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Magniram Vs. Mehdi HosseIn Khan - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in(1904)ILR31Cal95
AppellantMagniram
RespondentMehdi HosseIn Khan
Cases ReferredLala Dilawar Sahai v. Dewan Bolakiram
Excerpt:
reg judicata - co-defendants--civil procedure code (act xiv of 1882), section 13--'former suit'--'between the same parties'--judgment--contribution, right to, as between purchasers of mortgaged properties--transfer of property act (iv of 1882), sections 56, 81, 82--marshalling--inverse order, rule of. - .....1st party purchased the same for rs. 21,000, and this sale had the effect of satisfying the entire mortgage debt due to the decree-holder; that as the sum of rs. 21,000 realised by the' sale of the plaintiff's property went to satisfy the mortgage on all the four properties, it should be held that the mortgage has been satisfied with the plaintiff's money, and the plaintiff is accordingly entitled to contribution from the defendants 1st party, the amount of such contribution being the excess of the amount so paid with one which was the value of his property, over his share of the liability for the mortgage debt; that he sum of rs. 21,000 has therefore to be divided in proportion to the vales of the two properties purchased by the plaintiff and the two purchased by the same proportion.....
Judgment:

Banerjee and Pargiter, JJ.

1. The suit out of which this appeal arises was brought by the plaintiff appellant to recover a certain sum of money by way of contribution from the defendants 1st party. The main allegations upon which the suit is based are shortly these: That the predecessors in interest of the defendants 2nd party on the 15th of October 1881 mortgaged their share in four properties, Dighout Titaria, Kunda, Lakhan Dhanaman and Chhathu Dhanaman to one of the defendants 4th party for Rs. 8,000; that out of the mortgaged properties the first two were purchased on the 12th of January 1888 by the defendants 1st party, and the remaining two properties were purchased by the plaintiff at an execution sale on the 9th of July 1888; that subsequently the mortgagee, the defendant 4th party, having obtained a decree on his mortgage on the 26th of April 1892, caused the sale of the last two properties on the 23rd of May 1893, and the defendants 1st party purchased the same for Rs. 21,000, and this sale had the effect of satisfying the entire Mortgage debt due to the decree-holder; that as the sum of Rs. 21,000 realised by the' sale of the plaintiff's property went to satisfy the mortgage on all the four properties, it should be held that the mortgage has been satisfied with the plaintiff's money, and the plaintiff is accordingly entitled to contribution from the defendants 1st party, the amount of such contribution being the excess of the amount so paid with one which was the value of his property, over his share of the liability for the mortgage debt; that he sum of Rs. 21,000 has therefore to be divided in proportion to the vales of the two properties purchased by the plaintiff and the two purchased by the same proportion will give for the plaintiff's must be taken to have paid Rs. 15,000 and odd in excess of his share of the mortgage debt which he was really liable to pay; and accordingly the plaintiff brings this suit to recover that sum together with interest amounting in all to Rs. 24,000.

2. The defence of the defendant 1st party was, so far as it is necessary to consider it for the purposes of this appeal, to the effect that this suit was not maintainable, as the mortgage decree in execution of which the sale of the plaintiff's mouzahs took place and to which the plaintiff was a party, expressly directed the sale of those mouzahs in the first instance; and that the sum of Rs. 21,000 paid by the defendants 1st party Wais far in excess of the real value of the property purchased by them, and they paid that amount with the object of having the mortgage debt completely satisfied so that the property which they had purchased might not be brought to sale.

3. The Court below upon these pleadings framed certain issues of which the third is the only one of importance for the purposes of this appeal, and which was in these terms, namely:

Whether the plaintiff is entitled to any and what contribution from defendants 1st party?

4. And the learned Subordinate Judge below has answered the questions raised in this issue against the plaintiff, holding in the first place that the decision in the mortgage suit to which the present plaintiff and defendants let party were both parties, operated as res judicata against the present claim, and further that the claim for contribution was barred by Section 82 of the Transfer of Property Act, and, in the second place, he has held that the amount paid by the defendants 1st party for their purchase' at the execution sale was much in excess of the value of the properties purchased and that that amount was paid only to pay off the mortgage debt completely; and the Court below has accordingly dismissed the plaintiff's suit.

