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Hongkong and Shanghai Banking Corpn. Vs. Official Assignee of Calcutta - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata High Court
Decided On
Case NumberSuit No. 3583 of 1954
Judge
Reported inAIR1959Cal616,63CWN316
ActsTransfer of Property Act, 1882 - Section 67A
AppellantHongkong and Shanghai Banking Corpn.
RespondentOfficial Assignee of Calcutta
Cases ReferredAnath Bandhu Dev v. The Dominion of India
Excerpt:
- .....the suit compels a plaintiff mortgagee to do what the respondent did here, namely, include in his suit mortgage claims over which the court had no jurisdiction. if this is so, the inclusion cannot be pleaded as a compliance with the obligation whatever it may be ......... the words 'all the mortgages in respect of which the mortgage money has become due' must be limited to those mortgages which the court in which the mortgagee sues has jurisdiction to enforce.'28. to hold that section 67a of the transfer of property act is a part of the cause of action and to enable the plaintiff to combine in one suit different mortgages in different territories would be to engraft into the words of clause 12 of the letters patent a new category of jurisdiction in suits for land. in the decision.....
Judgment:

A.N. Ray, J.

1. This is a mortgage suit under Order 34 Rule 4 of the Code of Civil Procedure. The suit was originally instituted against Khwaja Shamshuddin. On or about 19-9-1957 on his application Khwaja Shamshuddin was adjudicated insolvent by an order of this Court. By an order dated 21-1-1958 the Official Assignee of Calcutta was brought on the record as the defendant.

2. The plaintiffs case is that the defendant carried on business in the sale, purchase and export of goat skins and hides under the name and style of East Asiatic Trading Company. The defendant had a current overdraft account with the plaintiff. In the said account from time to time the plaintiff used to lend and advance various sums of monies to the defendant and the defendant from time to time used to draw on such monies and repay various sums from time to time.

3. In paragraph 3 of the plaint it is stated that the overdraft account was secured by (a) pledge and/or hypothecation of all stocks of goat skins and hides of the defendant in his godown at 2, Chingrihatta Lane, Calcutta (b) mortgage of premises 11/A Kyd Street, Calcutta, and (c) equitable mortgage of premises No. 2 Chingrihatta Lane, Calcutta.

4. In consideration of a loan of Rs. 1,80,000/-granted to the defendant in the overdraft account the defendant executed a registered deed of mortgage in favour of the plaintiff on 3-11-1949, the sum secured being Rs. 1,80,000 plus interest, costs, charges and expenses, the rate of interest being 4 per cent, per annum payable by equal monthly instalments, the date of payment being 10-11-1950 and the property mortgaged was 11/1 Kyd Street Calcutta.

5. In paragraph 5 of the plaint it is alleged that the security by way of pledge as also the mortgage of premises 11/1 Kyd Street having proved insufficient to cover the indebtedness of the defendant! in the overdraft account, the defendant on or about 10-11-1949 deposited with the plaintiff at Calcutta within the jurisdiction several documents of title with intent to create security of premises No. 2 Chingrihatta Lane, Calcutta for payment of advances made or to be made in the overdraft account and for all sums due on such account to the extent of Rs. 2,00,000/-.

6. In paragraph 7 of the plaint it is stated that the amount due and owing by the defendant to the plaintiff after appropriating payments was Rs. 6,49,427/5/2 up to 31-12-1953.

7. In paragraph 8 it is stated that the plaintiff submitted statement of account from time to time and that the defendant acknowledged in writing the correctness thereof, the last of such acknowledgment being dated 6-1-1954 signed by authorised agent of the defendant.

8. In paragraph 9 it is stated that after giving credit to the defendant for all monies paid and proceeds of sale of the defendant's goods received from time to time there is now due and owing by the defendant to the plaintiff the sum of Rupees 6,54,850/14/5.

