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Ahmad-ud-dIn Khan Vs. Hari Raj Singh - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad High Court
Decided On
Judge
Reported in(1897)ILR19All545
AppellantAhmad-ud-dIn Khan
RespondentHari Raj Singh
Excerpt:
act no. iv of 1882 (transfer of property act), section 82 - mortgage--contribution--principles upon which contribution is to be assessed. - - 77 and have, like the plaintiff's villages, fetched more than their quota of liability for the decree. the unsold portion of the mortgaged property affords the fund out of which the claims of all the persons whose villages have contributed more than their own share of liability must be satisfied. if that fund is large enough to meet the claims of all, those claims must be satisfied in full, but if, by reason of some of the villages sold not realizing their full value at auction, the fund be insufficient fully to discharge all the claims, a rateable reduction must be made. in that case the claims will only be satisfied proportionately......from the value of each property the amount of any other incumbrance to which it is subject at the date of mortgage.' this rule is based on the principle 'that a fund which is equally liable with another to pay a debt shall not escape because the creditor has been paid out of that other fund alone.'--(fisher on mortgages, 4th edition, p. 659). it therefore follows that such of the mortgaged properties as have been sold for realization of the mortgage-money and have thus contributed to the mortgage debt are not liable to a claim for contribution, and that such a claim can only be advanced by the owners of those villages which have contributed more than their rateable share of the debt and against those portions of the mortgaged property only which have not contributed to the mortgage debt.....
Judgment:

Banerji and Aikman, JJ.

1. This was a suit for contribution and arose, out of the following circumstances. On the 4th of July 1874, thirty-eight villages were mortgaged by Kadir Ali and Dmrao Begam to Raja Shiu Raj Singh, the father of the appellant. On the 28th of February 1878, he obtained a decree for sale under the said mortgage in suit No. 77 of 1877. This decree we will refer to in this judgment as decree No. 77 to distinguish it from two other decrees, Nos. 65 and 66 to which reference will also be necessary. In consequence of certain proceedings which it unnecessary to detail, nine villages and a fourth share of a tenth village ceased to be liable under decree No. 77, which therefore had effect only as against twenty-eight and three-fourth villages. Four of the villages affected by this decree were sold in execution of a simple money decree, and were acquired by the plaintiff from the purchasers. Those villages were brought to sale on the 20th of August 1879, and 20th of August 1882, in execution of decree No. 77, and they fetched at auction Rs. 44,500. The plaintiff states that the proportionate amount due from his villages on account of the decree No. 77 was Rs. 22,370-1-0. He sues to recover the difference from the defendants on the ground that the defendants are owners of villages which were equally liable with the plaintiff's villages under decree No. 77, but which have contributed nothing towards the satisfaction of that decree. Six of those villages and an eighth share in a seventh were purchased by Raja Shiu Raj Singh, in execution of simple money decrees, and a share in an eighth village was similarly purchased by Janki Das, the predecessor in title of defendants Nos. 2 to 5. It is from these villages that the plaintiff seeks to obtain contribution. He' has got a decree for the principal amount of his claim, but without interest. Against this decree the defendants have preferred this appeal and First Appeal No. 299 of 1893, and the plaintiff has filed a cross-appeal, (No. 287 of 1893) in respect of the refusal of interest. It is contended on behalf of the defendant-appellant that the principle upon which the plaintiff has apportioned among the several villages liable to contribute to the decree No. 77, the amounts of their proportionate liability is erroneous; that he has not taken into account the liabilities which existed on most of those villages under the prior mortgages upon which decrees Nos. 65 and 66 were passed; that the plaintiff is entitled to claim contribution from those villages only which have not been sold in execution of decree No. 77; that the unrealized balance of that decree must be regarded as the amount which the villages purchased by the decree-holder himself have contributed to the decree, and that in determining the amount which the plaintiff is entitled to recover regard must be had to the claims-for contribution of the owners of such of the other mortgaged villages as have been sold in execution of decree No. 77 and have, like the plaintiff's villages, fetched more than their quota of liability for the decree.

