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Supreme Court of India

JAYASINGH DNYANU MHOPREKAR & ANR.versusKRISHNA BABAJI PATIL & ANR.

Citation
1985 INSC 158
Decided
17 July 1985
Disposal
Dismissed

Holding

A statutory grant of occupancy rights to mortgagees does not extinguish the mortgagor's right of redemption; the mortgagee must hold any advantage for the benefit of the mortgagor under Section 90 of the Indian Trusts Act.

Summary

The plaintiffs, permanent Mirasi tenants, mortgaged their half‑share of Paragana Watan lands to the defendants in 1947. After the Bombay Paragana and Kulkarni Watans (Abolition) Act, 1950 abolished the watans, the defendants (or their heirs) paid the occupancy price and obtained a grant of the entire land from the Prant Officer under Section 8 of the Act, relying on their possession. The plaintiffs sought redemption of the mortgage, arguing that the grant extinguished their right to redeem. The Supreme Court held that a mortgagee’s right of redemption cannot be extinguished by a statutory grant; under Section 90 of the Indian Trusts Act, 1882 a mortgagee who gains an advantage must hold it for the benefit of the mortgagor. Consequently, the defendants were required to surrender the advantage obtained and the decree for redemption was upheld. The appeal was dismissed.

Issues considered

  • The grant of occupancy rights to mortgagees under the Bombay Paragana and Kulkarni Watans (Abolition) Act, 1950 extinguishes the mortgagor's right of redemption.
  • Whether Section 90 of the Indian Trusts Act, 1882 imposes a fiduciary duty on a mortgagee that prevents him from profiting from a statutory grant.

Legislation cited

Subjects

mortgageright of redemptionoccupancy priceabolition of watansSection 90 Indian Trusts Actfiduciary dutypossessiongrant of land

Judgment

      308


 A                     JAYASINGH DNYANU MllOPREKAll & ANR.
                                      v.
                          KRISHNA llAllAJI PATIL & ANR.

                                 JULY 17, 1985"

 n                 [E.S.VENKATAIW!IAH AND R.B.MISRA, JJ.]

            Mortgage - Redemption of mortgage - Right to redeem the
      mortgage, extinguishment of - Whether by virtue of the granf of
      mortgage lands by the Prant Officer to the mortgagees in physical
      possession under section 8 of the Bombay Paragana and Kulkarni
      Watans (Abolition) Act, 1950, the right of mortgagees and/or
 c    their legal representatives to redeem the mortgage had become·
      extinguished - Bombay Paragana and Kulkarni (Abolition) Act, 1950
      sections 3 (4),4-A and 8 read with section 90 of the Indian
      Trust Act, 1882, scope of.

             Krishna Bsbaji Patil, respondent No.l herein and his
      brother Bendu Bsbaji Patil were holding a half-share in the lands
 D    bearing survey numbers 221/1,222/2,226/8 and 226/12 in all
      measuring 22 Acres and 13 Gunthas situated at Monja Shirai, Peta
      Shirola, District Sangli in !Wlarashtra, as permanent Mirasi
      tenants and were in actual possession of their share in the said
      lands. The lands in question were Paragana Watan lnam lands and
      the Watandars belonged to the family of Kokrudkar Deshmukhs • On
 E    May 20, 1947 they executed a mortgage deed in favour of two
      persons by name Dnyanu Krishna Mhoprekar and Ananda Santu
      Mhoprekar mortgaging their share in the above lands with
      possession by way of security for a loan of Rs.1,000 which they
      borrowed under the mortgage deed. The mortgage deed was for five
      years. The mortgagees were entitled to appropriate the income
 F    f.rom the 1110rtgaged property towards interest. ·

