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Bharat Indu and ors. Vs. Gobardhan Das and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Judge
Reported inAIR1915All201; 28Ind.Cas.901
AppellantBharat Indu and ors.
RespondentGobardhan Das and ors.
Cases ReferredAbdullah Khan v. Basharat Hussain
Excerpt:
.....to prosecute the appeal to attain this result. if we were now called upon to decide between the mortgagor and mortgagee, we should hold that the mortgagee was only entitled to sell the property to realise the principal sum of rs, 6,000, but we think that at the time a formidable argument could have been put forward in respect of the mortgagees' contention that they were entitled to interest as well as principal, based upon the decision of this court in first appeal no. we mean by this that the fact that the mortgagor allowed a decree to be made against him for the alleged interest as well as the principal does not necessarily mean that it was a fraudulent transaction. in our opinion, if it was necessary for the appellants in order to sustain their present contention to show that the..........the principle would equally apply to the case where the mortgagor remained in possession of the mortgaged property without paying the rent which he had covenanted to pay. we mean by this that the fact that the mortgagor allowed a decree to be made against him for the alleged interest as well as the principal does not necessarily mean that it was a fraudulent transaction. it is consistent with his admitting a debt which he believed that he was liable for and against which there was no use lighting (paper torn) was before the mortgagee's legal rights he evidently thought he could recover the interest when he left the mortgagor in possession without paying rent. in our opinion, if it was necessary for the appellants in order to sustain their present contention to show that the compromise.....
Judgment:

1. This appeal arises out of a suit in which the plaintiffs claimed to redeem a mortgage, dated the 18th of July 1898, and made by Hakim Wilayet Ali in favour of one Maharaj Gobardhan Das, the principal amount borrowed being the sum of Rs. 6,000. There is no dispute between the parties that the plaintiffs are entitled to redeem the mortgage. The contest is that the plaintiffs say that they are entitled to redeem upon payment of the principal sum of Rs. 6,000, whilst on the other hand the defendants say that the amount due upon their mortgage has been duly and finally ascertained by a decree of this Court, dated the 1st of August 1910. This decree ascertains the amount due for principal, interest and costs at the sum of Rs. 20,270-11-0 with future interest at 1 per cent, per mensem. The defendants contend that the plaintiffs cannot redeem without paying this sum. The Court below has decided in favour of the defendants.

2. The fasts are a little complicated, but may nevertheless be shortly stated. The plaintiffs had another mortgage against Hakim Wilayet Ali affecting other property than that now in suit. They sued on foot of this mortgage, obtained a decree, sold the property and having exhausted their rights against the mortgage security, they applied for a decree under Section 90 of the Transfer of Property Act, so as to enable them to follow the other property of the judgment-debtor for the purpose of realising a large sum still unpaid. This decree they duly obtained, and in execution thereof they attached the property which it is now sought to redeem; and later on, on the 21st of March 1911 and the 21st of August 1911, purchased it themselves. We may mention that the attachment was made on the 12th of November 1907, although the actual sale did not take place until the dates just mentioned. In the meantime a suit on foot of the mortgage, which it is now sought to redeem, was instituted in February 1909. It is now necessary for a moment to refer to the particular nature of the mortgage. On the face of it, it is a possessory mortgage. It expressly provides that the possession should go aginst interest that the mortgagee should not be accountable for rents and profits, and on the other hand the mortgagor should not be liable for interest. Simultaneously, however, two other documents, namely a patta and a kabuliat, were executed and registered. These documents provided that the mortgagor should remain in possession as tenant to the mortgagee, paying a yearly rent which in fact was equal to 12 per cent per annum simple interest on the principal sum of Rs. 6,000. The mortgage was recited and there was a provision that rent in arrear should bear interest at the rate of 1 per cent, per mensem. In the plaint the mortgagee set forth that the mortgagors had only paid 11/2 years' interest, and accordingly they claimed that the full principal sum was due together, with compound interest at the rate of 12 per cent, per annum after giving credit for the 11/2 years in which the rent was paid. The defence was that there was no liability in respect of interest, that the mortgagee could only sue for rent under the lease, and that this rent was in no way a charge on the property, that rent could only recovered in the Revenue Court, and that consequently the plaintiff was only entitled to sell the property to realise the principal sum of Rs. 6,000. The mortgagees on the other hand urged the Court to hold that the mortgage, patta and kabuliat all represented a single transaction and that the true intention was that, if the rent was not paid, it I should be a charge on the property realisable by sale in an ordinary mortgage suit. In short, the contention was that the transaction should be regarded as a simple mortgage with interest at 12 per cent, per annum. The Court of first instance decided in favour of the defendants and held that the plaintiffs were only entitled to the principal money secured. The plaintiffs appealed, again urging that on the proper construction of the three documents they were entitled to realise the interest as well as the principal. The appeal was compromised on the 1st of August 1910. The plaintiffs were given a decree for the amount we have already s mentioned, which was practically all they claimed. It is said that some small sums, amounting to a few hundred rupees, were given up in respect of costs, but in all other respects the plaintiffs' appeal succeeded as the result of the so-called compromise. The appellants here contend that, as against them, this compromise decree must be deemed fraudulent and collusive. We shall assume for a moment (without deciding) that the appellants have a right to challenge the validity of this decree on the ground that it was fraudulent. Our attention has not been called to any direct evidence of fraud. So far as we can see, Hakim Wilayat Ali Khan fought the case as best he could at least up to the time of the compromise decree. The plaintiffs say that the very fact that he made this compromise decree, which was tantamount to confessing judgment, at a time when he knew that they were creditors for a large amount, on the face of it stamps the transaction as a fraud as against them. No doubt a good deal might be said fur this proposition, if it was absolutely clear that Hakim Wilayat Ali Khan could have succeeded in having the appeal of the mortgagees dismissed, and that he and his advisers knew that they had only to prosecute the appeal to attain this result. If we were now called upon to decide between the mortgagor and mortgagee, we should hold that the mortgagee was only entitled to sell the property to realise the principal sum of Rs, 6,000, but we think that at the time a formidable argument could have been put forward in respect of the mortgagees' contention that they were entitled to interest as well as principal, based upon the decision of this Court in First Appeal No. 98 of 1907, judgment in which case was delivered on the 22nd of December 1908. That was a case rather the converse of the present. There had been a mortgage, on the face of it usufructuary. Simultaneously a lease was made to the mortgagor at a rent equivalent to 6 per cent per annum on the principal money (admittedly far below the actual profits of the property). The mortgagor made default in payment of lent and was ejected. Thereupon the mortgagee went into possession and remained in possession taking all the rents and profits. In a suit for redemption the mortgagor contended that, inasmuch as the mortgagee had received profits which it was never intended that he should receive, he ought to give an account of so much of the profits as were in excess of the stipulated rent as against the mortgage-debt. The mortgagee, on the other hand, contended that he was entitled to rely on the terms of the mortgage-deed which expressly stated that possession was to go against interest and that he was not to be accountable for profits. A Bench of this Court decided in favour of the plaintiffs holding that the mortgagee was bound to give an account of the excess of profits. We merely mention this case as showing that it might very reasonably have been argued that the principle would equally apply to the case where the mortgagor remained in possession of the mortgaged property without paying the rent which he had covenanted to pay. We mean by this that the fact that the mortgagor allowed a decree to be made against him for the alleged interest as well as the principal does not necessarily mean that it was a fraudulent transaction. It is consistent with his admitting a debt which he believed that he was liable for and against which there was no use lighting (paper torn) was before the mortgagee's legal rights he evidently thought he could recover the interest when he left the mortgagor in possession without paying rent. In our opinion, if it was necessary for the appellants in order to sustain their present contention to show that the compromise decree was fraudulent, they have failed to do so.

3. We have already mentioned that the plaintiffs-appellants purchased the present property on the 21st of March 1911 and the 21st of August of the same year. If they are in the same position as any ordinary auction-purchaser who had attended and purchased at the auction sale, then it would seem that they are bound by the decree which was binding between the mortgagors and the mortgagees. In other words, they are only entitled to redeem the property upon payment of the amount ascertained to be due by the decree of the 1st of August 1910.

4. The appellants, however, contend that by virtue of their attachment, dated the 12th of November 1907, they were entitled under Section 91 of the Transfer of Property Act to redeem the mortgage. That Section provides that certain persons, and amongst others a judgment-creditor of the mortgagor who has obtained execution by attachment of a mortgagor's interest in the property, are entitled to redeem or institute a suit for redemption of the mortgaged property. The answer to this contention is that the plaintiffs at the time they instituted the present suit had long ceased to occupy the position of 'creditors attaching the mortgager's interest' in the property. The property had been sold in pursuance of the attachment and they themselves became the purchasers of the equity of redemption, and stood in his shoes. Attachment does not confer an estate. It merely operates to keep the property in the custody of the law until such time as a sale can be had to satisfy the decree (or decrees) by virtue of which the attachment issued. It seems to us, therefore, that the plaintiffs by purchasing the equity of redemption could place themselves in no higher position than if that property had been purchased by a third party, and that the mere fact that at some time prior to the sale they had got an attachment of the mortgagor's property, gave them no right at the time they instituted the present suit.

5. In this view we think that the decree of the Court below is correct and ought to be affirmed. We may point out that we do not affirm, the finding upon which the decision in the Court below proceeds. We may also point out that the decision of this Court in First Appeal No. 98 of 1907 was reversed by their Lordships of the Privy Council in the case of Abdullah Khan v. Basharat Hussain 17 Ind. Cas. 737 : 35 A. 48 : 17 C.W.N. 233 : 13 M.L.T. 182 : (1913) M.W.N. 131 : 17 C.L.J. 312 : 15 Bom. L.R. 432 : 25 M.L.J. 91 : 40 I.A. 31. We dismiss the appeal with costs. We extend the time for payment to three months from this date.


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