# I96I March z4. Petition di~missed. MRITUNJOY PANI AND ANOTHER v. NARMANDA BALA SASMAL AND ANOTHER

- **Citation:** [1962] 1 S.C.R. 290
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Case number:** Civil Appeal No. 119 of 1957
- **Bench:** K. Subba Rao, Raghubar Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/i96i-march-z4-petition-di-missed-mritunjoy-pani-and-another-v-narmanda-bala-2022
- **Pages:** 8

## Headnote

Mortgage-Right of redemption-Suit, when maintainableMortgagor and Mortgagee-Legal position-Indian Trusts Act, r88a
(II of r882), s. 90.
Usufructuary mortgage bond was executed in favour of the
father of the appellant who was put in possession of the mortgaged property. One of the terms of the usufructuary mortgage
was that in case of failure of payment of rent by the mortgagor,
the mortgagee was to pay off the arrears of rent to the landlord,
which obligation the mortgagee did not honour as a result of
which the property was brought to sale and ultimately purchased by the mortgagee.
The mortgagor filed a suit against the mortgagee, the appellant's father, for redemption of the mortgage and for possession.
The defence inter alia was that the mortgagee had purchased
equity of redemption in execution of the rent decree and that
the mortgagor had no longer any right to sue him for redemption and their remedy, if any, was to sue for setting aside the
sale on the ground of fraud or otherwise.
Held, thats. 90 of the Trusts Act read with the illustration
(c) lays down the principle that no one can be allowed to benefit
for his own wrongful act.
Held, further, that the legal position with regard to mortgagor and mortgagee was that:-
( I) the governing principle is that "once mortgagee
..,... ·. -
• I
,,
....
,.
•
•
•
1 S.C.R. SUPREME COURT REPORTS
291
always a mortgagee" till the mortgage is terminated by the act
r96r
of the parties themselves, by merger or by order of the Court;
(2) where a mortgagee purchases the equity of redemp- M.itunjoy Poni
tion in execution of his mortgage decree with the leave of court
& Another
or in execution of a mortgage or money decree obtained by
v.
a third party, the equity of redemption may be extinguished; Narmanda Bala
and, in that event, the mortgagor cannot sue for redemption SasJnal & Another
without getting the sale set aside; and
(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.
In the instant case the right to redeem the mortgage was
not extinguished and in the eyes of law, the purchase in the
rent sale was deemed to have been made in trust for the mortgagor and the suit for redemption was maintainable.
Sidhakamal Nayan v. Bira Naik, A.LR. 1954 S.C. 336, relied
on.
Malkarjun Bin Shidramappa Pasare v. Narharl Bin Shivappa,
(1900) L.R. 27 I.A. 216, distinguished.
CIVIL
APPELLATE
JURISDICTION:
Civil
Appeal
No. 119 of 1957 .
Appeal by special leave from the judgment and
decree dated March 3, 1955, of the Orissa High Court
in Appeal No. 593 of 1950.
R. Patnaik, for the appellants.
D. N. Mukherjee, for the respondents.
1961. March 14. The Judgment of the Court was
delivered by
SUBBA RAO, J.-This is an appeal by special leave
Subba Rao J.
against the judgment of the High Court of Judicature
for Orissa dated March 3, 1955, setting aside the judgment of the Court of the District Judge, Mayurbhanj,
and restoring that of the Subordinate Judge, Balasore.
The facts leading up to this appeal may be briefly
stated. The land in dispute originally belonged to
one Bhagaban Parida. On July 16, 1924, he executed a registered kabala for a consideration of Rs. 2,000
in favour of one Priyanath Sasmal. On June 2, 1928,
Priyanath Sasmal executed a usufructuary mortgage bond (Ex. B) for Rs. 1,500 in favour of
292
SUPREME COURT REPORTS
[1962]
'96'
Lakshminarayan Pani, the father of the appellants
Mritunjoy Pani herein. Under the terms_ of the said usufructuary
& Another
mortgage, the mortgaged property was put in possesv.
sion of the mortgagee. One of the terms of the mortNaimanda Bala gage deed was that the initial responsibility for the
Sasmal &- Another payment of rent was that of the mortgagor and that,
Subb::;ao J. if for any reason he did not pay the arrears of rent, the
mo

## Text

290
SUPREME COURT REPORTS
(1962]
to furnish security for the proper realisation of the
tax levied or leviable under the Act. We agree with
M 1'· Nand Lal the Chief Commissioner that there was no violation of
Raj Kishan
v.
the principles of natural justice in the present case.
Commissioner of
For the reasons given above we hold that there is
Sales Tax, Delhi no merit in the petition which is accordingly dismissed
& Another
with costs.
S. K. Das J.
I96I
March z4.
Petition di~missed.
MRITUNJOY PANI AND ANOTHER
v.
