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Narayanasamy Rao and anr. Vs. Ramasamy Naicker and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in60Ind.Cas.611
AppellantNarayanasamy Rao and anr.
RespondentRamasamy Naicker and ors.
Cases ReferredBalasubramania Nadar v. Sivaguru Asari
Excerpt:
indemnity-bond - covenant to pay--sale of specific property in case of failure to pay--mortgage, whether created--priority, over, intermediate mortgages. - .....which has led to the present complication. if the court had been apprised of the fact since the suit mortgage and sales have been created by the father, it would have allotted to the father the properties over which he created the mortgage and would have directed him to discharge his own debt leaving the son's share unaffected by the father's transactions. however, that was not done. in our opinion, exhibit a does create a mortgage. the subordinate judge, referring to imbichi v. achampat avukoya haji 39 ind. cas. 867 : 3 m.l.j. 58 : 6 l.w. 115 : (1917) m.w.n. 533, has come to the conclusion that a charge was created. in the judgment relied on the learned judges differing from madho misser v. sidh binaik upadhya 14 c.l 687 : 7 ind. dec. (n.s.) 456 and harjas rai v. naurang 3 a.l.j. 20.....
Judgment:

1. One Perumal Naick was the owner of the three classes of properties which are known as the A, B and C properties. His son is also known as Perumal Naicker. The son brought a suit against the father in Original Suit No. 11 of 1905 for partition. During the pendency of the suit, the father mortgaged all the properties to one Parthasarathy Iyengar by Exhibit E on the 16th Septembar 1903. On the 15th October 1910 he sold a property alone to plaintiff for Rs. 2,000 by releasing that property from the mortgage to Parthasarethy Iyengar by paying the consideration received from the plaintiff to the mortgagee. As the suit for partition -was pending then, the father executed Exhibit A on the same date' as the sale deed, Exhibit B, agreeing to indemnify the plaintiff under certain conditions. In January 1911 be mortgaged the B and C properties to the 4th defendant. The degree for partition between the father and the son was passed on the 29th September 1917, Parthasarathy Iyengar sued the first defendant, the son, and the fourth defendant, the second mortgagee, for the balance due to him under the mortgage. In execution of the decree, B and O properties were sold to the fifth defendant on the 2nd March 1914 for about Rs. 5400, Out of this, a sum of Rs 3,700 was paid to Parthasarathy Iyengar and the balance of Rs. 1,700 was paid into Court. The fourth defendant applied or the payment of this balance to him in satisfaction of his claim under the second mortgage. It was resisted by plaintiff. On the claim being allowed, the present suit was instituted by the plaintiff asking for a declaration that the balance in Court must be paid to him as his claim under the indemnity-bond was prior in date to that of the mortgage in favour of the fourth defendant and for other reliefs. The District Munsif gave a decree for Rt. 1,000 and costs in favour of the plaintiff. On appeal, that decree was modified by decreeing the plaintiffs' claim for priority to the extent of Rs. 1,300. This second appeal is against that decree.

