Judgment:
Huluvadi G. Ramesh, J.
1. This second appeal is filed by the second mortgagee of the suit properties being aggrieved by the order of dismissal passed by the Principal Civil Judge (Sr. Dn.), Hubli in R.A.No. 98/2000.
2. The suit properties are, a country tiled North-East shop premise measuring about 55 'xl2' with a backyard of 10 'xl2' out of 220 sq. yards of C.T.S.No. 1132/A, Ward No. 3 of Anchatgeri Oni, Hubli and another is a country tiled southern side premise measuring about 65'xl4' out of 220 sq. yards in the same survey number as noted above. According to the plaintiffs, they are the owners of the above suit properties and on 28.8.1961 the father of the plaintiffs by name Ambasa Yallappa Pujari had mortgaged item No. 1 in a favour of husband of defendant No. 1 and defendant No. 2 for Rs. 7,000/- for a period of 7 years. Thereafter, the plaintiffs along with their father have received another sum of Rs. 23,000/- and have executed a registered mortgage deed on 23.5.1973 in favour of the husband of defendant No. 1 and 2 for a further period of 8 years and again created charge on item No. 1 and also mortgaged item No. 2 of the suit property. Subsequently, both the mortgagees i.e., defendants 1 and 2 for unlawful gain have transferred their mortgage right in favour of defendants 3 and 4 on 17.4.1980 by a registered mortgage deed and defendant No. 5 who is the brother of defendants 3 and 4 started residing therein after having got his name entered in the CTS records. After considerable time, when the plaintiffs have approached defendants 1 and 2 and requested to get the mortgage redeemed by offering an amount of Rs. 30,000/-, on one or the other pretext they were postponing although, the plaintiffs were ready to get the mortgage redeemed by paying an amount of Rs. 30,000/-. Hence, legal notice was issued on 06.08.1991 and later the suit was filed. The said suit was contested by the defendants 3, 4 and 5. It is contended by them that by virtue of the registered deed dated 17.4.1980 the mortgage is transferred in their favour by defendants 1 and 2 and in the family partition the mortgage right had fallen to the share of defendant No. 5 and he is residing therein with his family members and he has spent about 11, 800/- between 1980-1991 to meet the repair expenses of the suit properties and also further earlier to the filing of the suit he has again spent Rs. 45,000/- towards repairing of the dilapidated walls of the suit properties thereby, the plaintiffs are liable to pay a sum of Rs. 86,800/- to get the suit relief. Based on the pleadings, the Trial Court has raised as many as five issues. After the Trial and after hearing the parties, the Trial Court has decreed the suit of the plaintiff directing them to deposit the mortgage amount of Rs. 30,000/- and also the expenses of Rs. 5,000/- and since the amount of Rs. 30,000/- was already deposited in the Court it was directed to deposit only the remaining amount of Rs. 5,000/-. Being aggrieved by the said order of the Trial Court i.e., the I Additional Civil Judge (Jr. Dn.), Hubli, an appeal was preferred by defendant No. 5 before the Principal Civil Judge (Sr. Dn.), Hubli in R.A.No. 98/00. The said Court has dismissed the appeal filed by defendant No. 5. Hence, this second appeal.
3. The substantial questions of law that would arise for consideration in this appeal are:
i) Whether both the Courts below have considered the principles laid down under Section 63A(1) and (2), 72, 76(d) of the Transfer of Property Act of 1882?
ii) Whether both the Courts below have committed any error in not considering the documentary evidence produced with regard to repairs effected?
iii) Whether the appellant is entitle for the amount spent on repairs as claimed by him?
4. Heard the Counsel for the respective parties.
5. It is the submission of the Learned Counsel appearing for the appellant/defendant No. 5 that as per the terms of mortgage deed, the mortgagee was entitled to carry out the repairs moulding putting up the walls if any which are in dilapidated condition and accordingly, the appellant has spent nearly Rs. 56,800/- towards repairs and also to put up the construction by erecting the walls of four rooms and although, he has spent substantial amount, both the Courts below have not considered this aspect and have committed an error in not appreciating the terms of the mortgage deed and in dismissing the claim of the mortgagee.
