Account-Mortgagee in possession-s-Suit for redemption-Account as to rents
and profits

Mortgage and Charge-Mortgagee in possession-s-Account-s-Rents and profits
received by a mortgagee in possession

Mortgage and Charge-s-Redemption-s-Notice of intention to redeem-Whether
required as against a transferee of the mortgage-Whether the commence-
ment of redemption proceedings may constitute proper notice

1. Three months notice of intention to redeem mortgaged property as
required by Civil Justice Ordinance, s. 119 (2) (b), is sufficient if given to
the mortgagee, and a transferee, particularly where no formal notice of the
transfer has been given to the mortgagor, has no right to insist that the
mortgagor deal with her in matters relating to the mortgage.

2. The notice of intention to redeem mortgaged property which is re-
quired by Civil Justice Ordinance, s. 119 (2) (b), need not be in writing,
and the commencement of an action for redemption which was dismissed
for failure to meet the three months notice requirement was itself sufficient
notice of intention to 1 cdeern so that the mortgagor could, three months
thereafter, successfully institute a new redemption action.

3. The duty of a mortgagee in possession to account for rents and
profits in a foreclosure or redemption action, as provided by Civil Justice
Ordinance, s. 123, applies to all mortgages of non-agricultural property, and
applies even though it was the intention of the parties to create a cus-
tomary mortgage . onder which the mortgagee took possession from the be-
ginning and was ) be entitled to all rents and profits until the mortgage was paid off.         

Civil Justice Ordinance 1929, ss. 119 (2) (b), 123.

Action

February 1 \ 1938. Flaxman J.: This is the second action
brought by plair tiff, the proprietor of plot No.2 (2) in block 6 F
West, Khartour.i City, against the defendants. This property was
mortgaged to first defendant on April 13, 1933, to secure a sum of
£E.60 and the charge was transferred to second defendant by the
mortgagee on April 11, 1937 and the transfer duly registered.

The plaintiff seeks to exercise her right to redeem and asks for
an account. In the first action her claim was dismissed for lack of the

••. Court: Flaxman J.

notice required by section) 19 (2) (b) of the Civil Justice Ordinance
1929. She has now raised this suit and once again a lack of the re-
quired notice is pleaded on behalf of the second defendant. Issues
to determine this point have been framed as follows:

1. Was plaintiff bound to give second defendant notice of an
   intention to redeem?
2. If so, did plaintiff give second defendant proper notice of such
   intention?

The issues raised an arguable point which I have found more
difficult to determine than it's apparently simple nature indicates. The
second defendant is the transferee of the mortgage and it is admitted
that, in spite of the advisability of such a step where the transfer of a
mortgage is concerned, no formal notice of the transfer was given to
the mortgagor. It is of course as obvious that she knew of the transfer
before she raised these suits as it is obvious that second defendant
knew perfectly well for months before this action was raised that
plaintiff intended to redeem. The defence is a quibble, but never-
theless one which I cannot dismiss summarily and without reference
to law.

The relative provisions of the Civil Justice Ordinance 1929 are.
contained in section 119 (2) which reads:

"Where a time. for the payment of the principal money is
not specified in the mortgage deed or where such time is so
specified and the mortgagor has not exercised his rights to redeem
at the expiration of such time, the mortgagor shall not be en-
titled to redeem:

(b) if the property mortgaged is land other than agricul-
tural land and the mortgagee has entered into possession in ac-
cordance with the terms of the mortgage deed unless the mortga-
gor has given to the mortgagee three months notice of his inten-
tion to redeem."

It is admitted that the plaintiff has now given notice as required
above to the first defendant, the mortgagee, and I consider that this
notice is all that the transferee is entitled to demand from the mort-
gagor. The assignee is in no better position than the assignor. The
latter is still, in spite of the assignment, liable to account to the plaintiff
for profits, and I do not consider that the transfer, particularly without

formal notice, gives the transferee the right to insist that the mortgagor
must deal with her in matters relating to the mortgage.

This view may be incorrect. Even so, I am of opinion that there
has been sufficient notice to second defendant of an intention to
redeem by the fact of the institution by the mortgagor of the first suit.
The section above referred to does not, as in the case of it's succeed-
ing section, require the notice to be in writing.

I take the reason for notice to be that a mortgagee should have a
reasonable time to find another security for his money; and where he
is in possession, so that he may find another place for himself or his
tenant before he must retransfer the property to its owner. The no-
tice provided by the first suit should have given the transferee notice
that the plaintiff intended to redeem, and had in fact taken a practical
step towards redemption. Nothing appears in evidence to show that
the plaintiff intimated to second defendant any alteration of the in-
tention, and I feel convinced that the purpose of the section was
served by the institution of the first suit. If the second defendant was
entitled to notice she has received it.

In view of this finding it seems unnecessary to consider the ques-
tion of whether or not tbere was effective notice to second defendant
after the institution of the first suit.

Issue 3 is: "Are defendants, or either of them, as mortgagees in
actual possession, bound to account to plaintifI?"

It is submitted ':>y first defendant that he 'is not bound to account.

He refers to the terns of the original instrument of charge which I
assume to have bet n in the usual form prescribed by the Land Settle-
ment and Registration Ordinance 1925 for a charge with possession,
and which recites that "he shall be entitled to enter into possession
and receipt of the rents and profits of the said land until the said sum
and costs and e:' penses have been paid and the said land redeemed."

For the pla mtiff it is submitted that it is clear from the provisions
of section 123, C.I.O., that a mortgagee in possession is bound to
account and that she is entitled to have an account taken. The second
defendant raises no objection to such an account.

I think it is clear from section 123, C.I.O., that a mortgagee in
possession is bound to account for rents and profits or for a fair
occupation rent, whether the mortgage agreement was for possession
and the possession was from the outset, or whether as the proprietor