{"id":4864,"date":"1967-08-31T00:00:00","date_gmt":"1967-08-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/anandram-jivraj-gagle-vs-premraj-mukandas-ors-on-31-august-1967"},"modified":"2018-08-21T13:14:26","modified_gmt":"2018-08-21T07:44:26","slug":"anandram-jivraj-gagle-vs-premraj-mukandas-ors-on-31-august-1967","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/anandram-jivraj-gagle-vs-premraj-mukandas-ors-on-31-august-1967","title":{"rendered":"Anandram Jivraj Gagle vs Premraj Mukandas &amp; Ors on 31 August, 1967"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Anandram Jivraj Gagle vs Premraj Mukandas &amp; Ors on 31 August, 1967<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1968 AIR  250, \t\t  1968 SCR  (1) 424<\/div>\n<div class=\"doc_author\">Author: S Sikri<\/div>\n<div class=\"doc_bench\">Bench: Sikri, S.M.<\/div>\n<pre>           PETITIONER:\nANANDRAM JIVRAJ GAGLE\n\n\tVs.\n\nRESPONDENT:\nPREMRAJ MUKANDAS &amp; ORS.\n\nDATE OF JUDGMENT:\n31\/08\/1967\n\nBENCH:\nSIKRI, S.M.\nBENCH:\nSIKRI, S.M.\nSHAH, J.C.\nSHELAT, J.M.\n\nCITATION:\n 1968 AIR  250\t\t  1968 SCR  (1) 424\n\n\nACT:\nTransfer  of  Property\tAct  (4\t of  1882),  ss.  76(d)\t and\n76(h)--Priorities  laid down in s. 76(h) whether subject  to\nthose in s. 76(d).\n\n\n\nHEADNOTE:\nThe  respondents  filed\t a suit against\t the  appellant\t for\nredemption  of a mortgage.  The suit was decreed subject  to\npayment\t of  a sum of Rs. 9,224-12-0 towards  principal\t and\ninterest  within  six  months.\t A  preliminary\t decree\t was\ndirected  to be drawn up.  The appellant filed an appeal  in\nthe  Court of the District Judge and inter alia\t urged\tthat\n\"the court ought to have directed the Commissioner to deduct\nthe rent received (i) first towards taxes, then (ii) towards\ninterest of the amount, of repairs etc., then (iii)  towards\ninterest  on the principal amount, then towards (iv)  amount\nof  repairs and expenses and then towards the  principal  of\nthe loan.\" The appeal was dismissed.  A second appeal in the\nHigh Court also failed.\t The appellant came to this Court by\nspecial\t leave.\t  It  was  urged  on  his  behalf  that\t the\npriorities in s. 76(h) of the Transfer of Property Act\twere\nsubject to the priorities in s. 76(d) and therefore interest\non  the principal amount should, in the present\t case,\thave\nbeen  given priority over the payment of the expenditure  on\nmaintenance and repairs.\nHeld:The appeal must fail.\nThe  object of s. 76(d) is not to fix any priorities but  to\nmake  it  obligatory on the mortgagee, in the absence  of  a\ncontract  to the contrary to carry out necessary repairs  to\nthe  property but the amount he can spend is limited to\t the\ndifference between rents and profits and payments  mentioned\nin  cl. (c) and the interest on the principal money.  It  is\ncl.  (h) which directs the mortgagee to apply  the  receipts\nfrom the mortgaged property in a certain manner.  The  order\nof application is (1) the expenses properly incurred for the\nmanagement  of the property and the collection of rents\t and\nprofits\t and the other expenses mentioned in cls.,  (c)\t and\n(d),  (2) interest thereon, (3) the surplus, if any, has  to\nbe utilised towards reduction of interest on principal money\nand   (4)   the\t principal  money  itself.   There   is\t  no\ncontradiction between s. 76(d) and s. 76(h).  The fact\tthat\ns. 76(d) limits the scope of the liability has no bearing on\nthe  question whether it lays down any order  of  priorities\ninconsistent with those mentioned in cl. (h) [428B-E]\n\n\n\nJUDGMENT:\n<\/pre>\n<p>CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8 of 1965.<br \/>\nAppeal\tby special leave from the judgment and decree  dated<br \/>\nOctober\t 5, 1962 of the Bombay High Court in Appeal No.