# MAHANT RAMDHAN PURI v. BANKEY BIHARI SARAN & OTHERS

- **Citation:** [1959] 1 S.C.R. 1085
- **Court:** Supreme Court of India
- **Decided:** 1959
- **Case number:** Civil Appeal No. 239 of 1954
- **Bench:** Gajendragadkar, A. K. Sarkar, SuBBA RAo, Vivian Bose
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mahant-ramdhan-puri-v-bankey-bihari-saran-others-1452
- **Pages:** 15

## Headnote

Deed, constri;ction of-Mortgage or lease-Accounts-Mortgagee, if bound to render account-Transfer of Property Act (IV of
I882), SS. 76 and 77.
D executed a document in favour of M hypothecating an
eight annas share in a village for the purpose of discharging a
debt of Rs. 29>496 payable by him to M.
In respect of this property there was a pre-existing thika in favour of J for a period
of 9 years, under which D took Rs. 2,205 as peshgi money without interest and the annual rent was fixed at Rs. 2,205.
The
document provided that (i) interest at ~ per cent. per month
was payable on the sum of Rs. 29>496;
(ii) during the
subsistence of the thika M would receive the rent from J
and appropriate Rs. l,769-12-0 towards interest and pay
Rs. 435-4-0 as rent to D; (iii) after 'the expiry of the thika
M would take physical possession of the land and appropriate
the produce towards interest and pay Rs. 435-4-0 as rent
to D; (iv) on the expiry of the thika M would repay the
peshgi amount of
l~s. 2,205 to J and this sum was added to
principal amount due ; (v) on the expiry of 15 years, or after the
extended period, D would repay the entire principal amount;
(vi) and the property was given as security for the amount payable by D.
The respondents who are successors of D instituted
a suit for redemption on the basis that the transaction was a
usufructuary mortgage, for rendition of accounts and for recovery of surplus profits. The appellant, successor of M, contended that the suit for redemption was not maintainable as the
transaction was not a mortgage but a lease, and that even if it
was a mortgage there was no statutory liability to render
accounts as the document provided that the receipts were to be
taken in lieu of interest and the case was governed by s. 77,
Transfer of Property Act :
Held, that the transaction was a mortgage and not a lease.
The guiding rule of construction is that the intention of the
parties must be looked into and that once there is debt with
security of land for its redemption the arrangement is a mortgage by whatever name it is called.
Held, further, that there was a contract between. the mortgagor and the mortgagee within the meaning of s. 77, Transfer
of Property Act to the effect that the receipts from the mort-
•
gaged property be taken in lieu of interest ari.d consequently the
mortgagee was :10t liable to render accounts. The stipulation
...
May 23.
•
1086
SUPREME COURT REPORTS
[1959]
'958
in the document for paym~nt of Rs. 435-4-0 to the mortgagor
was a personal obligation of the mortgagee and he had a right to
Mahant
take the entire receipts from the land in lieu of interest. Though
Ramdhan Puri
the rate of interest is stated as
~- per cent. per month it was
v.
mentioned to enable the parties to approximately fix the
Bank'y
amount to be appropriated by the mortgagee from and out of
Bihari Saran
the rent received frorn the thikadar.
The mere fact of the
mention of the rate of interest could not make s. 77 inapplicable
in view of the clearly expressed intention of the parties.
Subba Rao }.
•
Pandit Bachchu Lal v. Chaudhri Syed Mohammad Mah, (1933)
37 C. W. N. 457, referred to.

## Text

I
S.O.R.
SUPREME COURT REPORTS
1085
MAHANT RAMDHAN PURI
v.
BANKEY BIHARI SARAN & OTHERS
(GAJENDRAGADKAR, A. K. SARKAR, SuBBA RAo
and VIVIAN BOSE JJ.)
Deed, constri;ction of-Mortgage or lease-Accounts-Mortgagee, if bound to render account-Transfer of Property Act (IV of
I882), SS. 76 and 77.
D executed a document in favour of M hypothecating an
eight annas share in a village for the purpose of discharging a
debt of Rs. 29>496 payable by him to M.
In respect of this property there was a pre-existing thika in favour of J for a period
of 9 years, under which D took Rs. 2,205 as peshgi money without interest and the annual rent was fixed at Rs. 2,205.
