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Narayan Budhaji Mokal Vs. Posha Jama Thakur - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 84 of 1920
Judge
Reported inAIR1921Bom172; (1921)23BOMLR466
AppellantNarayan Budhaji Mokal
RespondentPosha Jama Thakur
Excerpt:
.....of the mortgagor who seeks to redeem, so that he could then ovado those general principles of justice, equity and good conscience by which we are bound in a case of this description when dealing with the claim of the plaintiffs. for instance, in this very case where it has been proved that the subsequent mortgagee has paid the amount due under the prior mortgage with a view to acquire the rights under that mortgage, that the prior mortgagee has handed over the mortgage bond to the subsequent mortgagee, and that though the prior mortgagee has received the amount due under his mortgage, but has failed to pass a receipt an required by the section, the subsequent mortgagee would be able to acquire no right whatever in respect of the prior mortgage......father paid off the 1st mortgagee, tatya keshav and obtained possession from him of the suit property, together with the time deeds under the original mortgage of the 1st of february 1880. the property continued in the possession of the original mortgagor's family as tenants rent-notes being passed to the plaintiffs, the last of which was dated may 1906, exhibit 13 in the case. in 1915 the plaintiff filed a suit against the defendants for ejectment on the basis that his father was the owner of the property and the defendants were his tenants. the defendants pleaded that the document of 1893, although ostersibly a sale-deed, was in reality a mortgage. this point was conceded by the plaintiff with the result that a redemption decree was passed. the plaintiff's then contended.....
Judgment:

Norman Macleod, Kt., C.J.

1. The plaintiff tiled this 3uit to recover the sum of Rs. 357-8-0 from the defendants or in the alternative to recover the sum by sale of the mortgaged property, or to recover the possession of the property by foreclosure. It appears that this property was mortgaged by the then owners, who are now represented by the defendants, to one Ramchandra Raghunath on the 1st of February 1880 for a sum of Rs. 250 with possession. The mortgagee sold his right to one Tatya Keshav on the 6fch of March 1880. It was provided that the mortgage debt was not to carry interest, and the mortgagee was to enjoy the property mortgaged in lieu of interest. The defendants then passed a document in favour of the present plaintiff's father on the 15th March 1893. That document on the face of it appeared to be a sale-deed transferring the property to the plaintiffs' father in consideration of Rs. 600, In 1898 the plaintiff's father paid off the 1st mortgagee, Tatya Keshav and obtained possession from him of the suit property, together with the tiMe deeds under the original mortgage of the 1st of February 1880. The property continued in the possession of the original mortgagor's family as tenants rent-notes being passed to the plaintiffs, the last of which was dated May 1906, Exhibit 13 in the case. In 1915 the plaintiff filed a suit against the defendants for ejectment on the basis that his father was the owner of the property and the defendants were his tenants. The defendants pleaded that the document of 1893, although ostersibly a sale-deed, was in reality a mortgage. This point was conceded by the plaintiff with the result that a redemption decree was passed. The plaintiff's then contended that the defendants could not be allowed to redeem without paying off not only what should be held to be due under the document of 1893, but, also what was due under the mortgage of the 1st of February 1880. The learned Judge came to the conclusion that the defendants should be allowed to treat the plaintiffs as second mortgagees only and that they were not bound to redeem both mortgagees, relying upon Order XXXIV, Rull 1, by the explanation to which the prior mortgagee need not be joined in a suit to redeem a subsequent mortgage. I should say it would be very doubtful whether that applies to a case where the prior mortgagee is the same person as the subsequent incumbrancer. However that may be, the result of that suit was that accounts were taken of the 2nd mortgage under the Dekkhan Agriculturists' Relief Act and possession was given to the defendants, they being allowed to pay off the mortgage amount by instalments. It cannot be said that anything was decided in that suit with regard to the 1st mortgage except this that the defendants were allowed to redeem the 2nd mortgage without also at the same time paying off the 1st mortgage, and under the provisions of the Dekkhan Agriculturists' Relief Act they were allowed to go into possession The plaintiffs unfortunately did not appeal against that decree.

