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Bhupati Banerjee Vs. Bon Behary Roy and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1941Cal436
AppellantBhupati Banerjee
RespondentBon Behary Roy and anr.
Cases ReferredHar Prasad v. Ram Chandar
Excerpt:
- .....may be found due and payable to the plaintiffs in that suit, i. e. defendants 5 and 6 in this suit. defendants 1 and 2, although they have appeared and resisted the application for a receiver, have not filed a written statement. after the minor defendants had been made parties they entered appearance and they filed a written statement. the point which has been taken by them at the hearing is that this case is covered by section 52, t. p. act, which amounts to saying that suit no. 1776, in which they were plaintiffs and which was pending at the time that the deed of mortgage and the instrument of further charge were executed is not collusive, and that a right to the immovable property dealt with by the two deeds i have mentioned was directly and specifically in question in that suit......
Judgment:

Panckridge, J.

1. This suit has raised a number of interesting points which have been argued before me with great clearness by learned Counsel on behalf of their respective clients. The plaintiff on 5th November 1938 advanced a sum of Rs. 8000 to defendants 1 and 2. These defendants are the two out of four brothers, who are jointly entitled to the premises known as 82/1/2, Cornwallis Street, and 4, Nalini Sircar Street. Defendants 5 and 6 are the remaining two brothers who have not yet attained majority and were made additional parties on 11th January 1940, when in the course of an application for a receiver the plaintiff ascertained that defendants 1 and 2 proposed to rely on certain proceedings in a family partition suit between the four brothers. The loan of 5th November 1938 was secured on the undivided half part or share of the two properties I have mentioned belonging to defendants 1 and 2 by a mortgage in the English form. On 6th December 1938 a deed of rectification was executed by the mortgagor and the two mortgagees by substituting interest at the rate of 7 per cent. per annum for the rate of 6 per cent. per annum set out in the deed of mortgage. The position of defendants 3 and 4, to whom I will refer as the Pachasia defendants, is this. They were plaintiffs in suit No. 1779 of 1938 which was instituted against a private company known as the Ben Nevis Co. Ltd., owned by the family of the other defendants in this suit and also against the defendants in this suit nomination. On 15th December 1938 a consent decree was made in accordance with certain terms of settlement. The 12th term is as follows:

The undivided 1/4 share of the defendant, Bon Behary Roy, (i. e., defendant 1 in this suit), in premises No. 82/1/2, Cornwallis Street, is declared charged for payment to the plaintiffs by the defendant Bon Behary Roy of the sum of Rupees 3500 within two years from the date of filing of these terms of settlement with interest at the rate of 6 per cent. per annum with quarterly rests. The defendant Bon Behary Roy states and declares that his said 1/4 undivided share in the said premises is free from all encumbrances whatsoever save and except a mortgage for Rs. 8000 in favour of Bhupati Banerjee, (i. e., the plaintiff in this suit) executed by him jointly with the defendant Mritunjoy Roy (defendant 2 in this suit) whose undivided 1/4 share in the said premises is also included in the said mortgage. The defendant, Bon Behary Roy, will execute in favour of the plaintiffs a deed of mortgage in respect of his said undivided 1/4 share in the said premises No. 82/1/2, Cornwallis Street, Calcutta, for the due repayment of the said sum of Rs. 3500 as aforesaid within 10 days from the filing of these terms of settlement.

