TaxTMI 
TaxTMI 
1961 (3) TMI 88
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.... stated. The land in dispute originally belonged to one Bhagaban Parida. On July 16, 1924, he executed a registered kabala'for a' consideration of Rs. 2,000 in favour of one Priyanath Sasmal. On June 2, 1928, Priyanath Sasmal executed a usufructuary mortgage bond (Ex. B) for Rs. 1,500 in favour of Lakshminarayan Pani, the father of the appellants herein. Under the terms of the said usufructuary mortgage, the mortgaged property was put in possession of the mortgagee. One of the terms of the mortgage deed was that the initial responsibility for the payment of rent was that of the mortgagor and that, if for any reason he did not pay the arrears of rent, the mortgagee was under an obligation to pay off the arrears to the landlord and to obtain ....
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.... came to an end; with the result the trial court decreed the suit and the appellate court, setting aside that decree, dismissed the suit. The legal representatives of the mortgagor preferred a second appeal to the High Court against the judgment and decree of the District Judge. A division bench of the High Court agreed with the conclusion of the trial court, set aside the decree of the District Court and restored that of the trial court. Hence the present appeal. Learned counsel for the appellants i.e., the legal representatives of the mortgagee, contended that in execution of the rent decree the mortgagee became the purchaser of the equity of redemption, with the result that the relationship of mortagor and mortgagee ceased to exist and,....
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....ortgage and of his expenses properly incurred as mortgagee, B holds the land for the benefit of A." The following three conditions shall be satisfied before s. 90 of the Indian Trusts Act can be applied to a case: (1) the mortgagee shall avail himself of his position as mortgagee; (2) he shall gain an advantage; and (3) the gaining should be in derogation of the right of the other persons interested in the property. The section, read with illustration (c), clearly lays down that where an obligation is cast on the mortgagee and in breach of the said obligation he purchases the property for himself, he stands in a fiduciary relations ship in respect of the property so purchased for the benefit of the owner of the property. This is only anot....
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....ss there is either a contract between the parties or a merger or a special statute to debar them." These observations must have been made on the assumption that it was the duty of the mortgagee to pay the rent and that he made a default in doing so and brought about the auction sale of the holding which ended in the purchase by him. The reference to s. 90 of the Indian Trusts Act supports this assumption. Learned counsel for the appellants relied upon the decision of the Judicial Committee in Malkarjun Bin Shidramappa Padare v. Narhari Bin Shivappa ((1900) L.R. 27 I.A. 216) in support of his contention that a mortgagor cannot seek the relief of redemption without first getting the sale set aside. There, a mortgaged property was sold in ex....
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....ct of the parties themselves, by merger or by order of the court. (2) Where a mortgagee purchases the equity of redemption in execution of his mortgage decree with the leave of court or in execution of a mortgage or money decree obtained by a third party, the equity of redemption may be extinguished; and, in that event, the mortgagor cannot sue for redemption without getting the sale set aside. (3) Where a mortgagee purchases the mortgaged property by reason of a default committed by him the mortgage is not extinguished and the relationship of mortgagor and mortgagee continues to subsist even thereafter, for his purchase of the equity of redemption is only in trust for the mortgagor. Let us now apply the aforesaid principles to the concurr....