# K. MANICKCHAND & ORS v. ELIAS SALEH MOHAMED SAIT & ANR

- **Citation:** [1969] 2 S.C.R. 1061
- **Court:** Supreme Court of India
- **Decided:** 1968-12-03
- **Case number:** Civil Appeal No. 440 of 1965
- **Bench:** J. M. Shelat, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/k-manickchand-ors-v-elias-saleh-mohamed-sait-anr-4555
- **Pages:** 21

## Headnote

Transfer of Property Act (4 of 1882), ss. 60, 76, 77 and 83-Scope
of-Proceeding under s. 83-If estops the filing of a suit for accountsSuit for redemption, what is.
Usurious Loans Act (10 of 1918), ss. 2(3) and 3(3)--Scope ofSuit to enforce agreement in respect of loan, what is-Commencement of
Act, meaning of-When Act became applicable in Cantonment area in
Bangalore.
General Clauses Act (10 of 1897), ss. 3(13) and 5(3)-Dif/erence
between 'commencement of Act' and 'an Act coming into operation'.
On July 14, 1933, the respondents executed a usufructuary mortgage
deed in respect of their premises in the Cantonment Area of Bangalore
in the Mysore State, for a sum of Rs. 50,000, working out the consideration on the basis of the amounts due under the earlier loans and adding
to it the cash paid at the time df execution of the mortgage deed. The
deed laid down, (i) that the mortgagee was entitled only to a sum of
Rs. 700 per mensem, in lieu of interest on .the mortgage money and not
to the entire receipts from the mortgaged property; (ii) that the mortgagors were to pay to the mortgagee
interest on the
principal sum at
!!% per mensem which would work out at Rs. 750 per mensem during
the period the mortgaged property remained vacant, or during the period
the mortgagee was unable to realize the rents of the mortgaged premises,
showing thereby, that the mortgagee's right was not confined to the receipts from the mortgaged property being taken in lieu of interest; and
(iii) the mortgagee had the right to enhance the rent or to eject
the
existing lessee and let out the premises at enhanced rent, but did not
have the right to appropriate the entire amount of enhanced
rent but
Rs. 700 per mensem only.
On July 14, 1933, the respondents executed a usufructuary mortgage
under s. 83 of the Transfer of Property Act, 1882 to discharge the debt
due under the mortgage deed but the mortgagee
did not accept
the
money.
Thereafter, the mortgagor sold the mortgaged property and the
purchaser deposited a sum of Rs. 66,463 and
odd under s. 83 of the
Transfer of Property Act, to be paid over to the mortgagee. The mortgagee accepted the amount and delivered possession of the
mortgaged
property and the necessary documents.
The mortgagor then filed a suit
for directing the mortgagee to render an account of his administration df
the mortgaged p'fOperty from the date of mortgage and to pay the mortgagors the amount that may be found due.
A preliminary decree for
taking accounts and ascertaining the sum due was passed by the
trial
court. fo appeal to the High Court the mortgagee contended that (a)
in view cf the unconditional tender of the
mortgage
money
o~ two
occasions under s. 83 of the Transfer of Property Act, the mortgagor
was estopped from instituting. the suit for accounts; and (b) the mortgage
fell within the scope of s. 77 of the Transfer of Property Act so that
accounting could not be claimed under s. 76 of the Transfer of Property
Act. The High Court held on the first contention that the mortgagor
wai not estopped an<l refrained from saying anything about the applica-
1062
SUPREME COURT REPORTS
[1969] 2 S.C.R.
bility of s. 76 or s. 77 of the Transfer of Property Act as the trial court
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had not gme into the question.
The mortgagee applied for a certificate
for filing an appeal to this Court, but the High Court refu<ed it on the
ground that its judgment was not a final adjudication of the rights be.-
tween the parties.
The mortgage did not pursue his remedy by filing
a petition for special leave in this Court, and the judgment of the High
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Court became final.
The trial court then took up the case and held : fi) that s. 76 of
the Transfer of Property Act was applicable to the mortgage deed, and
(ii) that the mortgagor was not entitled to any relief under the Usurious
Loans Act, 1918. The trial court worked out the accounts and ascertained the sum payable by the mortgagee to the mortgagor.
On appeal,
the High Court held that the mortgagor was entit

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K. MANICKCHAND & ORS.
v.
ELIAS SALEH MOHAMED SAIT & ANR .
December 3, 1968
[J. M. SHELAT AND V. BHARGAVA, JJ.)
Transfer of Property Act (4 of 1882), ss. 60, 76, 77 and 83-Scope
of-Proceeding under s. 83-If estops the filing of a suit for accountsSuit for redemption, what is.
Usurious Loans Act (10 of 1918), ss. 2(3) and 3(3)--Scope ofSuit to enforce agreement in respect of loan, what is-Commencement of
Act, meaning of-When Act became applicable in Cantonment area in
Bangalore.
General Clauses Act (10 of 1897), ss. 3(13) and 5(3)-Dif/erence
between 'commencement of Act' and 'an Act coming into operation'.