2. A certified copy of the decree and terms of settlement was registered on 31st January 1939. On that day the plaintiff advanced a further sum of Rs. 3689 to defendants 1 and 2. This sum was secured by an instrument which is described on its back-sheet as a further charge. At the moment I will not set out its terms, but merely say that it was registered on the day of its execution, i. e., on the same day as the certified copy of the terms of settlement in suit No. 1779 of 1938, although an hour or so later than the certified copy. It is now admitted that the date of the consent decree must be regarded as the date of the charge created thereby, and accordingly that charge is prior in point of time to the encumbrance created by the instrument of 31st January 1939. The position with regard to defendants 5 and 6, the minor brothers of defendants 1 and 2, is that on 14th September 1938 they instituted Suit No. 1776 of 1938 against their two elder brothers and the Ben Nevis Co. Ltd. The plaintiffs asked among other things for a declaration that a certain transfer was void and inoperative, but their suit is in essence a family partition suit for the shares of the parties are set out, and a declaration of those shares is asked for. There is also a prayer for discovery, partition and for necessary accounts and inquiries. This suit terminated in a compromise decree, the Court certifying that the compromise was for the benefit of the minors. The matter was referred to an arbitrator who was given power to take accounts and to effect the partition of the properties and to adjust the rights and liabilities of the parties inter se by allotment of the properties or otherwise.

3. The decree also provides that the major defendants' right, title and interest in and to all their joint family properties shall stand charged for payment of whatever moneys may be found due and payable to the plaintiffs in that suit, i. e. defendants 5 and 6 in this suit. Defendants 1 and 2, although they have appeared and resisted the application for a receiver, have not filed a written statement. After the minor defendants had been made parties they entered appearance and they filed a written statement. The point which has been taken by them at the hearing is that this case is covered by Section 52, T. P. Act, which amounts to saying that Suit No. 1776, in which they were plaintiffs and which was pending at the time that the deed of mortgage and the instrument of further charge were executed is not collusive, and that a right to the immovable property dealt with by the two deeds I have mentioned was directly and specifically in question in that suit. I am of opinion that this argument ought not to prevail, because there was no contest as to the shares of the family members who were parties to the partition suit. Learned Counsel for the minor defendants points out that in a partition suit it is often the case that the Court, when accounts have been taken, to compensate for excess amounts drawn by one of the cosharers makes an adjustment by reducing the share of the immovable property allotted to him and proportionately increasing the shares allotted to other cosharers. That is undoubtedly the case, and it is well recognized that a person who advances money on the security of an undivided share in joint property runs the risk of this happening in partition proceedings instituted by the borrower or his cosharers. It does not follow from this that the ordinary partition suit where there is no contest as to the fractional share of the parties is a suit in which their rights to the immovable property are directly and specifically in question. Learned Counsel has relied on Jogendranath Gossain v. Debendranath Gossain ('99) 26 Cal 127. The passage relied upon is the following:

To obtain the benefits of his purchase and the rights incidental thereto the purchaser must seek the interventions of the Court and he will be hound by all the proceedings in the partition suit in this Court.

4. These observations are clearly obiter, because the question before the Court was whether a judgment-creditor who had obtained a mortgage decree in the Alipore Court should be restrained from proceeding with the sale of the properties because a receiver appointed by this Court in a partition suit was in possession. It was suggested that the judgment-creditor by seeking to bring the properties to sale, had committed contempt of Court. The result of the application was that it was dismissed with costs, the judgment-debtors who were parties in the partition suit being made to pay all costs occasioned by an interim stay of the sale. On the other hand in Shaik Khan Ali v. Pestonji Eduljee Guydar ('97) 1 CWN 62 Petheram C. J. and Rampini J. expressly held that Section 52 does not apply to a case where the shares of the parties and their rights to those shares are not disputed. I have also been referred to Jogendra Chunder Ghose v. Fulkumari Dassi (1900) 27 Cal 77. In that case a partition suit had been instituted by one of six brothers who had a Hindu widowed mother surviving. Pending the suit one of the defendants transferred his share to a purchaser on the basis of its being a one-sixth share. It appears that in the suit there was a question as to the right of the mother, and the Court held that the doctrine of lis pendens applied. The facts of the case seem to me to distinguish it from the decision of Petheram C. J. and Rampini J., to which I have referred and which I consider should govern this case.

