- Bookmark
- Share
- CaseIQ
Ram Rup v. Jang Bahadur
Written Summary of the Opinion — Lakshmikanta Jha, C.J.
Factual and Procedural Background
This appeal arises from a suit for redemption decreed by the trial court on 23 April 1947. The defendants (first party) are mortgagees; the defendants second party are transferees of a portion of the disputed land; defendants third party are the landlords. Plaintiffs include Jang Bahadur Singh (plaintiff no. 1) and others who claimed tenancy under a kabuliat dated 21 December 1922 over a 20.55 acre holding. Rent fell into arrears and a rent suit (No. 1570 of 1936) resulted in an ex parte decree dated 4 January 1937, with execution taken out as Execution Case No. 1080 of 1937.
While execution was pending, on 20 July 1937 Jang Bahadur and Jawad Ali executed a sudbharna (mortgage) bond (Ext. A) for Rs. 800 in favour of Lalji Singh and Sukar Singh; the entire holding was given as a usufructuary mortgage to pay the decretal dues and subsequent arrears. The mortgage money remained with the mortgagees but they did not pay the decretal amount, and the holding was sold at court sale on 20 August 1937; the landlords purchased and obtained delivery on 30 November 1937.
Plaintiffs applied on 21 July 1939 under section 3(1) of the Bihar Restoration of Bakasht Lands and Reduction of Arrears of Rent Act, 1938, seeking restoration; the Collector rejected the application on the ground that a settlement had been made before 19 April 1938. Revisional authorities declined to interfere. Plaintiffs then sued for redemption of the sudbharna bond, alleging the settlement was fraudulent and collusive and that the mortgage subsisted; they also alleged the defendants' possession remained that of mortgagees. The trial court decreed redemption on payment of Rs. 800. The defendants (appellants) appealed.
Legal Issues Presented
- Whether the sudbharna bond dated 20 July 1937 was acted upon (i.e., whether it became effective and whether the mortgagees acquired rights and possession under it).
- Whether the plaintiffs' right of redemption subsists despite the rent sale and subsequent settlements by the defendants with the landlords.
Arguments of the Parties
Plaintiffs' (Respondents') Position
- The sudbharna bond (Ext. A) was duly executed, registered and acted upon; the registration receipt was handed over to Lalji Singh and the mortgagees came into possession as mortgagees.
- The defendants held the mortgage money (Rs. 800) and therefore were trustees with a duty to pay the landlords' decretal dues to avert sale; they failed to do so.
- The subsequent rent sale and the defendants' settlement with the landlords were fraudulent/collusive or resulted from defendants' misconduct, so the plaintiffs can treat the rent sale as a private sale and assert their equity of redemption.
- If the sale is treated as private and the mortgage is treated as subsisting, plaintiffs are entitled to redeem by paying the amount necessary to account for what the defendants paid (including salami) to obtain settlement.
Defendants' (Appellants') Position
- The mortgage bond remained inoperative or was not acted upon; the defendants contend there was no fraud in the rent sale and no collusive settlement, so the plaintiffs have no right to redeem.
- It was argued (by Mr. Lal Narain Sinha) that where the property vested in the landlords by the rent sale, a later settlement by the landlords with the original mortgagees would not revive the mortgagors' equity of redemption.
- The defendants also presented a factual account (asserted by D.W.5) that the landlords' dues were larger (claimed Rs. 900) and the plaintiffs were unwilling to contribute the excess, suggesting non-payment was not solely defendants' fault; this narrative was not pleaded originally and was treated as an afterthought by the court.
Legal Arguments by Counsel (Selected)
- Counsel for defendants relied on observations in Gauri Shanker Sahu and Fekua Mahto to contend that, absent fraud, purchase by mortgagee after a rent sale does not revive equity of redemption.
