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Seth Dooly Chand Vs. Maharaja Sir Rameswar Singh Bahadur - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in40Ind.Cas.623
AppellantSeth Dooly Chand
RespondentMaharaja Sir Rameswar Singh Bahadur
Excerpt:
transfer of property act (iv of 1882), sections 49, 76(f) - mortgage--agreement to keep mortgaged premises insured, failure to perform--insurance effected by receiver in mortgage suit--money received under insurance policy, applicability of. - .....contained an agreement on the following terms: 'it is hereby agreed and declared that all sums of money received under and by virtue of any such insurance as aforesaid shall be applied by the mortgagee, if so required by the mortgagor in or towards substantially and to the satisfaction of the mortgagee re-building re instating or re-pairing the said premises so to be insured as aforesaid.' eventually, the mortgagee brought a suit upon the mortgage. on the 14th january 1914, a receiver was appointed by the court in the mortgage suit. a preliminary decree was then passed on the 6th april 1914 and the decree absolute was made on the 23rd november 1914. on the 18th january 1915, an order was made by the court that the property should be brought to sale for the satisfaction of the amount.....
Judgment:

Fletcher, J.

1. This is an appeal by a judgment-debtor against an order of the learned Subordinate Judge of the second Court at Alipore, dated the 24th February 1917. The appeal arises under the following circumstances. By an indenture of mortgage made in the month of July 1911 between the judgment-debtor of the one part and the decree-holder of the other part, the judgment-debtor mortgaged to the decree-holder a certain Jute Press together with the machineries and fixtures to secure a sum of 21/2 lakhs of rupees with interest. In the said indenture was contained a covenant by the mortgagor that he would at all times during the continuance of the security insure and keep insured to the full value thereof and for not less than Rs. 3,30,000 the mortgaged premises from loss or damage by fire in the name of the mortgagor in some office to be approved of by the mortgagee and that he would assign, endorse and deliver to the mortgagee the policy for such insurance and the receipt for every such payment within seven days after payment and that; in default, it would be lawful for the mortgagee to make those payments and such payments when made by the mortgagee would be a charge upon the mortgaged premises. The mortgage-deed also contained an agreement on the following terms: 'It is hereby agreed and declared that all sums of money received under and by virtue of any such insurance as aforesaid shall be applied by the mortgagee, if so required by the mortgagor in or towards substantially and to the satisfaction of the mortgagee re-building re instating or re-pairing the said premises so to be insured as aforesaid.' Eventually, the mortgagee brought a suit upon the mortgage. On the 14th January 1914, a Receiver was appointed by the Court in the mortgage suit. A preliminary decree was then passed on the 6th April 1914 and the decree absolute was made on the 23rd November 1914. On the 18th January 1915, an order was made by the Court that the property should be brought to sale for the satisfaction of the amount found due on the mortgage security. Then, on the 19th December 1916, there occurred a fire and the Receiver received from the Insurance Company in which the premises were insured from loss or damage by fire the sum of Rs. 86,000 and odd. The mortgagor then applied to the Court that the money so received by the Receiver should be laid out in restoring the premises that had been destroyed or damaged by fire. The learned Judge refused that application. Against that order, the judgment-debtor has appealed to this Court.

2. Two questions have been raised in this appeal. First of all, that the manner in which the money received by the Receiver from the Insurance Company was to be applied being provided for by the mortgage deed and the parties having regulated their rights by contract the contract must be given effect to by the Court and secondly, that if that be not so, the Judge did not exercise a wise discretion in declining to order the money received by the Receiver to be laid out in restoring the premises that had been damaged by fire. The first point is 'Is that money in the hands of the Receiver governed by the terms of the mortgage deed.' In my opinion, it is not; and I state shortly why. First of all, the mortgage-deed applies, as it states in its terms, to a policy which is kept on foot by the mortgagor, although the mortgagee had the option of making the payments if he thought fit. In this case, the premiums that were paid on the policy were not paid by the mortgagor and the mortgagee had never thought fit to make these payments. It is only with reference to the money received under and by virtue, of any such insurance as aforesaid' that the mortgagor has the right under the terms of the deed, to direct as to whether the money shall be laid out in restoring the premises destroyed by fire. As I have already pointed out 'any such insurance as aforesaid' means an insurance effected in accordance with the terms of the mortgage-deed. The parties did not provide for what would happen in a case where the property having come in the custody of the Court, the officer of the Court under the direction of the Judge had kept the property insured against any loss or damage by fire for the benefit of all the parties to the suit. In my opinion, this case is not governed by the terms of the mortgage-deed. The insurance was kept on foot by the Judge as a matter of protection for all persons who were parties to the suit. It may be that there are other parties besides the mortgagor and the mortgagee A subsequent mortgagee may be called a party for whose benefit also the Court took the precaution of insuring the premises. If that is so, then the money having been in the custody of the Court and it having arisen by the payments made by an officer of the Court, the Court had ample discretion in directing in what manner the money so received should be laid out. The question, therefore, is Has the Court exercised its discretion rightly and for the benefit of all the parties to the suit.' The judgment debtor's case is that the premises should be re-built. As far as I can see, there was no evidence before the learned Judge showing that the premises could be restored to their former state for the sum received from the Insurance Company. In the absence of that evidence it would be impossible for the learned Judge to come to the conclusion that these premises could be restored as they existed before the fire. The costs of building materials and the other matters connected with the re-building may have and probably have substantially gone up within the last few years. Also the Judge had to consider whether it was convenient for the Court to superintend and undertake the re-erection of a large building as a Jute Press. What the nature of the building was I do not know. But having regard to the amount for which it was mortgaged apparently it was a building of considerable size and the amount of the damage done by the fire must have been considerable because the money received by the Receiver amounted to the sum of Rs. 86,000 and odd. In that view, I think the learned Judge having come to the conclusion that it would not be convenient to have these buildings restored, no grounds have been shown to us on which we can say that the learned Judge improperly exercised his discretion. The learned Judge clearly, in my opinion, had a discretion to decide in what manner the money received by the Receiver ought to be applied, and he came to the conclusion that the most convenient and the best course for the application of the money would be to allow the mortgagee to receive it in part satisfaction of his mortgage money rather than to direct the Receiver to undertake the re-construction of the building. In the result, I see no reason to differ from the conclusion arrived at by the learned Subordinate Judge of the Court below. The present appeal, therefore, fails and must be dismissed with costs, five gold mohurs.

Smither, J.

3. I agree.


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