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Tara Prasanna Mukherji Vs. Hart - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in(1885)ILR11Cal718
AppellantTara Prasanna Mukherji
RespondentHart
Cases Referred and Wooma Moyee Burmonya v. Ram Buksh Chetlangee
Excerpt:
civil procedure code (act xiv of 1882) section 295 - rateable distribution of sale proceeds--money decree--cause of action--mortgage decree--mortgagee purchasing under his own decree, execution of decree by. - .....next place, it was by the plaintiff's own act that the defendant was prevented from drawing the money in suit out of court. the words-of the section are clear, and we are bound to give them their ordinary meaning. the section says that a person entitled to assets paid to another not entitled to receive them may sue such person to compel him to refund. the cause of action does not, therefore, arise until the money is paid, and we think that this suit is premature and must be dismissed for that reason.3. the next ground of appeal is based on the first paragraph of section 295 which provides that, 'whenever assets are realised by sale or otherwise in execution of a decree, and more persons than one have prior to the realization applied to the court by which such assets are held for.....
Judgment:

Agnew, J.

1. Who, after stating the facts, proceeded.--The first ground of appeal taken before us was, that the suit is premature. The suit is based on the provisions contained in the last paragraph but one of Section 295 of the Civil Procedure Code.

2. That section provides for the rateable distribution of assets among holders of decrees for money, and the paragraph in question provides that, 'if all or any of such assets be paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.' It is contended for the defendant, that as the amount sued for has admittedly not come to his hands, the suit cannot lie, as he cannot be called upon to 'refund' what he has never received; that the cause of action arises upon the receipt of assets by the person alleged not to be so entitled to receive them; and that when assets have not been received there can be no refund. 'For the plaintiff it was argued, on the authority of Goqaram v. Kartick Chunder Singh B.L.R. Sup. Vol. 1022 : 9 W.R. 514 and Wooma Moyee Burmonya v. Ram Buksh Chetlangee 16 W.R. 11 that it is necessary in such a suit as this to set aside the order of the Court directing the payment of the money; that unless the suit is brought within one year from the date of such order it will be barred under Article 13, Schedule II of the Limitation Act, which provides a period of one year for a suit to alter or set aside a decision or order of a Civil Court in any proceeding other than a suit, such period to be calculated from the date of the decision or order sought to be set aside; and that, if the defendant's contention is correct, it would be in the power of any person to whom assets have been wrongfully ordered to be paid, by refraining from drawing the money out of Court, to debar the person entitled to the assets from his remedy. In the first place no person would be allowed to avail himself of the plea of limitation under such circumstances, for that would be to allow him to benefit himself by his own wrong; in the next place, it was by the plaintiff's own act that the defendant was prevented from drawing the money in suit out of Court. The words-of the section are clear, and we are bound to give them their ordinary meaning. The section says that a person entitled to assets paid to another not entitled to receive them may sue such person to compel him to refund. The cause of action does not, therefore, arise until the money is paid, and we think that this suit is premature and must be dismissed for that reason.

3. The next ground of appeal is based on the first paragraph of Section 295 which provides that, 'whenever assets are realised by sale or otherwise in execution of a decree, and more persons than one have prior to the realization applied to the Court by which such assets are held for execution of decrees for money against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of the realization, shall be divided rateably-among all such persons.'

4. The decree in the plaintiff's suit on his mortgage was against Harish Chunder Ghose and Brajendrabala Dasi 'personally,' and the decree in the defendant's suit directed Harish Chunder Ghose personally and Brajendrabala Dasi out of the estate of Panchanun Ghose to pay the amount decreed, and it is argued that decrees against a defendant personally and against the same defendant in a representative capacity, are not decrees against the same judgment-debtor,' and that therefore the plaintiff is not entitled to ask for a rateable distribution of assets between himself and the defendant. As we are of opinion that the suit must be dismissed as premature, it is not necessary to decide this point, but, if it was necessary, we should decide it in favour of the plaintiff.

5. The last ground of appeal which was relied upon was as to the meaning of the words 'decrees for money' in Section 295. It was argued for the defendant that a mortgage decree is not a 'decree for money ' within the meaning of the section, but that the only decrees included in those words are decrees for money simpliciter; and that, although a mortgage decree sounds in money, it is not a 'decree for money' unless the mortgagee abandons his lien upon the mortgaged property. It is further argued that, if he does not abandon his lien, he is bound in equity to proceed against the mortgaged property in the first instance, and exhaust that before proceeding against the mortgagor's other property; and that the English rule that a mortgagee may proceed on all his remedies at once does not apply in this country.