2. They have now filed this suit on the mortgage of the 1st of February 1880. The trial Court passed a decree in their favour for the amount claimed, viz., Rs. 357-8-0. But it is conceded that the plaintiffs could not recover in any event more than Rs. 250, the original mortgage amount, as it wan expressly provided that the mortgage debt was not to carry interest, the mortgagee being in possession and enjoying the profits.

3. In appeal the lower appellate Judge decided all the points in the case in favour of the plaintiff's except one, with the result that the suit was dismissed with costs. The learned Judge thought that as the plaintiff's could not produce a receipt of the amount they had paid to the 1st mortgagee, they had not the required authority to proceed against the heirs of the original mortgagor for repayment of the amount which had been paid in discharge of the 1st mortgage. The learned Judge relied upon Section 74 of the Transfer of Property Act. That suction deals with the rights of a subsequent mortgagee to pay off prior mortgagees. It provides that ' any second or other subsequent mortgagee may, at any time after the amount due on the next prior mortgage has become payable, tender such amount to the next prior mortgagee, and such mortgagee is bound to accept such tender, and to give a receipt for such amount; and (subject to the provisions of the law for the time being in force regulating the registration of documents) the subsequent mortgagee shall, on obtaining such receipt, acquire, in respect of the property, all the rights and powers of the mortgagee as such, to whom he has made such tender.' Under Section 17(2)(11) of the Indian Registration Act, a receipt for payment of money due under- a mortgage when the receipt does not purport to extinguish the mortgage, does not require registration. The argument is that the subsequent mortgagee having paid off the prior mortgagee without obtaining a receipt did not acquire any right to stand in the shoes of the 1st mortgagee for the purpose of recovering the mortgage money from the mortgagor.

4. The question is a much larger one. The question is not only whether on the facts of this case the Court should dismiss the suit because the plaintiffs have not armed themselves with the receipt of the money which was paid to the 1st mortgagee, but also whether the facts that the money was paid, and that the mortgage deed was handed over to them, do not give to them the right in equity to sue for the money due on the 1st mortgage.

5. We have been referred to the decision in the case of Mahomed Ibrahim Hossain Khan v. Ambika Pershad Singh I.L.R. (1912) Cal. 527, 14 Bom. L.R. 280, p. c. There there was a simple mortgage for Rs. 12,000 of the suit property, dated 20th November 1874, the mortgagee to have possession until the amount was repaid in 1887. Between the 20th November 1874 and the 17th February 1888 the properties in suit were further charged with simple mortgages some of them relating to two of the properties in suit and one of them relating to the third. Then on the 17th February 1888- a further mortgage was made of the suit properties with the express purpose of paying off the mortgage of 20th November 1874. The money borrowed on the document of the 17th February 1888 was applied in discharging the debt due on the mortgage of November 1874, and that mortgage was given up to the mortgagee of February 1888. The question was whether that mortgagee was entitled to priority over the intermediate mortgagees in whose favour mortgages had been created between February 1874 and February 1888. Their Lordships of the Privy Council held that the question was whether the mortgagee of 1888 intended when paying off the mortgage of 1874 to keep that mortgage alive. They referred to the decision of the Privy Council in Gokuldoss Gopal- dass v. Pambux Seochand . in which it was held that a purchaser of an equity of redemption in immoveable property situated in India, who, having notice of a second mortgage, paid off a first mortgage upon the property without an assignment of the 1st mortgage to him, must be assumed, according to the rule of justice, equity and good conscience, to have intended to keep the 1st mortgage alive, and consequently was entitled to stand in the place of the 1st mortgagee and to retain possession against the 2nd mortgagee until repayment.