- Counsel further argued that, under the Indian Evidence Act, section 92, rights and liabilities fixed by a document must be proved by the document's terms and not by oral evidence; he contended plaintiffs could not rely on oral evidence to establish that a duty was cast on defendants to pay decretal dues. The court rejected this submission because the bond was silent on the point and extrinsic evidence was therefore admissible.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sheikh Sultan Ahmad v. Syed Maksed Hussain | Execution of a document gives validity by performance (signing/registration); delivery is not essential unless agreed. | Applied to hold that the duly executed and registered sudbharna bond was effective without proof of physical delivery; supported the conclusion that mortgagees acquired legal right to possession after registration. |
| Hunoomanpersaud Panday v. Mussumat Dabooee Munraj Koonweree (Judicial Committee) | Principle that a party cannot take advantage of his own wrong (commodum ex injuria sua nemo habere debet). | Relied on to hold that defendants, having allowed the sale through their misconduct, cannot benefit by the settlement and defeat plaintiffs' equity of redemption. |
| Vedanayagar Mudaliar v. Vedammal | Reiterates the universal application of the maxim that one cannot benefit from his own wrongful act. | Cited to support the principle that the mortgagees' misconduct cannot be turned into a legal advantage against mortgagors. |
| Kamala Kanta v. Annanda Chandra Chakraburtty | Mortgagees cannot, by suffering dispossession and taking a new title from the landlord, affect mortgagors' rights. | Applied to reinforce the court's view that subsequent settlement by mortgagees cannot defeat mortgagors' right of redemption when dispossession resulted from mortgagees' own default. |
| Tali Mahton v. Lekhraj Mahton | A mortgagee in possession has a duty to maintain possession as against the landlord and cannot suffer dispossession and then take a settlement. | Followed as a directly analogous authority supporting that defendants had a duty and breached it; therefore plaintiffs' right of redemption persisted. |
| Chandi Mander v. Sitabi Bhagat | A mortgagee cannot claim land is no longer subject to mortgage as a result of his own default. | Applied to buttress the proposition that defendants cannot benefit from their own default; consistent with Tali Mahton and other Bench decisions. |
| Gauri Shanker Sahu v. Sheotahal Gir | Observations that, in certain factual situations, mortgagor/assignee cannot assert right to redeem after a rent sale unless the sale is set aside. | Distinguished on its facts: the court held that Gauri Shanker must be read in light of its facts (mortgagor had opportunity to preserve equity but did not). Therefore it was not applicable here. |
| Fekua Mahto v. Babu Lal Sahu | Held that when property sold in execution for rent and later purchased by the mortgagee (whose failure caused the decree), such purchase does not revive equity of redemption in absence of fraud. | Distinguished: court found the facts in Fekua Mahto involved no duty on mortgagees to pay rent (they were held by decree to have no right), so that decision did not control the present case where a duty was present and breached. |
| Nawab Sidhee Nuzur Ally Khan v. Rajah Ojoodhyaram Khan | Principle that a sale obtained through fraud may be treated as a private sale and equities can be enforced by imposing a trust on the estate that passed under it. | Relied upon to hold plaintiffs may treat the rent sale as a private sale as against the defendants and claim redemption without necessarily setting aside the decree or sale; the sale can be treated as subject to a trust imposed because of defendants' fraud. |
| Deonandan Prashad v. Janki Singh | Cited in arguments about reconveyance and consequences of purchase obtained by fraud. | The court considered the reliance upon Deonandan Prashad but held the plaintiffs' relief was available without a separate prayer for reconveyance; Deonandan Prashad was not accepted as preventing the plaintiffs' remedy in the present factual matrix. |
| Ramdas Singh v. Manki Singh (Second Appeal No. 907 of 1948, unreported) | Used as a supporting authority (unreported decision) for the proposition that a sale may be treated as private where fraud/collusion is shown. | Cited as corroborative authority supporting the court's conclusion that plaintiffs could treat the sale as private and claim redemption. |
Court's Reasoning and Analysis
The court proceeded by (i) examining the formal validity and operation of the mortgage deed, (ii) assessing the factual evidence on possession and receipt of the registration receipt, (iii) determining whether a duty to pay landlords' dues rested with the defendants, and (iv) analysing whether defendants' conduct and the subsequent settlement barred redemption.
On execution and registration: the mortgage bond (Ext. A) was executed and registered at Lakhisarai. The court accepted oral and documentary evidence (including testimony of attesting witnesses P.W.1 and P.W.2 and P.W.5) that the registration receipt was handed over to Lalji Singh (now deceased) and that the mortgagees were thus entitled to take delivery of the mortgage bond and to come into possession. The court relied on Sheikh Sultan Ahmad to hold delivery was not essential to make the deed effective; therefore the mortgage became effective upon due execution and registration.
On the deposit and trusteeship: the deed recited payment of Rs. 800; the recital was prima facie evidence but rebuttable. D.W.5 admitted only Rs. 50 was actually paid to plaintiffs; plaintiffs testified the money was to be used by Lalji Singh to satisfy the decretal sum and meet document costs. The court concluded that the defendants held the money and therefore occupied the position of trustees with a duty to pay the landlords' dues and to protect the mortgaged property from sale.