The
document provided that (i) interest at ~ per cent. per month
was payable on the sum of Rs. 29>496;
(ii) during the
subsistence of the thika M would receive the rent from J
and appropriate Rs. l,769-12-0 towards interest and pay
Rs. 435-4-0 as rent to D; (iii) after 'the expiry of the thika
M would take physical possession of the land and appropriate
the produce towards interest and pay Rs. 435-4-0 as rent
to D; (iv) on the expiry of the thika M would repay the
peshgi amount of
l~s. 2,205 to J and this sum was added to
principal amount due ; (v) on the expiry of 15 years, or after the
extended period, D would repay the entire principal amount;
(vi) and the property was given as security for the amount payable by D.
The respondents who are successors of D instituted
a suit for redemption on the basis that the transaction was a
usufructuary mortgage, for rendition of accounts and for recovery of surplus profits. The appellant, successor of M, contended that the suit for redemption was not maintainable as the
transaction was not a mortgage but a lease, and that even if it
was a mortgage there was no statutory liability to render
accounts as the document provided that the receipts were to be
taken in lieu of interest and the case was governed by s. 77,
Transfer of Property Act :
Held, that the transaction was a mortgage and not a lease.
The guiding rule of construction is that the intention of the
parties must be looked into and that once there is debt with
security of land for its redemption the arrangement is a mortgage by whatever name it is called.
Held, further, that there was a contract between. the mortgagor and the mortgagee within the meaning of s. 77, Transfer
of Property Act to the effect that the receipts from the mort-
•
gaged property be taken in lieu of interest ari.d consequently the
mortgagee was :10t liable to render accounts. The stipulation
...
May 23.
•
1086
SUPREME COURT REPORTS
[1959]
'958
in the document for paym~nt of Rs. 435-4-0 to the mortgagor
was a personal obligation of the mortgagee and he had a right to
Mahant
take the entire receipts from the land in lieu of interest. Though
Ramdhan Puri
the rate of interest is stated as
~- per cent. per month it was
v.
mentioned to enable the parties to approximately fix the
Bank'y
amount to be appropriated by the mortgagee from and out of
Bihari Saran
the rent received frorn the thikadar.
The mere fact of the
mention of the rate of interest could not make s. 77 inapplicable
in view of the clearly expressed intention of the parties.
Subba Rao }.
•
Pandit Bachchu Lal v. Chaudhri Syed Mohammad Mah, (1933)
37 C. W. N. 457, referred to.
CIVIL APPELLATE JURISDICTION:
Civil Appeal No.
239 of 1954.
Appeal from the judgment and decree dated December 12, 1950, of the Patna High Court in Appeal from
Original Decree No. 188 of 1945 arising out of the
judgment and decree dated December 18, 1945, of the
Court of the Additional Subordinate Judge, IV Class,
Gaya, in Title Suit No. 4 of 1945.
Purshottam 'l.'ricumdas and S. P. Varma, for the
appellant.
•
S. P. Sinha and R. C. Prasad, for respondents
Nos. 1-4, 8-10, 13 and 14.
1958. May 23. The Judgment of the Court was
delivered by
SUBBA RAO J.-This appeal by certificate under
Art. 133 (1) (a) of the Constitution of India is directed
against the judgment and decree of the High Court of
Judicature at Patna setting aside those of the Subordinate J·udge, Ga ya, in a suit for. redemption of an
usufructuary mortgage.
Deokinand, the common ancestor of plaintiff-respondents l to 4 and proforma respondents 6 to 12, executed a document dated August 20, 1923, in favour of
Mahant Tokhnarain Puri of Nadra, the predecessor-ininterest of defendant l, hypothecating eight annas
milkiat share in mauza Lodipur, Mahimabigha, Tauze
No. 4246. for the purpose of discharging a debt of
-Rs. 31,701 payable by him to the Mahanth. There are
conflicting versions in regard to the nature of this
transaction-re~pondents claim it to be a usufructuary
'
' '
'
I
S.C.R.
SUPREME COURT REPORTS
1087
mortgage, while the appellant ttsserts it to be a lease.
1 958
The plaintiff-respondents instituted 'l'itle Suit No. 4 of
Mahant
1945 in the Court of the Additional Subordinate Judge
Ramdhan Pt<ri
IV, Gaya, for redemption of the said document on the
v.
basis that it was a usufructuary mortgage, for rendiBankey
tion of accounts and for the recovery of surplus profits
Bihari Saran
dμe to them.
