# GYARSI BAI AND OTHERS v. DHANSUKH LAL AND OTHERS

- **Citation:** [1965] 2 S.C.R. 154
- **Court:** Supreme Court of India
- **Decided:** 1964-11-18
- **Case number:** Civil Appeal No. 257 of 1963
- **Bench:** K. SUBBA RAo, Raghubar Dayal, N. Rajagopala Ayyangar Jj
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/gyarsi-bai-and-others-v-dhansukh-lal-and-others-3307
- **Pages:** 13

## Headnote

Mortgage-Suit for enforcement of Mortgage with possession-Preliminary decree declaring amount due under mortgage without asking mort·
gagee to account for profits-'--Mortgagee's liability to account for period
before preliminary decree, and after decree-Code of Civil Procedure (Act
5 of 1908, 0. 34, rr. 4 & 2-Transfir of Property Act, s. 76(h)-Ettoppe/
-Conditions to be satisfied.
A mortgagee in possession of the mortgaged property filed a suit for
enforcement of the mortgage. As provided in 0-34, rr. 4 and 2 the trial
court framed a preliminary decree in Form No. 5A of the Appendix D
to the First Schedule of the Code of Civil Procedure declaring the amount
due under the mortgage. This was done without debiting the profits of
the property realised by the mortgagee in the manner contemplated by
s. 76 Transfer of Property Act.
After the decree was passed the mortgagors prayed that the mortgagee be asked to render accounts.
Their
application was rejected by the Trial Court, but the High Court in
revision remanded the case and directed the trial court to declare the
amount due under the mortgage after taking accounts from the mortgagee.
The mortgagee's legal representatives (the present appellants) appealed
to the Supreme Court by special leave.
The appellants contended that since
the preliminary
decree
had
finally dc!ormined the rights of the parties no claim for subsequent
accounting could arise.
The respondents (mortgagors) on the other hand
contended that the appellants had withdrawn the amount deposited in
court in part satisfaction of the d~cree after having given an assurance that
they would render accounts of the profits, and therefore the appellants
were stopped from denying their liability to account.
HELD : (i) In a suit on a mortgage for sale the court may either
order an account to be taken of what is due to the plaintiff at the 'date
of the preliminary decree, or it may declare the amount so due on that
date.
In the latter case the .decree will be made in Form No. 5A in
Appendix D to the First Schedu1e.
In a case where a decree is made
in Form No. 5A it is the duty of the Court to ascertain the amount due
to the mortgagee at the date of the preliminary decree. The amount due
cannot be declared unless the net profits realised by the mortgagee from
the property are ascertained.
The ascertainment of the net profits is
therefore a matter directly and substantially in is.Sue up to the date of
the pre1iminary decree.
If the requisite pJea is not raised and the court
does not in framing the preliminary decree take into account the net
profits a subsequent plea for rendition of' accounts by mortgagee would
be barred on the principle of res judicata.
A preliminary decree is
final in resoect of disputes that should have been raised before it was
made.
[159 D-160 DJ
In the present case therefore the mortgagor could not claim rendition
-0f accounts for the period prior to the preliminary decree. [160 DJ
A
B
c
D
E
F
G
H
•
A
B
GYARSI BAI v. DHANSUKH LAL (Subba Rao, J.)
155
(ii) The same however cannot be said of the net receipts realized
by the mortgagee subsequent to the preliminary decree as no dispute about
them could have been raised before it was made.
As a suit notwithstanding tl1e preliminary decree
continue till the
passing of the final
decree and therefore any payment made by the judgment-debtor to the
decree-holder would go in deduction of his mortgagee liability.
On the
same analogy the net receipts statutorily debited to the mortgagee would
equally be taken into consideration in fixing the mortgagor's ultimate
liability.
[160 B-162 B; 162 HJ
Case law discussed.
(iii) There can be no estoppel unleso the penon to whom a representation is. made acts on that representation to his detriment.
By depositing
the decretal amount the respondents had only discharged their legal liability under the decree and this cannot in any sense of the term be described as detrimental to them. [166 D-G]

## Text

154
GYARSI BAI AND OTHERS
v.
