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Ram Prasad Vs. Bishambhar Nath and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1934All772; 150Ind.Cas.1035
AppellantRam Prasad
RespondentBishambhar Nath and ors.
Excerpt:
.....whole amount of his hypothecation decree by the sale of the property therefore the plaintiff has a right to receive the profits of the property before the sale. that the mortgagor is ordinarily to bind himself personally to pay the mortgage money and that in case of failure to pay, the mortgagee is to have a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied in payment of the mortgage money. where there is a personal remedy still subsisting (not being barred by time), the mortgagor is liable to have his properties other than the mortgaged properties sold up in case the mortgaged properties fail to fetch the entire amount of the mortgage money......to the rightful man when the appeal is decided.2. the facts are that defendants 1 to 4 executed a simple mortgage on 19th february 1921 in favour of the plaintiff and defendant 13 for a period of two years, the mortgage money being rs. 8,000. on this mortgage the plaintiff brought a suit on 16th january 1931 for sale and that suit was decreed on the 4th august 1932. subsequently to that decree for sale the plaintiff made an application on the 27th august 1932 to the court in the following terms : that the plaintiff had obtained a hypothecation decree under order 34, rule 4, civil p.c.:it is submitted that the plaintiff's claim was only for principal and simple interest remitting compound interest simply because the property mortgaged was not sufficient to pay off the amount due. on.....
Judgment:

Bennet, J.

1. This is a first appeal from order brought by a defendant Ram Prasad against an order of the learned Subordinate Judge of Agra in the following terms:

The order dated 12th October 1932 is therefore affirmed to the effect that the tenantry shall henceforth make deposits in Court. Those deposits will be made over to the J.D. Bam Prasad on his giving security. The money shall remain in Court's deposit to be made over to the rightful man when the appeal is decided.

2. The facts are that defendants 1 to 4 executed a simple mortgage on 19th February 1921 in favour of the plaintiff and defendant 13 for a period of two years, the mortgage money being Rs. 8,000. On this mortgage the plaintiff brought a suit on 16th January 1931 for sale and that suit was decreed on the 4th August 1932. Subsequently to that decree for sale the plaintiff made an application on the 27th August 1932 to the Court in the following terms : That the plaintiff had obtained a hypothecation decree under Order 34, Rule 4, Civil P.C.:

It is submitted that the plaintiff's claim was only for principal and simple interest remitting compound interest simply because the property mortgaged was not sufficient to pay off the amount due. On account of bad times, the status and value of immoveable property have fallen down and are declining. The defendants are being benefited by the income from the mortgage property. Whatever amount of mortgage was left with the mortgagee and the subsequent vendee has not yet been paid by him. On the other hand he is withholding it and is benefiting himself with the rent from the property. The delay means entire benefit to him and loss to the plaintiff. It will take about a year in putting the property to sale... It is therefore prayed that an injunction may be issued to the tenants mentioned below directing them to deposit into Court the amount due pendente lite and future and that they should not pay the same to the defendants....

3. The defendants were not made parties to this application and the application was granted by an order dated 12th October 1932. There was no order against the defendants but merely an order directing these tenants to pay the rent into Court. On the following day, the 13th October 1932, two judgment-debtors objected, Musammat Bhagato and Ram Prasad, and eventually the Court passed the order now under appeal on the 5th November 1932, in which the Court said that it had heard counsel on behalf of Ram Prasad a transferee from the original judgment-debtor. The Court mentions that money had been been left with Ram Prasad to pay the decree-holder but he had not paid as yet. Any contract of that nature would be a matter between Ram Prasad and the mortgagors and the plaintiff was not a party to that contract and therefore the plaintiff had no legal right to enforce such a contract against Ram Prasad.

4. Objection is taken to the order of the lower Court on the ground that the application of the plaintiff of the 27th August 1932 merely claims that because the plaintiff may fail to recover the whole amount of his hypothecation decree by the sale of the property therefore the plaintiff has a right to receive the profits of the property before the sale. The application does not set out any claim of the plaintiff to have a personal decree under Order 34, Rule 6, against the mortgagors. I consider that if a plaintiff had a right to such a personal decree and made that the basis of his application then a case might exist in which a Court could appoint a receiver for the benefit of a plaintiff. But in the present case no such allegation has been made in the application and therefore the present case is not one of that nature. The present case is merely a claim that because the plaintiff has a hypothecation decree for sale, therefore he is entitled to receive the income from the property before the property is sold.

5. I am of opinion that in the present circumstances that only right to which the plaintiff has shown that he is entitled is the right to put the property to sale. Until the property is sold the right to receive the profits of the property belongs to the mortgagors or their transferees. Learned Counsel for the plaintiff referred to a Full Bench ruling of the Madras High Court reported in M. Paramasivan Pillai v. A.V.R.M.S.P.S. Ramasami Chettiar A.I.R. 1933 Mad. 570. In that ruling a contrary view was taken and it was laid down that even in a case where no personal relief subsists against a mortgagor and his properties the Court has jurisdiction to order the appointment of a receiver in the suit of a simple mortgage. That ruling dissents from a ruling of this Court reported in Gobind Ram v. Jivala Pershad A.I.R. 1918 All. 240. I also note that there are the following, rulings against the doctrine advanced on behalf of the plaintiff, namely, Khoo Joo Tin v. Ma Sein A.I.R. 1928 Rang. 176, Nrisingha Charan Nandy v. Rajniti Prasad Singh A.I.R. 1932 Pat. 360 and also the Allahabad ruling quoted and another Allahabad ruling reported in Makhan Lal v. Mustaq : AIR1927All419 . Learned Counsel for the plaintiff also referred to Rameshwar Singh v. Chuni Lal Shah A.I.R. 1920 Cal. 545. In that case a receiver had been appointed and the Court held that the appointment was binding on the parties (p. 423). Accordingly there was no question before the Court as to whether the Court was entitled to appoint a receiver under the circumstances of the case and the ruling is only concerned with the question as to which of the different mortgagees should receive the profits. I am of opinion that the general principle of of law is clear. Where a plaintiff in a mortgage suit has no right to a personal decree he cannot apply for enforcement of personal remedies. His remedy is limited to bringing the mortgaged property to sale and he can only obtain a remedy from the date of the auction-sale. Until that auction-sale he has no right to take possession of the property or any income of the property. That being so there is no jurisdiction for a Court to appoint a receiver under Order 40. The language used in Order 40 is no doubt wide - 'where it appears to be just and convenient,' but it cannot be just and convenient unless the plaintiff has a legal right to obtain the profits of the property before the date of sale. Similarly underOrder 39 which deals with temporary injunctions such as was asked in the application of the plaintiff. That order refers in Rule 1 to the possibility of the property in dispute in a suit being in danger of being wasted. The enjoyment by the mortgagor of the profits of the property to which he is entitled before the date of sale cannot be said to be wasting the property. Order 38 Rule 5 dealing with attachment before judgment contemplates a case where a defendant is about to dispose of his property. Again the same distinction arises as the accepting of the profits of a property to which a defendant is entitled cannot be said to be disposing of the property.

6. I may point out that on the theory of the plaintiff there would be no distinction between a simple mortgage of property and a simple mortgage of property and also of the income or profits from that property.

7. If the plaintiff has a right to attach the profits before the sale of the property in the case of a simple mortgage he would therefore be acquiring the same rights as he would have on a mortgage not only of the property but also of the profits from the property.

8. I may note that it has been argued by Learned Counsel for the plaintiff that on the strength of various English rulings referred to in M. Paramasivan Pillai v. A.V.R.M.S.P.S. Ramasami Chettiar A.I.R. 1933 Mad. 570 the plaintiff had such a right. I consider that the analogy from English rulings is a mistaken one. This matter has been dealt with by the learned Chief Justice of the Patna High Court in Nrisingha Charan Nandy v. Bajniti Prasad Singh A.I.R. 1932 Patna 360 at p. 362 where he states:

It is urged on behalf of the plaintiffs that a simple mortgagee under Indian law is in a position analogous to that of an equitable mortgage and that whereas a legal mortgagee cannot obtain the appointment of a receiver an equitable mortgagee could, and so therefore ought a simple mortgagee. But the reason for the early refusal of the English Courts to appoint a receiver on the application of a legal mortgagee was that he already had a higher and legal right to personal possession... The right of an equitable mortgagee to have a receiver appointed is based on his right to be put by the Court into the position of a legal mortgagee. The same difference therefore between a simple mortgagee under Indian law and a legal mortgagee under English law exists between a simple mortgagee and an equitable mortgagee.

9. The present case in my opinion should be decided on the wording of Order 34, and other orders of the Civil P.C. and the analogy of the English law of mortgages is misleading. For these reasons I consider that the orders of the lower Court should be set aside, that is the orders of the 12th October 1932 and 5th November 1932 and that the application of the plaintiff of 27th August 1932 should be dismissed. It may be that if the plaintiff makes a proper application showing that he has a right to a personal decree, then he may be entitled to the remedy for which he asks and I do not consider that the present order should bar the plaintiff from making such an application. But I consider that the appeal should be allowed with costs throughout.

