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Vishnu Balkrishna Naik Vs. Shankareppa Gurlingappa Wagarali - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 779 of 1939 and Civil Application No. 334 of 1941
Judge
Reported in(1942)44BOMLR415
AppellantVishnu Balkrishna Naik
RespondentShankareppa Gurlingappa Wagarali
DispositionAppeal dismissed
Excerpt:
transfer of property act (iv of 1882), sections. 92, 83-mortgage-subrogation-paying off of prior mortgage-civil procedure code (act v of 1908),section 64- attachment before judgment-mortgage pending attachment-claims enforceable under attachment-disposal of application for execution-whether amounts to dismissal of such application.;section 92 of the transfer of property act, 1882, is retrospective in its effect.;him singh v. jai singh [1937] all. 880, tota ram v. ram lal (1932) i.l.r. 54 all. 897, f.b subraya v. tbnmannd (1938) 40 bom. l.r. 1001 and isap v. umarji (1937) 39 bom. l.r. 1309 followed.;tukaram v. atmaram (1938) 40 bom. l.r. 1192 referred to. ;where a person himself redeems a mortgage, that is to say, pays the mortgage money out of his own pocket and not merely discharges a..........1922, the plaintiff, who had acquired an interest in the suit lands, had filed a suit against the prior mortgagee, one kalkundri, and there was a consent decree under which he was allowed to redeem that mortgage on payment of rs. 1,290, and the lands were taken by him in his possession. ;he thus stood in the position of the mortgagee. on may 16, 1925, the defendants mortgaged the lands to one gurlingappa, the father of applicant no. 1, for rs. 3,000. they took rs. 1,710 from gurlingappa and there was a stipulation that gurlingappa was to pay off the plaintiff's mortgage by paying him rs. 1,290. gurlingappa deposited the amount in court with an application under section 83 of the transfer of property act, 1882, and the plaintiff accepted the amount in full satisfaction of his mortgage.....
Judgment:

Sen, J.

1. This is an appeal against an order made by the Assistant Judge of Belgaum in an appeal against an order passed by the Subordinate Judge of Hukeri on an application made in execution proceedings. The material facts are these :-

2. The plaintiff in a suit filed in 1924 obtained a money decree against fourteen judgment-debtors. He got the five lands now sought to be sold and other lands belonging to the defendants attached before judgment on December 17, 1924. Before this, in 1922, the plaintiff, who had acquired an interest in the suit lands, had filed a suit against the prior mortgagee, one Kalkundri, and there was a consent decree under which he was allowed to redeem that mortgage on payment of Rs. 1,290, and the lands were taken by him in his possession. ;He thus stood in the position of the mortgagee. On May 16, 1925, the defendants mortgaged the lands to one Gurlingappa, the father of applicant No. 1, for Rs. 3,000. They took Rs. 1,710 from Gurlingappa and there was a stipulation that Gurlingappa was to pay off the plaintiff's mortgage by paying him Rs. 1,290. Gurlingappa deposited the amount in Court with an application under Section 83 of the Transfer of Property Act, 1882, and the plaintiff accepted the amount in full satisfaction of his mortgage debt and delivered possession of the lands to Gurlingappa. The plaintiff filed darkhasts in execution of his decree in 1928, 1930 and 1932 before the present Darkhast No. 253 of 1936 was filed. The darkhast of 1932 was transferred to the Court at Hukeri and was given number 13 of 1935. In that darkhast certain lands were sold and an amount of Rs. 559 was realised, and the darkhast was disposed of on June 10, 1936, In the present darkhast the decree holder contended that as the lands in question were attached before judgment no fresh attachment was necessary. The papers were accordingly sent to the Collector for sale of the lands. On August 10, 1936, Gurlingappa's son and grandson (Gurlingappa having died meanwhile) made an application to the Court contending that the attachment before judgment had ceased by the operation of O. XXI, Rule 57, of the Civil Procedure Code, 1908, as the darkhast of 1935 had been dismissed owing to a default on the part of the decree-holder, and that if the lands were to be sold, they should be sold subject to the mortgage of Rs. 3,000, or at least subject to the charge of Rs. 1,290 paid by Gurlingappa to satisfy the decree-holder's prior mortgage. The decree-holder's reply was that the mortgage of 1925 was void as it came into existence during the attachment and that the attachment had not come to an end as there had been no default on his part when the darkhast of 1935 was disposed of.

