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Syed Ibrahim Sahib Vs. Armugathayee and anr. - Court Judgment

LegalCrystal Citation
Decided On
Reported in16Ind.Cas.877
AppellantSyed Ibrahim Sahib
RespondentArmugathayee and anr.
Cases Referred and Purushothama v. Municipal Council of Bellary
mortgage - prior and puisne mortgagees--sale to prior mortgagee after creation of puisne encumbrance--subsistence of first mortgage against puisne encumbrancer notwithstanding sale--claim for enforcement of amount due on first mortgage--prior mortgagee's right to interest after date of sale--claim for taxes which mortgagor covenanted himself to pay--costs of repairs, liability of puisne encumbrancer for--transfer of property act (iv of 1882), sections 65, 72, 76 101. - .....therefore, be disallowed.6. the question whether the plaintiff's mortgages were destroyed by the sale (exhibit e) was argued at the bar. a distinct argument was also urged on the point whether the plaintiff can claim interest subsequent to exhibit e. it is unnecessary to decide whether the right under the mortgages is altogether destroyed, as the appellant's contention with regard to the claim for interest must be upheld on a point which is consistent with the mortgages being alive as against the appellant. the respondent contends that section 101 of the transfer of property act is applicable to the case, and that the encumbrances under the mortgages c and d must be taken to have continued to subsist as against the appellant after the date of exhibit e, as their subsistence was for the.....

1. The plaintiff's suit in this case is to enforce payment of the amount due to her on two mortgages executed by the 1st defendant's father in July 1891. Of these, the first, Exhibit C, is a usufructuary mortgage for Rs. 500. The second, Exhibit D, is a simple mortgage for Rs. 200. On _the 4th September 1896. a sale-deed was executed by the 1st defendant's father in plaintiff's favour. The consideration, Rs. 900, for the sale-deed was made up of Rs. 700, the principal amounts due on the two mortgages, Rs. 900, the interest on the simple mortgage bond, Rs. 55, the amount due to plaintiff for the Municipal tax which the vendor had covenanted to pay by the terms of the usufructuary mortgage-deed and certain sundry amounts which he had borrowed from the plaintiff and Rs. 15 paid in cash. The 2nd defendant had obtained from the vendor a mortgage of the same property in 1893. He instituted a suit on it in 1905, brought the properties to sale and purchased them. The present plaintiff was the 2nd defendant in that suit. The decree directed the sale of the property subject to the plaintiff's prior encumbrances. The plaintiff claimed to recover in this suit as due to her under her mortgages Rs. 830, the amount due up to 4th September 1896 as fixed in the sale-deed, Exhibit E, and Rs. 800 for interest subsequent to that date up to the 17th July 1908, the date of the plaint. She also claimed Rs. 98-5-4, the total amount of Municipal tax paid by her for the property and Rs. 171-10-8 for repairs and improvements made by her.

2. The 2nd defendant alleged that the plaintiff was not entitled to recover anything, contending that her mortgage rights over the property were destroyed by her purchase in the year 1896 and that she was not in law entitled to recover anything either on account of Municipal assessment or repairs and improvements.

3. Both the lower Courts have held that the mortgages must be regarded as kept alive as against the 2nd defendant. The District Munsif allowed the interest claimed on the simple mortgage-bond up to the date of plaint and further interest from the date of plaint to the, date fixed for payment at 1 1/8 per cent, per mensem, the rate stipulated in Exhibit D. He disallowed the amount claimed for Municipal assessment and repairs and improvements. On appeal, the District Judge held that the plaintiff was entitled to add the amount paid by her for Municipal assessment and also the amount spent by her for restoring a room which had fallen down. The amount added to the Munsif's decree for the expenses of the repairs was Rs. 128-6-0.

4. In second appeal, the liability for Rs. 830, which was fixed as principal and interest due on the mortgages on the date of the plaintiff's sale-deed, is not objected to, but the remainder of the decree is impeached.

