JUDGMENT
S.K. Dubey, J.
1. This is an appeal under Clause 10 of the Letters Patent aginst the judgment and decree dated 8-10-1986, passed by a learned Judge of this Court in First Appeal No. 52 of 1978, reversing the judgment and decree dated 20-5-1978, of dismissal of the suit for redemption of mortgage, passed in Civil Suit No. 4-OA/76, by the District Judge, Morena.
2. The factual matrix, in brief, are these.
A deed as respects mortgage (Ex. P/3) dated
21-2-1947 of suit properties was executed by
the plaintiff/ respondents in favour of
defendant/appellant and his father for a
consideration of mortgate-money of
Rs. 15,000/-. It was agreed that instead of
interest, the rent of Rs.75/- per month of the
suit-shop equal to interest, shall be paid by the
‘mortgagors. Relevant clause has been quoted
in para 4 of the impugned judgment which we
reproduce:
“Hence our shop No. 151 shown in the enclosed map is mortgaged with possession for an amount of Rs. 15,000/-, behalf of which is 7500/- in favour of Gajadhar s/o Laljit and Hargovind s/o Gajadhar, Proprietor of firm Gajadhar Hargovind Vaishaya Agrawal, R/o Padrail Karoli for indefinite term with condition that we shall not charge rent of our shop while the mortgagee shall not charge interest on his money, that is to say, that the rent and interest shall be equal. When full mortgage money is paid in one instalment, he will get back the mortgaged shop. Possession is delivered today to the mortgagees by executing a rent note which will form part of the mortgage deed.” (Extwracted from the agreed translation, filed by counsel in this Court).
3. The mortgagors, on the said term, on the same day, executed a rent-note. The mortgagors fell into arrears and so the landlord mortgagee instituted a Civil Suit (No. 166 of 1950) for the recovery of rent, wherein, on 17-2-1951, a decree for Rs. 1.263/- (Ex. D/6) was passed. According to’ defendant/appellant, the mortgaged property was put to auction in execution of the decree which, the defendant/mortgagee purchased for Rs. 200/- by Court auction. As no one objected to auction sale, the Court vide order dated 18-3-1953 (Ex. D/3) finalised the sale extinguishing the right of ownership of the house and dismissed the execution of the decree in full satisfaction. It would be appropriate to mention here that the identity of the house by giving its particulars is not specified in the order nor asale certificate in pursuance of Court sale, registered or unregistered was filed, by the appellant/defendant in the Court. Against Court sale, the mortgagee/ defendant instituted a suit (Civil Suit No. 119 of 1956) for recovery of possession of the house based on the rent-note. This suit was decreed on 20-10-1958 vide Ex. D/7 and in execution of the decree, possession was. delivered to the morgagee/defendant. Thereafter, the mortgagee instituted another suit in the Small Cause Court for arrears of rent, wherein a decree was passed vide judgment dated 22-3-1960 (Ex. D/8).
4. On 18-9-1976, the mortgagors plaintiffs instituted a suit (No. 4-A/76) for redemption of the mortgaged property in the Court of District Judge, Morena, which was contested as barred by limitation and as the Court sale had become final and the right of equity of redemption had been purchased in auction-sale, the plaintiff had lost any right to institute the suit unless he court sale is declared as void. The trial Court held the suit for redemption of the mortgage within limitation, but dismissed the suit holding that right of equity of redemption has been lost because of the Court sale. The plaintiff aggrieved of the said judgment and decree preferred an appeal, which was allowed by the learned single Judge of this Court holding that in the circumstances of the case, right of redemption was not lost and the plaintiff, in his right, is entitled to right to a decree of redemption of the mortgaged property, as the defendant mortgagee, though purchased the property in Court sale, but because of fiduciary relationship which the mortgagee had under Section 90, illustration (c) of the Indian Trusts Act, for short, ‘Trusts Act’ and, therefore, without proceeding under Order 34 of the Code of Civil Procedure and without the mortgaged property putting to sale under Order 34, Rule 14, CPC, the right of the mortgagors was not lost on the principle, “once a mortgage always a mortgage”. The mortgagee/defendant, aggrieved of the said judgment decree, has filed this appeal under clause 10 of the Letters Patent,