6. The Learned Counsel appearing for the respondents/ mortgagors has vehemently contended that the mortgage was in favour of defendants 1 and 2. Thereafter, against the terms of the mortgage deed there is a subsequent mortgage created by original mortgagees in favour of this appellant. Any such term as per the mortgage between defendants 1 and 2 and the mortgagors cannot be insisted to be acted upon by subsequent mortgagee as it is either without consent or without concurrence of the mortgagors and further submitted that both the Courts below having rightly considered that after issuance of legal notice with a ready cash to get the mortgage redeemed, deliberately, the appellant/second mortgagee has effected repairs and spent some amount, for which, the mortgagors/plaintiffs are not liable and there is no privity of contract between the appellant and the mortgagors. Accordingly, sought for dismissal of the appeal.
Section 63A of the Transfer of Property Act, 1882 reads thus:
63-A. Improvements to mortgaged property-(1)Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement; and the mortgagor shall not, save only in cases provided for in Sub-section (2), be liable to pay the cost thereof.
(2) Where any such improvement was effected at the cost of the mortgagee and was necessary to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient, or was made in compliance with the lawful order of any public servant or public authority, the mortgagor shall, in absence of a contract to the contrary, be liable to pay the proper cost thereof as an addition to the principal money with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine percent per annum, and the profits, if any, accruing by reason of the improvement shall be credited to the mortgagor.
Section 72 of the said Act reads thus:
'72. Rights of mortgagee in possession-A mortgagee may spend such money as is necessary-
(a) for the preservation o f the mortgaged property from destruction, forfeiture or sale;
(b) for supporting the mortgagor's title to the property;
(c) for making his own title thereto good against the mortgagor; and
(d) when the mortgaged property is a renewable leasehold, for the renewal of the lease;
and may, in the absence of a contract to the contrary, add such money to the principal money, at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine percent per annum:
Provided that the expenditure of money by the mortgagee under Clause (b) or Clause (c) shall not be deemed to be necessary unless the mortgagor has been called and has failed to take proper and timely step to preserve the property or to support the title. Where the property is by its nature insurable, the mortgagee may also, in the absence of a contract to the contrary, insure and keep insured against loss or damage by fire the whole or any part of such property; and the premiums paid for any such insurance shall be added to the principal money with interest at the same rate as is payable on the principal money or, where no such rate is fixed, at the rate of nine percent annum. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage-deed or (if, no such amount is therein specified), two-thirds of the amount that would be required in case of total destruction to reinstate the property insured.
Nothing in this section shall be deemed to authorize the mortgagee to insure when an insurance of the property is kept up by or on behalf of the mortgagor to the amount in which the mortgagee is hereby authorized to insure.
Further, Section 76(d) of the said Act reads thus:
'76. Liabilities of mortgagee in possession-When, during the continuance of the mortgagee the mortgagee takes possession of the mortgaged property. -
a) xx xx xx
b) xx xx xx
c) xx xx xx
(d) he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of rents and profits thereof after deducting from such rents and profits, the payments mentioned in Clause(c) and the interest on the principal money;
7. As per the evidence let in by defendant No. 5, he said to have spent Rs. 11,800/- to carry out the repairs of the suit properties prior to 1991 between the period from 1980-1991. Apart from that, it is also his case that he has constructed four room walls by spending an amount of Rs. 45,000/-. Thus, his claim is that in all he has spent Rs. 56,800/-. He has also examined one of the pancha D. W.2 who has deposed that in the panchayath held between the plaintiffs and defendant No. 5, defendant No. 5 has stated that he has spent Rs. 11,500/- for repair of suit properties and the plaintiffs in presence of panchas agreed to repay the same and also consented to construct four rooms of suit houses. It is the argument of the Learned Counsel for the appellant/defendant No. 5 that as per the provisions of Transfer of Property Act and also as per the terms of the mortgage, since he has spent substantial amount, he is entitled to recover the same, failing which, he cannot be directed to vacate and hand over the possession of the suit properties. The Trial Court after having gone through the evidence