\t 598<br \/>\nof 1960, from Appellate Decree.\n<\/p>\n<p>S. T. Desai and J. P. Aggarwal, for the appellant.<br \/>\nO. P. Malhotra, and P. C. Bhartari, for the respondents.\n<\/p>\n<p><span class=\"hidden_text\">425<\/span><\/p>\n<p>The Judgment of the Court was delivered by<br \/>\nSikri,\tJ. This appeal by special leave is directed  against<br \/>\nthe  judgment and decree of the Bombay High Court in  Appeal<br \/>\nNo.  598  of  1960, whereby the\t High  Court  confirmed\t the<br \/>\njudgment  and decree dated January 30, 1960, passed  by\t the<br \/>\nExtra  Assistant  Judge,  District  Court,  Ahmednagar,\t  in<br \/>\nRegular Appeal No. 300 of 1958, confirming the decree  dated<br \/>\nApril  7,  1958,  passed by the Joint  Civil  Judge,  Junior<br \/>\nDivision, Ahmednagar, in Civil Suit No. 609 of 1948.<br \/>\nThe  relevant  facts  for the determination  of\t the  points<br \/>\nraised\tbefore us by the learned counsel for the  appellant-<br \/>\nmortgagee, are as follows: The respondents before us filed a<br \/>\nsuit  for  the redemption of the mortgage of a\tbungalow  at<br \/>\nAhmednagar  alleging that the sale-deed in respect  of\tthis<br \/>\nbungalow  for Rs. 5,000 was in fact a  possessory  mortgage.<br \/>\nOne of the terms of this deed, dated August 4, 1928, was :\n<\/p>\n<blockquote><p>\t      &#8221;\t  However, a condition is laid down  that if<br \/>\n\t      we  pay you within three years from  this\t day<br \/>\n\t      Rupees  five thousand relating to\t this  sale-<br \/>\n\t      deed, and (interest) thereon at the rate of 12<br \/>\n\t      twelve  annas  per cent per mensem  at  yearly<br \/>\n\t      rests,  and the amounts spent by you  to\tmeet<br \/>\n\t      the   expenses  for  repairs,   constructions,<br \/>\n\t      taxes,  etc.  together with interest  (at\t the<br \/>\n\t      rate)  mentioned\tabove&#8230;&#8230;..  you  are\t  to<br \/>\n\t      receive the same and allow us to purchase\t the<br \/>\n\t      aforesaid property back.\n<\/p><\/blockquote>\n<p>The  transaction was held to be a mortgage and there  is  no<br \/>\ndispute\t on  this  point.  On April 7, 1958,  the  suit\t was<br \/>\nfinally decreed for redemption of the property subject to  a<br \/>\npayment of Rs. 9,224-.12-0, Rs. 4,612-6-0 as principal,\t and<br \/>\nRs.  4,612-6-0 as interest thereon, within six\tmonths\tfrom<br \/>\nthat  date.  A preliminary decree was directed to  be  drawn<br \/>\nup.   The  appellant  filed an appeal in the  Court  of\t the<br \/>\nDistrict  Judge,  Ahmednagar,  and,  among  other   grounds,<br \/>\nalleged\t  that\t&#8220;the  Court  ought  to\thave  directed\t the<br \/>\nCommissioner  to deduct the rent received (i) first  towards<br \/>\ntaxes, then (ii) towards interest of the amount of  repairs,<br \/>\netc.,  then (iii) towards interest on the principal  amount,<br \/>\nthen  towards (iv) amount of repairs and expenses  and\tthen<br \/>\ntowards\t the  principal of the loan&#8221;.  The  Extra  Assistant<br \/>\nJudge did not agree with this contention, and dismissed\t the<br \/>\nappeal.\t  The  appellant filed a second appeal to  the\tHigh<br \/>\nCourt.\t The  High  Court  also\t disagreed  with  the  above<br \/>\ncontentions.   The High Court held that the  priorities\t had<br \/>\nbeen  settled  by the courts below in  accordance  with\t the<br \/>\nprovisions of s. 76(h) of the Transfer of Property Act, 1882<br \/>\n(IV of 1882) and were, therefore, proper.<br \/>\nThe  method of accounting followed by the  Commissioner\t ap-<br \/>\npointed\t in the case, and which was accepted by\t the  courts<br \/>\nbelow,\twas as follows : Out of the income derived from\t the<br \/>\nproperty (There is no dispute that the bungalow was fetching<br \/>\nrent from<br \/>\n<span class=\"hidden_text\">426<\/span><br \/>\nmonth to month) the outgoings were deducted in the following<br \/>\norder of priority :\n<\/p>\n<blockquote><p>\t      1. Payment of taxes.