1952 (5) TMI 27 - HC - Indian Laws

Plaintiff entitled to redeem mortgage despite fraudulent sale, emphasizing fiduciary duty.

The plaintiff was granted the right to redeem a usufructuary mortgage and recover possession with mesne profits. The court found the decree and sale to be ... - Issues Involved:1. Redemption of a usufructuary mortgage.2. Possession with mesne profits.3. Validity of the court sale in execution of a money decree.4. Allegation of fraud in obtaining the money decree and court sale.5. Applicability of Section 44 of the Evidence Act.6. Limitation under Article 95 of the Limitation Act.7. Fiduciary duty of the mortgagee.Detailed Analysis:1. Redemption of a Usufructuary Mortgage:The plaintiff executed a registered usufructuary mortgage bond on 11-7-1932 for Rs. 122 in favor of Harihar Tewari, mortgaging 3.83 acres of land and putting the mortgagee in possession in lieu of interest. The plaintiff sought redemption of the mortgage, alleging the mortgage amount was offered to the defendants, and upon refusal, it was deposited in court. The defendants resisted, claiming the plaintiff's right of redemption was extinguished due to a court sale in execution of a money decree obtained by them.2. Possession with Mesne Profits:The plaintiff claimed recovery of possession with mesne profits on redemption. The courts below decreed the suit for redemption and possession with mesne profits, and the defendants appealed.3. Validity of the Court Sale in Execution of a Money Decree:The defendants argued that the plaintiff's right of redemption was extinguished by a court sale held in execution of a money decree obtained against the plaintiff. The plaintiff did not seek to set aside the court sale but claimed the sale was fraudulent.4. Allegation of Fraud in Obtaining the Money Decree and Court Sale:The courts below found that the money decree and the subsequent sale were obtained by fraud. The plaintiff had no knowledge of the money suit or the court sale. The mortgagee was bound to pay the rent himself, and by making the deposit of the decretal dues, he discharged his own liability. The claim for reimbursement by the defendants was deemed dishonest.5. Applicability of Section 44 of the Evidence Act:Section 44 of the Evidence Act allows a party to show that a judgment, order, or decree was obtained by fraud. The courts below found that the decree and sale were vitiated by fraud, allowing the plaintiff to treat the sale as a nullity and claim the right of redemption without setting aside the sale.6. Limitation under Article 95 of the Limitation Act:The defendants contended that the money decree or the court sale not having been set aside within three years of the plaintiff's knowledge of the fraud under Article 95 of the Limitation Act, the plea of nullity was not available. However, the courts below held that the plaintiff could ignore the fraudulent sale and claim redemption.7. Fiduciary Duty of the Mortgagee:The mortgagee, being in a fiduciary position, could not gain an advantage in derogation of the rights of the mortgagor. The mortgagee's actions in obtaining the money decree and purchasing the property in execution were fraudulent and in breach of fiduciary duty.Separate Judgments:Pandit Lakshami Kant Jha, C.J.:The Chief Justice held that the plaintiff was entitled to redeem the mortgage, as the decree and sale were vitiated by fraud. The plaintiff could treat the sale as a nullity under Section 44 of the Evidence Act, and the suit for redemption was not barred by limitation.David Ezra Reuben, J.:Reuben, J. dissented, holding that the plaintiff could not ignore the sale and redeem the mortgage on the ground of fraud in obtaining the decree. He opined that the decree, although fraudulent, was not a nullity and could not be challenged in this suit as the period under Article 95 of the Limitation Act had expired.Ramaswami, J.:Ramaswami, J. agreed with the Chief Justice, holding that the plaintiff could ignore the sale on the ground of fraud and was entitled to a decree for redemption. He emphasized the fiduciary duty of the mortgagee and the applicability of Section 44 of the Evidence Act.Conclusion:The appeal was dismissed with costs, affirming the plaintiff's right to redeem the mortgage and recover possession with mesne profits, treating the court sale as a nullity due to fraud.