Skip to content


The Eastern Mortgage and Agency Co., Ld. Vs. FakuruddIn Mahomed Chowdhury and anr. and - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in17Ind.Cas.849
AppellantThe Eastern Mortgage and Agency Co., Ld.
RespondentFakuruddIn Mahomed Chowdhury and anr. and ;golam Sattur Chowdhury and anr.
Cases ReferredMohunt Anand Das v. Ram Perkash Das
Excerpt:
mortgage - mortgage-deed providing for appointment of receiver--inability of receiver to pay any interest--direction by court to receiver to pay money to mortgagor to prefer appeal from mortgage-decree--order of court, whether justifiable--order, whether appealable--appeal--civil procedure code (act v of 1908), order xl, rule 1 clouse (1)(d), order xliii, rule 1 clouse (s). - .....gholam sattur chowdhury and others, defendants in suit no. 359 of 1910, for rs. 1,20,224. from the mortgage-deed, it appears that the money was lent on the mortgage on certain conditions. the first was that messrs. garth and weatherall were to be appointed managers of the properties on behalf of the mortgagors and were to hold charge of the properties for a certain number of years until they had paid off the principal and the interest due to the mortgagees. the deed then provided for the manner in which the management was to be conducted and the collections of the estate were to be applied. the government revenue was first to be paid, then the municipal cesses, then rents for sikmi and patni tenures of superior landlords and all other charges payable in respect of the mortgaged premises.....
Judgment:

1. These two Appeals, Nos. 279 and 280 of 1912, are preferred against orders passed by the Subordinate Judge of Barisal on the 6th May 1912, on applications made to him by the judgment-debtors in two suits, Nos. 358 and 359 of 1910, instituted in his Court and orders passed on the 5th and 6th June 1912, disallowing objections made to those orders by the decree-holders, the present appellants. The appellants, the Eastern Mortgage and Agency Company, Limited, were the plaintiffs in both these suits and, in each suit, they sought to recover money due on mortgage-bonds. In suit No. 358, they sought to recover the principal with interest on a mortgage-bond executed by the defendants, Fakuruddin Mohamed Chowdhuary and others, on the 16th August 1895, for Rs. 1,85,000, and in Suit No. 359, the same Company sought to recover the principal with interest on another charge for Rs. 60,000, created on the same properties as those covered by the mortgage-bond, on the 11th July 1900. The defendants in the Second suit were Gholam Sattur Chowdhury and others. On trial, the plaintiffs obtained preliminary decrees against Fakuruddin Mohamed Chowdhury and others, defendants in suit No. 358 of 1910, for Rs. 3,90,104, and against Gholam Sattur Chowdhury and others, defendants in suit No. 359 of 1910, for Rs. 1,20,224. From the mortgage-deed, it appears that the money was lent on the mortgage on certain conditions. The first was that Messrs. Garth and Weatherall were to be appointed managers of the properties on behalf of the mortgagors and were to hold charge of the properties for a certain number of years until they had paid off the principal and the interest due to the mortgagees. The deed then provided for the manner in which the management was to be conducted and the collections of the estate were to be applied. The Government revenue was first to be paid, then the Municipal cesses, then rents for sikmi and patni tenures of superior landlords and all other charges payable in respect of the mortgaged premises for the defence and preservation thereof, and then the mortgagees were to be paid half-yearly the interest due on the loan. The deed farther provided in paragraph 6 that, if the managers failed to discharge their duties as provided in the deed, the mortgagees might appoint a Receiver of the rents and profits of the mortgaged premises; and it then went on to provide as follows: 'Every Receiver, so appointed, shall be required to give security, etc., and shall be bound to apply and dispose of the rents and profits of the said mortgaged premises as hereinbefore provided in the case of managers by Clause V, Section 3, save that the salary or other remuneration of the Receiver shall be payable instead of the commission of the managers therein referred to.'

2. The managers, owing, it is said, to obstruction offered on behalf of the mortgagors, were unable to obtain possession of the properties or to carry on the management and, in consequence, Messrs. Garth and Weatherall were appointed trustees for the mortgagors and this arrangement was agreed to by the mortgagees. This arrangement 'appears not to have been more satisfactory than that which preceded it, the mortgagees receiving nothing by way of interest from the properties, and, in consequence, on the 26th September 1910, a Receiver was appointed on an application by the mortgagees which was consented to by the mortgagors.

3. The two suits were disposed of in April 1912, and the Receiver, who was in possession from the 26th September 1910 up to that date, appears to have still continued in possession.

4. After the disposal of the two suits by the Subordinate Judge, two applications were made by the two sets of judgment-debtors in the two cases to the successor-in-office of the Subordinate Judge, who decided the suits, praying for orders from him on the Receiver to pay over to them Rs. 6,000 and Rs. 4,000 respectively in the two cases. The judgment-debtors seem to have asked that these sums should be paid over to them in order to enable them to appeal against the judgment and decree passed against them in each of the two suits.

