Sant Ram Misir v. Ram Bilas Misir

Plowden and Sinha, JJ.:— This is a defendant's appeal arising out of a suit for accounts under Section 33 of the U.P Agriculturists' Relief Act.

The mortgage was made on the 25th of October, 1933, for a sum of Rs. 1,950 by Ram Bilas and others in favour of Sant Ram. Various defences were raised to the action with which we are not concerned at this stage. Part of the property was in possession of tenants and it is admitted on both sides that the rent realised by the mortgagee from them was Rs. 35-15-6 per year. There is no controversy as regards this. The dispute is as regards the portion of the profits of the mortgage which was actually in the possession of the mortgagee himself. The learned Munsif came to the conclusion that the basis of calculation must be the letting value of the plots and he declared a sum of Rs. 1,582-7-0 as due to the mortgagee. On appeal by the plaintiffs, the learned District Judge has dissented from that principle and held that the, true basis of calculation must be “the usufruct minus the costs of production.” He finally came to the conclusion that Rs. 975 was due to the mortgagee on a proper accounting.

The mortgagee has come before us in second appeal. His main contention is that the basis of calculation adopted by the learned District Judge does not receive any sanction from the provisions of section 9 of the U.P Debt Redemption Act which is the only relevant provision of law on the point. Section 9 of the Act says that: “In the case of a mortgagee with possession, the net profits realised by the mortgagee or which, with the exercise of ordinary diligence, might have been realised by him, shall determine the amount, if any, due by the debtor….”

It is contended that section 2(1) of the Act enjoins upon the courts to give the same meaning to words and expressions in the. Act which they receive under the U.P Land Revenue Act, 1901, or the U.P Tenancy Act, 1939. It is, therefore, argued that in order to find a true solution of the question involved in this case we have to refer to section 233(2) of the U.P Tenancy Act which provides that: “…the valuation of sir, which is not let, and of khudkasht which has been cultivated continuously for three years at the date of the suit shall, for purposes of calculating the amount divisible among the co-sharers as profits, be made at the rates applicable to exproprietary tenants….” The learned counsel for the appellant has, however, lost sight of the fact that the question of the rate applicable to exproprietary tenants arises only if we do not know or there is no method of knowing what the actual profits have been. If we know or have a method of knowing the precise amount which the mortgagee has realised out of the land in his possession, it is those profits which must form the basis of calculation under section 9 of the U.P Debt Redemption Act or Section 33 of the U.P Agriculturists' Relief Act or even section 233(2) of the U.P Tenancy Act of 1939.

The learned counsel for the appellant has strenuously contended that it will be taxing the mortgagee for his skill and extra labour if the basis of calculation is the one which has been accepted by the learned District Judge. Skill and labour should not be taxed; they should, as far as possible, be encouraged; we should be anxious not to put a premium on negligence. To hold that the mortgagee in this case has special claims upon the consideration of the court is to give him credit for what was, under the law, his obvious duty under the Transfer of Property Act. Every mortgagee is expected under section 76(a) of the Transfer of Property Act to manage the property as a person of ordinary prudence would manage if it were his own, or, under clause (b) “to use his best endeavours to collect the rents and profits thereof.” If this is the law, we cannot say that a mortgagee who has taken pains in the management of the property entrusted to his care by the mortgagor, has done anything more than what the law required him to do. On a consideration of all the facts we have come to the conclusion that the basis of calculation adopted by the learned District Judge is on a rational and sound basis.

It has also been contended by the learned counsel for the appellant that the learned District Judge has adopted an arbitrary method in making the calculation. In considering this argument we have to bear in mind certain provisions of the Transfer of Property Act. It is no doubt true that at the date of the transaction the mortgagee could never think that he would be called upon to render accounts, but we have to take the law as it is. Section 33 of the U.P Agriculturists' Relief Act has clearly recognised the right of the mortgagor to claim accounts and it has been held by a Full Bench of this Court in Muhammad Ishaq Khan v. Rup Narain Singh(1) that under the Transfer of Property Act this right cannot be taken away even if there is no covenant in the mortgage deed allowing him such a right. Once, therefore, the right to claim accounts is recognised by the legislature, all the provisions relating to the liability of the mortgagee as defined by section 76(g) and (h) of the Transfer of Property Act come into operation. Section 76(g) imposes upon the mortgagee “an obligation to keep clear, full and accurate accounts”. Indeed their Lordships of the Privy Council in the case of Shadi Lal v. Lal Bahadur(2) and the Full Bench decision in the case of Muhammad Ishaq Khan v. Rup Narain Singh emphasised the serious consequences to the mortgagee, in the event of his failure to comply with the provisions of the law. If this is so, he cannot seriously challenge the basis of calculation adopted by the learned District Judge, nor can he impugn the method which he has chosen for arriving at the precise amount of profits.

In the result, we are of opinion that the decree of the learned District Judge is correct and we dismiss this appeal, but under the circumstances we make no order as to costs.