Jamal Mohammad vs Mohamad Unus and 11 others

K.A. Swami, C.J.—This appeal by the first defendant is preferred against the Judgment and decree dated 21.9.1992 passed in A.S. No.

442 of 1982 and Cross Objection by the learned single Judge. The appeal arises out of a suit for partition and separate possession filed by one

Sikkandar, who died during the pendency of the suit and his legal representatives have been brought on record. The trial Court decreed the suit in

the following terms:

In the result, there will be a preliminary decree for partition and separate possession of the plaintiff''s 4/7th share in suit items 1 to 3 and 5 to 7. The

plaintiffs are also entitled to 4/7th share in the redemption of other amount of Ex. A.14, i.e., in Rs. 700/- due to the joint family from the first

defendant. It will be adjusted at the time of passing of final decree for partition by way of equity. The suit in other respects is dismissed. In the

circumstances of the case, both parties are directed to bear their respective costs.

Aggrieved by the judgment and decree of the trial Court, the first defendant preferred A.S. No. 442 of 1982 and the plaintiff in the suit

preferred Cross-Objections to the extent he was denied of share in item No. 4 of the suit properties. Learned single Judge has held that as the

mortgage money was used for the purpose of purchasing Item No. 4 which was the mortgaged property, the plaintiff would be entitled to a share

in Item No. 4 to the extent he would have been entitled to, for the mortgage money. Accordingly, learned single Judge has held that the plaintiff

would be entitled to 4/28 share in item No. 4. Therefore, first defendant has come up in appeal.

Learned Counsel for the appellant has confined the arguments in so far as the judgment and decree under appeal, relate to item No. 4. It is

contended that, no doubt, item No. 4 was mortgaged to the original plaintiff, but, as the first defendant came to purchase the same by paying a sum

of Rs. 2,000/-, including a sum of Rs. 700/- which was the mortgage money, it became the self-acquired property of the first defendant. Therefore,

the plaintiff would not be entitled to any share in it, except a share in the amount of Rs. 700/-. The trial Court has accepted this stand of the first

defendant, whereas, learned single Judge has negatived it. Therefore, the following point arises for consideration in this appeal:

When there are more than one mortgagee, standing in the position of co-owners and one of them purchases the mortgaged property by using the

mortgage debt and also by paying additional sum, whether such purchase should be held to be for any on behalf of the mortgagees or should be

held to be his own self-acquired property?

Learned Counsel appearing for the appellant has placed reliance on Section 90 of the Indian Trusts Act, 1882 and has also relied upon the

decisions in Vellai Mira Ravuttan v Mira Moidian Ravuttan (1864 (II) MHCR 414, Alavala Balayya v. Alavala Guruvayya (1914 (1) L.W. 874),

Sheikh Mohammad Ali v. Sheik Mumtaz Ali (1929 (IV) ILR (Lucknow) 261) = (A.I.R. 1929 Oudh. 521) and Peer Mohideen v. Asia Bivi

(A.I.R. 1934 Mad 686) an i Verma''s ""Islamic Law'''' VI Edition, para 121 at page 388. We may point out that all these decisions relate to money

transactions. They do not relate to purchasing of the mortgaged property by one of the co-mortgagees by suing the mortgage money. Therefore,

the said decision are of no assistance to the appellant. Section 90 of the Indian Trusts Act specifically provides, ""Where a tenant for life, co-owner

mortgagee or other qualified owner of any property, by availing himself 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 advantage, 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 advantage.

Thus in order to attract Section 90 of the Indian Trust Act, the mortgagee must have used his position as mortgagee to gain advantage over the

other mortgagees. In the instant case, recitals contained in the sale deed cleans indicate that the first defendant used his position as one of the

mortgagees for the purpose of purchasing item No. 4 which was mortgaged and was in possession of the first defendant for and on behalf of the

other co-mortgagees, including the plaintiff. That, he used his position as a co-mortgagee is clear from the fact that the mortgage debt has been

adjusted towards i sale consideration. It was very well open to the I first defendant to keep aside the shares of the other mortgagees in the

mortgage debt and only adjust that portion of the mortgage debt which was due to him towards the sale consideration and pay the balance of the

mortgage money to the other co-mortgagees. But, he did not do so. This conduct of the first defendant would go to show that he purchased the

mortgaged property to gain an advantage in derogation of the rights of other co-mortgagees. In the facts and circumstances of the case, it can also

be held that he purchased the mortgaged property representing all the co-mortgagee by adjusting the entire mortgage money towards the sale

consideration in order to gain an advantage over other mortgagees. Therefore, he must be deemed to hold that property so purchased for the

benefit of al the mortgagees; of-course, subject to repayment of their due share of the expenses property incurred. Further, if any liability is

incurred or contracted to in gaining an advantage, the other persons so interested are liable to indemnify. In the instant case, no such liability is

pleaded. In such a situation, the position of the first defendant will be that of a trustee. The property was under usufructuary mortgage. It was the

first defendant who was in possession of the property as one of the co-mortgagees. A division Bench of this Court in C.V. Ramaswami Naidu and

Others Vs. C.S. Shyamala Devi and Others, has held that

If the source of the purchase price or the consideration for the investment in a joint enterprise emanates front a common fund, then the shares of

each of the co-owners or co-entrepreneurs would be the same as their interest in that common fund. This equitable right is subject to a contract to

the contrary. If, therefore, there is evidence that two or more persons purchased the property or an interest in the property, then the rule in Section

45 of the Transfer of Property Act would be automatically attracted unless the parties have contracted otherwise in the matter of their quantum of

interest in the joint property. The fact that the property was purchased in the name of one of the co-owners, would not make a serious dent of the

above rule of good conscience, provided however it is established by acceptable evidence that such purchase in the name of a co-owner was by

accident or by consent and that the consideration for such purchase emanates from a common fund. It is this rule of justice, equity and good

conscience which is reiterated in the Indian Trusts Act by the provisions which deal with quasi-trusts as the are styled in legal parlance.

Similarly, in Ramaswami Aiyar v. Subramania Aiyar (A.I.R. 1923 Mad 147 = 16 L.W.297) it has been held that co-owner in possession of the

common property is a constructive trustee and he is subject to liabilities as a trustee u/s 95 of the Act. We have already pointed out that the first

defendant was in possession of Item No. 4 for and on behalf of all the co-mortgagees and using his position as a co-mortgagee he adjusted the

mortgage debt towards sale consideration. Therefore, as already pointed out, he must be deemed to have purchased the mortgaged property i.e.

Item No. 4 for and on behalf of himself and all the other mortgagees. That being so, the decree passed by the learned single Judge awarding 4/28th

share in item No. 4 cannot be held to be erroneous or illegal as such, and division is proportionate to the contribution made by the other

mortgagees towards the sale consideration. Hence, we see no reason to interfere with the judgment and decree of the learned single Judge.

Accordingly, this Letters Patent Appeal is dismissed. In the facts and circumstance of the case, there will be no order as to costs.