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Ramanna Chettiar Vs. K. Manickam Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1935Mad1011
AppellantRamanna Chettiar
RespondentK. Manickam Chettiar and ors.
Cases ReferredHakim Lal v. Ram Lal
Excerpt:
- .....mookerjee, j., arrived at the result that the substituted security must be a fraction of the share allotted to the mortgagor bearing the same proportion to the share as the mortgage property would bear to the family property. but all the illustrations given by the learned judge are cases where the mortgage is in terms of an undivided share either in the whole or in some item of joint property.6. in the particular case before the learned judge the mortgage deed itself, expressly referred to pending partition proceedings and provided that the shares in any village which might be allotted to the mortgagor under the partition proceedings would be considered to be mortgaged and hypothecated for the money advanced. there is a case hem chandar ghose v. thako moni debi (1893) 20 cal. 533,.....
Judgment:

Varadachariar, J.

1. This is a second appeal by the plaintiff mortgagee, against so much of the decree of the Courts below as refused relief to him against the B scheduled properties in the hands of defendants 2 to 4. Under Ex. A, dated 17th August 1919, the father of defendant 1 acting for himself and on behalf of his minor son, the present defendant 1, mortgaged 1 acre 82 cents of lands constituting R.S. No. 199/1. The document makes no reference to his being a member of a joint Hindu family with anybody else except his son nor does it purport to mortgage any Share in joint family property. It merely states that the patta for the morgtgage property stands in the names of himself and others and that the property is in his enjoyment. It however turned out that he had co-parceners and in a partition suit between the co-parceners the 1 mortgagor was allotted only 51 cents in S. No. 199/1. He got other properties for his share and amongst them S. No. 199/2 which adjoins the mortgage prosperity. This is the property specified in the plaint B schedule, S. No. 199/2, and certain other properties were sold by the mortgagor under Ex. I to defendant 2 in 1924 and defendant 2 sold S. No. 199/2 to defendants 3 and 4 in 1926. The present suit has been brought by the plaintiff against defendants 1 to 4 claiming that the mortgage money may be realised by sale of the 51 cents allotted to his mortgagor in S. No. 199/1 and also by sale of the 1 acre 53 cents in S. No. 199/2. The Courts below have given a decree for sale of the 51 cents in S. No. 199/1 but dismissed the claim against S. No. 199/2. The second appeal relates to this portion of the claim.

2. Some questions were raised before the trial Court as to whether some of the transfers above set out were real, bona fide and for consideration. If by operation of any rule of law S. No. 199/2 becomes subject to a mortgage in favour of the plaintiff, I do not see that the doctrine of bona fide purchaser for value has any significance in the case. If the plaintiff's claim against this item of property can be put only as something in the nature of a charge or an equitable right, the question of bona fides and consideration may become material. The District Munsif based his conclusion in respect of this item of property on the ground that there was no sufficient evidence before him to prove that S. No. 199/2 fell to the share of the mortgagor in lieu of the properties hypothecated under Ex. A. For some reason the partition suit decree was not produced before the trial Court and apparently this accounts for that remark. The partition decree was produced before the District Court and there was accordingly no difficulty at that stage in determining what items of property fell to the mortgagor's share in the family partition.

3. I am not quite sure whether Mr. Viswanatha Sastri is right in his contention on behalf of the respondents that the plaintiff relied upon the allegation that S. No. 199/2 was specifically given to the mortgagor in lieu of his share in S. No. 199/1. The translation is somewhat misleading but the relevant paragraph of the plaint, read as a whole in the vernacular, seems rather to allege that this is the way in which S. Nos. 199/1 and 199/2 were divided between the mortgagor and his nephews. Leaving this question alone, the point still remains whether and how far the theory of substituted security enunciated by the Privy Council in Byjinath Lall v. Ramoodeen Chowdhry (1876) 1 I.A. 106 can avail the plaintiff in the circumstances of the present case.

4. The proposition stated in Byjinath Lall v. Ramoodeen Chowdhry (1876) 1 I.A. 106 that the mortgagee of the undivided share of one co-sharer must pursue his remedy against the lands allotted to his mortgagor at a partition between him and his co-sharers, and as against the mortgagor the mortgagee would have a charge on the whole of such lands. In other words the mortgagee would take the subject of the pledge in the new form which it had assumed. This passage at p. 120 proceeds on the assumption that the mortgage covers the whole of the undivided share. On an examination of the facts of the case however it appears that the mortgagor was entitled to shares in three villages, but the mortgage comprised his undivided share only in two villages. Their Lordships were prepared to apply the principle even to a case of that kind though at p. 122 they advert to the difficulty of determining which of the lands allotted to the mortgagor should be taken to represent the mortgaged premises whore the mortgage does not cover the whole undivided share of the mortgagor in the family property. They observe that on the facts of that particular case that difficulty did not arise.