On July 14, 1933, the respondents executed a usufructuary mortgage
deed in respect of their premises in the Cantonment Area of Bangalore
in the Mysore State, for a sum of Rs. 50,000, working out the consideration on the basis of the amounts due under the earlier loans and adding
to it the cash paid at the time df execution of the mortgage deed. The
deed laid down, (i) that the mortgagee was entitled only to a sum of
Rs. 700 per mensem, in lieu of interest on .the mortgage money and not
to the entire receipts from the mortgaged property; (ii) that the mortgagors were to pay to the mortgagee
interest on the
principal sum at
!!% per mensem which would work out at Rs. 750 per mensem during
the period the mortgaged property remained vacant, or during the period
the mortgagee was unable to realize the rents of the mortgaged premises,
showing thereby, that the mortgagee's right was not confined to the receipts from the mortgaged property being taken in lieu of interest; and
(iii) the mortgagee had the right to enhance the rent or to eject
the
existing lessee and let out the premises at enhanced rent, but did not
have the right to appropriate the entire amount of enhanced
rent but
Rs. 700 per mensem only.
On July 14, 1933, the respondents executed a usufructuary mortgage
under s. 83 of the Transfer of Property Act, 1882 to discharge the debt
due under the mortgage deed but the mortgagee
did not accept
the
money.
Thereafter, the mortgagor sold the mortgaged property and the
purchaser deposited a sum of Rs. 66,463 and
odd under s. 83 of the
Transfer of Property Act, to be paid over to the mortgagee. The mortgagee accepted the amount and delivered possession of the
mortgaged
property and the necessary documents.
The mortgagor then filed a suit
for directing the mortgagee to render an account of his administration df
the mortgaged p'fOperty from the date of mortgage and to pay the mortgagors the amount that may be found due.
A preliminary decree for
taking accounts and ascertaining the sum due was passed by the
trial
court. fo appeal to the High Court the mortgagee contended that (a)
in view cf the unconditional tender of the
mortgage
money
o~ two
occasions under s. 83 of the Transfer of Property Act, the mortgagor
was estopped from instituting. the suit for accounts; and (b) the mortgage
fell within the scope of s. 77 of the Transfer of Property Act so that
accounting could not be claimed under s. 76 of the Transfer of Property
Act. The High Court held on the first contention that the mortgagor
wai not estopped an<l refrained from saying anything about the applica-
1062
SUPREME COURT REPORTS
[1969] 2 S.C.R.
bility of s. 76 or s. 77 of the Transfer of Property Act as the trial court
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had not gme into the question.
The mortgagee applied for a certificate
for filing an appeal to this Court, but the High Court refu<ed it on the
ground that its judgment was not a final adjudication of the rights be.-
tween the parties.
The mortgage did not pursue his remedy by filing
a petition for special leave in this Court, and the judgment of the High
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Court became final.
The trial court then took up the case and held : fi) that s. 76 of
the Transfer of Property Act was applicable to the mortgage deed, and
(ii) that the mortgagor was not entitled to any relief under the Usurious
Loans Act, 1918. The trial court worked out the accounts and ascertained the sum payable by the mortgagee to the mortgagor.
On appeal,
the High Court held that the mortgagor was entitled to the benefit 'of
the Usurious Loans Act and directed the payment df a larger sum to the
mortgagor on the basis of the applicability of that Act.
In appeal to this Court, on the questions : ( 1)
whether the suit for
accounts was not maintainable in view of the proceedings under s. 83
of the Transfer of Property Act; (2) whether the mortgage deed was
governed by s. 77 of the Transfer o'f Property Act and consequently outc
side the purview of s. 76; (3) whether the mortgagor was entitled to
relief under s. 2(3) (b) and (c) of the Usurious Loans Act; and (4).
whether interest on the amount found due was payable only from the date
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of the decree of the High Court and not from the date of suit,
HELD : ( 1) A preliminary decree in a suit for accounts cannot be
said to be a mere interlocutory order. Such a decree finally decides the
points which the court was required to decide at that stage.
In the
present case, the trial court decided in its preliminary decree that the
proceedings under s. 83 of the Transfer of Property Act did not debar
the mortgagor from filing the suit for accounts and the decree was conE
firmed by the High Court at the earlier stage.
The High Court took an
incorrect view of its judgment in its order on the. application for certificate to file an appeal to this Court that
its judgment was not a final
judgment but was a mere interlocutory order; but the remedy df the
appellant lay in seeking leave to appeal from
this Court. Therefore,
the judgment of the High Court having become final, it was no longer
open to the appellants to raise the ground of non-maintainability of the
suit· on account of the proceedings under s. 83 of the Transfer of ProF
perty Act. [1069 D-E; 1070 A-E]
(2) "!be various tern1s df the mortgage deed show that it was not
of the character mentioned in s. 77 of the Transfer of Property Act.
Therefore, s. 77 did not apply and, as the mortgagee had taken possession of the mortgaged property and was liable to render accounts of his
administration, s. 76 of the Transfer o'f Property Act was applicable.
[1071 F-G]
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(3) The Usu-rious Loans Act was not applicable to the suit transaction and the mortgagor was not entitled to any relief under the Act.
