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Hirachand Himatlal Marwadi Vs. Kashinath Thakurji Jadhav - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 194 of 1941
Judge
Reported inAIR1942Bom339; (1942)44BOMLR727
AppellantHirachand Himatlal Marwadi
RespondentKashinath Thakurji Jadhav
DispositionAppeal allowed
Excerpt:
.....to suit for want of notice whether constitutes waiver--agreement for mortgage whether creates charge over property--indian registration act (xvi of 1908), section 17.;it is open to the party protected by section 80 of the civil procedure code, 1908, to waive his right to notice, and his waiver binds the rest of the parties. but only he can waive notice; and a party who has himself no right to notice cannot challenge a suit on the ground of want of notice to the only party entitled to receive it.;raghubans sahai v. phool kumari (1905) i.l.r. 32 cal. 1130, 1134, followed.;delay in objecting to a suit, on the ground of want of notice under section 80, howsoever long, would not necessarily by itself be a ground for holding that the notice had been waived; but if any prejudice to the..........to certain obligations with respect to paying off the defendant's debts, and the other was an agreement to mortgage the cinema houses within three months. on july 9, 1937, defendant no, 3, another of the creditors, obtained a lease of the rainbow talkies from the defendant; and on july 16 defendant no. 4 obtained a mortgage of the same property from the defendant. on august 11, 1937, an application in insolvency was made against the defendant by one bhaurao kokate. on the same day the defendant was adjudicated insolvent and receivers were appointed, now represented by defendants nos. 2a and 2b in this suit. the plaintiff has sued for specific performance from the receivers of his agreement for a mortgage and also for a declaration of the priority of his agreement over the lease of.....
Judgment:

Macklin, J.

1. This appeal arises out of an agreement for a mortgage. The plaintiff was one of the creditors of defendant No. 1 for a substantial amount, and defendant No. 1 is the proprietor of two cinema houses in Poona city, one of which is known as 'Rainbow Talkies'. On June 1, 1937, at a time when defendant No. 1 was considerably indebted to the plaintiff, he executed two documents in favour of the plaintiff on the same day and registered them both. The first was a document giving the plaintiff the right to temporary possession of the cinema houses subject to certain obligations with respect to paying off the defendant's debts, and the other was an agreement to mortgage the cinema houses within three months. On July 9, 1937, defendant No, 3, another of the creditors, obtained a lease of the Rainbow Talkies from the defendant; and on July 16 defendant No. 4 obtained a mortgage of the same property from the defendant. On August 11, 1937, an application in insolvency was made against the defendant by one Bhaurao Kokate. On the same day the defendant was adjudicated insolvent and receivers were appointed, now represented by defendants Nos. 2A and 2B in this suit. The plaintiff has sued for specific performance from the receivers of his agreement for a mortgage and also for a declaration of the priority of his agreement over the lease of defendant No. 3 and the mortgage of defendant No. 4. He won his suit on these three points, and defendant No. 3 now comes in appeal. No one else has appealed, and the only parties to the appeal are the plaintiff-respondent and the appellant-defendant No. 3.

2. By way of a preliminary objection to the appeal, it was contended that the appeal was incompetent by reason of the receivers not being upon the record of the appeal. It is argued that the decree as between the plaintiff and the receivers must stand as they have not appealed, and that Rule 20 of Order XLI of the Civil Procedure Code applies to this case, so that the receivers, being 'interested' in the result of the appeal, are proper, if not actually necessary, parties to it. It is also said that although the Court's powers in appeal are wide, it ought not to give a decree in favour of any party to the suit who has not been made a party to the appeal. The latter contention seems to be contrary to the provisions of Rule 33 of Order XLI. As to the first contention, even if the decree as between the plaintiff and the receivers is to stand, it does not follow that the receivers are necessary parties because they are interested in the result of the appeal. They are merely officers of the Court, and it is difficult to see what interest they have in the result. And even if the decree does stand as against them so that the plaintiff is entitled to get specific performance of his agreement for a mortgage, it does not follow that as between the plaintiff and defendant No. 3 the plaintiff's mortgage will be given priority; and the priority which the trial Court has given to the plaintiff over defendant No. 3 is the only objectionable feature of the lower Court's decree, so far as defendant No. 3 is concerned.

