Foodeni Sah vs Azhar Hussain Khan

Ross, J.—(After setting out facts as above his Lordship proceeded as follows): The plaintiff now appeals against the terms of redemption contending that as the defendant set up a fraudulent conveyance in repudiation of his title as mortgagee, he was not entitled to the mortgagee''s privilege of adding to his principal his disbursements on behalf of the estate. Reference was made to the decision in National Bank of Australasia v. The United Hand-in-Hand and Band of Hope Co. [1879] 4 A.C. 391. The facts of that case were rather complicated, but were briefly that the respondent company had given two mortgages to the bank and thereafter there had been various collusive transactions by the bank, viz., a purchase through the bank''s solicitors and an improper exercise of the power of sale under the mortgages as a result of which the bank had acquired the company''s mine and had taken possession and worked the mine. The company sued the bank, alleging in the first place that the mortgages were ultra vires of the directors but also impugning the bank''s purchase and all the subsequent acts, and claiming an account and offering to pay all just dues. It was decided that the mortgages were valid and that the company was entitled to redeem; and that the bank had no title as owner and was liable as mortgagee in possession to account. The argument in appeal before the Judicial Committee on behalf of the appellant bank was that redemption could not be decreed when the mortgages had been impugned and redemption had not been claimed. The decision was that although the authorities supported the technical rule, yet in the circumstances of that case the mortgagee was not entitled to the benefit of that technicality. That decision does not support the plaintiff''s argument. In that case the, defendant''s argument failed and the plaintiff was held to be entitled to redeem. Here the position is different; it is the plaintiff suing as mortgagor, who is claiming to limit the rights of the mortgagee. The learned advocate for the appellant however relied upon certain observation quoted from the judgment of Lord St. Leonards in Incorporated Society v. Richards [1841] 1 Dr. & War 334 to the effect that a mortgagee who set up an adverse title could not claim all the benefits attached to the character of a fair creditor. But the effect given to this observation was only with regard to the terms as to interest and costs, That is a very different thing from going the length of depriving the mortgagee of a statutory right. The decision certainly does not support any such conclusion as that. And it is clear that the mortgagee has a statutory right u/s 72, T.P. Act, 1882, to be reimbursed for these payments of rent. It is said that he did not profess to make these payments as mortgagee, but made them as owner after his invalid purchase. But when the purchase goes, then the parties are remitted to their original position and he must be credited with these payments as made by him in his capacity as mortgagee, the only capacity that he had when the conveyance failed.

This was the only point that was argued in this appeal and in my opinion the argument fails and the appeal must be dismissed with costs.

Scroope, J.

I agree.