5. I therefore hold that the defence of defendants 5 and 6 is without substance. As regards the position of the Pachasia defendants, it was at first suggested that what they had obtained was some exceptional variety of charge which, being created by a decree of the Court, gave them unusual advantages. This contention was however abandoned, and it is now admitted that the interest created by the consent decree in suit No. 1779 is a charge within the meaning of Section 100, T. P. Act. It is however said that the plaintiff's rights under the deed of 31st January do not entitle him to the benefit of part 2 of Section 100, and he is not a person to whom property has been transferred for consideration. Alternatively, it is said that if the property has been transferred for consideration, this has not been without notice of the Pachasias' charge. I will deal with the point as to notice first. The plaintiff, his attorney and a clerk in the attorney's employ have given evidence, and the plaintiff and his attorney both say that they had no actual notice of the charge, and I see no reason to doubt the truth of this statement because there is no evidence that the property has depreciated in value between 31st January 1938 when the advance was made, and 9th December 1939 when the suit was filed. If therefore the plaintiff, knowing of the Pachasia defendants' prior encumbrance, had been willing to make the advance because he was satisfied that the value of the property was sufficient to cover both advances and leave a reasonable margin of safety, it is hard to see why he should now be unwilling for the property to be sold and to satisfy himself in respect of the further charge after the Pachasia defendants have been paid off. As regards the attorney, the suggestions are that he should have called for an abstract of title, and that if he had done so, there is no reason to suppose that the defendants would have run the risk of being prosecuted for cheating by concealing the fact of the Pachasias' charge. He says that it is not the practice to call for an abstract of title in a case of a further charge where all the title deeds are in possession of the mortgagee, and I accept his evidence on that point.

6. Further, it is said that he should have been put on enquiry because in the deed of further charge there is no express covenant that the hypothecated properties are free from encumbrances. The document however is one prepared by the attorney, and it is hard to understand how a man can be put on enquiry by something appearing in or omitted from his own words. It is not suggested that he asked the defendants to agree to such a covenant, and that they refused. A clause in the deed, to which I shall have to refer again, provides that all the powers and provisions and covenants contained or employed in the original deed of mortgage, shall be applicable to the deed of further charge as fully as if the same powers, provisions or covenants had been set out and specifically made applicable thereto. The original mortgage deed contains a covenant of freedom from encumbrances. Mr. Bachawat points out that that covenant can only be construed as at the date when the deed was executed, and that if it is incorporated in the deed of further charge, it does not cover the intervening period between the two deeds. As a matter of construction that may or may not be so, but I have no doubt that the attorney thought that the effect of the provision I have read was to introduce into the deed of farther charge a specific covenant for freedom from encumbrances as on the date of the charge. Finally, my attention has been drawn to a provision that the

right, title and interest of Mritunjoy in the mortgaged property should be primarily liable for the payment of the moneys secured in exoneration of the defendant Bon Behary Roy, but it is also provided that this shall not affect the mortgagee or in any wise preclude him from enforcing or having recourse to all or any remedies or means for re. covering payment of such moneys which may be available for such purpose at such times and in such order and manner as he may think fit.

7. It is said that this ought to have put the attorney on enquiry, and that if he had enquired he would have discovered that the reason for the stipulation was that owing to the Pachasias' charge, Bon Behary's share was at the date of the deed of further charge encumbered to a greater extent than Mritunjoy's. The attorney says that he inserted the provision at the request of the two defendants, who represented to him that their relations were strained, and that Bon Behary was only willing to join in the deed of further charge if this provision was inserted. The attorney says that he did not trouble about the matter as the provision was not one which affected his client's sights. I accept that explanation, and in my opinion, there being no express notice of the charge, it cannot- be said that the plaintiff or his attorney has wilfully abstained from an enquiry or search which he ought to have made or been guilty of gross negligence, but for which he would have known of the Pachasias' charge. I should add that the Explanations introduced by the Amending Act of 1929 into Section 3, T. P. Act, dealing with the effects of registration, have no application to the present case. It is true that when the deed of further charge was registered the certified copy of the consent decree had been already registered on the same day a few hours previously, but it had not been entered in the books kept under Section 51, Registration Act, nor had the requisite particulars of the transaction been entered in the indexes kept under Section 55 of that Act. Accordingly the conditions laid down in Provisos 2 and 3 to Explanation 1 had not been fulfilled.

