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H.L. Weatherall Vs. the Eastern Mortgage and Agency Co. Ltd. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in9Ind.Cas.985
AppellantH.L. Weatherall
RespondentThe Eastern Mortgage and Agency Co. Ltd.
Cases ReferredHerbert v. Green
Excerpt:
receiver - mortgagor executing trust-deed--possession by trustee--mortgagee suing on mortgage--appointment of receiver by court--discretion of court--circumstances of case. - .....the mortgagee company was a consenting party but did not enter into any covenants. under the trust-deed, in so far as it is necessary to recite its provisions for our present purpose, the mortgaged properties were vested in the trustees but the estate they took was subject to the mortgage of the 19th august 1895 and the further charge of the 11th july 1900. the trustees were to continue in possession and manage the properties with a view to the liquidation of the mortgage-debt by periodical payments from the income and the substantial benefit conferred upon then, was that their possession would continue for five year's after the full payment of the mortgage-debt, and they would also receive remuneration for the management; there can be no doubt that the object of the trust-deed was.....
Judgment:

1. This appeal is directed against an order by which the Court below has appointed a Receiver in respect of properties which form the subject-matter of a mortgage-suit. The circumstances under which the order has been made are reasonably clear from the materials placed before us. On the 19th August 1895, one Aftanunnessa Khatun, on her behalf and on behalf of her infant son, executed a mortgage in favour of the Eastern Mortgage and Agency Company to secure a loan of Rs. 1,85,000. On the same day, she executed a power-of-attorney in favour of Garth and Weather-all by which they were authorised to manage the mortgaged premises entirely without the interference of the mortgagors. Subsequently, legal difficulties arose in the management of the propertied by the Attorneys and, particularly in connection with the institution of suits and the conduct of legal proceedings. The mortgagors also found it necessary to take a further loan of Rs. 60,000. The result was that on the 11th July 1900 two instruments were executed by the mortgagors one in favour of the Company called the deed of further charge, and the other a deed of trust, in favour of Garth and Weatherall. In this latter instrument the mortgagee Company was a consenting party but did not enter into any covenants. Under the trust-deed, in so far as it is necessary to recite its provisions for our present purpose, the mortgaged properties were vested in the trustees but the estate they took was subject to the mortgage of the 19th August 1895 and the further charge of the 11th July 1900. The trustees were to continue in possession and manage the properties with a view to the liquidation of the mortgage-debt by periodical payments from the income and the substantial benefit conferred upon then, was that their possession would continue for five year's after the full payment of the mortgage-debt, and they would also receive remuneration for the management; there can be no doubt that the object of the trust-deed was to vest the properties in the trustees and entrust the management in their hands for the protection of the mortgagors as also the mortgagee. It is alleged by the mortgagee-Company that the trustees, one of whom Garth died in 1904, have not carried out the stipulations of the trust-deed, that no payments have been made on the indenture of mortgage in respect of the instalments due on the 14th March 1899 and succeeding instalments, and that in respect of the deed of further charge, there has been default with regard to all instalments after the 14th September 1900. Under these circumstances, the mortgagee-Company commenced a suit to enforce their security against the mortgagors and the surviving trustee for recovery of Rs. 4,76,571, and immediately after the institution of the suit, they applied to the Court below for the appointment of a Receiver. This application was not opposed by the mortgagors though the mortgagees and the mortgagors were not agreed as to the person to be so appointed. The application was resisted by the surviving trustee Weatherall, who contended in substance that, so long as the trust-deed continued in force and was not set aside by a suit instituted for the purpose, neither the mortgagee nor the mortgagors could practically dispossess him by the appointment of a Receiver. The learned Subordinate Judge has overruled this contention and has appointed a Receiver. The trustee has appealed to this Court and on his behalf it has been contended that so long as the trust-deed is in operation, no Receiver can be appointed. In our opinion, there is no force in this contention.