            During the subsistence of the mortgage, the Bombay Para-
      gana and Kulkarni Watans {Abolition) Act, 1950 Bombay Act No. 50
      was passed under which all the Paragana and Kulkarni Watans were
      abolished and the State Government resumed the watan lands.
' G   Dnyanu Krishna Mhoprekar, one of the mortgagees died in or abou:
      the year 1955 leaving behind him Jayasingh Dnyanu Mhoprekar, the
      appellant 1 herein as his heir and the Karta of his joint family.
      Bandu Babaji Patil, one of the mortgagors· also died iI) the year
      1955 leaving behind him three sons, plaintfff No. 1 being the
      Karta of the family.
 H
                   J.D.MHOPREKAR v. K.B.PATIL                 309


      After the coming into force of the Watans Abolition Act,        A
the holders of the Watan i.e. the members of the Deshmukh family
did not pay the occupancy price as provided in section 4(1) of
the Act within the prescribed time and apply for the occupancy
right of such lands. Thereupon in the proceedings initiated to
grant the lands in favour of the penaanent Mirasi tenants. who
were in actual possession thereof, the respondents, who were          B
permanent Mirasi tenants of the half-share in the lands covered
by the survey numbers in question deposited in the Government
Treasury on July 29, 1963 a sum of Rs.182.41 being the requisite
occupancy price equivalent to 24 times· the assessment requesting
that the grant should be made in their favour. The appellants
mortgagees and their heirs in possession of the half-share and        C
another Pandu Krishna who by virtue of the sale deed, by the
other branch ·of the respondent 's family in his favour is in,
possession of the other half share in the lands also deposited
the occupancy price claiming the whole land.

        The Prant Officer, by his order dated February 5,1964,        D
instead of granting occupancy right ·in respect of the one-half
9li:are of the land which belonged to the respondents in their
favour ordered that l:he entire extent of land measuring 22 Acres
and 13 Gunthas should be granted in favour of the appellants and
one Pandu Krishna as they were in physical possession. The res-
pondents questioned the said proceedings before higher autho-
rities and pending a decision thereat, made an abortive attempt       E
to redeem the mortgage in a proceeding under section 83 of the
Transfer of Property Act, 1882 in. Miscellaneous Application No.41:
of 1963. Thereafter, the respondent instituted a suit for redemp-
tion in Regular Civil Suit No.67 of 1965 on the file of the Civil·
Judge, Junior Divison, Islampur. In the written statement, it was
pleaded inter alia that since after the abolition of the watans,      F
the mortgaged -i:aiids had been given to the appellants by the
Government after . receiving the occupancy price amount! ng to
Rs.364.81 on February 5, 1964 the right of the mortgagors and/or
their legal representatives to redeem the mortgage had become
absolute owners of the suit lands. After the trial, the suit was
dismissed bY the Civil Judge, Aggrieved by the decree of the          G
Trial Court, the respondents preferred an appeal before the
District Court, Sangli in Civil Appeal No. 278 of 1966. In that
appeal the decree of the trial Court was reversed and a decree
for redemption was passed. Under that decree the respondents were
directed to pay, in addition to the amount of Rs.1,000 borrowed
under the mortgage deed a sum of Rs.182.41 which was equivalent       H
 to one-half of the amount paid by appellant No. 1 and others in
         310              SUPHEME COURT REPORTS ·     [1985] SUPP.2 s.c.R.


A        order to obtain the grant from the Government. Accordingly an
         appropriate preliminary decree was drawn up under order XXXIV,
         Rule 7 of the Code of Civil Procedure. Aggrieved by the said
         decree the appellants filed a second appeal before the High Court
         of Bombay in SA ·No. 37 of 1969 which was dismissed on ~rch 3,
         1971 and thus the decree made by the first appellate court was
ll       affitined. Hence the appeal by special leave.