5. Shri N. K. Jain, learned counsel for the appellant, contended that the mortgage and the lease-back were two separate transactions and a mortgagee, in his own independent right as a landlord, was entitled to sue for eviction and for arrears of rent. His suit for arrears of rent and decree passed thereunder was not under a mortgage, therefore, Court sale confirmed on 18-3-1953, as the mortgagors did not object to the same, the sale so confirmed was not hit by the provisions of Order 34, Rule 14(1), C.P.C. and, therefore, the mortgagors were estopped from challenging the sale subsequently, as right of equity of right of redemption was extinguished, the plaintiffs/ mortgagors were not entitled to bring the suit under Section 60 of the Transfer of Property Act, for short, the ‘T.P. Act’, nor, in this case, the benefit of Section 90, Illustration (c), of the Trust Act was available to the mortgagors as the fiduciary position because of the finalisation of the Court-sale, came to an end. As the decree was independent of the mortgage, the plaintiffs could have only instituted a suit for declaration of the sale being void which having become barred by time, the suit of the present plaintiffs/mortgagors was rightly dismissed by the trial Court. To support the contentions, learned counsel placed reliance on Sachidanand Prasad v. Babu Sheo Prasad Singh, AIR 1966 SC 126, Narpatchand A. Bhandari v. Shantilal Mool Shankar Jain (1993) 3 SCC 351 : (AIR 1993 SC 1712), Trustee of JCotidas Beragi Sadhu, Ratlam Trust Board v. Ramjatan Ramprasad Sonar, AIR 1963 MP 266; Dayalchand v. Gajrajsingh, 1980 JLJ 219 : (AIR 1980 MP 162); Mathuralal v. Sobhgmai, 1964 JLJ 376; L. Sankaran v.Adima Kunju, AIR 1965 Ker 132; Raja Jagadish Chandra Deo Bhabal v. Bhubaneswar Mitra, AIR 1923 Cal 121; Chitta Bhula v. Bai Jamni, AIR 1916 Bom 108 and Jan Mahommed Abdulla Datu v. Datu Jaffar, AIR 1914 Bom 59. Suffice it to say that all the aforesaid decisions except the decision in Narpalchand’s case (supra) were cited before the learned single Judge which have been referred and rightly distinguished in the judgment under challenge, therefore, we are not inclined to repeat and to burden this judgment by referring the said decisions. In case of Narpatchand (supra), the Supreme Court has reiterated the view that when a lessor of a leased property creates a usufructuary mortgage in respect of such property, what he transfers under Section 109 of the T.P. Act as a mortgagor in favour of the usufructuary mortgagee includes his right to possession of such property and, the right to receive the rents and profits accruing from it. Thus, Section 109 of the T.P. Act entitles the usufructuary mortgagee from the lessor as against the lessee, for all rights which the lessor had against such lessee. This being the settled position, cannot be disputed.
6. However, in the present case, the question for consideration before us is whether in the Court-sale which is disputed by the plaintiffs as not duly proved concerning the mortgaged property, Shri R. D. Jain, learned counsel for respondents/plaintiffs, submitted that from the order sheet (Ex. D/ 3), it is not clear whether the mortgaged property was put to auction and of the same, sale was finalised and, therefore, the right of equity of redemption merged in the sale and, therefore, that having losi, the plaintiffs’ suit was not liable lo be decreed and the principle “once a mortgage always a mortgage” was not applicable in the case.
7. From the facts which have been given in brief and by the trial Court in its judgment in detail (paras 1 to 4) and accepting the argument of the defendant thai the property was auctioned and purchased by him for a nominal sum of Rs. 200/-, while the decree was for Rs. l,441,/- and the properly mortgaged for the mortgage-money of Rs, 18,000/- was worth more than Rupees 50,000/ – at the time of mortgage of which the value on the institution of the suit was more than a lac, was not purchased by the defendant in Court-sale with the leave of the Court as admittedly, it was not a third party’s decree which was put in execution. Therefore, in our opinion, the mortgagee in possession by purchasing the right of ownership in Court-sale gained an advantage in derogation to the rights of the mortgagors. The Supreme Court, in the case of Mrutunjay Pani’s case AIR 1961 SC 1353, on similar pleas, placing reliance on Sidhakmal Nayan v. Bira Naik, AIR 1954 SC 236, stated the legal position as between a mortgagor and a mortgagee governing the principle “once a mortgage always a mortgage” till the mortgage is terminated by the act of the parties themselves, by merger or by order by a Court or by statute, held in para 7 thus:
“(7) The legal position may be stated thus : (1) The governing principle is “once a mortgage always a mortgage” till the mortgage is terminated by the act of the parties themselves, by merger or by order of the Court. (2) Where a mortgagee purchases the equity of redemption in execution of his mortgage decree with the leave of Court or in execution of a mortgage or money decree obtained by a third party, the equity of redemption may be extinguished; and, in that event, the mortgagor cannot sue for redemption without getting the sale set aside. (3) Where a mortgagor purchases the mortgaged property by reason of a default committed by him the mortgage is not extinguished and the relationship of mortgagor and mortgagee continues1 to subsist even thereafter, for his purchase of the equity of redemption is only in trust for the mortgagor.”
