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1966 DIGILAW 19 (PAT)

Narain Prasad Singh v. Radhakant Prasad Singh

1966-02-07

H.MAHAPATRA, S.N.P.SINGH

body1966
Judgment 1. The defendant first party in a suit for redemption of mortgage is the appellant. Defendant second party were the original mortgagors, from whom the plaintiffs purchased the equity of redemption. The plaintiffs deposited the mortgage money due under the mortgage bond under Section 83 of the Transfer of Properly Act in 1945 in Court, but the delivery of possession was given to them in May, 1960. While passing the decree, there was a direction for determination of the mesne profits as due to the plaintiffs under Section 76, Clause (1) of the Transfer of Properly Act, and a final decree in that respect was passed on the 23rd of December, 1958, against the defendant first party, the mortgagee. The mortgagee, defendant first party came in appeal against that and the plaintiffs preferred a cross-objection as no interest had been allowed to them on the decretal amount The lower appellate Court upheld the final decree, but modified it by allowing on the cross-objection of the plain-tiffs interest, at the rate of six per cent per annum of the decretal amount from the date of the suit till the date of the final decree Against this the present appeal has been brought. 2. Learned counsels main grievance is that the cost of cultivation was not deducted in determining the amount of mesne profits payable by the mortgagee for holding the possession of the land after the deposit of the money under Section 88 of the Transfer of Property Act for about five years Clause (i) of Section 78 of the Transfer of Property Act was amended by Sec. 40 of Act XX of 1929. It reads now as follows: "76. Liabilities of Mortgagee in Possession--When during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property- X X X X (i) When the mortgagor tenders or deposits in manner hereinafter provided, the amount for the time being due on the mortgage, the mortgagee must, notwithstanding the provisions in the other clauses of this section, account for his receipts from the mortgaged property from the date of the lender or from the earliest time when he could take such amount out of Court, as the case may be and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property". The last part of the clause was newly added, by which the mortgagee was deprived of the benefit of deducting any expenses incurred by him after the date of the deposit of the mortgage money by the mortgagor Learned counsels argument was that expenses spoken about in this clause do not include the cultivation expenses, hut only expenses on account of rates and taxes, ground rent etc. It is difficult to accept this contention. The deprivation of the benefit in regard to deduction of all kinds of expenses incurred in respect of the mortgage property was introduced by way of penalty with a view to discouraging the mortgagee from retaining possession after the mortgage money is tendered or deposited to their credit. If all the expenses which could legitimately be claimed to have been incurred in respect of the mortgaged properly were deductible, then however late the mortgagee may be in delivering possession of the properties to the mortgagor he will stand to lose nothing. That is why the amendment introduced the new addilion to the clause. Before the amendment, a Full Bench decision of the Madras High Court in T Subba Rao Garu V/s. Sri Balusu Buchi Sarvarayudu, ILR 47 Mad 7: (AIR 1923 Mad 533) had held on principles of mesne profits that all expenses incurred on account of agricultural operations on the mortgaged properly will be deducled from the total gross receipts in the hand of the mortgagee for payment to the mortgagor under Clause (1) of Section 76, and that led to the Amending Act XX of 1929. Sec. 40. 3. If we refer to the provisions of Clause (h) of Section 76, we shall see what the legislature meant by the expenses That clause refers to expenses, including that incurred for the collection of rents and profits. Cost of cultivation is incurred for getting the profits from the land, and, therefore, it necessarily comes within Clause (h). The next Clause (i) has prohibited deduction of any expenses incurred, . . . .in connection with the mortgaged properly" Cost of cultivation must necessarily come within that limit. The Courts below were right in thinking that the mortgagee was not entitled to deduct those expenses from what he received from the land during the period that he held possession in spite of the deposit of the mortgage money. 4. . . .in connection with the mortgaged properly" Cost of cultivation must necessarily come within that limit. The Courts below were right in thinking that the mortgagee was not entitled to deduct those expenses from what he received from the land during the period that he held possession in spite of the deposit of the mortgage money. 