SETH SORABJEE Vs. SETH DWARKADAS RANCHHODDAS

JUDGEMENT

(1.) This appeal was originally before the Board on February 12, 1932, when, upon a preliminary objection taken by the appearing respondents, their Lordships agreed humbly to advise His Majesty that the certificate of the Court of the Judicial Commissioner of the Central Provinces admitting the appeal was wrongly granted but that special leave to appeal ought to be granted to the appellant upon lodging a petition for that purpose. This petition was duly lodged, and their Lordships report was approved by Order in Council of March 17, 1932.

(2.) The case, which comes here on appeal from a judgment and decree in second appeal, raises a question of some importance as to the right under the existing law in India of a mortgagor of proprietary rights to recover on redemption subordinate tenures acquired by the mortgagee during the subsistence of the mortgage. This question came before this Board in Bajah Kishendatt Ram V/s. Rajah Mumtaz Ali Khan (1879) L.R. 6 I.A. 145 before the enactment in 1882 of the Indian Trusts Act and the Transfer of Property Act. In that case the mortgagee of the proprietary rights of a talookdar had acquired during the continuance of the mortgage certain subordinate tenures in the talaq known as birts, and their Lordships found on the facts of that case that the mortgagee taking advantage of his position as de facto talookdar had acquired the birta on very favourable terms and had allowed them to merge in the taluq, and that it would be inequitable to allow him on redemption to revive the birts for his own benefit. They accordingly held that the mortgagor was entitled to redeem the estate as then enjoyed by the mortgagee on paying the original mortgage money plus the purchase money of the birta. They at the same time made it clear that they were not prepared to affirm the proposition that every purchase of a sub-tenure by the mortgagee must be held to have been made for the benefit of the mortgagor. The judgment reads (p, 153):- Their Lordships are not prepared to affirm the broad proposition that every purchase by a mortgagee of a sub-tenure existing at the date of the mortgage must be taken to have been made for the benefit of the mortgagor, so as to enhance the value of the mortgaged property, and make the whole, including the sub-tenure, subject to the right of redemption upon equitable terms. It may well be that when the estate mortgaged is a zemindar in lower Bengal, out of which a putnee tenure has been granted, or one within the ambit of which there is an ancient mokurreree istimrari tenure, a mortgagee of the zemindary, though in possession, might purchase with his own funds and keep alive for his own benefit that putnee or mokurreree In such cases the mortgagee can hardly be said to have derived from hiasmortgagor any peculiar means or facilities for making the purchase which would not be possessed by a stranger, and may therefore be held entitled, equally with a stranger, to make it for his own benefit. In such cases also the putnee, if the putneedar failed to fulfil his obligations, would not be resumable by the zemindar, and the zemindary would always have been held subject to the mokurreree.

(3.) At the close of their judgment their Lordships referred to the English decisions which they observed were only applicable because they were agreeable to general equity and good conscience, and said (p. 159):- It seems to their Lordships that, although some of the earlier cases may have been qualified by more recent decisions, the general principle is still re-cognised by English law to this extent, viz., that most acquisitions by a mortgagor enure for the benefit of the mortgagee, increasing thereby the value of his security ; and that, on the other hand, many acquisitions by the mortgagee are in like manner treated as accretions to the mortgaged property, or substitutions for it, and, therefore, subject to redemption., The law laid down in Rakestraw V/s. Brewer (1728) 2 P. Wms. 511 as to the renewal of a term obtained by the mortgagee of the expired term, being, as coming from the same root, subject to the same equity, has never been impeached.