RAM DAYAL Vs. MUKAT MANOHAR

JUDGEMENT

(1.) This is a second appeal by the defendants against concurring decrees the two lower Courts decreeing redemption in favour of the plaintiff of a certain usufructuary mortgage and under Order 34, Rule 9 a payment by the defendants to the plaintiffs of Rs. 137 with interest. The mortgage in question was executed on 24 April 1917 by Umrao Singh in favour of the plaintiffs. The principal sum secured under the mortgage was Rs. 4,500 and the plaint states that the mortgage deed in question is a possessory mortgage deed and the profits arising from the mortgaged property have been agreed to be set off against the interest on the mortgage money. In Paras. 4 and 5 it was alleged that most of the items entered in the mortgage deed were fictitious and that for that reason the mortgagees had only paid Rs. 2,136-3-6 of the mortgage money, and in Para. 6: Although the mortgagees did not pay the entire mortgage money, yet they all along realised the profits arising from the mortgaged property.

(2.) There was no rate of interest specified in the mortgage but in a tabular statement, List B attached to the plaint, the plaintiffs with some ingenuity have assumed a rate of 8 per cent, interest without stating that figure. This rate of interest is arrived at by calculating the profits as Rs. 360 per annum and ascertaining that that amount of profits on the total mortgage amount of Rs. 4,500 would be 8 per cent. As a matter of fact on the allegations of the plaint that the mortgagees paid only something less than half of the Rs. 4,500 the interest if it was calculated would come to about double 8 per cent, and logically therefore on the plaint the calculation of interest is incorrect. The basis of the claim is that the profits amounted in the first year to Rs. 360 and interest amounted to Rs. 171 and therefore the debt should have gone in reduction of the capital amount. As indicated there is no ground whatever for assuming that 8 per cent, should be the rate of interest and the assumption that a rate of interest should be taken on a fictitious total seems unsound. This point has not been noticed by the Courts below and no attention whatever has been directed by either Court to what is the rate of interest. The defence was that the entire amount had been paid. In this mortgage no cash consideration was paid but about 20 debts were included which totalled Rs. 4,500. In regard to these debts the finding of the Courts below is that items on p. 25 totalling Rs.7,51-6-0 were fictitious and three other items totalling Rs. 895-11-6 were genuine but were not paid. Now the rights of the plaintiffs arose as follows: Umrao Singh filed a petition in insolvency after executing the mortgage deed in question and in his schedule of debts he mentioned this mortgage. Umrao Singh was adjudicated an insolvent. The equity of redemption of Umrao Singh was put up to auction by the receiver and purchased by the plaintiffs for Rs. 50. This sum appears small but at the time there was a mortgage deed dated 6 January 1914 in favour of plaintiff 1; the original amount of the consideration was Rs. 428-8-0, but at the time of the auction purchase the amount had considerably increased owing to interest. On 25 May 1924 the receiver executed a sale deed in favour of the plaintiffs of the equity of redemption and it is under this sale deed that the present plaintiffs have sued as transferees from Umrao Singh. The position of the plaintiffs therefore is not precisely the same as would be the position of a mortgagor who was suing for redemption. Now the genuine items which have not been paid are as follows:

(3.) Now the question around which argument chiefly centres is whether the defendants mortgagees in possession are bound to render accounts under Section 76 to the plaintiffs on redemption of this mortgage, or whether Section 77, T.P. Act, applies to the case and the defendants as mortgagees in possession are not bound to account. Section 77 provides as follows: Nothing in Section 76, Clauses (b), (d), (g) and (h), applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal.