Case Note & Summary
The litigation arose out of a suit for redemption of two usufructuary mortgages created by the plaintiffs-mortgagors in favour of the defendant-mortgagee. The first mortgage dated July 5, 1927 covered 7.20 acres of occupancy raiyati lands in village Hichapur, forming part of a larger holding under khata No. 59. The second mortgage dated April 15, 1928 covered 7.20 acres in village Utrain, part of a larger holding under khata No. 269. Under the mortgage deeds, the mortgagee agreed to pay a portion of the annual rent of the entire holdings, while the mortgagors were to pay the balance. For the Hichapur lands, the mortgagee was liable for Rs. 33-14-9 out of total rent Rs. 153-3-0, but he consistently paid Rs. 33 annually, failing to pay the trivial balance of 14 annas 9 pies. The mortgagors defaulted in paying their substantial share of Rs. 119-4-3. Similarly, for the Utrain lands, the mortgagee was liable for Rs. 68-10-9 out of total rent Rs. 155-4-0, but paid Rs. 68 annually, leaving 10 annas 9 pies unpaid, while the mortgagors defaulted in paying Rs. 86-9-3. Due to these defaults, the landlord obtained rent decrees and the properties were sold. The mortgagee purchased the Hichapur lands at a rent sale on June 18, 1934 in the name of Dwarkalal and the Utrain lands at a certificate sale on January 22, 1934 in the name of Deonarain. The plaintiffs filed Title Suit No. 91 of 1950 seeking redemption of the mortgages, arguing that the mortgagee's purchases at the sales enured for their benefit under Section 90 of the Indian Trusts Act and Illustration (c). The trial court decreed the suit. The first appellate court allowed the appeal in part, granting redemption only of 3.93 acres of plot No. 955 in Hichapur on the ground that it was not sold, and permitted withdrawal of Rs. 1,000 deposited by the plaintiffs. The High Court dismissed the second appeal. On appeal by special leave, the Supreme Court examined whether the mortgagee gained an advantage by availing himself of his position as mortgagee. The Court noted that in Basmat Devi v. Chamru Sao, A.I.R. 1964 S.C. 1707, it was held that where the mortgagee's default was substantial and contributed to the sale, Section 90 applied. However, in the present case, the mortgagee's default was trifling and not the real effective cause of sale; the mortgagors' own substantial defaults caused the sale. There was no evidence of mala fide or ulterior object. Therefore, Section 90 and Illustration (c) were not attracted, and the sales extinguished the equity of redemption. Regarding the 3.93 acres of plot No. 955, the courts below had inconsistently observed both that it was not sold and that the sale was a rent sale. Both counsel conceded that a rent sale could not be partial. The Supreme Court decided to proceed on the footing that the entire holding was sold, making the last paragraph of Section 60 of the Transfer of Property Act inapplicable. However, because the respondent did not file a cross-appeal against the decree for redemption of 3.93 acres, the Court maintained that decree. In the result, the appeal was dismissed with costs.
Headnote
A) Trusts and Mortgages - Mortgagee's Advantage - Section 90 Indian Trusts Act, 1882, Illustration (c) - Mortgagee acquired mortgaged property at rent sale after trifling default in rent - Mortgagee's failure to pay a small portion of rent was not the real effective cause of sale; mortgagors' substantial default caused sale; no mala fide or ulterior object shown - Held that Section 90 Illustration (c) not attracted and purchase did not enure for benefit of mortgagors; rent sale and certificate sale extinguished equity of redemption (Paras 1-5). B) Transfer of Property - Redemption of Mortgaged Property - Section 60 Transfer of Property Act, 1882 - Proportional redemption of unsold portion - Since Supreme Court proceeded on footing that entire holding was sold at rent sale, mortgagors did not own equity of redemption in any portion, so last paragraph of Section 60 had no application; but decree for redemption of 3.93 acres of plot No.955 was maintained because no cross-appeal by respondent - Held that appeal dismissed with costs (Paras 5-7).
Issue of Consideration
Whether purchases at rent sale and certificate sale by mortgagee enured for benefit of mortgagors under Section 90 of Indian Trusts Act and Illustration (c); whether mortgagors entitled to redeem entire mortgaged lands; whether proportionate redemption of unsold portion permissible under last paragraph of Section 60 of Transfer of Property Act
Final Decision
Appeal dismissed with costs. The decree of the High Court was maintained. The Supreme Court held that Section 90 Indian Trusts Act and Illustration (c) were not attracted because the mortgagee's default was trifling and not the real effective cause of sale; the rent sale and certificate sale extinguished the right of redemption. However, since there was no cross-appeal by the respondent, the decree for redemption of 3.93 acres of plot No. 955 passed by the first appellate court and affirmed by High Court was maintained.
Law Points
- Section 90 of Indian Trusts Act applies only when mortgagee avails himself of his position and gains advantage
- trifling default in rent by mortgagee not a real contributory cause of sale
- purchase at rent sale extinguishes equity of redemption
- last paragraph of Section 60 Transfer of Property Act inapplicable when mortgagors do not own equity of redemption