9. In paragraph 10 of the plaint it is stated that in Suit No. 4111 of 1953 of this court pursuant to an order dated 1-2-1954 the stock of goat skins and hides belonging to the defendant in the possession of the plaintiff was sold by the joint receivers appointed in the said 1953 suit. The net sale proceeds amounting to Rs. 1,13,434/14/9 are lying to the credit of the joint account of the said receivers, The plaintiff states that if the claim of the plaintiff is allowed in the said 1953 suit the plaintiff is ready and willing to appropriate the proceeds towards pro tanto satisfaction of the plaintiffs dues in this suit.

10. In paragraph 11 of the plaint it is stated that the plaintiff is the mortgagee who holds both the said mortgages from the defendant relating to advances made to the defendant in the said current over-draft; account and in respect of each of which the plaintiff has a right to obtain the same kind of decree. It is further stated that in the absence of a contract to1 the contrary the plaintiff is suing on both the mortgages in this suit.

11. The suit was instituted with leave under Clause 12 of the Letters Patent on the ground that part of the mortgaged land is within the jurisdiction of the court.

12. The defendant in his written statement denied in the first place the right of the plaintiff to obtain the same kind of decree in respect of both the mortgages' as also the right of the plaintiff to sue on both the mortgages in this suit. The defendant denies the correctness of the amount due to the plaintiff. The defendant denies the jurisdiction of this court.

13. The following issues were framed:

(1) What are the maximum sums payable under the respective mortgages in suit?

(2) Has this court any jurisdiction to try the suit?

14. The parties led no oral evidence.

15. On the question of jurisdiction counsel for the plaintiff contended first that there was one overdraft account which is secured by 2 mortgages --a registered mortgage in respect of the Calcutta property and an equitable mortgage in respect of Chingrihata property. It was argued that the totality of advance was one and the totality of securities was also one. It was contended that the suit being on one overdraft account and on security therefor the court had jurisdiction. The second contention of the plaintiff was that under Order 2 Rule 3 of the Code of Civil Procedure the plaintiff could join two independent causes of action and therefore this suit is properly constituted with leave under Clause 12 of the Letters Patient. The plaintiffs third contention was that Section 67A of the Transfer of Property Act is independent of Clause 12 of the Letters Patent and therefore Section 67A of the Transfer of Property Act confers on the plaintiff a right to combine two mortgages in one suit. It was also argued that Section 67A of the Transfer of Property Act is, therefore, a part of the plaintiff's cause of action and as such this court has jurisdiction. The last contention of the plaintiff on the question of jurisdiction was that leave having been granted and an interlocutory order, namely, appointment of the Official Receiver in respect of both the Calcutta and Chingrihatta property having been made the court would not entertain any plea with regard to jurisdiction at this stage.

16. On the question of jurisdiction counsel for the plaintiff relied on the decisions reported in Surendra Krishna Roy v. Iswar Bhubaneswari, ILR 60 Cal 54 and Satruhan Singh v. Collector of Gorakhpur : AIR1940All205 for the proposition that 2 separate causes of action for land could be combined in a suit for land.

17. With regard to the first contention of the plaintiff that the account was an overdraft account on a totality of advance I am of opinion that this is not a suit on overdraft account simpliciter but is a mortgage suit. I do not accept the plaintiffs contention that the securities were one. Obviously there were two separate securities created at different points of time and they are separate in character. I cannot also accept the plaintiff's contention that the registered mortgage was in respect of the overdraft account. There is no reference to overdraft account in the registered mortgage. The registered mortgage is in fact in respect of a loan of Rs. 1,80,000/- repayable with interest and certain other charged. There are two totally different mortgages and it cannot be predicated that the registered mortgage is in respect of the overdraft account. The two mortgages are separate in point of time of creation, they are separate with regard to the amount secured and also with regard to the date of payment. The registered mortgage was repayable on 10-11-1950 and the equitable mortgage was repayable on demand. The plaintiff in this suit is enforcing the registered mortgage for the defendants liability on loan. The plaintiff is also enforcing the equitable mortgage for the defendant's liability to the plaintiff. Neither the claims nor the liabilities are the same.