3. The trial Court held that the attachment had ceased and that the applicants were entitled to a charge of Rs. 3,000 on account of the mortgage of 1925. On appeal there was a remand and the finding of the trial Court after remand was that there had been no default on the part of the decree-holder in the darkhast of 1935 and that the applicants were subrogated to the extent of Rs. 1,290 to the rights of the prior mortgagee. The appellate Court held that Darkhast No. 13 of 1935 was not dismissed by reason of the decree-holder's default and that the respondents, i.e. the applicants, were entitled to have the lands in dispute sold subject to a charge of payment of Rs. 1,290 to them. The grounds on which the first point was decided were that the darkhast had not been 'dismissed' but 'disposed of', that some amount had been realised there under and that the costs of the execution were awarded to the decree-holder. On the second question it held that the question was really not one of subrogation ; but whether the mortgage of Rs. 3,000 was wholly void or whether the respondents could claim to have the property sold subject to a charge of Rs. 1,290 in their favour. UnderSection4 of the Civil Procedure Code a private transfer of the property attached is not absolutely void, but void only as against all claims enforceable under the attachment, and as the property attached had been subject to the payment of Rs. 1,290 before the attachment and the decree-holder could sell the property only subject to that mortgage, it was held that the mortgage of 1925 could not be void as regards that part of the transaction under which Gurlingappa paid off the prior mortgage of the decree-holder. Relying on Dinobundhu Shaw Chowdhry v. Jagmaya Dasi (1901) I.L.R. 29 Cal. 154 P.C. the lower appellate Court held that the applicants, having paid Rs. 1,290 to the decree-holder in satisfaction of his prior mortgage, were entitled to have the attached property sold subject to a charge to that extent. It also came to the conclusion that the applicants were entitled to subrogation on the principle enunciated in Section 92 of the Transfer of Property Act. Accordingly, it modified the order of the trial Court and directed that the property be sold subject to such charge.

4. Mr. Gumaste on behalf of the appellant, the decree-holder, has concerned himself only with the second question raised by the lower appellate Court, namely, whether the applicants are entitled to have the lands in dispute sold subject to a charge of Rs. 1,290 in their favour, the finding on the first issue being in his client's favour. He has contended that Section 92 of the Transfer of Property Act cannot apply in this case, because if that section applied, the applicants could invoke the benefit of only paragraph 3 of that section ; and that paragraph provides that a person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such persons shall be so subrogated. Admittedly there is no registered instrument of agreement as to subrogation in this case. Mr. Gumaste has further contended that in the present case the money with which the prior mortgage of the decree-holder has been redeemed was not money advanced by Gurlingappa for the protection of his interest, but that it must be deemed to be money belonging to the mortgagor, i.e. money to which in the first instance the mortgagor was entitled under the mortgage and which the mortgagor required Gurlingappa to utilize in redeeming the prior mortgage ; and that being so, he has argued that paragraph 1 of Section 92 cannot apply and that paragraph 3 also requires that the money used for redeeming the prior mortgage must be advanced by the person who claims to be subrogated. He has further contended that Section 92 is retrospective in its operation. On this last point there are decisions of the Allahabad High Court [Hira Singh v. fai Singh [1937] All. 880 and Tota Ram V. Ram Lal I.L.R. (1932) All. 897, F.B.] as well as of this Court, namely, Subrayav. Timmanna : AIR1938Bom508 and Isap v. Umarji : AIR1938Bom115 that Section 92 of the Transfer of Property Act is retrospective in its operation. In Tukaram v. Atmaram : AIR1939Bom31 it was held that Section 53A is retrospective in its operation, and the arguments used in that decision apply with equal force to Section 92. In view of these decisions of this Court it is not open to the respondents to contend that Section 92 is not retrospective, and Mr. Gajendragadkar on behalf of the respondents has not raised any contention on this point.