5. A preliminary objection has been taken by the learned Vakil for the respondent on the ground that the liability for the debt not being resisted in second appeal and appeal being valued only with respect to the interest decreed from the date of Exhibit E, the sale-deed, the appellant is not entitled to attack the decree for the interest on the debt subsequent to the sale-deed. In the memorandum of second appeal, the grounds taken urge the 2nd defendants non-liability to the plaintiff for anything on the footing of her mortgages. But the appellant did not want to impeach in this Court the plaintiff's right to cover the amounts found due on the date of Exhibit B. The preliminary objection is not sustainable. There is nothing to prevent the appellant from attacking only a portion of the decree, although the reason for the attack might cover the whole decree. The objection must, therefore, be disallowed.

6. The question whether the plaintiff's mortgages were destroyed by the sale (Exhibit E) was argued at the Bar. A distinct argument was also urged on the point whether the plaintiff can claim interest subsequent to Exhibit E. It is unnecessary to decide whether the right under the mortgages is altogether destroyed, as the appellant's contention with regard to the claim for interest must be upheld on a point which is consistent with the mortgages being alive as against the appellant. The respondent contends that Section 101 of the Transfer of Property Act is applicable to the case, and that the encumbrances under the mortgages C and D must be taken to have continued to subsist as against the appellant after the date of Exhibit E, as their subsistence was for the plaintiff's benefit, and that she is, therefore, entitled not only to the principal but also to the interest which Exhibit D gave her according to its terms. The appellant argues that Section 101 is not applicable and that, even if, on the principle underlying that section, the plaintiff is entitled to have the benefit of the encumbrances as against the and defendant, she is not entitled to the interest. And he draws attention to a passage in Dr. Rash Behary Ghose's work on Mortgages, in which the learned author says that the Transfer of Property Act does not expressly provide for a case where the payment of the charge is contemporaneous with the purchase of the equity of redemption. It is unnecessary to consider whether the case comes within the express language of Section 101 or not, as the conclusion to be come to on the question of the plaintiff's right to subsequent interest would be the same whether to the language of Section 101 itself would be applicable or only the principle recognised in that section. The section declares (sic) the charge or encumbrance existing (sic) purchase of the property by the (sic)he charge or encumbrance shall (sic)shed unless its continuance would (sic) benefit. The encumbrance is kept alive as against a puisne encumbrance ii the circumstances referred to in the sec ion It. does not, of course, continue against the owner whose equity of redemption the encumbrance has purchased. By declaring that the encumbrance will subsist where it is for the benefit of the encumbrances the section does not state what the exact rights on the encumbrance would be after f the date of the purchase. Suppose a firs mortgagee takes a further mortgage on the property for the amount due on his first mortgage after the execution of a second mortgage in favour of a third party by the mortgagor, and suppose, further, that, ac cording to the terms of the substituted mortgage, the rate of interest agreed upon is less than that fixed in the previous mortgage instrument. It is quite clear that, although the first mortgagee may claim priority for his mortgage as against the 2nd mortgagee, notwithstanding its merger in the substituted mortgage instrument, he cannot be entitled to the higher rate of interest fixed in his first mortgage-deed as he agreed under the substituted mortgage to receive a less rate from that date. The rule embodied in Section 101 is one which in equity and justice should be enforced to protect the rights created under the first mortgage and the question in each case is what is the measure of protection which equity and justice require to be given Now, on the date of Exhibit E, the plaintiff agreed with her mortgagor to take the property for the price agreed upon according to that Exhibit. She thenceforward enjoyed the property in lieu of the price she gave for it, although she was previously in possession of it as usufructuary mortgagee under Exhibit C. What was enjoyed by her till then as compensation for the amount advanced on the usufructuary mort-gage, she agreed subsequently to enjoy in consideration of the whole price fixed in Exhibit E. She cannot, therefore, claim any further compensation from that date for any portion of the price. See Times Chunder Sircar v. Zahur Fatima 18 C.P 164 : 17 I.A. 201. If, for instance, she took a fresh mortgage instead of a sale-deed and gave up all claim to future interest, her covenant to that effect would be binding on her in a suit against the 2nd mortgagee quite as much as it would bind her against her mortgagor himself. No case expressly deciding this point was cited on either side, but we observe that in several cases, where priority was allowed for a previous mortgage on the ground that it was not extinguished, no interest after the date of merger as against the previous owner of the equity of redemption was allowed. See Gangadhari. v. Sivaram 8 M.K 246; Seetharama v. Venkatakrishna 16 M.K 94 and Vanmikalinga Mudali v. Chidambara Chetty 29 M.K 37. Where a previous mortgage was merged in a subsequent one interest was allowed as against a puisne encumbrancer only at the rate stipulated in the substituted mortgage. See Chetwynd v. Allen (1899) 1 Ch. 353 : 68 L.J. Ch. 160 : 47 W.R. 200 : 80 L.T. 110 and Mohesh Lal v. Mahant Bawan Das 9 C.K 961 : 13 C.L.R. 221 : 10 I.A. 62.; Syamalarayudu v. Subbarayudu 21 M.K 143 cited for the respondent, is not in point, as it does not appear that the plaintiff in that case was in possession of the property enjoying it in consideration of the amount paid by him to discharge the prior encumbrance. We must, therefore, disallow the amount of Rs. 300 awarded to the plaintiff for interest subsequent to the date of Exhibit E, when the 2nd defendant became the purchaser of the property, i.e., the 24th March 1908.