\n<\/p><\/blockquote>\n<blockquote><p>\t      2.  Payment  of  interest\t on  the  amount  of<br \/>\n\t      expenditure on maintenance and repairs.\n<\/p><\/blockquote>\n<blockquote><p>\t      3.  Payment of the expenditure on\t maintenance<br \/>\n\t      and repairs.\n<\/p><\/blockquote>\n<blockquote><p>\t      4. Interest on the amount of principal of\t the<br \/>\n\t      mortgage bond.\n<\/p><\/blockquote>\n<blockquote><p>\t      5. Amount of principal under dispute.\n<\/p><\/blockquote>\n<p>The learned counsel for the appellant, Mr. S. T. Desai, says<br \/>\nthat item 4 above should be item 3, and to substantiate this<br \/>\nhas submitted three propositions before us :\n<\/p>\n<blockquote><p>\t      (1) Section 76(h) does not lay down any  order<br \/>\n\t      of  priority  inconsistent with the  order  of<br \/>\n\t      priority\tmentioned in s. 76(d) and  does\t not<br \/>\n\t      reverse that order.  Both the provisions\tmust<br \/>\n\t      be read together and in a harmonious manner;<br \/>\n\t      (2)  The liability for repairs under s.  76(d)<br \/>\n\t      is very limited in its scope.  This  liability<br \/>\n\t      arises  only if there is a surplus left  after<br \/>\n\t      deducting\t from the rents and profits  of\t the<br \/>\n\t      property two items, viz.;\n<\/p><\/blockquote>\n<blockquote><p>\t      (i)   expenses mentioned in clause (c), and\n<\/p><\/blockquote>\n<blockquote><p>\t      (ii)  interest on the principal money;<br \/>\n\t      (3) If the mortgagee expends more for  repairs<br \/>\n\t      than the surplus left after the last mentioned<br \/>\n\t      deductions,  that\t expense  would\t not  be  in<br \/>\n\t      pursuance\t of  any liability of his  under  S.<br \/>\n\t      76(d)  but  would be claimed under  the  right<br \/>\n\t      conferred\t by  s. 63A(2) and S.  72(b).\tSuch<br \/>\n\t      expenses would be treated as additions to\t the<br \/>\n\t      principal money.\n<\/p><\/blockquote>\n<blockquote><p>\t      Sections 76 (c), (d), (h), 63A and 72(b)\tread<br \/>\n\t      as follows:\n<\/p><\/blockquote>\n<blockquote><p>\t      &#8220;76.   When,  during the\tcontinuance  of\t the<br \/>\n\t      mortgage,\t the mortgagee takes  possession  of<br \/>\n\t      the mortgaged property;-\n<\/p><\/blockquote>\n<blockquote><p>\t      (c) he must, in the absence of a, contract  to<br \/>\n\t      the  contrary,  out  of  the  income  of\t the<br \/>\n\t      property,\t pay  the  Government  revenue,\t all<br \/>\n\t      other charges of a public nature and all\trent<br \/>\n\t      accruing\tdue in respect thereof\tduring\tsuch<br \/>\n\t      possession, and any arrears of rent in default<br \/>\n\t      of  payment.of  which  the  property  may\t  be<br \/>\n\t      summarily sold;\n<\/p><\/blockquote>\n<blockquote><p>\t      (d)  he must, in the absence of a contract  to<br \/>\n\t      the  contrary, make such necessary repairs  of<br \/>\n\t      the  property  as he can pay for\tout  of\t the<br \/>\n\t      rents and profits thereof after<br \/>\n<span class=\"hidden_text\">427<\/span><br \/>\n\t      deducting\t from  such rents  and\tprofits\t the<br \/>\n\t      payments\tmentioned  in  clause  (c)  and\t the<br \/>\n\t      interest on the principal money;\n<\/p><\/blockquote>\n<blockquote><p>\t      (h) his receipts from the mortgaged  property,<br \/>\n\t      or, where such property is personally occupied<br \/>\n\t      by  him,\ta fair\toccupation-rent\t in  respect<br \/>\n\t      thereof,\tshall, after deducting the  expenses<br \/>\n\t      properly\tincurred for the management  of\t the<br \/>\n\t      property\tand  the  collection  of  rents\t and<br \/>\n\t      profits  and the other expenses  mentioned  in<br \/>\n\t      clauses (c) and (d), and interest thereon,  be<br \/>\n\t      debited against him in reduction of the amount<br \/>\n\t      (if  any)\t from  time to time due\t to  him  on<br \/>\n\t      account  of  interest  and,  so  far  as\tsuch<br \/>\n\t      receipts exceed any interest due, in reduction<br \/>\n\t      or   discharge  of  the  mortgage-money;\t the<br \/>\n\t      surplus,\t if  any,  shall  be  paid  to\t the<br \/>\n\t      mortgagee;&#8230;&#8230;&#8230;&#8230;<\/p><\/blockquote>\n<p>\t      63A.   (1)   Where   mortgaged   property\t  in<br \/>\n\t      possession  of the mortgagee has,\t during\t the<br \/>\n\t      continuance  of the mortgage,  been  improved,<br \/>\n\t      the mortgagor, upon redemption, shall, in\t the<br \/>\n\t      absence  of  a contract to  the  contrary,  be<br \/>\n\t      entitled to the improvement; and the mortgagor<br \/>\n\t\t\t    shall  not, save only in cases provide<br \/>\nd for  in<br \/>\n\t      sub-section  (2),\t be liable to pay  the\tcost<br \/>\n\t      thereof.\n<\/p>\n<p>\t      (2) Where any such improvement was effected at<br \/>\n\t      the cost of the mortgagee and was necessary to<br \/>\n\t      preserve\tthe  property  from  destruction  or<br \/>\n\t      deterioration or was necessary to prevent\t the<br \/>\n\t      security\tfrom becoming insufficient,  or\t was<br \/>\n\t      made  in compliance with the lawful  order  of<br \/>\n\t      any  public servant or public  authority,\t the<br \/>\n\t      mortgagor shall, in the absence of a  contract<br \/>\n\t      to  the contrary, be liable to pay the  proper<br \/>\n\t      cost  thereof as an addition to the  principal<br \/>\n\t      money  with  interest at the same rate  as  is<br \/>\n\t      payable  on the principal, or, where  no\tsuch<br \/>\n\t      rate  is fixed, at the rate of nine  per\tcent<br \/>\n\t      per  annum, and the profits, if any,  accruing<br \/>\n\t      by reason of the improvement shall be credited<br \/>\n\t      to the mortgagor.\n<\/p>\n<p>\t      72.   A  mortgagee may spend such money as  is<br \/>\n\t      necessary-\n<\/p>\n<p>\t      (b)  for\tthe preservation  of  the  mortgaged<br \/>\n\t      property from destruction, forfeiture or sale;<br \/>\n\t      and  may, in the absence of a contract to\t the<br \/>\n\t      contrary,\t add  such money&#8217; to  the  principal<br \/>\n\t      money, at the rate of interest payable on\t the<br \/>\n\t      principal, and where no such rate is fixed, at<br \/>\n\t      the rate of nine per cent per annum;  Provided<br \/>\n\t      that the expenditure of money by the mortgagee<br \/>\n\t      under  clause  (b) or cause (e) shall  not  be<br \/>\n\t      deemed to be necessary<br \/>\n<span class=\"hidden_text\">428<\/span><br \/>\n\t      unless the mortgagor has been called upon\t and<br \/>\n\t      has failed to take proper and timely steps  to<br \/>\n\t      preserve\tthe  property  or  to  support\t the<br \/>\n\t      title&#8230;&#8230;&#8230;&#8221;\n<\/p>\n<p>It seems to us clear that. the object of s. 76(d) is not  to<br \/>\nfix  any  priorities  but  to  make  it\t obligatory  on\t the<br \/>\nmortgagee, in the absence of a contract to the contrary,  to<br \/>\ncarry  out necessary repairs to the property but the  amount<br \/>\nhe can spend is limited to the difference between rents\t and<br \/>\nprofits\t and payments mentioned in cl. (c) and the  interest<br \/>\non the principal money.\t When we come to cl. (h), it directs<br \/>\nthe  mortgagee\tto  apply the receipts\tfrom  the  mortgaged<br \/>\nproperty in a, certain manner.