3. The first point taken in this appeal is concerned with want of notice to the receivers under Section 80 of the Civil Procedure Code. A receiver is a 'public officer' within the meaning of Section 80 and is entitled to two months notice of any suit in which 'any act purporting to be done by him in his official capacity' is challenged. An act in this sense includes an illegal omission, i.e. a breach of his official duty; and it is argued that in this case the receivers by the very nature of their office were bound to give the plaintiff specific performance of the plaintiff's agreement with defendant No. 1. It is well settled and is conceded that the party in whose favour the section prescribes notice to be given can waive his right to notice. But in terms there has been no waiver here; and defendant No. 3 argues that the receivers cannot even be deemed to have waived it, and that being so, the suit was bad in its inception and should have been dismissed as against all the defendants, and must be dismissed now.

4. But even assuming for the sake of argument that this is a case to which Section 80 applies, we decline to accept the objection for two reasons. In the first place defendant No. 3 is not the proper party to raise it, and in the second place the receivers in our opinion must be deemed to have waived their right to notice. It is open to the party protected by Section 80 to waive his rights, and his waiver binds the rest of the parties. But only he can waive notice, and if that is so, it is difficult to see any logical basis for the position that a party who has himself no right to notice can challenge a suit on the ground of want of notice to the only party entitled to receive it. We think therefore that this ground of attack is not open to defendant No. 3; and for our view on this point direct support may be obtained from Rughubans Sahai v. Phool Kumari (1905) I.L.R. 32 Cal. 1130.

5. Assuming however that it is open to defendant No. 3 to take this point, we think that the receivers must be deemed to have waived their right to notice. On this point three cases were cited to us. In Manindra Chandra v. The Secretary of State (1907) 5 C.L.J. 148 it was held that the Secretary of State must be deemed to have waived his right to notice because objection to the suit on the ground of want of notice was not taken till three years from the beginning of the suit and after the plaintiff's case had been closed. In Bhola Nath Roy v. Secretary of State far India (1912) I.L.R. 40 Cal. 503 it was held that waiver was established because no issue as to the suit being defective for want of notice had been raised at all and no objection to the suit on that ground was taken until a very late stage just before the actual trial. It does not appear from the report whether any prejudice on the ground of limitation or otherwise had been actually caused to the plaintiff. But in Murarilal v. E.V. David (1924) I.L.R. 47 All. 291 where objection as to want of notice was not taken in the written statement but was taken before the trial and no prejudice had been caused by the delay to the plaintiff, it was held that the defendant could not be deemed to have waived his right to notice. One rule that seems to be deducible from these cases is that any prejudice to the plaintiff caused by the delay would result in the defendant being deemed to have waived his right to notice, even though delay, however long. would not necessarily by itself be a ground for holding that he had waived it. In the present case the objection was not taken at all until March 24, 1941, two years after the issues were first framed; and by that time the plaintiff's rights under the Specific Relief Act were barred. In view of these findings the question whether notice was or was not necessary in this particular case need not be considered.

