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Lala Kesho Das Vs. Manzoor Hasan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty ;Civil
CourtAllahabad
Decided On
Reported inAIR1943All334
AppellantLala Kesho Das
RespondentManzoor Hasan and ors.
Excerpt:
- - it seems to us that in a case like this in which the encumbered estates act is completely silent as to the basis of apportionment the court prima facie will be driven to fall back upon the only principles which could have been made applicable at the time when the parties entered into the contract in question. there is in existence a principle of apportionment which, in our judgment, is not overridden by the provisions of the encumbered estates act and until we can find a good reason for discarding that principle, we think it should be followed......of apportionment under section 9 because the whole debt was recoverable from any portion of the mortgaged property.3. the learned special judge held in favour of the mortgagee creditor that it was not open to the applicants to reagitate the questions of the execution and consideration of the mortgage bond of 1921. he went on to consider those very two questions upon the assumption that it was open to the applicants to reagitate them and on a careful consideration, he held that mt. mustafai begum had duly understood the bond and its contents and that she had duly executed it and he further held that it was clear that the mortgage bond in suit 'was executed in lieu of some debts which had been incurred by mt. mustafai begum and her mother,' and therefore he held that the bond was.....
Judgment:

Yorke, J.

1. This is a creditor's first appeal from the judgment of the Special Judge first grade, of Meerut under Section 14, Encumbered Estates Act. On 24th October 1921 a simple mortgage was executed by Syed Hasan, his wife Mt. Mustafai Begum and one Ibne Hasan, who is said to be the brother-in-law of Syed Hasan, in favour of the present appellant, Lala Kesho Das, for a total consideration of Rs. 16,000 in respect of certain property in village La war Khas in the Meerut district. The document did not state the shares of the three mortgagors in this property but it did contain a long list of the old debts which went to make up the sum total of Rs. 16,000. There was no cash consideration for the mortgage, the whole of the consideration being made up of old debts, credit for which was allowed in the deed. In the year 1980 the mortgagee Kesho Das, instituted suit No. 94 of 1930 for recovery of the amount due on this mortgage. By that date, Mt. Mustafai Begam had died and Syed Hasan was sued in his own capacity as a mortgagor and also as one of the heirs of his wife. The other heirs of Mt. Mustafai Begum who were parties to the suit were Mt. Haidari Begum, her daughter, and Manzoor Hasan and Maqbool Hasan minor sons of Mt. Mustafai Begum and Syed Hasan, The plaintiff obtained a preliminary decree on 27th January 1981 and a final decree on 30th July 1932; but it appears that the property had not been finally brought to sale by the date of the enactment of the U.P. Encumbered Estates Act of 1934.

2. On 26th October 1936 an application was made under Section 4, U. P. Encumbered Estates Act, by Manzoor Hasan, Maqbool Hasan and Mt. Haidari Begum. They named in their application only two creditors, Kesho Das and Ghasi Bam. In this case we are concerned with the former of these two persons only. On 6th September 1937 the landlords applicants filed their written statement under Section 8 of the Act and in regard to the mortgage debt of Kesho Das they sought to evade liability by alleging that their mother was a pardanashin lady and so on. The creditor, Kesho Das, replied with his written statement of claim on 2nd January 1938 and he contended that it was not open to the landlords applicants to question the findings of the Court of the Civil Judge in which he had obtained a preliminary decree and final decree several years earlier. He further said in para. 10 of the written statement that there was no question of apportionment under Section 9 because the whole debt was recoverable from any portion of the mortgaged property.

3. The learned Special Judge held in favour of the mortgagee creditor that it was not open to the applicants to reagitate the questions of the execution and consideration of the mortgage bond of 1921. He went on to consider those very two questions upon the assumption that it was open to the applicants to reagitate them and on a careful consideration, he held that Mt. Mustafai Begum had duly understood the bond and its contents and that she had duly executed it and he further held that it was clear that the mortgage bond in suit 'was executed in lieu of some debts which had been incurred by Mt. Mustafai Begum and her mother,' and therefore he held that the bond was executed for consideration. The learned Judge went on to consider the question of the extent of the liability of the applicants, that is, he started to consider the question of apportionment which arises under Section 9 (5) (a), U.P. Encumbered Estates Act. In this connection he prejudged, as one might say, the whole course of his decision on the point by saying:

It has been contended on behalf of the creditor that the applicants' liability must be decided with reference to the property of their mother. I am unable to agree with this contention because in this case there is clear evidence to show the extent of the amounts borrowed by her.