The applicability of the Act depends upon two conditions name!¥ :
(i) whether the present suit is a suit either for redemption of a secunty
· or for the enforcement of an agreement in respect df a loan made. either
before or after the commencement of the Act; and (ii) whether the
agreement for the enforcement of which the suit :vas filed was mad~, or
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the security for the redemption of which the smt wrui filed was given,
after the commencement of the Act. [1074 E--F]
{i) The suit was not one for redemption of a security; [1076 0-Hl
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MANICKCHAND V. MOHD. SAIT
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(a) A suit for redemption is defined in s. 60 of the Transfer of ~o
perty Act as a suit for a right to redeem which consists df three reliefs,
namely: (A) to require the mortgagee to deliver to the mortgagor the
mortgage deed and all documents
relating to the mortgaged property
which are in the posse;sion or power of the mortgagee; (Bl. where the
mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor;
and (C) at the cost of the mortgagor
either to retransfer the
mortgaged property
to him or to such third
person as he may direct.
Jn the present suit there was none of these
prayers as there was no occasion fo'r claiming them, because, those reliefs had already been obtained in the petition under s. 83 o'f the Transfer of Property Act even prior to the institution of the suit. [1075 D-E,
F-G; 1076 E, F-G]
(b) The taking of accounts and the passing of a decree in favour
of the mortgagor in respect of a surplus remaining in the hands df the
mort~agee are reliefs which could be granted in a suit for redemption.
But the circum..:;tance that, in a suit for redemption,
apart
from
the
prayers which form pan of the enforcement df the
right to rede~m,
certain other pravers can a1so be granted cannot lead to the concluston
that a suit, which is solely for those other incidental reliefs, must be a
suit for redemption. [1077 B-F]
( c) While the mortgagor's right to dispute
the
acco~nts and .to
claim a decree for surolus was not taken away, he has no right to claim
enforcement of the right Of redemption as the various reliefs constituting
the bundle of the right to redeem had alreadv been obtained under s. 83
of the Transfer of Property Act. [1078 A-Cl
Neither was the suit one for the enforcement of an agreement in
respect o'f a loan.
A suit for accounting and for a decree for surplus in accordance with
the provisions of s. 76 of the Transfer of Property Act and 0.34, r. 9 of
the Civil Procedure Code cannot be said to be a suit claiming a right
to enforce an agreement. [1078 D-E]
(ii) The mortgage deed on the basis
df which
accounting and a
decree for surplus were claimed by the mortgagor was not executed after
the commencement of the Usurious Loans Act and therefore the
Act
could not be applied to the present suit.
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(a) In the year 1933, when the mortgage was executed, the Usurious Loans Act was not applicable in the Cantonment Area.
The fact
that the Act was passed in 1918 and was in operation in other areas will
not result in the Act having commenced in the area where it has not
yet been apolied.
Under s. 5 (3) of the Genecal Clauses Act there is a
distinction between 'an Act coming into operation' and 'the 'commence~
ment of the Act' and the date of corning into operation is not necessarily
the date of commencement.
Jn interpreting s. 2(3)(b) and (c) df the
Usurious Loans Act, the relevant
exoression is 'Commencement of the
Act'.
Under s. 3 (13) df the General Clauses Act. an Act can only commence in a particular area on the date on which that Act comes into
!orce in that area.
In the present case, the Usurious Loans Act came
m.t~ force in. !he Bang~lore Civil and
Military Station only under the
C1v1! and M1\1tary Station of Bangalore (Application of Laws) Order.
1937, on Aortl L 1937 and not earlier. Therefore
the Act
was not
applicable. [1078 F-H; 1079 D-H]
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qaiamba/ Ramalin11am and Others v.
Rukn-ul-Mulk Syed Abdul
Wa11d and 01hm. A.I.R. 1950 P.C. 64 and
ln re: Hayes,
I.L.R.
12
Mad. 39, referred to.
1064
SUPREME COURT REPORTS
[1969] 2 $.C.R.
(b) The purpose df s. 3(3) of the Usurious Loans Act is to meet
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the contingency that a suit, to which the provisions of the Act are sought
to be applied, may not 'be in the form of a suit for the recovery of a
loan, or for the enforcement of any agreement or security iri respect of a
loan or for the redemption of any such security; but if it is substantially
of that nature it has to be held that the requirements of s. 2(3) of the
Act are satisfied. The provision was not intended to
take away the requirement that for the applicability of the
Usurious Loans Act,
the
loan mentioned ins. 2(3) (a) and the agreement mentioned ins. 2(3) (b)
must have been made after the commencement of the Act and the security mentioned ins. 2(3)(c) must have been given after the commencement of the Act. [I 080 C-H]
Vaishnu Dass and Others v. Thaker Da . .s, l.L.R. f.1954] 7 Punjab 1,
overruled.
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( 4) The amount for which the suit was decreed, applying s. 76 of
the Transfer of Property Act and ignoring the provisions of the Usurious
Loans Act, was payable by the mortgagee at the time when the suit was
instituted, and therefore interest was payable on that amount from the
date of the suit. [1081 C-DJ
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 440 of
1965.