8. In point of fact, the only entry in the books kept by the Registrar was that of the payment of the registration fee in the fee-book. That book does not record the nature of the document in respect of which a fee is paid, and if the clerk had examined the fee-book it would have told him nothing, because the persons who presented the document for registration and paid the fee were the Pachasias, and their names and not the name of the defendant Bon Behary would be recorded. I now come to the final point which is not a very easy one to decide, namely whether by the so-called further charge, the mortgagor defendants can be said to have transferred property within the meaning of Section 100. It has been rightly pointed out that although in England the Pachasia defendants' rights would be postponed to the plaintiff's 'rights under the deed of charge, the reason for this is that in former times in England the doctrine of tacking prevailed and to some extent still prevails. The position in England was that a first or legal mortgage transferred the whole of the legal estate to the mortgagee, and that any subsequent encumbrances whether by deposit of title deeds or by instruments in the form of a mortgage, created only equitable interest. By reason of this doctrine a person having the legal estate if he made a subsequent advance by way of further charge, was entitled to add his equitable mortgage to his legal mortgage and to squeeze out the intermediate mortgagees and so gain priority for his equitable charge over theirs.

9. It is doubtful if this doctrine or anything like it has ever prevailed in India, because as has been pointed out more than once, and as was recently laid down by the Judicial Committee in Ram Kinkar v. Satya Charan , the Indian law, certainly since the Transfer of Property Act, does not differentiate between legal and equitable interests. However the matter, quite apart from principle, has been entirely concluded since 1882 by Section 93, T. P. Act. The question therefore must depend on the construction of the deed of further charge.

Now the deed proceeds by describing defendants 1 and 2 as 'mortgagors' and the plaintiff as 'mortgagee.' It then recites the original deed of mortgage of 5th November 1938, in extenso. It is followed by the recital that

the mortgagors being in need of money have applied to the mortgagee for a loan of Rs. 3689 which the mortgagee has agreed to advance upon having the repayment thereof with interest thereon secured in the manner thereinafter appearing.

10. Then comes the operative part of the deed. There is first a covenant by the mortgagors to repay the principal and interest due on the mortgage on 31st January 1940. This is followed by a covenant in the following terms:

The mortgagors do and each of them doth hereby covenant and declare that all the hereditaments comprised in the hereinbefore recited indenture of mortgage shall henceforth be a security for and be charged with as well the payment of the said sum of Rs. 8000 now lent with interest thereon from the date thereof at the rate aforesaid as also the payment of the said sum of Rs. 3699 secured by the hereinbefore indenture with all interest to become due.

11. In this passage owing to a slip the figures have been obviously transposed. Up to this point I should be disposed to hold that the document did not more than create a charge, though the description of the properties and the recital in extenso of the original mortgage leave little doubt that the intention of the parties was to create a security in all respects similar to that created by the deed of 5th November. But what I have to decide is not what the parties wanted to do, but whether they have succeeded in carrying out their intention. The passage I have just quoted is followed by a provision that no part of the hereditaments shall be redeemable until both sums with interest thereon respectively shall have been fully paid to the mortgagee. Now, as to this I was referred to Har Prasad v. Ram Chandar ('22) 9 AIR 1922 All 174. I do not think that this case is of much assistance because what had happened there was that a usufructuary mortgagee had subsequently made an additional advance to the mortgagor. When the additional advance was made a document was executed containing the following provisions:

The stipulation is that when I shall redeem the mortgaged land I shall also pay the said amount, with interest thereon at the stipulated rate, and then the mortgaged property shall be redeemed; without payment of the said sum the property shall not be redeemed.

