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Indian Overseas Bank Vs. N.A. Sellamuthu and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberAppeal Suit No. 781 of 1977
Judge
Reported inAIR1982Mad89
ActsTamil Nadu Co-operative Land Mortgage Banks Act, 1934 - Sections 21 (2); Tamil Nadu Co-operative Land Mortgage Banks (Amendment) Act, 1934; Transfer of Property Act, 1882 - Sections 28(2) and 58
AppellantIndian Overseas Bank
RespondentN.A. Sellamuthu and ors.
Appellant AdvocateShakir Ali, Adv.
Respondent AdvocateR.G. Rajan, ;V. Radhakrishnan and ;G. Nagarajan, Advs.
Cases ReferredIn Good v. Parry
Excerpt:
.....staked out a claim'.a 'grant',on the contrary has a distinctly broader meaning. xiv) regarding the word 'claim':the word is derived from the latin 'clamor',meaning a call, a demand, and, as applied in the law, has been described as a term of well defined, and well understood meaning, although in particular cases it has been said to require construction in the light of the context. while in its popular sense, and as used in statutes and some state constitutions, the word has been judicially interpreted to extension only to those claims originating in contracts either expressed or implied and is seldom used when referring to a demand for damages that a party may sustain in consequence of a wrong or injury to his person or property, it has been held sufficiently comprehensive to embrace..........claims against the property secured by such mortgage.'the question to be considered is whether the word 'claims' used in sub-s. (2) of r 28 covers mortgage rights. i am of the opinion that it does not.5. a 'claim' is ' demand of a right or supposed right; an assertion which is open to challenge; a right to claim or demand; a just title to anything; the thing claimed or demanded, especially a piece of public land staked out'. (the lexicon webster dictionary, encyclopedic edition, vol. i).6. 'claim, title, pretension, pretence are comparable when they denote an. actual or alleged right to demand something as one's possession, quality, power, or prerogative. 'claim' carries the strongest implication or any, of these terms of a demand for recognition; only the context can indicate whether.....
Judgment:

1. This is an appeal by the plaintiff from the judgment of the learned 11 Additional Subordinate Judge of Salem in O. S. No. 8 of 1974.

2. The appellant instituted O. S. No. 8 of 1974 on the file of the Sub-Court. Salem, for recovery of a sum of Rupees 16,849.26 due under a mortgage by deposit of title deeds created by defendants 1 and 2 on 12-6-1970, receiving a consideration of Rs. 12,000/-, repayable with interest at 41/2 per cent over the Reserve Bank of India official rate with a minimum of 91/2 per cent per annum with quarterly rests, every month and in default, at the rate of 12 per cent per annum with quarterly rests.

3. Respondents 1 and 2 herein, who were defendants 1 and 2, filed a memo on 30-9-1974 admitting the suit claim. The third defendant, who is the contesting respondent, is the Salem Co-operative Land Mortgage Bank, Ltd. in whose favour the second defendant executed A. registered mortgage deed in respect of one of the suit items,, namely S. No. 147/4C of Anupur Village, for a consideration of Rs. 9,500/- received as loan by him. The third respondent contended that by reason of the provisions of S. 28 of the Tamil Nadu Co-operative Land Mortgage Banks Act X of 1934 the claim of the plaintiff is enforceable only subject to the rights of the third respondent under the mortgage deed in favour of the latter, though the mortgage deed was executed by the second defendant after the mortgage in favour of the plaintiff. The contention was accepted by the learned Subordinate Judge and a preliminary decree was passed as prayed for with costs less Rs. 500/- paid on 22-2-1975 payable by defendants I and 2 subject to the priority rights of the third defendant secured by the mortgage deed under Exhibit B-9 in respect of the first item of the suit properties. Against this judgment and decree of the learned Subordinate Judge granting priority to the third defendant the plaintiff, who is a prior mortgagee, has preferred this appeal.

