Appeal No 119 of 1957
Appeal by special leave from the judgment and decree dated March 3 1955 of the Orissa High Court in Appeal No 593 of 1950
B Patnaik for the appellants
D N Mukherjee for the respondents
March 14
The Judgment of the Court was delivered by SUBBA RAO J
This is an appeal by special leave against the judgment of the High Court of Judicature for Orissa dated March 3 1955 setting aside the judgment of the Court of the District Judge Mayurbhanj and restoring that of the Subordinate Judge Baladore
The facts leading up to this appeal may be briefly 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 2000 in favour of one Priyanath Sasmal
On June 2 1928 Priyanath Sasmal executed a usufructuary mortgage bond exhibit B for Rs 1500 in favour of 292 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 a receipt acknowledging the payment
The mortgagee did not pay the arrears of rent with the result that for arrears of rent the said property was brought to sale and ultimately purchased by the mortgagee for a sum of Rs 300 on September 22 1936
The sale was confirmed on November 4 1936 and the mortgagee took possession through Court on December 21 1938
The mortgagor filed a suit against the mortgagee in the Court of the Subordinate Judge Balasore for redemption of the mortgage and for possession
As the mortgagor died after the filing of the suit his widow and son were brought on record as his legal representatives
The defence of the appellants to that suit was that possession was not delivered to their father the mortgagee under the terms of the mortgage deed that the debt was discharged that their father had purchased the equity of redemption in execution of the rent decree and that the mortgagor had no longer any right to sue him for redemption
The learned Subordinate Judge and on appeal the District Judge concurrently found that in fact possession was delivered to the mortgagee on the basis of the mortgage deed and that the plea of discharge was not true but while the trial court held that after the purchase of the property by the mortgagee in execution of the decree for rent he was holding the property only on behalf of the mortgagor the appellate court came to the conclusion that after the said purchase the relationship of mortgagor and mortgagee 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 293 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 ie 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 therefore the respondents could not sue for redemption and their remedy if any was to sue for setting aside the sale on the ground of fraud or otherwise
On the other hand learned counsel for the respondents contended that as the sale was the result of manifest dereliction of duty imposed upon the mortgagee by the terms of the transaction the purchase by the mortgagee would only be in trust for the mortgagor and therefore the suit for redemption was maintainable
To appreciate the rival contentions it is necessary to notice briefly the law on the subject
The relevant section governing the facts of the case is section 90 of the 2 of 1882
The material portion of the section reads Where a mortgagee by availing himself of his position as such gains an advantage in derogation of the rights of the other persons interested in the property he must hold for the benefit of all persons so interested the advantage so gained but subject to the 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
 Illustration c to that section says A mortgages land to B who enters into possession
B allows the Government revenue to fall into arrears with a View to the land being put up for sale and his becoming himself the purchaser of it
The land is accordingly sold to B Subject to the 294 repayment of the amount due on the mortgage 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 section 90 of the 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 another illustration of the well settled principle that a trustee ought not to be permitted to make a profit out of the trust
The same principle is comprised in the latin maxim commodum ex injuria sua nemo habere debet that isconvenience cannot accrue to a party from his own wrong
To put it in other words no one can be allowed to benefit from his own wrongful act
This Court had occasion to deal with a similar problem in Sidhakamal Nayan vs Bira Naik 1
There as here a mortgagee in possession of a tenant s interest purchased the said interest in execution of a decree for arrears of rent obtained by the landlord
It was contended there as it is contended here that the defendant being a mortgagee in possession was bound to pay the rent and so cannot take advantage of his own default and deprive the mortgagors of their interest
Bose J speaking for the Court observed at p 337 thus The position in our opinion is very clear and in the absence of any special statutory provision to the contrary is governed by section 90 Trusts Act
The defendant is a mortgagee and apart from special statutes the only way in which a mortgage can be terminated as between the parties to it is by the act of the parties themselves by merger or by an order of the Court
The maxim once a mortgage always 1 AIR 1954 SC 336
295 a mortgage applies
Therefore when the defendant entered upon possession he was there as a mortgagee and being a mortgagee the plaintiffs have a right to redeem unless 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 section 90 of the supports this assumption
Learned counsel for the appellants relied upon the decision of the Judicial Committee in Malkarjun Bin Shidramappa Padare vs Narhari Bin Shivappa 1 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 execution of a decree against the mortgagor and the plaintiff neglected or refused to pray that it might be set aside
The Judicial Committee held that an execution sale could not be treated as a nullity if the court which sold it had jurisdiction to do so and it could not be set aside as irregular without an issue raised for that purpose and investigation made with the judgment creditor as a party thereto
That was not a case where the mortgagee who had an obligation to discharge under the mortgage deed made a default with the result the
property was sold and purchased by the mortgagee himself
The proposition enunciated by the Judicial Committee would apply to a case where the equity of redemption was extingui shed by the court sale
This may apply to a case where the mortgagee after obtaining leave to bid purchases at a sale in execution of his decree or a decree obtained by a third party
In such a case there may be scope for the argument that the equity of redemption is extinguished and therefore the mortgagor cannot get relief till the sale is set aside in the manner known to law
But when the sale is 1 1900 LR 27 IA 216
296 brought about by the default of the mortgagee the mortgage is not extinguished and the relationship of mortgagor and mortgagee continues to exist and therefore there will not be any necessity for setting aside the sale
The legal position may be stated thus 1 The governing principle is once a mortgage always a mortgage till the mortgage is terminated by the act 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 concurrent findings arrived at by the courts below
All the courts concurrently found that in fact possession was delivered to the mortgagee on the basis of the mortgage deed exhibit B They have also found that the plea of discharge taken by the appellants was not true
The High Court found that under the mortgage deed the mortgagee had a duty to pay the arrears of rent to the landlord but he made a default in paying the said arrears
The High Court farther held that the sale was the result of manifest dereliction of the duty imposed upon the mortgagee by the very terms of the transaction
The said findings clearly attract the provisions of section 90 of the 
In view of the aforesaid principles the right to redeem the mortgage is not extinguished and in the eye of law the purchase in the rent sale must be deemed to have been made in trust for the mortgagor
In the promises the High Court was right in holding that the suit for redemption was maintainable
297 No other point was raised before us
The appeal fails and is dismissed with costs
Appeal dismissed


Summary:
Usufructuary mortgage bond was executed in favour of the father of the appellant who was put in possession of the mortgaged property
One of the terms of the usufructuary mortgage was that in case of failure of payment of rent by the mortgagor the mortgagee was to pay off the arrears of rent to the landlord which obligation the mortgagee did not honour as a result of which the property was brought to sale and ultimately purchased by the mortgagee
The mortgagor filed a suit against the mortgagee the appel lant s father for redemption of the mortgage and or possession
 The defence inter alia was that the mortgagee had purchased equity of redemption in execution of the rent decree and that the mortgagor had no longer any right to sue him for redemption and their remedy if any was to sue for setting aside the sale on the ground of fraud or otherwise
Held that section go of the Trusts Act read with the illustration c lays down the principle that no one can be allowed to benefit for his own wrongful act
Held further that the legal position with regard to mort gagor and mortgagee was that 1 the governing principle is that once mortgagee 291 always a mortgagee till the mortgage is terminated by the act of the parties themselves by merger or by order of the Court 2where 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 and 3where 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
In the instant case the right to redeem the mortgage was not extinguished and in the eyes of law the purchase in the rent sale was deemed to have been made in trust for the mortgagor and the suit for redemption was maintainable
Sidhakamal Nayan vs Bira Naik AIR 1954 SC 336 relied on
Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa 1900 LR 27 IA 216 distinguished