Case: Mritunjoy Pani And Another Vs. Narmanda Bala Sasmal And Another

said obligation he purchases the property for himself, he stands in a fiduciary relationship 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 memo habere debet, that is, convenience 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 v. Bira Naik, AIR 1954 SC 336 . There, as here, a mortgagee in possession of a tenants 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 S. 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 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 S. 90 of the Indian Trusts Act supports this assumption.6. Learned counsel for the appellants relied upon the decision of the Judicial Committee in Malkarjun v. Narhari, 27 Ind App 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 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 mortgagee 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 extinguished 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 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.7. 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 mortgagor 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 purchases of the equity of redemption is only in trust for the mortgagor.8. Lot us now apply the aforesaid principles to the concurrent findings rived 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, Ex. 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 further 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 S. 90 of the Indian Trusts Act. 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 premises, the High Court was right in holding that the suit for redemption was maintainable.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]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.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 mortgagor 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 purchases of the equity of redemption is only in trust for the mortgagor.8.us now apply the aforesaid principles to the concurrent findings rived 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, Ex. 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 further 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 S. 90 of the Indian Trusts Act. 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 premises, the High Court was right in holding that the suit for redemption was maintainable.