4. Learned counsels next contention was that in calculating mesne profits from lands, cultivation expenses have got to be deducted. He referred to the definition of mesne profits" in Clause (12) Sec.2 of the Code of Civil Procedure. That definition, in our view, has no application because Clause (1) of Section 76 of the Transfer of Property Act does not refer to "mesne profits". It says "receipts" No doubt, in the present case, the trial Court, as well as the appellate Court, has used the expression "mesne profits in passing the decree against the mortgagee-defendant first party, but that expression has been loosely used. Clause (1) renders it obligatory on the part of the mortgagee to account for that he receives from the mortgaged property. The argument that the word receipts in this clause should be taken in the sense of "mesne profits" is not correct. Learned counsel also drew our attention to some of the decisions where the expression mesne profits was used, but, in our view, that was a loose expression and not an expression in exactitude. 5. Another point pressed by the learned counsel was in respect of the interest that was allowed by the lower appellate Court against the appellant on the decretal amount. The trial Court did not say anything about interest, but a cross objection was preferred before the lower appellate Court on behalf of the plaintiffs, claiming interest, both pendente life and future, and pendente lite interest was allowed to them at the rate of six per cent per annum. Learned Counsel contended that in view of the fact that sufficient penalty has been imposed upon the mortgagee defendant first party (appellant), in the sense that he is now to pay to the mortgagors all that he received from the land, without deducting any expenses which he had to incur legitimately, he should not be saddled with further interest. The decree itself is by way of damages against him and interest on damages will be inequitable and cannot be defended in law. The decree itself is by way of damages against him and interest on damages will be inequitable and cannot be defended in law. On the other side, a reference was made to Sec.34 of the Code of Civil Procedure, where in a suit for money the granting of interest is in the discretion of the Court. In the case of Mahabir Prasad Rungta V/s. Durga Dutta, AIR 1961 SC 990 , their Lordships also held that the court has got full discretion in allowing pendente lite interest in a proper case. Interest prior to the institution of the suit is dependable upon the contract between the parties, but as far as interest pendente lite and future is concerned, it is for the Court to decide whether the ends of Justice call for grant of any such interest. The lower appellate Court undoubtedly has exercised this discretion in favour of the plaintiffs as far as pendente lite interest is concerned, but, we mink that in the circumstances of the case that discretion does not appear to have been judicially exercised, because the defendant first party has already been saddled with the burden of the entire receipt from the land and the plaintiffs will have the benefit thereof now. If they (plaintiffs) were in possession themselves they would not have got the benefit of the whole of the receipts, as out of the receipts from the land they would have Incurred the cultivation expenses themselves. In that view of the matter, the grant of pendente lite interest to them from the defendant first party (appellant) does not appear to be justified. 6. The reason given by the lower appellate Court for refusing future interest, as stated in the judgment, was that the plaintiffs did not ask for it but on a reference to the grounds of appeal filed in that Court it appears that they had not only asked for pendente lite interest but also for future interest. We think that the plaintiffs have got a justifiable claim for future interest. If the decretal amount is not paid by the defendant-first party (appellant) within three months from the date of the decree prepared by this Court, he will be liable to pay future interest at the rate of six per cent per annum to the plaintiffs from the date of the final decree as made in the trial Court till realisation. If the decretal amount is not paid by the defendant-first party (appellant) within three months from the date of the decree prepared by this Court, he will be liable to pay future interest at the rate of six per cent per annum to the plaintiffs from the date of the final decree as made in the trial Court till realisation. To this extent the cross objection preferred by the plaintiffs-respondents is allowed The appeal is also allowed to the extent that the pendente lite interest as decreed by the lower appellate Court will be omitted from the decretal amount. 7. In view of partial success of both the parties, they are directed to bear their own costs in this Court.