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A.M.A. Firm by Managing Partner Murugappa Chettiar in the Place of A.M.A. Palaniappa Chettiar Vs. Marudachalam Chettiar (Died) and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtChennai
Decided On
Reported inAIR1948Mad412; (1948)1MLJ284
AppellantA.M.A. Firm by Managing Partner Murugappa Chettiar in the Place of A.M.A. Palaniappa Chettiar
RespondentMarudachalam Chettiar (Died) and ors.
Cases ReferredNatesan Chettiar v. Ramalingam Chettiar
Excerpt:
.....the well-known case of the fotick chunder dey sircar v. this was sufficient to dispose of the case but the learned judges went further and added that the charge under section 65 of the bengal tenancy act was not a charge as defined by section 100 of the transfer of property act since the tenancy act which was intended to benefit a landlord could not be so construed as to deprive the landlord of the rights and remedies enjoyed by an ordinary judgment-creditor......he passed a decree in form no. 7 of appendix d, schedule i of civil procedure code.6. against this decree, defendants 1 and 2 preferred an appeal to the district court and the district court reversed the decree of the trial court and dismissed the plaintiff's suit. the learned district judge held that the charge in favour of the municipality was not such as would fall under section 100 of the transfer of property act and therefore the rights of the parties were not governed by the law relating to mortgages; that in any event, the plaintiff and defendants 8 to 15 were not entitled to redeem, their only right being to bring a fresh suit for sale on foot of their mortgage in their favour; that the suit for redemption was barred by limitation under article 132 of the limitation act and that.....
Judgment:

Satyanarayana Rao, J.

1. This second appeal is preferred by the plaintiff whose suit was decreed by the District Munsiff, Tirupur, but dismissed on appeal by the District Judge, Coimbatore.

2. One Sivasubramania Chettiar and four others executed on the 18th April, 1925, a security bond in favour of the defendants 9 to 13 and the father of the plaintiff and the father of defendants 8 and 14. Suit O.S. No. 301 of 1928, Sub-Court, Coimbatore, was filed to enforce the security bond against the suit house and other properties. Defendants 4 to 7 who were not the executants of the security bond contested the claim and the suit as against their 1/3rd share in the suit house was dismissed and a preliminary decree against the 2/3rd share of the executants was passed on 12th November, 1932 (Ex. P-1). While that suit was pending the Tirupur Municipality instituted suit O.S. No. 943 of 1930 in the District Munsiff's Court, Tirupur, for recovery of arrears of property tax due in respect of the suit house for the years 1927-28, 1928-29, and 1929-30 and claimed a first charge on the suit house under Section 85 of the Madras District Municipalities Act. To that suit, the persons holding the security (who may be hereafter termed second mortgagees) were not impleaded as parties, though they were interested in the right of redemption. The Municipality obtained a decree and in execution of that decree the suit house was brought to sale and one Kumaraswami Chetty became the purchaser on 23rd August, 1932. The auction purchaser sold the property to defendants 1 and 2 under a sale deed dated 13th June, 1934. In execution of the final decree in O.S. No. 301 of 1928, the plaintiff and defendants 8 to 15 pur-chased 2/3rd share of the suit house on 15th January, 1936, and obtained symbolical possession on 9th December, 1938.

3. The present suit was instituted by one of the purchasers in O.S. No. 301 of 1928 for redemption of 2/3rd share of the suit house, for partition and possession of that share and for an account of the mesne profits received by defendants 1 and 2 as well as for future profits, impleading the other purchasers as defendants 8 to 15. The defendants 1 and 2 are purchasers from Kumaraswamy and are in possession of the suit house. The 3rd defendant is a subsequent mortgagee from defendants 1 and 2 of the suit house and defendants 4 to 7 are the original owners of the 1/3rd share. The plaintiff and defendants 8 to 15 contend that as they were not made parties to the suit by the Municipality which was in the position of a first mortgagee, their right of redemption was not affected and that the purchase by Kumaraswamy was affected by the doctrine of Us pendens.

4. The defence to the action is that the second mortgagees are not necessary parties to the first mortgagee's suit; that the decree in O.S. No. 943 of 1930 is binding on the second mortgagee purchasers; that they are not liable to account for mesne profits and that the defendants are in any event entitled to the value of improvements. They also plead that the right of defendants 4 to 7 in the suit house became, extinguished by reason of the sale in pursuance of the decree in O.S. No. 943 of 1930.

