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Chandri Ayal Abdul Haji Sajan Vs. Abdul Karim Lalbhai Shet - Court Judgment

LegalCrystal Citation
Decided On
Case NumberFirst Appeal No. 172 of 1925
Reported in(1926)28BOMLR1360
AppellantChandri Ayal Abdul Haji Sajan
RespondentAbdul Karim Lalbhai Shet
DispositionAppeal allowed
.....mortgaging the property vested in her without the leave of court-validity of such mortgage-suit by mortgagee-beneficinrise in the mortgaged properly whether necessry parties to the suit-civil procedure code (act v of 1908), order xxxi, rule 1 ; order xxxiv, rule 1.;plaintiff sued to recover the amount due on a mortgage-bond passed by defendant, a mahomedan woman, as administratrix of the estate of her deceased husband. defendant was a boneficiary in the property mortgaged to the extent of two annas s the remaining fourteen annas belonged to her children. she contended that the mortgage was executed without the leave of the court as required by section 90 of the probate and administration act, and that the other beneficiaries were necessary parties to the suit. the plaintiff..........a payment of the balance out of their other assets. moreover, the rate of interest fixed in the suit mortgage was as high as 15 per cent.5. putting oneself in the position of a chamber judge, to whom any such application for a mortgage might have been made i am satisfied that it would have been quite improper on his part to have sanctioned a mortgage for rs. 16,000. at 15 per cent, when the only specific debts shown were rs, 9,000 odd. as regards these marriage expenses, it must be borne in mind, in the first place, that a beneficiary ought not to spend the whole of his patrimony over marriage expenses. in any event the entirety of the balance 6ver the rs, 9,000 ought not to be spent for the benefit of two of the beneficiaries to the detriment of the minor beneficiary.6. further,.....

Amberson Marten, Kt., C.J.

1. The plaintiff-respondent brought this suit to recover on a mortgage bond, dated August 22, 1922, the sum of Rs. 16,000 for principal and Rs. 2,500 for interest 'at 15 per cent., making together Rs. 18,500 with costs and future interest by selling the mortgage property. The main point before us is, whether this mortgage bond can be enforced in the present suit as has been decided in the affirmative by the trial Judge. The defendant-appellant, who is an illiterate Mahomedan woman, is the widow and administratrix of one Abdul Haji Sajan, who died in January 1918. Letters of Administration to her husband's estate were granted to her by this High Court on December 6, 1918. The mortgage property in question is not her sole property. Her interests in it are solely as administratrix and as beneficiary to the extent of two annas. The remaining fourteen annas in the property belong to her three children, two of whom are adults and one a minor. None of her children are parties to this suit.

2. The first point is that the leave of the Court to mortgage the property was not obtained under Section 90, Sub-section (3), of the Probate and Administration Act, which provides:

An administrator may not, without the previous permission of the Court by which the Letters of Administration were granted,-mortgage, charge or transfer by sale, gift, exchange or otherwise any immoveable property for the time being vested in him under Section 4.

3. Admittedly there was no express order of the Court granting the widow permission to mortgage this property for Rs. 16,000. But what the plaintiff relies on is an order of the Court of October 10, 1921, Exhibit 48, giving leave to sell for the sum of Rs. 16;000. It will be seen from the petition, Exhibit 50, asking for that order that the petitioner there alleged that the estate owed debts to the extent of Rs. 9.210 and that she wished to provide for the marriage expenses of her two children, Mohidin and Nurbai.

4. It is argued that a mortgage is less than a sale : that the greater includes the less ; and that, consequently, the existing order for sale authorised the mortgage. In the view I take this is a fallacy, The evidence before the Court, when making the order of October 1921, was to the effect that the property was worth some Rs. 14,912, Consequently, a mortgage for Rs. 16,000 would be more than the estimated value of the property. And, if the property on enforcement of the mortgage did not realise the full Rs. 16,000, then it would be open to the mortgagee to proceed personally against the beneficiaries, and in that way to obtain a payment of the balance out of their other assets. Moreover, the rate of interest fixed in the suit mortgage was as high as 15 per cent.

