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Mirza Qaiser Beg Vs. B. Sheo Shanker Das and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1932All85; 129Ind.Cas.708
AppellantMirza Qaiser Beg
RespondentB. Sheo Shanker Das and ors.
Cases ReferredRodh Mal v. Ram Harakh
Excerpt:
.....for sale at first. 23. no direct authority of this high court has been placed before us, which has clearly laid down that the mortgagee is an absolute master of the situation and can dictate to the court the order in which he would sell the mortgaged property. if mainipur is sold first the appellant must either pay the whole amount of the mortgage decree, for which really mainipur will not be ultimately liable, or he must submit to the property being sold, and then institute a second suit for contribution impleading all the owners of all the mortgaged properties covered by the mortgage of 1914. 35. in this state of conflicting interests, we have to sea what is the best course for the exercise of the court's discretion......he is not entitled to dictate to the court the order in which the mortgaged properties should be sold. a decree under order 34, rule 5 civil p.c., directs the sale of all the mortgaged properties and so long as rights under the particular mortgage sought to be enforced by the decree are not prejudiced, the court executing the decree has in my opinion full power to regulate the order in which and the condition subject to which the mortgaged properties should be sold in order to do justice between two subsequent transferees. it may for that purpose apply the rule of contribution as between such transferees by postponing the sale of 'one of the properties on payment by the subsequent transferee interested in it of the proportionate amount charged on it till he remaining properties are.....
Judgment:

Niamatullah, J.

1. This is an execration of decree appeal from an order passad by the learned Subordinate Judge of Jaunpur on an objection preferred by the appellant to the sale of village Mainipur, one of eleven properties directed to be sold by the decree obtained by the respondents under Order 34, Rule 5, Civil P.C. Another of those sloven properties is village Pachhatia. It is common ground that Tashitn Ali Khan, to whom the aforesaid eleven properties belonged, executed a mortgage deed in 1910 in respect of village Paehhatia in favour of Damodar Das now represented by his son Sheo Shankar Das and others the respondent decree-holders.

3. On 16th July 1914, Hashim Ali Khan executed a mortgage deed in respect of all the eleven items in favour of the aforesaid Damodar Das. : On 19th August 1915 Hashim Ali Khan sold Mainipur to Mirzi Kaiser Beg, the appellant. The respondent-decree-holders or their predecessor in title obtained certain mortgages in respect of some of the eleven properties other than Mainipur by certain deeds executed in 1919 and 1922.

4. Damodar Das having died in the mean time his legal representatives Sheo Shankar Das and others respondent-decree-holders obtained a decree for sale of the eleven properties on foot of the mortgage dated 16th July 1914, in a suit to which the appellant Kaiser Beg was a party. The decree was made final on 20th December 1926.

5. The respondents also instituted Suit No. 40 of 1924 for sale of village Pachhatia on foot of the prior mortgage of 1910 had it sold and purchased it themselves. This was apparently after the institution of their suit on foot of the mortgage of 1914 in which they prayed for sale of all the properties including village Pachhatia and in which a decree was passed for sale of all of them. This fact is not however material for the decision of this appeal as the prior mortgage in respect of village Pachhatia remains unaffacted by the decree passed in the ,suit on foot of the mortgage of 1914.

6. Village Pachhatia having been sold in execution of decree for satisfaction of a prior mortgage cannot be sold for satisfaction of the mortgage of 1914 which can operate only on the surplus if any left after the satisfaction of the prior mortgage and on the remaining ten villages as to one of which viz., Mainipur, the appellant is a subsequent transferee and as to some of which the decree-holders are subsequent mortgagees as already stated.

7. The decree-holders applied for execution of their decree and prayed for sale of Mainipur only. Their motive in doing so is obvious. They desired to throw the whole burden of the mortgage of 1914 on village Mainipur in which they have no interest but the appellant has and to save as far as possible the other nine properties for satisfaction of their subsequent mortgages of 1919 and 1922. It is quite true that no subsequent transferee as the appellant is can insist on the properties other than his own being sold to satisfy the mortgage unless the doctrine of marshalling can be made applicable. I do not think that any question of marshalling can arise in the present case as the appellant cannot be regarded to be a subsequent transferee without notice of the mortgage of 1914 which is evidenced by a registered instrument and for that reason constructive notice thereof must be imputed to him.

8. Exactly the same considerations apply to the decree-holders qua their position as subsequent mortgagees under the deeds of 1919 and 1922. They cannot as subsequent mortgagees claim marshalling by having the village Mainipur sold for satisfaction of the mortgage of 1914. Apart from registration they must have had actual notice of their own mortgages of 1910 when they took the mortgages of 1919 and 1922. They should also be deemed to have constructive notice of the sale in favour of the appellant which is evidenced by a registered instrument, But this circumstance does not enter into the consideration of the question whether they can avail of the rule of marshalling.

