1. This is an appeal against an order made by Ameer Ali, J., in a mortgage suit. The preliminary decree in the suit was made on 7th May 1930, and the Registrar reported that Rs. 5,110 odd was due to the plaintiff. In the final decree, made on 14th December 1931, it was ordered inter alia that the premises be sold; and in pursuance of these two decrees, the property was sold on 3rd February 1933, and purchased by one Haji Abdur Rahim for Rs. 6,450, The sale was subsequently confirmed, and after payment of the commission of the Registrar and the Accountant-General, there is now lying in Court standing to the credit of the suit a sum of Rs. 6,151 odd. The plaintiff's dues amount now to Rs. 6, 530 odd, and apart from his costs, which have not yet been taxed, the money in Court will not be sufficient to meet his claim, and he has given up his costs up to the preliminary decree. That being the position, the plaintiff asked for payment to him out of the sum lying in Court.
2. The purchaser, in answer to his petition, urged that there was a sum of Rs. 1,749 odd owing to the corporation of Calcutta for consolidated rates, that this sum ought to be paid out of the sum lying in Court, and the balance only be paid to the plaintiff. His contention was, that under the conditions of sale it was provided that the purchaser should not be liable to pay the outgoings previous to the date of payment of the purchase money, and that the rents and outgoings should be apportioned where necessary. This condition is usual, and is included in the form of conditions of sale in Appendix J., Form No. 1 of the Rules and Orders of the High Court on the Original Side.
3. It is not disputed that consolidated rates, and other similar Municipal rates, are included in such a term as 'outgoings' when used with reference to premises such as these. But it is provided by Section 205, Calcutta Municipal Act 1923, that the consolidated rates shall, subject to certain conditions, be a first charge upon the premises, and it is contended by the plaintiff that the expression 'outgoings' cannot be held to cover such a charge.
4. It should be noted in passing that the notification of sale, published by the Registrar, gave full particulars of the property to be sold, and mentioned specifically that it was subject to a lease for 25 years commencing from 1st December 1919, at a monthly rent of Rs. 30 the lessee to pay the whole of the Municipal tax. But no mention was made of this charge, or of any other encumbrance, although our rules provide, in Ch. 27, R. 9, which deals with sales by the Registrar, that where a property is to be sold subject to an encumbrance, the nature and amount of such encumbrance shall be stated.
5. Against this, the plaintiff argues that, at the sale, a representative of the corporation read out a letter, a copy of which appears at p. 10 of the Paper Book, in which the Officiating Law Officer of the corporation said:
With reference to the sale of the premises, I beg to state that the sums mentioned below are due to the corporation in respect of the consolidated rates in respect thereof. I submit that the dues of the corporation should be paid out of the proceeds of the sale of the property. I beg to notify the claim of the corporation to the intending purchasers at the time of the sale,
6. These dues included the amount of a decree with regard to which an application was being made for attachment of the premises, the amount of another decree declaring the amount to be a charge on the premises and an amount due upon certain Bustee Rate Bills. It will be noted that nothing was said in that letter about any statutory charge which the corporation had over the property in respect of rates, and although every one must be presumed to know the law, including, presumably, the Calcutta Municipal Act, no notice of this encumbrance was given either at or before the sale.
7. That being the position, Ameer Ali, J., decided in favour of the purchaser, that the sums due to the corporation must first be deducted from the sum lying in Court, and that the balance only must be paid to the plaintiff. In our opinion, the learned Judge's decision was right, and he approached the question from the right angle. The crucial point is what was sold. It seems clear that the property was sold subject to a condition that the purchaser should not be liable to pay for outgoings prior to the date of payment of the purchase money, and, secondly, that he purchased it free from any encumbrance or charge. It would be strange indeed if after he had purchased the property upon that condition, he found himself liable to pay for those very outgoings in another form, by reason of the statutory charge which existed in favour of the corporation. Still stranger would it be if, after be had bought the property on the faith of a notification of sale which made no mention of any prior mortgage or charge of any kind, but did make specific mention of the fact that the property was subject to a lease, he found that what he had purchased was subject to a statutory charge in favour of the corporation.
8. It appears from what the learned Judge says in his judgment, that the usual practice is either for the Registrar or for some representative of the corporation to mention at sales held by the Registrar any claim which the corporation may have for rates of taxes in respect of the premises, and, so far as we can ascertain, the usual practice for some, years has been for the Registrar to pay out of the purchase money any such sum due to the corporation. It may be that the Registrar and the corporation have regarded this procedure and practice as equivalent substantially to carrying out the provisions of Order 34, Rule 12, Civil P.C., which provides that when any property is sold which is subject to a prior mortgage, the Court may, with the consent of the prior mortgagee, direct that the property be sold free from the same, giving to such prior mortgagee the same interest in the proceeds of the sale as he had in the property sold.
9. It is clear that this property was sold subject to a clean title being given, free from any prior mortgage or charge; and until the mortgagee is in a position to give such a title, he is not entitled to the purchase money. He cannot give any such title until this first charge in favour of the corporation has been disposed of. Consequently, the money in Court cannot be paid out to him unless and until this claim has been settled, and I can see no objection to its being settled in accordance with the usual practice, that is to say by payment to the corporation by the Registrar out of the purchase money.
10. But we desire to observe that the rules conditions and forms provided in Ch. 27 of the Rules of this Court for sales by the Registrar, are not sufficiently clear or explicit, especially upon the points which we have had to consider in this appeal and we think that these rules and forms of conditions of sale ought to be amended, in order to remove any doubt about such matters, and similar doubts which may arise upon sales by the Registrar.
11. At first sight it appeared to us, that the effect of the learned Judge's decision was that some hardship would be suffered by the mortgagee. But on further consideration it becomes apparent that this is not really so. The true position is that, the mortgagor has wasted the mortgagee's-security by failing to pay the rates as they became due, and by thus causing a first charge to be imposed upon the property in priority to the rights of the mortgagee. The mortgagee ought to have been more active in protecting his rights. The result is that this appeal must be dismissed with cost.
12. I agree.