The appellant pleaded, inter alia, that
the suit for redemption was not maintainable as the
document was not a mortgage but a lease, that on the
assumption that it was a mortgage it would only be an
anomalous mortgage in respect whereof there was no
statutory liability to render accounts to the plaintiff,
that even if it was a usufructuary mortgage, it was
governed by the provisions of s. 77 of the Transfer of
Property Act taking the mortgage out of the purview
of s. 76 (d) and (g) of the said Act.
It is not necessary to particularize other defences as
nothing turns upon them in the appeal. The learned
Subordinate Judge held that the document created a
u~ufructuary mortgage and not a lease and that s. 77
of the Transfer of Property Act applied to the document exonerating the appellant from any liability to
render accounts. In the result, the learned Subordinate
Judge gave a conditional decree in favour of respondents 1 to 4 for possession on their depositing in Court
a sum of Rs. 26,839-7 -0 within six months from the
date of the decree. The plaintiff-respondents preferred
an appeal against that decree to the High Court at
Patna. The High Court agreed with the learned
Subordiqate Judge that the document was a usufructuary mortgage but differed from him on the question
of applicability· of s. 77 of the Transfer of Property
Act. The High Court set aside the decree of the learned
Subordinate Judge and passed instead a preliminary
decree for redemption and sale on default of payment:
the decree also directed the rendition of accounts
between the parties in the light of the directions given
in the judgment. The second defendant against whom
the decree was passed preferred the above appeal.
Su&ba Rao ].
The point to be first decided is whether the transac-
'
tion is a lease as contended by the contesting respon- •
'
dents. The only guiding rule that 'can -be extracted
/
•
1088
SUPREME COUR.T REPORTS
[1959]
from the cases on the"subject is that the intention of
the parties must be looked.into and that 'once you get
Mahant
Ramdhan Puri a debt with security of land for its redemption, then
the arrangement is a mortgage by whatever name it is
called' (See Ghosh on Mortgages, V Edn., Vol. I, p. 102).
v.
Bankey
Bihari Sarnn
Let us now examine the terms of the document Exhibit
A (3) to ascertain the intention of the· parties. The
St<bba Rao l · document was obviously not drafted by a trained mind.
It appears to be a confused product of one of those
village document-writers. We shall read the document,
omitting the recitals not material to the question
raised : The first part of the document recited that the
executant was heavily indebted to the other party
under mortgage bonds and also otherwise and that
common friends settled that a part of the properties
mortgaged should be let out in ijara with possession at
a lower rate of interest so that "the increment of
interest may be checked and the present necessities
may be met". It was also stated in the document that
in respect of the said property there was a pre-existi11g
thika (lease) dated April 21, 1922, in favour of Munshi
Dodraj Lal alias Munshi Jatadhari Lal, for a period of
9 years and that under the said lease, Rs. 2,205 was
taken by the executant as peshgi money without
interest and the rent was fixed at a sum of Rs. 2,205.
Then the document proceeds to state thus:
" In respect of Rs. 29,496 the total sum of peshgi
money, he should, for the satisfaction of interest
thereon, get executed a usufructuary mortgage deed
bearing a lower rate of interest in respect o~ 8 annas
share i. e., half share in mauza Lodipur Mahima Bigha.,
principal with dependencies, together known and
unknown tola and tolas ...................................... .
. .. . .. . . . . . . . . . . . . for term of 15 years on fixing Rs. 2,205
as the annual rental and by getting mortgaged thereunder 8 annas proprietary interest, thikadari interest
together with peshgi money and the right to receive
thikadari rent from the said thikadars. Accordingly,
at the request and entreaty of me, the executant, the
sa.id Mahanthji took pity at my condition and agreed
• to my request and got ready to get usufructuary
mortgage deed executed. Therefore, I, the executant,
I
•
'
'
'
,
•
S.O.R.