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Appeal from the judgment and decree dated September 19,
1958 of the Mysore High Court in Regular Appeal No. 134 of
1953.
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H. R .. Gokhale, S. Govind Rao and K. Rajendra Chaudhuri,
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for the appellants.
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C. B. Aggarwala and R. Gopalakrishnan, for the respondents
The Judgment of the Court was delivered by
Bhargava, J. This appeal arises out of Original Suit No, 19
of 1943 instituted in the Court of the District Judge, Civil Station, Bangalore, by four plaintiffs. The first two plaintiffs were
Elias Saleh Mohamed Sait (respondent No. 1)
and Mohamed
Saleh Mohamed Sait (respondent No. 2), sons of Saleh Mohamed Sait who died in or about the year 1917 leaving behind
his widow, Rahamatbai, three minor sons, . and three daughters. The eldest of the minor sons was Ahmed Saleh Mohamed
Sait, who also died before the institution of tht: suit, the other
two being respondents 1 and 2.
At the time when inheritance
opened on the death of Saleh Mohamed Sait, admittedly the
family was governed by Hindu Law in the matter of succession
and inheritance, so that the daughters did not acquire any right
in the property left by their father. The principal relief claimed
in the suit was for accounts under section 76 of the Transfer
of Property Act No. 4 of 1882 (hereinafter referred to as ''the
T. P. Act") in respect of a mortgage deed dated 14th July, 1933
(Ext. C) executed by Ahmed Saleh Mohamed Sait, the two
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MANICKCHAND V, MOHD. SAIT (Bhargava, J.)
!065
respondents in this appeal, and their mother Rahamatbai, for a
sum of Rs. 50,000/. mortgaging premises No. 6, South Parade,
Civil & Military Station, Bangalore, in favour of Khanmull
who was defendant in the suit and who is now represented by the
appellants as his legal representatives.
Before the institution
of the suit, the mortgagors' rights in the mortgaged property
had been transferred to .Khan Saheb Abdul Gani Saheb and
Khan Saheb Abdul Shakoor Saheb who also joined in the suit
as plaintiffs 3 and 4. The eldest son Ahmed Saleh Mohamed Sait
became a major in or about the year 1927 and, till that time,
Rahamatbai, was managing the property. Until the year 1930,
it appears that no debts were taken by the members of this family.
The first Joan that was taken on the basis of a simple mortgage
deed dated 20th May, 1930 executed by the eldest son Ahmed
Saleh Mohamed Sait as well as by Rahamatbai as guardian ot
respondents 1 and 2 who were minors at that time. Thereafter,
a number of Joans were taken, details of which need not be
mentioned. One of these Joans was cm the basis of a usufruc·
tuary mortgage executed in favour of one J. Krishnalal; but both
the Courts below have held that Krishnalal was a benamidar for
the defendant Khanmull, so that the various loans taken were
all from Khanmull. On 14th July, 1933, the three brothers and
their mother executed a mortgage deed Ext. C for a sum of
Rs. 50,000/ ·, working out the consideration on the basis of the
amounts due under earlier loans, and adding to it the amount of
cash paid at the time of execution of this mortgage deed. Ahmed
Saleh Mohamed Sait died in the year 1939 and his mother
Rahamatbai also died in the same year. On 21st January, 1943,
the two respondents and their 'sisters deposited a sum of Rs.
50,000/- under s. 83 of the T. P. Act to discharge the debt nnder
the mortgage deed Ext. C dated 14th July, 1933, but the defendant did not accept that money, with the result that the petition under s. 83 of the T. P. Act failed. It was on 22nd January, 1943 that the two respondents sold the mortgaged property
to plaintiffs 3 and 4 for a sum of Rs. 75,000/-. Thereafter,
plaintiff No. 3 filed Original Petition No. 11 of 1943 in the Court
of the District Judge, Civil Station, Bangalore, under s. 83 of
the T. P. Act and deposited a sum of Rs. 66,463-15-6 to be paid
over to the mortgagee. Khanmull, the mortgagee, accepted the
amount deposit as correct, delivered possession of the mortgaged
property and the necessary documents, and obtained payment
of the amount.
A joint memo. dated 15th March
1943 was
filed evidencing this transaction and the Court pass~d an order
on the same date recording it.
Thereafter, on 3rd November
1 ?43, t~e four plaintiffs, mentioned above, instituted the on'.
gmal Smt No. 19 of 1943 and, as mentioned earlier the main
pray~r was. t~at t~e defendant be directed to render ~n account
of his adm1mstrat10n of the mortgaged property from 14th July,
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SUPREME COURT REPORTS
[ 1969) 2 S.C.R.
1933 to 12th March, 1943, and to pay to the plaintiffs the amount
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that may be found due to the plaintiffs after adjusting interest
that may be found due to the defendant at a reasonable rate and
after deducting amoultts not paid and interest charged from out of
the principal of Rs. 50,000/- said, to be due on the mortgage of
14th July, 1933.
The second and the third reliefs in the suit
related to matters which are not the subject-matter of this appeal
in this Court and, consequently, need not be mentioned. The
fourth and fifth reliefs were in respect of the claim for interest
@ 6 · per cent per annum on the amount found due under the
first relief, and for costs.
