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Tansukh Rai and anr. Vs. Sri Gopal - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Judge
Reported inAIR1921All131; (1921)ILR43All677
AppellantTansukh Rai and anr.
RespondentSri Gopal
Excerpt:
.....arising out of mortgage referred to arbitration--award ignoring the mortgage andgiving a simple money decree--decree held to be executable against the property formerly mortgaged. - - recent cases in this court have clearly established the principles on which this provision should be applied. 'i cannot do better than quote, as i quoted in my judgment in that case, the statement of the subordinate judge. ' it clearly contemplates an existing surviving mortgage. it clearly does not contemplate a claim when the mortgage has ceased to exist. in addition to this the mortgagor failed to hand over possession of all the property. but he sued in the civil courts for compensation, alleging the original loan, the unpaid rent, the failure to give possession, and, stated shortly in commercial..........decisions by benches of this court. the question is whether a mortgagee who has obtained a simple money decree, has obtained such decree in satisfaction of a claim arising under his mortgage within the meaning of order xxxiv, rule 14, of the code of civil procedure, so as to present him from bringing the mortgaged property to sale in execution of his decree. the lower court has decided the question against the mortgagee, who appeals. it seems superfluous in these days to point out once more that this provision in the first schedule to the code supplements old section 99 of the transfer of property act in a modified form, more favourable, if that be an appropriate expression, to the mortgagee, and the principle aimed at, and the mischief sought to be avoided, by this enactment is that,.....
Judgment:

Walsh, J.