5. Against the decree of the lower Court dismissing the suit, the plaintiff has preferred the present appeal, and the questions raised for our, determination in this appeal are:

(i) Whether the suit is barred by the principle of res judicata;

(ii) Whether Section 82 of the Transfer of 'Property Act can be a bar to this suit; in other words whether there can be marshalling as between purchasers of the mortgaged property, and whether if there can be such marshalling, it would exclude the right of any party to claim contribution;

(iii) Whether the defendants 1st party who purchased two of the mortgaged properties before the other two were purchased by the plaintiff could claim the right of throwing the whole of the mortgage debt upon the two properties purchased by the plaintiff, or in other words whether the rule known as the rule of 'inverse order' should hold good;

(iv) To what amount, if any, is the plaintiff entitled by way of contribution.

6. Upon the first point, it is argued by the learned vakil for the plaintiff-appellant, in the first place broadly that there can be no res judicata as between co-defendants, and that as the present plaintiff and the defendants 1st party were only co-defendants in the mortgage suit and not parties arrayed against one another, even if any question like the one now raised in the present suit had been in issue in the former suit, it could not be treated as res judicata, regard being had to the language of Section 13 of the Code of Civil Procedure, to which alone we must refer as embodying the whole of the law of res judicata in this country, as has been held by the Privy Council in the case of Gokul Mandar v. Pudmanund Singh (1902) I.L.R. 29 Calc. 707. And in the next place it is contended that even if there can be res judicata as between co-defendants, having regard to the questions which might and ought to have been raised in the former suit and were heard and determined, and the questions raised in the present suit, the decision in the former suit cannot operate as res judicata in the present suit. We are of opinion that the first branch of the appellants' contention is not correct but that the second is. Section 13 of the Code of Civil Procedure does not preclude the decision upon any issue from operating as res judicata merely because the issue is raised as between co-defendants, if the matter involved was directly and substantially in issue in a former suit, and the other necessary conditions are satisfied. It is true, Section 13 speaks of the matter having been directly and substantially in issue in a former suit between the same parties, and it is true that from their position, the words 'between, the same parties' may naturally be taken to qualify the words immediately preceding, i.e., 'former suit' but it would be doing no violence to the language of the section if we hold that the words 'between the same parties' qualify not simply the two words immediately preceding, namely 'former suit,' but the whole expression 'in issue in a former suit' in which case the necessary condition as regards the identity of parties will be, not that the former suit must hate been one between the same parties arrayed as plaintiff and defendant as the parties to the subsequent suit, but that the issue in the former suit must have been one between the same parties claiming adversely to each other, though they might have been co-defendants in the former suit and are arrayed as plaintiff and defendant in the suit subsequently brought. That these may arise issues for determination as between co-defendants was pointed out in the case of Cottingham v. Earl of Shrewsbury (1843) 3 Hare 627 and the same view has been taken by the Courts in this country: see the cases of Barn Chandra Narayan v. Narayan Mahadev (1886) I.L.R. 11 Bom. 106, Ahmad Ali v. Najabat Khan (1895) I.L.R. 18 All. 65 and Sheikh Khoorshed Hossein v. Nubbee Fatima (1878) I.L.R. 3 Calc. 551. Of course the issue raised must directly and substantially involve the matter m issue in the subsequent suit, and if not expressly raised, the matter must be one which, as provided by explanation 2 of Section 13 of the Code of Civil Procedure, is such that it might and ought to have been made ground of defence or attack in the former suit. But though the broad contention of appellant must therefore fail, his more limited contention, namely that the decision in the former suit, that is, the mortgage suit, does not operate as res judicata in the present suit, ought to succeed. For the question now raised is, whether the plaintiff is entitled to contribution by reason of the sale of his property having the effect of satisfying the entire mortgage debt. The question which must be taken to have been determined by the decree in the former suit, read with the light of the judgment to which we can refer see the cases of Kali Krishna Tagore v. The Secretary of State for India (1888) I.L.R. 16 Calc. 173 and Jagatjit Singh v. Sarabjit Singh (1891) I.L.R. 19 Calc. 159 was in what order should the mortgaged properties be sold; and the determination of the Court was that the properties other than those purchased by the present defendants 1st party should be sold first; or, in other words, that the properties purchased by the present plaintiff were to be sold first; and so they were. Does that preclude necessarily the determination of the question whether in the event of such sale satisfying the whole of the mortgage debt the plaintiff is or is not entitled to contribution?' We are of opinion that this question must be answered-in the negative. It was not necessary for the Court in the former suit to determine this question, none of the parties asking the Court in the former suit to determine that question; and as a. matter of fact it has not been determined either by the decree or; by the judgment in the former suit. That being so we must hold that the Court below was wrong in its conclusion that the determination of the present question was barred by the principle of res judicata.