18. The plaintiffs suit is a mortgage suit and is not a suit on overdraft account.

19. It is well settled that a mortgage suit is a suit for land within Clause 12. It is also well settled if, in a mortgage deed, part of the mortgaged land is inside and part is outside the court's territory, the court can give leave to sue and thereupon it has jurisdiction to entertain a mortgage suit and to pass a decree upon it. See Hari Ram Serwagi v. Rameshwarlal, ILR 1946-2 Cal 63 at p. 68. It is common case here that there is not a mortgaged deed in respect of two properties but that there are two separate mortgages for two separate properties.

20. Where there are two separate mortgages there are two separate causes of action or claims for mortgaged properties. In ILR : AIR1933Cal295 Rankin C. J. observed at page 67 (of ILR Cal): (at p. 300 of AIR) as follows:

'The cause of action does not matter in such a case except in so far as it affects the propriety of the joinder of the claim to the different parcels of land in the same suit. Two different suits cannot certainly be rolled into one for the purpose of obtaining jurisdiction over land outside the limits.'

To my mind that observation makes it clear that two separate causes of action for two separate mortgages and for two separate parcels of land one of which does not lie within the jurisdiction of the court could not be combined into one for the purposes of the jurisdiction. The decision in : AIR1933Cal295 related to establishing title and possession of certain properties on the basis of one deed of dedication which comprised properties both within and outside the jurisdiction. There is no dispute that if one and the same mortgage deed comprised two properties in different territories a suit can be fifed in the territory of one court where part of the land is situated. In a suit for land it is the situation of the land which confers jurisdiction. There is no nexus between cause of action and jurisdiction in a suit for land. If that were so the plaintiff in a partition suit with moveable property within the jurisdiction of this court and with immoveable property lying outside the jurisdiction of this court could have instituted a suit in this court with leave under Clause 12 of the Letters Patent. In my view under Clause 12 of the Letters Patent in suits for land the questions whether the defendant resides within the jurisdiction and whether cause of action arose within the jurisdiction are totally irrelevant. In a suit for land with leave under Clause 12 of the Letters Patent the plaintiff has to show that whole of the land or part of the land is within the jurisdiction. The instant case before me if it were tested from the point of view of two causes of action in respect of two mortgages the suit would have been competent only if part of land in each mortgage was within the jurisdiction of this court. It is the mortgaged land which will attract jurisdiction. To borrow the words of Gentle, J. in ILR 1946-2 Cal 63 the hypothecation of each mortgage must include an in-lying land which is necessary to enable a court to assume jurisdiction. The principle is that it is one mortgage in respect of lands part of which is within the jurisdiction of the court. The mortgage is indivisible and therefore there is one suit.

21. The decision in : AIR1940All205 was cited by counsel for the plaintiff for the proposition that if the plaintiff has two or more causes of action he can take advantage of the provisions of Section 17 of the Code of Civil Procedure if the joinder of such causes of action is permitted by the provisions contained in Order 1 Rule 3 and Order 2 Rule 3 of the Code. In my view this decision is not of any use in the present case. The jurisdiction here is to be tested by Clause 12 of the Letters Patent and not with reference to provisions contained in Sections 16 to 20 of the Code. In the Allahabad case the plaintiff filed a suit in the Basti Court impeaching certain mortgages at Basti and 1 mortgage at Gorakhpur. The mortgagees were different and that is why it was held in that decision that the plaintiff had different causes of action which could not be combined. An argument was extracted that the mortgagee being the same in the instant case the suit was properly instituted in this court. The argument is fallacious for the reason that it assumes that in a suit for land under Clause 12 of the Letters Patent cause of action and not situation of land will attract jurisdiction. Such assumption strikes at the root of jurisdiction in suits for land under Clause 12.