2. In our opinion these contentions are valid and must prevail.

3. By Section 82 of Act No. IV of 1882 'where several properties, whether of one or several owners, are mortgaged to secure one debt, such properties are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, after deducting from the value of each property the amount of any other incumbrance to which it is subject at the date of mortgage.' This rule is based on the principle 'that a fund which is equally liable with another to pay a debt shall not escape because the creditor has been paid out of that other fund alone.'--(Fisher on Mortgages, 4th Edition, p. 659). It therefore follows that such of the mortgaged properties as have been sold for realization of the mortgage-money and have thus contributed to the mortgage debt are not liable to a claim for contribution, and that such a claim can only be advanced by the owners of those villages which have contributed more than their rateable share of the debt and against those portions of the mortgaged property only which have not contributed to the mortgage debt and have benefited by the sale of the property of the claimants for contribution. The unsold portion of the mortgaged property affords the fund out of which the claims of all the persons whose villages have contributed more than their own share of liability must be satisfied. This is a consideration which the plaintiff has entirely kept out of view in putting forward his claim.

4. The next observation which we deem it necessary to make is that the villages which were liable to contribute to the decree No. 77 were not all the villages comprised in the mortgage on which that decree was passed, but those of the mortgaged villages only against which the decree could be enforced. Such of the mortgaged villages as had been sold in execution of decrees obtained upon prior mortgages could not be proceeded against for realization of the amount of decree No. 77. It is admitted by both the parties that the entire villages Aurangzebpur and Lakhiwala, 17 biswas of Begampur Haru and 1 biswas of Mansa were sold in satisfaction of prior mortgages. Those villages were not therefore liable under the decree No. 77, and should, in addition to the nine and a quarter villages to which we have referred at the commencement of this judgment, have been excluded from the list of villages affected by that decree. Under Section 82 of Act No. IV of 1882, the liability of the villages from which the holder of the decree No. 77 was entitled to realize the amount of that decree is proportionate to the value of each village, after deducting from such value the amount of the incumbrance or incumbrances to which each village was liable on the date of the mortgage on which decree No. 77 was passed, that is, on the 4th of July 1874. The plaintiff in preparing the account filed with his plaint has wholly ignored the provisions of Section 82; and the admitted fact that several of the villages liable under the decree No. 77 were also liable under decrees Nos. 65 and 66, or one of them, on the date of the mortgage which formed the basis of the decree No. 77. The proportionate amount for which those villages were liable under decrees Nos. 65 and 66 should have been deducted from the value of those villages as required by the aforesaid section.

5. The plaintiff has calculated the rateable share of the liability of the several villages with reference to the amount of Government revenue assessed on and payable by each village and not according to its actual market value. This course has been adopted by the Court below also. Exception was at first taken on behalf of the appellant to this mode of calculation, but the objection was subsequently waived and the learned Counsel on both sides agreed that the amount of revenue payable for each village should be taken as the measure of the profits yielded by each. The learned Counsel for the appellant has asked us to hold 18 times the annual revenue to be the value of each village for the purposes of this suit. Having regard to the prevailing selling price of property of this description, which varies from 16 to 20 years' purchase, we think that 18 years' revenue may reasonably be assumed to be the fair value of the villages in question, and that for the purpose of apportioning be each village the amount of its rateable share of the mortgage debt we may take 18 times the Government revenue to be the value of each. From this value should be deducted the proportionate amount of the incoumbrances to which each village was subject under the decrees Nos. 65 and 66 at the date of the mortgage.

