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Krishnaji Vinayak Belapurkar v. Motilal Magandas Gujarati .
Judgment Summary — Patkar, J. & Murphy, J.
Factual and Procedural Background
The plaintiff relied on a sale-deed executed in his favour by defendant No. 8 acting as guardian on behalf of her son, defendant No. 9, who was described in the sale-deed as a minor. The plaintiff instituted a suit for redemption of the mortgage. Subsequently defendant No. 9 instituted a suit on 7 February 1921 to set aside the sale-deed; that suit culminated in a compromise (Ex. 105) on 7 September 1922 in which defendant No. 9 admitted the plaintiff's right under the sale-deed. Under that compromise one house (No. 158) was to be retained by defendant No. 9, the other (No. 174) by the plaintiff, and defendant No. 9 was to receive Rs. 2,000. After the compromise, defendant No. 9 applied (Ex. 122) to be made a plaintiff in the redemption suit; the learned Subordinate Judge initially rejected the application but joined defendant No. 9 as a plaintiff at the time of passing the decree. The Subordinate Judge allowed redemption in favour of the plaintiff and defendant No. 9 and decreed accounts resulting in a sum (reported as Rs. 6,920-8-0). The defendants-appellants appealed. The High Court(s) considered multiple contentions and dismissed the appeal with costs.
Legal Issues Presented
- Whether the original plaintiff had a legal right to sue at the date of institution of the suit and whether the late joinder of defendant No. 9 as a plaintiff at the time of decree was permissible.
- Whether the compromise between the plaintiff and defendant No. 9, reached during the pendency of proceedings, amounted to a transfer invalid under Section 52 of the Transfer of Property Act.
- Whether the Subordinate Judge (or the trying Court) had jurisdiction to pass a decree exceeding the pecuniary limit (specifically, whether a decree for more than Rs. 5,000 could be made after taking accounts).
- From what date interest on any surplus should be calculated (date of payment of the mortgage debt or date of the suit) and what rate of interest was appropriate.
Arguments of the Parties
Appellants' Arguments
- The plaintiff had no right to sue at the date of institution; therefore the learned Subordinate Judge erred in effectively making defendant No. 9 a plaintiff at the time of passing the decree (reliance placed on Parmanand Misr v. Sahib Ali, Bhanu v. Kashinath, and Sayad Abdul Hak v. Gulam Jilani).
- The compromise between plaintiff and defendant No. 9 effected a transfer in favour of the plaintiff during the pendency of the suit and such transfer (if any) is invalid under Section 52 of the Transfer of Property Act (reliance on Ishwar v. Dattu).
- The learned Subordinate Judge had no jurisdiction to pass a decree for Rs. 6,920-8-0 because that amount exceeded his pecuniary jurisdiction (Rs. 5,000).
- Interest on any surplus should have been awarded from the date of the suit (relying on Janoji v. Janoji) and, in any event, the proper rate of interest should have been lower (argued 4% or at most 6% rather than the 9% awarded under the mortgage bond).
Plaintiff's / Respondent's Position (as reflected in the opinion)
- The plaintiff's title under the sale-deed was not non-existent at institution; the sale-deed was passed in his favour (it was executed by defendant No. 8 as guardian). The compromise subsequently made by defendant No. 9 confirmed or admitted the plaintiff's right under the sale-deed.
- The compromise resulted in defendant No. 9 withdrawing objections and consenting to the sale-deed; both plaintiff and defendant No. 9 were entitled to the equity of redemption and the decree allowing redemption in favour of both was appropriate.