DHANSUKH LAL AND OTHERS
November 18, 1964
[K. SUBBA RAo, RAGHUBAR DAYAL AND N. RAJAGOPALA
AYYANGAR JJ.J
Mortgage-Suit for enforcement of Mortgage with possession-Preliminary decree declaring amount due under mortgage without asking mort·
gagee to account for profits-'--Mortgagee's liability to account for period
before preliminary decree, and after decree-Code of Civil Procedure (Act
5 of 1908, 0. 34, rr. 4 & 2-Transfir of Property Act, s. 76(h)-Ettoppe/
-Conditions to be satisfied.
A mortgagee in possession of the mortgaged property filed a suit for
enforcement of the mortgage. As provided in 0-34, rr. 4 and 2 the trial
court framed a preliminary decree in Form No. 5A of the Appendix D
to the First Schedule of the Code of Civil Procedure declaring the amount
due under the mortgage. This was done without debiting the profits of
the property realised by the mortgagee in the manner contemplated by
s. 76 Transfer of Property Act.
After the decree was passed the mortgagors prayed that the mortgagee be asked to render accounts.
Their
application was rejected by the Trial Court, but the High Court in
revision remanded the case and directed the trial court to declare the
amount due under the mortgage after taking accounts from the mortgagee.
The mortgagee's legal representatives (the present appellants) appealed
to the Supreme Court by special leave.
The appellants contended that since
the preliminary
decree
had
finally dc!ormined the rights of the parties no claim for subsequent
accounting could arise.
The respondents (mortgagors) on the other hand
contended that the appellants had withdrawn the amount deposited in
court in part satisfaction of the d~cree after having given an assurance that
they would render accounts of the profits, and therefore the appellants
were stopped from denying their liability to account.
HELD : (i) In a suit on a mortgage for sale the court may either
order an account to be taken of what is due to the plaintiff at the 'date
of the preliminary decree, or it may declare the amount so due on that
date.
In the latter case the .decree will be made in Form No. 5A in
Appendix D to the First Schedu1e.
In a case where a decree is made
in Form No. 5A it is the duty of the Court to ascertain the amount due
to the mortgagee at the date of the preliminary decree. The amount due
cannot be declared unless the net profits realised by the mortgagee from
the property are ascertained.
The ascertainment of the net profits is
therefore a matter directly and substantially in is.Sue up to the date of
the pre1iminary decree.
If the requisite pJea is not raised and the court
does not in framing the preliminary decree take into account the net
profits a subsequent plea for rendition of' accounts by mortgagee would
be barred on the principle of res judicata.
A preliminary decree is
final in resoect of disputes that should have been raised before it was
made.
[159 D-160 DJ
In the present case therefore the mortgagor could not claim rendition
-0f accounts for the period prior to the preliminary decree. [160 DJ
A
B
c
D
E
F
G
H
•
A
B
GYARSI BAI v. DHANSUKH LAL (Subba Rao, J.)
155
(ii) The same however cannot be said of the net receipts realized
by the mortgagee subsequent to the preliminary decree as no dispute about
them could have been raised before it was made.
As a suit notwithstanding tl1e preliminary decree
continue till the
passing of the final
decree and therefore any payment made by the judgment-debtor to the
decree-holder would go in deduction of his mortgagee liability.
On the
same analogy the net receipts statutorily debited to the mortgagee would
equally be taken into consideration in fixing the mortgagor's ultimate
liability.
[160 B-162 B; 162 HJ
Case law discussed.
(iii) There can be no estoppel unleso the penon to whom a representation is. made acts on that representation to his detriment.
By depositing
the decretal amount the respondents had only discharged their legal liability under the decree and this cannot in any sense of the term be described as detrimental to them. [166 D-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 257 of
1963.
Appeal by special leave from the judgment and order dated
April 5th 1961 of the Rajasthan High Court in S. B. Civil Revision
D
No. 181 of 1956.
E
F
G
H
B. D. Sharma, for the appellants.
A. V. Viswanatha Sastri, Rameshwar Nath, S. N. And/ey and
P. L. Vohra, for the respondents.
The Judgment of the Court was delivered by
Sobba Rao J.
This appeal by special leave is directed against
the judgment of a Division Bench of the Rajasthan High Court in
S. B. Civil Revision No: 181of1956.
The plaint-schedule properties originally belonged to one Noor
Mohammad, his wife and son.