4. He went on to work out, as far as he could, the amounts borrowed by or on behalf of Mt. Mustafai Begum and to apportion the debts as between the applicants and the non-applicants, Syed Hasan and Ibne Hasan, upon that footing.

5. On behalf of the creditor appellant it is contended that there is no principle upon which the Court below was justified in so apportioning the debts between the applicants and the non applicants. It is conceded that the questions which arise are quite simple, viz. (1), whether the three applicants are entitled to apportionment or not? and (2), if so, on what basis? It is conceded, and must be conceded, having reference to the decision of a Full Bench of this Court in Punjab National Bank, Ltd. v. Vishwa Nath Khanna : AIR1941All363 , that the three applicants were certainly entitled to apportionment. The only question which arises then is as to the basis on which the apportionment should proceed. Learned Counsel contends that it was not open to the Court to go behind the mortgage of 1921. That was the document by which the predecessors of the applicants and the non applicants incurred the present liability or secured the debts for which they were liable, and it was a contract to which the provisions of Section 82, T. P. Act, were applicable. That section provides as follows:

Where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date.

6. In short, where parties owning separate property execute a joint mortgage to secure a debt which thus is treated as a joint debt the property of each of them included in the mortgage is liable to contribute to the mortgage rateably in proportion to its value at the date of the mortgage. Inferentially, the individual liability of each mortgagor comes to be the share in the mortgage debt which is proportionate to the existing value of that property which he has contributed as part of the mortgage security. Learned Counsel contends that as that was the footing upon which the parties entered into the contract there is really no other basis available upon which the apportionment should proceed. He has referred to the case of a promissory note; that is a ease where, speaking generally, the liability is stated as the liability of the individuals executing the pronote without any individualisation, that is to say, without any mention of the share of each individual in the debt. The law presumes that the share of each, if there are three, is one-third each; but parties who enter into a mortgage contract do not fall within the scope of that presumption because they enter into the contract subject to the rule stated in Section 82, T. P. Act. As to the suggestion that Section 9 (5) (a), Encumbered Estates Act, overrides the provisions of the Transfer of Property Act, it is, of course, true that to a considerable extent the Eucumbered Estates Act does override the general law as laid down in the Transfer of Property Act. But this is not a case of one clear provision overriding another clear provision but only of an inference which is sought to be drawn from the Encumbered Estates Act. It seems to us that in a case like this in which the Encumbered Estates Act is completely silent as to the basis of apportionment the Court prima facie will be driven to fall back upon the only principles which could have been made applicable at the time when the parties entered into the contract in question.

7. Learned Counsel for the landlords applicants has sought to support the conclusion of the Court below by reference to the results of a decree which has been made under Section 14. Such a decree does, by virtue of Section 18, Encumbered Estates Act, result in the extinguishing of the mortgage security and the substitution of a simple money decree in place of the previous rights of the mortgagee. It is suggested therefore that in carrying out apportionment this Court should not apply a principle arising out of the law relating to mortgages but should apportion the mortgage debt by making each mortgagor liable to the extent by which he is to be supposed to have benefited from the mortgage. The argument seems to rest upon the footing that because Section 18 has this result, it should be supposed that the principles which would have been applicable to apportionment at the time of the execution of the deed can have no application. We are unable to see that the argument leads to the result aimed at. As we have pointed out, the results upon which the argument is based only accrue at the stage of Section 18 and that is a stage which only arises after a decree has been made by application of the provisions of Section 14. On the other hand, the stage of apportionment contemplated by Section 9 (5) (a) is a stage which is really preliminary to the stage of Section 14. It seems to us that the argument which has been put forward does not lead to any certain conclusion and is not a helpful argument in the sense that it would afford a clear guide to the correct principle of apportionment. It would also operate to deprive the mortgagees of the very valuable right arising out of Section 82 in view of which they accepted a mortgage at a time when they might otherwise have been driven to take more drastic action against their debtor. There is in existence a principle of apportionment which, in our judgment, is not overridden by the provisions of the Encumbered Estates Act and until we can find a good reason for discarding that principle, we think it should be followed. Upon this view, we must allow this appeal and set aside the order of the special Judge dated 13th December 1939. It will now be necessary for him to proceed to apportion the debts by application of the principles underlying Section 82, T. P. Act. We accordingly remand the case, so far only as it relates to the claim of Kesho Das appellant, to the Court below for disposal according to law. The creditor appellant will have his costs of this appeal from the landlords applicants. Costs in the Court below will abide the result.


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