- The taking of accounts could legitimately result in a decree exceeding the pecuniary jurisdictional threshold of the trying Court when the amount is found due on account; and interest should be calculated from the date the mortgage debt was paid, with the rate awarded (9%) being within the lower Court's discretion as it was specified in the mortgage bond.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Parmanand Misr v. Sahib Ali | The opinion notes that this case "does not bear on the question of the joinder of a party as an additional plaintiff." | The Court treated it as inapposite to the joinder issue in this appeal. |
| Bhanu v. Kashinath | Held that if the plaintiff at the time he brings his suit has no interest, joinder of a co-plaintiff who has interest cannot confer on the original plaintiff any right of suit. | The Court discussed this principle but found the facts of the present case different and held the plaintiff did have a right of action at institution. |
| Sayad Abdul Hak v. Gulam Jilani | Similar to Bhanu v. Kashinath: joinder cannot supply a plaintiff's lack of title at institution. | The Court acknowledged this view but distinguished the present facts (plaintiff's title was not wholly lacking; it was clouded). |
| Krishna Boi v. Collector and Government Agent, Tanjor | Madras High Court took a view contrary to Bhanu/Sayad on the effect of joinder after institution (i.e., did not accept that joinder cannot cure). | Court noted the conflicting authority and relied on authorities permitting consideration of events occurring after institution. |
| Hughes v. Pump House Hotel Co. (No. 2) | English authority interpreting a similar rule (Order XVI, Rule 2 of English Rules) on joinder/addition of parties. | Referred to as part of the comparative authority supporting flexibility in joinder where justice requires it. |
| Nuri Mian v. Ambica Singh | Ordinarily decree should accord with parties' rights at date of institution, but Court may take notice of events since institution to make a decree according to circumstances at the time the decree is made in order to do complete justice or shorten litigation. | The Court applied this principle to justify taking the compromise into account and joining defendant No. 9 at decree time. |
| Shankerbhai Manorbhai v. Motilal Ramdas | Accepted the view that a Court in appeal can take into consideration events subsequent to the decree. | Referred to support the proposition that subsequent events may be considered to do justice between parties. |
| Rustomji v. Sheth Purshotamdas | Authority accepting that subsequent events may be considered. | Referred to as supporting precedent for consideration of post-institution events. |
| Sakharam Mahadev Dange v. Hari Krishna Dange | Authority on consideration of events subsequent to institution or decree. | Referred to in support of the same principle. |
| Rani Mewa Kuwar v. Rani Hulas Kuwar (Privy Council) | Held that a compromise is based on assumption of some antecedent title in the parties and acknowledges and defines what that title is. | Court relied on this to say the compromise acknowledged the plaintiff's antecedent title and thus plaintiff had not been without title at institution. |
| Ishwar v. Dattu | Held that a partition effected in the family of the mortgagee while a redemption suit by the mortgagor is pending does not affect the mortgagor's right of redemption (illustrating S. 52 considerations). | Distinguished on facts: here there was no transfer during pendency; if there were a transfer by compromise, it did not prejudice the mortgagees' rights. |
| Kachu v. Lakshmansing | Authority cited for the mortgagors' entitlement to possession and an account of surplus profits (Order 34, Rule 9 CPC). | Applied to support the entitlement to accounts and surplus in the decree. |
| Shamrao Pandoji v. Niloji Ramji | Authority that in suits for accounts the jurisdiction to pass a decree for more than the pecuniary limit is not excluded where, on taking accounts, a larger sum is found due. | Used to justify that the Subordinate Judge's decree exceeding Rs. 5,000 was not invalid merely because it exceeded the pecuniary limit. |
| Ramchandra Baba Sathe v. Janardan Apaji | Similar authority on jurisdiction in account suits. | Referred to support the Court's conclusion on jurisdiction to decree amounts found due on accounts. |
| Ambadas v. Vishnu | Another authority on the same jurisdictional point in account suits. | Referred to alongside the other authorities on jurisdiction. |
| Janoji v. Janoji | Relied on by appellants to argue that interest on surplus should be awarded from the date of the suit. | The Court reviewed commentary and other authorities and rejected the submission in the present facts, holding interest should be from date mortgage amount was paid. |
| Haji Abdul Rahman v. Haji Noor Mahomed (Telang, J.) | Contains commentary on Janoji v. Janoji and references a change in Seton on Decrees regarding interest liability of mortgagee in possession. | Quoted to support the proposition that interest on surplus is to be charged from the date the mortgage debt was paid. |
| Ashworth v. Lord | Authorities stating that a mortgagee in possession who holds over after being paid his debt will be charged with subsequent receipts and interest from the date the mortgage debt was paid. | Invoked to support calculation of interest from the date of payment of the mortgage debt. |
Court's Reasoning and Analysis
The Court proceeded in a staged analysis addressing each main contention.
1. Plaintiff's title at institution and joinder of defendant No. 9:
The Court examined precedents which hold that a plaintiff who lacks title at institution cannot acquire a right to sue simply by joinder of a co-plaintiff who has title. The Court distinguished those authorities from the facts here: the sale-deed had been passed in favour of the plaintiff by defendant No. 8 as guardian (defendant No. 9 was described as a minor in that deed) and defendant No. 9 subsequently commenced proceedings and then entered into a compromise that admitted the plaintiff's right. The Court relied on authorities (notably Nuri Mian v. Ambica Singh and related cases) establishing that a decree should ordinarily reflect parties' rights at the date of institution but that where events occurring after institution make it necessary to consider altered circumstances to do complete justice or avoid further litigation, the Court may take notice of such events and mould the decree accordingly. Applying that principle, the Court found the compromise meant both plaintiff and defendant No. 9 were entitled to the equity of redemption and that joining defendant No. 9 as a plaintiff at the time of decree did not offend procedural rules (Order 1, Rule 10 / O. 1, R. 10) and was within the Court's power, though the earlier exercise of discretion in favour of joining would have been preferable.