On possession and duty: the court accepted plaintiffs' evidence that the defendants were put in possession as mortgagees and cultivated the land shortly after the bond's execution. Given that position, the defendants' failure to deposit the decretal amount (Rs. 688) although Rs. 800 was in their custody was a breach of duty; this breach caused or allowed the rent sale.
On the effect of the defendants' subsequent settlement and possible collusion: the court found evidence sufficient to warrant an inference of deliberate non-payment designed to secure the land for the defendants. The court noted the pattern of conduct — alleged oral hukumnama not in the kabuliats, splitting of settlement into two blocks under registered kabuliats (H and H1) with reduced rentals payable as salami, defendants' presence and attestation on the peon's delivery report, and failure of the defendants to bring forward witnesses (notably Sukar) to rebut certain factual assertions — all consistent with collusion or deliberate misconduct.
On legal principle and authority: the court applied equitable maxims and Bench and higher authority to hold that a party cannot take advantage of his own wrong and that a mortgagee who causes dispossession by his default cannot defeat the mortgagor's equity of redemption by subsequently taking settlement. The court distinguished earlier authorities (Gauri Shanker Sahu and Fekua Mahto) relied upon by defendants on their facts, finding them inapplicable to the present case where a duty to pay existed and was breached.
On remedy and quantum: while the trial court awarded redemption on payment of Rs. 800, the appellate court modified the decree. Because the defendants had used their position to secure a reduced rent by paying salamis to the landlords, the plaintiffs were required to pay back the salami amounts that the defendants had paid. The court quantified the salami at Rs. 1,325 and directed redemption to be allowed on payment of that amount within four months.
Holding and Implications
Holding: The appeal is dismissed with modification; the judgment of the trial court is affirmed in principle but the decree for redemption is modified to require the plaintiffs to pay Rs. 1,325 (the salami paid by the defendants) within four months to redeem the mortgage. The plaintiffs will not be awarded costs in this court.
Implications and consequences:
- Direct effect on the parties: The plaintiffs retain the equity of redemption and may redeem the mortgage on payment of Rs. 1,325 within four months; the defendants are entitled to be credited with the salami they paid to obtain settlement.
- The court held that where a mortgagee in possession breaches a duty (by deliberate non-payment resulting in a rent sale) and thereby obtains a benefit, equity will not permit the mortgagee to take advantage of that wrong to defeat the mortgagor's right of redemption.
- The opinion distinguished earlier authorities relied on by the appellants on the basis of their facts; the decision applies established equitable maxims rather than announcing a novel general rule. The remedy granted was restorative of the mortgagor's position subject to accounting for sums actually paid by the mortgagee to obtain settlement.
- Costs: the plaintiffs were not allowed costs in this appellate court.
Short Additional Notes From the Record
Reuben, J. concurred. The final entries indicate "Decree modified." and the record reference "G.N.P".
Lakshmikanta Jha, C.J:— This appeal is by the defendants first party (hereafter to be referred to as ‘the defendants’). It arises out of a suit for redemption which has been decreed by the trial court by its judgment dated the 23rd April, 1947.
The mortgagees are the defendants first party; the transferees of the mortgagees of a portion of the disputed land are the defendants second party and the landlords are the defendants third party.
