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Ganesh Narayan Khare Vs. Gopal Vishnu Apte - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 1017 of 1915
Judge
Reported inAIR1916Bom61; (1917)19BOMLR75
AppellantGanesh Narayan Khare
RespondentGopal Vishnu Apte
Excerpt:
.....of the court-sale binding on mortgagor-interest of mortgagor's son in the property not affected by sale-redemption of son's share-indian trusts act (ii of 1882), section 90.;a mortgagee obtained a decree against the mortgagor on a claim independent of the mortgage and assigned it to a benamidar of his. the equity of redemption in the mortgaged property was sold in execution of the decree and purchased at a fair price by another benamidar of the mortgagee. shortly afterwards, the second benamidar transferred his right to the mortgagee. the mortgagor and his son having sued to redeem the mortgage :-;(1) that inasmuch as the equity of redemption fetched at the sale a very good price the case did not fall within the rule of martand v. dhondo (1897) i.l.r. 22 bom. 624; and that even if it..........to have purchased without the leave of the court. but if the mortgagee is purchasing not under a mortgage sale of which he has the conduct, as would be the case under a power of sale contained in an english mortgage, then the prohibition upon purchasing is only to be found in the civil procedure code, order xxi, rule 72, which is a reproduction of section 294 appearing first in the code of 1877. the learned counsel for the respondents sought to base his case upon the decision of mr. justice macpherson in section m. kamini deli v. ramlochan sirkar (1870) 5 blr 450 in 1870. but that was a case where a simple money decree had been obtained for money which was secured by the mortgage. it was, therefore, not a case of a decree for a claim independent of the mortgage, as it is here and the.....
Judgment:

Basil Scott, Kt., C.J.

1. The claim of the plaintiff's in this suit is to redeem and recover the plaint property. They allege that the plaintiff No. 1 (since deceased) mortgaged the property with possession to defendant No. 1 by a deed dated the 7th September 1888 and that the cause of action arose in September 1893. The defendants admit the mortgage, but say that in 1902 the right of redemption was sold in execution of a decree of one Mahadeo Vithal Lagu and was purchased by one Eaghunath Krishna Tilak from whom it was purchased by the defendant No. 1 on the 20th December 1902.

2. The learned trial Judge finds that in 1897 the 1st defendant brought a suit against the mortgagor for a claim independent of the mortgage and obtaining a decree assigned it to Mahadeo Vithal Lagu. Lagu, in execution, attached the equity of redemption in the mortgaged property. The purchaser at the auction sale was Eaghunath Krishna Tilak and Eaghunath in the same year transferred his right to the 1st defendant. The lower Court finds it proved that the assignment of the decree to Lagu and the purchase by Eaghunath Tilak were benami for the 1st defendant. The lower Court, however, held that the purchase by the 1st defendant was valid until it was set aside and not having been set aside in execution proceedings was binding upon the plaintiffs and he allowed the claim for redemption only in respect of the share of the 2nd plaintiff, the son of the original mortgagor.

3. From that decree an appeal was preferred to the lower appellate Court and in the memorandum of appeal the finding that the decree was in respect of a claim independent of mortgage was not challenged. The lower appellate Court reversed the decree of the trial Court and remanded the case for taking accounts on the footing that both mortgagors should be allowed to redeem. The ground of the decision appears to be this, that it being established that the defendant No. 1 who was a mortgagee had purchased the mortgaged property benami, he must have purchased it without leave to bid and therefore, the mortgagor could disregard the sale and could redeem. Apparently at the base of this conclusion is the idea that there must' have been some fraud and that fraud would make the sale void and not voidable. In my opinion the conclusion of the lower appellate Court is wrong.

4. It has been argued on behalf of the respondents that the case upon these facts is practically identical with that of Mar-tand v. Dhondo I.L.R. (1897) Bom. 624. As appears, however, from the judgment in that case and the subsequent case of Hussein v. Shankargiri I.L.R. (1898) Bom. 119 it was established that the mortgagee by an improper use of his position had obtained the equity of redemption at an under-value at a Court sale. That is by no means proved here. The auction proceedings are on the record which show that the equity of redemption of the property which had been mortgaged for Rs. 475, fetched Rs. 234 gross and 214 net and that there were thirteen bidders of whom the benamidar for the defendant No. 1 was the highest. The bid amounted to half the amount for which the property had been mortgaged and even if we assume that the property was not mortgaged for more than 2/3rd of its value, not a very likely assumption in the Deccan, the equity of redemption must be held to have fetched a very good price. There is, therefore, no reason for treating the case on its facts as on all fours with Martand v. Dhondo I.L.R. (1807) Bom. 624. Even, however, if it could be so treated, that would be no justification for holding that the mortgagor was entitled to treat the sale as a nullity. The decision of the Privy Council in Khiarajmal v. Daim I.L.R. (1904) IndAp 23, shows that where the debt sued for in the suit in which the decree resulting in the judicial sale is passed is not for the mortgage debt, the fact that the mortgagee purchased would not be a reason for holding that the sale was a nullity for want of jurisdiction, but a casts of irregularity in procedure only. In this connection the observations of the Judicial Committee in Malkarjun v. Narhari I.L.R. (1900) Bom. 337 are also very pertinent. It was observed there by Lord Hobhouse in delivering the decision of the Court that ' if the sale is a reality at all, it is a reality defeasible only in the way pointed out by law.'

