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Jagannath Marwari and anr. Vs. Kalachand Banerjee - Court Judgment

LegalCrystal Citation
Subject Property; Civil
CourtKolkata
Decided On
Reported inAIR1925Cal785
AppellantJagannath Marwari and anr.
RespondentKalachand Banerjee
Excerpt:
- .....they have been made liable to render accounts as mortgagees in possession since that date by the decree appealed against. the receiver brought this suit for redemption of the mortgage on the 10th march, 1919. no appeal was taken against the final decree for foreclosure by the receiver which was the proper method of challenging it. it was argued by the respondents that the receiver not having been made a party it was incompetent for him to lodge an appeal. i am unable to appreciate this argument. the receiver derived his interest, if any, during the pendency of the suit and he would surely have been allowed to maintain an appeal on proper application to the appellate court. as a matter of fact, the receiver did appeal to the high court but upon a matter which was not before the court.....
Judgment:

Walmsley, J.

1. This appeal is preferred by the defendants. The material facts of the ease are these: In February 1913, one Tara Prasanna Bose and his wife executed a mortgage for the sum of Rs. 40,000 in favour of the first defendant Jagannath Marwari. The mortgage was by way of a Kat-kobala and the mortgagee Jagannath Marwari was acting for himself and for one Bepin Behari Banerji the second defendant. The mortgage related to three pieces of property. Two years later, these mortgagees instituted a suit on the document adding one Kedar Nath Marwari as a defendant because he had some interest in one of the properties. It is unnecessary, however, to refer again to Kedar Nath's interest. Tara Prasanna Bose and his wife, after making two applications for time, put in, on the 6th of March 1915, a petition of compromise with the mortgagees undertaking to pay the interest that might accrue due on the principal amount within the month of Chaitra every year and securing in return the advantage that time should be extended up to the end of 1326 B.S. for payment of the whole debt in the event of their fulfilling this promise to pay the interest regularly. They agreed also that, if they failed to pay such interest within the time stipulated, the mortgagees would be entitled to foreclose the mortgage. This petition was filed in March 1915. The suit, however, was not disposed of because of the contest with Kedar Nath Marwari. On the 7th September 1915, Tara Prasanna Bose died and he was succeeded by his only son Amulya Krishna Bose. This Amulya Krishna Bose had previously before the institution of the suit even, been adjudicated an insolvent in another Court at Bankura and a receiver had been appointed with regard to his property. This Amulya ratified the deed of compromise executed by his parents and a decree was passed thereon on the 15th March, 1916. In the proceedings subsequent to the death of Tara Prasanna, the receiver appointed in Amulya's insolvency case was not made a party. Shortly after the passing of the decree, the receiver entered appearance before the Judge and put in two applications asking that he should be made a party to the suit, that the suit should be tried in his presence and so forth. Meanwhile, Amulya and his mother failed to pay the interest as stipulated and the Court was then asked to make a decree for foreclosure). The petitions filed by the receiver were dealt with by the learned Judge in his judgment dated the 31st August 1916 and were rejected and a decree for foreclosure was made. In accordance with that decree, the mortgagees obtained delivery of possession. There were certain other proceedings-one of them being that there was an appeal by the receiver to this Court. Finally, the present suit was instituted on the 10th March 1919. The learned Subordinate Judge has decreed the suit. He has held that the decision of his predecessor dated the 31st August 1916, granting a foreclosure decree to the mortgagees is bad and, in accordance with that view, he has given the receiver an opportunity of redeeming the mortgage.

2. On behalf of the mortgagees who are the appellants before us numerous points have been taken. Two of them appear to me to stand out very prominently, and, with regard to these two, we asked the learned pleader for the respondent whether he could support the learned Judge's judgment. The two points are these: First, that the appellants being secured creditors are in a privileged position under the provisions of Section 16, Clause (5) of the Provincial Insolvency Act, and, secondly, that the circumstances do not disclose any ground for a Judge of concurrent jurisdiction to reverse the decision of his predecessor.

3. I do not propose, however, to deal with the second ground, because, to my mind, the appellants are entitled to succeed on the first ground.

4. Now, the wording of Section 16, Clause (5) of the Provincial Insolvency Act is very clear. It runs as follows: ' Nothing in this section shall affect the power of any secured creditor to realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.' Now there is no doubt that the appellants are secured creditors. It follows, therefore, that they are entitled to deal with their security in the same manner as they would have been entitled to deal with it, if the section referred to had not been passed. Then, in the earlier part of the section, provision is made for the vesting of the property in the Court or in a receiver. To me, it seems clear, therefore, that a secured creditor is entitled to deal with his security as though there has been no vesting in the Court or in the receiver. If that is so I fail to see how the fact that Amulya has been declared an insolvent and a receiver of his property has been appointed can affect the present ease. Amulya was the only son of his father Tara Prasanna and the substitution of Amulya for Tara Prasanna was all that was necessary when Tara Prasanna died.