A preliminary decree was passed by the trial Court on 4th
February, 1948, directing that -accounts be taken pursuant to
s. 76 of the T. P. Act on the foot of the mortgage deed Ext. C
dated 14th July, 1933, for the period beginning with the date
of that deed, and directing the defendant to file his full statement of accounts in that behalf in the manner of a verified pleadll
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ing.
It was further directed that, after the plaintiffs filed their
statement by way of a similar pleading, issues arising thereon
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for determination between the parties will be settled and then
enquiries will be held by way of evidence, if necessary, or by
way of arguments of counsel, and the suit will b1i proceeded with
for the purposes of passing a final decree.
The costs on and
incidental to this part of the decree were left to be adjudged
on the result of the enquiry. There was also a direction specifiE
cally reserving for consideration at the time of the final decree
proceedings all questions relating to accounting as well as reliefs
claimed under the Usurious Loans Act, No. 10 of 1918 (hereinafter referred to as "the Act").
Both parties appealed against this preliminary decree in the
High Court of Mysore.
The appeal of the plaintiffs was conF
fined to reliefs Nos. 2 and 3 in the suit which had been refused
by the trial Court and, consequently, we are: not concerned
with the decision of the High Court in that appeal. The defendant in his appeal challenged the decree for accounting. The
validity of the decree was assailed mainly on two grounds. One
was that, in view of the unconditional tender of the mortgage
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money on two occasions. under s. 83 of the T. P. Act, the plaintiffs were estopped from instituting the suit for accounting; and
the other was that the mortgage in question fell within the scope
of s. 77 of the T.P. Act, so that accounting could not be claimed under s. 76 of the T. P. Act. This appeal was decided by a
Full Bench of the High Court which held that the proceedings
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undef" s. 83 of the T. P. Act did not operate so as to conclude
the rights of the mortgagors in all respects, and. that a mortgagor, who had applied to the Court and made a deposit under s. 83
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MANICKCHAND V. MOHD. SAIT (Bhargava, J.)
1067
of the T. P. Act, was not estopped, merely by reason of. the
deposit and payment to the mortgagee of the amount so deposited,
from demanding an account of the income of the mortgaged property under s. 76 of the T.P. Act by a separate suit. The Full
Bench noticed that the trial Court had directed an account to
be taken under s. 76 of the T.P. Act, but had not gone into the
question whether the mortgage deed fell within s. 77 of the T.P.
Act or not, so that the High Court refrained from saying anything further about the incidence of ss. 76 and 77 to the transactions in suit.
Thereafter,•the case was taken up by the trial Court which
held that s. 76 of the T.P. Act was applicable to the mortgage
deed in question and that the mortgagee under the deed was
entitled to get interest @ Rs. 700 per month only and was
liable to account in respect of his collections from the mortgaged
property.
Another issue raised was whether the mortgage deed
dated 14th July, 1933 was not supported by consideration. The
trial Court held that this question was no longer open for reconsideration at the stage of the final decree and rejected the plea
of the plaintiffs in that behalf. The Court further rejected the
claim of the plaintiffs for relief under the Act, and the Mysore
Money Lenders Act 13 of 1939. A further finding recorded was
that the mortgage in question was not valid and binding against
respondent No. 2, who was plaintiff No. 2 in the suit.
As a
r~sult of these findings, the Court worked out the accounts and
d1Iected. the defendant to pay a sum of Rs. 33,447-5-10 with
cu~rent mterest @ 6 .Per cent per annum from the date of the
s~1t to the se~ond plamtJff, and to pay a sum of Rs. 13,342-1-6
with current mterest @ 6 per cent per annum to the first plainhff fro_:n the same date. It was f~rther held that plaintiffs 3 and
4 wer~. not entitled to any relief m the suit. Plaintiffs 1 and 2
were d!Iected to make up the deficiency in court-fee on the
amounts aw~r~ed to them, and the defendant to pay proportionate
costs to plaintiffs 1 and 2.
Against this final decree, the defendant filed an a
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the Mysore Hi&h Court impleading pl;;intiffs 1 and 2 ppet m
res~o~dents, while these two plaintiffs filed cross-ob ·~~tlon~s
PlamtJffs 3 and 4 were not impleaded as parties in th J
1.
6he appe~l and ~he cros1-objections were heard by ~h=p~a h
Court which partially modified the decree passed by the tr~ I
ourt.
The separate decre f
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ia
plaintiff No. 2 was set asid~ a~~ ~h ar;f er am~unt in favour of
favour of plaintiff No 1 w
. e ~ ecree or the amount in
made a joint decree in. favou~so;ar1e? ;n two respects.
It was
variation was that plaintiff" 1 anJ'1~mtiffs l ~nd 2. The second
the benefit of the Act and'' a d.
f were e d to be entitled to
!fee IQn was made for accounting
·1068
SUPREME COURT REPORTS
(1969} 2 S.C.R.
on the basi:; of the applicability of the Act.
This order was
made by the High Court on the 19th September,, . 1958.
