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The Rajah of Kalahasti Vs. Sree Mahant Prayag Dossjee Varu - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Judge
Reported in35Ind.Cas.224; (1916)30MLJ391
AppellantThe Rajah of Kalahasti
RespondentSree Mahant Prayag Dossjee Varu
Cases ReferredRani Kanno Dai v. B. Lacy I.L.R.
Excerpt:
.....to deceased--duty to account for assets--burden, of proof--mesne profits, whether included in assets--mortgagee becoming absolute owner of equity of redemption--merger. - - (2) where no such property remains in the possession of the judgment-debtor and he fails to satisfy the court that he has duly applied such property of the deceased as is proved to have come into his possession, the decree may be executed against the judgment-debtor to the extent of the property in respect of which he has failed to satisfy the court in the same manner as if the decree has been against him personally. krishna doss (1911)21mlj1096 .the district judge finds (and this is in fact not disputed) that the appellant has failed to pay even the interest due under the mortgage decree, and further that he..........to shows that the rule enabling the purchaser to fall back on his mortgage is an infringement of legal rights. consequently a strict construction should be placed on this provision of law. i am of opinion that the mortgagee purchaser can use his previous mortgage only as a shield if there are mesne incumbrances, and that also only in respect of the properties which are covered by such incumbrances.' i respectfully agree with the above observations.10. the observation of their lordships of the privy council in bhawani kunwar v. mathura prasad singh i.l.r. (1912) c. 89 : m.l.j. 311 shows that where there are no incumbrances there is an extinguishment of the right under the mortgage when the equity of redemption is acquired.11. the decision in laxman ganesh rajendra v. muthurabai narayan.....
Judgment:

Moore, J.

1. The respondent, the Mahant of Tirupati, obtained a mortgage decree in O.S. No. 40 of 1910 in the District Court, North Arcot, on the 23rd day of February 1911 against the appellant the Rajah of Kalahasti as the legal representative of the late Rajah. Akkappa Nayanim Varu by whom the mortgage has been executed. The appellant, it may be mentioned, succeeded to the estate in May 1905. The mortgaged property having been exhausted, a personal decree for nearly three lakhs of rupees was passed against the appellant on the 7th day of April 1914. It appears that on the 14th day of July 1896 the then Rajah had executed a simple mortgage for one lakh of rupees in respect of certain villages in favour of the appellant for arrears of maintenance and other debts due to the latter. The respondent decree-holder applied in Execution Petition No. 42 of 1914 to attach the mortgage right possessed by the appellant, the judgment-debtor under the mortgage dated the 14th day of July 1896, alleging that the judgment-debtor had not properly applied the assets of the late Rajah which had come to his hands. The appellant then put in a petition asking for the release from attachment of the mortgage right on the ground that the decree having been obtained against him on a mortgage bond executed by his predecessor in title, the decree-holder could not attach a debt due to him, the appellant, in his private capacity. Pie further stated that he had sold the equity of redemption of the properties on the 15th day of February 1913.

2. The District Judge found that the appellant had appropriated to his own use large sums which ought to have been applied in paying off charges on the estate, and that he was therefore personally liable for at least the amount of the mortgage which had been attached, and dismissed the petition.

3. The questions for determination in this appeal are (1) whether it is competent to the decree-holder to attach the mortgage right which is said to be the private property of the appellant and (2) whether upon the appellant succeeding to the Kalahasti Estate the mortgage right in his favour becomes extinguished.

4. It cannot be doubled that the property of the deceased Rajah must be regarded as assets in the hands of his legal representative for the purpose of Section 50 of the Civil Procedure Code. See Rajah of Kalahasti v. Achigadu (1905) L.R. 30 M. 454 which was followed in Zemindar of Karvetnagar v. Trustee of Tirumalai, Tirupati, etc. Devastanams I.L.R. (1908) M. 429. Section 52 of the Civil Procedure Code provides that where a decree is passed against a party as the legal representative of a deceased person, and the decree is for the payment of money out of the property of the deceased, it may be executed by the attachment and sale of such property. (2) Where no such property remains in the possession of the judgment-debtor and he fails to satisfy the Court that he has duly applied such property of the deceased as is proved to have come into his possession, the decree may be executed against the judgment-debtor to the extent of the property in respect of which he has failed to satisfy the Court in the same manner as if the decree has been against him personally.

5. The judgment-debtor had only to account up to the full value of the assets he received as legal representative. It is for the decree-holder in the first instance to prove that some assets came to the legal representative, and the onus is then shifted on the latter to show how the assets were applied.

6. Once it is admitted or proved that the legal representative sought to be made liable has come into possession of assets belonging to the estate of the deceased, it is for him to satisfy the court as to the extent of the assets received and to account for them, Goverdhan Doss v. Krishna Doss : (1911)21MLJ1096 . The District Judge finds (and this is in fact not disputed) that the appellant has failed to pay even the interest due under the mortgage decree, and further that he has also appropriated large sums which ought to have been applied in paying off charges on the estate.

7. The argument adduced on behalf of the appellant was that the income of the Zemindari cannot be regarded as property of the deceased which came into the hands of the present Rajah, that his liability is confined to the extent of the property which came into his hands, and that he is not bound to pay the debts of the late Rajah out of the income of the estate. In Asseemoonnissa v. Ammeroonnissa Khatoon 15 W.R. 285, it was held that where a person is proceeded against as the representative of a deceased judgment-debtor and it is proved that property which belonged to the deceased judgment-debtor has come into his hands, it lies upon the person against whom execution is sought, to account for all the property of the deceased judgment-debtor, which has come into his hands, and that in so accounting, mesne profits whether accruing in the shape of rent or interest must be brought into account. I agree with that decision, and think that the rents and profits received are assets just as much as the real estate. See In re Hyatt: Bowles v. Hyatt (1888) 38 Ch. D. 609. The learned Vakil for the appellant relies in support of his contentions on the rulings in Rani Kanno Dai v. B.J. Lacy (1897) I.L.R. 19 A. 235, and Veerasokka Raju v. Papidh I.L.R. (1901) M. 792. The 20 Madras case is clearly not in point, as payments, had been made by the legal representative to the extent of the full value of the property which had come into his hands and it was consequently held that a decree could not be executed even though he might still have in his possession property which had originally belonged to the deceased. Rani Kanno Dai v. B.J. Lacy I.L.R. (1897) A. 235 may be distinguished on the ground that the decree-holder had agreed for consideration not to execute his decree against the movable property of the widow.