5. Putting oneself in the position of a Chamber Judge, to whom any such application for a mortgage might have been made I am satisfied that it would have been quite improper on his part to have sanctioned a mortgage for Rs. 16,000. at 15 per cent, when the only specific debts shown were Rs, 9,000 odd. As regards these marriage expenses, it must be borne in mind, in the first place, that a beneficiary ought not to spend the whole of his patrimony over marriage expenses. In any event the entirety of the balance 6ver the Rs, 9,000 ought not to be spent for the benefit of two of the beneficiaries to the detriment of the minor beneficiary.

6. Further, speaking for myself, I have in Chambers refused to grant orders for sale by Mahomedan or Hindu widows where there were infants involved, unless provision was made for the share of the infants being paid into Court, or otherwise secured for their benefit. I may add that it has been contended before me that, under the Probate and Administration Act, the Court has no power to make any such condition. It can either refuse or grant an application but not make conditions. But be that as it may, and whether, as regards the order for sale, any such provision should have been made for safeguarding the interests of the minor beneficiary that affords no reason, to my mind, that we should treat the Court as having by that order for sale ordered something which was never even suggested to it, viz., a mortgage for a larger amount than the estimated value of the estate and without any necessity being shown for such a large sum being raised on the mortgage.

7. It was urged before us that the mortgagee was entitled to rely on this order, and was not bound to inquire into the circumstances under which it was made, and for that purpose Gangapershad Bahu v. Maharani Bibi I.L.R. (1884) 11 Cal. 379 was cited to us. There their Lordships of the Privy Council say (p. 384):-

Therefore, as regards the principal of this loan, it is sufficient for the plaintiff to say: 'I have got the order of the Court.' But when he cornea to the rate of interest he has not got the order of the Court; and if he chooses to lend his money without an order that binds the infant's estate, then it is for him to show that the matter was one of necessity, or of clear expediency for the benefit of the infant's estate,

8. Now that case was not one under Section 90 at all. And, moreover, there was a clear order of the Court allowing certain money to be raised by mortgage, but it did not specify the rate of interest. In fact, the rate of interest charged was 18 per cent., and the Court there reduced that rate to one of 12 per cent. To some degree, therefore, that case, so far from being in favour of the respondent, is against him. It cannot be suggested here that any such rate as 15 per cent, was ever authorised by the Court.

9. The next point, taken by the respondent was that it was not open to the present defendant, the administratrix, to raise this point. It was said that a mortgagor cannot derogate from her grant, and that in particular under Section 90, Sub-section (4), it is only at the instance of 'some other beneficiary' that a point can be raised ; and that, moreover, the mortgage in question is not void, but is only voidable, and at the instance of such a beneficiary. But, in the present case, the curious circumstance is that the beneficiaries actually applied to be added as parties. That will be found in the petition, Exhibit 60, of September 4, 1924. In that application they expressly raised the point that the administratrix had nut obtained the sanction of the Court to that mortgage. The learned Judge decided the application adversely to the applicant in these words :-

Plaintiff does not) wish to make these persons as parties. I do not think this is a case where She court could interfere. I therefore do not grant the application.

10. In our opinion, that decision of the learned Judge was wholly wrong. Not only had ha ample power under the Code to add these persons as parties if he wished, but, in our opinion, it was his clear duty as a matter of justice and fairness so to do. 'Order I, Rule 10, Sub-rule (2), gives power to the Court at any stage of the proceedings and either upon or without the application of either party to add as plaintiff or defendant ' any person whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit.' Here the real question in the suit was whether the mortgage could be enforced against the persons who were entitled bentficially to fourteen annas in the property.

11. Next, if one turns to Order XXXI, Rule 1, no doubt, it states that :-

In all suits concerning property vested in a trustee, executor or administrator, where the contention is between the persons beneficially interested in such property and a third person, the trustee, executor or administrator shall represent the persons so interested, and it shall not ordinarily be necessary to make them panties to the suit....

12. But that rule ends ' But the Court may, if it thinks fit, order them or any of them to be made parties.' Then, as regards Order XXXIV, Rule 1, that directs that 'Subject to the provisions of this Code', all persons having an interest either in the mortgage security or the right of redemption shall be joined as parties to any suit relating to the mortgage.'