In
pursuance of the direction made in that order, parties gave an
agreed calculation indicating that the principal amount advanced
as the original loan under Ext. C was Rs. 36,750/. Interest due
@ 12 per cent per annum on the principal amount up to the
date of execution of the mortgage deed Ext. C was Rs. 5,919/-.
The moneys spent by the mortgagee for taxes and repairs were
Rs. 9,178.34.
The total rent collected by the mortgagee was
Rs. 1,00,342.09, and the amount received in Original Petition ·
No. 11 of 1943 under s. 83 of the T.P. Act was Rs. 66,463.97.
On the basis of· these figures and after deciding various points
disputed before it, the High Court passed a decree for a sum of
Rs. 99,603.61 P out of which Rs. 13,342.09 P was to carry interest @ 6 per cent per annum from 3rd November, 1943, the
date of the suit, and the balance of Rs. 86,261.51 P was to
carry interest at the same rate from 4th February, 1948, the
date of the preliminary decree passed by the trial Court, up to
the date of realisation. The plaintiffs were awarded costs against
the legal representatives of the
defendant on
the
sum
of
Rs. 13,342.09 P in both the Courts. Time was · granted to the
appellants
to
make payment till 19th March, 1959. It was
further laid down that the appellants were liable under the decree
to the extent of the assets left by the deceased defendant Khanmull which might be in their hap.els and to the extent of the assets
of the joint family, because the original defendant had died. It
is against this decree passed by the High Court that the appellants have come up to this Court in this appeal unde:r certificate
granted by the High Court.
Mr. Govinda Rao, counsel for the appellants in this appeal,
raised the following four points pefore us :-
(1) that the suit for accounts should be .held to be nonmaintainable in view of the proceedings under s. 83
of the T .P. Act which preceded the suit and under
which
the
mortgagee
received
the
sum
of
Rs. 66,463.97 P in discharge of the mortgage, delivered the necessary documents to the mortgagors
and also gave possession of the mortgaged property.
( 2) that the mortgage transaction evidenced by the deed
Ext. C dated 14th July, 1933 was governed bys. 77
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of the T.P. Act and was, consequently, outside the
purview of s. 76 of the T.P. Act;
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(3) that the plaintiffs were not entitled to the relief under
the Act which was not applicable to this mortgage
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MANICKCHAND v. MOHD. SAIT (Bhargava, J.)
I 069
which related to property situated in the Bangalore
Civil and Military Station and that, in any case,
even if the provisions of the Act be applied, the
transactions prior to the mortgage deed in suit could
not be reopened; and
(4) that the interest on the surplus amount found due
from the appellants to the respondents, if any, should
have been allowed only from the date of the decree
of the High Court, viz., 19th September, 1958 and
not from the date of the suit, viz., 3rd November,
1943.
So far as the first point is concerned, it does not arise out
of the appellate judgment passed by the High Court in the appeal
brought up before it against the final decree in the suit.
The
question whether the proceedings under s. 83 of the T.P. Act
debarred the plaintiffs from filmg a suit for account; and payment of surplus was decided by the trial Court in the preliminary
decree when the trial Court held that, in spite of those proceedings, the suit was maintainable and proceeded to pass a prelinlinary decree for accounts.
That decision of the trial Court was
confirmed by the High Court by its Full Bench judgment dated
13th February, 1951. That judgment has become final and
that decision, which finally decided the points arising in the preliminary decree, cannot now be challenged in this Court in an
appeal from the judgment at the stage of final decree. No doubt,
the appellants had sought certificate from the High Court against
that judgment dated 13th February, 1951, in order to file an
appeal in this Court, but that application for certificate was
rejected on two different grounds.
The first ground was that
the appeal in the High Court had been valued for purposes of
court-fee and jurisdiction at Rs. 10,000/- only, so that there
was no right under Art. 13 3 of the Constitution to obtain a
certificate.
The second ground was that the judgment of the
High Court could not be deemed to be a final adjudication of the
rights between the parties, because that Court had, in effect,
confirmed the decree of the trial Court to take accounts and ascertain the sums that will be found due from the defendant to
the plaintiffs. Thereafter, the appellants did not file any petition
for . special !eave in this Court seeking leave to appeal either
agamst the judgment dated 13th February, 1951 confirming the
preliminary decree in the suit, or against the order dated 7th
Se~tember, 19 51 by which the High Court dismissed the application for grant of certificate.
The result is that the judgment
of the High Court became final.
Learned counsel urged that
the order of the High Court dated 7th September, 1951 misled
the appellants inasmuch as the High Court in that order held
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1070
SUPREME COURT REPORTS
(196912 S.C;R.
that its judgmeint dated 13th February, 1951 was not a final adjudication of rights between the parties, so that the appdlants were
under the impression that they would be entitled to challen~e
the judgment of the High Court dated 13th February, 1951 m
an appeal filed against the final adjudication envisaged by the
High Court at the stage of passing the final decree It may be
that the High Court was not right in taking the view that its
judgment dated 13th February, 1951 was not a final judgment
but a mere interlocutory order and mentioned this ground in·
correctly· as one of the grounds for rejecting the application for
certificate. Even if the High Court made such an incorrect order,
the remedy of the appellants lay in seeking leave to appeal from
this Court against that order itself. In fact, the judg;ment dated
13th February, 1951 was very clearly a final judgment in respect of all the points which were decided in the preliminary decree
passed by the trial Court and confirmed by this judgment by the
High Court. A preliminary decree in a suit for accounts cannot
be said to be a mere interlocutory order. Such a d':cree finally
decides the points which the court is required to decide at that
stage or chooses to decide at that stage.