8. I am of opinion that the District Judge was right in holding that the appellant having failed to satisfy the Court that he had duly applied the property of the deceased was personally liable to the extent of the property in respect of which he had failed so to satisfy the Court. It remains to consider the question (which was not. raised in the Lower Court) whether the mortgage right possessed by the appellant under the mortgage of 1896 became extinguished when he succeeded to the estate and became the owner of the equity of redemption. It is argued on behalf of the appellant that the doctrine of merger does not apply, the appellant being only a qualified owner, and that the appellant has by his conduct signified his intention of keeping the mortgage alike for his benefit. I do not think it necessary to refer to the various English cases cited by Mr. Govindaraghava Iyer. Courts in India are governed by the statutory provision contained in Sectuib 101 of the Transfer of Property Act which is as follows: 'Where the owner of a charge or other incumbrance on immovable property is or becomes absolutely entitled to that property, the charge or incumbrance shall be extinguished, unless he declares, by express words or necessary implication, that it shall continue to subsist, or such continuance would be for his benefit.'

8. The Advocate-General contends that the section presupposes the existence of puisne incumbrances and that the appellant cannot reserve in his favour his own mortgage which had become extinguished when he acquired the equity of redemption. I think that this contention must be upheld. The earlier part of the section states the doctrine of merger. An extinguishment of the debt will ordinarily take place, where the mortgagee becomes also absolute owner of the equity of redemption, for then the equitable estate becomes merged in the legal. The effect of the proviso to the section which states the exception to the rule of merger is (1) to enable the person in whom the two titles are united to keep the incumbrance alive and (2) to declare that the incumbrance should continue to subsist, where the result would be for his benefit. Ordinarily the only object and advantage of keeping incumbrances alive, is that it may be used against the holder of a subsequent incumbrance.

9. Reference may be made to a recent case Arumuga Sundara Maharaja Pillai v. Narasimha Aiyar (1915) 29 M.L.J. 583 where the learned Chief Justice held that where there are no mesne incumbrances outstanding on the date of the purchase of the equity of redemption by the mortgagee there is merger under Section 101 of the Transfer of Property Act. Mr. Justice Seshagiri Aiyar put the matter very clearly at page 591 of the report where the learned Judge says 'It is clear that the section (i.e. Section 101) contemplates the existence of puisne incumbrances. Unless that be the object the clause relating to 'the subsistence of the incumbrance being for the benefit' of the purchaser can have no meaning. The person who becomes absolutely entitled to the property cannot reserve in his favour and as against himself his own mortgage. As I read the section it leaves untouehed the general rule of law that When a mortgagee purchases the equity of redemption the incumbrance in his favour is extinguished. It only enacts that where there are other mortgages on the property the intention will be imputed to the mortgagee purchaser that he intended to keep alive his own mortgage as a protection against subsequent claimants. The discussion in the House of Lords in the case already referred to shows that the rule enabling the purchaser to fall back on his mortgage is an infringement of legal rights. Consequently a strict construction should be placed on this provision of law. I am of opinion that the mortgagee purchaser can use his previous mortgage only as a shield if there are mesne incumbrances, and that also only in respect of the properties which are covered by such incumbrances.' I respectfully agree with the above observations.

10. The observation of their Lordships of the Privy Council in Bhawani Kunwar v. Mathura Prasad Singh I.L.R. (1912) C. 89 : M.L.J. 311 shows that where there are no incumbrances there is an extinguishment of the right under the mortgage when the equity of redemption is acquired.

11. The decision in Laxman Ganesh Rajendra v. Muthurabai Narayan Gobind I.L.R. 39 B. 369 is to the same effect.

12. In the result the appeal is dismissed with costs.

Sadasiva Aiyar, J.

13. I entirely agree with the judgment just now pronounced by my learned brother. The doctrine that a widow could, by her conduct, treat the savings out of the income of her' husband's estate as her separate property and that then it would become property at her absolute disposal so that her alienations thereof could not be questioned by her husband's reversioners, cannot be extended so as to give her the right to treat all the income as her absolute property not available to her husband's creditors. There are, no doubt, observations in Rani Kanno Dai v. B. Lacy I.L.R. 19 A. 235 which seem to go to the length that the rents of the husband's estate could not be treated in law as assets of her husband for any purpose but I respectfully dissent from those remarks.

14. On the ground of merger, I would hold that the appellant was not entitled to treat himself as owner of a mortgage right in lands belonging to the Zamindari of which he became the sole owner, though certain restrictions have been placed by the Impartible Estates Act on the extent of his power of alienation. His claim for the release of a non-existent mortgage right was therefore rightly dismissed. As this non-existent right has not yet been sold in execution, it is a matter for consideration for the District Court whether under Order 21 Rule 66 Clause (e), it ought not to notify in the same proclamation that the attached property is a right which had ceased to exist long ago, assuming that the court is bound to bring it to sale at the instance of the decree-holder and is not entitled under Section 151 of the Civil Procedure Code to stop the sale altogether on that account.


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