5. As to the other propositions relied on by Mr. Gumaste he has relied on Hira Singh v. Jai Singh [1937] All. 880 Lakshmi Amma v. Sankara Narayana Menon I.L.R. (1935) Mad. 359, F.B., and Rai Bahadur Bansidhar Dhandhania. v. Kairoo Mandar I.L.R. (1938) Pat. 666 In the first of these cases it has been held that where a person himself redeems a mortgage, that is to say, pays the mortgage money out of his own pocket and not merely discharges a contractual liability to make the payment, he is entitled to the right of subrogation under the first paragraph of Section 92 if he is one of the persons, other than the mortgagor, enumerated in Section 91, but that where the person does not himself redeem the mortgage, that is to say, does not himself pay the money out of his own pocket in excess of his contractual liability but advances money to a mortgagor and the money is utilized for payment of a prior mortgage, whether the money is actually paid through the hands of the mortgagor or is left for such payment in the hands of the person advancing the money and it is then paid to the prior, mortgagee through the hands of that person, the latter acquires the right of subrogation under the third paragraph of Section 92, only if the mortgagor has by a registered instrument agreed that he shall be so subrogated. Mr. Gumaste has contended that in the present case it cannot be held that the money utilised for the payment of the prior mortgage was advanced by Gurlingappa. He has referred to the terms of the mortgage bond, exhibit 54, in which the mortgagor said that the amount of Rs. 1,290 was deposited with Gurlingappa for paying the prior mortgagee Vishnu Balkrishna. His contention, therefore, is that the applicants cannot come either under the first paragraph or the third paragraph of Section 92.

6. Mr. Gajendragadkar on behalf of the respondents has contended that the question raised by this case does not primarily concern Section 92 of the Transfer of Property Act at all, though no doubt the applicants in their application, exhibit 14, claimed that the applicant No. l's father was subrogated to the prior right of the decree-holder in respect of Rs. 1,290, and the trial Court, after the remand, raised an issue whether the respondents (applicants) were subrogated to the extent of Rs. 1,290 which was due to the appellant (decree-holder), and which was paid off by respondent No. l's father Gurlingappa. Mr. Gajendragadkar has contended that under Section 64 of the Civil Procedure Code the whole of the mortgage transaction cannot be held to be void but that (as the lower appellate Court has held) the mortgage must be held to be good in so far as it was not contrary to the attachment of 1924, that is, to the extent of Rs. 1,290. Section 64 is in these terms :-

Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment.* * * * * .

7. There is no doubt that the expressions 'contrary to such attachment' and 'as against all claims enforceable under the attachment' limit the operation of Section 64 only to certain transfers or acquisitions of interest or payments to the judgment-debtor. What was attached in 1924 was the property subject to the mortgage in favour of the decree-holder, and the terms of exhibit 54 make it clear that the sum of Rs. 1,290 expressly and separately mentioned as part of the consideration for the mortgage was included in order that it might be utilized for paying off the prior mortgage debt, that is, for a purpose which was unaffected by the attachment, i.e. not connected with the judgment-debtors' equity of redemption which was under attachment. It seems to me, therefore, that the learned advocate for the respondents is right in contending that the payment of the amount out of Rs. 3,000 which was to be utilized for the payment of the earlier mortgage was not affected by the attachment, or to use the words of the section, was not 'contrary to the attachment' and was not 'against any claim enforceable under the attachment '.

8. Mr. Gumaste, however, has contended that the mortgage must be regarded as an entire transaction, and that as it must be held that the amount of Rs. 1,290 paid for the discharge of the prior mortgage was not paid by Gurlingappa but by the judgment-debtors themselves, it is not possible to say that a part of the transaction of 1925 was not vitiated by the prior attachment. It seems to me, however, that the very object with which Section 64 has been enacted is to save rights which do not conflict with the claims enforceable under the attachment. This is clear from the Privy Council decision in Dinobundhu Shaw Chowdhry v. Jogmaya Dasi I.L.R. (1901) Cal. 154 P.C. referred to in the judgment of the lower appellate Court. The facts in that case were that the respondent was a mortgagee of a property which the appellant purchased at an execution sale and the respondent sued to enforce his lien under the mortgage, the appellant's purchase being subject to his prior lien, The attachment under which the sale to the appellant took place was made in 1891 at which time the property was subject to two mortgages dated 1888 and 1890. At the time of the attachment the mortgagor was arranging with the respondent for an advance of Rs. 40,000 to enable him to pay off those two mortgages, and in accordance with the arrangement made he executed in the respondent's favour a mortgage bond which, after reciting the two earlier mortgages and the fact that the loan of Rs. 40,000 was taken in order to pay them off, contained the stipulation that after the money due on the aforesaid two mortgages had been repaid the mortgagor shall cause a reconveyance of those properties to be executed and registered and would make over to the respondent the mortgage deeds regarding those earlier mortgages. Accordingly Rs. 40,000 was advanced, the two mortgages paid off, and the property reconveyed to the mortgagor who handed over the reconveyances to the respondent. The sale at which the appellant purchased property took place about nine months later. One of the arguments advanced by the appellant in that case was that the effect of Section 276 of the Civil Procedure Code (which corresponds to Section 64 of the present Code) was to make void, as against him, the respondent's mortgage, it having been made pending the attachment of October, 1891. Their Lordships held (p. 166) :-

