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H.V. Low and Co. Vs. Hazarimull Babu and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in94Ind.Cas.786
AppellantH.V. Low and Co.
RespondentHazarimull Babu and ors.
Excerpt:
transfer of property act (iv of 1882), sections 56, 81 - mortgage of several properties--mining leases granted by mortgagor in respect of some properties--mortgage decree--order of sale--marshalling. - .....co-sharers of the principal defendants in the other two suits who owned an eight-anna share of the mortgaged property. the appellants before us are messrs. h.v. low &. co., ltd., who were added as defendant no. 3 in the suits from which appeals nos. 3 and 4 arise and who were the defendant no. 8 in the suit which has given rise to appeal no. 19. the suits were decreed by the subordinate judge against all the defendants. the mortgage in appeal no. 3 is dated the 3rd april 1917. in appeal no. 4, the mortgage is dated the 23rd september 1913 and in appeal no. 19, it is dated the 10th of january 1917. the appellants before us are the lessees of two mouzahs called simsa and barkola and they obtained a mining lease from the mortgagors in appeals nos. 3 and 4 on the 10th february 1919 with.....
Judgment:

B.B. Ghose, J.

1. These three appeals arise out of three suits brought on different mortgages by the same plaintiff. In the suits out of which Appeals Nos. 3 and 4 arise, the defendants were the same. In the suit which has given rise to Appeal No. 19, the principal defendants were the co-sharers of the principal defendants in the other two suits who owned an eight-anna share of the mortgaged property. The appellants before us are Messrs. H.V. Low &. Co., Ltd., who were added as defendant No. 3 in the suits from which Appeals Nos. 3 and 4 arise and who were the defendant No. 8 in the suit which has given rise to Appeal No. 19. The suits were decreed by the Subordinate Judge against all the defendants. The mortgage in Appeal No. 3 is dated the 3rd April 1917. In Appeal No. 4, the mortgage is dated the 23rd September 1913 and in Appeal No. 19, it is dated the 10th of January 1917. The appellants before us are the lessees of two mouzahs called Simsa and Barkola and they obtained a mining lease from the mortgagors in Appeals Nos. 3 and 4 on the 10th February 1919 with regard to a moiety share of those two mouzahs. They also obtained a similar lease from the mortgagors in Appeal No. 19 on the 25th August 1919. There is no question that the appellants are bound by the several mortgages and that the property in their hands is liable to be sold in execution of the mortgage-decrees along with the other properties mortgaged at the instance of the mortgagee. These defendants in the Court below made an application in each case praying that the two movzahs of which they had taken leases should be put up to sale last of all. In answer to their petitions, the mortgagors contended that these two mouzahs should be put up to sale first as the whole of the mortgage-debt would then be paid off out of the purchase-money of these two mouzahs; they were the most valuable part of their property and something would remain in excess after satisfy-in? the mortgages. The mortgagors also said that, if these two properties were sold first, it would be unnecessary to proceed with the sale of their other properties. The mortgagee was indifferent as to what direction the Court might make with regard to the order in which' the mortgaged properties were to be put up to sale. In all the cases, the Subordinate Judge made an order to the effect that these two properties Simsa and Barkola should be put up to sale first as he considered that that was the most equitable order having regard to the fact that the defendant Company--the appellants before us--had taken their mining leases with full knowledge of the indebtedness of the mortgagors and on favourable terms and further that the agents of the Company who negotiated the transaction undertook to pay off the several mortgages.

2. In each of these suits there was another set of defendants who were the sons of the mortgagors and they pleaded that they were not bound by the leases granted by their fathers as the leases were not granted for the benefit of the joint Mitakshara family of which they were all members. This question the learned Subordinate Judge has left open, and it seems to me that it was unnecessary to decide that question which was an issue between defendant and defendant wholly unconnected with the main issues which arose in the mortgage suits.