22. Counsel for the defendant relied on two decisions reported in Krishna Kishore De v. Amarnath, ILR 47 Cal 770: (AIR 1920 Cal 131) and Premsukh Mahata v. Mangalchand, 41 Cal W. N. 854. In the decision reported in ILR 47 Cal 770: (AIR 1920 Cal 131), the original mortgagors were Mukherjees and the mortgagee was one Banerjee in respect of certain Howrah properties. Banerjee thereafter executed a sub-mortgage of his interest in the mortgaged properties at Howrah and included in that same document as further security Banerjee's one third share in two houses at Calcutta within the jurisdiction of this court. The sub-mortgagee instituted a mortgage suit at Calcutta where the additional lands were situated and claimed the usual reliefs on the original mortgage deed against the mortgagors and on the sub-mortgage against the mortgagee of the original mortgage, as the mortgagor of the sub-mortgagee. The suit was decreed. A purchaser of the original mortgagor's equity of redemption instituted a suit to set aside the mortgage decree which was dismissed. On appeal it was held that the sub-mortgagee could enforce the original mortgage against the mortgagor but could do so only in the Court in whose territory the land in the mortgage is situated but not in the other court. At page 777 (of ILR Cal): (at p. 133 of AIR) of the report (47 Cal 770): (AIR 1920 Cal 131), it was held that the inclusion in one suit of a mortgage upon outlying land with another mortgage upon in lying did not confer upon the court or enable it to assume jurisdiction with respect to the original mortgage and leave to sue in that mortgage suit which had been given under Clause 12 was ineffective and the mortgage decree was a nullity.

23. In the decision reported in 41 Cal W. N. 854 the suit related to a first mortgage in the month of August, 1932 in respect of certain properties at Khulna outside the jurisdiction of this court. There was another mortgage in the month of November, 1933 and the properties mortgaged comprised Khulna properties as well as certain Calcutta property.

24. The mortgagor and the mortgagee were the same in respect of both the August and the November mortgages. The suit was filed with leave under Clause 12 of the Letters Patent. In the trial Court Ameer Ali, J. held that the suit failed upon the August mortgage on account of want of jurisdiction. The appeal court held that as regards the August mortgage the suit was bound to fail owing to want of jurisdiction. To my mind the decision in 41 Cal W. N. 854 is an authority for the proposition that if there are two separate mortgages this court will have no jurisdiction to try the suit unless each mortgage contains the whole or part of the land within the jurisdiction of this court.

25. In the decision reported in Promotha Nath Roy v. Kanakendra Nath, ILR 1938-2 Cal 604 there was an equitable mortgage of certain muffasil properties in the month or April 1931 to secure repayment of Rs. 1,35,000/- with interest. In the month of July 1934, there was a further loan of Rs. 35,000/-. To secure repayment of the loan the mortgagors by a deed conveyed into the mortgagee certain Calcutta properties and by the same deed further charged all the muffasil properties covered by the equitable mortgage in the month of April 1931. A mortgage suit was filed in this court to recover the loan secured by the equitable mortgage as well as the loan secured by the registered mortgage. A point arose that there were two causes of action--one under the equitable mortgage and the other under the registered deed. Panckridge, J., observed that if different causes of action are to be joined in the same suit the court must be satisfied that it has jurisdiction in respect of each of them and his Lordship went so far as to hold that this court would have had no jurisdiction to enforce the equitable mortgage of the muffasil properties if the registered deed in the month of July had never come into existence. The effect of the July registered deed was to create a mortgage in respect of certain Calcutta properties to secure a loan of Rs. 35,000/-and to create a further charge in respect of the muffasil properties covered by the earlier equitable mortgage and the deed further provided that as additional security for payment of all moneys owing and payable by the mortgagors unto the mortgagee under the memorandum of agreement of deposit of title deeds the mortgagors charged and assured unto the mortgagees all the Calcutta properties. The later registered mortgage was held to augment the security in respect of the loan secured by the memorandum of deposit and to alter the transaction of equitable mortgage by changing it from hypothecation of the muffasil properties into a hypothecation of muffasil properties and Calcutta properties. In the instant case the position is just the reverse. The registered mortgage is earlier in point of time and is intended to secure a loan of Rs. 1,80,000/-. The equitable mortgage in the instant case is later in point of time and is intended to secure loan of Rs. 2,00,000/- and is in respect of muffasil properties. The two mortgages are separate and each mortgage is the foundation of separate cause or claim. In my view this court has no jurisdiction in respect of the equitable mortgage inasmuch as there is no Calcutta property charged or hypothecated by the transaction of equitable mortgage. The causes of action for the registered mortgage and for the equitable mortgage are two separate and totally distinct ones and they cannot be combined or rolled into one for purpose of jurisdiction.