6. Now, under an ordinary mortgage decree, the mortgagee is entitled, if he cannot obtain satisfaction from the mortgaged property, to take out execution in the same suit against other property of the mortgagor. It is not necessary that he should bring a fresh suit for the balance. Then, is there anything in the section to take away this right of the mortgagee to obtain satisfaction against other property of the mortgagor when there are other creditors? The section provides that, 'whenever assets are realized by sale or otherwise in execution of a decree, and more persons than one have, prior to the realization, applied to the Court by which such assets are held, for execution of decrees for money against the same judgment-debtor, and have not obtained satisfaction thereof, the assets, after deducting the costs of the realization, shall be divided rateably among all such persons.' Formerly the first attaching creditor was allowed to pay himself out of the proceeds of sale of property which he had attached to the exclusion of other attaching creditors. That has been done away with, and the rule now is, that all attaching creditors shall share rateably. Then the section provides that, when property is sold subject to a mortgage, the mortgagee as such shall not be entitled to share in any surplus. The reason for this is, that in such a case the mortgagee is secured, and he cannot be entitled to more than his principal, interest and costs. Then the section provides for the sale of mortgaged property free from the mortgage, and for the distribution of the proceeds of sale when the mortgaged property is sold in execution for the discharge of the mortgage.

7. The object of the section appears to us to be to provide for the rateable distribution of the assets of a judgment-debtor among all persons who have obtained decrees ordering the payment of money to them from the judgment-debtor; and the fact that a person, who has obtained such a decree, also holds security, or is entitled to any other relief under the decree is immaterial. There is, therefore, we think nothing in the section which takes away the right of a mortgagee, who has obtained a decree upon his mortgage, to proceed in the same suit against property of the mortgagor not subject to the mortgage when there are other creditors--nothing which shows that the only persons entitled to share rateably in the proceeds of sale of property sold in execution of a decree are those who have obtained decrees for money only. We think, therefore, that every decree, by virtue of which money is payable, is to that extent a 'decree for money,' within the meaning of the section, even though other relief may be granted by the decree; and that the holder of such a decree is entitled to claim rateable distribution with holders of decrees for money only. If it were not so, and if the holder of a mortgage decree, or of any decree under which money was payable and other relief granted, was held not to be the holder of a decree for money, this result would apparently follow, that before he could claim rateable distribution he would be obliged to sue again for his money only. This could hardly have been the intention of the Legislature.

8. The next question is, whether a mortgagee is bound in equity to proceed in the first instance against the mortgaged property, and to exhaust that, before he can claim to come in and share rateably with other creditors. We have not been referred to any authority for this proposition, and we do not know of any reason why the English rule that a mortgagee may proceed on all his remedies at once should not be applied in this country. But it is clear that when a mortgagee has sold any portion of the mortgaged property under his decree, and has purchased it himself, he is bound, before he can proceed further against the mortgagor, to prove that there is still a balance due to him, and that the property sold realized a fair amount, and this ought to be enquired into most carefully by the Court to which the application to share rateably is made. The mere fact that the property was purchased at auction is not alone sufficient to prove its value, where the mortgagee himself is the purchaser. It would manifestly be inequitable to allow a mortgagee to buy in the mortgaged property at auction for a sum far below its real value, and then to go on against other property of the mortgagor to the injury of other creditors. In this case no inquiry seems to have been made as to the value of the mortgaged property. The Munsif merely says: 'There is nothing in the record or in the conduct of the parties which goes to prove that the properties fetched inadequate and unfair prices, or that the sale benefited the debtors.' And the District Judge does not refer to the point at all. The defendant, in his written statement, alleged that the property No. 1 was worth Rs. 40,000 at least, and the lower Courts should have raised an issue upon this and have enquired into the value. We think, apart from this, that there is matter upon the record, and upon the plaintiff's own case, which shows that this property was sold for far less than its real value. The amount of patni jama payable to the zamindar in respect of the property is stated in the Schedule to be Rs. 2,000. Taking the property at ten years purchase, a very low valuation, it appears to be worth at least Rs. 20,000; that is to say, more than sufficient to cover the whole of the plaintiff's claim for principal, interest, and costs. Moreover, the mortgage was for Rs. 15,000 at compound interest. Rs. 12,000 was only actually advanced, but it is not likely that the plaintiff agreed to advance Rs. 15,000 at compound interest upon property which, according to his case now', was worth only between Rs. 16,000 and Rs. 17,000. If we had not been of opinion that the suit must be dismissed upon the grounds already stated, we should have sent it back to the Munsif for enquiry as to the value of the property. The appeal is allowed with costs and the suit is dismissed.


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