5. We understand that the learned Counsel, who now appears on behalf of the present appellants, took exception at the time to any such order being passed by the Subordinate Judge and he was given to understand that no final order would be passed until the learned Counsel had had an opportunity of applying to the High Court. However, no sooner had the learned Counsel left Barisal than the Subordinate Judge called up the two applications and passed orders granting the prayers in both of them. The learned Counsel, on receipt by telegram of intimation of the orders passed, applied to this Court for a temporary stay of the orders of the Subordinate Judge which was granted, and three days afterwards, put in two formal applications applying for rules on the opposite party to show cause why execution of the orders should not be suspended pending the disposal of the appeals.

6. These two Rules being Nos. 3689 and 3640 of 1912, together with the order directing the stay of delivery of the money by the Receiver to the judgment-debtors which is Rule No. 3608 of 1912, were brought before this Court for hearing on the 17th June last and, at the request of the parties, it was directed that the hearing of the appeals preferred by the present appellants against the orders of the Subordinate Judge, dated the 6th May 1912, directing the delivery of the two sums to the two sets of judgment-debtors should be expedited. The two appeals have, therefore, now come on for hearing before us.

7. A preliminary objection has been taken to the competency of the two appeals by the learned Pleader for the respondents, who has contended that, having regard to the provisions of Order XL, Rule 1, and Order XLIII, Rule 1, Clause (s), Civil Procedure Code, no appeal lies. We hold that this contention is unsound. Clause (d) of Rule 1 of Order XL, distinctly provides that the Court may, by order, confer upon the Receiver powers for the application and disposal of the rents and profits of the estate under his management. The learned Counsel has suggested that this order must be one passed at the time of the appointment of the Receiver so as to give a right to appeal under Order XLIII, Rule 1. This contention is, in our opinion, manifestly unsound; for, no Court could possibly pass orders at the time of the appointment of the Receiver so as to cower the application and disposal of the rents and profits which might be collected subsequently. We think that there can be no doubt that Order XI and III, Rule 1, Clause (s), gives an appeal in the case of an order like the present passed under Clause (d) of Rule 1 of Order XL.

8. In the case of Mohunt Anand Das v. Ram Perkash Das 14 C.W.N. 183 : 5 Ind. Cas. 69 the question was raised whether an appeal lay against certain directions given by the Court under Order XL, Rule 1, Clause (1)(d),and it was held that an appeal would lie by virtue of Order XLIII, Rule 1(s). In our opinion, therefore, the preliminary objection taken fails.

9. In support of the appeals, it has been argued that, under the terms of the mortgage-deed and under the terms of the order appointing the Receiver, the learned Subordinate Judge was not justified in giving directions to the Receiver to pay over to the two sets of judgment-debtors the sums of Rs. 6,000 and Rs. 4,000 respectively for the purpose for which they were applied for. We have already, in this judgment, stated the conditions on which Messrs. Garth and Weatherall were appointed as managers, on behalf of the mortgagors and have referred to the provision in the deed for the appointment of a Receiver with similar powers at the instance of the mortgagees in the event of their failure to carry on the management. Those clauses of the mortgage-deed lay down specifically and distinctly that the duties of the Receiver after collecting the profits are, first, to defray the costs of management which are not to exceed 20 per cent, of the gross collection; secondly, to pay the Government revenue and cesses and rents due to superior landlords and, in the third place, to pay the half-yearly interest due to the mortgagees. The Receiver appears to have been appointed by the Court in these two suits in accordance with the terms of this deed and, in the order appointing him, the Subordinate Judge directs, after providing for the Receiver's remuneration, that he shall meet all collection charges out of his remuneration which is fixed at 12 1/2 per cent, of the actual collection, and he then empowers him to institute and defendant suits regarding these properties whether for collection of rents or for any other purpose, and then goes on to direct him to pay the Government revenue and all rents due to superior proprietors out of the collections, and after doing all this, to deposit the balance in Court. There was a further direction in Case No. 359 of 1910, that the Receiver should pay the mortgagors defendants their maintenance allowance of Rs. 150 per month.

10. The mortgage-bond and the order passed for the appointment of the Receiver certainly do not provide for the payment of the two sums under appeal to the mortgagors for the purpose of instituting appeals in order to set aside decrees obtained against them on the basis of the mortgage.

11. The Subordinate Judge, however, in passing the orders allowing the payments holds that, as the decrees in the two mortgage suits are merely preliminary decrees and as no decrees absolute have been passed, the petitioners, the mortgagees, have no absolute right in the properties of the defendants and so have no right to impose on the defendants any conditions as to the application of the profits of the estate. He has further held that, as under the terms of the deed, it was provided that pecuniary grants might be allowed for law expenses, the payments such as he has directed the Receiver to make in these two instances came within the provisions of the bond.