2. Mr. Ayya Aiyer has argued a number of questions before as. The most important of them is whether Exhibit A the indemnity bond, creates a charge or a mortgage on the properties mentioned in it. It ought to be stated that Exhibit A only refers to the B Schedule properties. It must also be stated that the decree in the partition between the father and the son allotted to each of the sharers a half of every item of the properties in suit. This was an unfortunate procedure which has led to the present complication. If the Court had been apprised of the fact since the suit mortgage and sales have been created by the father, it would have allotted to the father the properties over which he created the mortgage and would have directed him to discharge his own debt leaving the son's share unaffected by the father's transactions. However, that was not done. In our opinion, Exhibit A does create a mortgage. The Subordinate Judge, referring to Imbichi v. Achampat Avukoya Haji 39 Ind. Cas. 867 : 3 M.L.J. 58 : 6 L.W. 115 : (1917) M.W.N. 533, has come to the conclusion that a charge was created. in the judgment relied on the learned Judges differing from Madho Misser v. Sidh Binaik Upadhya 14 C.L 687 : 7 Ind. Dec. (N.S.) 456 and Harjas Rai v. Naurang 3 A.L.J. 20 : A.W.N. (1906) 82, say that for the creation of a charge, it is not essential that there should be an existing liability. It does not appear that it was argued in that case that there is a distinction in this respect between the language of Section 58, and that of Section 100 of the Transfer of Property Act. Whereas, by the terms of Section 58, a present mortgage can be emoted for a future debt, there are-no such words in Section 100. Therefore, if the decision in Imbichi v. Achampat Avukoya Haji 39 Ind. Cas. 867 : 3 M.L.J. 58 : 6 L.W. 115 : (1917) M.W.N. 533, is to be literally understood as relating to the creation of a charge as different from a mortgage, as at present advised, we would have directed the case to be further argued; but, in our opinion, it is not necessary to canvass that decision as we think that a mortgage was created by the terms of Exhibit A. The same remarks would apply to the dictum of Krishnasawmy Aiyar, J., in balasubramania Nadar v. Sivoguru Asari 11 Ind. Cas. 629 : 21 M.L.J. 562. Therefore, the learned Judges speak of the creation of a charge as opposed to that of a mortgage. As was pointed out in Rama Brahmam v. Venkatanarain Puntulu 16 Ind. Cas. 209 : 23 M.L.J. 131 : (1912) M.W.N. 1124, and Ramachariar v. Dorosami Pillai 29 Ind. Cas. 605, there are apt words in Exhibit A which are sufficient for fie creation of a mortgage in respect of the properties given as indemnity. The date is specified; the property is specified; there is a covenant to pay. These are words which indicate that the property is to be sold in case the debt is not re-paid.

3. One other contention of Mr. Ayya Aiyar must be noticed, that is, although the mortgage in terms might have been created on the date of the execution of Exhibit A its legal consequence attached to the property given as security only on the happening of the contingency contemplated, namely, the deprivation of plaintiff's possession. We are unable to agree with this contention. The language of Section 58 is clear and, unless the parties contemplated the bringing info existence of the mortgage on a future date, the rule is that, on the date of the execution of the document, the mortgage takes effects. Instances of mortgages for debts are very common. In such cases it has never been suggested that an intermediate mortgage would deprived the creditor of his priority if such intermediate mortgage was created at a time when there was no debt owing from the debtor to the creditor. In our opinion, there was a mortgage, and that mortgagee, that is, the plaintiff, is entitled to priority over the 4th defendant's mortgage. In this suit the question of right of subrogation need not be considered.

4. The two further subsidiary questions are, whether the lower Court is right in giving the plaintiff 12 per cent interest. The plaintiff is not entitled as of right to any particular rate of interest. All that he is entitled to in some compensation for the deprivation of possession. The value of the property would, doubt, be the particular amount en which interest by way of compensation will have to be awarded. We think that the interest at 12 per cent awarded by the Subordinate Judge is too high. Six per cent should be the rate of interest.

5. The last question relates to the nature of the decree that we should pass. As held in Balasubramania Nadar v. Sivaguru Asari 11 Ind. Cas. 629 : 21 M.L.J. 562 the plaintiff, who is an intermediate mortgagee between Parathasarathy and the fourth defendant, is entitled to sue for the sale of the properties mortgaged to him, as he was not a party to the suit by Parthasarthy. The equities in the case cannot be satisfactorily worked out without impleading Parthsarathy. We must reverse the decrees of the Court below and remand the sail; to the Court of first instance with the following directions:

(a) Partbasarathy should be made a party.

(b) He must be directed to deposit in Court the monies received by him with interest thereon at 6 percent, per annum.

(c) The monies paid by the fifth defendant for the purchase should then be paid to him out of this sum and out of the money in 'Court with interest at 6 par cent. from the date of payment.

(d) The properties B and C should then be brought to sale afresh.

(e) Parthasarathy should be paid the balance due to him out of the sale proceeds.

(f) Out of the balance, the amount due to plaintiff should be paid with respect to the properties given as indemnity.

(g) The balance, if any, should be paid to the fourth defendant.

6. Costs will be provided for by the first Court.


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