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Ramasami Aiyangar Vs. Govinda Iyer and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1916)31MLJ839
AppellantRamasami Aiyangar
RespondentGovinda Iyer and anr.
Cases ReferredYates v. Morton and Bangess
Excerpt:
- - the rights of a mortgagee under the english law are so different from those of a mortgagee in this country that it is not safe to apply the english analogy here. his argument was that as leases of this kind are resorted to in the usual course of management, any equities subsisting between the lessor (judgment-debtor) and the lessee must bind the auction purchaser as well. the actual decision in that case was perfectly right on the frame of the plaint......the auctionpurchaser. there are two aspects of this question. (1) does lis pendens continue in a mortgage suit up to the sale of the property? and (2) if it so continues, is the purchaser affected to his prejudice by the outstanding lease? the views held by the various high courts have not been uniform. therefore, it is desirable to examine the principles on which the lis is made to depend in such cases. it is clear that until decree in a mortgage suit any dealing with the property mortgaged will be effected by lis pendens. if by virtue of the mortgage decree, the property is regarded as being under attachment till the sale takes place, on the analogy of section 64 of the code of civil procedure, private dealings can be avoided by persons claiming under the decree. it was suggested for.....
Judgment:

Seshagiri Aiyar, J.

1. Mr. Ganesa Aiyar takes the preliminary objection that the suit is for damages below Rs. 500 and that consequently there is no second appeal. In order to understand the nature of the suit, it ought to be stated that the plaintiff purchased the properties in suit in auction in September 1908. He was put in possession on the 15th January 1909. Exhibit D, the attakshi says that on the date of the delivery, tuvarai crops upon a portion of the property had been removed away and that the purchaser was put in possession of the lands and the crops on the remaining property. In the plaint, the plaintiff says that his cause of action for the harvested crops arose on the 3rd January 1909 and for the crops cut and carried away since delivery in February 1909. So far as the claim for the harvested cropsis concerned, it is taken away from the cognisance of the Small Cause Court by the second part of Article 31 of the second schedule to the Provincial Small Causes Courts Act. It would be a claim for an account which under the ruling in Savarimuthu v. Aithurusu Rowther (1907) 18 M.L.J. 88 is triable only by the regular Courts. As regards the claim for the subsequent cutting and carrying away of the crops, it is no doubt a claim for damages which are within the cognisance of a Small Cause Court. We agree with the decisions in Annamalai v. Subramanyam I.L.R. (1892) M. 298 Raghava Reddy v. Krishna Reddy (1912) 23 M.L.J. 193 : : (1912)23MLJ193 and Rama Aiyar v. Saminatha Aiyar I.L.R. (1911) M. 726. We think the decision of Munro, J. in Venkoba Rao v. Muthn Aiyar (1907) 18 M.L.J. 88 is not correct and we are not prepared to follow it. If a claim is partly within the jurisdiction of the Regular Courts and, partly within the jurisdiction of Small Cause Courts, there can be no question that the plaintiff is entitled to file a suit for the consolidated amount in the Regular Courts. It is in this view we hold that the suit was rightly brought in the District Munsif's Court and that a second appeal lies. We overrule the preliminary objection. On the merits the question is whether the lease for 3 years granted by the judgmentdebtor is binding on the auctionpurchaser. There are two aspects of this question. (1) Does lis pendens continue in a mortgage suit up to the sale of the property? and (2) if it so continues, is the purchaser affected to his prejudice by the outstanding lease? The views held by the various High Courts have not been uniform. Therefore, it is desirable to examine the principles on which the lis is made to depend in such cases. It is clear that until decree in a mortgage suit any dealing with the property mortgaged will be effected by lis pendens. If by virtue of the mortgage decree, the property is regarded as being under attachment till the sale takes place, on the analogy of Section 64 of the Code of Civil Procedure, private dealings can be avoided by persons claiming under the decree. It was suggested for the respondent, that when an order for sale is made the lis ceases. The effect of this contention will be to enable the judgment-debtor to deprive the purchaser of possession. He can grant a perpetual lease and thus render it impossible for the auction-purchaser to get possession of the property. I think the sounder view is to hold that the property continues to be subjected to lis pendens until the actual sale is effected.