3. The defendant Company have appealed against the decrees passed by the learned Subordinate Judge and they attack the particular portion of the decree in each case in which the order in which the mortgaged properties should be sold is stated, that is to say, they object to the order that Mouzahs Simsa and Barkola should be put up to sale first in satisfaction of the mortgage-decree. Their contention, in the first place, is that the other properties which are not the subject of the lease to them should be sold first and that, if the mortgages are not satisfied out of the sale-proceeds, then the property leased to them should be sold; secondly, they urged that, if that contention of theirs be not accepted, the order with regard to the sale of the two properties Simsa and Barkola first should be expunged and the mortgagee should be allowed to proceed to execute his mortgages against any property he chooses. It is said on behalf of the appellants that the law as enacted in Section 56 of the Transfer of Property Act, namely, where two properties are subject to a common charge and one of the properties is sold the buyer is, as against the seller, in the absence of a contract to the contrary, entitled to have the charge satisfied out of the other property so far as such property will extend, should be applied to the present cases. It is next said that, if that provision is not applicable, then the general principle of marshalling of securities as laid down in Section 81 of the Transfer of Property Act should be applied as a rule of equity.

4. In my judgment, the answer to the contention that the principle of Section 50 should be applied is that here the mortgagors have a valuable interest in the property, that is, the right to receive rent and royalty from the lessees, the dead rent being fixed at Rs. 25,000 per annum in each case, the mortgagors may very well say that, if their interest which is still subsisting and which is superior to that of the lessees is sold, then the rest of their property would be preserved, and, in such a case, it seems to me that it will not be open to the lessees to say that the two properties in question should not be sold, because the sale might in the end affect their interest. When I asked the learned Vakil for the appellants whether this principle has ever been applied in any reported decision in favour, of the lessee of a mortgagor his answer was that he had not been able to find any case. On that ground and the lessees having taken with full notice in my judgment, the principle of marshalling of securities is not applicable to the present cases. The contention, therefore, of the learned Vakil for the appellants that properties other than those leased to the defendant Company should be sold first cannot be upheld.

5. It is next contended on behalf of the appellants that the learned Subordinate Judge is wrong in finding on the evidence that the persons who conducted the negotiations for the leases with the mortgagors agreed to pay off the mortgage-debts. It is urged that in the various petitions filed by the mortgagors before the learned Subordinate Judge they did not allege this as aground for having the two Mouzahs Simsa and Barkola sold first and that the story of the agreement is absolutely an afterthought. In Appeal No. 19, it is said that there is absolutely no evidence of the alleged agreement. It seems to me, however, that the appellants when they invoked equity in their favour signally failed in their case; they have not, it appears, paid any rent or royalty to the mortgagors since the date of the lease and this sum would, it is said, amount to over Rs. 12,000 with interest. The mortgage debt in this case would amount to about that sum and it can hardly be said to be equity that the other properties belonging to the mortgagors should be sold in order to pay off the mortgage debt while the appellant Company have in their hands money due to the mortgagors to the same extent. In my opinion, therefore, on that ground alone the order made by the learned Subordinate Judge should be held to be quite equitable and should stand.

6. With regard to the other two appeals, the Subordinate Judge has accepted the evidence given by the mortgagors that there was such an agreement by Mr. Samson who' is now the general manager of the defendant Company. There was mention of one Jyotish Chandra Mukerjee in the evidence. Jyotish comes forward and denies the whole story in his evidence. But he goes too far because he says that he had no knowledge whatsoever of the indebtedness of the mortgagors. It is hardly necessary to point out that with regard to one branch of the mortgagers it was necessary to have the sanction of the Court for the lease and it was recited in the order that the estate of the mortgagors was heavily encumbered and it was, therefore, necessary to grant a mining lease, and, on the basis of that order, the lease was granted. Mr. Samson does not give his evidence. I am unable to hold that the Subordinate Judge was wrong in accepting the evidence given by the mortgagors in these two cases. But apart from that, having regard to the circumstances that the mortgagors are entitled to a large sum of money as royalty out of these properties and that the lease was taken subject to the encumbrance with full knowledge of the indebtedness of the lessors, I think we should not interfere with the order of the lower Court.

7. The result, therefore, is that all the three appeals are dismissed with costs. We allow only one set of hearing-fee in each appeal to be divided between the different sets of respondents who have appeared.

Walmsley, J.

8. I agree.


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