5. In several Indian cases the proposition has been repeated much in the form in which it was enunciated by the Judicial Committee in the above case. But in a very recent case before the Privy Council, Mahomed Afzal Khan v. Abdul Rahman 1932 P.C. 235, their Lordships slightly modify the statement of the proposition by making it applicable even where a co-sharer mortgages his undivided share in some of the properties held by him jointly with other co-sharers. The actual point for determination in that case was as to the immunity of the properties allotted to other sharers at the partition. Their Lordships had not therefore to work out the application of the principle as against the properties allotted to the mortgagor at the partition. This problem was somewhat more fully dealt with in a judgment of the Calcutta High Court in Hakim Lal v. Ram Lal (1902) 6 C.L.J. 46. By the aid of the method adopted in certain American cases, Mookerjee, J., arrived at the result that the substituted security must be a fraction of the share allotted to the mortgagor bearing the same proportion to the share as the mortgage property would bear to the family property. But all the illustrations given by the learned Judge are cases where the mortgage is in terms of an undivided share either in the whole or in some item of joint property.

6. In the particular case before the learned Judge the mortgage deed itself, expressly referred to pending partition proceedings and provided that the shares in any village which might be allotted to the mortgagor under the partition proceedings would be considered to be mortgaged and hypothecated for the money advanced. There is a case Hem Chandar Ghose v. Thako Moni Debi (1893) 20 Cal. 533, where this proposition is adverted to by the Calcutta High Court, but it is not possible to gather from the report whether the mortgage there was of specific property or of an undivided share. Even in that case the High Court was dealing with the question of the immunity of the shares allotted to other people. In none of the cases to which my attention has been drawn : of. Amar Singh v. Bhagwan Das 1933 Lah. 771 and Umar v. Sakharam (1933) 149 I.C. 229 had the Court to deal with a case where, the mortgage document made no reference to the mortgagor owning only a share in the property but, purported to, mortgage specific property as if it belonged exclusively to the mortgagor; Mr. Muthukrishna Ayyar relied upon the observation in Muthiah Rajah v. Appala Raja (1911) 34 Mad. 175 at p. 176, where the principle of Byjinath Lall v. Ramoodeen Chowdhry (1876) 1 I.A. 106) is, stated in the following words:

The authorities are clear that a mortgagee of an undivided share in common property or of one of the joint properties, before partition, from, one of the sharers is only entitled to proceed against the substituted property which falls to the share of the mortgagor at the partition, unless the partition has been unfair or is in, fraud of the mortgagee.

7. This statement, which includes the-case of a mortgage of an item of joint family property, is no doubt in appellant's favour; but the particular distinction now arising for decision did not call for decision in that case and as the learned Judges merely purported to restate the effect of the authorities, I do not feel justified in treating the above observation as carrying the law beyond the extent to which the decided cases have proceeded. Whatever the position, might have been at the time when, the Privy Council enunciated this doctrine in 1874, the law of mortgages in India at present rests mainly on Statute and it is the policy of the Transfer of Property Act and of the Registration, Act that any person dealing with property must be in a position to trace the encumbrances to which it is subject at, any particular time. Where a joint-family member purports to mortgage property A as his own and subsequently gets property B at a. partition, a transferee of property B from him cannot ordinarily discover that property B is subject, to any encumbrance. If on the other hand the original mortgage had purported to comprise the whole of his undivided share in joint family property, a search of the registration records will, undoubtedly put the subsequent transferee on notice of the prior mortgage. These considerations ought not to, be ignored when one is called upon to, extend this doctrine of substituted security. Further, even as a matter of Hindu Law, the rights of an undivided member to alienate a specific item of property whether by way of sale or of mortgage, are by no means absolute.