2. Now as to the authorities. In Kolluri Nagabhushanam v. Ammanna I.L.R. (1880) M. 71, it was assumed without discussion that the lis would continue up to sale. In Mallikarjunadu Setti v. Lingamurti Pantulu etc. I.L.R. (1900) M. 244:12 M.L.J. 279, there is an obiter to the effect that the principle of Salt v. Cooper (1880) 16 Ch. D. 544, would apply to India. The rights of a mortgagee under the English law are so different from those of a mortgagee in this country that it is not safe to apply the English analogy here. In Calcutta, there is a course of decisions enunciating the view that lis pendens affects the mortgaged property up to sale. See Surjuram Marwari v. Barhamdeo Persad (1905) 2 C.L.J. 288, Bhagwan Das Khettiry v. Nilkanta Ganguli 9 C.W.N. 171, Kissorylal Chowdhury v. Raja Sewbux Bogla 13 C.W.N. 787, Madaneswar Singh v. Mahamaya Prosad Singh 15 C W.N. 672, Brajah Nath Pal v. Joggeswar Bagchi (1908) 9 C.L.J. 346 and Modan Mohan Singh v. Rajkishori Kumari (1912) 17 C.L.J. 381. In Allahabad the same view is taken: Thakur Prasad v. Gaya Sahu I.L.R. (1898) A. 849 and Chuni Lal v. Abdul Ali Khan I.L.R. (1901) A. 881. The viewtaken in Bombay does not commend itself to me. In Shivajuram v. Waman I.L.R. (1867) B. 989 while holding that the lis continues after decree, the learned Judges say that its effect would depend upon the continuance or subsistence of execution applications. Samal v. Babagi I.L.R. (1901) B. 361 is to the same effect. All the authorities are reviewed in Bhoje Mahadev Parab v. Gangabai I.L.R. (1913) B. 621. Mr. Justice Batchelor says that if execution proceedings are not taken, there can be no contentious suit or proceeding. The decree in question was a maintenance decree which created a charge. The learned Judge seemed inclined to hold that the case of a mortgage decree may be different. Mr. Justice Shah says that if there was a considerable interval between the passing of a decree and of an application to enforce it, the Us cannot subsist all the time. The effect of the Bombay rulings is to make the lis depend not upon the subsistence of the decree in the suit, but upon the active prosecution of applications for enforcing it. With all deference I am unable to follow this reasoning. The essence of the doctrine is that the property in dispute is the subjectmatter of a suit. There is no attachment in the case of mortgage decrees and all that is claimed in execution is to carry out the terms of the decree. Therefore it is the fact that the property is directed to be sold that is the basis of the doctrine of lis pendens and not the fact that applications are prosecuted to enforce the terms of the decree. The proceedings in question continue the mortgage suit up to sale (see Kerakoose v. Brooks (1860) 8 M.I.A. 339 . I am therefore of opinion that at the time of the sale to the plaintiff the property was subject to lis pendens.

3. On this conclusion the point pressed by Mr. Venkatarama Sastriar arises that his client is entitled to mesne profits from the date of the sale. We think that in estimating the profits, the amount of rent secured on the property by the judgment-debtor may be taken as the amount payable to the plaintiff. Mr. Ganesa Aiyar contended that in estimating that amount, payments made to the judgment-debtor should be credited against the purchaser. His argument was that as leases of this kind are resorted to in the usual course of management, any equities subsisting between the lessor (Judgment-debtor) and the lessee must bind the auction purchaser as well. I am willing to concede that a lease of this nature is within the powers of an ordinary and prudent owner of property. Radhika v. Radhamani (1888) L.R. 7 M. 96 and Subharaza v. Sitarama Raz (1016) M.W.N. 171 support this position. But the further contention that the purchaser is affected by the equities against the Judgment-debtor is not consistent with the language of Section 52 of the Transfer of Property Act. Subharaza v. Sitarama Raz I.L.R. (1902) M. 214:12 M.L.J. 279 is a peculiar case. In that case the purchaser claimed rent and not mesne profits and he prayed for the whole amount against the tenant, with an alternative prayer against the Judgment-debtor for the amount recovered by the latter from the tenant. The actual decision in that case was perfectly right on the frame of the plaint. I do not think the learned Judges intended to lay down either that the purchaser is bound to implead the Judgment-debtor or that he can have his claim for the payment made to the Judgment-debtor only against the latter. Prima facie, the purchaser is entitled to look to the person in possession from the date that title accrued to him, for mesne profits or damages. The payment in advance under the lease, although it may be the usual course adopted as between lessor and lessee should not drive the purchaser to seek his remedy against a person to whom the money was paid. A person who obtains a lease when the lis subsists takes considerable risks and if he pays money under it before he had enjoyment of the land, he cannot resist the right of the purchaser whatever may be his rights to get back the money from his lessor.

4. For these reasons, I hold that the purchaser is entitled to the proportionate share of rent secured under the lease of the property in dispute. We direct the Subordinate Judgs to return a finding as to the amount recoverable by the plaintiff on the footing of our judgment. Finding should be submitted on the evidence on the record in 6 weeks and 7 days will be allowed for filing objections.

Bakewell, J.

5. The plaintiff is the purchaser of certain land sold by the Court under a mortgage decree dated 24th September, 1902 which directed the defendants to pay the amount found to be due and that in default of payment before the specified day the mortgaged property should be sold and the proceeds of sale be paid into Court and applied in payment of the amount of the decree and that any balance should be paid to the defendants and any deficiency should be realizable from the first defendant and the other properties of the defendants. The decree thus followed the form prescribed by Section 88 of the Transfer of Property Act, 1882 and also contained a declaration of the liability of the defendants for any deficiency of the sale proceeds in respect of which a subsequent decree might be passed under Section 90.