6. The next contention of the appellant-defendant No. 3 is that his rights are protected by the fact that he had no notice of the plaintiff's agreement for a mortgage. Admittedly he did not receive actual notice. But the plaint mentioned the fact of the plaintiff's agreement having been registered as one ground of constructive notice having been given to defendant No. 3; and it was also alleged that he had constructive notice by the fact that the plaintiff got possession of the property under his other agreement of June 1, 1937. The plaintiff's possession, besides being inconspicuous, would not in this case give constructive notice to defendant No. 3 within the meaning of Section 3 of the Transfer of Property Act, because admittedly it came to an end before defendant No. 3's lease was executed. As to the fact of its being registered giving defendant No. 3 constructive notice (and admittedly it was registered with all necessary formalities), the answer to the question would depend, according to the definition in Section 3 of the Transfer of Property Act, upon whether the plaintiff's agreement for a mortgage was or was not compulsorily registrable.. If it was compulsorily registrable and was in fact properly registered, then defendant No. 3 must be deemed to have received constructive notice; otherwise not. Ultimately the question depends upon whether the plaintiff's agreement creates a charge upon the property. If it creates a charge, then it would have to be registered. But I may point out that no question of priority arises at all, unless the plaintiff has a charge over the property by reason of his agreement. If it gives him no charge, then it is merely a document giving him a' right to receive another document, and obviously cannot give him priority over defendant No. 3's registered lease of the property.

7. An issue was framed by the trial Court dealing with the question of charge. and the formal finding is that the agreement for a mortgage gave the plaintiff a charge over the property. But in the judgment the only passage in support of the finding appears to be one in which the learned Judge says that the agreement gave the plaintiff an equitable mortgage because the money had already been Advanced. Herein he seems to be clearly wrong. It is true that in Jewan Lal Daga v. Nilmani Chaudhuri (1927) 30 Bom. L.R. 305, P.C. the Privy Council described an agreement for a mortgage as being a 'valid agreement charging the property.' But the question of charge was not before their Lordships, and the reason for granting specific performance of the agreement was that it was a valid agreement, not that it created a charge. In Maneklal v. Satraspur . (1926) 29 Bom. L.R. 253 the question of an agreement for a mortgage giving a charge over the property was considered, though not definitely decided; and the remarks to be found in the judgment on the point indicate that, whatever may be the position in English law, such an agreement does not under Indian law give rise to a charge. That it does not ordinarily give rise either to an equitable mortgage or to a charge was definitely stated in W(1937) 40 Bom. L.R. 545aman v. Janardhan . Indeed outside the Presidency towns even deposit of title deeds will not give rise to an equitable mortgage (see Konchadi Shanbhogue v. Shiva Rao (1904) I.L.R. 28 Mad. 54. Prima facie therefore the plaintiff does not obtain a charge over the properties and in consequence priority over defendant No. 3 by reason of his agreement for a mortgage.

8. But on behalf of the plaintiff it is argued that we ought to read the agreement for a mortgage along with the other document executed on the same day, namely the document under which the plaintiff gave limited possession for four months to defendant No. 3 upon certain conditions. Quite apart from the difficulty of construing one document by reference to another, it is, I think, enough to say that upon the strength of his agreement for a mortgage it would have been impossible for the plaintiff to obtain a decree for sale of the property in satisfaction of the debt and that we cannot read into that document any intention to create a charge at all. That being so, the plaintiff is not entitled to priority over defendant No. 3, even if he gets specific performance of his agreement. It is therefore unnecessary to consider the further point taken by the appellant, namely that this is not a fit case for the grant of specific performance.

9. The result is that the appeal is allowed with costs, and the plaintiff's suit must be dismissed as against defendant No. 3. As defendant No. 3 opposed the suit on every point and put the plaintiff to the trouble of proving his debts, he must bear half his costs of the suit and the plaintiff must pay the other half. The declaration as to priority of the plaintiff over defendant No. 3 must be deleted from the decree of the trial Court, and so must the clause as to the plaintiff getting possession on the execution of his mortgage and surrendering possession to defendant No. 3 when his mortgage is paid off. The trial Court is directed to make such provisions in the mortgage deed as will protect the priority of defendant No. 3, and the mortgage to be executed in favour of the plaintiff must provide that possession shall be postponed until such time as it is possible for him to get possession, having regard to the terms of defendant No. 3's lease. In other respects the order of the trial Court is confirmed.


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