Jang Bahadur Singh, who is the plaintiff no. 1, and one Jawad Ali, predecessor-in-interest of plaintiffs nos. 4 to 6, claim to be tenants of the defendants third party, in respect of a holding having an areas of 20.55 acres, with an annual jama of Rs. 136 and odd, including cess, under a kabuliat dated the 21st December, 1922. The rent of this holding having fallen into arrears, a rent suit was instituted in 1936, being Rent Suit no. 1570 of 1936, for recovery of the arrears of rent for the years 1342 to 12 annas kist of 1343 Fasli, and a decree for rent was duly obtained ex parte on the 4th of January, 1937 (Ext. 1) of which execution was taken out, being Execution Case no. 1080 of 1937. While the execution case was pending, Jang Bahadur and Jawad Ali jointly executed a sudbharna bond (Ext. A) on the 20th of July, 1937, for Rs. 800 in favour of Lalji Singh, father of defendants nos. 1 to 3, and Sukar Singh, defendant no. 9. The entire holding was given in usufructuary mortgage for paying off the dues under the decree as well as the arrears of rent which accrued due after the institution of then rent suit. The money raised under the mortgage bond 1 remained with the mortgagees, who, however, did not pay the dues under the decree for which execution had been taken out and consequently the holding was sold on the 20th of August, 1937, at a court sale, and the landlords themselves became the purchasers, and they obtained delivery of possession on the 30th of November, 1937. The plaintiffs later on came to know of the purchase of the holding by the landlords in execution of the decree for arrears of rent and thereupon they made an application to the Collector on the 21st of July, 1939, under section 3, clause (1), of the Bihar Restoration of Bakasht Lands and Reduction of Arrears of Rent Act, 1938 (Bihar Act IX of 1938) for the restoration of the holding to them. The case of the plaintiffs was that the holding was in the possession of the landlords after the rent sale and, therefore, they were entitled to the restoration of the holding. The case was resisted by the defendants as well as the landlords on the ground that the holding had been settled with Jago Singh (defendant no. 2) and Sukar Singh (defendant no. 9) under an unregistered hukumnama dated the 5th December, 1937, and it was alleged that the settlement was later on confirmed by two registered kabuliats in their favour, dated the 10th of November, 1938. The Collector in charge rejected the application and accepted the case of the objectors that the application was not maintainable because, in his opinion, the settlement had been made with the defendants by the landlords before the 19th day of April, 1938, and so the plaintiffs were not entitled to restoration under the Act. The Divisional. Commissioner as well as the Board of Revenue were moved in their revisional jurisdiction, but they did not interfere with the order of the Collector in charge on the ground that his order was final. The plaintiffs have, therefore, brought the present suit for redemption of the sudbharna bond dated the 20th July, 1937. Their case, in short, is that the settlement is fraudulent and collusive and as such, the mortgage subsists and they are entitled to redeem it. Their further case is that the defendants having taken possession of the disputed land as mortgagees, the character of their possession was not changed by reason of the settlement. The case of the defendants, on the other hand, is that the mortgage bond remained inoperative and that there was no fraud in the rent sale, nor was the settlement collusive. They, contend, therefore, that the plaintiffs have no right to redeem.
The trial court has decreed the suit and held that the plaintiffs are entitled to redeem the mortgage on payment of Rs. 800. The defendants have, therefore, preferred the present appeal.
The question for our consideration is (1) whether the sudbharna bond dated the 20th July, 1937, was acted upon, and (2) whether the plaintiffs' right of redemption subsists.
The mortgage bond in suit (Ext. A) was duly executed and registered at Lakhisarai. The evidence of Jang Bahadur, plaintiff no. 1 (P.W 5), is that, after the registration of the bond he made over the registration receipt to Lalji Singh, father of Ramrup (D.W 5), after endorsing it in his favour. His statement is supported by Prayag (P.W 2) and Muhshi (P.W 1). Both of them are attesting witnesses to the mortgage bond and, so, their competence to speak about the fact cannot be questioned. According to Prayag (P.W 2), Lalji and Sukar were both present at the registration office, whereas, according to Ramrup, defendant no. 1 (D.W 5), his father Lalji had not gone to the registration office. Lalji is dead, and Sukar, who is alive and is competent to speak about the fact; has not come forward to corroborate Ramrup's evidence and contradict Prayag. I am, therefore, of the opinion that the mortgagors handed over the registration receipt to Lalji duly endorsed in his favour and the mortgagees became entitled to take delivery of the mortgage bond from the registration office and come into possession. The defendants have led evidence to show that the mortgage bond remained in the registration office. I do not feel inclined to accept this story. Nor is it necessary, to decide the question because the mortgage bond became an effective document after its due execution and registration. In support of my view I may refer to the case of Sheikh Sultan Ahmad v. Syed Maksed Hussain*(1), where it has been held that “to execute a document simply means to perform what is required to give validity to a writing, as by signing and sealing it. Delivery of the same is not an essential part of it, unless that is specifically agreed to between the parties to the deed”. It may be mentioned that the defendants, admit the execution and registration of the sudbharna bond in their presence and with their consent, and it is not their case that there was any stipulation between the parties that unless the deed was delivered to the plaintiffs, or the document withdrawn from the registration office, title would not pass; nor is there any indication in the mortgage bond itself to that effect. In my opinion, therefore, the mortgagees acquired a legal right to possession after the execution and registration of the mortgage bond in suit.
The mortgage bond was for Rs. 800. The recital in the deed shows that the entire consideration money had been received by the plaintiffs. This recital is evidence, though not conclusive, against the plaintiffs; but the presumption arising from the recital is re-butted by the fact that D.W 5 (defendant no. 1) admits that only Rs. 50 was paid to the plaintiffs to meet the cost of the execution and registration. Jang Bahadur, plaintiff no. 1 (P.W 5), has stated in his evidence
“We were not to get anything out of the consideration money. Out of the consideration money Lalji Singh had to satisfy the decree and rent for 4 annas kist of 1348 and also to meet the cost of the document.”