On September 14, 1936, they
mortgaged the said properties with possession to B.F. Marfatia.
for a sum of Rs. 25,000. On February 22, 1938, the said mortgagors executed a simple mortgage in respect of the same properties to one Novat Mal for Rs. 5,000.
On December 21, 1942,
Radha Kishan, Har Prasad and Pokhi Ram acquired the equity of
redemption in the said properties in an auction sale held in execution of a money decree against the mortgagors.
On February 14,
1950, and March 13, 1950, Seth Girdhari Lal, the husband of
Appellant No. l herein, purchased the mortgagee rights of Novat
Mal and Marfatia respectively.
On May 1, 1950, Girdhari Lal
was put in possession of the mortgaged properties.
On July 22,
1950, Respondents 9 to 11 purchased the equity of redemption of
the mortgaged properties from Radha Kishan. Har Prasad and
Pokhi Ram. On August 10, 1950, Girdhari Lal instituted Civil
156
SUPREME COURT REPORTS
[1965] 2 S.C.R.
suit No. 739 of 1950 in the Court of the Senior Subordinate A
Judge, Ajmer, for enforcing the ~aid two mortgages. In the suit
he claimed Rs. 48,919-12-6 a• the amount due to him under the
said two mortgages.
On April 25, 1953, the Senior Subordinate
Judge, Ajmer, gave a preliminary decree in the suit for the recovery of a sum of Rs. 34,003-1-6 with prop9rtionate costs and
future interest; he disallowed interest from September 14, 1936,
B.
to March 13, 1950, on the mortgage of Rs. 25,000. The plaintiff-mortgagee preferred an appeal, being Civil Appeal No. 71 of
1953, to the judicial Cominissioner, Ajmer, against the said
decree in so far as it disallowed interest to him.
The defendants
preferred cross-objections in respect of that part of the decree
awarding costs against them.
On July 25, 1953, the defendants
C
filed an application under O.XXXIV, r. 5 ( 1), of the Cqde of
Civil Procedure, seeking permission to deposit the decretal amount
in court and praying that possession of the properties may bo
directed to be delivered to them and also for directing the decreeholder to render accounts of the profits of the mortgaged properties
received by him.
On July 29, 1953, the respondents deposited
Rs. 35,155-2-6 in the Trial Court.
On August 17, 1953, the
decree-holder filed objections to the said deposit on the ground
that it was much less than the decretal amount.
On August 27,
1953, the Trial Court made. an oder permitting the decree-holder
D
to withdraw the said amount with the reservation that the question
E
as to what was due under the decree would be decided later. On
August 25, 1954, both the appeal of the decree-holder and the
cross-objections of the defendants were dismissed.
On December
7, 1954, the defendants filed an applicatio!I in the Trial Court for
the determ' nation of the amount due under the decree and for
directing the decree-holder to render accounts of all the realizaF
tions from the mortgaged properties. On March 14, 1955, the
Supreme Court granted special leave to the decree-holder for preferring an appeal against the judgment of the Judicial Commissioner dismissing Civil Appeal No. 71 of 1953. On February 15,
1956, the Trial Court dismissed the application filed by the defendants for directions on the ground that the mortgage deed had G ·
merged in the preliminary decree and that the said decree contained no directions to the plaintiff to render accounts. On February 29, 1956, the defendants applied to the Judicial Commissioner, Ajmer, under s. 152 of the Code of Civil Procedure for
. amending the preliminary decree by including therein a direction
against the plaintiff for rendition of account in respect of the profits
H
received. by him from the mortgaged properties. On April 12,
1956, the Judicial Commissioner dismissed the said application.
GYARSI BAI v. DHANSUKH LAL (Subba Rao, J.)
157
A On April 25, 1956, the defendants filed a revision petition against
the order of the Trial Court dated February 15, 1956, in the Court
of the Judicial Commissioner, Ajmer.
As by that time the Supreme Court had given special leave to appeal against the decree of
the Appellate Court confirming the preliminary decree, the Judicial
•
Commissioner, on August 1, 1956, made an order adjourning the
B hearing of the revision petition till after the decision of the Supreme Court in Civil Appeal No. 383 of 1956. On February 17,
1957, the decree-holder died, and his legal representatives, who
are the appellants herein, were brought on record.