5. The learned District Munsiff held that the second mortgagee purchasers not having been made parties to the suit O.S. No. 943 of 1930 and being necessary parties to that suit, were not barred by the proceedings in that suit, that defendants 4 to 7 were not entitled to the 1/3rd share in the suit house as they were barred by the sale in O.S. No. 943 of 1930, that plaintiff and defendants 8 to 15 were entitled to a 2/3rd share, that the doctrine of Us pendens did not apply and that defendants 1 and 2 were entitled to the value of improvements which were left to be determined in the proceedings for passing final decree and that the defendants were liable to render an account of the profits from the date of their taking possession subject to just deductions. In the result he passed a decree in Form No. 7 of Appendix D, Schedule I of Civil Procedure Code.

6. Against this decree, defendants 1 and 2 preferred an appeal to the District Court and the District Court reversed the decree of the trial Court and dismissed the plaintiff's suit. The learned District Judge held that the charge in favour of the Municipality was not such as would fall under Section 100 of the Transfer of Property Act and therefore the rights of the parties were not governed by the law relating to mortgages; that in any event, the plaintiff and defendants 8 to 15 were not entitled to redeem, their only right being to bring a fresh suit for sale on foot of their mortgage in their favour; that the suit for redemption was barred by limitation under Article 132 of the Limitation Act and that the plaintiffs and defendants 8 to 15 acquired no rights under their purchase as the right of the owners of the suit house became vested in Kumaraswamy Chetty in 1932 under a sale prior in point of time. He agreed with the District Munsiff that defendants 4 to 7 were not entitled to claim the 1/3rd share.

7. Against this decision of the learned District Judge, the plaintiff preferred this second appeal. It is contended on behalf of the appellant (1) that the charge in favour of the Municipality is within the purview of Section 100 of the Transfer of Property Act and that therefore the Municipality is in the position of a first mort-gagee and the rights inter se between the two mortgagees are governed by the law relating to the mortgages, (2) that the proper Article of limitation applicable is Article 148 of the Limitation Act and not Article 132 and (3) that as the second mortgagees were not impleaded to the suit by the first mortgagee, their right to redeem the 2/3rd share of the house is not extinguished. The respondents' learned advocate attempted to support the judgment of the lower Court and urged in addition that in any event as the first mortgagee purchaser purchased the equity of redemption he is entitled to redeem in his turn the second mortgagee purchasers and that the trial Court is wrong in directing his clients to account for the profits.

8. The first question that arises for consideration is the nature of the charge in favour of the Municipality under Section 85 of the District Municipalities Act. Section 100 of the Transfer of Property Act is as follows:

Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.

Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.

9. The charge in the present case is not created by act of parties and therefore It may be left out of consideration. Is it not a charge created by operation of law? Section 85 of the District Municipalities Act declares that the property tax on buildings and lands shall subject to the prior payment of land revenue, be a first charge on the buildings and lands (omitting moveable property which is not relevant now). The sale in pursuance of the charge unlike the sale for arrears of revenue cinder the Revenue Recovery Act has not the effect of annulling the prior encum-ibrances. Under Schedule IV to the Act, a power of distraint and sale of the property of the defaulter for arrears of the tax is conferred upon the Municipality. Under Rule 35-A of the said Schedule:

If any tax due from any person remains unpaid in whole or in part at the end of the period specified in Sub-rule (1) of Rule 30 and if such person has left British India or cannot be found, the said tax or such part thereof as remains unpaid together with all sums payable in connection therewith shall be recoverable as if it were an arrear of land revenue.

10. Even this limited power under Rule 35-A attracts only the procedure laid down under the Revenue Recovery Act for the realisation of the arrears of revenue, but does not carry with it the substantive provision of law relating to the annulling of encumbrances under the Revenue Recovery Act (Section 42 of the Revenue Recovery Act). The effect of Section 85 being only to create a first charge on the property, is there any reason to suggest that it is not a charge springing into existence ' by operation of law ' within the meaning of Section 100 of the Transfer of Property Act? There does not appear, either in the language of Section 100 of the Transfer of property Act or the provisions of the Madras District Municipalities Act any reason for concluding that it does not. Reliance has, however, been placed by the Court below and by the learned Advocate for the respondents before me, on the line of cases where the charges for rent under the Bengal Tenancy Act and under the Madras Estates Land Act have been held not to fall under Section 100 of the Transfer of Property Act. The starting point for this view is the well-known case of the Fotick Chunder Dey Sircar v. Foley I.L.R. (1887) Cal. 492, a decision under the Bengal Tenancy Act, 1885. The landlord in that case obtained a decree for arrears of rent and wished to execute the decree by attachment and sale of the moveable property of the tenant without first proceeding against the tenure on which the rent was a first charge. The contention on behalf of the tenant was, that Section 100 of the Transfer of Property Act as it then stood applied to a charge for rent and that the provisions of Section 68 of the Transfer of Property Act were attracted and that the landlord was not entitled to attach moveable property without first exhausting his remedies against the tenure on which the rent was a charge. The learned Judges held that by reason of the language of Section 100 of the Transfer of Property Act, Section 68 was not made applicable and even if it applied after a decree in a suit the section could have no application. This was sufficient to dispose of the case but the learned Judges went further and added that the charge under Section 65 of the Bengal Tenancy Act was not a charge as defined by Section 100 of the Transfer of Property Act since the Tenancy Act which was intended to benefit a landlord could not be so construed as to deprive the landlord of the rights and remedies enjoyed by an ordinary judgment-creditor. The decision therefore on the point now relevant turned only on the policy of the Tenancy Act. This decision was followed in Madras in Suramma v. Suryanarayana Jagapathirazu : (1918)35MLJ443 , a case under the Madras Estates Land Act. It was there pointed out that a charge under Section 100 of the Transfer of Property Act can only arise in respect of payment of money and as rent under the Madras Estates Land Act, may be in respect of money or in kind, it cannot with any consistency be held that the charge for rent was a charge within the meaning of Section 100 of Transfer of Property Act in some cases and not in other. cases. This view, however, was not accepted by Sadasiva Ayyar, J., in Venkata-lakshmamma v. Seetayya : (1920)39MLJ30 . The learned Judge observed at page 790:

