The Bengal Banking Corporation vs S.A. Mackertich on 4 January, 1884

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Calcutta High Court
The Bengal Banking Corporation vs S.A. Mackertich on 4 January, 1884
Equivalent citations: (1884) ILR 10 Cal 315
Author: R Garth
Bench: R Garth, Cunningham


Richard Garth, C.J.

1. This is an appeal by the plaintiffs against the judgment of the Court below, so far only as it concerns the defendant, Sarah Amelia Mackertich. Against the other two defendants the learned Judge made a decree, but refused to make one as against Mrs. Mackertich.

2. The claim against her was of this nature.

3. By a deed, dated the 1st of February 1880, Mrs. Mackertich gave to her husband, M.J.N. Mackertich (since deceased) a power-of-attorney to sell or mortgage a one-fifth share of a house in Elysium Bow, to which she, was entitled in her own right.

3. Being so empowered, Mr. Mackertich in the month of September in the same year, arranged to borrow from the plaintiffs’ Bank a sum of Rs. 8,000, and on the 1st of October they lent him that money upon the security of a promissory note of that date signed by himself, and Hem Chandra Bannerjee (the other defendant in this suit) and also signed by himself as attorney for his wife, Mrs. Mackertich. The note was in this form. (See ante, p. 316),

4. Having obtained the Rs. 8,000 upon this security, Mr. Mackertich (apparently with the plaintiffs’ knowledge), sold his wife’s one-fifth share of the house to some third person on the 28th of January 1881 for a sum of Rs. 13,000, and having received the purchase-money, he died on the following day, the 29th of January.

5. His estate then came into the hands of the Administrator-General to be administered in due course of law, and with it the Rs. 13,000, and this suit was afterwards brought by the plaintiffs to recover the sum due for principal and interest upon the promissory note against the Administrator-General (as representing Mr. Mackertich’s estate and Hem Chandra Bannerjee upon their personal liability, and as against Mrs. Mackertich), praying that the Rs. 8,000 and interest might be paid out of the Rs. 13,000 in the hands of the Administrator-General.

6. It seems clear that the power-of-attorney gave Mr. Mackertich no right to pledge his wife’s personal credit by the promissory note, so that the only way in which she could be affected would be by charging her Rs. 13,000 in the hands of the Administrator-General with the amount due upon the note, as representing the one-fifth share of the property which her husband had agreed to mortgage.

7. Mr. Kennedy has contended here for the appellants (as he did in the Court below), that the one-fifth share having been sold after the note was given, the proceeds of the sale became subject to the charge in favour of the plaintiffs’ Bank in the same way as the property itself was so subject’ before the sale.

8. To this Mrs. Mackertich’s first answer was, that the note was not registered, and although it might be admissible in evidence as a promissory note, or even as an agreement to execute a mortgage, it was not available in any way to the plaintiffs, as a mortgage, or as creating any interest in the mortgaged property, without registration.

9. It is upon this point, and this point only, as we understand, that the judgment of Mr. Justice Pigot proceeds. He held that this document could not be put in evidence, or be treated as creating an interest in land, or in the Rs. 13,000, the produce of the land, inasmuch as it had not been registered.

10. But he considered that the document was receivable in evidence and available for another purpose, namely, that of charging the other defendants personally with the amount of the debt, and he accordingly gave the plaintiff a decree against those defendants personally.

11. In arriving at this conclusion the learned Judge appears to have relied upon a case decided by Mr. Justice WEST in the Bombay High Court.

12. In that case a suit was brought for specific performance of an agreement to purchase a house, which was to this effect: “This day I have sold to you my house in which I live, for Rs. 1,900; and on account thereof I have received from you Rs. 100 as earnest at the time of execution of this bargain. And as to the remaining Rs. 1,800 the same are duly to be paid to me within one month from this day, when you will get the deed made in your favour.”

13. This document was not registered; and the question arose, whether, inasmuch as the transaction had been partially carried out under it, and an interest in the property created in favour of the purchaser, the document was admissible in evidence for the purposes of the suit, without being registered, and as I understand Mr. Justice West, his view was much the same as that taken by Mr. Justice Pigot here.

14. He considered that although as creating an interest in land the document was not receivable in evidence, it might be used for the purposes of the suit, namely, for the purpose of obtaining a specific performance of the agreement.