On December
16, 1960, this Court delivered judgment in the said appeal modifying the preliminary decree made in the suit and directing the
C Trial Court to pass a fresh final decree.
On April 5, 1961, the
High Court accepted the revision petition filed by the defendants,
remanded the case to the Trial Court and directed it to take an
account of the receipts from the mortgaged properties and expenses
properly incurred for the management etc. of the said properties
D as contemplated under s. 76(g) and (h) of the Transfer of Property Act and to determine what sum remained to be paid to the
mortgagees taking into account the decision of this Court. Hence
the present appeal.
E
The gist of the arguments of Mr. B. D.
Sharma, learned
counsel for the appellants may be stated thus : ( i) A preliminary
decree settles the rights of parties by deciding all the controversies
between them relating to a mortgage transaction and gives
all
necessary directions for carrying into effect those rights, while a
final decree concerns itself with the working out of those rights;
further, the mortgage merges into the preliminary decree and thercF after no relief can be given on the terms of the mortgage; on the
basis of the said two principles it must be held that, as the prelintinary decree in the present case did not give a direction to the
mortgagee for rendition of an account of the orofits of the mortgaged properties, the Court has no jurisdicti~n to direct such a
rendition of accounts on an application filed by the mortgagors
G after t)le preliminary decree was made. (2) The High Court went
wrong in holding that the appellants were estopped from raising
the plea that the mortgagee was not liable to render accounts for
the period between the date of the filing of the plaint and that of
the preliminary decree.
And (3) the High Court should have
H
taken into consideration the equities in favol_!r of the mortgagee.
The arguments of Mr. A. Viswanatha Sastri, learned counsel
for the rei:pondents, may be summarized thus : The relationship
of mortgagor and mortgagee continues upto. the date of the final
•
158
SUPR.BMB COUR. T
R.BPOR. TS
(1965) 2 S.C.R.
decree.
The statutory liability of a mortgagee to account for the
A
profits received by him and credit the same towards the mortgage
debt also subsists till that date and, therefore. the fact that the
amounts realized by the mortgagee were not given credit to in
ascertaining the amount due to him under the mortgage at the
time of the making of the prelinlinary decree would not relieve the
mortgagee of his liability to account for the same.
It is further
B
contended that though the rents realized could have been taken
into account at the tinle the preliminary decree was made, the
mortgagee was not bound to appropriate the amount towards the
debt before the preliminary decree, for he could do so aiter the
decree though the amounts were realized before the decree. In C
any view, it is contended, as the mortgagee did not deny his liability to account for the profits realized by hint from the mortgaged
properties before the preliminary decree was made, he could not
evade his statutory liability to account for the profits realized and
to appropriate the same towards the mortgage debt till the relationship of mortgagor and mortgagee came to an end.
D
The main question in the appeal is whether the preliminary
decree passed in the suit debars the mortgagors from clainling that
the mortgagee has to account for the profits realized by him from
the mortgaged properties in his possession; if he is not so debarred,
what is the period for whii;h the mortgagee could be compelled to
E
render accounts in respect Of'1he said profits? The suit was filed
on August 10, 1950; the preliminary decree was made under 0.
XXXIV, r. 4, of the Code of Civil Procedure on April 25, 1953.
The p:-eliminary decree does not contain any direction directing
the mortgagee to account for the profits realized from the mortgaged properties in his possession.
The contention briefly stated is
that, as there is no direction in the prelinlinary decree. the mortgagee escapes his statutory liability to render accounts under s. 76
of the Transfer of Property Act.
To appreciate this contention
the relevant provisions of the Code of Civil Procedure and those
of the Transfer of Proper(y Act may be considered.
Under 0.
XXXIV, r. 4, of the Code of Civil Procedure, in a suit for sale,
if the plaintiff succeeds, the Court shall pass a preliminary decree
to the effect mentioned in els. (a), (b) and (c)(i) of sub-r. (1)
of r. 2; under r. 2, in a suit for foreclosure. if the plaintiff succeeds,
the Court shall pass a preliminary decree ordering that an account
be taken of what is due to the plaintiff at the date of such decree
for (i) principal and interest on the mortgage.
