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Abdul Latif Vs. Abdul Gani Serang - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1939Cal730
AppellantAbdul Latif
RespondentAbdul Gani Serang
Excerpt:
- .....which the liability can be enforced. in a mortgage by conditional sale the manner of enforcement is by a suit for foreclosure. but this does not alter the fact that there is a pre-existing liability for the mortgage money. if the framers of the bengal agricultural debtors act intended to exclude from the definition of 'debt' money advanced on a mortgage by conditional sale, as distinguished from other forms of mortgage, they would have said so in unequivocal terms in one of the many exceptions that have been inserted in the definition in question. i therefore agree that the question must be answered in the affirmative, and that the rule must be made absolute.
Judgment:

Nasim Ali, J.

1. This rule is directed against the order of the Munsif at Sandwip, dated 17th March 1939, rejecting the defendant-petitioner's application for vacating his order, dated 5th April 1938, staying the hearing of a certain suit for foreclosure on the basis of a mortgage by conditional sale executed by him in favour of the plaintiff-opposite party. The only point for determination in this rule is whether a suit for foreclosure of a mortgage by conditional sale executed for the purpose of securing the payment of money advanced by way of loan is a suit in respect of a 'debt' within the meaning of Section 34, Bengal Agricultural Debtors Act, 1935. 'A mortgage' as defined in Section 58, T.P. Act,

is the transfer of an interest in specific immovable property, for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

2. A mortgage by conditional sale is a transaction essentially different from a sale with a condition of re-purchase. In a sale with a condition for re-purchase the ownership vests in the transferee from the date of the document and there is no question of any debt being in existence after the transaction. In a case of mortgage by conditional sale, the debt subsists and a right to redeem remains with the debtor. The provisions of Order 34, Rule 2, Civil P.C., support this view. The person entitled to the benefit of an obligatio was in Roman law termed creditor, while he who was bound by it was called debitor. Every obligation, of whatever nature, as vested in or belonging to a creditor, and availing against a debtor is an obligation arising out of a debt. There is of course a narrower sense, in which these terms are applicable only to those obligations which constitute debts; that is to say, obligations to pay a definite or liquidated sum of money: Salmond's Jurisprudence, 4th Edn. p. 423.

3. Section 2, Clause (8), Bengal Agricultural Debtors Act, defines the word 'debt' thus:

'Debt' includes all liabilities of a debtor in cash or in kind, secured or unsecured, whether payable under a decree or order of a civil Court or otherwise, and whether payable presently or in future.

4. The word 'liabilities' in this definition is not confined to' personal liabilities of the debtor' as the word 'personal' is not mentioned in the definition. The definition includes 'secured and unsecured' liabilities. All mortgage debts are secured liabilities, although in a simple mortgage there is a personal liability flowing from the covenant to pay while in a mortgage by conditional sale there is no such covenant and consequently there is no personal liability. There is nothing in this definition to suggest that the words 'liabilities of a debtor' in the definition are to be given a restricted meaning. My conclusion therefore is that a debt secured by mortgage by conditional sale is a debt within the meaning of Section 34, Bengal Agricultural Debtors Act, 1935. The result therefore is that this rule is made absolute. The order complained of is set aside. The hearing of this suit is stayed under Section 34, Bengal Agricultural Debtors Act, 1935. The petitioner will get his costs. Hearing fee is assessed at one gold mohur.

Narsing Rau, J.

5. The main question in this case is whether a loan secured by a mortgage by conditional sale constitutes a debt within the meaning of the Bengal Agricultural Debtors Act, 1935. The term 'debt' as used in the Act is defined in Section 2(8) as including all liabilities of a debtor in cash or in kind, secured or unsecured, whether payable under a decree or order of a Civil Court or otherwise and whether payable presently or in future. There are certain exceptions, of which the only relevant one is that the term does not include any amount the liability for the payment of which is only contingent.

6. The contention on behalf of the creditor is that the words 'of a debtor' in the above definition imply a personal liability of the debtor. In a mortgage by conditional sale, the mortgagor does not bind himself to repay the mortgage money. All that he does is ostensibly to sell the mortgage property on condition that on default of payment of the mortgage money on a certain date the sale shall become absolute or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller. In none of these cases, so the argument proceeds, is there any covenant by the mortgagor to repay the loan to the mortgagee. It is true that in certain contingencies mentioned in Section 68(1), T.P. Act, the mortgagee may have a right to sue for the mortgage money even in the case of a mortgage by conditional sale. But the liability of the mortgagor in these events, it is argued, is only a contingent liability and as such, specifically excluded from the definition of debt in the Bengal Agricultural Debtors Act.

7. I do not think that the term 'debt' can be given this narrow interpretation for the purposes of the aforesaid Act. There is no reason why we should limit the expression liabilities of a debtor' to mean certain liabilities of a debtor and not others. Even in the case of a mortgage by conditional sale it is quite clear that there i3 certain date on which the mortgage money becomes due. Under Section 60, T.P. Act, at any time after the principal money has 'become due,' the mortgagor has a right of redemption. This applied to all mortgages, whether by conditional sale or in any other form. It follows therefore that even in the case of mortgage by conditional sale there is a certain date on which the principal money 'becomes due.' The language of Section 67, T.P. Act, leads to the same conclusion. It seems to mo that when money becomes due, it is a liability of the debtor whatever may be the precise manner in which the liability can be enforced. In a mortgage by conditional sale the manner of enforcement is by a suit for foreclosure. But this does not alter the fact that there is a pre-existing liability for the mortgage money. If the framers of the Bengal Agricultural Debtors Act intended to exclude from the definition of 'debt' money advanced on a mortgage by conditional sale, as distinguished from other forms of mortgage, they would have said so in unequivocal terms in one of the many exceptions that have been inserted in the definition in question. I therefore agree that the question must be answered in the affirmative, and that the Rule must be made absolute.


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