               Dismissing the appeal, the Court

                HELD 1.1 It· is well settled that the right of redemption
         under a mortgage deed can come to an end only in a manner known
         to law. Such extinguishment of the right can take place by a
C        contract between the parties, by a merger or by a statutory pro-
         vision which debars the mortgagor from redeeming the mortgage. A
         OXlrtgagee who has entered into possession of the mortgaged
         property under a mortgage' will have to give up possession of the
         property when a suit for redemption is filed unless he is able to
         show that the right of redemption has come to an end or that the
         suit is liable to be dismissed on some other valid ground. This
D        flows from the legal principle which· is applicable to all mort-
         gages, namely "Once a mortgage, always a mortgage." [315 D-11,
         316 A]

                1.2 It is no doubt true that the father of the first
         appellant and the second appellant have been granted occupancy
 E       right lly the Prant Officer by his order dated February 5, 1964
         along with Pandu, the uncle of appeltant No. l. But the
         appellants would not have been able to secure the said grant in
         their favour but for the fact that they were in actual possession
         of the lands. They were able to be in possession of the one-half
         share of the respondents in the lands in question only by reason
 F       of· the mortgage deed. If the mortgagors had been in posssession
         of the lands on the relevant date, the lands would have auto-
         matically been granted in their favour, since the right of the
         tenants in the watan lands were allowed to subsist even' after the
         coming into force of the Act and the consequent abolition of the
         watans by virtue of section 8 of the Bombay Paragana and Kulkarni
 G       Watans (Abolition) Act,1950. The fact that they had mortgaged
         land with possession on the relevant date would not make their
         position any different. [316 A-DJ

                l.3 Section 90 of the Indian· Trusts Act, 1882 clearly
         shows that if a mortgagee by availing himself of his position as_
     H   a mortgagee gains an advantage which would be in derogation of
         the right of a mortgagor, he has to hold the advantage so derived
           J,D.MllOPl\EKAR v. K.B.PATIL [VENKATARAMIAll, J.j      311


by him for the benefit of the mortgagor. Section 90, therefore,.         A
casts an obligation on a mortgagee to hold the rights reqllired by
him in the mortgaged property for the benefit of the mortgagor
in such circumstances as the mortgagee is virtually in a
fiduciary position in respect of the rights so acquired 8nd he
cannot be allowed to make a profit out Of the transaction. [317
C-D, F-GJ                                                                B

       In this case the mortgagees i.e. Dnyanu, and Ananda could
each get l/ 4th share in the total extent of land measuring 22
Acres and 13 Gunthas only. by availing themselves of their
position as mortgagees. The grant made in their 'favour is an
advantage traceable ' to the possession of the land which they           c
obtained under the mortgage and that the said grant is certainly
in· derogation of the right of the mortgagors who were the
permane11t Mirasi tenants ·entitled to the grant under the Govern-
ment orders. The appellants could not have asserted their right
to the grant of the land when the plaintiffs had deposited the
requisite occupancy price well in time. The mortgagees obtained          D
the grant in their favour by making an incorrect representation
to the Gov.ernment that they were permanent Miras! tenants
although they were only mortgagees. As such the appellants sre
liable to surrender the advantage they have derived under the
grant in favour of the respondents even if the order of grant has
become     final   before   the Revenue authorities, of course,
subject to the payment of the expenses incurred by them in
securing the grant. [317 D-F, G-ti]

        CIVIL APPELLATE JURISDICTION    Civil Appeal No. 1599(N) of
1971.

      From the Judgment and Order dated       3.3.1971 of the Bombay
High Court in S.A. No. 37 of 1969.

      P.H. Parekh, C.S. Singh and Miss Indu Malhotra           for the
Appellants.

      V.A. Bobde,A.G •. Ratnaparkhi and Miss A. ·Chauhan for the         G
Respondents.

        The Judgment of the Court was delivered by

      VENKATARAMIAH, J. This appeal by special leave arises out
of a suit for redemption. Krishna Babaji Patil (Plaintiff No.l)          H
and his brother Bandu Babaji Patil were holding a half share in
the lands bearing Survey Nos. 221/1, 222/2, 226/8 and 226/12 in
      312               SUPREME COURT REPORTS        [1985] SUPP.2 s.c.R.