26. With regard to the plaintiffs contention that Section 67A of the Transfer of Property Act is a part of the cause of action and confers jurisdiction on this court, I am of opinion that this contention should fail.

27. In the decision of 41 Cal W. N. 854, Costello. J., observed that

'there is nothing in the section itself (67A of the Transfer of Property Act) or elsewhere in the Act to indicate what would be the consequences of noncompliance with the provisions of Section 67A. In other words no sanction is attached to the direction contained n the section. There is nothing either in the section itself or in the rest of the Act to indicate that a mortgagee is bound to comply with the provisions of 67A, where the circumstances were such that it was not possible to comply with the provisions of the section, as for example, where the subject matter or series of mortgages consists of properties lying within the territorial limits of a number of different jurisdiction.'

Panckridge, J., in the same decision observed at page 867 as follows:

'It appears to me to be unreasonable to suppose that the suit compels a plaintiff mortgagee to do what the respondent did here, namely, include in his suit mortgage claims over which the court had no jurisdiction. If this is so, the inclusion cannot be pleaded as a compliance with the obligation whatever it may be ......... the words 'all the mortgages in respect of which the mortgage money has become due' must be limited to those mortgages which the Court in which the mortgagee sues has jurisdiction to enforce.'

28. To hold that Section 67A of the Transfer of Property Act is a part of the cause of action and to enable the plaintiff to combine in one suit different mortgages in different territories would be to engraft into the words of Clause 12 of the Letters Patent a new category of jurisdiction in suits for land. In the decision reported in Muttra Electric Supply Co. v. Gopal Saran, 59 Cal W. N. 419 Mukharji, J., has held that under Clause 12 of the Letters Patent there is a broad classification of suits in respect of which the court has jurisdiction.

'The first classification is concerned with suits for land and immoveable property and the second classification is with regard to other suits. Regarding the first class of suits relating to land and immoveable property the limitation of jurisdiction of this court is that such land or immoveable property must be situate within its jurisdiction. Regarding the second class of suits other than those for land and immoveable property the first limitation is that the cause of action must arise wholly within its jurisdiction. Then this clause deals with those cases where part of the land or part of the cause of action is outside the jurisdiction of this Court.'

I have already stated that in a suit for land cause of action is not the determining factor or foundation of jurisdiction of the Court. But situation of the land is. If Section 67A of the Transfer of Property Act be accepted as a part of the plaintiffs cause of action in a mortgage suit which is a suit for land, Clause 12 of the Letters Patent would be robbed of its content and the limitation of jurisdiction of this court in suits for land would be rendered nugatory. If the plaintiff's contention be accepted it would tantamount to hold that the mortgagee can bring a mortgage suit in the Calcutta High Court in respect of Muffasil properties mortgaged under separate mortgage deeds provided that there is just one mortgage in respect of some Calcutta property. Such view would be against the clear limitation of jurisdiction imposed by Clause 12 of the Letters Patent.

