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Ram Harakh and anr. Vs. Rodh Mal - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad High Court
Decided On
Judge
Reported in(1885)ILR7All711
AppellantRam Harakh and anr.
RespondentRodh Mal
Excerpt:
.....acquired for valuable consideration and interest in either property. ' the principle of equity on this subject is very clearly laid down in the text-books (chap. 54. and that bona fide purchasers from judgment-debtors have a right to have the debts satisfied from the unsold estate or that last sold. but the question in this case is, whether in a suit framed like the present, in which the plaintiff sues to recover a certain sum of money, and having regard to the array of parties, such a question can be determined?.....judgment, and this right is paramount to that of subsequent creditors having a lien only on the unsold property, to have the prior creditor, who had a lien on both, satisfy himself from the estate which had been sold.--mccormick's appeal 57 pem. st. 54. and that bona fide purchasers from judgment-debtors have a right to have the debts satisfied from the unsold estate or that last sold.'3. i have not been able to refer to the authorities upon which this proposition is based, but this view of the law, as i have already shown, has been taken in various cases in this country. it is clear to me that the decree of the lower courts cannot stand in the present form. i must now consider the second question--as to apportionment. there is no doubt that if the defendant is compelled to pay more.....
Judgment:

Mahmood, J.

1. In the second appeal before us, two questions have been argued, the first one relates to marshalling, and the second relates to contribution or apportionment. It is admitted that when this property was brought to sale, the mortgage of the 17th July 1875, was not notified, and no evidence was adduced by the plaintiff to show that the defendant-appellant had notice of the aforesaid mortgage. Is the defendant-appellant then entitled to a decision in his favour on the two questions? In the first place, I refer to the formulation of the rule in Section 81 of the Transfer of Property Act (IV of 1882), not because the rule is literally applicable to this case (which it is not), but because the principle of this rule applies equally to the facts of the present case. Now Section 81 runs as follows: 'If the owner of two properties mortgage them both to one person, and then mortgages one of the properties to another person, who has not notice of the former mortgage, the second mortgagee is, in the absence of a contract to the contrary, entitled to have the debt of the first mortgagee satisfied out of the property not mortgaged to the second mortgagee, so far as such property will extend, but not so as to prejudice the rights of the first mortgagee, or of any other person having acquired for valuable consideration and interest in either property.' This of course relates only to a puisne mortgage of a portion of the property, the whole of which was subject to a prior mortgage; but there is no reason why this doctrine should not be applied to the case of the defendant-appellant. The rule has been followed in several cases, and I now proceed to refer to some of the cases which are important. The first case I would refer to is the case of Tulsi Ram v. Munnoo Lal 1 W.R. 353. In this case the mortgagor, a few days after hypothecating a village as security to the Government, mortgaged the same village with other property to the plaintiff in that case. The deed of mortgage was immediately registered, but the security-deed was not registered till long afterwards, and under the Registration Act, XIX of 1841, the Court in that case considered that the mortgage-deed had priority over the security-bond. The village having been sold by the Collector on account of a sum due under the security bond, it was held by Morgan (now Sir Walter Morgan) and Shumboo Nath Pandit, JJ., that though the purchaser took subject to a prior mortgage yet the mode in which the property had been dealt with by the mortgagor entitled the purchaser to require that the other property should first be applied in satisfaction of the mortgage-debt. The second case that I would refer to is the case of Nowa Koer v. Abdul Rahim W.R. January to July 1864 p. 374. In that case Mr. Justice Jackson is reported to have said as follows: 'It appears that the plaintiff in this case had a lien on three estates belonging to the debtor, and that a third party, having obtained a decree for money due from the same debtors, recovered the money by the sale of one of the plaintiff's three mortgaged estates. This sale does not release that estate from the mortgage, but it forces the plaintiff to take measures, in the first place, to recover the amount due to him from the remaining estates included in his mortgage-deed. If any balance remains after he has realized all which he can realize from these two remaining estates, he can then return to the third estate to recover the balance. No injustice is done to the plaintiff by requiring him to take satisfaction out of funds which are within his power for this purpose, and so placed by the deed; while, on the other hand, very great injustice might be done to other parties by allowing the plaintiff to proceed against the estate which has been already sold.' And then, referring to facts very similar to those that exist in this case, the learned Judge went on to say: 'If, then, the plaintiff has entered into any new and subsequent contract, varying the terms of the first contract, he cannot thereby injure the rights of parties who have succeeded to the interest of his debtor prior to the subsequent contract.' The principle of equity on this subject is very clearly laid down in the text-books (chap. XII, Story's Equity Jurisprudence). There is another case--Bishonath Mookerjee v. Kisto Mohun Mookerjee 7 W.R. 483 but I wish to rely principally on the judgment of Norman, J., in that case, who has taken the same view as I take in this case. After laying down this rule with reference to a puisne mortgagee, that learned Judge proceeds to observe (p. 484)--'Of course, a subsequent purchaser of one of the estates has just as great an equity as an incumbrancer.' There is another case Khetoosee Cherooria v. Banee Madhub Doss 12 W.R. 114 in which the learned Judges doubted whether the doctrine of marshalling of securities should be introduced in this country. There is, however, no authority which goes the other way. I hold that the equities which apply to a puisne incumbrancer in the marshalling of securities apply also to a bona fide purchaser for value without notice, such as the defendant-appellant in this case.

2. In Mr. Justice Story's work on Equity Jurisprudence, vol. I there is a note at page 613 to the following effect: 'Where a judgment-debtor owned two tracts, subject to the lien of the judgment, and sold one tract, the vendee had a right to have the other tract first applied to the judgment, and this right is paramount to that of subsequent creditors having a lien only on the unsold property, to have the prior creditor, who had a lien on both, satisfy himself from the estate which had been sold.--McCormick's Appeal 57 Pem. St. 54. And that bona fide purchasers from judgment-debtors have a right to have the debts satisfied from the unsold estate or that last sold.'

3. I have not been able to refer to the authorities upon which this proposition is based, but this view of the law, as I have already shown, has been taken in various cases in this country. It is clear to me that the decree of the lower Courts cannot stand in the present form. I must now consider the second question--as to apportionment. There is no doubt that if the defendant is compelled to pay more than the share of the debt apportioned on the property, he is entitled to contribution. But the question in this case is, whether in a suit framed like the present, in which the plaintiff sues to recover a certain sum of money, and having regard to the array of parties, such a question can be determined? I am of opinion that such an apportionment cannot be made in this case at this stage after the manner in which it has been tried. In my opinion, the appeal should be partially decreed, and the decrees of the lower Court modified to the effect that the rights and interests of the defendant-appellant in mauza Bhawalpura should not be brought to sale till the plaintiff has, in the first instance, resorted to the share of Jaipal in Misarpura for recovering the mortgage-money, and that the share of the defendant-appellant be brought to sale for the purpose of recovering such balance as may remain due after the sale of Jaipal's rights in Misarpura. I would modify the decree of the lower Courts accordingly, but make no order as to costs.

Brodhurat, J.

4. I concur in modifying the decree of the Lower Appellate Court as proposed by my learned colleague.


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