8. In Byjinath Lall v. Ramoodeen Chowdhry (1876) 1 I.A. 106 ) the Privy Council took care to point out that the mortgagor was not a member of a joint Hindu family and had therefore power to pledge his undivided share. It may be that their Lordships were then thinking of the Bengal rule forbidding private alienations by a member of a Mitakshara joint Hindu family. But even in Madras where larger powers of alienation have been recognised in the case of joint family members, a distinction has been drawn between cases where a member purports to alienate his undivided share generally and a case where he purports to alienate a specific item of property. In the latter case he has really dealt with property to which he had no title at the time and it is only as a kind of equity that the Courts allow the alienee to claim that at a partition between the alienor and his co-sharers this item of property might if possible be allotted to his alienor's share. If for any reason the allotment is not so made, the transfer will become inoperative and the transferee can only have a claim for compensation against the alienor : see Aiyyagiri Venkataramayya v. Aiyyagiri Ramayya (1902) 25 Mad. 690 (FB) at pp. 718 and 719. Is there any reason to restrict this principle to cases of sales, treating mortgages as standing on a different footing? I must admit that there is some difficulty in reconciling this principle if applied to mortgages with the observation in Mahomed Afzal Khan v. Abdul Rahman 1932 P.C. 235 already cited and with some of the eases which recognize the application of the principle of substituted security even in cases where a person mortgages his undivided share in some items of joint family property. But where no reference at all is made to the fact of the mortgagor being only a sharer and the property is mortgaged as if he was absolute owner thereof, it seems to me there is even less justification for the application of the doctrine of substituted security and there are obvious difficulties as pointed out above by me in extending this, doctrine very far.

9. The hardship of unlimited extension of the rule will be more clearly realised when we come to deal with the rights of bona fide alienees of the property allotted at the partition to the mortgagor. It is no doubt broadly laid down in Amar Singh v. Bhagwan Das 1933 Lah. 771, that the alienee can stand on no better footing than the alienor; but in Byjinath Lall v. Ramoodeen Chowdhry (1876) 1 I.A. 106 (P.C.) their Lordships enunciate the proposition more guardedly. In that case the alienees were purchasers in Court auction and could not therefore claim the benefit of the doctrine of purchase for value without notice. Their Lordships nevertheless took care to point out that the purchasers had notice. Intimately connected with this topic is the question whether as a result of the doctrine of substituted security, the mortgagee gets a 'mortgage' right over the substituted property or only a 'charge.' The right certainly cannot satisfy the definition of a 'mortgage' in the Transfer of Property Act, and if on the true construction of Section 100 all securities not falling within that definition are to be regarded only as amounting to charges, the question will arise under the Indian law whether such charges can avail against purchasers without notice; for in this respect there is a well recognized distinction between mortgages and charges. In the present case, for instance, both the lower Courts have found that defendants 3 and 4 are bona fide purchasers of S. No. 199/2. Ex. 1 which conveys property to defendant 2 no doubt refers to the plaint mortgage and provides for its discharge; but as pointed out already an examination of the register or even of Ex. A will not reveal to any purchaser that S. No. 199/2 is subject to any encumbrance, and the reference to prior encumbrance in Ex. 1 is explicable on the ground that it comprises a portion of S. No. 199/1 which is undoubtedly covered by the mortgage. In view of these considerations I am unable to see my way to apply the doctrine of substituted security to this case and to hold that S. No. 199/2 is subject to any mortgage in plaintiff's favour.

10. The lower appellate Court has assumed that the doctrine of substituted security may be applicable but has pointed out certain difficulties in giving effect to it in the suit as framed. Adopting the line suggested in Hakim Lal v. Ram Lal (1902) 6 C.L.J. 46, the learned District Judge was of opinion that the plaintiff must have claimed a charge over a fraction of all the properties which his mortgagor got at the partition and not chosen one particular item and sought to throw the whole liability upon it. Mr. Muthukrishna Ayyar contends that this ought not to involve the dismissal of the suit but only to limit his relief against S. No. 199/2 to a proper proportion of the mortgage amount calculated with reference to the proportion which the suit property bears to the properties allotted to the mortgagor at the partition. But it must be admitted that in the suit as framed and in the course of the trial this possibility has not been kept in view and if this argument is to be given effect to, it may be necessary to send the case back to the Court of first instance to ascertain what will be a fair share of the mortgage debt to be borne by these properties and evidence taken on the point. If I had otherwise been able to agree with the appellants' contention, I might, in view of the difficulties and uncertainties of the subject, have been disposed to overlook the omission of the parties to realize the true bearings of the case and give the plaintiff an opportunity to have his claim adjudicated on the basis of the ruling in Hakim Lal v. Ram Lal (1902) 6 C.L.J. 46. But in the view above indicated this question does not now arise.

11. The learned District Judge is certainly right in holding that the plaintiff cannot claim to enforce the personal covenant between the mortgagor and defendant embodied in Ex. 1 in respect of the payment of the debt due to the | plaintiff. He is also right in his view that the plaintiff cannot claim to enforce the vendor's lien, if any, that defendant 1 might have against defendant 2. The second appeal therefore fails and is dismissed with costs.


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