5. Reference has been made in this connection to certain English cases; but I am not satisfied that they are based upon the same simple provisions of the law. In my opinion, the wording of Clause (5) of Section 16 of the Provincial Insolvency Act admits of no obscurity and, so far as this question is concerned, I feel satisfied that it was not necessary for the Court to add the receiver as a patty to the mortgage suit. On that ground alone, I think that this appeal ought to be allowed.

6. The result, therefore, is that the decision of the lower Court is set aside and the plaintiff's suit dismissed with costs.

B.B. Ghose, J.

7. I am of the same opinion. I agree entirely with the reasons given by my learned brother for holding that a secured creditor may enforce his security in the game manner as if Section 16 of the Provincial Insolvency Act had not at all been enacted and this is so even with regard to the question of parties to the suit. It is contended on behalf of the respondent that, in a mortgage suit, all persons having an interest in the equity of redemption must be made parties and, as the right of the insolvent vested in the receiver under Section 16, he was a necessary party. I consider the contention to be unsound. Under one of the provisions of Section 16, the interest of the insolvent vests in the Court where no receiver is appointed. Can it be said that the mortgagee was bound to sue the Court in order to enforce his mortgage? That would be clearly absurd. The reasonable construction of Section 16, Sub-section (5) must, therefore, be that a secured creditor is not in any way affected by the other provisions of that section, and for the purpose of enforcing the mortgage, it should be held that the title to the property remained with the mortgagor.

8. With regard to the second ground urged on behalf of the appellants with which we were pressed, namely, that the Subordinate Judge exercised his jurisdiction properly in deciding the former suit on the questions raised before him and his decision cannot be reversed by a fresh suit, it is necessary to state the facts in some detail. The preliminary decree for foreclosure was passed on the 15th March, 1916, after Amulya had bean substituted in the place of his deceased father. Apparently, on the application of Amulya, an order was passed in the insolvency proceedings by the District Judge of Bankura on the 25th March, 1916, directing the receiver to pay the interest accrued due to the appellants on the mortgage. The receiver, however, did not act according to the directions of the District Judge. On the other hand, in his application of the 11th April 1916, to the Subordinate Judge before whom the mortgage suit was pending, he prayed that the preliminary decree which had been passed might be set aside and that he might be made a party in the said suit as receiver and the suit tried in his presence; and he also prayed, in the alternative, that the decree passed by the Court on the 15th March 1916, might not be enforced against the property mortgaged. A prayer to the same effect was also made in a petition on the 28th April, 1916. The Subordinate Judge decided the question against the receiver and held that, so far as the mortgagees were concerned, the properties did not vest in the receiver under Section 16 of the Act and overruling his objections, made the final decree for foreclosure on the 31st August, 1916. The receiver preferred an appeal to this Court against that judgment. But he seems to have urged his appeal only as if it was from an order of the lower Court refusing his prayer for extension of time to pay in the mortgage money under Order 34, Rule (3), Sub-rule (2) of the Code of Civil Procedure. The learned Judges of the High Court dismissed the appeal on the ground that no prayer for extension of time under the rule referred to had been made to the Court below. The appellants entered into possession on the 19th September, 1916, and have been in possession since then and they make this also a grievance, that they have been made liable to render accounts as mortgagees in possession since that date by the decree appealed against. The receiver brought this suit for redemption of the mortgage on the 10th March, 1919. No appeal was taken against the final decree for foreclosure by the receiver which was the proper method of challenging it. It was argued by the respondents that the receiver not having been made a party it was incompetent for him to lodge an appeal. I am unable to appreciate this argument. The receiver derived his interest, if any, during the pendency of the suit and he would surely have been allowed to maintain an appeal on proper application to the appellate Court. As a matter of fact, the receiver did appeal to the High Court but upon a matter which was not before the Court below. His right to prefer the appeal was never questioned. The decree of the Subordinate Judge of the 31st August, 1916, stands unreversed and is final. The Subordinate Judge held that the mortgagee was not bound to make the receiver a party to the mortgage suit and the mortgagee was entitled to a decree for fore-closure. In the present case, the Court below is in error in holding that it can set aside the former decree on the ground that it was erroneous. It is now well-settled that a decree cannot be challenged on the ground of its being erroneous by a fresh suit. In my opinion, the receiver is bound by the judgment and decree of the Subordinate Judge of the 31st August, 1916, and cannot maintain a fresh suit to redeem mortgage, and the contention that be is not bound by the former decree, as he was not a party to it, although he was a necessary party, cannot now be entertained. The appeal must, therefore, be allowed, the judgment and decree of the Court below set aside and the suit dismissed with costs.


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