SUPREME COURT REPORTS
1089
.................. have voluntarily 'I.et out in ijara with
possession the whole and entire 8 annas i.e., half of
Mauza Lodipur Mahima Big ha ............... for a peshgi
money of Rs. 31,701. .............. that Rs. 29,M16, the
peshgi money bearing interest at t per cent. per month
and Rs. 2,205, the peshgi money without interest, at
an annual rental of Rs. 2,205 including revenue and
cesses, for a term of 15 years, commencing from 1331
Fasli to 1345 Fasli ............... and have put him in
possession and occupation of the ijara property as my
representative. It is desired that the said ijaradar
should enter into and remain in possession and occupation of the ijara property and so long as the thika of
Munshi Dodraj Lal alias Jatadhari Lal. ............. .is
intact and in force, he should realize the rent from the
above-named thikadars and their heirs and representatives in accordance with the stipulations made in the
thika patta and kabuliat as representative of me, the
executant, and bring it into his possession and use,
thllit is to say, on his own authority he should set off
Rs. 1,769-12-0 on account of the interest on the
peshgi money bearing interest mentioned in this deed,
year .after year, and pay the remaining sum of
Rs. 435-4-0, the amount of rent due by the ijaradar,
i.e., the reserved rent, to me, the executant, and my
heirs and representatives ...... The ijaradar should not
make any default. If he does so, he and his heirs and
representatives shall be held liable to pay interest at
t per cent. per month."
Then the.document proceeds to incorporate the terms
agreed upon by the parties, to take effect after the
termination of the thikadari interest. It is stated:
"The ijaradar of this ijara deed or his ·heirs and
representatives on his own authority shall be competent to bring the thika property into his sir
possession as ijara property as a representative of me,
the executant, in accordance with the stipulations
made in the patta and kabuliats after setting off
Rs. 2,205 the peshgi money due to the thikadars by,
me, the executant, against the annual thikadari rent.
The said ijaradar should make his own f!,rrangement for
the cultivation of the ijara property,.get it cultivated
•
Mahan!
Ramdhan Puri
v.
Bankey
· Bihari Saran
Subba Rao ].
•
•
1090
SUPREME COURT REPORTS
[1959]
by others, realise tlie nakdi and jinsi income of
Mahant
the ijara property from the tenants ....................... .
Ramdhan Pnri and appropriate the produce of both the shares
v.
thereof.
I, the executant, and my heirs and represenRankey
tatives neither have nor shall have any right, claim
Bihari Saran · and demand in respect of the produce or the income
of the ijara property so long as the ijara deed is
Subba Rao f. intact except getting Rs. 435-4-0, the rent after the
payment and deduction of interest on the peshgi
money bearing interest."
The document then allocates the liability in respect of
improvements and sums spent in regard to. boundary
disputes to one or other of the parties to the document and then it continues to state:
"The peshgi money amounting to Rs. 31,701
with and without interest as mentioned in this ijara
deed has been realized from the ijaradar in this
manner that I allowed Rs. 28,246, the amount of loan
principal with simple and compound interest as per
account given below after remission of the interest
due to the ijaradar under all the three mortgage bonds
to be set off against the peshgi money by getting a
note made to that effect on the back of the said
mortgage bonds which I allowed to remain with the
ijaradar as a proof of payment of the pcshgi money
covered by this deed ........................... The term of
this ijara deed with possession shall terminate in the
month of Jeth, 1345 Fasli, when I, the executant, or
my heirs and representatives shall repay Rs. 31,701
being. the peshgi money with and without interest
mentioned in this deed in cash and in one lump sum
to the said ijaradar or his heirs and representatives,
I shall bring the ijara property into my sir possession.
If I do not repay the peshgi money with and without
interest on the expiry of the term of this ijara deed
with possession, then, till the repayment of the whole
and entire peshgi money with and without interest, this
ijara deed with possession shall precisely with all the
$tipulati6ns remain in force and intact. I, the
,
executant, or my heirs and representatives shall not
put forward an:i< sort of claim or demand in respect of
an increase' in the produce save and except the claim
•
I
,
'
'
'
I
•
S.C.R.
SUPREME COURT REPORTS
1091
for getting rent as fixed and the mentioned above ......
................................................ In security of the
payment of the peshgi money with or without interest
mentioned in this ijara deed I, the executant, have
mortgaged, hypothecated, encumbered and made liable
the ijara property. I do hereby make a trustworthy
declaration that till the repayment of the entire
peshgi money of the ijaradar I shall not in any way
directly or indirectly on any allegation mortgage,
hypothecate, encumber and transfer the ijara property."