The judgment of the
High Court dated 13th February, 1951 having become final, it
is no longer open to the appellants to raise the ground of nonmaintainability of this suit because of the earlier proceedings
under s. 83 of the T.P. Act.
The first point raised by learned
counsel has, thus, no force.
As regards the second point relating to the applicability of
s. 77 of the T.P. Act, it appears to us that the preliminary decree
passed by the trial Court and confirmed by the High Court would
also stand in the way of the appellants' raising such a ground at
the stage of appeal from the final decree.
The
preliminary
decree definitely directed taking of accounts which could only be
on the basis that s. 76 of the T.P. Act applied to the mortgage in
question. If it was held that s. 77 of the T.P. Act applied, there
could be no decree for accounts at all.
However, it appears
that, in the preliminary decree itself, both the trial Court and
the High Court took the extraordinary step of including a direcA
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tion that the question as to the applicability of s. 77 of the T.P.
Act would be considered at the stage of enquiry for purposes ' G
of passing the final decree.
In these circumstances, we have
allowed learned counsel for the appellants to argue this point on
merits on the basis that the judgment of the High Court confirming the preliminary decree had specifically left this question open
for decision at the stage of final decree.
On merits, however, we think that the High Court was perfectly right in recording its finding that the mortgage in suit is
governed by s. 76 of the T.P. Act and does not fall within the
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·1'0'71
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scope of s. 77 of the T.P. Act.
This is very clear from the
terms of the mortgage deed itself.
The mortgage deed clearly
lays down that the mortgagee is entitled to a sum of Rs. 700~ -
per mensem in lieu of interest on the mortgage money.
This
term by itself indicates that the entire receipts from the mortgaged property we~e i;iot to be taken by the mortgagee in lie!! of
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interest on the -prmc1pal money.
The mortgagee was entitled
to appropriate a sum of Rs. 700/- per mensem only towards the
interest. Then there are other terms in the mortgage deed which
clarify this position.
There is a condition that the mortgagors
were to pay interest on the principal sum of Rs. 50,000/- only
to the mortgagee @ 1 t per cent per mensem during the period
C
the said mortgaged property remained vacant or during the period
the mortgagee was unable to realise the rents of the mortgaged
premises.
This makes it clear .that, if there were no receipts
from the mortgaged property during any period either due to
vacancy or due to the inability of the mortgagee to realise the
rents, the mortgagee became entitled to interest @ 1 t per cent
per mensem, which would work out at Rs. 750/- per mensem.
D
This right of the mortgagee to receive interest clarifies the fact
that, under the deed, the mortgagee's right was not confined
to receipts from the mortgaged property being taken in lieu of
interest on the principal money.
The mortgagee was entitled
to interest in spite of there. being no receipts from the mortgaged
property. The mortgage deed further gave the right to the mort,
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gagee to enhance the rent or to eject the existing lessee and let
out the premises on enhanced rent; but the deed did not confer
on the mortgagee the right to appropriate the entire amount of
enhanced rent towards the interest.
The right to appropriate
rent towards interest was confined to the sum of Rs. 700/- per
mensem only.
All these terms of the mortgage deed clearly
F
show that it was not of the character mentioned in s. 77 of the
T.P. Act and, cQI1Sequently, s. 77 did not apply.
Section 76
was clearly applicable, as the mortgagee had taken possession
of the mortgaged property and was liable to render accounts of
administration of the property. The decision of the High Court
on this point must also, therefore, be upheld .
g
The third point raised on behalf of the appellants
however, appears to us to have considerable force.
In this connectio~, we may first indicate the position as to the applicability
of -:anous laws m. the Ban~alo~e Civil and Military Station at
vanous relevant tnnes which 1s necessary because this area was
con;.~rised in the State of Mysore and not in British India. The
H
pos1t1on was eicamined by the Privy Council in Gajambal Ramalingam and Others v. Rukn-ul-Mulk Syed Abdul Wajid and
Others, (1) when the Privy Council had to detennine the juris-
(1) A.I.R. 1950 P.C. &I.
L6 Sup. C.I./i9-17
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Ul72
SUPREME COURT REPORTS
[1969] 2 S.C.R.
diction of the Court of the District Judge in this ~rea. It was
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noied · that : -
"In the year 1881, the rendition of the state of
Mysore to its hereditary ruler was effected by the installation of the Maharaja under a Proclamation of the
Viceroy and Governor-Gene,al of India and at the same
time an Instrument of Transfer was executed whereby
it was (inter alia), by Art. 9, provided that the Maharaja would not object to the maintenance and establishment of British cantonments in the said territory
whenever and wherever the Governor-General :in Council might consider such cantonments necessary and
would grant free
of all
charge such
land
as
might be required for such cantonments and would renounce all jurisdiction within the lands so granted.
