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Issues Involved:
1. Redemption of mortgages. 2. Validity of agreements from 1901 and 1905. 3. Res judicata effect of the decree nisi of 1904. 4. Mortgagee's duty to account. 5. Ownership of Tokersey's and Ichharam's mortgages. Issue-wise Detailed Analysis: 1. Redemption of Mortgages: The plaintiffs, Hope Mills Company, sought to redeem three mortgages from 1900, questioning the bona fide purchase of the second and third mortgages by the first mortgagee. On April 5, 1900, the Company mortgaged Hope Mills to defendant No. 1 for five lakhs rupees. The second and third mortgages were executed on May 31, 1900. The defendant No. 1 entered possession on December 14, 1900, after a failure to pay the first installment of interest. The property was put up for sale in March 1901 but was withdrawn. The plaintiffs filed this suit to redeem the mortgages and have the agreements of 1901 and 1905 declared invalid if relied upon by defendant No. 1. 2. Validity of Agreements from 1901 and 1905: The agreements in question were entered into on May 30, 1901, and October 5, 1905. The 1901 agreement allowed defendant No. 1 to work and finance the Mill, reimbursing himself with an annual salary not exceeding Rs. 16,000. The 1905 agreement modified the earlier one, providing a monthly salary of Rs. 1,500 from the Agent's commission. The plaintiffs argued these agreements were void due to being contrary to public policy, defects in the directors' qualifications, and lack of registration. The court found the agreements valid, stating they did not require registration as they did not directly affect immovable property. The agreements were not considered a clog on the equity of redemption, and the remuneration was deemed fair for the services rendered. 3. Res Judicata Effect of the Decree Nisi of 1904: The plaintiffs contended that the decree nisi of 1904 was defective and could not be executed. The court agreed, stating that a decree nisi is not a final decision and thus cannot constitute res judicata. The decree nisi remained a dead letter unless defendant No. 1 voluntarily passed his accounts before the Commissioner. The court held that the present suit was not barred by res judicata due to the non-final nature of the decree nisi. 4. Mortgagee's Duty to Account: The plaintiffs argued that defendant No. 1, as a mortgagee in possession, was liable to render proper accounts. The court ruled that despite the agreements of 1901 and 1905, defendant No. 1 could not absolve himself from his duty to account as a mortgagee in possession. The agreements could justify his salary but did not exempt him from accounting for the profits and expenditures of the Mill. 5. Ownership of Tokersey's and Ichharam's Mortgages: The court examined whether defendant No. 1 held the second (Tokersey's) and third (Ichharam's) mortgages for himself or as an agent of the Company. The second mortgage was purchased by defendant No. 1 from Motilal Canji for Rs. 1,67,000, while the third mortgage was bought from Ibrahim Rahimtoola for Rs. 2,30,000. The court found no evidence to support the Company's claim that defendant No. 1 acted as their agent in these transactions. It was concluded that defendant No. 1 held these mortgages in his own right. Conclusion: The court held that the agreements of 1901 and 1905 were valid and binding on the plaintiff Company. The decree nisi of 1904 did not constitute res judicata, and defendant No. 1 was required to account as a mortgagee in possession. The ownership of the second and third mortgages was determined to be in favor of defendant No. 1, not the Company.
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