8. The Supreme Court, in case of Jayasingh v. Krishna, AIR 1985 SC 1646, after analysing Section 90 of the Trusts Act and Illustrations (b) and (c), in a case of grant which became final in favour of the mortgagee in relation to mortgaged property and the right to redeem the mortgage can be treated as having become extinguished, has held thus (at page 1648) :
“6………It is well settled that the right of redemption under a mortgage deed can come to an end only in a manner known to law. Such extinguishment of the right can take place by a contract between the parties, by a merger or by a statutory provision which debars the mortgagor from redeeming the mortgage. A mortgagee who has entered into possession of the mortgaged property under a mortgage will have to give up possession of the property when a suit for redemption is filed unless he is able to show that the right of redemption has come to end or that the suit is liable to be dismissed on some other valid ground. This flows from the legal principle which is applicable to all mortgages, namely, “Once a mortgage, always a mortgage……..”
9. The Supreme Court further said in para 9 of the report (Jaya singh’s case) that if a mortgagee by availing himself of his position as a mortgagee gains an advantage which would be in derogation of the right of a mortgagor, he has to hold the advantage so derived by him for the benefit of the mortgagor. As the grant made in their favour is an advantage traceable to the possession of the land which they obtained under the mortgage and that the said grant is certainly in derogation of the right of the mortgagors. Therefore, by virtue of Section 90 of the-Trusts Act,’ the appellant/mortgagee was virtually in the circumstances of the case in a fiduciary position in respect of the right so acquired and he could not be allowed to a profit out of a transaction.
10. In the case of Khadagonda Ram-gonda Patil v. Shripal Balwant Bainade, AIR 1988 SC 1200 wherein the mortgagor obtained a preliminary decree in respect of the properties mortgaged and a final decree for sale was also passed in the suit, but that final decree was not executed and became barred by time. It was observed therein that the final decree passed for foreclosure will not debar the mortgagor from all rights to redeem the mortgaged property. Rule 5(1) of Order 34, C.P.C., expressly recognised the right of the mortgagor to redeem the mortgage at any time before the confirmation of a sale made in pursuance of a final decree passed in a suit for sale. Similarly Rule 8(1) of Order 34 permits the mortgagor to redeem the mortgaged property before the confirmation of the sale in pursuance of a final decree in a redemption suit unless such final decree deprives a mortgagor from all rights to redeem the mortgaged property which is provided for sub-rule (3)(a) of Rule 8 of Order 34 relating to a mortgage by conditional sale or anomalous mortgage. Thus, provisions of Order 34, have laid down in clear terms the circumstances when the right of redemption of a mortgagor would stand extinguished. It is also clear that in a suit for redemption, a mortgage other than a mortgage by conditional sale or an anomalous mortgage, the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree, but before the confirmation of such sale. In view of these provisions, the question of merger of mortgage-debt in the decretal-debt does not at all arise.
11. Shri N. K. Jain, learned counsel for the appellant, placed implicit reliance on Sachidanand Prasad’s case (supra) wherein mortgagor’s suit for redemption was dismissed and application of Illustration (c) of Section 20 of the Trusts Act was not accepted; but, in our opinion, that case is distinguishable on facts. In that case, the usufructuary mortgagee was liable for a small portion of the rent payable for the entire holding and the mortgagor agreed to pay balance rent payable in respect to the property. On mortgagor’s default of payment of rent payable by him, the property was put to auction. It was held that the mortgagor’s default alone was a real effective part for the Court-sale and in that view of the matter, it was held that the right of redemption was extinguished by mortgagor’s own default of the terms of the mortgage.
12. In the instant case, though the mortgagors were in default of payment of arrears of rent due under the rent note, mentioned in the mortgage deed, but the right to the mortgagees flows under the mortgage deed which clearly attracts Section 90. of the Trusts Act. Therefore, unless the mortgagee proceeds under Order 34 and puts the property for sale in accordance with Rule 14 of @. 34, it cannot be said that right of equity of redemption was lost, because the provision of Rule 14 of Order 34 is for the benefit of the mortgagor so that the equity of redemption may not be sold at unduly low price or by depriving him summarily of the facilities which a suit for sale ensures. Therefore, in our opinion, applying the principle of justice, equity and conscience and the fact that the mortgageedid not obtain leave of the Court before purchasing the property for himself in Court-sale, in execution of the money decree obtained by him against the mortgagors, such sale does not extinguish the mortgage or destroy the right of redemption of the mortgagor. As the mortgagee has not proceeded in the manner provided under Order 34 of the C.P.C. for putting the property to sale by instituting a suit for foreclosure, it cannot be said that suit instituted by the respondents/plaintiffs, the mortgagors to redeem the property under the provisions of Section 60 of the T.P. Act, was not maintainable.
13. In the result, the appeal fails and is dismissed with costs. Counsel’s fee Rs. 750/-, if precertified.
14. The trial Court now shall proceed in accordance with law as directed by the judgment and decree passed by the learned Judge dated 8-10-1986. Stay order passed by this Court on 10-J2-1986 shall stand vacated.