6. The learned Counsel on both sides have agreed that out of the 31 villages against which decree No. 65 was passed, one, namely, Haji Muhammadpur was sold by auction in satisfaction of a prior mortgage, and was not therefore liable under that decree. It is also agreed that the same village, which was one of the 28 villages against which decree No. 66 was passed, was for the same reason not liable under the decree No. 66. It is further agreed that of the villages which were liable to contribute to the decree No. 77, the following namely Chela, Cheli, Jafarpur Kot, Ghalib Alipur Chandki and Chak Khojawala were not included in decrees Nos. 65 and 66, and were not therefore subject to any incumbrance under those decrees, and that the villages Muhammadpur Tilok, Bhagwanpur Partab and Yar Muhammadpur Pirthi were not liable under decree No. 66. It is further admitted that the villages Tanda Maidaswala, Sipah and Basanta were, before the date of the mortgage of the 4th of July 1874, upon which decree No. 77 was passed, sold by auction in execution of decree No. 65 and purchased by Umrao Begam and that Umrao Begam mortgaged them to Raja Shiu Raj Singh under the mortgage-deed of the 4th of July 1874. Those villages were not therefore subject to any, prior incumbrance on that date. This being so, no deduction should be made on account of any prior incumbrance from the value of nine out of the twelve villages mentioned above, and from the value of three namely, Muhammadpur Tilok, Bhagwanpur Partab and Yar Muhammadpur Pirthi a rateable reduction should be made on account of decree No. 65 only.

7. The next question to be considered is - what, on the 4th of July 1874, were the amounts of incumbrances under decree Nos. 65 and 66 on the villages liable to contribute to decree No. 77

8. As regards decree No. 65 it appears that prior to that date three of the villages affected by that decree were sold by auction and Rs. 39,516 was thus realized. Whilst it is urged on behalf of the plaintiff that the balance of the decretal amount should be regarded as the sum for which the villages affected by decree No. 77 were liable, it is contended by the learned Counsel for the defendant appellant that the whole amount of decree No. 65 should be taken into account, inasmuch as the owners of the villages which were sold in execution of that decree were entitled to claim from the unsold villages contribution for the amount realized from their villages in excess of their legitimate share of liability, and consequently the unsold villages continued to be liable for the proportion of the decretal amount for which they were originally liable. The former contention has found favour with the Subordinate Judge, but in our opinion it is unsound and untenable. It is true that the mortgagee realized by the sale of some of the mortgaged villages a large portion of the decretal amount, and that under the decree itself the unsold villages were liable for the balance of that amount only. But, as the appellant rightly argues, the owners of the villages which were sold for the realization of the decretal amount were entitled to claim contribution from the unsold villages in respect of the amount realized from their villages in excess of that for which they were liable. As a matter of fact the owners of the villages which have been sold have brought suits for contribution and obtained decrees. The unsold villages, therefore, continued to be liable, not only for the balance of the decretal amount, but also for the excess amounts contributed by the villages which were sold. So that the extent of their original liability remained the same. For this reason the proportionate amount for which the unsold villages were liable under decree No. 65 should be calculated with reference to the full amount which would have been due under that decree on the 4th of July 1874, had no sale taken place under it. We find from the office report printed at p. 3 of the respondent's book that Rs. 49,515-7-9-were due on the 10th of August 1874. Excluding interest for the period between the 4th of July and the 10th of August 1874, the amount payable on the 4th July 1874, was Rs. 49,233-7-9, or in round numbers Sections 49,230, which we adopt for facility of calculation. The proportionate liability of the villages subject to the operation of decree No. 65 should be calculated with reference to the above amount.

9. As for decree No. 66, the parties are agreed that the amount due upon that decree on the 18th of July 1874, was Rs. 20, 283-13-3, as found by the Court below in its answer to the reference made by us under Section 566 of the Code of Civil Procedure. That date was referred to through an oversight. We hold that the amount due on the 4th of July 1874, was Rs. 20,240 in round figures.

10. As we have said above, the plaintiff in preparing the statement showing the amounts of the rateable liability of each village, has not complied with the provisions of Section 82 of Act No. IV of 1882. He has altogether ignored the prior incumbrances existing on those villages on the date of the mortgage of the 4th of July 1874. For preparing a correct statement the amount of liability of each village under decree No. 65 should have been first calculated. Then should have been calculated the amount for which the villages were liable under decree No. 66, and in doing so, the amount of the prior incumbrance to which those villages were subject under the mortgage which resulted in decree No. 65 should have been deducted. The decree No. 66 was passed upon a mortgage bond, dated the 28th of April 1873. The bond upon which decree No. 65 was made was dated the 12th of December 1867, and was for Rs. 31,000 bearing interest at the rate of 12 annas per cent, per mensem. The suit in which decree No. 65 was passed was instituted on the 22nd of July 1873, and the amount of principal and interest claimed as duo on that date was Rs. 44,155-8. The amount due on the 28th of April 1873, the date of the bond on which decree No. 66 was founded, was therefore Rs. 43,500 in round figures. This is the amount of the prior incumbrance to which the villages affected by the decree No. 66 were subject on the 28th of April 1873, and which should be deducted from the value of those villages. A statement prepared in this manner would have given the correct value, of each village liable to contribute to decree No. 77 with reference to which its proportion of liability was to be apportioned.