Thus the entire consideration money having been left with the defendants, they were in the position of a trustee, and a duty was cast upon them to pay the landlords' dues and save the property from sale. The argument of Mr. Lal Narain Sinha is that it is not open to the plaintiffs to prove that a duty was cast upon the defendants by any oral evidence. His contention is that the rights and liabilities fixed under a document can be proved under section 92 of the Indian Evidence Act, only by the terms of the document and not otherwise. But the argument has no force, because the document is silent on the point. Extrinsic evidence is, therefore, admissible and the oral evidence, in my opinion, read in the light of the circumstances of the case, irresistably leads to the conclusion that a duty was cast upon the defendants to pay off the dues of the landlords.
The plaintiffs' case is that soon after the registration of the bharna bond they put the defendants in possession of the disputed land as mortgagees. The trial court has accepted the plaintiffs' evidence on the point, and I see no reason to take a different view. Jang Bahadur, plaintiff no. 1, has stated that the bharnadars were put in possession of the disputed land after the execution of the bharna bond and they brought the land under cultivation four or five days after its execution. This evidence gets ample support from the circumstances of the case to which I shall refer hereafter. Thus on the evidence it is clear that the defendants took possession as mortgagees and it was their clear duty to save the property from the court sale which took place on the 20th of August, 1937, in execution of the rent decree. Admittedly, the landlords became the auction-purchasers and the defendants took settlement from them and are in possession of the disputed land. In my opinion, the defendants, by taking the settlement from the landlords, could not change the character of their possession as against the plaintiffs. The defendants were clearly in the wrong in allowing the property to be sold and therefore, if the holding has come back into their hands, they cannot take advantage of their own wrong and deprive the plaintiffs of their right of redemption. It is a well known legal maxim that convenience cannot accrue to a party from his own wrong (commodum ex injuria sua nemo habere debet). The principle of this maxim was applied by their Lordships of the Judicial Committee in Hunoomanpersaud Panday v. Mussumat Dabooee Munraj Koonweree, where their Lordships have said: “But of course, if that danger arises or has arisen from any misconduct to which the lender is or has been a party, he cannot take advantage of his own wrong, to support a charge in his own favour, against the heir, grounded on a necessity which his wrong has helped to cause”. A Bench of the Madras High Court has also pointed out that the principle underlying the maxim is almost of universal application and held that no one can be allowed to benefit by his own wrongful act (vide Vedanayagar Mudaliar v. Vedammal(2). In my opinion, the plaintiffs were wronged by the misconduct of the defendants. The sale could have been averted if the defendants had simply deposited the decretal amount which was in their hands as trustees for the plaintiffs. The defendants cannot turn round now and say that the plaintiffs have lost their right of redemption because the old tenancy had been extinguished by the rent sale. The court, in equity, cannot lend its aid to such a defence. A Bench of the Calcutta High Court held in Kamala Kanta v. Annanda Chandra Chakraburtty(3) that “the mortgagees cannot by suffering dispossession and having taken a new title from the landlord affect the right of the mortgagors in the property of which they were put into possession under the mortgage”. The same principle was enunciated by a Bench of this Court in Tali Mahton v. Lekhraj Mahton, where their Lordships have said that “the mortgagee being in possession had, ascertain duty towards the mortgagor and it was his clear duty to maintain his possession as against the landlord. He could not by suffering dispossession put an end to the tenancy and then proceed to take a settlement of the land from the landlord”. This case was followed by a later Bench of this Court in Chandi Mander v. Sitabi Bhagat, where Harries, C.J enunciated the law thus: “In short the finding is that the mortgagee-respondents were the cause of the proceedings, and once they had been taken, they took a settlement again from the landlords of all the Bath, lands. To claim these lands now as not being lands subject to the mortgage is to claim a benefit arising from their own default, and this the law does not permit them to do. A mortgagee cannot be heard to say that land is no longer subject to a mortgage as a result of his own default or of any act on his part.” It may be observed that in the cases to which I have referred the landlords had obtained possession by the abandonment of the holding and not by rent sale, and the mortgagees by suffering dispossession-came back into possession by re-settlement. There is, in my opinion, no difference in principle between a case where a landlord obtains possession by abandonment and a case where he obtains possession by court sale. Once the land comes back into the possession of the mortgagee, it is immaterial by what process of law the landlord obtained possession. Such a question becomes relevant only when the court is called upon to consider the rights of the landlords and the tenants, and not when it has to consider the rights of the mortgagors against the mortgagees. Therefore, the present case is governed by the principle enunciated by the Bench decisions of this Court to which I have referred, and the plaintiffs are entitled to redeem.