With the greatest respect (referring to the view of Phillips, J., in Suramma v. Suryanarayana Jagapathirazu : (1918)35MLJ443 , I do not see why if a particular charge falls within the words of Section 100 it should not be a charge under that section because another kind of charge created by the same statute does not fall within the section. Further even rent payable in kind becomes really payable in money, whenever the rent is sued for and a decree in the alternative for the value of rent payable, in kind is asked for and granted.

11. The question therefore whether a statutory charge for rent under the Tenancy Acts is a charge as defined by Section 100 of the Transfer of Property Act turned mostly on the policy of the Acts and the fact that rent was not always payable in money. These difficulties do not arise in the case of a charge under Section 85 of the District Municipalities Act, as the tax is always payable in money. So far as I could see there is no particular policy behind the provisions of the District Municipalities Act. Under the analogous provisions under the Municipalities Act obtaining in other Provinces it has been held that a similar charge was within the purview of Section 160 of the Transfer of Property Act. See Shidrao Narayanrao v. Athni Municipality : AIR1943Bom21 and Nawal Kishore v. The Municipal Board, Agra I.L.R. (1943) All. 453. The only other case to which reference has been made in the arguments on this point was the decision in Corporation of Calcutta v. Arunchandra Singha I.L.R. (1934) Cal. 1047. All that case lays down is that Section 67-A of the Transfer of Property Act does not apply to statutory charges and securities created by operation of law but only to consensual securities created by act of parties. This conclusion was based on the language of Section 67-A of the Transfer of Property Act. This decision is no authority in support of the contention of the respondent. I do not find any warrant in the provisions of the District Municipalities Act to hold that the charge under Section 85 of the District Municipalities Act is not within Section 100 of the Transfer of Property Act. This being so, under Section 100 of the Transfer of Property Act,

All the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such a charge.

12. The question of limitation applicable to a suit by a second mortgagee after he obtained a decree for sale for redemption of the first mortgagee-purchaser is inti-mately connected with the question of the right of the second mortgagee-purchaser against the first mortgagee-purchaser when the second mortgagee was not impleaded as a party in the suit by the first mortgagee. The question of limitation therefore and the third contention as to the effect upon the rights of the second mortgagee of the decree obtained by the first mortgagee may be considered together. What-ever may be the views of the other High Courts, so far as our Court is concerned, ever since Mulla Vittil Seethi v. Achuthan Nair : (1911)21MLJ213 , it has been consistently held that the rights of the second mortgagee who was not impleaded as a party to the suit by the first mortgagee remain unaffected by such a suit and by sale in pursuance of that decree. No useful purpose is therefore served by reviewing the cases on the point and a most useful survey of the authorities is to be found in the recent decision of Wadsworth and Govindarajachari, JJ., in Sooryanarayana Rao v. Sarupchand Rajaji : AIR1948Mad105 .