4.The question to be considered is whether the mortgage executed in favour of the third defendant should have priority over the mortgage in favour of the plaintiff. it is contended by the learned counsel for the third defendant-third respondent that under S. 28 of the Tamil Nadu Co-operative Land Mortgage Banks Act, as amended by the Tamil Nadu Act 17 of 1968, to be referred to hereafter as the Act, the third defendant is entitled to such a priority. Section 28 sub-s. (2) of the Act reads as follows:

'Without prejudice to the provisions of sub-me. (1), and notwithstanding anything contained in the Madras Co-operative Societies Act, 1961 (Madras Act 53 of 1961 % %r in any other law for the time being being in force, a mortgage executed is favour of a mortgage bank after the 4th day of July, 1968, shall, subject to the claim of the Government in respect of land revenue, have priority over all other claims against the Property secured by such mortgage.'

The question to be considered is whether the word 'claims' used in sub-s. (2) of R 28 covers mortgage rights. I am of the opinion that it does not.

5. A 'claim' is ' demand of a right or supposed right; an assertion which is open to challenge; a right to claim or demand; a just title to anything; the thing claimed or demanded, especially a piece of public land staked out'. (The Lexicon Webster Dictionary, Encyclopedic Edition, Vol. I).

6. 'Claim, title, pretension, pretence are comparable when they denote an. actual or alleged right to demand something as one's possession, quality, power, or prerogative. 'Claim' carries the strongest implication or any, of these terms of a demand for recognition; only the context can indicate whether that demand is regarded as justifiable or not or whether the right is actually asserted by the person involved (though the house was legally the daughter's, the father, as the, one who had paid for it and had taken care of all taxes and insurance, had a moral claim to live there the rest of his life), (intelligent persons cannot accept the claims made for many patent medicines), (be advanced no claim to scholarly knowledge), (searching for truth off against all the claims and all the counterclaims of all the partisans Lip Mann), (liberty itself became a principle of anarchy rather than a body of claims to be read in the context of the social process - Laski). Claim also occurs in A more concrete sense as denoting the property or possession for which one sets up a claim (stake out a claim in an oil field).' (Webster's New Dictionary of Synonyms).

7. 'Claim: A demand for something as due; an assertion of a right to something.... To lay claim to: to assert one's right to, claim'. (Vide The Compact Education of the Oxford English Dictionary -, Vol. 1).

8. 'Claim: (1) A demand for something as due, an assertion of a right to something. (2) Right of claiming; right or title (to something or to with inf. phrase; also, on, upon a person, etc. Claim (v): (1) To demand as one's own or ones due; to seek or ask for on the ground of right (2) To assert and demand recognition of (an alleged right, title, or the like); to assert as one's own - ME'. (Vide Shorter Oxford English Dictionary - Third Edn.).

9. ' 'Claim' is a challenge by any man of the propertie or ownership of a thing which he hath not in possession, but is withholden from him wrongfully' (Terms de la Ley). (2) 'Claim against the Crown for damages or compensation (Crown Suits, Ordinance, 1876, & 18, (4 is an apt expression to include claims arising out of torts). (3) (Crown Proceeding Act, 1947 (10 & 11 Geo. 6, c. 44). S 1) 'a claim against the Crown after the commencement of this Act' does not include a claim statute-barred at the commencement of the Act)......(5) 'Claim for compensation' includes a notice of claim, as -well as the initiation of proceedings. (Vide Stroud's Judicial Dictionary - Third Edn. - Vol. 1).

10. There are claims in the Merchant Shipping Act; claims which may be adjusted or set off, the one against the other, statutory claims; claim for damages; claims arising out of some statutes; claims founded on and arising out of a breach of contract; and claims of certain rights.

11. In the Law Lexicon of Venkataramaiya it is made abundantly clear that the expression 'claim of right' does not refer to actual legal right and that it means a belief in legal right and that the claim of right as to ownership or possession of property may stem from a mistake of law or a mistake of fact or of both.