Mr. Lal Narain Sinha has contended that, assuming that the defendants were bound to pay the dues of the landlords and they made a default which resulted in the sale of the holding, the plaintiffs' right of redemption was extinguished, and any later settlement taken by the defendants cannot revive the plaintiffs' right of redemption. His contention is that, once the property has vested in the landlords, any subsequent settlement by them with the original mortgagees would not revive the mortgagors' right of redemption as tenants of the old holding. In support of his contention the learned counsel relied upon two Bench decisions of this Court, Gauri Shanker Sahu v. Sheotahal Gir, and Fekua Mahto v. Babu Lal Sahu. General observations made in those two cases apparently lend support to the appellants' argument, but the observations must be read in the light of the facts of those cases. In my opinion, the cases relied upon by Mr. Lal Narain Sinha are not applicable to the facts of the case before us. In Gauri Shanker Sahu's case, the landlord purchased the holding and took possession through court and served a notice upon the mortgagee under section 167, B.T Act to annul the encumbrance. Thereupon the mortgagee brought a suit to have his mortgage right declared and impleaded the mortgagor also in the action. The mortgagor did not put in appearance and the suit ended in a compromise between the landlord and the mortgagee. The mortgagor had an opportunity to preserve his equity of redemption, but he did not avail himself of it, although he was joined as a party defendant in the action. It was on these facts that their Lordships held that, unless the rent sale could be set aside, the mortgagor or his assignee could not be heard to assert his right to redeem. I may observe that the law laid down in Gauri Shanker's case, if read apart from the facts, would offend the rule of equity that a person cannot take advantage of his own wrong. In Fekua Mahto's case, Harries, C.J followed the Bench decision in Gauri Shanker's case, and it was held that where property subject to a mortgage is sold in execution of a rent decree and at some later period purchased by the mortgagee, whose failure to pay rent has resulted in the rent decree, such purchase by the mortgagee does not, in the absence of fraud, revive the equity of redemption which is extinguished by the sale. An examination of the facts in Fekua Mahto's case clearly shows that there was no duty cast upon the mortgagees to pay the rent in respect of the mortgaged property. Therefore, Fekua Mahto's case was not at all a case where the principle whether a wrong doer can take advantage of his own wrong was involved; The facts in Fekua Mahto's case were these. In 1886 the ancestors of plaintiffs 1 to 3 and defendants 8 to 10 mortgaged their tenure to one Musammat S. in village H. In 1892 the mortgagors sold their right to B, who paid up the money due on the mortgage and thus redeemed it. Later on B mortgaged the property to N. In 1898 the ancestors of plaintiffs 1 to 3 and defendants 8 to 10 again mortgaged the same village to defendants 1 to 7, and by the terms of the mortgage the latter, who were given possession, were bound to pay rent in respect of the tenure mortgaged. After this mortgage litigation ensued between N (mortgagee of B) and defendants 1 to 7, and eventually N obtained a decree for possession, but he never executed the decree and never obtained possession of the tenure. Defendants 1 to 7 fell in arrears with their rent. In July, 1904, 8 annas share in this village was sold to R.S in execution of a rent decree, which the owners of the village obtained, and later on, in the same year, the remaining 8 annas share in the village was sold to A.T in execution of another rent decree obtained by other co-owners. Therefore, by the end of 1904 the whole of this village had been sold in execution of rent decrees to R.S and A.T These two persons entered into possession of the property and remained in such possession till 1919. On the 22nd of May, 1919, defendants 1 to 3 purchased 8 annas interest held by R.S, and on the 10th of August, 1919, they purchased the other 8 annas interest held by A.T By the end of 1919, therefore, defendants 1 to 3, who, were the mortgagees under the mortgage executed in the year 1898, had become owners of the 16 annas in this village. In February, 1933, the original mortgagors, namely, plaintiffs 1 to 3 and defendants 8 to (10, sold their alleged mortgagors right to plaintiffs 3 and 4. The plaintiffs contended that they still held the equity of redemption in the mortgage and brought the suit claiming redemption. These facts clearly show that defendants 1 to 3, who were the mortgagees of the ancestors of plaintiffs 1 to 3 and defendants 8 to 10, were held by a decree of the Court to have no right in the mortgaged property in the litigation between defendants 1 to 7 and N. Therefore, they were under no obligation to pay the rent in respect of the tenure which ultimately came into their possession, because in the litigation that ensued between; them and N, the latter succeeded in defeating the claim of defendants 1 to 7, and so, in the eye of law, no duty was cast on them to pay the rent of the tenure in spite of their undertaking by the terms of the bond to pay the rent of the tenure mortgaged. The principle enunictated in Fekua Mahto's case, therefore, must be read in the light of these facts. In my opinion, Harries, C.J cannot be said to have laid down a rule contrary to what he has said in the later case of Chandi Mander v. Sitabi Bhagat, where he has clearly held that a mortgagee who is bound by the terms of the mortgage to pay rent in respect of the land mortgaged to him cannot claim a benefit arising from his own default.
