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Waman Mahadeo Apte Vs. Janardan Balvant Risbud - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberFirst Appeal No. 77 of 1936
Judge
Reported inAIR1938Bom357; (1938)40BOMLR545
AppellantWaman Mahadeo Apte
RespondentJanardan Balvant Risbud
Excerpt:
.....is capable of specific performance-decree for specific performance does not relate back to date of agreement-mortgagee-rate of interest stipulated for in deed.; in india a mere agreement to mortgage does not create any interest in the mortgaged property in favour of the party to whom the property is agreed to be mortgaged, nor does it create any charge. such an agreement gives rise only to a personal obligation, which does not constitute either a mortgage or a charge.; jahar lal bhutra v. bhupendra nath basu (1921) i.l.r. 49 cal. 495 and bhaskar v. shankar (1924) 26 bom. l.r. 418 distinguished.; an agreement to mortgage is not generally capable of specific performance. but assuming that a decree for specific performance is properly made in a suit, such a decree does not relate back to..........is, whether, as held by the learned first class subordinate judge of poona, the mortgage of the house in favour of defendant no. 3 is entitled to priority over that in favour of the plaintiff. it may be stated here that the plaintiff also held a mortgage over the house under a deed dated april 8, 1927, about which there is no dispute, nor as to the position of defendant no. 2, whose mortgage was evidently subject to the plaintiff's mortgage.2. by a deed of mortgage dated october 18, 1929, defendant no. 1 mortgaged his property, including a house situate in poona, to the plaintiff for rs. 3,500, with interest thereon at nine per cent. on february 1, 1929, defendant no. 1 had entered into an agreement to mortgage the house to defendant no. 3. as the first defendant failed to carry out.....
Judgment:

Rangnekar, J.

1. The appeal arises out of a suit brought by the plaintiff to enforce his, mortgage over defendant No. 1's house in Poona, and the main question that falls to be determined is, whether, as held by the learned First Class Subordinate Judge of Poona, the mortgage of the house in favour of defendant No. 3 is entitled to priority over that in favour of the plaintiff. It may be stated here that the plaintiff also held a mortgage over the house under a deed dated April 8, 1927, about which there is no dispute, nor as to the position of defendant No. 2, whose mortgage was evidently subject to the plaintiff's mortgage.

2. By a deed of mortgage dated October 18, 1929, defendant No. 1 mortgaged his property, including a house situate in Poona, to the plaintiff for Rs. 3,500, with interest thereon at nine per cent. On February 1, 1929, defendant No. 1 had entered into an agreement to mortgage the house to defendant No. 3. As the first defendant failed to carry out the agreement, defendant No. 3 filed a suit for specific performance against him, being suit No. 27 of 1931, and a decree in his favour was made on July 20, 1931. Accordingly, on December 5, 1931, the first defendant executed a mortgage of the house in favour of defendant No. 3. The mortgage was registered on January 16, 1932. The learned Judge passed the usual preliminary mortgage decree against defendant No. 1, but allowed interest only at six per cent, per annum from the date of the suit till realization on or about May 6, 1936, which was the date fixed for redemption. Then he directed that the house in question should be sold subject to the prior mortgage of 1927 in favour of the plaintiff, and that the sale proceeds should first be applied in satisfaction of the mortgage of defendant No. 3 and then in favour of the plaintiff, and that thereafter the balance should be applied towards the satisfaction of the mortgage in favour of defendant No. 2. Ag regards the rest of the property, he gave priority to the plaintiff, and then he directed in what order the property should be sold. In support of this view, the learned Judge relied upon two decisions in Jahar Lal Bhutra v. Bhupendra Nath Basu I.L.R. (1921) Cal. 495 arid Bhaskar v. Shankat : AIR1924Bom467 . In our opinion, these decisions have no bearing on the question. Both the decisions proceed on the doctrine of Us pendens. But in this case the position is extremely simple. It is not disputed,-and indeed it cannot be disputed-, that in this country a mere agreement to mortgage cannot create any interest in the mortgaged property in favour of the party to whom the property is agreed to be mortgaged, nor does it create any charge. An agreement to mortgage gives rise only to a personal obligation, which does not constitute either a mortgage or a charge. The agreement to mortgage the house was made on February 1, 1929 ; admittedly the plaintiff had no notice of it, and the house in question was then unencumbered. The house was mortgaged to the plaintiff on October 18, 1929. Defendant No. 3 filed his suit for specific performance long after the plaintiff's mortgage. It is clear that an agreement to mortgage is not generally capable of specific performance [see Sichel v. Mosenthal (1862) 30 Beav. 371 and South African Territories v. Wallington (1898) A.C. 309]. But assuming that a decree for specific performance was properly made in that suit, it is difficult to hold that the decree granting specific performance against the mortgagor would relate back to the date of the agreement, so as to confer on the third defendant priority over the plaintiff's mortgage. We think, therefore, that the view taken by the learned Judge is wrong and that part of the order which gives priority to defendant No. 3 must be deleted: from the decree.

3. We also think that the learned Judge was not right in allowing interest at six per cent. only. It is well established that a mortgagee is entitled to the rate of interest stipulated for in the mortgage deed, and unless there were any good grounds to deprive him of that right, it is difficult to understand why interest at nine per cent., which was the rate agreed upon, was disallowed. We think, therefore, that the decree as to interest will also have to be varied. Interest will run at nine per cent, from the date of the suit till realization up to the period fixed for redemption.

4. The decree as to how the sale proceeds are to be applied will have to be varied, and will be that the sale proceeds shall first be applied towards the satisfaction of the mortgage in favour of the plaintiff, then in satisfaction of the mortgage in favour of defendant No. 3 and then, towards the satisfaction of the mortgage in favour of defendant No. 2. Interest against defendant No. 1 will run at nine per cent. The rest of the decree will stand.

5. Deiendant No. 3 must pay the costs of the appeal.

N.J. Wadia, J.

6. I agree.


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