12. It is seen from 'Words and Phrases' (St. Paul, Minn. West Publishing Co.) that the word 'claim' has been variously understood and interpreted 'in various statutes in the United States of America. It is stated therein that:

'A 'claim' is, not only legally speaking, but in ordinary parlance, clearly distinguishable from a 'grant' or a 'title'. A 'claim' is defined in the Century Dictionary as 'the thing claimed or demanded; specifically, a piece of public land which a squatter or settler marks out for himself with the intention of purchasing it when the Government offers it for sale; as, 'he staked out a claim'. 'A 'grant', on the contrary has a distinctly broader meaning. It implies an acquired right, and is described as applicable to the conveyance of incorporeal rights'.'

It is further stated that:

'A claim is, 'in a just juridical sense, a demand of some matter of right made by one person upon another to do, or to forbear to do, some act or thing as a matter of duty'.'

13. The following passage occurs in the 'Corpus Juris Secundum' (Vol. XIV) regarding the word 'claim':

'The word is derived from the Latin 'clamor', meaning a call, a demand, and, as applied in the law, has been described as a term of well defined, and well understood meaning, although in particular cases it has been said to require construction in the light of the context. While in its popular sense, and as used in statutes and some state constitutions, the word has been judicially interpreted to extension only to those claims originating in contracts either expressed or implied and is seldom used when referring to a demand for damages that a party may sustain in consequence of a wrong or injury to his person or property, it has been held sufficiently comprehensive to embrace actions sounding in tort as well as those founded on contract. In particular connections, 'claim' has been held to imply the performance of services or the furnishing of materials to, or the expending of money on behalf of, another for which claimant is entitled to be paid, something unequivocal, something more than a mere inquiry as a basis for a later claim, more even than an expression of a future wish or desire to claim, if replies to the inquiry are favourable; also that the right is in dispute, suggesting contention, litigation, and something left for future discrimination; but not to imply formality necessarily, nor even the use of words, acts support of a claim having been held sufficient to establish it under particular circumstances, nor does it imply a past due indebtedness. x x x x x x x x

Assertion or Demand of a Right: In what has been termed its primary meaning, or in its ordinary or usual sense, the word is a broad and comprehensive term, and in its legal use has been understood in a somewhat enlarged sense, embracing every species of legal demand, not necessarily limited to money demands; and particularly when used in connection with property, 'claim' has been held to signify a demand and nothing more. The term has been specifically defined as meaning a demand of a right, or of an alleged or supposed right; a calling on another for something due or supposed to be due; an active assertion of right and the demand for its recognition, an assertion, demand, or challenge, of something as a right; the assertion of a liability to the party making it to do some service or to pay a sum of money, or a demand of a right or thing withheld, the amount of which can be stated in money; the demand of some matter as of right by one person on another to do or to forbear to do some act or thing as a matter of duty, more specifically, a challenge by a man of the property or ownership of a thing which he has not in possession, but which is wrongfully detained from him, or the assertion of ownership or proprietary interest or other direct right or claim to the property itself; also, the making known of the demand to the person who is subject to it; the means by or through which the claimant obtains the possession or enjoyment of the thing sought, as distinguished from the subject claimed; and also the occasion to pay. Used sometimes in a technical sense, the word 'claim' or 'claims' has been held to signify a demand enforceable in law and in conformity to particular statutory requirements, or a demand entered of record stating the amount.

The Right to Demand: In its secondary meaning, distinguished from the primary meaning, set out in the preceding subdivision, 'claim' has been defined as meaning a right to claim or demand; the right itself, such as a right or title, actual or supposed, to a debt, privilege, or other thing in possession of another; a right to lay claim to a specific property which is in another's possession; a title to any debt or privilege or other thing in possession of another; or a title to anything which another should give or concede, or confer on, the claimant; also the facts giving rise to the demand, which show the right asserted, hence a cause of action, or a chose in action.'

14. Thus, it would be seen that a claim something less than an incorporeal right in a property. 'A 'mortgage' is a transfer of an interest in specific immovable property'. Thereby an incorporeal right, in an immovable property is vested in the mortgagee, and that right is not a mere claim, such as claims against estate, claims for compensation, claims for damages, etc. Where a claim becomes enforceable it becomes a right, and in order to become enforceable, a claim has to be either conceded by a party and incorporated in a document as by a donor or a mortgagor or vendor of an immovable property or recognised by a Court incorporated in a decree.