12. Apparently the mortgagor claimed to redeem without paying off the subsequent advance, and it was held that he was not entitled to do so. It appears to me that this is a matter of agreement, and that the case is easy to decide without discussing the exact legal effect of the document executed at the time of the subsequent advance. However Stuart J. in his judgment says:

I had previously some doubts as to whether such a document was a mortgage within the meaning of Section 58 of Act & of 1882, but I have now arrived at the conclusion that it is a mortgage. It is true that there is no explicit transfer of an interest in specific immovable property, but taking the document as a whole, and in particular looking at the clause postponing redemption until the money is paid, it must, I think, be considered that the executant agrees that the mortgaged property shall remain in possession of Har Prasad until the additional amount secured by the deed, with interest, is repaid.

13. I should not on the authority of that case feel justified in holding that the provision in the deed of further charge to which I have just referred brings that deed within the ambit of Section 58. The final clause however is as follows:

All the powers, provisions and covenants contained or implied in the hereinbefore recited indenture in relation to the said sum of rupees eight thousand thereby secured with interest thereon whether in favour of the mortgagee or mortgagor shall be applicable to the said sum of rupees three thousand six hundred and eighty nine hereby secured and the interest thereon and to this security as fully as if the same powers, provisions and covenants had been set out and specifically made applicable thereto.

14. As I observed in the earlier part of my judgment the deed of 5th November is a mortgage in the English form and in the operative part there occurs the following passage:

This indenture also witnesseth that in consideration of the premises the mortgagors do and each of them doth hereby convey transfer and mortgage with the mortgagee. ...

15. Then follows a description of the property ...

To hold the same unto and to the use of the mortgagee his heirs and assigns for ever subject however that if the mortgagors pay to the mortgagee the said sum of rupees eight thousand with interest and costs as hereinbefore provided then the mortgagee will at the costs of the mortgagors re-convey the said hereditaments and premises hereby mortgaged unto the mortgagors, their heirs and assigns free from all encumbrances created by the mortgagee in the meantime.

16. That appears to me to be a 'provision' in the deed of 5th November within the meaning of the deed of 31st January, and the effect of the clause is to incorporate that provision and make it applicable 'to this security' as fully as if the provision had been set out in the deed of 31st January and specifically made applicable thereto. Without this clause I am of opinion that it would not be possible to say that the document was a transfer and therefore a mortgage within the meaning of Section 58. But having regard to that clause it is my opinion that the provision transferring the property to the mortgagee by way of security in the deed of 5th November is effectively incorporated in the deed of 31st January. It follows that the rights of the plaintiff under the deed of 31st January rank in priority to the rights of the Pachasia defendants under the consent decree in suit No. 1179. There will be the ordinary mortgage decree. Costs as provided for in the mortgage. Although counsel for defendants 5 and 6 has not argued that his clients are entitled to priority over the plaintiff or the Pachasia defendants and has confined himself to the question of lis pendens, he does in fact claim priority in his pleading, and so it would be as well to say that I decide that his charge being later in point of time than any of the other charges is postponed to all the charges which are the subject-matter of this suit. Mr. Laha's client will get the costs from the plaintiff in the first instance and the plaintiff will add them to his claim.

17. 19th July 1940. - My order is that the plaintiff may have his costs of the suit as against the first two defendants, with liberty to realise them out of the mortgage security as provided by the mortgage deed. If the mortgage security is not sufficient to satisfy these costs, Mr. Chowdhury is at liberty to apply for an order against the Pachasia defendants in respect of any extra costs which may have been occasioned by their appearance in the suit. I expressly decline to deal in this suit with the question of the Pachasia defendants' own costs. The property covered by the charge in respect of the Pachasia defendants will not be put up to sale in the first instance. The decree will be the usual mortgage decree as claimed in the plaint. Costs of the guardian-ad-litem to be paid by the plaintiff in the first instance and added to his claim.


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