NARMANDA BALA SASMAL AND ANOTHER
(K. SUBBA RAO and RAGHUBAR DAYAL, JJ.)
Mortgage-Right of redemption-Suit, when maintainableMortgagor and Mortgagee-Legal position-Indian Trusts Act, r88a
(II of r882), s. 90.
Usufructuary mortgage bond was executed in favour of the
father of the appellant who was put in possession of the mortgaged property. One of the terms of the usufructuary mortgage
was that in case of failure of payment of rent by the mortgagor,
the mortgagee was to pay off the arrears of rent to the landlord,
which obligation the mortgagee did not honour as a result of
which the property was brought to sale and ultimately purchased by the mortgagee.
The mortgagor filed a suit against the mortgagee, the appellant's father, for redemption of the mortgage and for possession.
The defence inter alia was that the mortgagee had purchased
equity of redemption in execution of the rent decree and that
the mortgagor had no longer any right to sue him for redemption and their remedy, if any, was to sue for setting aside the
sale on the ground of fraud or otherwise.
Held, thats. 90 of the Trusts Act read with the illustration
(c) lays down the principle that no one can be allowed to benefit
for his own wrongful act.
Held, further, that the legal position with regard to mortgagor and mortgagee was that:-
( I) the governing principle is that "once mortgagee
..,... ·. -
• I
,,
....
,.
•
•
•
1 S.C.R. SUPREME COURT REPORTS
291
always a mortgagee" till the mortgage is terminated by the act
r96r
of the parties themselves, by merger or by order of the Court;
(2) where a mortgagee purchases the equity of redemp- M.itunjoy Poni
tion in execution of his mortgage decree with the leave of court
& Another
or in execution of a mortgage or money decree obtained by
v.
a third party, the equity of redemption may be extinguished; Narmanda Bala
and, in that event, the mortgagor cannot sue for redemption SasJnal & Another
without getting the sale set aside; and
(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.
In the instant case the right to redeem the mortgage was
not extinguished and in the eyes of law, the purchase in the
rent sale was deemed to have been made in trust for the mortgagor and the suit for redemption was maintainable.
Sidhakamal Nayan v. Bira Naik, A.LR. 1954 S.C. 336, relied
on.
Malkarjun Bin Shidramappa Pasare v. Narharl Bin Shivappa,
(1900) L.R. 27 I.A. 216, distinguished.
CIVIL
APPELLATE
JURISDICTION:
Civil
Appeal
No. 119 of 1957 .
Appeal by special leave from the judgment and
decree dated March 3, 1955, of the Orissa High Court
in Appeal No. 593 of 1950.
R. Patnaik, for the appellants.
D. N. Mukherjee, for the respondents.
1961. March 14. The Judgment of the Court was
delivered by
SUBBA RAO, J.-This is an appeal by special leave
Subba Rao J.
against the judgment of the High Court of Judicature
for Orissa dated March 3, 1955, setting aside the judgment of the Court of the District Judge, Mayurbhanj,
and restoring that of the Subordinate Judge, Balasore.
The facts leading up to this appeal may be briefly
stated. The land in dispute originally belonged to
one Bhagaban Parida. On July 16, 1924, he executed a registered kabala for a consideration of Rs. 2,000
in favour of one Priyanath Sasmal. On June 2, 1928,
Priyanath Sasmal executed a usufructuary mortgage bond (Ex. B) for Rs. 1,500 in favour of
292
SUPREME COURT REPORTS
[1962]
'96'
Lakshminarayan Pani, the father of the appellants
Mritunjoy Pani herein. Under the terms_ of the said usufructuary
& Another
mortgage, the mortgaged property was put in possesv.
sion of the mortgagee. One of the terms of the mortNaimanda Bala gage deed was that the initial responsibility for the
Sasmal &- Another payment of rent was that of the mortgagor and that,
Subb::;ao J. if for any reason he did not pay the arrears of rent, the
mortgagee was under an obligation to pay off the
arrears to the landlord and to obtain a receipt acknowledging the payment. The mortgagee did not pay the
arrears of rent, with the result that for arrears of rent
the said property was brought to sale and ultimately
purchased by the mortgagee for a sum of R.s. 300 on
September 22, 1936.
The sale was confirmed on
November 4, 1936, and the mortgagee took possession
through Court on December 21, 1938. The mortgagor
filed a suit against the mortgagee in the Court of the
Subordinate Judge, Balasore, for redemption of the
mortgage and for possession.