A      all measuring 22 Acres and l3 Gunthas sltuateq at Monje Shirai,
       Peta Shirola, Distri~.t Sangli as permanent Mi.rasi tenants and
       were in actual possession of their sha•~ .in the said lands. The
     · lands in question were Paragana Watan Inam lands and the Watan-
       dars belonged .to the fami1y of Kokrudkar Deshmukhs. On May 20,
       1947 Krishna Ba,baji Patil (Plaintiflf No. 1) apd llandu Babaji
li     Patil executed a mortgage cjeed in favour of two persons by ruune
       Dnyanu Krishna Mhoprekar and · .Ananda Santu Mhoprekar (Defendent
       No, 2) mortgaging thel.r share in the above lands with possession
       by way of security for a loan of Rs .1000 which they borrowed
       under th" mortgage deed. The mortgage was for five years• The·
       mortgagees were entitled to appropriate the incdme from the·mort-
       gaged property towards interest. Dnyanu Krishna 'Mhoprekar, ' one of
C      the mortgagees, died in or about the year 1953 leaving beh:lnd him
       Jayasingh !Jnyanu Mhoprekar, (Defendant No. l) as his heir and the
        'Karta' of his joint family, Bandu Babaji Patil, one of the
       mortgagors, referred to above, died in the year 1955 leaving
       behind him his son plaintiff No. 2 and two other sons as his           ;
       heirs. Plaintiff No. 2 is the 'Karta' of that branch of the
       family.
D
            The remaining orue-half share in the lands comprised in the
      above Survey Numbers belonged to Ganu Vithu and Pandu Vithu who
      were members of the other branch of the family of the mortgagors.
      They had also mortgaged their share in favour of one Pandu
      Krishna who was no other than the brother of Dnyanu and the
E     father of Ananda Santu Mhoprekar (Defendant No. 2). Defendant No.
      2 had, however, been given in adoption to Sarttu. Subsequently
      Ganu Vithu and Pandu Vithu sold their share in favour of the
      motgagee Pandu Krishna. Thus the family of the defendants was in
      possession of both the shares in · the lands bearing Survey Nos.
                                                                                  :
      221/l, 222/2, 226/8 and 226/12.
F
            The plaintiffs instituted the suit for redemption in
      Regular Civil Suit No. 67 of 1965 on the .file .of the Civil Judge,
      Junior Divison, lslampur out of which this appeal arises after an
      abortive attempt to redeem the mortgage in a proceeding under
      section 83 of the Transfer of Property Act, 1882 in Miscellanous
G     Application No.li4 of 1963. The suit was resist~d by the defen-
      dants. In , the written statement filed by the Defendant No.l it
      was pleaded inter alia that since after the ~bolition of the
                    ~~     ~-                            I
      Watans the mortgaged lands had been granted in favour of Dnyanu
      (the father of defendant No. l Jayasingh), Ananda (Defendant
      No.2) and Pandu Krishna (brother of Dnyanu) by the Govermnent
Ii    after receiving the occupancy price amounting to Rs.364.81 on
              J.D.MHOPREKAR v. K.B.PATIL        [VENKATARAMIAH, J. J      313


      February 5, 1964 the right of the mortgagors and/or their legal           A
      representatives to redeem the mortgage had become extinguished
      and that the grantees of the land had become absolute owners of
      the suit lands. After the trial, the suit was dismissed by the
      Civil Judge. Aggrieved by the decree of the Trial Court, the
      plaintiffs preferred an appeal before the District Court, Sangli
      in Civil Appeal No. 278 of 1966. In that appeal which was heard           B
      by the Assistant Judge, Sangli the decree of the Trial Court was
      reversed and a decree for redemption was passed. Under that
      decree the plaintiffs were directed to pay, in addition to the
      amount of Rs .1, 000 borrowed under the mortgage deed a sum of
      Rs.182.41 which was. equivalent to one-half of the amount paid by
      defendant N0 .l and others in.order to obtain the grant from the          c
      Government. · Accordingly an appropriate preliminary decree was
      drawn up under Order XXXIV, Rule 7 of the.Code· of Civil Proce-
      dure. Aggrieved by .the decree of the learned Assistant Judge,
      Sangli, the defendants filed a second appeal before the High
..,   Court of Bombay in S•A· No. 37 of 1969. The Second Appeal was
      dismissed on March· 3, 1971 .and the decree made by the first             D
      appellate court was affirmed. This appeal by special leave is
      filed against the judgment and decree of the High Court.

