Posted On by &filed under Calcutta High Court, High Court.

Calcutta High Court
Nobin Chandra Bhattacharyya … vs Debendra Sen And Ors. on 7 January, 1927
Equivalent citations: AIR 1927 Cal 522
Author: Mukerji


Mukerji, J.

1. This appeal arises out of an order passed by the District Judge of Mymensingh on the 21st December 1925 reversing an order which had been passed by the Subordinate Judge of that District on the 21st October 1925. The appellant before us held a decree for money, dated the 10th September 1923, against a certain judgment-debtor. That judgment-debtor had prior to the date of the said decree mortgaged certain properties in favour of the decree-holder respondent in this appeal. The mortgagee instituted a suit on his mortgage on the 22nd December 1924 and obtained a decree nisi on the 15th April 1925. A final decree was subsequently passed on the 16th May 1925. Between these dates, that is to say, on the 20th April 1925 the appellant in execution of his own decree for money purchased some of the mortgaged properties, that is to say, lots Nos. 1, 2 and 5 and some dags of lot No. 8. The mortgagee after obtaining the final decree and in execution thereof advertised all the mortgaged properties for sale. An application was thereafter made on behalf of the appellant praying that the mortgaged properties with the exception of those which he had purchased in execution of his money decree should be sold first and if the proceeds of that sale were not sufficient for discharging the decretal debt due to the mortgagee, then the properties which he had purchased might be put up to sale. The learned Subordinate Judge on the 21st October 1925 passed an order to the effect that lots excepting Nos. 1, 2 and 5 should be sold first and if that sale was not sufficient for satisfying the mortgagee’s decree, then lots Nos. 1, 2 and 5 should also be sold. Against this order the mortgagee decree-holder preferred an appeal to the District Judge and the learned District Judge being of opinion that the mortgagee decree-holder bad an absolute right to determine the order in which the properties should be sold and relying upon the authority of the decision of a case, Khirodhar Singh v. Gajadhar Lal Mahto A.I.R. 1925 Pat. 484, to which reference will be made hereafter, allowed the appeal, set aside the order of the Subordinate Judge, dated the 21st October 1925, and directed that the properties would be put up to sale in the order chosen by the mortgagee decree-holder. Against this order the present appeal has been preferred to this Court.

2. Two extreme positions have been taken up by the two parties before us in this appeal. On behalf of the appellant it has been contended that the Court has an absolute discretion in determining the order in which the properties have to be sold, and inasmuch as the learned Subordinate Judge in the exercise of that discretion passed an order to the effect that the properties other than lots Nos. 1, 2 and 5 should be sold first, the learned District Judge ought not to have interfered in appeal with that order. On behalf of the respondents, the mortgagee decree-holders, it has been urged that the mortgagee decree-holder is the person who has got the absolute right to lay down the order in which the properties that are mentioned in his decree should be sold and that the Court has no discretion to interfere with the order in which the mortgagee decree-holder desires the sale to take place. I may say at the very outset that the question as to whether all the properties mentioned in the mortgage decree should be advertised for sale or not does not arise in the present case and in fact the proceedings in the Court below passed that stage at which such a question might arise.

3. Now, on behalf of the appellant, reliance has been placed upon the terms of the mortgage decree which, it may be mentioned, strictly follows the words of Order 34, Rule 4 of the Civil Procedure Code, it being stated therein that the mortgaged property or a sufficient part thereof should be sold in default of the defendant paying the amount under the decree, as suggesting that the Court has a discretion in determining the order in which the properties are to be sold. Reliance has also been placed on behalf of the appellant upon a number of decisions to which I shall now refer. The first case relied upon is that of Syed Mahommad Saddik v. Ram Lal Mandar [1910] 15 C.W.N. 80. In that case two properties had been mortgaged by one deed and subsequent to the said mortgage the mortgagor sold one of the properties to a third person. The mortgagee thereafter brought a suit on the mortgage and got a decree against the mortgagor as well as the transferee, and than applied for execution against both the properties, bat the Court ordered that the execution should proceed against the property which still belonged to the mortgagor. On that order being passed, the mortagages had the petition for execution dismissed and thereafter made a fresh application for execution against the property which the judgment-debtor had transferred in favour of the third party. This Court in dealing with that case made certain observations which are to the effect that the discretion as to the order in which execution should issue is vested in the Court alone and the decree-holder cannot be allowed to fetter the hands of the Court by suggesting a particular order in which the properties should be sold.

4. The next case to which reference has been made is the decision of Raj Keshwar Prosad v. Mahommad Khalil-ul-Rahman A.I.R. 1924 Pat. 459. In that case it was laid down that ordinarily the right of selling property in execution of a mortgage decree in a particular order rests with the decree-holder, but that a subsequent mortgagee who has purchased a property in execution of a decree on his own mortgage is entitled to compel the prior mortgagee to proceed against properties not included in the subsequent mortgage before proceeding against the properties included in his own mortgage, even though at the time of his purchase, although not at the date of his mortgage, he was aware of the existence of the prior mortgage.