Form No. 5 of
Appendix D to the First Schedule to the Code prescribed the form
for directing the accounts to be taken and Form No. SA thereof
F
G
H
A
B
c
D
E
GYARS! BAI v. DHANSUKH LAL (Subba Rao, I.)
159
provides for a decree which by itself declares the amount due to
the plaintiff on the mortgage.
Section 76(h) of the Transfer of
Property Act says :
"When, during the continuance of the mortgage, the
mortgagee takes possession of the mortgaged property,
his receipts from the mortgaged property, or, where such
property is personally occupied by him, a fair occupation-rent in respect thereof, shall, after deducting the
expenses properly incurred for the management of the
property and the collection of rents and profits and the
other expenses mentioned in clauses ( c) and ( d), and
interest thereon, be debited against h ;m in reduction of
the amount, if any, from time to time due to him on
account of interest and, so far as such receipts exc~ed
any interest due. in reduction or discharge of the mortgage-money; the surplus, if any, shall be paid to the
mortgagor.".
The gist of the said provisions may be stated thus : In a suit on a
mortgage for sale the Court may order an account to be taken of
what is due to the plaintiff at the date of the preliminary decree
and in that case the decree will be made in Form No. 5 in Appendix D to the First Schedule to the Code; or it may declare the
amount so due on that date, in which case a decree will be made
in Form No. 5A in the said Appendix.
In a case where a deccee
is made in Form No. 5A, it is the duty of the Court to ascertain
the amount due to the mortgagee at the date of the preliminary
decree.
How can the amount due to the mortgagee as on the date
F
of preliminary decree be declared unless the net profits realized
by him from the mortgaged property are debited against him ?
The statutory liability of the mortgagee to account upto the date
of the preliminary decree would be the subject-matter of dispute
in the suit upto the date of the said decree. The Court has to
ascertain the amount due under the mortgage in terms of the
G mortgage deed and deduct tho net realizations in the manner prescribed in s. 76(h) of the Transfer of Property Act and ascertain
the balance due to the mortgagee on the date of the preliminary
decree. If the mortgagor did not raise the plea, he would be
barred on the principle of res judicata from raising the same as
H
the said matter should be deemed to have been a matter which was
directly and substantially in issue in the suit up to that stage. It
is settled law that though a mortgage suit would be pending till
a final decree was made, the matters decided or ought to have been
160
SUPREME COURT REPORTS
(1965] 2 S.C.R.
decided by the preliminary decree were final.
Suppose the martA
gagor paid certain amounts to the mortgagee before the preliminary decree; if these were not given credit to the mortgagor and a
larger amount was declared by the preliminary decree as due to
the mortgagee, can the mortgagor, after preliminary decree, reopen the question ? Decidedly he cannot.
This is because the
preliminary decree had become final in respect of the disputes
B
that should have been raised before the preliminary decree was
made. So too, under s. 76(h) of the Transfer of Property Act,
the net receipts of the mortgaged property have to be statutorily
debited against the mortgagee in deduction of the amount due
under the mortgage from time to time in the manner prescribed
thereunder.
The principle underlying the said clause is that the
C
usufruct of the mortgaged property represents the mortgagor's
money.
On the same analogy of voluntary payment, if a preliminary decree, by a wrong decision or by reason of an omission
of the requisite plea, ignored the net realization in ascertaining the
amount due to the mortgagee, it must be held that the Court refused 0
to give credit to the said receipts. We therefore, bold that in the
present case so far as the amounts statutorily debited to the mortgagee under s. 76(h) of the Transfer of Property Act before the
date of the preliminary decree are concerned, they could not be
taken into account as the Court did not take those amounts into
consideration at the time it made the said decree.
E
But the same cannot be said of the net receipts realized by
mortgagee subsequent to the preliminary decree.
None of the
• principles relied upon by the learned counsel for the appellants
helps him in this regard. It is true that a preliminary c:tecree is
final in respect of the matters to be decided before it is made : see
Venkata Reddy v. Pethi Reddy('), ands. 97 of the Code of Civil F
Procedure. It is indisputable that in a mortgage suit there will
be two decrees, namely, preliminary decree and final decree. and
that ordinarily the preliminary decree settles the rights of the
parties and the final decree works out those rights : see Talebali
v. Abdul Azia( 2 ), and Kausalya v. Kau/eshwar( 8 ).