As the mortgagor died
after the filing of the suit, his widow and son were brought on record as his legal representatives. The defence of the appellants to that suit was that possession was
not delivered to their father, the mortgagee, under the
terms of the mortgage deed, that the debt was discharged, that their father had purchased the equity
of redemption in execution of the rent decree, and
that the mortgagor had no longer any right to sue
him for redemption. The learned Subordinate Judge
and, on appeal, the District Judge concurrently found
that in fact possession was delivered to the mortgagee
on the basis of the mortgage deed and that the plea
of discharge was not true; but, while the trial court
held that after the purchase of the property by the
mortgagee in execution of the decree for rent he was
holding the property only on behalf of the mortgagor,
the appellate court came to the conclusion that after
the said purchase the relationship of mortgagor and
mortgagee came to an end; with the result the trial
court decreed the suit and the appellate court, setting
aside that decree, dismissed the suit. The legal
representatives of the mortgagor preferred a second
appeal to the High Court against the judgment and
,,
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••
.. '
..
I S.C.R. SUPREME COURT REPORTS
293
decree of the District Judge. A division bench of the
'96'
High Court agreed with the conclusion of the trial Mr;tunjoy Pan;
court, set aside the decree of the District Court and
.;;, Another
restored that of the trial court. Hence the present
v.
appeal.
Narmanda Bala
Learned counsel for the appellants i.e., the legal Sasmal & Anoth1r
representatives of the mortgagee, contended that in Subba Rao J.
execution of the rent decree the mortgagee became
the purchaser of the equity of redemption, with the
result that the relationship of mortgagor and mortgagee ceased to exist and, therefore, the respondents
could not sue for redemption and their1'emedy, if any,
was to sue for setting aside the sale on the ground of
fraud or otherwise.
On the other hand, learned counsel for the respondents contended that, as the sale was the result of
manifest dereliction of duty imposed upon the mortgagee by the terms of the transaction, the purchase
by the mortgagee would only be in trust for the mortgagor and, therefore, the suit for redemption was
maintainable.
To appreciate the rival contentions it is necessary
to notice briefly the law on the subject. The relevant
section governing the facts of the case is s. 90 of the
Indian Trusts Act, 1882 (2 of 1882). The material
portion of the section reads,
"Where a ......... mortgagee ...... by availing himself of his position as such, gains an advantage in
derogation of the rights of the other persons interested in the property, .......... he must hold, for the
benefit of all persons so interested, tbe advant!1ge
so gained, but subject to the repayment by such
persons of their due share of the expenses properly
incurred, and to an indemnity by the same persons
8'gainst liabilities properly contracted, in gaining
such advantage."
Illustration ( c) to that section says,
"A mortgages land to B, who enters into possession. B allows the Government revenue to fall into
arrears 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
294
SUPREME COURT REPORTS
[1962]
repayment of the amount due on the mortgage and
of his expenses properly incurred as mortgagee, B
holds the land for the benefit of A."
M ritunjoy Pani
& Another
v.
The following three conditions shall be satisfied before
Narmanda Bala s. 90 of the Indian Trusts Act can be applied to a
Sasmal & Another case: (1) the mortgagee shall avail himself of his posiSubb;;.0 J. tion 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 that a
trustee ought not to be permitted to make a profit
out of the trust. The same principle is comprised
in the latin maxim commodum ex injuria sua nemo
habP-re debet, that is,:convenience cannot accrue to a
party from his own wrong. To put it in other words,
no one can be allowed to benefit from his own wrongful act. This Court had occasion to deal with a
similar problem in Sidhakamal Nayan v. Bira Naik(').
There, as here, a mortgagee in possession of a tenant's
interest purchased the said interest in execution of a
decree for arrears of rent obtained by the landlord. It
was contended there, as it is contended here, that the
defendant, being a mortgagee in possession, was bound
to pay the rent and so cannot take advantage of his
own default and deprive the mortgagors of their
interest. Bose, J., speaking for the Court, observed at
p. 337 thus:
"The position, in our opinion, is very clear and in
the absence of any special statutory provision to
the contrary is governed by s. 90, Trusts Act. The
defendant is a mortgagee and, apart from special
statutes, the only way in which a mortgage can be
terminated as between the parties to it is by the act
of the parties themselves, by merger or by an order
of the Court. The maxim "once a mortgage always
(r) A.LR. 1954 S.C. 336.
..
•
•
1
•
I S.C.R. SUPREME COURT REPOR'rs
295
a mortgage" applies; Therefore, when the defen-
'96I
dant entered upon possession he was there as a ,1Jritunjoy Pani
mortgagee and being a mortgagee the plaintiffs have
6 Another
a right to redeem unless there is either a contract
v.
between the parties or a merger or a special statute N"manda Bala
to debar them."
Sasmat & Another
These observations must have been made on the
assumption that it was the duty of the mortgagee to
pay the rent and that he made a default in doing so
and brought about the auction sale of the holding
which ended in the purchase by him. The reference
to s. 90 of the Indian Trusts Act supports this
assumption.