1. This is an Execution First Appeal raising a question which is by no means infrequent and which is constantly accompanied with difficulties of solution. The learned Judge from whose order the appeal is brought rightly says that it is not free from difficulty. He evidently felt doubts himself. The only criticism which one can pass upon his judgment is that lie relied upon somewhat antiquated reports, in the face of some recent decisions by Benches of this Court. The question is whether a mortgagee who has obtained a simple money decree, has obtained such decree in satisfaction of a claim arising under his mortgage within the meaning of Order XXXIV, Rule 14, of the Code of Civil Procedure, so as to present him from bringing the mortgaged property to sale in execution of his decree. The lower court has decided the question against the mortgagee, who appeals. It seems superfluous in these days to point out once more that this provision in the first schedule to the Code supplements old Section 99 of the Transfer of Property Act in a modified form, more favourable, if that be an appropriate expression, to the mortgagee, and the principle aimed at, and the mischief sought to be avoided, by this enactment is that, inasmuch as equity has always leaned against any attempt to clog or destroy the equity of redemption, a mortgagee who has substituted mortgagee rights may not, give the go-by to the mortgage and the rights given by the mortgage against the security, and obtain a simple money decree and then endeavour to sell under the decree the property originally mortgaged, and by becoming purchaser, acquire the proprietorship unencumbered by the equity of redemption. Recent cases in this Court have clearly established the principles on which this provision should be applied. On one side of the line there is the decision in the case of Kadma Pasin v. Muhammad Ali (1919) I.L.R. 41 All. 399, decided by my brother PIGGOTT and myself. There the decree had been obtained upon an agreement which had been entered into not in substitution of or modification of but to supplement the mortgage-deed. 'I cannot do better than quote, as I quoted in my judgment in that case, the statement of the Subordinate Judge. He says: 'It seems to me to be drawing an unjustifiably subtle distinction to say that the claim arose, not under the mortgage, but under the separate agreement, when that agreement was made as a direct consequence of the mortgage, and as a means of giving effect to the conditions of the mortgage.' On the other side of the line are two recent decisions: one, the case of Chedi Lal v. Saadat-un-nissa Bibi (1916) I.L.R. 39 All. 36, to which also I was a party, where it was held that the bar created by Rule 14 of Order XXXIV did not apply where the mortgage had become extinct by the expiration of time; and the other, the case of Suraj Narain Singh v. Jagbali Shukul (1920) I.L.R. 42 All. 566, where my brothers Tudball and Sulaiman after examining into the facts of the case, held that the bar did not apply because the mortgagee seeing the force of the mortgagor's contention that the mortgage was not enforceable, had to abandon his claim under the mortgage. The vital words of Rule 14 are these: 'In satisfaction of a claim arising under the mortgage.' It clearly contemplates an existing surviving mortgage. It clearly does not contemplate a claim when the mortgage has ceased to exist. It would require words such as 'arising out of,' or 'in relation to,' in order to give such an effect to the provision. The duty of the court, therefore, in all these cases and in this case - the task is by no means a simple one - is to examine all the circumstances, and particularly the conduct of the parties where there has been previous litigation over the mortgage. Shortly stated, the circumstances of this case are that the mortgage was granted for sir land and also certain zamindari. In breach of the provisions of the Agra Tenancy Act the mortgagee carried out the usufruct, so far as the air land is concerned, by leaving the proprietor or mortgagor in possession under a rent agreement in which the rent had not been fixed as required by the Agra Tenancy Act. Presumably the rent, if fixed, would have been insufficient co compensate the mortgagee, and the arrangement appears to have been in the nature of a collusive one, so familiar in these courts, to defeat the provisions of the Statute. Controversy having arisen in the Revenue Court, the kabuliat was declared to be invalid. In addition to this the mortgagor failed to hand over possession of all the property. The result was to leave the mortgagee in considerable difficulty. Ho might have contented himself with suing for a simple money decree upon the covenant in the mortgage. He did not do that; but he sued in the Civil Courts for compensation, alleging the original loan, the unpaid rent, the failure to give possession, and, stated shortly in commercial language, the general loss of his security. The plaint was very badly framed and if the gentleman responsible for it had wanted to make the position of the mortgagee as difficult as possible, he could not have done better. The defendant, who is now respondent, attacked the validity of the mortgage in his written statement. There wore other defendants, minor members of the mortgagor's family, who even disputed its validity on the ground of want of legal necessity; but in the result the parties went to arbitration, and the matter ended in an award which was eventually filed as a decree. Both parties in the appeal before us have relied upon the award and the proceedings in arbitration in support of their case. Without going into detail I have come to the conclusion that the parties before the arbitrator treated the mortgage as no longer in existence or as no longer effective as a valid security, and that the award was made upon that basis. The arbitrator took into account the profits enjoyed by the mortgagee in the past, the rents or rent payable by the mortgagor and debited the decree-holder with the possession to the extent to which he had enjoyed it as against the mortgagor, dealing however, in my view, with that possession only as an item on the other side of the account. In passing, I might Bay that it must be taken at the result of our decision that the appellant is not in possession either as mortgagee or under any legal title; that he can be ejected, and that he is completely estopped from setting up any claim to possession. Mr. Narain Frasad Ashthana urged upon us with great force that there had been no legal decision, as there had been in the authorities I have referred to, denouncing or destroying the validity of the mortgage as such and that the appellant still had mortgagee rights open to him to exercise, if ho saw fit. It is en this part of the case, in my opinion, that the respondent's case breaks down. It seems to me that the decree enforcing the award in this case has put it out of the power of the mortgagee for all time to assert the existence of the mortgage or the survival of any mortgagee rights. The legal character of his claim to which the arbitrator has given, effect, cannot be better stated than was stated by Mr. Justice Straigat in his judgment in the case of Mahesh Singh v. Chauharja Singh Weekly-Notes 1882 p. 31. He says: 'It was true that the relief prayed for in the plaint was not precisely asked in this form; but in treating the suit as one for damages, it could be determined upon a cause of action disclosed on the face of the pleadings and in accordance with the evidence given in the case. In estimating the measure of damages to be decreed, the principal sum with interest at the rate specified in the contract might fairly be taken as a reasonable guide.' The case chiefly relied upon by the Judge in the Court below, Narsingh Das v. Musammat Munna (1909) 6 A.L.J. 731, was decided before the change in the law made by the order which we are now interpreting, I, have, therefore, come to the conclusion on the special circumstances of this case, and not without some hesitation, that the appeal succeeds and that the mortgagee is entitled to execute his decree against the property in question.

Wallach, J.

2. Order XXXIV, Rule 14, does not apply unless the decree obtained by the mortgagee is for the payment of money in satisfaction of the claim arising under the mortgage. It must be a subsisting mortgage and not one which by reason of the Row of time or any other like circumstance, has ceased to be enforceable by law. In the case before us it appears that the judgment-debtor, who is respondent, pleaded in the suit which was referred to arbitration, that the conditions of the mortgage were unenforceable in law and were totally void. Although the arbitrator has not said so in so many words, in my opinion he accepted that view and gave a money decree. That being so, the mortgage not being subsisting, and, having been found to be unenforceable in law, the case is clearly one which does not fall under Order XXXIV, Rule 14. The ruling in the case of Suraj Narain Singh v. Jagbali Shukul (1920) I.L.R. 42 All. 488 applies and in my opinion, therefore, this appeal should be allowed.

3. The order of the Court is that the appeal is allowed. The matter should be remitted to the Lower Court according to law in accordance with this judgment, and the appellant must have his costs.


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