It cannot
also be disputed that mortgage merges in the preliminary decree
G
and the rights of parties are thereafter governed by the said decree :
see Kusum Kumari V· Debi Prasad Dhandhania('). But we do
not see any relevancy of the said principles to the problem that
arises in this case in regard to the liability of the mortgagee to
account for the net receipts under s. 76 (h) of the Transfer of H
Property Act.
A preliminary decree is only concerned with dis-
(I) (19631 Supp. 2. SC. R. 616.
(3) [194S] I. L. R. 2S Pat. 30S.
(2) [1930] I. L. R. ~7-Cal. 1013.
(4) [193S] L. R. 63 LA. 114.
GYARSJ BAJ v. DHANSUKH LAL (S~bba Rao, /.)
161
A putes germane to the suit upto the date of the passing of the said
decree. The net receipts of the mortgaged property by the mortgagee subsequent to the preliminary decree are outside the scope
of the preliminary decree : they are analogoua to amounts paid
IO a_ mortgagee by a mortgagor subsequent to the preliminary
I
decree.
Realizing this difficulty, Mr. Sharma contended that it must
be held that the question of statutory liability of the mortgagee to
account for the receipts must be deemed to have been decided in
favour of the mortgagee by the preliminary decree. It is true
that the mortgagee may, if he chose, have raised this untenable
C contention that for some reason he was not under a statutory' liability to account for receipts under s. 7 6 of the Transfer of Property
Act; and if the Court wrongly decided in his favour, the finding
might have been binding on the mortgagor in respect of the mortgagee's liability to account for receipts even fpr the subsequent
period subsequent to the preliminary decree was neither expressly
D He had conceded his general statutory liability, but, by some mistake, it was not quantified upto the date of the preliminary decree
and deducted from the mortgage amount. His liability for tho
period subsequent to the preliminary decree was neither expressly
nor impliedly
negatived by the preliminary decree.
In thil
context, the decision of the Judicial Committee in Madan Thea1: · tres, Ltd. v. Dinshaw & Co. Ltd.(') may usefully be cited. There,
the question arose whether after the preliminary decree there
could be an adjustment of the suit within the meaning of 0.XXIII,
r. 3, of the Code of Civil Procedure. The Judicial Committee
observed:
'
G
"A decree holder need not, of course, agree to any
adjustment or accept payment otherwise than into court,
but in their Lordships' opinion it is open to the debtor to
allege and prove that an adjustment has taken place or
payment in whole or in part has been made and received.
. . . . . . Admittedly the suit continues until the final
decree is passed, and there is no time limit for recording
the agreement arrived at as there is under Or. 21, r. 2·
As a suit, notwithstanding the preliminary decree, continued till
the passing of the final decree any payment made by the judgmentdebtor to the decree-holder after the preliminary decree would go
H
in deduction of his mortgage liability.
On the same analogy, the
net receipts statutorily debited to the mortgagee would equally be
{!) (194S) L R. 72 I. A. 277, 286.
.•
162
SUPREME COURT REPORTS
[1965] 2 S.C.R.
•
taken into consideration in fixing the mortgagor's ultimate liabiA
lity. This question was considered by Clark, J., in Satyanarayana
v. Suryanarayana(').
There, the appellant mortgaged certain
property to the respondent's father, who went into possession of
the same. . In the usual course a preliminary decree was made in
favour of the mortgagee.
After the preliminary decree the mortgagor filed an application for an account to be taken of the profits
B
·received by the mortgagee after the date of the preliminary decree
and before the passing of the final decree.
It was contended that
in the absence of any provision in the preliminary decree for
taking of any account, no such account could be ordered.
Rejecting that contention, the learned Judge observed :
"That he (the mortgagor) is so entitled is well-settled.
law.
A mortgage suit continues until the final decree is
passed and the relationship of a mortgagor and mort-
'.~agee continues until thefi.
Accordingly a mortgagee in
possession has until the expiry of that period the liabilities imposed on him by s. 76, T.P. Act.