The matter, however, does not rest only with the breach of a duty on the part of the defendants. The evidence discloses not only a case of misconduct, but also warrants an inference of collusion between them and the landlords' amlas. The plaintiffs knew that the landlords had taken out execution of the rent decree (which has not been challenged as fraudulent or collusive). Accordingly, they executed the mortgage bond in suit to avoid the sale by payment of the landlords' dues in respect of the holding which was worth at the time, on the defendants' own evidence, Rs. 3,300. They kept the amount in deposit with the defendants. But, although Rs. 800 was in deposit with them and the sale was to take place for Rs. 688 only, the amount was not deposited or paid to the landlords, and the holding, of which they were in possession as mortgagees, was allowed to be sold. This conduct of the defendants is consistent only with the hypothesis that they had brought the landlords' men into collusion and got an assurance that they would get settlement of the land after the sale, and it appears from the kabuliats (Exts. H and H1) subsequently executed that they succeeded in their design. In order to justify their conduct the defendants have put forward a story that default in payment of the landlords' dues was due to the fault of the plaintiffs themselves. The story put forward by Ramrup (D.W 5) in his evidence is that the landlords' dues amounted to Rs. 900, and the payment was not made because the plaintiffs were not willing to pay the excess amount. This story was not set up in the written statement and seems to be an afterthought. According to him, Rs. 50 had been paid to the plaintiffs before the execution of the bharna bond to meet the cost of the execution and registration, and Rs. 150 was to be contributed by the plaintiffs to clear off the entire dues of the landlords. If there was any truth in this story, attempts would have been made by the defendants to recover the sum of Rs. 50 after the transaction failed. Even if Rs. 900 was due, there is no reason why the defendants should not have deposited the decretal amount of Rs. 688 only when Rs. 800 was kept in their custody. In my opinion, the landlords' dues were deliberately withheld with the sole object of getting the mortgaged property sold. It seems that the defendants had an eye on the property and they wanted to have a full title over it, and this they secured by taking settlement under registered kabuliats on payment of salamis at a reduced rental (vide exhibits H and H1). It may be remembered that Sukar (defendant no. 9) was a joint mortgagee with Lalji, father of plaintiffs nos. 1 to 3. They were, not members of the same family, nor were they residents of the village in which the lands in suit are situated; yet it appears from exhibits H and-H1 that they took the settlement of the land separately by splitting up the holding into, two blocks. Lalji took settlement of 13.70 acres of land (21 bighas. 19 kathas and 13 dhurs) in the name of his son Jago (defendant no. 2) at an annual jama of Rs. 45-6-0 on payment of Rs. 803-8-0 as salami. Sukar took settlement of 6.85 acres (10 bighas 10 kathas and 17 dhurs) in his own name at an annual jama of Rs. 22-11-0 on payment of Rs. 441-8-0 as salami. The kabulia to show that the settlement was to take effect from 1346 Fasli. But, as I have already pointed out, the story of an oral settlement under an unregistered hukuranama was set up to defeat the plaintiffs' claim for restoration under Bihar Act IX of 1938, although there is no mention of the hukumnama in the kabuliats (exhibits H and H1). I may also mention here that the defendants' anxiety in bringing about the rent sale is evidenced by the fact that, when the peon went to give delivery of possession after the confirmation of the sale; the defendants themselves, according to the evidence of plaintiff no. 1 (P.W 5), attested the peon's report of delivery of possession of the disputed land in favour of the landlords. His evidence is that Jago and Sukar attested the report. The peon's report appears from exhibit 6 to have been destroyed. But neither Jago nor Sukar has come to the witness-box to deny the plaintiffs' story on this point, nor has defendant no. 1 (D.W 5) denied the plaintiffs' story. Therefore; it is clear that, when the dakhaldehani was taken out by the landlords, the defendants, who were on the spot, attested the delivery of possession. This could not have been possible, in my opinion, in the absence of any collusion between the defendants and the landlords' amlas. The default does not seem to be unintentional