Shortly thereafter the Maharaja, pursuant to the said
9th article, assigned free of charge to the •exclusive
management of the British Government .for th•e purposes stated in that article the lands described therein
which were in effect the area forming. the Bangalore
Civil and Mililtary Station and renounced all jurisdiction in the lands so assigned. The Instrument of Transfer of 18 81 was superseded by a Treaty concluded between the British Government and the Maharaja on
26th November, 1913, but no material change was effected so far as the exercise of jurisdiction was concerned. The area comprised in the Civil and Military
Station of Bangalore remained part of the territory of
Mysore."
In this decision, their Lordships of the Privy Council held that
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remained part of the territory of Mysore by approving the decision of the Madras High Court in Re Hayes('). As a consequence, the Bangalore Civil and Military Station came under
the administration of the British Government, but it did not
form part of British India.
It remained a part of the territory
of Mysore.
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On the 11th June, 1902, the Governor-General in Council
in India, in exercise of the powers conferred on him, issued Indian (Foreign Jurisdiction) Order in Council, one of the clauses ·
of which laid down that the Governor-General in Council may
make such rules and orders as may seem expedient for carrying
the Order into effect, and, in particular, for determining the
H
law and procedure to be observed, whether by applying with or
(1) l.L.R. I 2 Mad. 39.
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MANICKCHAND v. MOHD. SAIT (Bhargava, J.)
1073
witjiout modifications all or any of the provisions of any enactment in force elsewhere, or otherwise. It is the admitted case
of the parties that the Act, when enacted, was not followed
by any order under the Order in Council dated 11th June, 1902
applying it with or without any modifications to the Bangalore
Civil and Military Station.
The Act, therefore, did not apply
in this area when enacted.
The Order in Council dated 11th
June, 1902 was amended by the Civil and Military Station of
Bangalore (Application of Laws) Order, 1937, and it was under
this Order that the provisions of the Act were applied to this
area with a very minor modification of omitting sub-section (2)
of sectiqn 1.
Then, on 18th July, 1947, the Indian Independence Act, 1947
received the Royal Assent.
In pursuance of the provisions of
that Act, a notification was issued on 26th July, 1947 by the
Crown Representative under the authority of the Indian (Foreign
Jurisdiction) Order in Council, 1937. By this notification which
recited that the jurisdiction theretofore exercised by the Crown
Representative in the area known as the Civil and Military Station, Bangalore, would, with effect from 26th day of July, 1947,
be restored to His Highness the Maharaja of Mysore save for that
portion !hereinafter described as the Military and Railway areas
contained in the boundaries set out in Schedules thereto annexed,
the Crown Representative was pleased to direct that with effect
from the said 26th day of July, 1947, all notifications issued
under the Indian (Foreign Jurisdiction) Order in Council, 1902,
or under the Indian (Foreign Jurisdiction) Order in Counc.il, 193 7,
whereby specific provision was made for the said area whether for
the making of laws for or administration of laws or for the application of laws to the said area or for the administration of justice
therein or otherwise should be cancelled save in so far as the
said military and railway areas were CO\llcemed.
The result of
this notification was that, with effect from 26th July,
1947,
the laws in force in British India, which had been applied to the
Bangalore Civil and Military Station which
included the area
where the property now in suit is situated, ceased to operate.
The jurisdiction over this area having passed back to His High·
ness the Maharaja of Mysore, the Maharaja, on 4th August,
1947, promulgated the RetrocessiQ!l (Application of Laws) Act
No. 23 of 1947. Under section 3(a) of this Act, all laws which
were in force in the Civil and Military Station immediateiy prior
to the date of retrocession, were to continue from that date to
have. effect and be operative in the !etroceded area. It may be
mentmned that the date of retrocess1on in respect of the Bangalore Civil ~nd Military Station was the 26th July, 194 7.
The
result of this Act was that the laws previously applicable in this
area up to 26th July, 194 7 were continued retrospectively in
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1074
SUPREME COURT REPORTS
[1969] 2 S.C.R·
force, so that the Act also co~tinued in force. Thereafter, the
A
Maharaja of Mysore promulgated the Retroceded Area (Application of Laws) Act No. 57 of 1948 on the 5th day of A~gust,
1948. Under s. 3 of this Act, the laws, which were in force
in the Retroceded Area immediately before the 15th August,
1948, were to cease to be effective or operative in the Retroceded
Area, while all laws in force in the State of ~ysore were to
B
apply to the Retroceded Area. Consequently, wtth effect from
15th August, 1948, the Act ceased to be operative in this area
and, instead, the Usurious Loans Act, 1923 (Mysore Act 9 of
1923) became operative in it. Subsequently, howev,er, the State
of Mysore acceded to India after the Constitution and, from the
date of accession, the Act again became applicable, because this
c
area became a part of India. This was the legal position in this
area during the various p1!riods with which we may be concerned.
The question of the applicability of the provisions of the Act
to the present suit depends on the interpretation of s.