13. Now 1 do not mean to say necessarily that in all cases where say, a mortgagor is, in fact, a trustee, it is necessary to add the beneficiaries. Far from it. But I do say this that where beneficiaries are absolutely entitled to 14/16th share in the property, and where, as here, they come to the Court and allege, as is prima facie true, that their administrator or trustee has committed a breach of trust in selling or mortgaging the property without the leave of the Court, then it seems to me a clear case where they should, if they so apply, be added as parties to the suit.

14. Moreover, in the present case, there was this almost ridiculous result arrived at. The learned Judge having first declined to add the persons primarily interested as parties, then proceeded at the trial of the suit to refuse to allow the administratrix to raise this point about the want of leave to mortgage. In other words, this important point was to be decided in favour of the mortgagee without the estate being given any opportunity whatever of disputing the point. And, as far as I can understand from the learned Judge's judgment, he considered that, in some separate suit or on some future occasion, it was to be left to these other beneficiaries to raise this point. It was actually suggested by the pleader for the respondent that the beneficiaries might wait till the estate was sold by the Court in pursuance of this order, and when it had thus been sold to the purchaser, another suit might be brought. In other words, the position was to be further complicated by bringing some further person on the scene at some future occasion. But, speaking generally, the object of correct procedure is to enable all disputes to be settled once and for all in a properly constituted action, and not to leave parties to a multiplicity of suits, which in the end can only produce utter confusion.

15. There is another point which occurs to me and that is this. There is an express prohibition against selling or mortgaging any property without the leave of the Court under Section 90. If, therefore, an administrator purports to do so, he commits a breach of trust. But, if the Court with full notice of that want of leave proceeds to enforce that unauthorised mortgage by making an order for sale of the mortgaged property, in effect the Court is conniving at the breach of trust. One knows perfectly well that in many cases, e. g. a claim for specific performance, it is an answer for parties to say : ' If you make that order, you are in effect forcing me to commit a breach of trust.' A fortiori, the Court then having full notice of the facts ought not to lend its aid to any device of that sort,

16. Then, as regards the suggestion that a mortgagor cannot derogate from her grant, that point really does not arise here because you have not got all the proper mortgagors before the Court, even if the proposition, as enunciated in Hillaya Sub-baya v. Narayanappa Timmaya I.L.R. (1911) 36 Bom. 185 can be accepted in the . broad literal sense in which it is there laid down,

17. Returning for a moment to the earlier points and as to whether a power of sale includes a power of mortgage, I had intended to refer to a rather similar question that has often arisen in England as regards trusts or powers under a settlement or will. The references in the text books on the subject will be found in Seton on Judgments, Vol. II, p 1125; Far-well on Powers, p. 558; and Dart's Vendors and Purchasers, Vol. I, p. 87. In Part it is stated :-

As a general rate, a power of or trust for sale, out and out, for a purpose or with an object beyond the raising of a particular charge, does not author' is a mortgage ; but where it is for raising a particular charge, and the estate itself is settled or devised subject to that) charge, then it may be proper under the circumstances to raise the money by mortgage ; which will then be supported as a conditional sale.

18. Even if English law could apply, which technically it does not, I do not think that these observations necessary apply to oases where it is essential to get the sanction of the Court to a sale or mortgage, But, even if they did, then on the principle of the decisions referred to, it would seem that a mortgage would not be authorised in the present case The sale here was of the entire property. It was not merely for raising a particular charge. It was like a trust for sale out and out and not for the mere purpose of raising's, particular charge of Rs, 9,000. That being so, one can understand that there is a distinction between the present case and the case where the sale is only sufficient to raise a particular limited mortgage.

19. Then, as regards the argument that even a voidable mortgage will not be set aside except on equitable terms, the answer here is that the mortgagee has chosen to bring his suit on the mortgage bond, and has expressly opposed the joinder of person who were primarily interested in objecting to the validity of the mortgage. Therefore, whatever may be his remedies against them in some other proceedings, there is no reason why he should be allowed to obtain such an order for sale behind their backs, as has been obtained in the present case. It follows therefore, in the view we take, that this suit brought on this mortgage bond, in so far as it is a suit to enforce payment by sale of the mortgaged property or to recover the debt out of the estate of the deceased, is bad and fails,

[His Lordship then discussed other points not material to this report].

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