15. In Bennett v. L. and W. Whitehead, Ltd. 1926 2 KB 380 Atkin L. J. has observed thus:

'On this question I would desire to call attention to the words, 'The workman may, at his option, either claim compensation under this Act or take proceedings independently of this Act'. If the words mean that, while he has the option to do one of two things, as soon as he does one he may never thereafter do the second, it is not immaterial to notice that the first choice is to 'claim compensation'. It is. well known that up to 1900 the word 'claim' in the Act had been treated as meaning 'file a request for arbitration', and that the decision to the contrary of the House of Lords in Powell v. Main Colliery Co. 1900 AC 366 made an important change in the law as understood up to that date, and has to be remembered in dealing with relevant cases decided before that date. It is true that the House of Lords was dealing with 'the claim for compensation' under S. 2, sub-s. (1) of the Act of 1897; but it could hardly be contended that the word bears different meanings in S. 1, sub-s. (2), and in S. 2, sub-s. (1). 'Claim compensation' therefore means intimate a claim to the employer. Such intimation may be written or verbal, and may be evidenced by proof that the employer has in fact paid compensation.'

16. In Good v. Parry reported in 1963 2 All ER 59, the Court of Appeal consisting of Lord Denning, M. R., Dancewear's and Davies, L. J., the provisions of Section 23 (4) of the Limitation Act, 1939 (2 & 3 Geo. 6 c. 21) came up for consideration and their Lordships observed that:

'Section 24 goes to show that an acknowledgment has to be in writing and signed by the party or his agent. Clearly here the writing and the agency is satisfied. The whole question is whether, in this letter, there is an 'acknowledgment of the claim'. The words 'the claim' are not, perhaps, very happy. A person may acknowledge that a claim has been male against him without acknowledging any indebtedness ..................'

17. Thus, it would be seen that a claim is not to be equated with a right in and immovable property. If the interpretation sought to be put upon the word 'claim' by the learned counsel for the third defendant-third respondent is to be accepted, then the Land Mortgage Bank would be entitle to sell the hypothecation in enforcement of the subsequent mortgage free of the prior encumbrances. That is not a situation that can be contemplated, with equanimity. By S. 28 (2) of the Act, the Land Mortgage Bank has ' not been empowered by its action, namely by enforcing the mortgage in its favour, to wipe out all the earlier encumbrances over a hypotheca. Therefore, the word, claims' in S. 28 (2) of the Act should be deemed to have been used in the sense of a claim that had not fructified into a right either by means of a transfer under a registered document, a transfer inter vivos under a registered document or a decree in pursuance of which an attachment has been made, and thereby a right in immovable property has been affected, namely the right of the owner to alienate the same. We may conceive of a case where, after an attachment of an immovable property in pursuance of a decree of Court, a mortgage in favour of a land mortgage bank governed by the Act is created, and consider whether such a mortgage would take precedence over the attachment and have the effect of overriding the legal consequences of an attachment by a Court of Law. I have no hesitation in coming to the conclusion that the subsequent mortgage cannot have the effect of rendering nugatory the attachment effected through Court prior to the mortgage. Therefore, I am of the opinion that the mortgage in favour of the third defendant cannot take precedence over the earlier mortgage of the plaintiff.

18. Therefore, this appeal is allowed and the judgment and decree of the learned II Additional Subordinate Judge are modified and the priority given to the third defendant in the matter of the enforcement of the mortgage right is cancelled and a preliminary decree is passed as prayed for with costs less Rs. 560/payable by defendants 1 and 2. The third respondent will pay the costs of this appeal. However, the properties may be brought to sale in two sets, namely one set of properties, excluding the property mortgaged to the third defendant, may be brought to sale in the first instance and if the amount realised therefrom is not sufficient for satisfying the decree, then the next set, that is, the property mortgaged in favour of the third defendant, may be brought to sale.

19. Appeal allowed.


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