11. There is no dispute between the parties as to the amount due upon the decree No. 77 on the 20th of August 1879, the date on which the major portion of the plaintiff's Villages were Sold. That is the date with reference to which the plaintiff has made his calculations, and counsel for the appellant have consented to that date being adopted for convenience of calculation as the date on which the plaintiff became entitled to claim contribution.

12. The next question to be determined is whether the unrealised balance of the decree No. 77 should, as urged on behalf of the appellant, be treated as the amount contributed by the villages purchased by Raja Shiu Raj Singh to the discharge of the decree. It is stated that it was on the assumption that the purchase of those villages had discharged the amount of the balance, that no steps were taken to realize that balance by execution of the decree and that the appellant Raja Hari Raj Singh, who is now the holder of decree No. 77, is ready and willing to enter complete satisfaction of that decree. We are of opinion that the balance due upon the decree No. 77 should be treated as the amount contributed by the villages purchased by the mortgagee decree-holder.

13. All the mortgaged villages were liable, in the absence of a contract to the contrary, to contribute to the mortgage debt in proportion to their value. The villages purchased by the mortgagee were therefore liable to bear their share of the debt. The mortgagee decree-holder was not entitled to take out execution of his decree without crediting towards the decretal amount the sum which represented that share: were he allowed to act otherwise, he would have the advantage of throwing the whole burden of the mortgage debt on the mortgaged villages other than those purchased by himself and thus of relieving the villages last mentioned of the liability which Section 82 of Act No. IV of 1882 imposes on them. Those villages must therefore be held to have contributed the balance of the decretal amount as their quota of the debt. We are unable to accede to the contention of Mr. Sundar Lal, the learned Counsel for the respondent, that by taking into account the whole amount of the decree in calculating the share of liability of the plaintiff's villages, the plaintiff has given credit for all that the mortgagee decree-holder is entitled to, and that if he be allowed to treat the balance of the decretal amount as the contribution of his villages he would get credit for that amount twice over. As we have said, each of the mortgaged villages was bound to bear its rateable share of the debt. The plaintiff's villages equally with the villages purchased by the mortgagee, were liable for their share. The amount of the plaintiff's share has been realized by the sale of his villages. The amount contributed by the mortgagee to the discharge of his share is the balance due upon the decree. The mortgagee is therefore entitled to ask that, equally with the plaintiff, he should be allowed credit for the amount which his villages must be deemed to have contributed. By giving him credit for that amount we shall not be crediting him twice over with the same sum. The balance of the decretal amount appears from the' statement filed by the plaintiff with his plaint to be Rs. 9,274-9-10, being the difference between Rs. 86,071-9-10, the amount of the decree, and Rs. 76,797, the portion of it which has been realized by the sale of several villages, and the correctness of these figures has not been questioned. This sum of Rs. 9,274-9-10 should be apportioned amongst the several villages purchased by Raja Shiu Raj Singh as the quota of contribution of each of them.