9. In applying for sale of Mainipur alone the decree-holders are furthering their own interests as subsequent mortgagees. As mortgagees under the deed of 1914 it is perfectly immaterial to them whether all or some only of the properties affected by it are sold or whether they are sold in one order or the other.

10. The doctrine of contribution cannot be resorted to the prejudice of a mortgagee who has a paramount right to have his claim satisfied by sale of every part of the mortgaged property. With due regard to such right and apart from it he is not entitled to dictate to the Court the order in which the mortgaged properties should be sold. A decree under Order 34, Rule 5 Civil P.C., directs the sale of all the mortgaged properties and so long as rights under the particular mortgage sought to be enforced by the decree are not prejudiced, the Court executing the decree has in my opinion full power to regulate the order in which and the condition subject to which the mortgaged properties should be sold in order to do justice between two subsequent transferees. It may for that purpose apply the rule of contribution as between such transferees by postponing the sale of 'one of the properties on payment by the subsequent transferee interested in it of the proportionate amount charged on it till he remaining properties are sold and the remaining amount is not satisfied by the sale proceeds thereof, in which case that property may be proceeded against for recovery of the balance. I see no difficulty in adopting this course where equities between two subsequent transferees so require. Nor do I see any legal objection to apportionment being made in execution proceedings so as to do justice between subsequent transferees. It will have to be made if a suit for contribution is brought as will be the case on any one property being sold to satisfy more than what is apportion able on it. In any case, inconvenience and delay have to be ignored if justice cannot be otherwise done. It cannot possibly prejudice the mortgagee whose right to recover the entire mortgage money from every one of the mortgaged properties is fully recognized and safeguarded. If one of such subsequent transferees is the mortgagee himself, as in the case before us i t makes no difference. He cannot be allowed to avail of his position as the mortgagee decree-holder and to gain an unfair advantage for himself as a subsequent transferee competing with another subsequent transferee. It is quite clear to my mind that the real dispute in the present case is between the appellant as a transferee under the dead of 1915 and the respondents as transferees under the deeds of 1919 and 1922. Unless therefore there is some rule of law which gives the decree-holders a conclusive voice as regards the order in which the mortgaged properties should be sold and leaves no discretion to the Court to prevent what appears to me to be an attempt on their part to obtain an unfair advantage, I would adjust the equities in a manner which as far as possible, affords protection to both.

11. The decree-holders claim to have an unquestionable right to pick and choose properties for sale in the order best suited to their own interests. Their case is plainly stated in the reply to the appellant's objections and may be stated in their own language:

According to law the decree-holders have a right to recover their decretal amount from any property hypothecated by bringing the same to sale in any order they like. Accordingly in exercise of their legal rights they at present want to bring to auction sale only Mauza Mainipur.

The decree-holders themselves have the following encumbrances on the remaining properties hypothecated besides Mauza Mainipur.

Under decree No. 40 of 1927 of the Court of the Subordinate Judge, Jaunpur the present amount whereof must be about Rs. 2,3000, Out of this amount about Rs. 12,000 is prior to the decree under execution and the remaining is subsequent.

(b) Under hypothecation bond dated 27th March 1922, for Rs. 2,400, the entire principal, interest and compound interest whereunder is still unpaid.

If the decree-holders would leave Mauzsa Mainipur at present, it would make the realization of the subsequent dobt due to them doubtful.

12. The learned Subordinate Judge has not differentiated between the two capacities in which the respondent-decree-holders figure in this litigation. In my opinion the two should be kept sevarely apart and the case should be approached as if the subsequent mortgages relied on by them are in favour of third persons. The mortgagee-decree-holders as such will not suffer by the mortgaged properties being sold in any order.

13. The learned advocate for the respondents has not been able to refer us to any rule of law which entitles the decree-holders to the dominant position they claim for themselves to the detriment of others and to gain an undue advantage to themselves as rival subsequent transferees.

