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Jagat Singh and ors. Vs. Jai NaraIn and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1927All482; 101Ind.Cas.877
AppellantJagat Singh and ors.
RespondentJai NaraIn and ors.
Excerpt:
- - 95): the entire 20 biswas in the village ramnagar jagatpur and the entire 20 biswas in the village pasgawan as well as 10 biswas in the village daothan were purchased by damodar das for rs. they admittedly failed to lead evidence in the matter. it is well recognised now that equity of redemption is as much property under the transfer of property act as actual physical immovable property. it was a suit for sale of the equity of redemption by a subsequent mortgagee, a suit well recognised in these provinces except during the period during which the rule laid down in the case of mata din kasodhan v. justice banerji held in that case, that the sale (like the one of 1881 in this case) having been the outcome of a suit under section 67 of the transfer of property act (no......security for payment of the mortgage money at the time of redemption should the value of the two villages mortgaged with possession prove insufficient to pay the debt. the rate of interest, and the collection charges were fixed by agreement between the parties. the result of the transfer was that damodar das took possession as mortgagee of the two villages, and obtained a lien by way of a simple mortgage over the third village. four days later on 24th april 1877 the mortgagee leased the two villages ramnagar jagatpur and pasgawan to the mortgagors and on the same day the mortgagors hypothecated the two villages and half share in village deothan as security for payment of the lease money agreed to be paid under the lease of the same date. a charge was created in clause (6) in the.....
Judgment:

1. This is an appeal by the plaintiffs from the dismissal of their suit for redemption of a mortgage. They are the song and grandsons of Bahadur Singh and Tundi Singh who executed the mortgage in suit on 20th April 1877 in favour of Damodar Das for a sum of Rs. 22,000. Under the mortgage two villages Ramnagar Jagatpur and Pasgawan were mortgaged with possession, and half share in Mouza Deothan was hypothecated by way of security for payment of the mortgage money at the time of redemption should the value of the two villages mortgaged with possession prove insufficient to pay the debt. The rate of interest, and the collection charges were fixed by agreement between the parties. The result of the transfer was that Damodar Das took possession as mortgagee of the two villages, and obtained a lien by way of a simple mortgage over the third village. Four days later on 24th April 1877 the mortgagee leased the two villages Ramnagar Jagatpur and Pasgawan to the mortgagors and on the same day the mortgagors hypothecated the two villages and half share in village Deothan as security for payment of the lease money agreed to be paid under the lease of the same date. A charge was created in Clause (6) in the following words:

In security of the lease money we hypothecate the 20 biswa share in each of the villages Ramnagar Jagatpur and Pasgawan named above, and the 10 biswa share in mauza Deothan in addition to the charge of the mortgage money due under the mortgage deed dated the 20th April 1877.

2. As usually happens in these cases, the mortgagors behaved as if nothing had happened, went on pocketing the profits of the villages and paid nothing to the mortgagee-lessor. The result was that under Clause (2) of the lease Bahadur Singh and Tundi Singh were ejected from the two villages on 15th May 1879. After taking possession of the two villages Damodar Das instituted a suit to enforce the simple mortgage of 24th April 1877 against the three villages on 10th June 1880 for recovery of the amount of arrears of lease money. The prayer in that suit was that a money decree may be passed, and in case of default of payment the property subsequently hypothecated, that is, the three villages, may, subject to the prior hypothecation lien created under the mortgage deed of 20th April 1877, be sold by auction. The claim was admitted, and Damodar Das obtained a judgment and decree in terms of his prayer in the plaint. The property was put up to auction and purchased by Damodar Das himself in satisfaction of the decree. The terms of the sale certificate are (p. 95):

The entire 20 biswas in the village Ramnagar Jagatpur and the entire 20 biswas in the village Pasgawan as well as 10 biswas in the village Daothan were purchased by Damodar Das for Rs. 10,400-6-0 with proclamation that Rs. 22,000-0-0 the prior mortgage money, was due to the decree-holder in this suit and that a suit was brought by Carew and Company to the effect that the judgment-debtors had sold the jungle...in village Deothan...and that a claim was brought by Mt. Rupni, daughter of Jagat Singh, a minor, to the effect that the property advertised for sale was ancestral, and the judgment-debtors had spent the money for unlawful purposes, and that Rs. 1,000-0-0 were in arrears in village Deothan.

3. This is a clear narration of the disabilities alleged to attach to the property and what would or might affect the property in the hands of the auction purchaser.

4. In the lower Court the argument was that the property did not pass to Damodar Das because the sons of the mortgagors were not parties to the decree. It is obvious that to render a sale ineffectual on that ground it was necessary for the plaintiffs to prove that the debts were contracted for immoral purposes. They admittedly failed to lead evidence in the matter.

