TMI Blog2008 (4) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the mortgagee on a monthly rent of ₹ 97.50. As the mortgagors failed to pay the rent, on 19.5.1952, the mortgagee filed suit being O.S. No. 120/51-52 on the file of the Ist Munsif, Bangalore for arrears of rent. The said suit was decreed. In pursuance of the said decree, the mortgagee (2nd defendant) filed Execution Petition No. 1002/51-52 and the property was put on auction sale by the executing Court. Mortgagee being the highest bidder purchased the schedule property in court auction. Sale was confirmed. The respondents/mortgagors neither objected for the sale nor confirmed the sale or taken any steps to set aside the sale over three decades. On 18.2.1983, the plaintiffs/respondents, after nearly three decades, filed a suit being O.S. No. 632 of 1983 on the file of the III Addl. City Civil Judge, Bangalore for a decree of redemption of the mortgage of the suit schedule property sold in public auction as long back as on 11.9.1952. The Civil Judge, after considering both oral and documentary evidence, dismissed the suit with costs on 31.7.1990. Aggrieved by the said order, the plaintiffs filed R.F.A. No. 465 of 1990 before the High Court. The High Court allowed the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary mortgage dated 19.02.1948 on payment of ₹ 10,000/- for a period of five years from the plaintiffs. However, the plaintiffs/mortgagors continued in possession as tenants on monthly rent of ₹ 97.50. As the plaintiffs/ mortgagors failed to pay rents, O.S. No.120/51-52 was filed for recovery of ₹ 1,225/- towards arrears of rent. The suit was decreed and the property was put in auction in execution No. 1002/51-52 and the mortgagee/second defendant purchased the schedule property in court auction on 11.09.1952. The sale was confirmed under Order XXI Rule 92 CPC. The second defendant became the absolute owner of the schedule property. It is the claim of the mortgagee that the sale held on 11.09.1952 was the sale of the right of plaintiffs in the mortgaged property in question which came to be purchased by him/second defendant, the said sale having become final, there was no right of redemption subsisting on the date of confirmation of sale as mortgage came to an end. In this way, it was contended that the suit which was filed for redemption of the schedule property is mis-conceived and not maintainable in law. It was also claimed that the property once mortgaged wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in payment of the mortgage-money, or partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee. Section 60 refers to 'right of mortgagor to redeem' which reads thus: Section 60 - Right of mortgagor to redeem.- At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished : Provided that the right conferred by this section h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue to fall into arrear with a view to the land being put up for sale and his becoming himself the purchaser of it. The land is accordingly sold to B. Subject to the repayment of the amount due on the mortgage and of his expenses property incurred as mortgagee, B holds the land for the benefit of A. A perusal of the various clauses in the mortgage deed dated 19.02.1948, second mortgage dated 12.12.1948, pleadings in O.S. No. 120/51-52 filed for arrears of rent which was decreed on 19.05.1952, order passed in E.P.No. 1002/51-52 dated 11.09.1952 as well as pleadings in O.S. No.632/1983 on the file of third Additional City Civil Judge, Bangalore filed for redemption of mortgage and the reasoning of the High Court in RFA No. 465/1990 dated 11.12.1998 which is impugned in this appeal clearly support the stand taken by the contesting respondents/plaintiffs. Though learned senior counsel for the appellants contended that the claim and the decree in O.S.No.120/51-52 has nothing to do with the mortgage dated 19.02.1948 or 12.12.1948, a perusal of all the details referred to above leads to an irresistible conclusion that the decree in favour of the appellant mortgagee in O.S. No. 120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the appellants. 8) In view of the factual scenario, though learned senior counsel for the appellants relied on decisions of various High Courts, we are of the view that there is no need to refer the same. 9) In Mritunjoy Pani and Another vs. Narmanda Bala Sasmal and Another, [1962] 1 SCR 290, the legal position as to right of redemption in a usufructuary mortgage and Section 90 of the Indian Trusts Act have been clearly explained. The following discussion and conclusion are relevant: The following three conditions shall be satisfied before s. 90 of the Indian Trusts Act can be applied to a case : (1) the mortgagee shall avail himself of his position as mortgagee; (2) he shall gain an advantage; and (3) the gaining should be in derogation of the right of the other persons interested in the property. The section, read with illustration (c), clearly lays down that where an obligation is cast on the mortgagee and in breach of the said obligation he purchases the property for himself, he stands in a fiduciary relationship in respect of the property so purchased for the benefit of the owner of the property. This is only another illustration of the well settled principle tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etting the sale set aside. (3) Where a mortgagee purchases the mortgaged property by reason of a default committed by him the mortgage is not extinguished and the relationship of mortgagor and mortgagee continues to subsist even thereafter, for his purchase of the equity of redemption is only in trust for the mortgagor. Xxxx xxxx xxx The said findings clearly attract the provisions of s. 90 of the Indian Trusts Act. In view of the aforesaid principles, the right to redeem the mortgage is not extinguished and in the eye of law the purchase in the rent sale must be deemed to have been made in trust for the mortgagor. In the premises, the High Court was right in holding that the suit for redemption was maintainable. 10) In Jayasingh Dnyanu Mhoprekar and Another vs. Krishna Babaji Patil and Another, (1985) 4 SCC 162, again considering similar claim with reference to Section 83 of the Transfer of Property Act and Section 90 of the Indian Trusts Act, this Court held: 6. The only question which arises for decision in this case is whether by reason of the grant made in favour of the defendants the right to redeem the mortgage can be treated as having become extinguished. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make a profit out of the transaction .. 11) In Namdev Shripati Nale vs. Bapu Ganapati Jagtap and Another, (1997) 5 SCC 185 in a similar situation this Court held thus: 6. We are of the view that in the totality of the facts and circumstances, the provisions of Section 90 of the Indian Trusts Act are attracted. The first respondent- mortgagee gained an advantage by availing himself of his position as a possessory mortgagee and obtained the regrant. This he did by committing a wrong. He committed a default in not paying the occupancy price within the time limited by law for and on behalf of the mortgagor. The regrant was obtained in his name by posing himself as a tenant, which was possible only because he was in possession of the land (as a possessory mortgagee). The advantage so gained by him in derogation of the right of the mortgagor should attract the penal consequences of Section 90 of the Indian Trusts Act. We hold that the default committed by a possessory mortgagee, in the performance of a statutory obligation or a contractual obligation, which entails a sale or forfeiture of right in the property to the mortgagor, will attract the provisions of Section 90 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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