It is true
that 0. 34, r. 8 does not in terms. provide that a mortgagor in a suit for redemption applying for a final decree
is entitled to have an account taken of the profits
received by the mortgagee in possession between the
date of the preliminary decree and the date when possession is given; but the provisions of 0. 34 read as a whole
clearly indicate that such.an account must necessarily
be taken.
Even if they did not, the right of the mortgagor to such an account is established beyond question
by the provisions of s· 76, T.P. Act.
Again it is beyond
question that when a suit whether for sale or redemption
of a mortgage is filed it is the duty of the Court to decide
in that suit all the claims of the mortgagor and mortgagee
under the mortgage up to the date when the final decree
is given.
Such claims can and indeed must be included
in the mortgage suit. If they are riot included the person
failing to include them is barred thereafter under the provisions of 0. 2, R. 2, Civil P.C. from filing. a suit in
respect of them."
c
D
E
~F
G
The learned Judge cited a number of decisions in support of his
conclusion.
These observations appear to be rather wide and
comprehensive enough to take in the liability of a mortgagee to
account for the net receipts from the mortgaged property even
H
for the period before the preliminary decree.
But the facts of
(I) A. I. R. 1949 Mad. 613, 614.
A
B
c
D
GYARSI BAI v. DHANSUKH LAL (Subba Rao, J.)
163
that case show that the learned Judge was only considering the
question of the mortgagee's liability for a period after the preliminary decree was made, even though the preliminary decree did
not contain a direction that the mortgagee had to account for the
said receipts.
We agree with these observations with the limitation mentioned above.
We, therefore, hold that as regards the
net receipts from the mortgaged properties subsequent to the making of the preliminary decree the Court was right in giving credit
for them to the mortgagor in fixing his liability.
Mr. Viswanatha Sastri next argued that the mortgagee
is
debarred by the doctrine of estoppel from denying his liability to
account for the net receipts from the mortgaged properties for the
period between the date of the plaint and the date of the preliminary decree.
The plea of estoppel is based upon the foilowing
facts : On July 25, 1953, the respondents filed an application in
the Court of the Senior Subordinate Judge, Ajmer, wherein they
mentioned that under the preliminary decree the amount due was
Rs. 958-4-0, that the amount realized by the appellants as rent
from the tenants up to the date of the said application was
Rs. 4,250, that the costs awarded by the Court against them
against which they were going up in appeal was Rs. 2553-1-6
and the balance payable to the appellants after deducting the said
E amounts was Rs. 35,155-2-6. The prayer in the petition was that
the appellants be directed to deliver possession of the said properties to them and also be called upon to render true and correct
account of the recoveries made by the mortgagee as rent from the
date of suit to the date of his handing over possession of the said
properties.
To that petition the mortgagee filed a counter-afli·
F davit wherein he admitted that he had realized only Rs. 4,488-2-0
towards rent from August 10, 1950, to July 28, 1953, and that
he had incurred an expenditure of Rs· 1,897 in connection with
the management of the said properties during the said period and
that the respondents should have deposited Rs. 30,515-10-0 in the
Court according to the "present"
decree. The sum of
G Rs. 39,515-10-0 was arrived at by adding the net receipts of rents
from August 10, 1950, to July 28, 1953, to the amount sought to
be deposited by the respondents in Court. It is, therefore, clear
that the mortgagee admitted that he had to account to the respondents for the receipts of the mortgaged properties. After depositH
ing Rs. 35,515-2-6, the respondents filed on December 7, 1954,
an application in the Court of the Subordinate Judge stating that
they were prepared to deposit all the remaining amounts which
would on settlement of accounts, be found duly payable to the
I
164
SUPREME COURT REPORTS
[1965] 2 S.C.R.
mortgagee.
They also prayed that the mortgagee be directed to
produce the accounts of all the rents and profits which he had
realized so that the Court, after checking the aforesaid accounts,
might decide what amount was exactly due to the mortgagee. To
that application the mortgagee filed a counter-affidavit, wherein
he stated thus :
"That the plaintiff has no objection to give an account
as to the amount of rent realised by him and the expenses
· incurred by him in the management and preservation of
the mortgaged property but he maintains that he has a
right to remain in possession of the property and enjoy
its usufruct till the last penny due on the mortgage in his
favour is paid up to him.
