(1) This order will dispose of S. A. Os. Nos. 17 and 40 of 1959. They arise out of an order under Section 33 of the Provincial Insolvency Act (No. V of 1920). Partap Singh was adjudicated insolvent and thereafter his creditors submitted applications to prove their debts. Creditors whose debts were disputed are Kundan Lal, Kharaiti Lal, Chhotu Ram, Relu Ram, Achhru Ram, Joginder Singh and Rakha Ram. The Insolvency Judge held that the debts of Kundan Lal and Kharaiti Lal were proved and this finding was upheld by the lower appellate Court in appeal. So far Chhotu Ram is concerned, the Insolvency Judge held that debt was proved, but the same was not a secured debt.
As regards Relu Ram and Achhru Ram, it was held that their debts were mortgage debts and as such were secured debts. With regard to Joginder Singh, it was held that it was not proved that any debt was due to him. Regarding Rakha Ram, it was held that the debt was due to him and it was not secured. On appeal under S. 75 of the Provincial Insolvency Act by Kundan Lal and Kharaiti Lal, it was held by the learned Additional District Judge that no debt was due to Chhotu Ram, Relu Ram and Achhru Ram. No appeal was preferred by Joginder Singh. So far Rakha Ram's debt was concerned, the Insolvency Judge's decision was upheld.
The present appeals have been preferred by Chhotu Ram (S. A. O. No. 17 of 1959) and Relu Ram and Achhru Ram (S. A. O. No. 40 of 1959).
(2) A preliminary objection has been raised by Mr. Gupta, learned counsel for Kundan Land and Kharaiti Lal, that no second appeal lies. His contention is that the order under appeal has been passed under S. 33 of the Insolvency Act and only one appeal is allowed under S. 75 of the Act. There is fore in this objection.
In this situation, the learned counsel for the appellant has prayed that these appeals be treated as petitions for revision. I treat these appeals as petitions for revision. Scope of proviso to S. 75(1) of the Provincial Insolvency Act is much wider than S. 115 of the Code of Civil Procedure. The High Court can go into the question whether the decision of the District Judge is in accordance with law. As I have come to the conclusion that the decision of the learned Additional District Judge is not in accordance with law, I would interfere under my revisional powers under S. 75 of the Act.
(3) In both these cases it has been held that no debt is due to them on the short ground that the deeds of mortgage are neither stamped nor registered. It may be mentioned that the mortgage deeds were admitted into evidence and the objection are to stamp would be of no consequence in view of S. 36 of the Indian Stamp Act (No. 2 of 1899), which is in these terms:
'36. Where an instrument has been admitted in evidence, such admission shall not, except as provided in S. 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.'
With regard to registration, the matter stand thus. The counsel for the appellants states that the mortgages are in possession of the property and as such they can use the mortgage as a shield to protect their possession when the mortgagor or the receiver in whom the interests of the mortgagor vest tries to dispossess them. The question is whether the benefit conferred by the provision of S. 53A of the Transfer of Property Act is available to the mortgagee as against the receiver? The insolvency does not put an end to the possession of a mortgagee under an unregistered document of mortgage.
If the mortgagee can protect his possession, I fail to see how the receiver can take possession of the property without discharging the mortgage debt. It has been held by the Full Bench of the Lahore High Court in Milkha Singh v. Mt. Shankari, AIR 1947 Lah 1, that an unregistered document can be used as a shield to protect possession, which has been delivered under the unregistered document.
The question that remains to be determined is whether the appellants are actually in possession of the property? The learned counsel for the respondents states that in case it is held that they are not in possession of the property, then the only evidence to prove the debt being the unregistered deeds of mortgage the decision of the lower appellate Court holding that there is no proof of the debt would be correct. This is so. In this view of the matter, the only course left open is to send back the case to the Insolvency Judge to determine whether Chhotu Ram, Relu Ram and Achhru Ram are in possession of the property. If they are so in possession then the unregistered deeds can be made use of by them to protect their possession under the doctrine of part performance. If they are in possession, they can hold on to their possession as mortgagees till the mortgages are redeemed.
Therefore there will be no point in rejecting their claim at this stage and mislead the auction purchaser who would not be able to take possession without paying off the mortgage charge. It will be perpetrating injustice on him for it is settled law that an auction purchaser at a court sale only purchases the right, title and interest of the judgment-debtor and in this case that right, title and interest is subject to the charge in favour of the mortgagees. In order to shorten litigation and avoid all complications I have deemed it fit to order that in case it is held that the alleged mortgagees are in possession of any property of the insolvent, their claim should be admitted and in case it is held otherwise, the decision of the lower appellate Court will stand and should be allowed to stand.
(4) I therefore allow these petitions for revision, set aside the orders of the Courts below and remand the case to the Insolvency Judge for decision in accordance with the observations made above.
(5) The parties are directed to appear before the Insolvency Judge on 29-4-1960.
(6) There will be no order as to costs.
(7) Petitions allowed.