7. We come now to the second question raised. The rule of marshalling as laid down in the Transfer of Property Act, Section 81, is no doubt limited to the case of mortgagees, and does not apply to the case of purchasers of mortgaged properties subject to prior incumbrances. Nor does the rule of marshalling in the case of purchasers as laid down to Section 56 of the Act apply to a case between purchaser and purchaser, Section 56 being limited in its operation to the page in which the party claiming marshalling is a purchaser and the party against whom it is claimed if the original mortgagor. For the same reason the case of Lala Dilawar Sahai v. Dewan Bolakiram (1885) I.L.R. 11 Calc. 258 cited in the argument, in which a claim for marshalling was disallowed, may be distinguished from the present case. Upon reason and principle it is difficult to say why, if marshalling is to be allowed as between two subsequent mortgagees, it should not be allowed as between subsequent purchasers. But though that is so, and though, as has been found by the Court below, the defendants 1st party bought without notice of the prior mortgage in favour of the defendants 4th party, as the plaintiff was a purchaser for value it would not be right to hold that the plaintiff is not entitled to claim contribution if the sale of his property results in the satisfaction of the mortgage debt completely. In saying as we have said above, that the defendants 1st party had no notice of the prior mortgage, all we meant was that they had no express notice; but the mortgage having been registered, if they had made a reasonable enquiry they could have become aware of the existence of the prior mortgage; and, therefore, in point of law they could not claim the position of a purchaser without notice as against the plaintiff who is a subsequent purchaser for value. In our opinion then, if the sale of the plaintiff's property has resulted to the, complete satisfaction of the mortgage debt, the plaintiff is entitled to contribution. What the amount of such contribution may be is to be considered under the fourth point we have stated above.

8. As to the third point the argument is this. That us when the defendants 1st party purchased their two properties from the mortgagors, the remaining two properties were still in the hands of the mortgagors, the purchasers might well have thought that the mortgage debt would be paid wholly out of the properties still in the hands of the mortgagors; and the plaintiff, a subsequent purchaser, must be taken to be in the shoes of the mortgagors. And if that is so, the sale at the instance of the prior mortgagee should be, as it has been, in the inverse of the prior mortgagee should be, as it has been, in the inverse order of sales to the different purchasers, that property being sold I n satisfaction of the mortgage decree first, which was purchased from the mortgagors last.

9. We are unable to give effect to this contention. Though as between the mortgagor and the purchaser from the mortgagor property in the bands of the mortgagor should be sold first without giving the mortgagor any claim for contribution,, yet when all the properties have passed to the bands, of purchasers for value, there is no sufficient reason for holding that later purchasers should not be entitled to contribution as the earlier ones. It appears to us that the rule best in accord with the, principles of justice, equity and good conscience is to make, the mortgaged properties in the hands of different purchasers liable to contribute to, the mortgage debt in proportion to their values. And this brings us to the fourth and the last point raised in the case.