Mukerji, J.

10. I entirely agree that the appeal should succeed. In view of the elaborate arguments that have been addressed to us by the Learned Counsel for the respondent, I wish to say a few words for myself.

11. The respondent, Har Narain, obtained a simple money decree on foot of a simple mortgage on 4th of August 1932. Having obtained that decree, he made the application to be considered by us in this appeal; it is dated 27th of August 1932. In this application the plaintiff-respondent stated that the property hypothecated had gone down in value; that owing to the smaller value the property mortgaged might realize, he did not claim even compound interest in his suit; that the defendants were enjoying the usufruct of the property mortgaged and the necessary delay in the sale of the property would benefit the defendants and that if the tenants of the buildings mortgaged were called upon to pay their rent into Court there would be an all round benefit, namely, the defendants' burden to pay the mortgage money would be lightened and the plaintiff would be benefited by payment of the money due to him. The plaintiff appended a long list of names of the tenants occupying the mortgaged premises as the persons who should be prohibited from paying rent to the defendants.

12. Notices were issued to only some of the tenants and to some of the defendants. The learned judge adopted the doubtful procedure of passing ex parte order. However, ultimately on 5th November 1932, he passed a definite order to the effect that the tenants should make the deposits of their rents in the Court. He also directed that these deposits of their rents would be handed over to defendant Ram Prasad, who was a purchaser of a part of the mortgaged premises, on his furnishing security.

13. In this Court the defendant, Ram Prasad contends that the learned Judge was entirely wrong in making that order. The argument on behalf of the appellant is that the mortgage being simple, the plaintiff was not entitled to receive the usufruct of the mortgaged premises and that the appellant and the other defendants were the owners of the property, and, therefore, entitled to the usufruct of it till they lost title by a sale in execution of the decree. This argument is entirely sound. The rights obtained by a simple mortgagee are defined in Section 58, Clause (b) of the Transfer of Property Act. That definition indicates that the possession of the property is to be with the mortgagor; that the mortgagor is ordinarily to bind himself personally to pay the mortgage money and that in case of failure to pay, the mortgagee is to have a right to cause the mortgaged property to be sold and the proceeds of the sale to be applied in payment of the mortgage money. Where there is a personal remedy still subsisting (not being barred by time), the mortgagor is liable to have his properties other than the mortgaged properties sold up in case the mortgaged properties fail to fetch the entire amount of the mortgage money.

14. Now the simple mortgage, which the plaintiff holds, does not entitle him to obtain the usufruct of the mortgaged property in any circumstances. If the mortgaged property be sold and the plaintiff purchases it, he becomes the owner of the property, and as such he would he entitled to take the usufruct; but while the relation of mortgagor and mortgagee subsists, there is no right in the mortgagee to obtain the usufruct of the property.

15. The Learned Counsel for the respondent argued that in the plaint he had stated that his remedy against the person of the mortgagor subsisted, and, therefore, his application of 27th of August 1932 should be read as one for attachment of immoveable property before judgment or as an application for an injunction under Order 39 Rule 1 of the Civil Procedure Code. As against this argument it has to be pointed out that the application does not mention that it is based on the plaintiff's right to enforce a personal remedy against the mortgagors. Next it is to be pointed out that the application relates to the mortgaged property itself, and not to any other property. There is no allegation in the application which would bring the case under either Order 38 or Order 39, Civil Procedure Code. The application was not meant to be one for preservation of the property under Order 39, Rule 1 of the Civil Procedure Code. The object of the application was simply to have the benefit of the income of the mortgaged premises before the mortgaged premises are sold up.

16. The Learned Counsel for the respondent has relied on several deeisions and principally on the Madras decision in M. Paramasivan Pillai v. A.V.R.M.S.P.S. Ramasami Chettiar A.I.R. 1933 Mad. 570. I would respectfully differ from that decision. It is based mainly on the views of English law and ignores the definition of a simple mortgage as given in the Transfer of Property Act.

17. As pointed out by my learned brother, there are decisions of this Court which are contrary to the view taken in the Madras Court, and I, with all respect, agree with the decisions of this Court and cannot accept the view enunciated in the Madras case already quoted or cases in other High Courts which follow the same view.

18. Mr. Pathak on behalf of the respondent urged that the dismissal of his application dated 27th of August 1932 should not debar him from making any proper application that he may have to make under Orders 38 and 39 of Civil Procedure Code. It goes without saying that any new application that he may make will have to be dealt with by the Court below on its merits, and the dismissal of the present application, unless the new application be on the same lines as the present application, will not be a bar.

19. For the reasons given above, I agree with the order proposed by my learned brother.


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