5. In this Court, however, all other grounds of appeal were abandoned and the plaintiff-appellants' learned Counsel Dr. Sapru confined himself to only one argument that the sale certificate did not transfer the equity of redemption to Damodar Das because the usufructuary mortgage was saved and therefore the plaintiffs still had an existing right for the redemption of the usufructuary mortgage in suit. The one question therefore presented to us for decision is whether by the sale of the 22nd of November 1881 duly confirmed by the Court executing the decree, the mortgagors' right in the equity of redemption was extinguished or not. The learned Counsel's argument was that the equity of redemption was preserved to the mortgagors. If so, the conclusion must be that nothing was sold. If the purchaser had been some person other than Damodar Das he would have paid Rs. 10,400-0-0 without obtaining any rights in the property, because on the one hand he was liable to redemption, according to the learned Counsel, by the mortgagors, and on the other a usufructuary mortgagee was in physical possession of the property. It will be helpful to consider for a moment the situation as it existed on 15th May 1879 when Bahadur Singh and Tundi Singh were ejected from possession of the property. The rights of Damodar Das on that day were a charge on two villages under the usufructuary mortgage dated 20th April 1877 and a subsequent charge on them under the simple mortgage of the 24th of April 1877. On village Deothan he had two liens, one under the usufructuary mortgage of 20th April 1877, and the other under the simple mortgage of 24th April 1877, Thus, after preserving his rights under the mortgage of 20th April, he was entitled to bring to sale the equity of redemption in all the three villages under the simple mortgage of 24th April. It is well recognised now that equity of redemption is as much property under the Transfer of Property Act as actual physical immovable property. There can be no doubt that what Damodar Das did was to sue in 1880 for the sale of this equity of redemption, and when a decree was passed, what was put up to auction was this equity of redemption. It was the equity of redemption owned by Bahadur Singh and Tundi which was sold at auction, and after the sale it no longer remained their property.

6. It was argued that the sale was void by reason of the principles enacted subsequent to the sale in Section 99 of the Transfer of Property Act (No. 4 of 1882), which ran as follows:

When a mortgagee in execution of a decree for the satisfaction of any claim, whether arising under the mortgage or not, attaches the mortgaged property, he shall not be entitled to bring such property to sale otherwise than by instituting a suit under Section 67.

7. What happened in the present case, however, was that the property (equity of redemption) was brought to sale by instituting a suit similar to one under Section 67 of the Transfer of Property. Act and not otherwise. Secondly, the terms of this section are much wider than the equitable principle applying to such a case, and therefore the prohibition of the enactment cannot be applied in the very terms of the section to a sale which took place prior to 1882. The equitable principle is now laid down in the present Code of Civil Procedure, Order 34, Rule 14, which repealed the provisions of Section 99. The rule lays down:

Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage.

8. This is the equitable principle laid down by their Lordships of the Privy Council in Khairajmal v. Daim [1905] 32 Cal. 296, Possibly the attention of their Lordships was then not called to the wider terms of Section 99 of the Transfer of Property Act What they said was:

But the Judge has made a decree for redemption of the whole estate, on the ground that the mortgagees could not acquire the equity of redemption directly or indirectly by purchase at a Court sale except by a suit brought on the mortgage, on account taken and time specially allowed for redemption Their Lordships throw no doubt on the principle, which has been acted on in many cases in India, that a mortgagee cannot, by obtaining a money decree for the mortgage debt and taking the equity of redemption in execution relieve himself of his obligations as mortgaged, or deprive the mortgagor of his right to redeem on accounts taken, and with the other safeguards usual in a suit on the mortgage.

9. We are of opinion that in 1881 when the sale took place the principle of equity enunciated by their Lordships was applicable and not a prohibition as laid down in Section 99 of the Transfer of Property Act. In addition to this, we have already given reasons for holding that even if the principle of the provisions of Section 99 of the Transfer of Property Act applied in terms to the sale of 1881, the equity of redemption in the auctioned property will not be saved to the mortgagors after the sale was confirmed.

10. We have avoided in discussing the learned Counsel Dr. Sapru's arguments a reference to a Full Bench ruling of this Court, Lal Bahadur v. Abharan Singh [1915] 37 All. 165 which would be a complete answer to his arguments. That ruling is in sharp conflict with an earlier ruling of a Divisional Bench of this Court Sirdar Singh v. Ratan Lal [1914] 36 All. 516. It was not necessary for us to inquire whether the sale of 1881 was void or only voidable, because the sale was not held in execution of a money decree, nor in execution of a decree arising out of the mortgage, which is the subject of the present suit. That decree itself was a decree for sale on foot of a mortgage and obtained, as observed by their Lordships in Khairajmal v. Daim [1905] 32 Cal. 296, on accounts taken, and with the other safeguards usual in a suit on the mortgage. It was a suit for sale of the equity of redemption by a subsequent mortgagee, a suit well recognised in these provinces except during the period during which the rule laid down in the case of Mata Din Kasodhan v. Kazim Husain [1891] 13 All. 432 (F.B.). overruled in Balmakund v. Mt. Sangari [1897] 19 All. 379 prevailed in this Court. The facts of the present case are, in our opinion, similar to those of Parmanand v. Daulat Ram [1902] 24 All. 549 with this difference that sale of an equity of redemption is now held to have been contemplated by the Transfer of Property Act. The learned Chief Justice (Sir John Stanley) and Mr. Justice Banerji held in that case, that the sale (like the one of 1881 in this case) having been the outcome of a suit under Section 67 of the Transfer of Property Act (No. 4 of 1882) did not offend against Section 99 of the Act.

11. The appeal fails and is dismissed with costs.


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