Learned counsel for the appellants relied upon the
decision of the Judicial Committee in Malkarjun Bin
Shidramappa Pasare v. Narhari Bin Shivappa (1) in
support of his contention that a mortgagor cannot
seek the relief of redemption without first getting the
sale set aside. There, a mortgaged property was sold in
execution of a decree against the mortgagor and the
plaintiff neglected or refused to pray that it might be
set aside.
The Judicial Committee held that an
execution sale could not be treated as a nullity if the
court which sold it had jurisdiction to do so; and it
could not be set aside as irregular without an issue
raised for that purpose and investigation made with
the judgment creditor as a party thereto. That was
not a case where the mortgagee who had an obligation
to discharge under the mortgage deed made a default
with the result the property was sold and purchased
by the mortgagee himself. The proposition enunciated by the Judicial Committee would apply to a
case where the equity of redemption was extinguished by the court sale. This may apply to a case
where the mortgagee, after obtaining leave to bid,
purchases at a sale in execution of his decree or a
decree obtained by a third party. In such a case
there may be scope for the argument that the equity
of redemption is extinguished and, therefore, the
mortgagor cannot get relief till the sale is set aside in
the manner known to law. But when the sale is
(r) (1900) L.R. 27 I.A. 216.
Subba Rao J.
•
296
SUPREME COURT REPORTS
[1962]
z96z
brought about by the default of the mortgagee, the
mortgage is not extinguished and the relationship
Mdtunjoy Pani of mortgagor and mortgagee continues to exist and,
& Another
v.
therefore, there will not be any necessity for setting
Narmanda Bala a.side the sale.
Sasmal & Another
The legal position may be stated thus: (1) The
governing principle is "once a mortgage always a
Subba Rao J. 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 mortgagee
purchases the mortgaged property by reason of 8.
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.
Let us now apply the aforesaid principles to the
concurrent findings arrived at by the courts below.
All the courts concurrently found that in fact possession was delivered to the mortgagee on the basis of
the mortgage deed, Ex. B. They have also found that
the plea of discharge taken by the appellants was not
true. The High Court found that under the mortgage
deed the mortgagee had a duty to pay the arrears of
rent to .the landlord, but he made a default in paying
the said arrears. The High Court further held that
the sale was the result of manifest dereliction of the
duty imposed upon the mortgagee by the very terms
of the transaction. 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.
•
,
, '
- . -,._.. -
' . ·- - ··----'
/:
1 S.C.R. SUPREME COURT REPORTS
297
No other point was raised before us: The appeal
fails and is dismissed with costs. -
"
\
-. - '-._
· ' ' ' An~ dis:,;;issed.
Mril11njay' p~,.i
& A.not.%1r
'.
Y.
' .
'
.Narmanda Bala
Sa.smai ;s.· .d.1tu1A1r
PURSHOTTAM LAL DRAW.Al.~·.
ti.
DEW AN. CHAMA?{. LAL . .AND. AN~J.!JliR
. (K. SUllBA RAO, .RAoHUBAB DAYAL and
', ' ' J. R., MUDHO~, JJ.) ' •'
'
"Eriaeuee Pr'!t!erly-Renision applicaJicin lo Custodian Generw-
. LimilaJion for fils."(!.-Cuslodfa'.',Gen.mil, powers of-Cancellation of
allolmenl '" revmon-Admsnsslra!son of Evacuee Property Act,
z950 (JI of z950), ss. 27, 56-Adminislration of Evacuee Property
(Central) Rules, z950. rr. I4, 31(5).
·
The appellant and the respondent,' who were displaced ~r
sons from West Pakistan, were,allotted lands in the same village.
At the instance of certain persons, the first allotment was, can-
. celled and there was a re-allotment. The'respondent was aggriev-
. ed by this or~er and on September 27,' 1950, . he filed a review
application, liefore ·the -Deputy. Commissioner for restoration of
. the original ailotmerit but, it was dismissed on May 12, 1951,
Against this order the- respondent preferred a revision application to the Additional Custodian, who dismissed· the same on
. August 25, 1952, .· Thereupon, the ,respondent.· filed a revision
application before the Custodiail General on October 30. 1952.
To this revision_ only the Custodian was made . a party; but .. the
appellant., was· made' a party by order of the custodian General
on August 25, 1953· After hearing th& parties the Custodian
General on September 29. 1954· cancelled· part of the re-allotment made in favour of the appellant.· .The. appellant contend-
.ed; '(i) that. the revision application to the Custodian General
· was barred by time; 'and (ii) that the Custodian General had no
power to cancel the allotment. . . '. ,
. ·
.
.
·Held, 'that the revision application.was not barred by time.
Rule 31(5) provides that . .a revision petition to- the . Custodian
Gt:neral "shill ordi11 .. nfy ~ ·lriade within sixty days of the
38
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'
S.Jiba Ra4 J.
rg6r
March I.f.