10. Now, the properties of the plaintiff and those purchases by the defendants 1st party are valued by the plaintiff himself in, his own plaint roughly at Rs. 7,000 and Rs. 22,000. There is however one mistake in the plaintiff's estimation of these values which is conceded by the learned vakil for the appellant, and that is, the omission to deduct the road and public work cesses from the gross income. Making that correction, the values of the plaintiff's and the defendant's properties would be roughly speaking, Rs. 6,000 and odd and Rs. 20,000 and odd. Then the Rs. 21,000, as the petition on page 227 of the Paper Book (Exhibit H) clearly shows, was paid, not because it was the proper value of the property purchased, but because it was necessary to pay that amount to satisfy the mortgage debt completely; and if it satisfied that debt, the sum of Rs. 21,000 must be rateably distributed in proportion of Rs. 6,000 and odd and Rs. 20,000 and odd to determine the respective liabilities of the plaintiff's properties and the defendant's properties. Thus, divided, the amounts will be respectively Rs. 5,049-9 and Rs. 15,950-7. Deducting the amount payable for the plaintiff's properties from the value of those properties, that is, Rs. 6,000 and odd, there would remain a balance of Rs. 1,521-2, which, the plaintiff is entitled to recover from the defendants 1st party. It was argued for the plaintiff-appellant that this was not the correct mode of calculation; that as the plaintiff's properties have fetched Rs. 21,000 at the execution sale, that sum must be taken to be the value of those properties, and the mortgage-debt must be taken to have been satisfied with what was in effect the plaintiff's money. And if that was so, the plaintiff would, be entitled to obtain from the defendants 1st party an amount equal to the difference between the amount paid by the plaintiff, that is, Rs. 21,000, and the amount for which his property was liable, such liability being determined however, not upon the basis of Rs. 21,000 being the value of the plaintiff's property, but upon the basis of the actual intrinsic values of the plaintiffs' properties and those of the defendants as given in the plaint. This contention, on the face of it, involves a strange anomaly, namely, that whereas for the purposes of determining the plaintiff's liability Rs. 6,000 or 7,000 should be taken to be the value of the properties, for the purpose of determining his right to recover from the defendants 1st party, the whole of Rs. 21,000 bid at the auction should be taken to be the value of those properties, and that notwithstanding the express declaration by the auction purchaser made before the payment of the whole of the purchase money, in his petition (Exhibit H) that that large amount was paid not because it was the value of the property, but because it was necessary to pay it in order to wipe off the mortgage debt. Moreover, it should be borne in mind that there was no competition at the auction sale, the bids having been raised by sham bidders being brought forward by defendants 1st party for reasons best known to them. That is a fact which is not disputed before us, so that the plaintiff cannot complain that if the defendants 1st party had not made their last bid, the next lower bid by a stranger would have been the value which the properties sold could have fetched. A claim like the present for contribution is an equitable claim, and in determining the amount of it we must take an equitable view of all the circumstances attending the case, and must not give effect to what is only an apparent and not the real state of things. It is only apparently that Rs. 21,000 paid for the properties at the auction sale would represent the value of those properties as obtained by such sale, the real state of things being, as is manifest, this, that the amount was paid in order to satisfy the mortgage debt so as to prevent any further sale in execution of the mortgage decree. What the plaintiff, therefore, is entitled to recover should be calculated not upon the footing of Rs. 21,000 being the value of. those properties, but upon the footing of the properties being of the value mentioned in the plaint after making the correction for road and public work cesses as indicated above, and by treating the mortgage debt as having, been paid off by the defendants 1st party in consideration of their having obtained the properties of the plaintiff, the amount due to the plaintiff being the difference between the real value of his properties and the liability which they were under and which has been satisfied by the sale of the property.

11. A decree will be made in favour of the plaintiff in the manner indicated above; and the parties will recover and bear costs in proportion to their success and failure. The amount recoverable by the plaintiff shall bear interest from the date of the execution Bale, but having regard to the previous litigation between the parties the rate ought not to be higher than ten per cent.


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