The plaintiff is therefore
entitled to remain in possession of the property till the
amount of Rs. 14,916-11-0 on account of interest
wrongly disallowed by thio learned Court is also paid to
him alongwith the other dues or till the said interest is
finally disallowed by Honourable the Supreme Court of
India in appeal."
It will be seen again that the mortgagee in clear terms admitted
his liability to account for the net receipts from the mortgaged
properties; but he claimed that he would be entitled to be in
possession till the interest amount due was also paid to him. On
August 27, 1953, the Senior Subordinate Judge ordered that the
amount deposited by the mortgagors less the amount attached by
the Income-tax Officer may be paid to the mortgagee.
As by
that time the appeal and the cross-objections filed by the mortgagee
A
B
c
D
E
and the respondents respectively were not disposed of, the learned
Subordinate Judge left open the question as to the amount that
F
would actually be due to the mortgagee till after they were disposed of.
It appears that the said amounts were drawn out by
the mortgagee.
From the aforesaid documents it is clear that the
respondents deposited Rs. 35,515-2-6 in the Court after taking the
net proceeds alleged to have been realized by the mortgagee from
the mortgaged properties and prayed that the mortgagee should G
be directed to render true and correct accounts from the daie of
the. suit to the date of his handing over possession of the said
properties to the respondents.
The mortgagee admitted his liability to account for the receipts and only claimed that he
was
entitled to be in possession of the properties till the interest disallowed by the Court was paid ·10 him.
From the said facts it is
argued t)iat the respondents would not have permitted the mortgagee to draw out the amount if he had not admitted his liability
H
GYARSI BAI v. DHANSUKH LAL (Subba Rao, I.)
! 6S
A to account for the net receipts from the mortgaged properties and
that the mortgagee having drawn that amount subject to tha
liability, he is now estopped from denying his liability.
Under
s. 115 of the Evidence Act when one person by his declaration,
act or omission intentionally caused another person to believe a
thing to be true and to act upon such belief, he cannot deny the
B truth of the thing.
The doctrine of estoppel embodied in s. 115
of the Evidence Act has been explained by the Judicial Committee
in C. D. Sugar Co. v. C. N. Steamship(') in the following terms :
"estoppel is a complex legal notion, involving a combination of several essential elements, the statement to be
C
acted upon, action on the faith of it, resuling detriment
to the actor."
To invoke the doctrine of estoppel three conditions must be satisfied : (1) representation by a person to another, (2) the other
shall have acted upon the said representation, and ( 3) such action
o shall have been detrimental to the interests of the person to whom
the representation has been made.
In the instant case it may be
said that the first two conditions are satisfied : the appellant repr_esented to the respondents that he was liable to render accounts to
them in regard to the net proceeds of the mortgaged properties
from the date of the plaint to the date of the preliminary decree,
and on the said representation the respondents agreed to
the
appellan\ drawing out from the Court about Rs. 35,515 deposited
by them.
But can it be said that the respondents had in any way
acted to their detriment on the basis of the representation made by
the appellant ? The respondents had to pay the decretal amount
F
to the appellant if they wanted to get possession of the properties.
What they paid was less than what they had to pay under the
decree.
By paying the said amount they did nothing more than
discharging their liability under the decree.
The discharge by
the respondents of their legal liability under the decree cannot in
any sense of the term be described as detrimental to them. Whether -the representation was made or not they had to pay that
G
amount and by paying that amount they had secured a benefit in
as much as from the date of payment the interest on that amount
ceased to run.
There is no scope, therefore. in this case to invoke
the doctrine of estoppel.
We, therefore, hold that the order of
the Rajasthan High Court was correct, except in regard to the
H
direction given by it to the Subordinate Judge to take into account
all the receipts of the mortgaged properties from August 10, 1950,.
-------------
(I) A. I. R. 1947 P. C. 40.
166
SUPREME COUllT REPORTS
[1965] 2_s.c.R.
to July 25, 1953. The order of the High Court is accordingly A
modified.
The parties will pay and receive proportionate costs
here and in the High Court.
Order modified.