14. The only question which now remains to be considered is whether the plaintiff is entitled to recover the whole amount contributed by his villages in excess of their own share of liability from such of the unsold villages as have not contributed either the full amount of their rateable share or a portion of that amount. In our judgment he is not entitled to do so. As we have said, unsold villages which have not contributed their full proportion of the debt afford the fund out of which the claims of all the persons who are entitled to contribution should be met. In this case the statement filed by the plaintiff himself shows that it is not the villages of the plaintiff only which have contributed more than their own quota, but that there are eight other villages which have made similar contributions. The owners of those villages are entitled to claim contribution equally with the plaintiff, and they also have to look to the fund to which we have referred above. If that fund is large enough to meet the claims of all, those claims must be satisfied in full, but if, by reason of some of the villages sold not realizing their full value at auction, the fund be insufficient fully to discharge all the claims, a rateable reduction must be made. In that case the claims will only be satisfied proportionately. We have caused accounts to be prepared in the mode indicated above, one relating to decree No. 65, another to decree No. 66 and a third to decree No. 77. This last account shows that the plaintiff's villages contributed Rs. 14,421-1-10 in excess of the rateable amount for which they were liable under decree No. 77; and that other villages have similarly contributed Rs. 7,653-9-3 in excess of their, share of liability. The owners of those villages were also entitled to claim contribution on the date of the plaintiff's suit. The statement further shows that the fund which is available to all the persons whose villages have contributed in excess of their quota of the mortgage debt is Rs. 7,064-9-3, being the amount which the unsold villages have not contributed. The reason why this amount falls short of the sum necessary to recoup in full the owners of the villages which have contributed in excess of their quota, is that four of the villages, sold in execution of decree No. 77 realized much less than their proper value and did not contribute the full amount of their proportionate liability. Contribution, however, cannot, as we have said above, be claimed from them. The total amount which the plaintiff is entitled to recover from the unsold villages is Rs. 4,614-9-2. Out of this sum the villages purchased by Raja Shiu Raj Singh are liable for Rs. 2,195-12-1 and those purchased by Nand Kishore, Sundar Lal, Jugal Kishore and Dhanpat Rai are liable for Rs. 2,418-13-1. The plaintiff had not, however, claimed, probably by an oversight, to recover from Nathiwali, one of the villages purchased by Raja Shiu Raj Singh, but not sold in execution of decree No. 77, its share of liability for the amount due to the plaintiff. Therefore Rs. 87-9-4, the proportionate amount of liability of that village, should be deducted from the Rs. 2,195-12-1 mentioned above, and the plaintiff will recover the balance of Rs. 2,108-2-9 from the remaining villages purchased by Raja Shiu Raj Singh, namely, 'Begampur Haru, 2 biswas, and the entire villages Kanrawala, Kadirganj, Murtazabad, Rajpur, Bhajrawala, and Khandiwala, each village being declared liable for its own share out of that amount. He will similarly recover from the shares in the village Mansa purchased by Nand Kishore and other defendants Rs. 2,418-13-1, each share being liable for its own quota only.

15. In our opinion the plaintiff is not entitled to obtain interest on those amounts, and the Court below has rightly rejected this part of his claim. He purchased the property in respect of which he claims contribution for the small sum of Rs. 500, and he has now advanced this claim for upwards of Rs. 36,000. He made the purchase evidently as a speculative bargain. The auction sale of his villages in execution of decree No. 77 took place so far back as August 1879, only a few months after his own purchase, and, although his right to claim contribution accrued in that month, he did not institute his suit until twelve years afterwards. Under such circumstances the Court below has, we consider, exercised a wise discretion in refusing to award interest to this plaintiff for the period prior to the date of the institution of the suit. For the period subsequent to that date till realization he should, in our opinion, obtain interest at 6 per cent. per annum.

16. The result is that we allow the appeal and vary the decree below by making a decree in favour of the plaintiff for recovery of Rs. 2,108-2-9 with interest thereon at the rate of 6 per cent. per annum from the 20th of August 1891, the date of the institution of the suit, to the 1st of December 1897, which we hereby fix as the date for the payment of the amount decreed by us, or to the date of payment, if payment be made before the 1st of December 1897, together with proportionate costs here and in the Court below, by sale of the following villages purchased by Raja Shiu Raj Singh, the father of the defendant-appellant, namely, Begampur Haru, 2 biswas, and Kanrawala, Kadirganj, Murtazabad, Rajpur, Bhajrawala and Kandiwala, each village being liable to sale in the event of the proportionate amount of its liability not being paid on or before the 1st of December 1897. The decree will set forth the amount of the proportionate liability of each of the villages above-mentioned for principal, interest and costs. The appellant Raja Hari Raj Singh will get his costs here and in the Court below proportionately to the portion of the claim dismissed as against him.


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