So to construe this section would be quite wrong. So far as the mortgage for 40,000 rupees prejudiced the execution creditor, it is void as against him ; but the section does not render void transactions which in no way prejudice him ; and to hold the mortgage void so as to confer upon him a benefit, which no one ever intended he should have, is entirely to ignore the object of the section and to pervert its obvious meaning. It is impossible to hold that the effect of that section is to give an execution creditor an unencumbered fed simple instead of an equity of redemption against the intention of the parties.

9. These remarks, in our opinion, apply with equal force to the contentions and the claim put forward by the decree-holder. As I have said above, Gurlingappa deposited Rs. 1,290 out of the mortgage amount of Rs. 3,000 in Court with an application under Section 83 of the Transfer of Property Act, and the plaintiff not only accepted that amount in full satisfaction of his mortgage debt but also handed over possession of the lands to Gurlingappa. It could hardly have been the intention of any party that the decree-holder should not only recover Rs, 1,290 on his mortgage debt but should also be entitled to bring to sale the property free from all encumbrances. It seems to me, therefore, clear that a part of the transaction of 1925 was intended to have the effect of the virtual substitution of one mortgagee, viz., Gurlingappa, for the original mortgagee, and Section 64 cannot be said to have rendered that part of the transaction void, as it in no way prejudiced the claims of the decree-holder against the property which he had got attached.

10. Mr. Gumaste has sought to distinguish the facts of Dinobundhu Shaw Chowdhry v. Jogmaya Dasi from the facts of the present case on the ground that there was a distinct arrangement in that case under which Rs. 40,000 was to be advanced by the respondent with the express object of paying off the prior mortgages, while, according to his contention, in the present case the money utilised in paying off the prior mortgage did not belong to the applicants but to the judgment-debtors and the applicants were merely agents of the judgment-debtors for effecting the discharge of the prior mortgage debt. We do not think that there is any substance in the distinction sought to be drawn and that materially, i.e. so far as the legal questions involved are concerned, the facts in Dinobundhu's case are on all fours with those in the present case.

11. Mr. Gajendragadkar has also sought to support his arguments by reference to the fact that the attachment of the properties in dispute was made subject to the prior mortgage encumbrance, and ho has contended, therefore, that the decree-holder should not be allowed to bring to sale any property larger than the property attached, namely, the lands in question free from the decree-holder's mortgage. I think that this argument is not without substance, and that if the decree-holder wanted to proceed against the lands free from encumbrances, he should have got them attached a second time after his mortgage had been satisfied. This argument, therefore, appears to me to be an additional difficulty in the way of the appellant.

