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A. Vijiaraghavalu Naidu (Died) and ors. Vs. R.M.A.R. Rm. Arunachalam Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1939Mad165; (1939)1MLJ582
AppellantA. Vijiaraghavalu Naidu (Died) and ors.
RespondentR.M.A.R. Rm. Arunachalam Chettiar and ors.
Cases Referred and Bansi Lal Bhagat v. Durga Prasad
Excerpt:
.....property comprised in the original mortgage. it has been argued by the learned counsel for the appellant that he would at best be a pro forma party and not a necessary party and that though in the interests of justice the plaintiff could have asked for his being impleaded even at a later stage, such a step had become unnecessary by reason of the fact that on 30th april, 1930, the official receiver had executed a formal sale-deed in favour of the plaintiff himself. 11 of appendix d to the code clearly show that what is contemplated in the suit there dealt with is that for the purpose of realising the amount due under the sub-mortgage, the sub-mortgagee may ask the court to bring the original mortgaged property to sale and the balance of sale proceeds that may remain after satisfying the..........to sell by auction several items of the insolvent's property including the claim under the suit mortgage and the plaintiff purchased them on 19th march, 1929. the plaintiff purchased the items thus sold for a sum of rs. 1,010 which was paid on 19th march, 1929, itself. the sale appears to have been sanctioned by court on 17th april, 1929, but for some reason or other a formal sale-deed was not executed till 30th april, 1930. the mortgage deed fixed a period of three years for payment and the twelve years under article 132 of the limitation act would thus have expired on 14th december, 1929. the appellant was accordingly obliged to institute this suit on 14th december, 1929, even though no sale-deed in his favour had by that time been executed by the official receiver. though the.....
Judgment:

Varadachariar, J.

1. The original appellant sued for the recovery of a sum of money alleged to be due under a mortgage deed Ex. A, executed by the first defendant in favour of one Narayana Chettiar on 14th December, 1914. Narayana Chettiar became insolvent in 1924. The Official Receiver in whom the assets of Narayana Chettiar vested purported to sell by auction several items of the insolvent's property including the claim under the suit mortgage and the plaintiff purchased them on 19th March, 1929. The plaintiff purchased the items thus sold for a sum of Rs. 1,010 which was paid on 19th March, 1929, itself. The sale appears to have been sanctioned by Court on 17th April, 1929, but for some reason or other a formal sale-deed was not executed till 30th April, 1930. The mortgage deed fixed a period of three years for payment and the twelve years under Article 132 of the Limitation Act would thus have expired on 14th December, 1929. The appellant was accordingly obliged to institute this suit on 14th December, 1929, even though no sale-deed in his favour had by that time been executed by the Official Receiver. Though the mortgage purported to be for Rs. 15,000 the plaint stated that only a sum of Rs. 5,500 had been advanced under the document and it claimed to recover that amount with interest, limiting the total claim to Rs. 10,000.

2. The plaint was at one stage rejected by the lower Court but later on it was restored. After this restoration, the first defendant filed a written statement raising various pleas of fact and questions of law. On the facts, he contended that the mortgage deed was nominal and no money had been received by him under that deed. As a point of law, he contended that the plaintiff had no right to maintain the suit in the absence of a registered sale-deed. He also contended that the restoration of the suit after the plaint had once been rejected was invalid, as the Court had no power so to restore and the only remedy of the plaintiff was to appeal against the rejection of the plaint.

3. On the evidence, the learned Subordinate Judge was of opinion that the mortgage deed was supported by consideration only to the extent of Rs. 1,000 but as the Judge decided the questions of law against the plaintiff he dismissed the suit. Hence this appeal.

4. Dealing with the questions of law, we do not think it necessary to express any opinion on the validity or otherwise of the order restoring the plaint to file because we have come to the conclusion that the plaintiff must fail on the ground that he had no right to maintain the suit. In the lower Court, it appears to have been contended that the plaintiff could in some sense be regarded as an assignee of the mortgage right and entitled to sue as such, even in the absence of a registered deed of transfer. This contention is obviously untenable see Fanny Skinner v. Bank of Upper India, Ltd. and has rightly not been persisted in before us. The learned Counsel for the appellant tried to sustain the suit on a different ground. He contended that as his client had paid Rs. 1,010 on 19th March, 1929, he was under Section 55(6) of the Transfer of Property Act entitled to a lien or charge for that amount on the properties agreed to be sold by the Official Receiver and he argued that as the holder of such a lien or charge, the plaintiff stood in the same position as a sub-mortgagee who was entitled to sue not merely his mortgagor but even the original mortgagor. To this line of argument various objections have been taken on behalf of the respondents. It has first been contended that this new basis of claim should not be permitted to be advanced at all because it will change the nature of the case. In support of that contention reliance was placed upon Mahesha Mal v. Gopal I.L.R.(1933) 14 Lah. 640. It was next contended that Section 55(6) of the Transfer of Property Act has no application to the facts of this case at all, because the contract to sell has not fallen through but has admittedly been carried out, though subsequent to the institution of the suit. It was also contended that the question of fact as to who was the party in default will have to be investigated before Section 55(6) of the Transfer of Property Act could be invoked and that it was too late for the plaintiff to ask for this question being now investigated. It was finally contended that even if the plaintiff could be regarded as entitled to rely upon this line of argument, the analogy of a sub-mortgagee cannot help the plaintiff in the circumstances of the present case, having regard to the frame of the suit. As we are of opinion that this last contention must succeed, we do not express any views on the other objections.