2. It is worthy of note that under the terms of the mortgage-instrument the mortgagee-Company are entitled to ask for the appointment of a Receiver. But even if there was no such provision therein, in the events which have happened, the mortgagees would, in our opinion, be unquestionably entitled to ask for the appointment of a Receiver. It is beyond dispute that the stipulations in the trust-deed have not been carried out, and the true object for which the trust-deed was executed has completely failed. It is not necessary for our present purpose to discuss whether this result is rightly attributable to the misconduct or negligence of the trustees. It is sufficient to hold that although for a number of years the trustees have managed the estate no payments have been made towards the satisfaction of the mortgage-debt and the debt which, it had been anticipated, would be paid up in full by the 15th March 1902, has not only been not diminished but has considerably increased. It has further been brought to our notice that the surviving trustee Weatherall has been absent from the country for nearly three years. The mortgagee-Company further states that payments have to be made to Government on account of revenue and other demands and also to superior landlords of tenures on account of rent and that, as a matter of fact, various payments have been made by them from time to time to save the properties from sale. Under such circumstances, there can be no room for controversy that the Court ought to appoint a Receiver. The appointment of a Receiver is a matter entirely within the discretion of the Court, in the exercise of which it will be guided by a consideration of the circumstances of the particular case Greville v. Fleming 2 J. and L. 335 at p. 339 : 69 R.R. 303. The appointment of a Receiver will be made almost as a matter of course, in the case of an English mortgage on the application of a mortgagee if the interest payable under the security is in arrears Shakel v. Duke of Marlborough 4 Madd. 463 : 56 Eng. Rep. 770; Free v. Hinde 2 Sim. 7; Hopkins v. Worcester Canal Co. L.R. 6 Eq. 447. Moreover, if, as in the case before us, the property mortgaged would be in danger if left until hearing, in the possession of the mortgagors, a Receiver should clearly be appointed Evans v. Coventry 5 De. G.M. & G. 911 : 3 Eq. R. 545 : 3 W.R. 149; Herbert v. Green 3 Irish Ch. Rep. 270. We have the additional circumstance in this case that the trustee has been absent for a long period from the country and it is not unreasonable to suppose that he has taken no effective interest in the management of the estate. Such an absence would ordinarily render him liable to be removed [In re Bignold's Settlement Trust L.R. 7 Ch. Rep. 223 : 41 L.J. Ch. 235 : 26 R.T. 176 : 20 W.R. 345; In re Harrison's Trusts (1852) 22 L.J. Ch. 69 : 1 W.R. 68. But it is argued that the provisions of the trust-deed render it impossible for the Court to grant any relief and that in view of the provisions of Order XL, Rule 1(2) the trustee cannot be removed from possession even if a Receiver is appointed. It is clear, however, from the trust-deed that, although it was assented to by the mortgagees, it did not in any way abridge their statutory right to ask for the interference of the Court in the contingencies which have happened. In fact, the mortgagees appear to have been made a party to the trust-deed mainly with a view to the revocation of the power-of-attorney and to secure their consent to the satisfaction of the mortgage-debt by periodical payments from the in come of the properties. We are, therefore, clearly of opinion that upon the deed of mortgage, the deed of further charge and the trust-deed taken together there is nothing to prevent the Court from appointing a Receiver if a case is made out for that purpose, and upon the facts already stated we feel no doubt whatever that such case has been amply established. The provisions of Order XL, Rule 1(2) also do not stand in the way of the mortgagees, who are not bound to allow the arrangement to continue when its purpose has wholly failed. We do not decide, however, how the income is to be applied after it has been brought into Court by the Receiver, nor do we decide whether the trustee has any claim under the provisions of the trust-deed against the proceeds.

3. The result, therefore, is that the order of the Court below is affirmed and this appeal dismissed with costs. We assess the hearing fee at five gold mohurs.

4. It is conceded that this judgment will govern the other appeal (M.A. No. 494 of 1910) which will consequently be dismissed with costs. We assess the hearing fee in this case also at five gold mohurs.

5. The mortgagor-srespondents will be entitled to separate costs. We assess the hearing fee at three gold mohurs in each appeal.

6. Let the record be sent down at once.


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