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Karam Sing Sobti Vs. Shukla Bedi and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtPunjab and Haryana High Court
Decided On
Case NumberEx. First Appeal No. 88-D of 1961
Judge
Reported inAIR1962P& H477
ActsTransfer of Property Act - Sections 56
AppellantKaram Sing Sobti
RespondentShukla Bedi and anr.
Cases ReferredSain Ditta Mal v. Bulaqi Mal and Sons
Excerpt:
.....it was the subject-matter of a dispute in court, but as observed by mohammad sharif, j. ' it is to be observed that the person seeking benefit under section 56 has to abandon his security should the charge of the person, whose mortgage is comprised of this property and another, is not satisfied in full......interest on the footing of this mortgage. during the pendency of the execution proceedings of this mortgage-decree the appellant, karam singh sobti, purchased 4-a hailey road, which is described at cottage. no. 2, for rs. 20,000/- from som parkash bedi. in execution of the mortgage-decree obtained by shrimati shukla bedi both 4-a and 4-b were put up for auction. the appellant prayed on the basis of the equitable doctrine of marshalling that property 4-b should first be sold in execution of the mortgage-decree and property 4-a should be called upon to contribute only in the event of short-fall. the executing court holding that karam singh sobti had purchased the property pendente lite rejected the prayer and directed the sale of both the properties as a composite unit.(2) aggrieved by.....
Judgment:

(1) Two properties described as 4-A and 4-B, Hailey Road, New Delhi, are comprised in a mortgage executed by the owner, Shri Som Parkash Bedi, in favour of first respondent Shrimati Skukla Bedi who subsequently on 3rd of August, 1957, obtained a decree for Rs. 21,460/- with interest on the footing of this mortgage. During the pendency of the execution proceedings of this mortgage-decree the appellant, Karam Singh Sobti, purchased 4-A Hailey Road, which is described at Cottage. No. 2, for Rs. 20,000/- from Som Parkash Bedi. In execution of the Mortgage-decree obtained by Shrimati Shukla Bedi both 4-A and 4-B were put up for auction. The appellant prayed on the basis of the equitable doctrine of marshalling that property 4-B should first be sold in execution of the mortgage-decree and property 4-A should be called upon to contribute only in the event of short-fall. The executing Court holding that Karam Singh Sobti had purchased the property pendente lite rejected the prayer and directed the sale of both the properties as a composite unit.

(2) Aggrieved by this order Karam Singh Sobti has come in appeal to this Court. The doctrine of marshalling, embodied in section 56 of the Transfer of Property Act, applies in the case of securities, including mortgages, to prevent one claimant arbitrarily depriving another of his only security. Thus if a person having two estates mortgages both to A, and then only one to B, B may, as against the mortgagor, compel the payment of the first mortgage out of the estate on which he had no charge. As stated in Halsbury's Laws of England, Third Edition, Volume 27, at page 398

'the doctrine applies where one creditor has a charge or lien on two funds and another has a charge or lien on only one of the funds. If, one encumbrancer has a security on two properties of the same mortgagor, and another mortgagee has a security on one property only, the two properties will be marshalled, so as to throw the first encumbrance as far as possible on the property not included in the second security. The securities need not have been created at the same time; they may be successive securities for the same debt.'

It is manifest that if both the properties are put to auction there is the possibility of the appellant being deprived of his security altogether. It may be that the appellant purchased this property as a conditional sale well knowing that it was the subject-matter of a dispute in Court, but as observed by Mohammad Sharif, J., in Sain Ditta Mal v. Bulaqi Mal and Sons, AIR 1947 Lah 230 'the utility of section 56 is not impaired by notice' and the provisions of section 56 can be made applicable before another person acquires for valuable consideration any interest in the property. In the section itself it is stated that the marshalling by subsequent purchaser will extend not

'to prejudice the rights of the mortgagee or persons claiming under him or of any other person who has for consideration acquired an interest in any of the properties.'

It is to be observed that the person seeking benefit under section 56 has to abandon his security should the charge of the person, whose mortgage is comprised of this property and another, is not satisfied in full.

(3) Mr. Chopra for the respondent has contended that there has been some complication in selling the properties described as 4-A and 4-B, Hailey Road, separately as the Land Development Authority has insisted on treating them as a composite unit to be sold not piecemeal but jointly. No proof has been adduced of the unwillingness of the Authority to permit separate sales of these units though an assertion to this effect was made in the application of the decree-holder made on 14th of December, 1959. In my opinion, the doctrine of marshalling should be made applicable in the present instance and especially when the appellant himself in the affidavit filed in this Court had made a categorical assertion that he is prepared to make a bid for Rs. 40,000/- for the house described as 4-B, Hailey Road. I would leave it open to the trial Court to direct the auctioneer to start the bid of property 4-B with the initial bid of Rs. 40,000/- of the appellant. If there is any objection to the ale of property 4-B the matter can be appropriately dealt with by the executing Court directing the sale of properties 4-A and 4-B as one unit is set aside. There will be no order to costs of this appeal.

Appeal allowed.


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