6. It may be said that in this case the plaintiff's father thought that he had purchased the equity of redemption in 1893. The question would then arise whether, when he paid off the mortgage of 1880, he intended that the mortgage should be extinguished or that it should be kept alive for his own protection in case there should be any intermediate incumbrances. But owing to the decision in Suit No. 279 of 1915 this case has assumed a different aspect, because it has now to be considered that in 1893 the plaintiff's father did not become the owner of the equity of redemption but only obtained the position of a subsequent incumbrancer, who was entitled to pay off prior incumbrances, and it appears to us that the same principles must apply as were applied by their Lordships of the Privy Council in Mahomed Ibrahim Hoasain Khan v. Ambika Pershad I.L.R.(1912) Cal. 527 p. c., the case I have referred to, namely, that if a second mortgagee pays off the first mortgagee without obtaining an assignment of the mortgage and without getting a receipt for the amount paid, but in lieu thereof obtains the actual mortgage document, then it cannot be said, according to the principle of justice, equity and good conscience, that the 1st mortgage is extinguished, and that the second mortgagee has no right to sue for the amount due under the first mortgage. If it had not been for the special provisions of the Dekkhan Agriculturists' Relief Act, the plaintiffs would still have been in possession of the mortgaged property. Therefore they would have been in a stronger position, than they are now, as they have been compelled under those provisions to give up possession in favour of the mortgagor under the decree in the former suit. But it does not appear to me that there are special provisions existing in this Presidency in favour of the mortgagor who seeks to redeem, so that he could then ovado those general principles of justice, equity and good conscience by which we are bound in a case of this description when dealing with the claim of the plaintiffs. It certainly would seem most inequitable in this case, if the plaintiffs, who had paid off the amount due under the first mortgage to the assignee of the original mortgage, should not be entitled to occupy the position of the first mortgagee. There being no dispute whatever with regard to that payment there is no reason why the plaintiff should be debarred from recovering that amount on the grounds claimed by the present respondents. In my opinion, therefore, the decision of the learned appellate Judge was wrong. He ought to have held that the plaintiff was still entitled to rely upon the first mortgage of the 1st of February 1880, and he ought to have passed an ordinary mortgage decree in favour of the plaintiff for a sum of Rs. 250 with costs throughout with interest at 6 per cent, from the date of the suit. The plaintiff will get his costs on the amount for which he succeeds.

Shah, J.

7. I concur. I desire to add a word with reference to the argument based upon Section 74 of the Transfer of Property Act. The lower appellate Court has accepted the construction of the section which is pressed on behalf of the defendants before us. The argument is that under the section the prior mortgagee is bound to accept the tender made by the subsequent mortgagee, and to give a receipt for the amount tendered, and that the subsequent mortgagee shall, on obtaining such receipt, acquire, in respect of the property, all the rights and powers of the mortgagee as such, to whom he has made such tender. It is urged that unless the second mortgagee has obtained a receipt referred to in the section, no rights in respect of the first mortgage in his favour can arise even though he has in fact paid the amount due under the first mortgage with the intention of acquiring the rights under that mortgage. I am unable to accept this argument. The section no doubt provides that on obtaining such a receipt the subsequent mortgagee shall acquire the rights of the next prior mortgagee. But it does not follow, in my opinion, that in case such a receipt is not obtained, the subsequent mortgagee can never acquire such rights. 1 am unable to accept the view that the obtaining of a receipt is a condition precedent to the acquisition of such rights. Where the Legislature means to provide that a document of a particular nature is necessary in order to create or acquire a right, appropriate language conveying that meaning has been used in the Act, as would appear from Sections 54, 59, 107, 118 and 123. No such language is used in this section; and it seems to me that the construction of the section which has been pressed before us, if accepted, would lead to injustice. For instance, in this very case where it has been proved that the subsequent mortgagee has paid the amount due under the prior mortgage with a view to acquire the rights under that mortgage, that the prior mortgagee has handed over the mortgage bond to the subsequent mortgagee, and that though the prior mortgagee has received the amount due under his mortgage, but has failed to pass a receipt an required by the section, the subsequent mortgagee would be able to acquire no right whatever in respect of the prior mortgage. That would be an unjust result, which would follow upon the narrow construction of Section 74 suggested by the defendants. I do not think that the provisions of that section are intended to be exhaustive. All that the section provides is that on the obtaining of such a receipt the rights of the subsequent mortgagee will undoubtedly come into existence. But it does not follow that in the absence of such a receipt such rights cannot at all come into existence. On the facts it is clear that if Section 74 is no bar to the acquisition of such rights, the second mortgagee has undoubtedly acquired such rights.


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