5. An extreme contention was urged on behalf of the respondent that a sub-mortgagee had no right to sue the original mortgagor at all and reliance was placed in support of this contention on Maung Po Hla v. Ma Ngwe Sint A.I.R. 1937 Rang. 56. It must however be stated that there are several decisions of this and other High Courts taking a different view Muthu Vijia Raghunatha Ramachandra Vacha Mahali Thurai v. Venkatachallam Chetti (1896) 6 M.L.J. 235 : I.L.R. 20 Mad. 35 Ramasami Pillai v. Muthu Chetti I.L.R.(1910) 34 Mad. 53, Muthukrishnier v. Veeraraghava Aiyar (1912) 25 M.L.J. 356 : I.L.R. 38 Mad. 297 (F.B.), Kanhai Lal v. Mahadeo Prasad (1912) 18 I.C. 389. Vellayan Chettiar v. Mahalinga Pathan : AIR1938Mad30 and Bansi Lal Bhagat v. Durga Prasad (1908) 9 C.L.J. 429. Without pausing to examine how far the reasoning of the Rangoon judgment is consistent with this line of authority, it seems to us sufficient to point out that the learned Judges of the Rangoon High Court have lost sight of form No. 11 in Appendix D to the Civil Procedure Code which clearly contemplates a suit by a sub-mortgagee in which he can ask for relief by way of sale of the property comprised in the original mortgage. While we are therefore prepared to hold that a sub-mortgagee may maintain a suit against the original mortgagor, there are difficulties in the frame of the present suit which make it impossible for us to give relief to the plaintiff on this basis.

6. At the outset we have to observe that the Official Receiver who for the purposes of this argument must be regarded as plaintiff's mortgagor, has not been impleaded as a party to this suit. It has been argued by the learned Counsel for the appellant that he would at best be a pro forma party and not a necessary party and that though in the interests of justice the plaintiff could have asked for his being impleaded even at a later stage, such a step had become unnecessary by reason of the fact that on 30th April, 1930, the Official Receiver had executed a formal sale-deed in favour of the plaintiff himself. This line of argument ignores the nature of the relief which a sub-mortgagee is entitled to claim as against the original mortgagor. The several clauses in Form No. 11 of Appendix D to the Code clearly show that what is contemplated in the suit there dealt with is that for the purpose of realising the amount due under the sub-mortgage, the sub-mortgagee may ask the Court to bring the original mortgaged property to sale and the balance of sale proceeds that may remain after satisfying the amount due under the sub-mortgage will be paid to the original mortgagee. For this purpose, it is necessary that an account should be taken not merely in respect of what is due under the original mortgage but also in respect of what is due under the sub-mortgage. The form also contemplates an opportunity for the original mortgagee to pay up the amount due to the sub-mortgagee plaintiff. These indications do not justify the contention that even in the absence of the original mortgagee, a sub-mortgagee can in some sense seek to represent the original mortgagee and claim to recover the whole amount due under the original mortgage, leaving it as a separate question to be decided between himself and the original mortgagee as to how much each of them is entitled to out of the original mortgage amount. In other circumstances, part of the difficulty that has arisen in the present case could have been avoided by reason of the sale-deed, Ex. G, but it so happened that that sale-deed was executed several months after the expiry of the twelve years period, with the result that on that date the Official Receiver as representing the original mortgagee could not have claimed payment to himself of the original mortgage amount. The plaintiff could stand in no better position so far as the rights derived under the sale-deed Ex. G are concerned.

7. If, in the suit as originally instituted, he is to be regarded only as in the position of a sub-mortgagee, he could have claimed only the amount advanced by him, in respect of which the law gives him a charge and not the amount due under the original mortgage. It is only for the purpose of realising the f amount due to him under that charge that he could have sought the aid of the Court to bring the mortgaged property to sale to the extent necessary to satisfy his own charge on this basis. The plaintiff is also met by other insuperable difficulties arising from the frame of the suit. It seems to us futile to ask the Court to settle the amount due on foot of the sub-mortgage in the absence of the sub-mortgagor. The further difficulty in this case is that the plaintiff has recovered some amounts out of some of the items purchased by him but the parties are not agreed as to the amount realised by the plaintiff from out of the other properties included in the sale in his favour. If, from out of the other items, the plaintiff had realised more than what was due to him for the Rs. 1,010 and interest thereon, he obviously could not maintain the suit as nothing would then be due to him under the sub-mortgage. Again, the sale in his favour covers a large number of items and the charge under Section 55(6) will attach to all those items. No reference has been made to those items in this suit and the plaintiff as a charge-holder will not be justified in throwing the whole charge upon one item of property covered by the charge. In view of these considerations we do not think any useful purpose will be served by permitting the appellant's learned Counsel to put forward the new line of argument that he attempted to advance before us.

8. With reference to the authorities relied on by him, we may also point out that some of them related to mortgages of promissory note debts and proceeded on the analogy of Section 134 of the Transfer of Property Act. It would be difficult in the present case to apply the principle of those cases because on the date of suit, the plaintiff can in no sense be regarded as a 'transferee'. The utmost that he could claim was a statutory charge under Section 55(6) and it does not seem to us right to place a person possessing such a charge on the same footing as a 'transferee' - contemplated by Section 134 of the Transfer of Property Act.

9. The appeal must accordingly be dismissed on the ground that the plaintiff had no right to maintain the suit. In this view, it is unnecessary to deal with the question of the quantum of consideration raised in the lower Court. The appeal is accordingly dismissed with costs - one set, to be equally distributed between 1 and 4 respondents.


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