5. The next case to which our attention has been drawn is that of Bhagwan Chandra Das v. Dharam Narayan Das A.I.R. 1924 Pat. 802, where it was broadly laid down that the holder of a decree on a mortgage is entitled in execution of the decree to have all the mortgaged properties advertised and put up to sale even though a part of the property had been purchased by a stranger, but that it is entirely in the discretion of the Court to direct in which order the properties should be sold. The learned Judges in their judgment in that case purported to follow the decision of this Court in the case of Syed Mahommad Saddik v. Ram Lal Mandar [1910] 15 C.W.N. 80 to which I have already referred.

6. Nextly, the appellant has relied upon the Fall Bench decision of the Madras High Court in the case of Kommineri Appayya v. Mangola Rangayya [1907] 31 Mad. 419. In this case it was laid down that a bona fide purchaser, who purchases for value a portion of the mortgaged property without notice of such mortgage, has no right, in a suit by the mortgagee to enforce his mortgage, to insist that the portion which had not been sold to him must be proceeded against first and the portion purchased by him must be sold only if there is any balance due, but under Sections 67 and 68 of the Transfer of Property Act, the mortgagee is entitled to an order that the mortgaged property or a sufficient part thereof should be sold on default of payment; but that it is competent to a Court under Section 88 of the Transfer of Property Act to order a sufficient portion of the mortgaged property to be sold, and if the portion not sold by the mortgagor is sufficient, and if the mortgagee will not be prejudiced, the Court may, by its decree, direct such unsold portion to be sold first, and if the decree directs the sale of the whole property, the Court, in execution, may first bring to sale the portion unsold and, if the sale proceeds be sufficient, stop the sale of the portion sold by the mortgagor.

7. On the other hand, the respondents have relied upon a number of decisions, the facts in connexion with some of which no doubt are distinguishable from the facts in the present case but from which, it is said, certain general principles follow which go to support the contention that has been but forward on their behalf. A good deal of reliance has bean placed on behalf of the respondents and naturally so upon the decision, on the authority of which the learned District Judge purports to have arrived at his decision. That is the case of Khirodhar Singh v. Gajadhar Lal Mahto A.I.R. 1925 Pat. 484, where on a consideration of a large number of authorities bearing upon the question the learned Judges held that the executing Court ought not ordinarily to fetter the discretion of the mortgagee decree-holder to put to sale whatever property he wishes to sell first and in a case where the applicant before the Court had purchased subject to the mortgage, there is no equity in his favour and, therefore, the mortgagee should be allowed to sell the properties in any order he pleased. This decision undoubtedly supports the view which the respondents contend for, but in the application of this decision here there is some difficulty as I shall presently point out. But before doing so it would be convenient to refer to the other cases upon which the respondents have relied in the course of their argument.

8. There is a decision of this Court, to which our attention has been drawn, in the case of Kristodas Kundu v. Ram Kant Roy Chaudhuri [1881] 6 Cal. 142. In that case there was a contest between a mortgagee and an attaching creditor who held certain money decrees against the mortgagor and it was observed by this Court that the mortgagee had undoubted rights with which the Court would not interfere at the instance of the attaching creditor: The next case is the decision of this Court in Lala Dilawar Saha v. Dewan Balakiram [1885] 11 Cal. 258, where an owner of a certain property mortgaged it to one person and then a portion of it to another and in a suit that had been instituted for a declaration that the properties in the hands of the latter person were liable to sale in execution of a decree on the mortgage, it was held that it was not incumbent on the mortgagee in suing to enforce his mortgage to proceed first with that portion of his property which had not been sold by the mortgagor. Our attention has also been drawn to the cases of Magniram v. Mehdi Hossain Khan [1903] 31 Cal. 95, Amir Chand v. Bakshi Sheo Prosad Singh [1906] 34 Cal. 13 and Tara Prosonna Bose v. Nilmani Khan [1904] 41 Cal. 418, but they have very little bearing upon the present question. They are cases in which such questions arose as are involved in Sections 56, 81 and 82 of the Transfer of Property Act.

9. It is necessary just to refer to one other case that has been relied upon on behalf of the respondents and that is the case of The Midnapur Zemindary Co. Ltd. v. Abinas Chandra Mitter [1919] 23 C.W.N. 308. There it was held that if three properties are equally liable in the hands of the mortgagor for a mortgage executed by him and during the subsistence of that mortgage they passed into other hands, they remain similarly liable but the owners of those properties who have acquired rights by such transfers are entitled to have their liability apportioned rateably amongst themselves, but that was a right between the holder of the properties inter se and it did not affect the mortgagee’s right to enforce his right against all or any of the properties. In the last place reliance has been placed on behalf of the respondents on a passage in Sir Rash Behari Ghose’s Law of Mortgage, Fifth Edition, Vol. 1, p. 389, where the learned author after citing two decisions, one in the case of Nowa Kowar v. Abdul [1864] W.R. 374 and the other in the case of Ram Dhun v. Mohesh [1882] 9 Cal. 406 proceeded to observe as follows:

These oases can be supported only on the ground that the purchasers bought without notice of the mortgage, and paid not for the equity of redemption but for an absolute interest, in the property; as there can be no question that ordinarily where the purchaser under an execution acquires merely the equity of redemption in a part of the mortgaged property he cannot compel the mortgagee to proceed first against the portion of the property which has not been sold for a purchaser who buys under an execution cannot set up the defence of a bona fide purchase for value without notice of the encumbrance. But a purchaser claiming under a conveyance executed by the mortgagor occupies a very different position, as the vendor prima facie conveys to the purchaser not simply the equity of redemption, but the property itself free from any liability to contribute to the mortgage debt.

10. The contention of the respondents, as based on this passage, is that under no> circumstances can a purchaser at an execution sale force the mortgagee to realise his decretal dues in the first instance from out of the properties which, still belong to the mortgagor, while a. purchaser under a private conveyance from the mortgagor may have such a remedy.

11. The learned author has relied upon a number of decisions which are quoted in support of it and on examining some, though not all, of them, it is clear to my mind that the passage does not bear the interpretation which the learned advocate appearing on behalf of the respondents contends for. It means to lay down that there is a difference between the title acquired by a purchaser under a conveyance and that acquired at a Court sale because in the first place the Court sells only the right, title and interest of the judgment-debtor subject to all existing equities against the properties and the certificate of sale, though it may not disclose the existing incumbrances, cannot enlarge the scope of that sale or pass a higher title than what the judgment-debtor really has and that it is otherwise with a conveyance executed by the judgment-debtor which prima facie conveys what it purports to do, and, nextly, because there is a presumption that the incumbrances were duly disclosed in the sale proclamation. The passage means that ordinarily there is a distinction between the two classes of purchasers; but if the purchaser at an execution sale can establish that as a matter of fact he purchased without notice of the mortgage and paid not for the equity of redemption but for an absolute estate, this distinction vanishes. In such a case the principles laid down in the two decisions which are referred to immediately before this passage may be applicable. In the case of Nowa Kowar v. Abdul [1864] W.R. 374 one of the estates in mortgage having been sold under an execution levied by an unsecured creditor, the purchaser resisted the attempt of the mortgagee to enforce his security against the property purchased by him without in the first instance proceeding against the properties which still belonged to the mortgagor, and this defence was allowed, the Court observing as follows:

The sale does not release that estate from the mortgage but it forces the plaintiff to take measures in the first place to recover the amount due to him from the remaining estates included in his mortgage deed. If any balance remains alter he has realized all he can from these two remaining estates, ha can then return to the third estate to recover the balance. No injustice is done to the plaintiff by requiring him to take satisfaction out of the funds which are within his power for this purpose, while, on the other hand, very great injustice might be done to other parties by allowing the plaintiff to proceed against the estste which has already been sold.

12. A similar principle was adopted in the other case, viz., that of Ram v. Mohesh [1882] 9 Cal. 406.

13. I am of opinion that in a case of this description it is not a question of absolute right but rather a question of justice or injustice to be determined in view of the fact that on the one hand the mortgagee is entitled to have his dues satisfied out of the mortgaged properties and on the other that the purchaser may have bought without notice of the mortgage and paid not merely for the equity of redemption but for an absolute interest in the property. I am of opinion that the view taken by the learned District Judge that the mortgagee is the master of the situation cannot be supported. On the other hand, I do not think that it can be said that the Court has got an absolute discretion in the matter as the Subordinate Judge seems to have thought. What has go to be considered is the question as to the respective equities which arise in favour of the parties. So far as the mortgagee is concerned, his rights extend only to the realisation of his dues, and if he can satisfy the Court that by the sale of the properties in the order which the Court proposes to lay down for the sale he would be prejudiced in the enforcement of his rights, the Court will have to accede to the request which the mortgagee will make. On the other hand, if the Court finds that the purchase by the stranger was made bona fide and although at a Court sale but without notice of the mortgage and on payment not merely of the value of the equity of redemption but the value of the absolute interest in properties, then the Court will have to make such provisions as regards the order of sale as would work no injustice to the purchaser, If the purchase by the stranger was a collusive one or if he paid only for the equity of redemption, no such equity will arise in his favour. In this view or the matter the decision in the case of Khirodhar Singh v. Gajadhar Lal Mahto A.I.R. 1925 Pat. 484, in my opinion, lays down the law correctly. The difficulty, however, in the present case is that neither of the Courts below has arrived at any finding on the questions whether the appellant’s purchase was a bona fide one or not, or whether he paid for the equity of redemption only or for an absolute interest in the property.

14. The order of the learned District Judge, therefore, will have to be set aside and the case will be sent back to his Court so that he may now go into the question aforesaid in the light of the observations made above and then deal with and dispose of the case in accordance with law. If the learned District Judge thinks that it will be necessary for the ends of justice to have further evidence, it will be quite open to him to pursue that course and allow the parties to adduce such evidence.

15. Costs of this appeal which we assess at two gold mohurs will abide the result.

16. The Rule is discharged.

Graham, J.

17. I agree.

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