14. Jugal Kishore Sahu v. Kedar Nath [1912] 34 All. 606 is a clear authority for the proposition that a mortgagee cannot throw the whole burden of his debt on some of the mortgaged properties and release the rest, at any rate, when the equity of redemption has partly vested in third persons: see also Mir Esuf Alt Haji v. Panchanand Chatterji [1910] 6 I.C. 842, and Ghosh on Mortgage, Vol. 1, p. 369 (Edn, 1911). The principle recognized in that case is not confined ho cases in which the question is raised in the suit itself. It is based on an equitable consideration which is equally applicable if the question arises in execution proceedings. If the Court executing the decree which directs sale of numerous properties has a discretion to sell the mortgaged properties in any order it deems equitable, it should be guided by what it thinks to be consonant with justice to all the parties concerned with dueregard to the mortgagee's right to have his mortgage money satisfied by sale of all the mortgaged properties or a sufficient part thereof. The Court should frustrate any attempt on his part to throw most of the burden on one only of the mortgaged properties. That the Court has such discretion admits in my opinion of no doubt. As already mentioned Order 34, Rule 5, under which a final decree for sale is passed, directs the sale of the whole or part of the mortgaged property. The Court executing the decree has to execute such decree.

15. The application of the decree-holders I in the present case prays for sale of a I certain village and is attempting to con fine the Court to execute the decree so far as that village is concerned. Order 21, Rule 11, Civil P.C., empowers the Court I executing the decree to call upon the decree holders to produce a certified copy of the decree. On a perusal thereof, if it feels satisfied that the request of the decree-holders for sale of one only of several properties directed to be sold is in any way improper, it may refuse to issues process unless the application is amended so as to suit the requirements of the case. This is, in my opinion, clearly contemplated by Rule 24. The issue of process for execution is subject to the consideration that there is no 'cause to the contrary.' In Raghavachariar v. D. Krishna Reddi A.I.R. 1924 Mad. 509 it was held that in executing a mortgage-decree the Court can direct at the instance of any person interested in some of the mortgaged items the sale of some items of the mortgaged property first before selling the other items, provided always the mortgagee is in no way prejudiced. I take this to mean that the mortgagee as such is not prejudiced. The qualification has no reference to the rights vested in him in other capacities.

16. The discretion of the Court is likewise affirmed in Bhagwan Chandra Das v. Dharam Narain Das A.I.R. 1924 Pat. 802. The Calcutta High Court has taken the same view in Galstaun v. Dinshaw : AIR1927Cal581 .

17. Narayanaswami Chetty v. Vellayya Pillai A.I.R. 1924 Mad. 366 is not, in my opinion, an authority to the contrary. It is true the mortgagee-decree-holders were held entitled to execute their decree against any of the mortgaged properties. But there is nothing in that case which can be construed as negativing the discretion of the Court as regards the order in which the mortgaged properties should be sold, It may be, as was observed in that case, that a person who is not entitled to the benefit of marshalling, has no right to demand that the decree-holder should execute his decree in a particular manner. In Madura Mills Co. Ltd, v. Ramasivami Chetty [1916] 34 I.C. 338 a learned Judge of the Madras High Court held that the Court has discretion in selling the mortgaged properties in any order it appears to it to be just.

18. We have not been referred to any case in which a contrary view has been definitely pronounced and considering all the circumstances of the case, I think that justice 'will be done to both the parties if the mortgage money is distributed between the village Mainipur and other mortgaged properties. This cannot however be done in the present instance without the consent of the mortgagee. I have had the benefit of ascertaining the views of my learned brother as regards the manner in which the equities of this case should be worked out am readily fall in with them for the purposes of this case. It is fair that the respondents should allow piecemeal redemption other, wise the properties should be sold on the inverse order of priority of transfers.

19. There was some discussion in the course of arguments that no appeal lies from the order passed by the lower appellate Court. That the question arising between the parties relates to execution, discharge or satisfaction of the decree within the meaning of Section 47, Civil P.C., cannot be doubted and has not been questioned, It is however contended that in so far as the order does not amount to a formal expression of an adjudication determining the rights of the parties, it is not a decree within the meaning of Section 2(2), Civil P.C. I am unable to accede to this contention. The whole question is whether the decree-holders have an absolute right to choose the Older in which the mortgaged properties should be sold in disregard of the rights of the appellant or whether the rights of the parties in this respect are regulated by the discretion of the Court. Any answer to these questions necessarily involves adjudication of the rights of the parties. Where the right of one or the other of the parties to have a certain thing done depends upon the direction of the Court, the order of the Court giving such direction against one party, or the other necessarily decides the right in controversy in the particular case, and is to that extent a decree if the order is one passed under Section 47, Civil P.C. For these reasons I am of opinion that an appeal lay to this Court from the order passed by the lower appellate Court now in question.

Sulaiman, J.

20. The facts are given fully in the judgment of my learned brother and it is not necessary to recite them aagin.

21. I agree that the doctrine of marshalling the securities cannot be availed of either by the appellant or by the respondents, Apart from the fact that the mortgage-deed was a registered one, the circumstances suggest that the appellant's guardian must have had notice of the previous mortgage. The respondents, when taking the subsequent mortgages, had, of course, notice of their first mortgage. They cannot claim a right to manipulate the order of the sales so as to bring about practically a tacking of their own subsequent mortgages to their first mortgage.

22. There is no doubt that the respondents are seeking to realize the whole of their mortgage-decree from Mainipur alone which was transferred to the appellant. They are in this way attempting to throw the whole burden of their mortgage on only one item of the mortgaged property and do not propose to proceed against the other properties over which they have taken subsequent mortgages. Ordinarily, if the proceedings are taken against the original mortgagor himself and no other party is being prejudiced, the mortgagee selects the items of the mortgaged property which he would like to get sold first. He may appreciate difficulties of litigation, defect in title, claims of third parties or insufficiency of the assets, and on any such grounds may not like to put up a particular item for sale at first. On the other hand, without any prejudice to the mortgagee there may be the rights of third parties involved and it may be more equitable and just to pub up properties for sale in an order different to that in which the mortgagee desires to sell them.

23. No direct authority of this High Court has been placed before us, which has clearly laid down that the mortgagee is an absolute master of the situation and can dictate to the Court the order in which he would sell the mortgaged property. But there are observations in several cases which might be said to support this view by implication, for instance in Bhikari Das v. Dalip Singh [1895] 17 All. 434, it was remarked that the right of a mortgagee to bring any portion of the mortgaged property to sale is not curtailed by the mortgagor, subsequently to the mortgage, selling any portion of the mortgaged property to a third person. The attention of the learned Judges however was not drawn to an earlier case of this Court in Rodh Mal v. Ram Harakh [1885] 7 All. 711, where it was held that

the equity which apply to the puisne encumbrancer in the marshalling of the securities apply also to a bona fide purchaser for value without notice of a portion of the mortgaged property.

24. There is plenty of authority in support of the view that there is a discretion in the Court in fixing the order in which ;the property should be put up for sale, and that this discretion is to be exercised in a reasonable and just manner consistent with the equities of the case. These leases have been referred to by my learned brother.

25. I have therefore no hesitation in coming to the conclusion that in cases where Section 81, T.P. Act, allowing marshalling of securities is in terms inapplicable, neither the mortgage can dictate to the Court the order in which it will sell the mortgaged properties nor can a subsequent transferee insist on any particular order in which the properties should be sold. The matter is really one of discretion for the Court; which should decide the dispute in the way it considers most just and equitable.

26. In the present case the mortgagee has applied for execution of his decree by the sale of only one item entered in the decree. The decree is for the sale of the whole or a sufficient part of the entire mortgaged properties, and the Court is entitled to compel the decree-holder to apply for the sale of the properties as described in the decree and not pick out one item at his pleasure. The appellant wants that his village Mainipur should not be sold till the other villages have been put up for sale. There is no such absolute right in him to insist on such a course.

27. I do not think that it would be equitable and just to apportion the liability and allow the appellant to postpone the sale of his village on condition of his paying the proportionate amount of the decretal money due against his village. It would be highly inconvenient for an execution Court to start an inquiry into the rateable liability of the various items of the mortgaged properties, which, properly speaking, should be the subject of an investigation in a separate suit for contribution. If the procedure of apportionment were to be adopted, the execution proceedings would be hung up for an inordinately long time and the question would never be settled finally till the matters have been disposed of by the appellate Court. So long as the integrity of the mortgage is not broken I think the mortgagee is entitled to insist on payment of the whole of the amount due to him before any property is re-leased from liability and the Court has no power to compel him to submit to a piecemeal redemption. I therefore cannot hold that it is open to us to start an inquiry into the proportionate liability and to allow the appellant to pay his proportion of the mortgage money and save his village against the wish of the mortgagee.

28. Further, I do not think that even if after an elaborate inquiry, the rateable liabilities of the various properties have been ascertained, it will necessarily lead to a complete solution of the difficulty. Suppose on finding the rateable proportions neither party thinks it worth while to deposit the amount due or has no money to deposit. Whose property is then to be put up for sale in the first instance? Would it be just and fair that the property which has passed to a previous transferee should be sold before those of subsequent transfers simply because the prior mortgagee wishes to show favour to the latter. In order to work out equities in this case we should examine the question as if the second and third mortgages ware in favour of other parties and not the prior mortgagee himself, and discover a basis which should have a general application.