7. The next question argued in second appeal relates to the plaintiff's claim for the amount paid by her for Municipal tax. According to the provisions of Exhibit C, the usufructuary mortgage-deed, the mortgagor, the 1st defendant in this suit, agreed to pay all Municipal taxes himself. The plaintiff's right with respect to the taxes was under the personal covenant entered into by the mortgagor. It is unnecessary to consider whether taxes due to a Municipality would come within the expression charge of a public nature', which the mortgagee in possession is bound to pay under Clause (c) of Section 76 of the Transfer of Property Act and the mortgagor is bound to pay when the mortgagee is not in possession under Clause (c) of Section 65. In this case, the mortgagee, notwithstanding her being in possession, was not bound to pay Municipal tax as the mortgagor expressly covenanted to pay it. The obligation of the mortgagor was not under Clause (c) of Section 65 of the Act, but under his covenant. The tax does not come under the expenses which the mortgagee is entitled to incur under Section 72 and add to the principal money due under the mortgage instrument, as the payment was not required either for the preservation of the property or for the protection of the mortgagor's title to it. It may be observed that the District Judge is wrong in supposing that the doors and windows of a house could be sold as moveable property of the mortgagor. Section 103 of the District Municipalities Act, before its amendment in 1897, allowed the seizure only of moveable property in the possession of the occupier where he was the defaulter. The plaintiff was not the defaulter in this case. Covenants entered into by the mortgagor cannot be enforced against a puisne encumbrancer, nor can the doors and windows of the house be regarded as moveable property. See Peru Bepari y. Ronuo Maifarash 11 C.P 164; Qeen-Empress v. Sheik Ibrahim 13 M.K 518 and Purushothama v. Municipal Council of Bellary 14 M.P 467. We must, therefore, disallow the amount awarded for Municipal tax.

8. With respect to the award of Rs. 128 for the costs incurred by the plaintiff in making repairs, it is not contended before us that the repairs were not of such a character as would entitle a mortgagee to reimbursement: but it is argued that the plaintiff did not spend the amount as mortgagee but as purchaser of the property as the repairs were made after the date of Exhibit E. No doubt, the plaintiff had become the purchaser in 1896, but the contention, though it looks plausible, is not entitled to succeed. As the mortgage subsisted after the purchase, the plaintiff must be held entitled to add all monies to the principal amount which she would be entitled to do under Section 72 if the sale did not take place. All rights incidental to the mortgage must subsist with the mortgage right itself. If the prior mortgagee spends money for preservation of the property from destruction, forfeiture or sale, it would be inequitable to hold that the puisne encumbrancer should have the benefit of the expenditure incurred for that purpose without paying for it. The value of the property over which the puisne encumbrancer is entitled to a charge is enhanced by the expenditure and he cannot claim the benefit of the expenditure without making payment for it. The objection to the award for the repairs must be disallowed.

9. The result is that this second appeal must be allowed except with regard to the award of repairs. The decree of the District Judge will be modified as indicated above. Both parties will pay arid receive proportionate costs in all the Courts. The time for redemption will be extended to three months from this date.

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