13. Section 91 of the Transfer of Property Act confers upon the second mortgagee the right to redeem the prior mortgage and the following section, Section 92 defines the rights on such redemption. Under Order 34, Rule 1, Civil Procedure Code, it is incumbent upon the first mortgagee to implead in his suit to enforce the mortgage security all persons interested in the right of redemption. The explanation to that rule makes it clear that in a suit by a puisne mortgagee for sale, it is not incumbent upon him to implead the prior mortgagee as a party. If the property is intended to be sold in the second mortgagee's suit free of encumbrance, the consent of the first mortgagee is needed under Order 34, Rule 12. Rule 13 of the said Order provides the manner in which the sale proceeds in a sale in a pusine mortgagee's suit effected with the consent of the first mortgagee free of encumbrance should be disposed of. It therefore follows that the right of redemption of the second mortgagee under Section 91 is not taken away by the decree and sale in the suit by the Municipality and he is entitled to institute a suit for redemption. Needless to state that redemption is a right which the second mortgagee could exercise at his option and a liability to be discharged by him. The present suit therefore being a suit for redemption, naturally is governed by the period of limitation prescribed under Article 148 of the Limitation Act and as this is not a suit for enforcing payment of money Article 132 of the Limitation Act would have no application. On the plain language of Articles 132 and 148 one would have thought that there is no difficulty in deciding the question of limitation and in choosing between the two Articles. The learned District Judge however relied on the decision in Lakshmanan Chettiar v. Sella Muthu Naicken : AIR1925Mad76 , a decision of a Single Judge of this Court and held that as a fresh suit upon the mortgage by the second mortgagee would now become barred under Article 132 the suit for redemption is also barred. That decision followed a decision of the Calcutta High Court in Nidhiram Bandopadhya v. Sarbissur Biswas (1910) 14 C.W.N. 439. The decision of the Calcutta High Court, however, was not accepted by a later Full Bench of that Court in Lakshmanchandra Naskar v. Ramdas Mandal I.L.R. (1929) Cal. 403. The other High Courts have also taken the view that in a suit of this description the proper Article applicable is Article 148. See Mussammat Ramjhari Koer v. Lala Kashi Math Sahai I.L.R. (1926) Pat. 513, Sundar Das v. Beli Ram A.I.R. 1933 Lah. 503, Mussamat Ram Kunwar Bai v. Mst. Chhitia Bai I.L.R. 1937 Nag. 367 and Priyalal v. Bohra Champa Ram I.L.R. (1923) All. 268. All these decisions were reviewed and followed in a later Bench decision of this Court which unfortunately is not reported in S.A. No. 304 of 1926 by Wallace and Anantakrishna Ayyar, JJ. I am therefore of opinion that the view of the Court below that the suit is barred by limitation cannot be upheld.

14. As stated already, the right of redemption of the second mortgagee purchaser has not been affected by the decision and sale in the suit by the first mortgagee. Reliance has been placed on behalf of the respondent on the decision of the Full Bench in Nagendran Chettiar v. Lakshmi Ammal : AIR1933Mad583 , in support of the contention that the first mortgagee purchaser is entitled to Continue in possession as against the second mortgagee purchaser and reference was made to certain observations in that judgment at pages 858-859. The Full Bench dealt with the question of the preferential right to possession between the purchasers in the suit by the first mortgagee and in the suit by the second mortgagee in which decrees were obtained and sales were held, the one without impleading the other. The Full Bench held that priority of the date of purchase of the mortgagor's right to possession conferred priority of title to possession. But, it must be noted even according to the Full Bench, it is only until the rights of the parties are worked out in a properly constituted suit this right to possession continues. This suit is not one for recovery of possession by one purchaser against the other, but is a suit for redemption. The decision, therefore, of the Full Bench, does not at all help the respondent. At page 861 in the judgment of the Full Bench it is pointed out that when the second! mortgagee brought the property to sale after purchase in execution of a decree obtained by the first mortgagee purchaser in execution of the decree the second mortgagee gets ' nothing ' is wrong. He purchases something and that something must be worked out in a later suit and this is what is being attempted in the present suit by the appellant. I therefore do not see anything in the Full Bench which takes away the rights of the second mortgagee purchasers. I therefore hold that the District Judge was wrong in concluding that the second mortgagee purchaser acquired nothing under his purchase and that therefore this suit was not maintainable.

15. The only other question that remains to be considered is whether the decree for accounting passed by the trial Court is proper or not. This question has been elaborately considered in the decision reported in Natesan Chettiar v. Ramalingam Chettiar 1937 M.W.N. 700. In the light of that decision, I do not see any substance in the contention urged on behalf of the respondent. A further contention has also been advanced by Mr. Sivaramakrishna Aiyar for the respondent that in any event as his client by virtue of his prior purchase acquired the right of redemption of the mortgagors he should be given the right to redeem the second mortgagee even if the second mortgagee is permitted to redeem the first mortgage. This contention was not raised in the Courts below. I will not therefore be justified in permitting him to raise it for the first time in second appeal.

16. For these reasons, I reverse the decree of the learned District Judge and restore that of the District Munsiff with costs here and the Court below.

17. No leave.


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