The gist of the aforesaid transaction may be stated
thus: The executant was indebted to the other party
in a large amount under mortgage bonds and otherwise. Through the intervention of common friends,
with a view to salvage some property, the amount due
from the executant to the other party was fixed in the
sum of Rs. 29,496 and it was settled that half share
in mauza should be given as security to the other
part-y. At the time of the execution of the document
there was an outstanding thika document in favour of
a third party, whereunder the said party advanced a
sum of Rs. 2,205 to the executant and agreed to pay
Rs. 2,205 as annual rent. As the other party agreed
to discharge the advance paid by the third party to
the executant, the right to collect the rent from him
was also agreed to be given as security to the other
party. With the result, the executant received
Rs. 31,701 under
the document, out
of which
Rs. 29,496.bore interest at t per cent. per month and
-Rs. 2,205 did not carry interest, presumably beca.use
the other party did not actually pay the amount to
the executant. The document divided the transaction into two parts. The first part dealt with the
terms governing the parties during the subsistence of
the thikadari interest; the second part mentioned the
terms binding on the parties after the expiry of the
said interest. During the first period, the other party
would receive the annual rent of Rs. 2,205 ftom the
thikadars, set off Rs. 1,769-12-0 on account of interest
on the peshgi money bearing interest an,d pay the
139
Mahant
Ramdhan Puri
v.
Bankey
Bihari Saran
Subba Rao }.
•
.fit!ahant
Ramdhan Puri
v,
Bankey
Bihari Saran
Subba Rao ].
•
1092
SUPREME COURT REPORTS
[1959]
remaining sum of Rs. 435-4-0 as reserved rent to the
executant. After the expiry of the thikadari interest
in 1338 Fasli, the other party would take actual
possession by setting off Rs. 2,205 the peshgi money
due to the thikadars by the executant, against the
annual thikadari rent. After getting possession of the
ijara property, the other party would make arrangements for its cultivation and appropriate the produce
towards interest, paying the executant only a sum of
Rs. 435-4-0 as rent. The previous deeds were discharged and endorsements to that effect made on the
back of the documents. If the debt was not discharged within 1345 Fasli, it was agreed that till the
repayment of the entire peshgi money, the ijara deed
with possession would precisely with all stipulations
remain in force and intact. The executant, in express
terms, undertook not to put forward any sort of claim
or demand in respect of the increase in the produce
except and save to get rent as fixed in the document.
From the aforesaid summary of the recitals in, the
document, the following facts emerge: (1) The executant owed large sums of money to the other party;
(2) interest at ~per cent. per month was agreed to be
paid on the sum of Rs. 29,496, i.e., on the entire
consideration excluding that amount which
was
advanced by the thikadars to the executant; (3) the
manner of discharging the debt was prescribed in the
document, namely, that during the subsistence of the
thikadari interest, the other party would receive the
rent from the thikadars and appropriate Rs-.1,769-12-0
on account of interest and pay a sum of Rs. 435-4-0
as rent to the executant and that after the expiry of
the thikadari interest, the other party would take
physical possession of the land and appropriate
the produce towards interest and pay .only a sum of
· Rs. 435-4-0 as rent to the executant; (4) on the
expiry of 15 years period or after the extended period,
the executant would pay the entire principal amount
to the -other party; (5) 8 annas share in the mauza
· was specifically given as security for the amount
'
payable by th~ executant. Under the document, there
was a relationship of creditor and debtor between the •
•
'
•
I
•
S.C.R.
, SUPREME COURT REPORTS
1093
parties and the property was givoo as security for the
payment of the amount advanced with interest.
Though the document is described as a cowle, the
parties, who have had earlier transactions, must be
deemed to have known the nature of the transaction
they were entering into. In clear and express terms
the nature of the transaction has been stated in more
Mahant
Ramdhan Puri
v.
Bankey
Bihari Saran
than one place. The executant, requested the other . Subba Rao f.
party, in respect of the advance amount and interest,
to get executed by him a usufructuary mortgage deed
bearing a lower rate of interest in respect of the
8 annas share. After mentioning the .various terms,
the executant restated the intention of. the parties in
the following terms :
" In security of the payment of the peshgi
money with or without interest mentioned in this ijara
deed, I, the executant, have mortgaged, hypothecated,
encumbered and made liable the ijara property."
Therefore, whatever ambiguity there might be in the
recitals that was dispelled by the unambiguous declaration made by the parties that the property was
given as security for the loan and the document was
executed as a mortgage. The gist of the document
was not a letting of the premises, with a rent reserved,
but a mortgage of the premises with a small portion of
the income of it made payable to the plaintiff. There
is, therefore, no scope for the argument in this case
that the document is a lease and not a mortgage. We
hold, agreeing with the High Court, that the document
is a mortg&ge and not a lease.
Even so, it was contended by the learned Counsel
for the appellant that the document did not create an
usufructuary mortgage but only an anomalous mortgage. This contention was raised as a foundation to
the argument that if the document was an anomalous
mortgage, the rights and liabilities of the parties
would be governed by the terms of the contract
between them and not by the provisions of s. 76 of
the Transfer of Property Act. The question does not .
really fall to be decided in this case. Whether the
transaction is a usufructuary mortgage Qr an anomalous
mortgage, in the circumstances of the case', there will
•
A-f ahant
Ramdhan Puri
v.
Bankey
Bihari Saran
S1tbba Rao ].
•
•
1094
SUPREME COURT REPORTS
[1959]
not be any differentie in the matter of rendition of
accounts, for in the ultimate analysis, as we would
presently show, the true construction of the relevant
terms of the document would afford an answer
to the question raised. w· e shall, therefore, proceed
to consider the question on the alternative basis.
If it was a usufructuary mortgage, it is contended
by the appellant that he was not liable to render
accounts to the mortgagor, as, under the mortgage
deed, he was authorized to take the receipts in lieu of
interest within the meaning of s. 77 of the Transfer of
Property Act. The relevant provisions of the Transfer
of Property Act are as follows :
"Section 76: When during the continuance of
the mortgage, the mortgagee takes possession of the
mortgaged property,-
(g) he must keep clear, full and accurate accounts
of all sums received and spent by him as mortgagee,
and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, J;rue
copies of such accounts and of the vouchers by which
they are supported;
(h) 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 him in reduction of the amount (i:f: any) from
time to time due to him on account of interest and, so
far as such receipts exceed any interest due, in reduction or discharge of the mortgage-money; the surplus,
if any, shall be paid to the mortgagor; ".
"Section 77: Nothing in section 76, clauses (b),
(d), (g) and (h), applies to cases where there is a
contract between the mortgagee and the mortgagor
that the receipts from the mortgaged property shall,
so long as the mortgagee is in possession of th~ pro-
. perty, be taken in lieu of interest on the principal
money, or in lieu of such interest and defined portions
of the prim:iipal."
•
•
'
'
'
•
·s.c.R.
SUPREME COURT REPORTS
1095
Section 76(g) of the Transfer of Property Act imposes
a liability on a mortgagee to keep, full and accurate
accounts supported by vouchers. So too, he is under
a statutory liability under cl. 'h' to debit the nett
receipts of the mortgaged property in deduction of the
amount due to him from time to time on account of
interest and where such receipts exceed any interest
due, in reduction and discharge of the mortgagemoney and to pay the surplus, if any, to the mortgagor. Therefore, every mortgagee in possession is
bound to keep clear, full and accurate accounts and to
render the accounts to the mortgagor in the manner
prescribed in cl. 'h'. But s. 77 enacts an exception to
the mortgagee's liability under els. (g) and (h) of s. 76.
Under that section (s. 77), if there is a contract between
the mortgagor and the mortgagee, whereunder it is
agreed that the receipts of the mortgaged property
should, so long as the mortgagee is in possession of the
property, be taken in lieu of interest· and a defined
portion of the principal, the mortgagee is freed from
the statutory liability to keep accounts or to render
accounts to the mortgagor in the manner prescribed
under els. (g) and (h) of s. 76 of the Act. This is so
because, the receipts are set off against the interest,
and there is nothing to account for.
