T.K Joseph, J.:— This suit which has given rise to this appeal was brought by the plaintiffs for redemption of a mortgage effected by their father in favour of one Lekshmna Iyer on 21-10-1102 for a sum of Rs. 12000. It was provided in the deed of mortgage that if the mortgage was not redeemed within 4 years it would work itself out into a sale of the properties. The mortgagor sued for redemption in the year 1106 but the plaint was rejected for non-payment of court-fees. Thereafter the mortgagee got patta transferred to his name which resulted in another suit by the mortgagor for cancellation of the proceedings resulting in transfer of patta but the suit was dismissed holding that the change of patta did not affect title, if any, of the mortgagor.
2. After the death of the mortgagor the plaintiffs instituted this suit for redemption. According to them a sum of Rs. 2157 stated in the deed of mortgage as having been received on all earlier date was not actually paid and another sum of Rs. 458 reserved for effecting repairs to the existing buildings and for putting up additional structures had not been expended by the mortgagee. It was therefore claimed that these sums should be deducted from the mortgage money. There was also a claim for damages on the ground that the buildings in the properties had fallen down due to the negligence of the mortgagee. The damage was sought to be ascertained and set-off against the mortgage money. The sole defendant in the suit is a purchaser of the property from the mortgagee. He resisted the suit contending that the original transaction was a sale and not a mortgage and that in any event the mortgagor's title had been extinguished by adverse possession. The allegation that the mortgage was not fully supported by consideration was denied and the claim for damages was repudiated. He also claimed compensation for improvements effected in the property.
3. The trial Court held that the transaction was a mortgage and not a sale. It was also held that the mortgage was supported by consideration except to the extent of Rs. 458 reserved for making repairs. Overruling the plea of adverse possession, the plaintiffs were given a decree for redemption on payment of Rs. 14101-4-4 inclusive of the value of improvements amounting to Rs. 2761-12-3. The defendant has preferred this appeal from the decree.
4. The first point raised in appeal relates to the nature of the transaction i.e whether the deed Ext. B evidences a mortgage or a sale. The conclusion reached by the learned Judge was not seriously assailed in view of the several decided cases on the question. We are satisfied that the finding recorded by the learned Judge is correct and that the stipulation that the mortgage was to amount to a sale in case it was not redeemed within 4 years is a clog on the equity of redemption.
5. The point strenuously argued by the learned counsel for the appellant was that the mortgagor's title was extinguished by adverse possession, as the mortgagee held the property as owner after the expiry of the period of 4 years. It was contended that there was a change in the nature of the possession and that the mortgagor had notice of the same. Reliance was placed on the written statements of the mortgagee in the two suits filed by the mortgagor wherein his possession as owner was asserted. The question whether this plea can succeed depends on whether a mortgagee who came into possession under the mortgage can during the continuance of the mortgage prescribe against the mortgagor.
6. In Khiarajmal v. Daim, ILR 32 Cal 296 (PC) (A), the Privy Council held that he could not. In that case the equity of redemption had been sold in execution of a decree against the heirs of the mortgagor and was purchased by persons who were found to be nominees of the mortgagees. One of the heirs sued for redemption more than 12 years after the Court sale, contending that the execution proceedings resulting in the sale of the properties were not binding on him as he was not properly represented in the suit and execution proceedings. A plea of adverse possession based on the purchase of the equity of redemption was set up by the defendants.
7. The circumstances relied on as evidence of adverse possession were that since the date of the execution sale no accounts had been demanded by or rendered to the mortgagors or their representatives, that no payment of subsistence money which they were entitled to under the mortgage had been made to them, that the parties after the sale ceased to cultivate the land and left the village and that renewed pattas had been granted to the purchasers in execution. It was held that if the purchasers had been independent parties and accounts had been rendered and payments made by the mortgagees to them instead of to the mortgagors, the circumstances relied on would have been cogent evidence of adverse possession of the equity of redemption in favour of such third parties.
8. It was further held that as the purchasers were agents of the mortgagees, possession had been that of mortgagees throughout and that as between the mortgagors and the mortgagees neither exclusive possession by the mortgagees for any length of time short of the statutory period of 60 years nor any acquiescence by the mortgagor not amounting to a release of the equity of redemption would be a bar or defence to a suit for redemption. Learned counsel for the appellant brought to our notice certain decisions in support of his argument that the altered nature of the possession would justify departure from the rule stated above.
9. However when these cases are examined it is seen that they fall under the latter category of cases referred to by the Privy Council viz., cases of acquiescence by the mortgagor amounting to a release of the equity of redemption. Usman Khan v. Nagalla Dasanna, AIR 1914 Mad 578 (2) (B), is one of the decisions relied on by the appellant. The mortgage in that case was a simple one which provided that the debt was to be repaid in 8 years and that on failure to pay the interest accruing every year or the principal at the end of 8 years, the mortgagee could take possession of the lands mortgaged.
10. After the expiry of this period the mortgagor received an additional sum of Rs. 250 from the mortgagee and released the equity of redemption to him. Possession was also surrendered to him. The mortgagor sent a petition to the Tahsildar for issuing patta to the mortgagee. It was held that there was no principle of law which prevented the parties from agreeing what the character of the possession to be held by the mortgagee should be from a certain date.