5. If the mortgagor's case is rested upon the provisions of Section 99 of the Transfer of Property, Act, before it was amended and transferred into the Civil Procedure Code, the answer is the same. For it has been held in more cases than one that the violation of the provisions of Section 99 in bringing the mortgaged property to sale upon a money decree unconnected with the mortgage is an irregularity and does not justify the Court in holding that the sale is a nullity : see Lal Bahadur Singh v. Abharan Sing I.L.R. (1915) All. 165.

6. But then it has been contended that the mortgagee is merely a trustee for the mortgagor because he is held to have purchased without the leave of the Court. But if the mortgagee is purchasing not under a mortgage sale of which he has the conduct, as would be the case under a power of sale contained in an English mortgage, then the prohibition upon purchasing is only to be found in the Civil Procedure Code, Order XXI, Rule 72, which is a reproduction of Section 294 appearing first in the Code of 1877. The learned Counsel for the respondents sought to base his case upon the decision of Mr. Justice Macpherson in Section M. Kamini Deli v. Ramlochan Sirkar (1870) 5 BLR 450 in 1870. But that was a case where a simple money decree had been obtained for money which was secured by the mortgage. It was, therefore, not a case of a decree for a claim independent of the mortgage, as it is here and the learned Judge in that case thought he was justified in applying the rule to be deduced from the English cases relating to sales where the seller has the conduct of the sale, such as sales under mortgages by mortgagees.

7. With regard to purchases by judgment creditors without leave of the Court Lord Hobhouse delivering the decision of the. Judicial Committee in Mahomed Meera Ravuthar v. Sawaai Vijaya Rughunadha Gopalar I.L.R. (1899) IndAp 17, made the following observations in connection with another Calcutta case of Sheo nath Doss v. Janki Prosad Singh I.L.R. (1888) Cal. 138. He said 'In this case the Calcutta High Court dwelt on the necessity of great caution in granting leave to bid; indeied, it laid down such conditions as would make the granting of leave a very rare thing, instead of being, as their Lordships believe it is, a very common thing. These conditions are drawn from English practice, partly from cases in which the applicant was a trustee or solicitor for the debtor and they are applicable to a system under which the decree-holder has the conduct of the sale Doubtless the conduct of the sale gives opportunities for influencing its course one way 'or another, which do not follow on the mere leave to bid. The Civil Procedure Code clearly throws on the Court the whole responsibility of conducting the sale.' In view of these considerations it is difficult if riot impossible to apply the provisions of Section 90 of the Indian Trusts Act to the holder of a simple money decree not based upon a mortgage. It is not a rule of universal application that a Judgment creditor should not bid at a sale under his decree, for example under Section 173 of the Bengal Tenancy Act of 1885 the judgment creditor is expressly authorised to bid.

8. It appears to me that disregard of the statutory provision that leave to bid should be obtained by a judgment creditor is merely an irregularity of practice and is not a fundamental breach of trust which nullifies the apparent effect of the Court sale. It only makes the sale voidable according to the provisions of the rule of the Civil Procedure Code. But the application to set aside the sale upon that ground must be made within the period of limitation and thiat has not been done here.

9. The question remaining to be decided is what was in fact sold by the Court in 1902. That is substantially a question of fact. depending upon the evidence of the documents in the execution proceeding and it can only be treated as a question of law arising for disposal in second appeal on the basis of its involving the construction of the sale certificate. In our opinion the sale certificate is not free from ambiguity. It states that the whole property has been mortgaged by the defendant and that the defendant's right of redemption is sold. That does not in terms exclude any other existing right to redeem which there may have been in some other Co-parcener. We are, therefore, not prepared to hold that the learned Judge of the trial Court was wrong in the conclusion he came to, that the 2nd plaintiff's share in the equity of redemption remained unaffected. We set aside the decree of the lower appellate Court and restore that of the trial Court. As to costs, we think that each party should bear his own costs of his appeal, but that the costs in the lower appellate Court should be borne by the present respondents. With regard to other costs, they are provided for in the judgment of the trial Court.

Heaton, J.

1. I entirely agree that the sale of the equity of redemption which took place in 1902 cannot be treated as nonexistent. It never was set aside in the way provided by law either by application or by suit. The Judge of first appeal recognises this, but he regarded the case as one, at least this is how I read his judgment, in which the mortgagee, in the peculiar circumstances of the case, had bought, not for himself, but as trustee for the mortgagor. He regarded tha sale, therefore, as a perfectly good sale, but one under which the interest really belonged to the mortgagor and not to mortgagee. He based this conclusion on the case of Martand v. Dhondo I.L.R. (1897) Bom. 624 but he did not find all the facts to exist which would enable the reasoning in Martand v. Dhondo to apply. If a case of the kind considered in Martand v. Dhondo arose now, we should, I apprehend, have to apply Section 90 of Trusts Act and the first thing to do would be to find whether facts existed which made Section 90 of the Trusts Act applicable. Such facts are not stated in the judgment of the Judge of first appeal, nor do they appear to exist. It seems to me, therefore, that the decision of that Judge is wrong. But supposing there had in truth appeared facts which did bring the case within Section 90 of the Trusts Act, then in my opinion the decision might perhaps have been different, though. I do not wish to express a positive opinion upon that point, for it is unnecessary to do so.


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