let in by the parties, has noted that defendant No. 5 has not acted as a man of ordinary prudence and when he intended to invest thousands of rupees for repairs he should have obtained the written consent of the owner and also the permission from the proper authority. Further, it has noted that although, defendant No. 5 has produced the receipts to show that he has purchased some building materials in the year 1991 the same have not been proved by him and the plaintiffs' counsel therein has submitted that the amount spent was not to carry out the repairs on the suit properties but for the construction of the building wherein Mahila Bank was in existence which is in the name of the son of defendant No. 5. However, on the submission of the Learned Counsel for the plaintiffs therein that they are ready to pay an amount of Rs. 5,000/- as expenses incurred by defendant No. 5 for minor repairs while also having found that the defendant No. 5 has not proved his case regarding the expenses incurred by him and also that there was no written consent, the Trial Court has decreed the suit of the plaintiffs directing to pay the mortgage amount of Rs. 30,000/- and another Rs. 5,000/- towards the expenses. In the appeal before the Lower Appellate Court, it has also having gone through the documents and also having noted the contents of the bills produced by defendant No. 5 and other documents has noted that according to defendant No. 5 he has spent Rs. 11,800/- between 1980-1991, but no iota of evidence is produced in this regard. Even referring to Exs.D1 to D27 which are said to be the bills for purchasing the building materials to establish the subsequent amount of Rs. 45,000/- it has noted that these bills are subsequent to the issuance of legal notice as per Ex.P5 to redeem the mortgage.
8. The position of defendant No. 5 is that of a second mortgagee wherein there is a privity of contract between the plaintiffs and defendants 1 and 2 in turn, defendants 1 and 2 for unlawful gain have subsequently mortgaged the suit properties in favour of defendants 3 and 4 and defendant No. 5 being the brother of defendants 3 and 4 said to have got the mortgage rights in his favour in respect of the suit properties. As per the records, it is seen that, legal notice at Ex.P5 is said to have been served on defendants 1 to 5 on 7.8.91 seeking for redemption of mortgage with a ready cash and even the plaintiffs shown to have deposited an amount of Rs. 30,000/- before the Trial Court and further only on the consent of the advocate therein, plaintiffs were ready to pay the amount of Rs. 5,000/- towards the repair charges.
9. First of all, the nature and conduct of defendant No. 5 has to be looked into. The privity of contract was there between the plaintiffs and defendants 1 and 2. To carry out repairs and also to put up any construction of the walls dilapidated, the appellant has not placed any such material to show that subsequently he has consented the plaintiffs to carry out such repairs despite the fact that the plaintiffs have issued legal notice. Furthermore, in the absence of any such documentary evidence mere corroborating evidence let in by defendant No. 5 to show that he has spent the amount on the property and also that for which the plaintiffs have consented would not be of any help. For the period from 1980-1991 according to defendant No. 5 he has spent Rs. 11,800/- and further, after issuance of legal notice he said to have spent Rs. 45,0007- towards raising of walls after demolishing the dilapidated walls of the four rooms for which, it appears there is no consent by the plaintiffs although, it is pleaded by the defendant No. 5 that there was an oral consent. Having regard to the nature of construction and having regard to the fact that there is no privity of contract between the plaintiffs and defendant No. 5 and in the absence on any written consent or any express consent by the plaintiffs to carry out such act, the defendant No. 5 cannot insist on the plaintiffs to pay the amount invested by him. However, for the period form 1980-1991 the defendant No. 5 is said to have spent about Rs. 11,800/ for which as rightly observed by the Lower Appellate Court he has not produced any material and any amount that is being spent by defendant No. 5 subsequent of the issuance of legal notice cannot be held to be binding on the plaintiffs. However, having regard to the factual position and equity, it would be appropriate to direct the plaintiffs to pay another sum of Rs. 5,000/- in addition to what has already been agreed to by the plaintiffs before the Trial Court.
10. For the foregoing reasons, the substantial questions of law raised are answered accordingly while allowing the appeal in part. The appellant/defendant No. 5 is entitled for another sum of Rs. 5,000/- towards the redemption of mortgage. The plaintiffs shall deposit the amount of Rs. 5,000/- within two months and immediately after payment the appellant/defendant No. 5 shall vacate the suit premises. Parties to bear their own costs.