29. The other question which was canvassed by counsel for the plaintiff was that by reason of an interlocutory order having been made in this suit end also by reason of the fact that the defendant did not make an application for revocation of leave the defendant should not be allowed to urge the plea of jurisdiction at this stage. Reliance was placed on the decision of Supreme Court in Chittaranjan Mukheriee v. Barhoo Matho, : AIR1953SC472 . That was an action for dissolution of partnership. The suit was filed with leave under Clause 12. An application for revocation was made. The application was refused. An appeal was preferred. The appeal court was pleased to revoke leave. Thereafter an appeal was preferred to the Supreme- Court and the appeal was allowed. It was alleged in the suit that the partnership was entered into orally at Calcutta and there was confirmation of the same by the defendant by a letter dated 14-12-1944 addressed to the plaintiff at Calcutta. That was part of the cause of action upon which leave under Clause 12 was granted. The defendant denied the genuineness of the letter and stated that the partnership was executed in Bihar. On these allegations an application for revocation of leave was made. The plaintiff made an application for the appointment of Receiver, and the application was dismissed. Thereafter the defendant made the application for revocation of leave. The trial court held that the defendant allowed the proceedings to continue involving expenses and it was too late to make an order for revocation. The appeal court took a contrary view. The Supreme Court took into consideration the fact that even when the defendant made the application for revocation he made no attempt to get further proceedings in the suit stayed. On the contrary the defendant himself applied for discovery and inspection of the plaintiffs documents and obtained an order in that behalf. Under those circumstances the Supreme Court came to the conclusion that the defendant made use of the existence of the suit to obtain interlocutory reliefs to his own advantage and therefore the application for revocation of leave was refused. In the instant case the defendant has not made use of the existence of the suit in any manner. It is true that there has been an interlocutory order for appointment of Receiver but that order was at the instance of the plaintiff and the defendant consented to the same. It would be wrong to hold that Court has jurisdiction to try a suit for land out side the jurisdiction just because there has been no application for revocation. I should like in this connection to refer to the decision of Mukharji, J., in Anath Bandhu Dev v. The Dominion of India, : AIR1955Cal626 , for the proposition that where a suit has been filed with leave under Clause 12 of the Letters Patent it is always open to the court to find that the court has no jurisdiction to try the suit and that leave was wrongly given. I respectrully agree with Mukharji, J., that where the suit has been instituted with leave under Clause 12 of the Letters Patent the court can always come to the conclusion that leave was wrongly given and that the court has no jurisdiction.

30. The only other question which remains is what is the maximum sum payable under the respective mortgages. The registered mortgage secures a sura of Rs. 1,80,000/- plus interest and other costs charges and expenses and the equitable mortgage is a security for the amount of Rs. 2,00,000/-. Counsel for the plaintiff did not really argue that the amount secured in the registered mortgage would be higher than what is expressly stated there. He made a faint attempt to say that since there was an overdraft account the registered mortgag'e should be answerable for the entire overdraft accounts. In my view the contention has no substance. The plaintiff is not entitled to any sum higher than what is expressly stated in the registered mortgage.

31. I have already stated that this court has no jurisdiction to grant the plaintiff any relief in respect of the equitable mortgage. The plaintiff calculated the plaintiff's dues on the registered mortgage to be the principal sum of Rs. 1,80,000/- and interest thereon at 4 per cent per annum from 3rd November 1949 to 5th June 1958 at Rs. 61,881/-. The principal and interest thus amount to Rs. 2,41,889/-.

32. In the result there will be a mortgage decree in respect of the Calcutta property for the sum of Rs. 2,41,881/- upto 5th June, 1958 and further interest and the plaintiff will be entitled to add to his claim one-half of the taxed costs of this suit. The mortgage decree will be in Form 5A in respect of premises 11A. Kyd Street as mentioned in the mortgage deed. The suit is dismissed with regard to the plaintiffs claim for equitable mortgage because this court has no jurisdiction in that behalf.


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