29. I sea absolutely no reason why a previous transferee should be called upon to deposit the proportionate amount due from the property in the first instance before the sale of his property can be postponed, while the subsequent transferee be allowed to sit and watch whether the previous transferee deposits the amount or allows his property to be sold first. Even if both these parties are called upon to pay their amount, the problem would still remain as to whose property should be sold first if both make default. It follows that if there is not to be piecemeal redemption an ascertainment of the rateable liability would not 'necessarily clinch the matter.

30. The proper course in a case of this kind is to adopt the procedure which the Court below has done, namely, to examine the equities and consider which course of action is most just and fair. : Had either of the parties bean an innocent transferee without notice would have had no hesitation in holding that f the equities were in favour of that party and that his interest should preferably be protested. But the difficulty created; in this case is due to the fact that there are some equities on both sides.

31. If the respondents are compelled to sell the villages war which they have subsequent charges they would be unable to enforce their claim on these subsequent mortgages after the sales of those villages in execution of the decree on the prior mortgage. They are accordingly most reluctant to leave Mainipur alone.

32. The fairest way for the parties would undoubtedly have bean to agree to the splitting up of the integrity, for even if the mortgagee succeeds in selling Mainipur first, the liability of the other properties will remain for rateable contribution. Another course open to the mortgagees is to execute their decree?, en the subsequent mortgages first and to have the amounts due on all the mortgages paid off out of the sale proceeds. If this course were adopted by them they may suffar no loss and the amounts due under all their mortgagss may be realized and if the whole 'amount is not paid off it would ha open to them to proceed against Mainipur. But it is possible that the sale proceeds may all go towards the discharge of the prior; encumbrance and nothing may be left for the payment of the subsequent mortgages. The plaintiff would then suffer I in this way that the wholo burden of the f prior mortgage would fall on those proparties only and not on Mainipur. They I would then be driven to a suit for contribution against the owner of Mainipur.

33. In the present case the contest is between the prior mortgagee who holds subsequent mortgages, and a puisne transferee. If the mortgagee were agreeable to submit to piecemeal redemption the most equitable course would be to ascertain the rateable liability of Mainipur and allow it to be realized on payment of the proportionate amount due against it, and in default to order its sale for the realization of that proportionate amount.

34. But if the mortgagee is not willing to allow partial redemption, it would be unjust to the intermediary purchaser that his village should be sold first of all. The appellant purchased his village in 1914 and the other mortgages of the respondents are subsequent to that date. It is unfair to the appellant that his village alone should be sold in the first instance while the other villages over which the mortgagees had subsequent encumbrances should be left untouched. If Mainipur is sold first the appellant must either pay the whole amount of the mortgage decree, for which really Mainipur will not be ultimately liable, or he must submit to the property being sold, and then institute a second suit for contribution impleading all the owners of all the mortgaged properties covered by the mortgage of 1914.

35. In this state of conflicting interests, we have to sea what is the best course for the exercise of the Court's discretion. When after making the first mortgage, a mortgagor transfers a part of his mortgaged property, it is only fair that the property remaining in the hands of the mortgagor should be sold in execution of the prior mortgage decree, before that which ha has transferred to the third party. And therefore if a fourth party, having notice of this equity in favour of the third party, acquires the property that remained with the mortgagor, he has no just ground for complaint if the Courts still enforce the same equity and put up his property for sale first before selling the property previously acquired by the third party.

36. On this principle, it seems to me that the most equitable and just way for the Court is to direct the sales of the properties affected by the various transfers in the inverse order of their priority of dates. All the documents being registered, the parties could with due diligence have obtained particulars of the previous transfers, even if they did not actually do so. The puisne transferee could, of course, have no notice of the subsequent mortgages. It is equitable that the property covered by the last transfer in point of time should be sold first and then that covered by the one just preceding it and so on, till the amount of the first mortgage money is fully paid up or all the properties covered by it have been sold.

37. I would therefore allow the appeal and direct that if the mortgagee agrees, the rateable liability of Mainipur should be ascertained and its owner allowed to redeem it on payment of that proportionate amount of the mortgage money, and in default the village should be sold for realization of that proportionate amount; but if the mortgagee does not agree to such a partial redemption, the various properties should be put up for sale in the inverse order of the priority of their transfers in point of time.

38. We allow the appeal and direct that if the mortgagee agrees, the rateable liability of Mainipur should be ascertained and its owner allowed to redeem it on payment of the proportionate amount of the mortgage money and in default the village should be sold for realization of that proportionate amount; but if the mortgagee does not agree to such a partial redemption the various properties should be put up for sale in the inverse order of the priority of their transfers in point of time.

39. We direct that the parties should bear their own costs of the appeal.


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