or accidental or under circumstances beyond their control; the non-payment, to my mind, was deliberate and intentional, designed for a wrongful gain, and that by itself constitutes fraud. It is no doubt true that the plaintiffs pitched their case too high and, alleged participation of the landlords in the fraud. This case was, however, abandoned. In order to succeed it is not necessary for the plaintiffs to prove participation of the landlords in the act of fraud: the plaintiffs, in my opinion, can succeed on a finding of fraud or misconduct to which the defendants and the agents of the landlords were parties. Therefore, on a careful consideration of all the facts and circumstances, I am clearly of the opinion that the defendants took the settlement in fulfilment of their design and, as such the plaintiffs are entitled to treat the court sale as a private sale and claim redemption, because the mortgage must be treated in the eye of law as still subsisting. If any authority be needed for this proposition, I would refer to Nawab Sidhee Nuzur Ally Khan v. Rajah Ojoodhyaram Khan, Deonandan Prashad v. Janki Singh; Gauri Shanker Sahu v. Sheotahal Gir, Fekua Mahto v. Babu Lal Sahu(4); and an unreported decision of this Court in Second Appeal no. 907 of 1948, Ramdas Singh v. Manki Singh, decided on the 4th May, 1949.
Lastly, it was contended by Mr. Lal Narain Sinha that, even if fraud be held to have been proved; the plaintiffs not having claimed re-conveyance of the property, the suit must fail and reliance has been placed by him on the decision of the Judicial Committee in Deonandan Prashad v. Janki Singh. In my opinion, this argument is not well founded. The plaintiffs' suit is, in effect, to quote the language of the Judicial Committee, in Nawab Sidhes Nuzur Ally Khan v. Rajah Ojoodhyaram Khan, “to confess and avoid that sale, by imposing a trust on the estate which passed under it (p. 553)”. The decree or the sale under it is not, therefore, required in law to be set aside. The plaintiffs' case is that the sale enures to their benefit, and the defendants', at whose instance the sale, took place, must be relegated to the position in which they were before the sale. The case clearly fails within the following dictum of Lord Williams in Nawab Sidhee Nuzur Ally Khan v. Raja Ojoodhyaram Khan:—
“As to this, it is sufficient to observe that on the allegations in the plaint that bar cannot be set up; for the title and possession of the defendants against whom the redemption is prayed by this suit, is expressly alleged to be founded on fraud. This period of limitation, therefore, may be laid out of the case; and we come then to what has appeared to their Lordships to be the real question in the case (the question to which we have above referred) whether the plaintiff can in point of Law, insist, notwithstanding the auction sale for arrears of revenue, that as against him, that sale ought to be viewed as a private sale. The title to redeem in this suit as against the parties subsequent to Abbott is rested on that ground, and the case which the plaintiff alleges by his plaint, and by the, documentary proof appended to it, is one of fraud between Abbott and McArthur, to deprive him of his title to redeem the Zemindary, by means of a secret purchase of it between them for three lakhs of rupees, including a fraudulent device of a sale by auction for arrears of revenue, such arrears to be designedly incurred.”
The plaintiffs are, therefore, entitled to treat the rent sale as against the defendants as a private sale and claim redemption even without a prayer for the setting aside of the state.
The trial court has decreed the suit for redemption on payment of Rs. 800 only; but as the defendants have used their position as mortgagees in securing an advantage by which the rent of the holding had been reduced on payment of salami, they are, in my opinion, entitled to the money which they paid to the landlords by way of salami to secure that advantage. Therefore, the plaintiffs must pay Rs. 1,325, paid as salami, within four months, and they would be entitled to redeem the mortgage on payment of this amount. With this modification, the judgment of the trial court is affirmed and the appeal dismissed; but, under the circumstances of the case, the plaintiffs will not be entitled to costs in this court.
Reuben, J.:— I agree.
On the finding that the mortgage deed was duly executed and registered, and that the registration-receipt was made over to the mortgagees with the intention of giving effect to the mortgage, there can be no question of want of delivery.
Decree modified.
G.N.P
Alert