6. The first defendant appears to have remained in possession of the mortgage property and during some abortive proceedings for the sale thereof granted a lease, dated 4th April 1907 to the 2nd respondent in the present proceedings.

7. On the 21st April 1908 an application was made for the sale of the property and a sale was held on 2nd September 1908 and confirmed on 2nd December 1908 and possession was delivered to the purchaser, the appellant on 15th January 1909.

8. In this appeal the question has been argued whether this lease is valid as against the purchaser.

9. The difficulty of the question arises from the fact that the High Court made no rules of procedure under Section 104 of the Transfer of Property Act and the Courts have therefore been obliged to apply the rules relating to the execution of decrees contained in the Code of Civil Procedure, 1882. The provisions of the Code relate primarily to decrees for money and follow the principle of the English Common Law that a decree for money terminates the litigation and that the decree-holder must initiate further proceedings to enforce it; but whereas under the Common Law the writ of execution is issued to an executive officer of the Crown, under the Code the Court itself executes the decree in a manner analogous to the procedure whereby the Court of Chancery sold property and distributed the sale proceeds among the persons entitled thereto during the course of a suit. Under the English Chancery Practice an action for foreclosure or sale continues until an order absolute for foreclosure is made, or if an order for sale is made until the property is sold and the proceeds are paid to the parties ; and the High Court of Calcutta has in effect followed this procedure which also obtains on the original side of this Court under its special rules of practice.

10. The form of decree prescribed by Section 88 of the Act contemplates alternative events, the defendants may or may not pay the amount due into Court and under Section 89 of the Act the Court ascertains which event has happened and in the first alternative it may award a further sum to the decreeholder as 'costs of suit' (S.94) and deliver possession of the property to the mortgagor: in the second alternative the Court is directed on the application of the party to pass an order which has a result not stated to be effected by the decree under Section 88 namely, that the mortgagor's right to redeem and the mortgagee's security are both extinguished. It is a fundamental principle of procedure that a court shall not alter or add to its decree wherein the rights of the parties are merged, whereby it becomes functus officio, but the provisions of Section 89 contemplate that the court retains a control over the suit whereby it may add to the terms of the decree passed under Section 88. Neither of these sections deals with the personal liability of the mortgagor under his contract, but under Section 90 after a sale has been held and the net sale proceeds have been acertained and found to be ' insufficient to pay the amount due for the time being on the mortgage,' which will include 'such costs of suit as have been properly incurred by him (the mortgagee) since the decree for foreclosure, redemption or sale up to the time of actual payment' (Section 94), the court may determine whether the. balance is legally recoverable from the defendant otherwise than out of the property sold and pass a 'decree' for such sum; the court may therefore adjudicate upon the rights of the parties under their original contract even after the first decree passed under Section 88 and pass a further decree. These are not powers ordinarily, exerciseable by a court executing a final decee, nor such as may be reserved by a Court for disposal in proceedings in execution and the power expressly given to the court to passa decree implies the continuance of its jurisdiction in the suit. For these reasons, if the case had been res integra I should have been prepared to hold, in accordance with the argument of Moore, J. in his judgment in Mallikarjunadu Setti v. Lingamurti Pantulu I.L.R. (1902) M. 214:12 M.L.J. 279, that mortgage suit remains pending until the rights of the parties are finally adjusted, that is until the sale moneys are distributed, or a final decree is passed under Section 90. It has, however, been decided by the majority of the Full Bench of this Court in that case that a decree under Section 88 is the final decree in a mortgage suit and all subsequent proceedings are in execution thereof and it follows, I think, that the contentious suit in which a right to this immoveable property was in question ceased to be actively prosecuted within the meaning of Section 52 of the Transfer of Property Act when the decree of 24th September 1902 was passed. It does not appear that there was any contentious proceeding thereafter. I am of opinion, therefore, that the lease in question does not fall within this section. The question remains, what is the effect of the decree under Section 88 upon the rights of the parties? It seems to me that it must be regarded as finally determining their rights in the property and as providing that in a certain event, that is default of payment by the mortgagor before a certain specified day, the parties shall have no right in the property, but only an interest in the proceeds of the sale thereby directed. In fact it operates as conversion of the property in the same manner as an order for sale of the Chancery Division operates as a conversion of real property into personalty. [See Fauntleroy v. Beebe I.L.R. (1902) M. 214=12 M.L.J. 279 Dodson Inre: Yates v. Morton and Bangess v. Boosh I.L.R. (1902) M. 214=12 M.L.J. 279; the property itself remains in custodia legis, no attachment is necessary and no disposition by either party can affect the order of the Court that the subjectmatter of the suit as it then stood shall be sold. It is obvious that, as pointed out by the learned vakil for the appellant, any construction whereunder either party retained a power of disposition over the mortgaged property would afford an opportunity of interminable litigation, against which the Court will certainly struggle.

11. For these reasons I am of opinion that the sale by the Court and its subsequent confirmation transferred to the purchaser the rights of the parties as they existed at the date of the decree and therefore free from the lease subsequently created by the mortgagor. I agree with the order proposed by my learned brother.


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