\tThe order of application  is<br \/>\n(1) the expenses properly incurred for the management of the<br \/>\nproperty  and  the collection of rents and profits  and\t the<br \/>\nother  expenses mentioned in cls. (c) and (d), (2)  interest<br \/>\nthereon, (3) the surplus, if any, has to be utilised towards<br \/>\nreduction  of  interest\t on principal  money,  and  (4)\t the<br \/>\nprincipal   money  itself.   In\t our  view,  there   is\t  no<br \/>\ncontradiction between s. 76(d) and s. 76(h).  It is true, as<br \/>\nstated in proposition No. 2 of the learned counsel, that the<br \/>\nliability  for\trepairs is limited in its scope\t and  arises<br \/>\nonly  if  there is a surplus left after deducting  from\t the<br \/>\nrents and profits of the property the expenses mentioned  in<br \/>\ncl.  (c), and the interest on the principal money,  but\t the<br \/>\nfact that the liability is limited in scope does not bear on<br \/>\nthe  question whether it lays down any order  of  priorities<br \/>\ninconsistent with the priorities mentioned in cl. (h). .This<br \/>\nis so because, as we have stated above, s. 76(d) is not con-<br \/>\ncerned with the question of priorities but with limiting the<br \/>\namount which can be spent by the mortgagee in possession for<br \/>\ncarrying Out necessary repairs.\n<\/p>\n<p>Coming now to the third proposition, it is not necessary  to<br \/>\ndeal  with the question of the relationship between S.\t63A,<br \/>\nS.  72(b)  and\ts. 76, because\tthe  plaintiff\thas  neither<br \/>\nalleged nor proved that any expenses were incurred by  which<br \/>\nimprovement  was effected and the improvement was  necessary<br \/>\nto  preserve the property from destruction or  deterioration<br \/>\nwithin\tS.  63A(2).  Similarly, he never alleged  or  proved<br \/>\nthat he spent money which was necessary for the preservation<br \/>\nof  the mortgaged property from destruction,  forfeiture  or<br \/>\nsale  within s. 72(b).\tThere is no allegation\tor  evidence<br \/>\nthat  the mortgagor had been called upon and failed to\ttake<br \/>\nproper and timely steps to preserve the property.<br \/>\nWe may mention that the only allegation to which our  atten-<br \/>\ntion  was  drawn  is contained in para\t11  of\tthe  written<br \/>\nstatement, which reads as follows :\n<\/p>\n<blockquote><p>\t      &#8220;11.  The transaction dated 4-8-28 is not\t one<br \/>\n\t      of  security or mortgage.\t The  defendant\t has<br \/>\n\t      never received rent for the suit property more<br \/>\n\t      than  Rs.\t 65 per month.\t The  defendant\t has<br \/>\n\t      incurred expenses from time to time for taxes,<br \/>\n\t      expenses,\t maintenance,  repairs,\t (and)\tcon-<\/p><\/blockquote>\n<p>\t      structions.  The defendant made  constructions<br \/>\n\t      and<br \/>\n<span class=\"hidden_text\">429<\/span><br \/>\n\t      repairs  and spent more, than Rs. 10,000\t(ten<br \/>\n\t      thousand)\t therefor  because it  was  his\t own<br \/>\n\t      property.\t I shall produce an extract in\tthat<br \/>\n\t      behalf.\tFor  many years the  property  under<br \/>\n\t      dispute was unoccupied<br \/>\nThis hardly covers the point now sough to be made.<br \/>\nFor the aforesaid reasons the appeal fails and is  dismissed<br \/>\nwith costs.\n<\/p>\n<pre>G.C.\t\t\t\tAppeal dismissed.\n\/S5SCI-14\n<span class=\"hidden_text\">430<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Anandram Jivraj Gagle vs Premraj Mukandas &amp; Ors on 31 August, 1967 Equivalent citations: 1968 AIR 250, 1968 SCR (1) 424 Author: S Sikri Bench: Sikri, S.M. PETITIONER: ANANDRAM JIVRAJ GAGLE Vs. RESPONDENT: PREMRAJ MUKANDAS &amp; ORS. DATE OF JUDGMENT: 31\/08\/1967 BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SHAH, J.C. SHELAT, J.M. 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