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Maharaja Sir Rameswar Singh Bahadur Vs. Chuni Lal Shaha and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in56Ind.Cas.839
AppellantMaharaja Sir Rameswar Singh Bahadur
RespondentChuni Lal Shaha and ors.
Cases ReferredEastern Mortgage and Agency Company v. Fakir
Excerpt:
mortgage, suit on - receiver, appointment and position of-order for appointment of receiver obtained by first mortgagee, effect of, on second mortgagee--second mortgagee purchasing equity of redemption, position of--mortgagee, when can ash for appointment of receiver. - 1. this appeal is directed against an order made on the receiver in a mortgage suit, who was appointed at the instance of the first mortgagee, now appellant before us. it appears that on the 4th may 1915 the first mortgagee, who held a mortgage over the entire property, instituted a suit to enforce his security against the mortgagor and the second mortgagee. seven days liter, he applied for the appointment of a receiver for the preservation of the property, for payment of arrears of rent due to the superior landlord, for the realization of rent and other incomes from the property and for the payment of the income to the plaintiff in reduction of his claim under the mortgage. the subordinate judge made a conditional order for the appointment of a receiver on the same day. the order was.....
Judgment:

1. This appeal is directed against an order made on the Receiver in a mortgage suit, who was appointed at the instance of the first mortgagee, now appellant before us. It appears that on the 4th May 1915 the first mortgagee, who held a mortgage over the entire property, instituted a suit to enforce his security against the mortgagor and the second mortgagee. Seven days liter, he applied for the appointment of a Receiver for the preservation of the property, for payment of arrears of rent due to the superior landlord, for the realization of rent and other incomes from the property and for the payment of the income to the plaintiff in reduction of his claim under the mortgage. The Subordinate Judge made a conditional order for the appointment of a Receiver on the same day. The order was made absolute on the 15th July 1915. Since then, the Receiver has been in possession and the order for payment of the profits in reduction of the dues on the first mortgage has been duly carried out. On the 12th July 1916 the mortgagee obtained a decree for Rs. 1,21,540. Meanwhile the second mortgagee, who held a mortgage on one half only of the property, had instituted a suit to enforce his security, without joining the first mortgagee as a party. He obtained a decree on the 2nd August 1915 for the sum of Rs. 6,177. This decree was put into execution, and, at the sale which followed, the second mortgagee purchased the equity of redemption in relation to his mortgage for a sum of Rs. 425 on the 10th August 1916. It appears that during the pendency of these proceedings, the second mortgagee had managed to obtain an order in his suit, directing the Receiver to pay him a portion of the income in his hands derived from the mortgaged property. What followed is not clear, but we find that on the 23rd August 1918 the second mortgagee made an application to the Court for the purpose of intercepting the whole of the income of the property purchased by him and to receive the amount for the satisfaction of his own dues. This application was opposed by the first mortgagee, but the Subordinate Judge made an order in favour of the second mortgagee on the 25th February 1919. The legality of this order is called in question in the present appeal.

2. On behalf of the first mortgagee, it has been contended that the order for the appointment of a Receiver of the 11th May 1915 is binding upon the mortgagor as also the second mortgagee in whose presence it was made and that the circumstances which had happened did not justify a modification of that order, Our attention has been invited to the case of Penney v. Todd (1878) 26 W.R. (Eng.) 502, where it was ruled that the possession of a Receiver in a mortgage suit was prima facie for the benefit of the party who bad obtained the appointment. On this principle it has been argued that the Receiver,' who was appointed at the instance of the first mortgagee, holds the property for his benefit alone and is bound to make over to him the entire income for the satisfaction of his dues. In our opinion this contention is clearly well founded.

3. The order for the appointment of the Receiver made conditionally on the 11th May 1915, and confirmed on the 15th July 1915, was passed in the presence of the mortgagor as also the second mortgagee. They are equally bound by the order in question. Nothing has happened since then which would entitle either of them to avoid the consequences of that order. The second mortgagee has contended that the fact that he has obtained a decree on his mortgage 'and has purchased the equity of redemption in execution of that decree has altered the position. We are of opinion that there has been no change in his position in relation to the Receiver at the instance of the first mortgagee. If neither the second mortgagee nor the mortgagor is entitled to question the propriety of the order for the appointment of the Receiver, the circumstance that the equity of redemption has been transferred from the mortgagor to the second mortgagee cannot place the latter in a position of advantage. In his character as purchaser in execution of his own decree, he is as much bound by the order for the appointment of the Receiver as the mortgagor. If the mortgagor had made an application to the Court to modify the order for the appointment of the Receiver and bad attempted to intercept the profits, no Court would have listened to him. The second mortgagee does not now stand in a different position. An argument was addressed to us on the assumption that the first mortgagee was a mortgagee by way of conditional sale and that as such he had obtained a decree for foreclosure. On that assumption it was argued, on the authority of the decision in Khubsurat Koer v. Saroda Charan Guha 12 Ind. Cas. 165 : 14 C.L.J. 526 : 16 C.W.N. 126, that a Receiver should not have been appointed at his instance. On an examination of the record, however, it transpires that the decree was for sale of the mortgaged properties, consequently no question can arise as to the propriety of the order for the appointment of a Receiver. It was suggested by the second mortgagee that a Receiver could not be appointed at the instance of a mortgagee who held a simple mortgage. We are unable to accept this contention as well founded on principle; there is indeed authority for the contrary view : Venkata Rajagopala Surya Row Bahadur v. Basavi Reddy 26 Ind. Cas. 986 : (1914) M.W.N. 771 : 1 L.W. 785 : 16 M.L.T. 407 : 29 M.L.J. 457. There is no foundation for the contention that a mortgagee who is not entitled to possession of the mortgaged properties is not entitled to ask for the appointment of a Receiver; whether the mortgagee is or is not entitled to possession he may invite the Court to appoint a Receiver, if the demands of justice require that the mortgagor should be deprived of possession. The principle applicable to oases of this character was lucidly stated in the case of Herbert v. Greene (1854) 3 Ir. Ch. Rep. 270 at p. 274: 'In a foreclosure suit or a suit to raise a charge affecting lands by sale of the lands, an order is not made for the appointment of a Receiver unless under the following circumstances : First, where interest is due on the security, the Court usually requiring an affidavit that interest for one year at least is due; or secondly, where the property is in danger, for example, if the lands are held under a lease and head rent has been permitted' to remain unpaid and in arrears; thirdly, where there is reason to apprehend that the sum for which the lands shall be sold will be insufficient to pay the encumbrances or charges thereon.' [See also Weatherall v. Eastern Mortgage and Agency Company 9 Ind. Cas. 985 : 13 C.L.J. 495, Eastern Mortgage and Agency Company v. Fakir-ud-din 17 Ind. Cas. 849 : 17 C.W.N. 16]. If we examine the case from a somewhat different point of view, the unreasonableness of the argument advanced on behalf of the second mortgagee becomes still more patent. If the property is not of sufficient value to meet the dues of all the encumbrances, it is clear that when the property is sold, the first mortgagee will be paid first and thereafter the remainder, if any, will be applied in discharge of the claims of the second mortgagee. It is inconceivable that if the relation between the first mortgagee and the second mortgagee is of this description, the latter, by purchasing the equity of redemption, should become entitled to intercept the profits of the mortgaged property before the dues of the first mortgagee have been satisfied.

4. The result is that this appeal is allowed, the order of the Court below set aside and the application of the 23rd August 1918 dismissed with costs in both the Courts. We assess the hearing-fee in each Court at five gold mohurs.


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