            Admittedly , the   land·s   in   question were   comprised   in a
      Paragana Watan. Under the Bombay Paragana and Kulkarni Watans
      (Abolition) Act, 1950 (Bombay Act No. 50 of 1950) (hereinafter
      referred to as 'the Act') all the Paragana Watans were abolished.         E
      Section 3 of the Act provided :

                 "3. With effect from and on the .appointed day, not-
                 withstanding anything contained in any law, usage,
                 se~tlement,   grant, sanad or order -
                                                                                F
                 (1) all Paragana and Kulkarni watans shall be deemed
                 to have been abolished;

                 (2) all rights to hold office and any liability
                 to render service appertaining to the said watans are
                 hereby extinguished;                                           G

                 (3) subject to the provisions of section 4, all watan
                 land is hereby resumed and shall be demed to ·be
                 subject to the payment of land revenue under tbe pro-
                 visions of the Code .and the rules made thereunder as
                 if it were an unalienated land:                                H
    314              SUPREME COURT REPORTS        (1985] SUPP.z s.c.R.

                                                     I
A               Provided that such resumption shali not affect the
              '·validity of any alienation of such W'iotan
                                                      '    land made in
                accordance with the provisions of section 5 of the
                Watan Act or the rights of an alienee thereof or any
                person claiming under or through him; I

                (4) all incidents appertaining to the said watans are
              ' hereby extinguished."

          Section 4 of the Act provided that a watan land resumed
     under the provisions of the Act should subject t!o the provisions
     of section 4A thereof be regranted to the holdet of the watan to
     which it appertained on payment of the occupancy price equal to
C   ·twelve times of the amount of the full assessment of such land
     within five years from the date of the coming into force of the
     Act and the holder sho~Lld be deemed to be an oc9upant within the
     meaning of the Bombay Land Revenue Code, 1879 in respect of such
     land and would primarily be liable to pay land revenue to the
     State Government in accordance with the provisions of the said
     Code and the rules made thereunder. Under the ffrst proviso to
D    sub-section (1) of section 4 the occupancy pr~ce payable was
     fixed at six times the amount of the full asseksment of such
     land in certain cases. The         second provis6 to sub-section
     (1) of section 4, however, provided that if the   ' holder failed
     to pay the. occupancy price within a period of five years, as
     provided therein, he should be deemed to be, unauthorisedly
E    occupying the land and would be liable to be summarily ejected
     in accordance with the provisions of the Bomblty Land Revenue
     Code. Section 8 of the Act provided that if any watan land had
     been lawfully leased and such lease was subsisting on the appoin-
     ted day, the provisions of the Bombay tenancy and Agricultural
     Lands Act, 1948 would apply to the said lease anti the rights and
F    liabilities of the holder of such land and t~e tenants would
     subject to the provisions of the Act be governed by the provi-
                                                        '
      sions of the liombay Tenancy and Agricultural Lands   Act, 1948.
     After the Act came into force, the Paragana watan which comprised
      the mortaged property also came to be abolished.Jlt appears that
      the holders of the watan i.e. the members of the Deshmukh family
G     did not pay the occupancy price as provided in ection 4 of the
      Act within the prescribed time and apply for the 6ccupancy right.
      Thereupon action was taken by the State Government to grant the
      lands in favour Of the persons who were in actual possession
      thereof in accordance wtth the directions contai~ed in the Order
      passed by the State Government in 'G.R.R.D. Nof PKA-1056-IV-L
H     dated May 3, 1957 and in G.R.R.D. No. 2760-U~-48810-L dated
      November 23, 1960 which directed that wherever the holder or the
         J.D.MHOPREKAR v.' K.B.PATIL   [VENKATARAMIAH, J.]   315


watandar had failed to pay the occupancy price as required by
section 4(1) of the Act before the prescribed period the lands in   A
question should be granted in favour of the permanent Mirasi
tenants whb were in actual possession _of suc_h lands. In those
proceedings the plaintiffs who were permanent Mirasi tenants of
the half share in the lands covered by the Survey Numbers in
question deposited in the Government Treasury on July 29, 1963 as
per challan Ex. 45 Rs. 182.41 being the requisite occupancy price   B
equivalent to 24 times the assessment requesting that the grant
should be made in their favour. The defendants and Pandu Krishna
who were in possession of the entire extent of land covered by
the Survey Numbers also deposited the occupancy price claiming
the whole land, that is, both the one-half share of the plain-
tiffs which had been mortgaged by them and. the other halt share    c
which Pandu Krishna .had acquired from Ganu Vithu and Pandu Vithu
the other branch of the plaintiff's family. The Prant Officer
instead of granting the one-half share of the land.which belonged
to the plaintiffs in th.eir favour ordered that the entire extent
of land measuring 22 Acres and 13 Gunthas should be granted in
favour of the defendants and . Pandu Krishna as they were in        IJ
possession of the whole land by his order dated February 5, 1964
in WTN/LGL/SR772. He, however, ordered that Dnyanu (father of
defendant No. l) would get 1/4 share, Ananda ((Defendant No. 2)
l/4 share and Pandu Krishna the remaining 1/2 share. It may be
noted that Dnyanu was dead by then. But his son defendant No.l
claimed that he should be treated as the grantee in his father's
place.   The plaintiffs having questioned the said proceedings      E
before higher authorities, no final decision appears to have been
given yet. ,It appears. that a final judgment _in those civil
proceedings· is awaited by the revenue authorities as can be seen
from t_he letter dated December 3, 1965 (Ex.43)and the letter
dated June 6, 1966 (Ex.44) written by the Mahalkari of Shirala
during the pendency. of the suit which has given rise to this       F
appeal.

     The only question which arises for decision in this case is
whether by reason of the grant made in favour of the def endailts
the right to redeem the mortgage can be treated as having become
extinguished. It is well settled that the right of redemption       G
under a mortgage deed can come to an end only in a manner known
to law. Such extinguishment of the right can take place by' a
contract between the parties, by a W.erger or by a statutory.
provision which debars the mortgagor from redeeming the mortgage.
A mortagee who has entered into possession of the mortgaged
property under a mortgage will have to give up possession of the    fl
     316              SUPREME COURT REPORTS        [1985] SUPP.2 s.c.R.

A
     property when a suit for redemption is filed unless he is able to
     show that the right of redemption has come to an end or that the
     suit is liable to be dismissed on some either valid ground. This
     flows from the legal principle which is applicable to all mort-
     gages, namely "Once a wrtgage, always a mortgage".       It is no
     doubt true that the father of the first defendant-and the second
JI
     defendant have been granted occupancy right by the Prant Officer
     by his order dated February 5, 1964 along with, Pandu, the uncle
     of defendant ,No. l. But it is not disputed that the defendants
     would not have-been able to secure the said grant in their· favour
     but .for the fact that they were in actual possession of the
     lands. They were able to be in possession of tre one-half share
     of the pl'.!.intiffs in the lands in question only by reason of the
c    mortgage deed. If the mortgagors had been in possession of the
     lands on the 'relevant date, the lands would have automatically
     been granted in their favour, since the rights ,of the tenants in
     the watan lands were allowed to subsist even after the coming
     into force of the Act and the consequent abolition of the watans
     by virtue of section 8 of ·the Act. The question is whether the
     position would be different because they had mortgaged land
lJ
     with possession on the relevant date.            1




          At this stage it is appropriate to refer to section 90 of
     the Indian Trusts Act, 1882 which reads as unde: :-

                "90. Advantage gained by qualified owner - Where a
                tenant for life, co-owner, mortgagee or other quali~
                fied owner of any property, by availing himseH of his
                position as such, gains an advantage in derogation of
                the rights of the other persons interested in the
                property, or where any such owner, as representing all
                persons interested in such property, gains any advan-
                tage, he must hold, for the benefit of all persons so
                interested, the advantage so gained but subject to
                repayment by such persons of their due share of the
                expenses properly incurred, and to an indemnity by the
                same persons against liabilities properly contracted,
                in gaining such adavantage."
 G
     Illustrations (b) and (c) to section 90 of the       Indian   Trusts
     Act, 1882 read thus:

                 "(b) A village belongs to a Hindu family, A, one of
                 its members, pays aazrana to Government and thereby
                 procures hls name to be entered as the inamdar of the
         J.D.Ml!OPREKAR V• K.B.PATIL   [VENKATARAMIAfl, J.]   317


           village. A holds the village for the benefit of him-      A
           self and the other members.

           (c) A mortgages land to B, who enters into possession.
           B allows the Government revenue to fall into arr~ar
           with a view to the land being put up for sale and his
           becaning himself the purchaser of it. The land is         B
           accordingly sold to B. Subject to the repayment of the
           amount due on the mortgage and of his P.xpenses proper-
           ly incurred as mortgagee, B holds the land for the
           benefit of A."

     An analysis of section 90 of the Indian Trusts Act, 1882 set    C
out above shows that i f a mortgagee by availing himself of his
position as a mortgagee gains an advantage which would be in
derogation of the right of a .illOrtgagor, he has to hold
the advantage so derived by him for the benefit· of the mortgagor.
We are of the view that all the conditions mentioned in section
90 of the lridian Trusts Act, 1882 are satisfied in this case.       D
The mortgagees i.e. Dnyanu, the father o{ defendant No. l and
Ananda the second defendant could each get 1/ 4th share in the
total extent of iland measuring 22 Acres and 13 Gunthas only by
availing themselves of their position as morgagees. The grant
made in their favour is an advantage traceable to the possession
of the land which they obtained under the mortgage and that the
said. grant is certainly in derogation of the right of the           E
mortgagors who wer~ the permanent Mirasi tenants entitled to the
grant under the Government orders         teferred to above. The
defendants could not have asserted their right to the grant of
the land when the plaintiffs had deposited the requisite ucc•J-
pancy price well in time. It is seen that the mortgagees obtained
the grant in their favour ·by making an incorrect representation     F
to the Government that they were permanent Mirasi tenants
although they were only mortgagees. Section 90 of the Indian
Trusts Act, 1882 clearly casts an obligation on a mortgagee to
hold the rights acquired by him in the mortgaged property for the
benefit of the mortgagor in such circumstances as the mortgagee
is virtually in a fiduciary position in respect of the rights so     G
acquired, and he cannot be allowed to make a profit out of the
transactiOn. The defendants are, therefore, liable to surrender
the advantage they have derived under the grant in favour of the
plaintiffs even if the order of grant has become final before the
Revenue authorities, of course, subject to the payment of the
expenses incurred by them in securing the grant. The decree of       H
    ll8             SUPREME COURT REPORTS       (1985] SUPP.2 s.c.R.


A   the 1st appellate court accordingly has directed that Rs.182.41
    should be paid by the plaintiffs to the defendants alongwith the
    mortgage money.

         It was, however, argued on behalf df the appellants before
B   us that since Pandu Krishna, the other grantee, has npt been
    impleaded no relief can be granted to the plaintiffs. There is
    no merit in this contention because the order of the Prant
    Offi~er makes the grant in specific shares. Dnyanu, the father
    of defendant No. 1 and Ananda (defendant ·No. 2) are granted 1/4
c   share each and only the remaining 1/2 share is given to Pandu
    Krishna. We are concerned in this case' only with the half share
    granted in favour of the.mortgagees. This decree relates only to
    that one-half share which had been mortgaged. Pandu Krishna, the
    other grantee, can have no interest in the one-half share which
D   is the subject matter of these proceedings. This contention is,
    therefore, rejected.

         The High Court was, therefore, right in affirming the
    judgment of the first appellate court. The appeal fails and it
E   is dismissed with costs.




    S.R.                                           Appeal dismissed.


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