12. These two reasons which the learned Judge has given for disallowing the objections taken by the present appellants to the payments to the defendants of the sum of Rs. 6,000 and Rs. 4,000 and for directing the Receiver to make the payments do not appear to us to be sound. The fact that the decrees in the mortgage suits were preliminary decrees and not decrees absolute could not, in any way, affect the powers of the Receiver appointed in a suit like the present. The appointment of the Receiver as contemplated by Clause (6) of the mortgage-deed and the order in the two suits was clearly for the benefit of the mortgagees. It is alleged on behalf of the mortgagees--and it has not been disputed by the other side--that, ever since the loan was made, the mortgagees have not received one single pice as interest and, in these circumstances, under the ordinary provisions of the law, the mortgagees would be entitled to apply for the appointment of a Receiver pending the disposal of the suits, and such a Receiver would be appointed as a general rule as a matter of course where the interest payable under the mortgage was in arrear. See Cootes Law of Mortgages, 7th Edition, Volume If, page 946, and the leading cases referred to therein. The appointment of the Receiver having been made in order to protect the interests of the mortgagees, the view taken by the Subordinate Judge that, after such appointment, the mortgagors are entitled to appropriate and dispose of the profits through the Receiver according to their own option is certainly incorrect. Under the ordinary law, it would be the first duty of a Receiver, so appointed for the protection of the interest of the mortgagees, to apply the profits, after defraying all charges and costs necessary for the protection of the properties covered by the mortgage, to the payment of the interest on the mortgage-debt. In the two cases now before us, the Receiver under the provisions of the mortgage-deed and under the order of the Court appointing him was bound, after first applying the profits in the manner directed in the bond and the order, to apply the balance, in the first instance, to the payment of interest on the mortgage-bond. Pending the disposal of the suits and until the decrees should be made absolute, the order of the lower Court was, no doubt, correct that this balance of the profits necessary to pay the interests on the mortgage and any surplus should be paid into Court.

13. We find, however, that no such payments were ever made by the Receiver since he was appointed and the only information which has been given to us as to his appropriation of the profits is that, on the 14th November 1910, he paid Rs. 250 to the defendants in Suit No. 358 of 1910 and Rs. 200 to the defendants in Suit No. 359 of 1910; that, on the 27th April 1911, he paid Rs. 400 to the former and Rs. 300 to the latter; on the 29th September 1911, he paid Rs. 500 to the former and Rs. 500 to the latter and on the 22nd December 1911, he paid similar sums to both. Further, in February 1912, under orders of the District Judge, he paid Rs. 1,800 and on the 22nd March 1912, he paid a further sum of Rs. 6.000. In addition to these, he paid maintenance allowance to the defendants in Suit No. 358 from July 1910 to July 1912 at Rs. 150 a month Amounting to Rs. 3,300. This brings up the total amount to Rs. 14,250.

14. Of the above, payment of the maintenance allowance is covered by the order appointing the Receiver, but so far as the other sums are concerned, there is nothing to indicate what justification there was for those payments or what reasons the learned Judge had in February and March 1912 for directing the payment of sums amounting to Rs. 7,800 to the defendants. Certain it is that, while those sums were being paid by the Receiver to the two sets of defendants in opposition to the terms of the deed and the order of his appointment, no sums whatever were paid into Court or to anybody, in compliance with the terms of the deed and the order of appointment, to cover the interest due to the plaintiffs mortgagees in the two suits on their mortgage-debts.

15. We have not in the present appeals to deal with these previous payments but all we have to decide is whether the orders of the Subordinate Judge directing the further payment of Rs. 6,000 and Rs. 4,000 can be supported. In our opinion, on the materials before us, it is impossible for us to sustain these orders. The learned Counsel, who appears on behalf of the respondents, has not attempted to support the orders of the Subordinate Judge on the grounds that, under the terms of the mortgage deed, the two payments might be made for legal expenses; and we think he is right in not making such an attempt. It seems to us idle even to suggest that, in a mortgage-deed, the mortgagees would have agreed to the insertion of a clause to enable the mortgagors to obtain funds to contest the rights of the mortgagees under the mortgage-deeds. We hold, therefore, that the learned Judge was not justified in finding that the two sums should be paid under the terms of the deed as allowances for legal expenses; and we also hold that the view which he took that the plaintiff's decree-holders had no position until the decrees were made absolute to object to the two payments is equally untenable. The materials, before us, fail to show either that any sum has beau deposited in Court or that the Receiver has, in accordance with his first duty as a Receiver appointed for the protection of the mortgagees' interest, appropriated the profits for the payment of interest on the mortgage-debt; and until such sums had been paid into Court sufficient to cover the interest due on that debt, we hold that the Subordinate Judge was not justified in passing the orders directing the Receiver to pay over the sums of Rs. 6,000 and Rs. 4,000 to the judgment-debtors. The result, therefore, is that we decree both the appeals and set aside the orders of the Subordinate Judge, dated the 6th May 1912, directing the payment of the two sums of Rs. 6,000 and Rs. 4,000 in the two Suits Nos. 358 and 359 of 1910 respectively. The appellants, who were the opposite party in the Court of Subordinate Judge, are entitled to their costs in this Court as well as in the lower Court. We fix the hearing fee in this Court at five gold mohurs in each case.

16. The two appeals having been disposed of, it is unnecessary to take up the Rules which accordingly are discharged but without costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //