Shib Lal vs Azmat-Ullah And Ors. on 25 February, 1896

Allahabad High Court
Shib Lal vs Azmat-Ullah And Ors. on 25 February, 1896
Equivalent citations: (1896) ILR 18 All 265
Author: K John Edge
Bench: J Edge, Kt., Knox, Blair, Banerji, Burkitt, Aikman


John Edge, Kt., C.J.

1. The suit in which this reference to the Full Bench has arisen was one for sale under Section 88 of the Transfer of Property Act. The plaintiff in the suit was the assignee of an alleged simple mortgage bond upon which the suit was brought. The execution of the bond was denied. The first Court found that the bond had not been made by the alleged mortgagor and dismissed the suit. On appeal to this Court the suit was decreed in the absence of the defendant-respondent; but, on its being proved that it was through misadventure that the defendant was not represented at the hearing in this Court, the ex parte decree of this Court was set aside and the appeal reinstated on the list for hearing. When the appeal came on to be heard the vakil for the respondent claimed that his client was entitled to take advantage of Section 135 of the Transfer of Property Act. Two questions were referred for decision to the Full Bench. The first question was: “Is the assignment for value of a simple mortgage before the due date of the mortgage a sale of an actionable claim within the meaning of Section 135 of Act No. IV of 1882?” The second question was: “If such assignment is the sale of an actionable claim, can the defendants respondents at this stage of the litigation avail themselves of Section 135?” The assignment in question was made before the mortgage money became payable.

2. We have been referred in the course of the arguments to the following cases: Lala Jugdeo Sahai v. Brij Behari Lal I.L.R. 12 Cal. 505, Modun Mohun Dut v. Futtar-un-nissa I.L.R. 13 Cal. 297, Bathnasami v. Subramanya I.L.R. 11 Mad. 56, Singaracharlu v. Sivabai I.L.R. 11 Mad. 498, Ramachandra v. Venkatarama I.L.R. 13 Mad. 516, Hakim-un-nissa v. Deo Narain I.L.R. 13 All. 102, Moti Ram v. Jeth Mal I.L.R.16 All. 313, Rani v. Ajudhia Prasad I.L.R. 6 All. 315, Muchiram Barik v. Ishan Chunder Chuckerbutti I.L.R. 21 Cal. 568, Ramakrishna v. Kurikal I.L.R. 11 Mad. 445, and Jamal-ud-din Khan v. Baij Nath Weekly Notes 1890, p. 24.

3. The answer to the first question must depend in our opinion upon the construction of Section 130 of the Transfer of Property Act. On the one hand it has been contended that that section which is a section of definition applies not only to a claim at present capable of enforcement by suit in the Civil Court but also to a claim in respect of which the cause of action has not at present arisen, but which in the future will mature into a claim which will then be enforceable in a Civil Court. The wording of Section 130 is not absolutely free-from doubt, but it is impossible for us to hold that a claim is actionable unless it is a claim in respect of a cause of action which has already matured and which, subject to procedure, may be enforced by suit. If it was the intention of the Legislature that Chapter VIII of the Transfer of Property Act should apply not only to claims in respect of which at the time of the transfer a cause of action was complete and ripe, but also to claims in respect of which a cause of action had not already arisen, it would have been easy for the Legislature-to have used appropriate language to convey its meaning. We cannot construe the “actionable claim” of Section 130 as co-extensive with the English legal term “chose in action.” Chapter VIII of the Transfer of Property Act was presumably passed, so far as its principal provisions are concerned, in order to discourage traffic in litigation. No doubt traffickers in litigation may purchase an unripe claim, or may wait and purchase a ripe claim, but the Legislature may have thought that there was good reason for limiting the application of Section 135 to cases in respect of which at or before the time of sale a suit could have been brought in a Civil Court, and may have thought it unadvisable that Section 135 should be applicable to the transfer of claims which had not matured into claims which were actionable. If a man had a cause of auction, or a supposed cause of action, good, if the facts relied on were true, he probably would seek to enforce his cause of action and to derive the utmost benefit from it by bringing his suit on his own behalf in respect of it. Where, however, a man transfers such right as he has to maintain a suit to a third person after his alleged cause of action has arisen (and by cause of action we mean everything necessary to the maintenance of the suit), a suspicion would arise that the purchaser was speculating in litigation. On the other hand, it might be impolitic to attempt to restrain the free transfer of claims which had not matured into causes of action. For instance, a merchant might sell a consignment of goods on the term of a year’s credit being given for payment. He might immediately afterwards find it necessary to raise money to carry on his business or to meet his liabilities, and consequently might wish to sell the debt, which would not be due and payable until the expiration of the year. The purchaser of that debt, even assuming that the debtor were a man of credit and responsibility, would not give the full value of the debt at the time when the debt would become payable. He would give at the outside the present value of a debt of that amount payable one year hence. It is obvious that in such a transaction the price actually paid would be the then discount value. The interest which a Court might allow might not be an adequate compensation for the loss to the purchaser of the use of the money paid as the actual price. Again, if Section 135 were to apply to the sale of a claim which had not been actionable at the time of the sale, it would apply in the following case. A man insures his life for Rs. 20,000 payable on his death. Owing to the necessity of finding money for his business he is obliged to assign for value the policy which he holds on his own life. At the time of the sale the present value of the policy might be only Rs. 1,000, and yet, if the purchaser paid Rs. 1,000 for it and Section 135 applied, the Insurance Company could avail themselves of Section 135 at the death of the person insured and discharge their liability by payment of Rs. 1,000 and some interest. There is no case, so far as we are aware, in which an actionable claim has been held to be a claim in respect of which at the date of transfer an action could not have been brought. In this case, as the assignment of the simple mortgage took place before the debt for which the mortgage was security became due and payable, and consequently before a suit could have been maintained for the payment of that debt and for the enforcement or discharge of the debt by sale of the mortgaged property, we hold that the defendants-respondents could not avail themselves of Section 135.

4. The Full Bench decision of this Court in the case of Rani v. Ajudhia Prasad I.L.R. 16 All. 315, did not decide this precise point. It was there said by the Court: “Now there cannot be any doubt in this case that on the facts the original mortgagee had, when he sold to the present plaintiff his rights under the mortgage, a claim against the mortgagors which a Civil Court would recognise as affording grounds for granting the relief contemplated by Section 68 of Act No. IV of 1883, plus the right to ask for the sale of the property in satisfaction of the debt as contracted for by the mortgage.” The latter portion of the sentence which we have quoted was probably not sufficiently explicit: It was not intended to suggest that a usufructuary mortgagee as such could obtain a decree for sale on his mortgage of the mortgaged property. What we intended to express in that case was that the usufructuary mortgagee having been kept out of possession might maintain a suit for the mortgage-money and in execution of his money decree in that suit might obtain the sale of the hypothecated property as the whole or part of the property of the judgment-debtor. The Court ordering execution of the decree might order a sale of other property and not of the hypothecated property. We refer to this in order to avoid any mistake as to our meaning.

5. Under these circumstances it is not necessary to answer the second question referred to the Full Bench. With this answer the appeal will go back for disposal to the Bench which made the reference.

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