Therefore, to
insist upon the mortgagee to keep. accounts or render
accounts to the mortgagor would be an empty formality. The essential condition for the application of
this section is that the receipts of the property should
be take~ in lieu of interest or in lieu of interest and a
defined portion of the principal. The contention of
the learned counsel for the respondents is that unless
the contract authorizes the mortgagee to take the
entire receipts in lieu of interest or in lieu of interest
and defined portions of principal, this section cannot
be invoked; for it is said that the principle behind the
section is that one is set off against the other, with the
result~ there is nothing to be accounted for, whereas if
only a part of the receipts is agreed to be paid towards interest or in lieu of such interest and defined
portions of the:: principal, there wo:uJd be surplus in•
the hands of the mortgagee, which would have to be
Mahant
Ramdhan Puri
v.
Bankey
Bihari Satan
Subba Rao ].
1Vlaha11t
Ramdhan l'uri
v.
Bankey
Bihari Sa1·au
Subba Rao ].
•
1096
SUPREME COURT REPORTS
[1959]
accounted for.
On th'e basis of that distinction, an
argument is advanced to the effect that, as in the
present case, the mortgagee had to pay a sum of
Its. 435-4-0 to the mortgagor, he was not authorized
by the mortgagor under the agreement to take the
entire receipts in lieu of interest, etc., within the meaning of s. 77 of the Transfer of Property Act. To put
it differently, the argument is that out of the receipts
from the mortgaged property a portion was paid to
the mortgagor and the mortgagee was authorized to
take only the balance in lieu of interest and, therefore,
there was no contract between the mortgagor and the
mortgagee for the latter taking the entire receipts in
lieu of interest. We find it difficult to accept this
argument. Under Exhibit A(3), the mortgagee undertook an unconditional obligation to pay a sum of
Rs. 435-4-0 in respect of the property mortgaged to
him. This obligation was not made to depend upon
the receipts from the property in the possession of the
mortgagee.
'V'hether there was yield from the land
or not, he had to make the payment to the mortgagor.
Though he had to pay the rent as a consideration for
his enjoyment of the land as a mortgagee, his liability
did not depend upon the receipts from the land-he had
to pay, receipts or no receipts.
His liability was also
not confined to the receipts, for he was under a
personal obligation to pay the amount to the mortgagor. On the other hand, the mortgagee was expressly authorized to take the entire income from the
land and appropriate the same towards interest and
the mortgagor agreed not to put forward any claim or
demand in respect of any increase in the produce.
Shortly stated, the mortgagee was under a personal
obligation to pay Rs. 435-4-0 to the mortgagor and
had a right to take the entire receipts from the land
in lieu of interest. It is not a case, therefore, where
receipts from the mortgaged property are divided
between mortgagor and mortgagee, but one where the
Il}Ortgagee·pays a specified amount to the mortgagor
• and appropriates the entire receipts in lieu of interest.
We, therefore, h9ld that, under the mortgage deed,
Exhibit A(3), there is
a
contract
between
the
•
•
\
'
'
•
S.C.R.
SUPREME COURT REPORTS
1097
mortgagee and the mortgagor within the meaning of
z958
s. 77 of the Transfer of Property Act, to the effect that
Mahant
the receipts from the mortgaged property should be
Ramdhan Puri
taken in lieu of interest.
v.
Relying upon the judgment of the High Court, a
Ba,.key
further attempt was made by the learned Counsel for
Bihari Sara.n:
the respondents to contend that the mention of a
specified rate of interest in the document is indicative
Subba Rao f.
of the fact that under the document the mortgagee,
would have to take only such part of the nett receipts
sufficient to discharge the interest and credit the
balance to the mortgagor. The mere mention of a
rate of interest does not necessarily lead to the conclu.
sion. The rate of interest may be stipulated for estimating the amount payable towards interest so that
the parties may visualize whether the nett receipts
could reasonably be set off against the interest. The
rate may also be given for other reasons.
The Judicial Committee, in Pandit Bachchu Lal v.
O'jiaudhri Syed Mohammad Mah(1), held that notwith·
standing the fact that a particular rate of interest was
mentioned in the mortgage deed, there was a contract
within the meaning of s. 77 of the Transfer of Property
Act. It was a case of a mortgage with possession and
a particular rate of interest was mentioned in the
mortgage deed. There was a provision for repayment
of the principal either in whole or in part before the
stipulated period, but it was otherwise provided that
the mortgagee should appropriate the surplus profits
towards_interest, he having no claim to interest and
the mortgagors having no claim· to the profits. The
Privy Council held, on a construction of the mortgage
deed, that the said deed contained a contract within
the meaning of s. 77 of the Transfer of Property Act,
1882.
In Exhibit A-3, though the rate of interest is stated
at t per cent. per month, it was obviously mentioned
to enable the parties to approximately fix the amount
to be appropriated by the mortgagee from and out
of the rent received from the thikadar. No doubt, tlie
same rate of interest is also mentioned when the•
(1) (1933) 37 C.W.N. 457.
1958
Mahant
Ramdhan Puri
v.
Bankey
Bihari Saf'an
Subba Rao ].
•
1098
SUPREME COURT REPORTS
[1959]
parties are dealing with their rights after the expiry
of the thikadari interest, but in more than one place
they have stated in clear and unambiguous terms that
the mortgagee could appropriate the produce towards
interest and that the mortgagor would not put forward
any sort of claim or demand in respect of any increase
in the produce. In view of the clearly expressed
intention of the parties, we cannot hold from the mere
fact that the rate of interest is mentioned that the
document does not come under the purview of s. 77 of
the Transfer of Property Act.
We hold that s. 77 of
the Transfer of Property Act applies to the document
and therefore the mortgagee is not lia hie to render any
account to the mortgagor.
On the footing that the mortgage is an anomalous
mortgage, we arrive at the same result. The learned
Counsel for the appellant contends that if the mortgage is an anomalous mortgage, the parties are only
governed by the provisions of s. 98 of the Transfer of
Property Act and not by the provisions of s. 77 of the
Act.
Section 98 says:
" In the case of an anomalous mortgage, the
rights and liabilities of the parties shall be determined
by their contract as evidenced in the mortgage-deed,
and, so far as such contract does not extend, by local
usage."
The question whether this section excludes the operation of other relevant provisions of the Act, including
s. 77, need not be considered in this case, for, whether
s. 77 applies, as the learned Counsel for the •respondents contends, or the terms of the contract would
govern the rights of the parties, as the learned counsel
for the appellant argues, the result would be the same
for the question to be decided is whether under the
terms of the mortgage, the mortgagee has the right to
appropriate the entire nett receipts in .lieu of interest.
We have already held that in Exhibit A(3) not only
there is such a recital but there is a specific term whereunder the mortgagor expressly agreed not to claim any
.produce received by the mortgagee.
Whether s. 77
applies or not, under the express terms of the contract,
•
\
'
'
•
S.C.R.
SUPREME COURT REPORTS
io99
the appellant is not liable to render accounts for the
excess receipts.
.. No other point is raised before us. In the result,
the decree of the High Court is set aside and that of
the Subordinate Judge is restored. The appellant will
have his costs throughout.
Appeal allowed.
MAKTUL
v.
Mst. MANBHARI & OTHERS
(GAJENDRAGADKAR, A. K. SARKAR and SuBBA' ·
RAO JJ.)
'
Customary Law-Inheritence-Hindu in Punjab succeeding to
maternal grandfather's estate-Such proterty, if ancestral qua /Jis
sons-Stare decisis-Rule, when inapplicable.
Under the customary law of the ·Punjab property inht!~ited
by a Hindu male from his maternal grandfather is not .. an~estral
property qua his sons.
·
· ·..
·.
:·
Narotam Chand v. Mst. Durga Devi, I. L. R. (1950) Punj. r,
approved.
· ·
·
Lelina v. Musammat Thakri, (1895) 30 P. R. 124 and Musammat Attar Kaur v. Nikkoo, (1924) I. L. R. 5 Lah. 356, not
approved.
The rule of stare. decisis is not an inflexible rule ,and is' l.napp1icable where the decision is clearly erroneous and· wht!n its
r.evei;sal does uot . shake any titles .,er .contracts ·or altei the
general course .of dealing.
., , ,.,
',
CrvIL APPELLATE JU,RI8DICTI0N! Civ,il Appeal No;
150.of 1955. . . .
.; . . .. .
· '.
,:.
· 'AJl:peal froiri'tll.e judgment and decr.eedateq A;ugust
20, 1952; ·of'th'e Puhjab High Court,'.in R'egular ll'irst·
~t>peal Ni?:.·1010£}~49 arisin.~,' ~~t :?f, the ·judgment
. ; ~J •
140·'
Mahant
Rctmdhan Puri
v.
Bankey
Bihari Saran
Subba Rao ].
May 23.
•