15. This really seems the only sensible way of reconciling the provisions of Clauses (b) and (h) of Section 17 of the Registration Act. By Clause (b) any document which purports to create an interest in land requires registration, and if not registered, it is (by Section 49) not available as affecting the property comprised therein. But by Clause (h) any document not itself creating an interest in land, but merely a right to obtain another document which would create such an interest, does not require registration.

16. We all know that there are a great many documents coming within the description of Clause (h) which may amount nevertheless to what are called equitable mortgages, and so create an interest in land. As such, they would require to be registered, though as mere agreements to mortgage, they, under Clause (h), would not. The only way, therefore, of meeting the difficulty seems to be, to hold that they are available for the one purpose without registration, but not for the other.

17. This is only extending to that class of cases the principle which we have laid down in the Pull Bench case of Ulfutunnissa v. Hossein Khan I.L.R. 9 Cal. 520.

18. It is clear, that if we were to hold that equitable mortgages when they are in the form of agreements to mortgage, do not require registration, such instruments would be generally used instead of legal mortgages, for the very purpose of avoiding registration; whilst, on the other hand, if we hold that any document which amounts to an equitable mortgage cannot be used as an agreement to execute a mortgage, we should be defeating the clear intention of Clause (h) of the Registration Act.

19. Mr. Kennedy in the course of his argument reminded us of a large class of cases, which are to be found in the English Reports, in which difficult questions used formerly to arise, whether certain documents amounted to leases, or only to agreements for leases. As leases they required one kind of stamp, as agreements for leases another kind of stamp. Now these cases rather serve to illustrate the principle, upon which I think we ought to decide the present question.

20. After the passing of the Act 8 and 9 Vict., c. 106 (the Act to simplify the transfer of property), all doubts with regard to these documents were at an end, because by Section 3 of that Act, all leases which were required by law to be in writing (that is, all leases for three years and upwards), were void unless made by deed, and the consequence was, that no document which secured to the lessee an interest for more than three years was valid as a lease, unless made by deed. But from that time the Courts were in the habit of construing those documents, which under the Act were void as leases, as agreements for leases, in order to render them effectual.

21. So here, although we must treat a document like the present as ineffectual to create any interest in land, we may treat it as valid for any other legitimate purpose. Thus, we may deal with this instrument as a promissory note, or as an agreement to execute a mortgage.

22. Mr. Kennedy goes so far as to contend, that even treating the document as a mere agreement to mortgage, his clients would be entitled under it to a charge upon the Rs. 13,000.

23. But I think that is not so. Unless they can treat the note as an equitable mortgage, the plaintiffs cannot, in my opinion, claim a charge upon the Rs. 13,000.

24. I think, therefore, that the Court below was right, and that this appeal should be dismissed with costs on scale 2.

25. I should add that even supposing that this document were admissible and effectual, as Mr. Kennedy contends, I think that other questions of equity would probably arise, which we have now abstained from considering. The defendant, Mrs. Mackertich, has not been called upon to go into her case at all. In fact we have stopped Mr. Kennedy from going into any other question, except that which was decided by the Court below.

Cunningham, J.

26. I agree in thinking that the judgment of the Court below must stand.

27. Mr. Mackertich having a power-of-attorney to sell or mortgage his wife’s property, signed on her behalf a joint and several promissory note for Rs. 8,000, and as collateral security agreed to assign by way of mortgage her interest in certain property.

28. The plaintiffs state that subsequent to this Mr. Mackertich effected a sale of the property for Rs. 13,000, and this Rs. 13,000, on Mackertich’s death, passed into the hands of the Administrator-General. The plaintiffs complain that the Administrator-General refuses to recognize their claim on the specific Rs. 13,000 which they say is liable to the debt, but regards it merely as enforce* able against the general property of the deceased.

29. The question, therefore, raised in the case is the plaintiffs’ right, in virtue of this document, to follow the sum of Rs. 13,000 in the hands of the Administrator-General, and render it liable for the debt which the joint and several promissory note created.

30. I think that what was said in the Court below, and has just been said by my lord, makes it clear that it is only by treating this document as a mortgage and investing it with all the effects of a mortgage that we could do what the plaintiffs ask, and as I think we are precluded by the Registration Act from allowing it to have this effect, I agree in thinking that the appeal must be dismissed.

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