KASHI PRASAD DICHHIT Vs. RAGHUNANDAN KHAGI

JUDGEMENT

(1.) The facts of this case are set out in details in the judgment of my learned brother. He has fully dealt with the various points urged by learned counsel.

(2.) After a possessory mortgage deed is executed the mortgagee may be in actual occupation of the mortgaged property or the property may be in the possession of tenants. Where a mortgagee is himself in occupation of the property the question arises as to how his income from it is to be calculated. Once a mortgagee took possession of the mortgaged property equity treated the mortgagee much as if he was a trustee. He had to render intelligible accounts; he was liable to account not merely for the profits which he in fact received, but for those which he might have received but for his own wilful default; he was liable for any damage to the property resulting from his bad management; he had to apply, if necessary, any surplus income, after paying the current interest on the mortgage debt, of keeping the mortgaged premises in repair, he was not to waste etc., and where he occupied any of the mortgaged property for his own use he had in his account to give credit in the profits for a full occupation rent. Jessel M.R. in Shepard V/s. Jones (1882) 21 Ch. D. 469 at p. 475 says : "I have always understood that occupation rent is only charged against a mortgagee who occupies." That being the English law, when the framers of the Transfer of Property Act came to deal with the liabilities of a mortgagee in possession they said in Section 76(h) his receipts from the mortgaged property, or where such property is personally occupied by him, a fair occupation rent in respect thereof, shall, after deducting the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in Clauses (c) and (d) and interest thereon, be debited against him in reduction of the amount, if any, from time to time due to him on account of interest etc

(3.) Mr. C.S. Saran on behalf of the mortgagee has urged that Section 9, U.P. Debt Redemption Act, does not make any change in the law, and the mortgagee in possession is liable to pay only a fair occupation rent as that is supposed to be the profit that he has made. He has urged that the mortgagor could not have complained if the mortgagee had let out the premises at a fair occupation-rent and if the mortgagee instead of letting out the premises to a tenant occupies it himself he cannot be put in a worse position, and all that the mortgagor should expect is the occupation rent as provided for in Section 76(h), T.P. Act. As a matter of general principle I can see much force in the submissions made by learned counsel. In Sarju Prasad Singh V/s. Randhir Singh Civil Revn. No. 325 of 1944, I said: To my mind, the fair mode of calculation, if it is not possible to find the actual value of the produce, would be to find at what rate the land in possession of the mortgagees could be let out to non-occupancy tenants. It must be remembered that a tenant not only provides seeds and manure but gives a lot of his time and labour in ploughing and watering the field and in sowing the crops, and he also takes the risk of the possible failure of crops. It would be noticed that under the English law a mortgagee in possession is liable not merely for the profits which he in fact received but for those which he may have received but for his wilful default : see Mayer V/s. Murray (1878) 8 Ch. D. 424. Even though a mortgagee is liable to account in the footing of wilful default, yet if he is in actual occupation of the property he is to pay only the-fair occupation rent and not to account for the entire profits that he may have made. The reason for this is obvious. A fair occupation rent is deemed to be a fair measure of the profits which a mortgagor is entitled to claim in an account on the mortgage.