12. Lastly, Mr. Gajendragadkar has argued that it is possible to hold that Gurlingappa on redeeming the decree-holder's prior mortgage was subrogated to the decree-holder's rights under the first paragraph of Section 92. Subrogation under that paragraph, of course, does not require that there should be a registered instrument of agreement as to the subrogation. Mr. Gajendragadkar has argued that on the facts of the present case it cannot be held that the money which was utilised in paying off the prior mortgage was money belonging to the judgment-debtor. In Him Singh v. Jai Singh there were no doubt special circumstances which clearly showed that the person who redeemed the mortgage was not a subsequent vendee but the mortgagor himself. The material facts in that case were that a mortgage of several properties was made in 1925, most of these being again mortgaged in 1926 to a different mortgagee, and that in 1929 three of the mortgaged properties were sold by the mortgagor to three persons, and in each case a sum of money was left in the hands of the vendee for payment to the prior mortgagee. These sums were accordingly paid by the three vendees, respectively, to the prior mortgagee. An important fact to be noticed is that a small balance was still due to the mortgagee and this sum was paid by the mortgagor himself before the prior mortgage was completely discharged. It seems to us that in the present case there are circumstances indicating that it would be more proper to hold that it was Gurlingappa's money which was utilized in paying off the prior mortgage debt. There is no doubt that exhibit 54, the mortgage deed of 1925, states that the mortgagor was depositing Rs. 1,290 with Gurlingappa for paying off Vishnu Balkrishna's mortgage debt. But it is to be remembered that the same document further on states that Gurlingappa was to pay this amount to the mortgagee in possession, viz. Vishnu Balkrishna, and that thereupon he himself was to take possession of the mortgaged lands; and when Gurlingappa deposited the amount of Rs. 1,290 in Court and presented an application under Section 83 of the Transfer of Property Act, the decree-holder accepted the amount in full satisfaction of his debt and delivered possession to Gurlingappa. Under Section 83 of the Transfer of Property Act, at any time after the principal money payable in respect of any mortgage has become due and before a suit for redemption of the mortgaged property is barred, the mortgagor, or any other person entitled to institute such suit, may deposit in Court the amount remaining due on the mortgage, and on notice being served on the mortgagee, the mortgagee may apply for and receive the said money, and the mortgage deed and all such other documents relating to the mortgaged property deposited with the mortgagee are to be delivered to the mortgagor or such other person as the mortgagor directs. It thus appears that the decree-holder regarded Gurlingappa as a person entitled to institute a suit for redemption, and the persons who are entitled to file such a suit are enumerated in Section 91 of the Transfer of Property Act. If, therefore, the decree-holder regarded Gurlingappa as a person who under Section 91 was entitled to sue for redemption, he was clearly regarded as a person who would be entitled to subrogation under the first paragraph of Section 92 ; and Mr. Gajendragadkar has contended that the decree-holder, after having accepted Rs. 1,290 from Gurlingappa on this basis, cannot now be permitted to say that the payment was made on behalf of the mortgagor or that the first paragraph of Section 92 is not applicable. Section 83 does not make any mention of an agent of the mortgagor or person entitled to redeem on behalf of the mortgagor. It seems to us that there is considerable force in this argument on behalf of the respondents and that it is difficult to say, particularly in view of the proceedings under Section 83, that Gurlingappa was not entitled to subrogation under the first paragraph of Section 92 of the Transfer of Property Act.

13. Accordingly, we must hold that the lower appellate Court was right in directing the property to be sold subject to a charge of Rs. 1,290 in favour of the applicants, the mortgage of 1925 not being void under Section 64 to that extent.

14. As regards the cross-objections filed by the respondents, they are based on the argument that Darkhast No. 13 of 1935 was dismissed on account of a default on the part of the decree-holder and that the attachment came to an end under O. XXI, Rule 57, of the Civil Procedure Code. Mr. Gajendragadkar has relied for this purpose on a passage in the judgment of the trial Court after the remand to the effect that though the decree-holder sought the sale of twenty-four lands in the darkhast and the papers were sent to the Collector for the sale, the Collector appears to have taken same objections with regard to some of the properties, and the papers were returned to the Court for compliance with those objections. The learned trial Judge has then found that on the Court's asking the decree-holder to remove those objections, the decree-holder, instead of removing them, requested the Court to sell only those lands which were saleable without any objection. If such were the facts, Mr. Gajendragadkar has contended that it would be clearly a case of non-prosecution of the darkhast, at least with regard to some of the properties, and as default includes non-prosecution of the darkhast, as held in Baba v. Kisan,1 it should be held that the decree-holder was guilty of default resulting in the dismissal of his darkhast. The lower appellate Court, however, has remarked that though the arguments on behalf of the respondents on this point were based on the statement of facts referred to above appearing from the trial Court's judgment, there was nothing in the record of the execution proceedings to show that the facts were such as stated by the learned Subordinate Judge. Mr. Gajendragadkar has filed an application on behalf of his clients for the admission of certain additional evidence on this question. We think there is no justification for admitting additional evidence on this point at this stage, as there is nothing to show that such evidence was not in the possession of his clients when the question was being tried. We agree with the observations of the learned appellate Judge that there is nothing on the record to show what it was that the decree-holder failed to do which may be regarded as default on his part and which would justify the inference that the darkhast was dismissed for default and not disposed of as expressly stated at the bottom of the darkhast, exhibit 49. The darkhast seems to have been disposed of on merits, and it was partially successful. It is also to be noted that the decree-holder got his costs against the judgment-debtor. It cannot, therefore, be said that the darkhast as a whole was dismissed, and there is nothing to indicate that there was any default on the part of the decree-holder. It seems to us, therefore, that the learned appellate Judge's finding on the question whether the darkhast was dismissed by reason of the decree-holder's default is correct. Accordingly both the cross-objections and the application for the admission of additional evidence must be dismissed with costs. The appeal also must be dismissed with costs.


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