11. This decision has no application to the present case. The mortgage originally was one without possession and possession was surrendered as a result of an agreement that such possession should be as owner of the land. The following observations from the judgment show that the principle laid down by the Privy Council was upheld:
“It is quite true that the mortgagee cannot, by a mere assertion of his own or by any unilateral act of his convert his possession as mortgagee into possession as absolute owner. That is a principle in favour of the mortgagor which prevents the mortgagee from altering the legal character of his possession of his own act or assertion. That has been laid down in several cases, one of the earliest of which is Ali Muhammed v. Lalta Baksh, ILR 1 All 655 (C).
12. Another case cited by the appellant's counsel is Muthukaruppan Samban v. Muthu Samban, AIR 1915 Mad 573 (D). This was a suit by a vendee of the equity of redemption and it was resisted on the ground that the mortgagor had conveyed the equity of redemption to the mortgagee by an earlier unregistered sale deed, that his possession thereafter was as owner and not mortgagee and that such possession having continued for over 12 years before the institution of the suit extinguished the title of the mortgagor even though the sale deed was invalid for want of registration.
13. It was held that the sale deed being an unregistered one was not admissible in evidence even for the purpose of showing the nature of the appellant's possession. There is an observation in the judgment that if the case had been one of oral sale with a request to the vendee to remain in possession with absolute rights, the same would have been a valid defence to the suit. The learned Judges said:
“An arrangement by which the legal nature and character of the previous possession is put an end to and subsequent possession treated as one by the vendee with absolute title is in our opinion sufficient to satisfy the requirements of Section 54 of the Transfer of Property Act.
14. This contemplates a case of acquiescence by the mortgagor amounting to a release of the equity of redemption. This decision was followed in Pandiyan Pillai v. Vellayappa Rowther, AIR 1918 Mad 572 (E), and it was held that possession continued in a different capacity would be sufficient to start adverse possession although the original possession was not given up. The mortgage in question in that case was similar to the one in this case, but there was the additional factor that the mortgagor transferred the patta to the mortgagee.
15. The question was whether the equity of redemption was available for attachment in execution of a decree against the mortgagor. It was found that on the date of attachment 12 years had not elapsed from the date of transfer of patta and that the mortgagee had not acquired tide by prescription. A Division Bench of the Lahore High Court held in Qadar Bakhsh v. Mangha Mal, AIR 1923 Lah 495 (F), that it would be going too far to say that in no possible case could the mortgagee set up an adverse title to the mortgaged property.
16. The facts of that case are different. While the mortgagee was in possession the mortgagor sold the equity of redemption to him under an unregistered sale deed. It was held that although the sale deed was inadmissible in evidence for want of registration, it could be referred to for the purpose of ascertaining the nature of the possession a view which the Madras High Court did not approve of in AIR 1915 Mad 573 (D). Possession after the sale deed was under an invalid title and was that of a trespasser and such possession having continued for over 12 years extinguished the mortgagor's title.
17. The last of the cases relied on by the appellant is Mg. San Chein v. Ma Daung U., AIR 1924 Rang 290 (G). The mortgage deed which was the subject matter of dispute in that case stated that it was a mortgage with possession but there was a further provision for payment of interest at 11/2 per cent, per annum and that in default of the payment of the same the mortgagee was to take over the land as owner. The mortgagor worked the land for one year and paid rent. Thereafter he never worked it and paid no interest either.
18. Finding that the forfeiture clause was enforced after the first year and that the mortgagee held the land as owner to the knowledge of the mortgagor for over 12 years it was held that the suit was barred by limitation. It is not possible to gather from the judgment whether the mortgagee was originally given possession. The indication is that he was not because the mortgagor himself was cultivating the land for one year after the mortgage and there is no case that the mortgagee leased the land to the mortgagor after taking the mortgage.
19. It is not clear whether the surrender of possession by the mortgagor after one year was treated as acquiescence amounting to the release of the equity of redemption. If there was no such acquiescence we feel constrained to differ from the view taken especially in view of the decision of the Privy Council referred to earlier.
20. It is thus seen that in all the cases relied on by the appellant there was some act on the part of the mortgagor which put an end to the mortgagee's possession as mortgagee and that the nature of the possession became changed after such act. It cannot be said that these decisions are inconsistent with the principles laid down by the Privy Council as in all these cases there was acquiescence on the part of the mortgagor amounting to a release of the equity of redemption.
21. None of these cases go to the extent of saying that a unilateral declaration by the mortgagee during the continuance of the mortgage that he was holding the property as owner would suffice to make his possession adverse to the mortgagor from that date. Such a proposition would lead to the result that if the mortgagee in possession merely asserts to the knowledge of the mortgagor that his possession is not as mortgagee but as owner, the normal period of limitation for redemption of the mortgage would be curtailed to 12 years.
22. In this case there was merely an assertion by the mortgagee that he was holding the land as owner which assertion far from being acquiesced in was repeatedly questioned by the mortgagor and this in our opinion is not sufficient to make the possession thereafter adverse to the mortgagor. We therefore hold that the plea of adverse possession must fail.
23. The only other question pressed by the appellants relates to the sum of Rs. 458 disallowed by the lower Court. According to the terms of the mortgage this sum was to be utilised for effecting repairs to the buildings and putting up additional structures. There is no satisfactory evidence that these things were done. This is not a matter which has become incapable of proof by lapse of time. We accept the finding of the learned Judge and hold that the plaintiffs are entitled to deduct this sum from the mortgage money. In the result we confirm the decree of the Court below and dismiss the appeal with costs.
V.B.B
24. Appeal dismissed.
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