2. Effect of compromise and Section 52, Transfer of Property Act:
The appellants argued the compromise effected an invalid transfer under Section 52. The Court analysed Ishwar v. Dattu (partition during pendency) and distinguished it: in the present case the transfer relied on was anterior to the suit or, if regarded as effected by the compromise, it was an admission by the party entitled to dispute the sale-deed, and in any event did not affect the position of the mortgagees whose sole interest was to be redeemed. The Court therefore held Section 52 did not apply to these facts.
3. Jurisdiction to pass a decree exceeding pecuniary limit in account suits:
The Court addressed the objection that the Subordinate Judge lacked jurisdiction to decree Rs. 6,920-8-0 because it exceeded Rs. 5,000. Citing authorities (Shamrao Pandoji v. Niloji Ramji, Ramchandra Baba Sathe v. Janardan Apaji, Ambadas v. Vishnu), the Court held that where, upon taking accounts, a larger sum is found due, the jurisdiction to pass a decree for that amount is not thereby excluded; hence the decree was not invalid on that ground.
4. Interest: from which date and at what rate:
The appellants relied on Janoji v. Janoji to contend interest should run from date of the suit. The Court reviewed commentary (including Telang, J.'s remarks in Haji Abdul Rahman v. Haji Noor Mahomed) and established authorities (e.g., Ashworth v. Lord) and treatises that hold a mortgagee in possession who holds over after payment of the debt must account for subsequent receipts and interest from the date the mortgage debt was paid. Applying that principle and given that the lower Court had found when the debt was paid, the Court concluded that interest was properly calculated from the date the mortgage amount was paid. As to the rate, the lower Court awarded 9% as provided in the mortgage bond; the appellate Court declined to interfere with the lower Court's discretion in awarding that contractual rate.
5. Overall assessment:
Both Patkar, J. and Murphy, J. concurred in these analyses: the plaintiff's title was not non-existent at institution; the compromise and subsequent joinder were appropriately treated; Section 52 did not invalidate the transaction in the facts of this case; the Subordinate Judge's decree was not vitiated by exceeding pecuniary limits after accounts; and the interest calculation and rate awarded were sustainable. Accordingly, they affirmed the decree below.
Holding and Implications
Holding: The appeal is DISMISSED and the decree of the lower appellate Court is affirmed; the decree allowing redemption in favour of the plaintiff and defendant No. 9 (and the accounts and interest awarded) stands. The appeal is dismissed with costs.
Implications and direct effects:
- The Subordinate Judge's order joining defendant No. 9 as a plaintiff at the time of the decree was held permissible under the Court's powers to add parties (O. 1, R. 10) where justice requires consideration of events occurring after institution; the Court noted it would have been preferable to have allowed the joinder earlier but did not invalidate the decree for joining at decree stage.
- The compromise between plaintiff and defendant No. 9 was treated as acknowledging the plaintiff's antecedent title (per Privy Council authority) and did not, on the facts, amount to an invalid transfer under Section 52 of the Transfer of Property Act.
- The decree for an amount exceeding the pecuniary jurisdictional limit of the trial Court (as revealed by accounts) was upheld on authority that taking accounts may reveal sums beyond the initial valuation and jurisdictional cap, and such a decree is not thereby invalid.
- Interest was properly computed from the date the mortgage debt was paid (not from the date of the suit) and the rate of 9% fixed in the mortgage bond was an appropriate exercise of judicial discretion that the Court refused to disturb.
- No broader new precedent was claimed to have been laid down; the Court relied on and applied existing authorities to the facts before it and affirmed the decree between the parties.
Final court notation in the opinion: "Appeal dismissed." (S.N/R.K)
Patkar, J.:— (After stating facts, the judgment proceeded.) The first contention on behalf of the defendants-appellants is that the plaintiff had no right to sue at the date of the institution of the suit, and that the learned Subordinate Judge having refused the application of defendant 9, Ex. 122, to be made a plaintiff, erred in making defendant 9 a plaintiff at the time when he passed the decree, and reliance is place on the cases of Parmanand Misr v. Sahib Ali(1), Bhanu v. Kashinath(2), and Sayad Abdul Hak v. Gulam Jilani(3).
2. It was held in Bhanu v. Kashinath that if the plaintiff at the time he brings his suit has no interest in the subject-matter thereof, the joinder of a person as co-plaintiff who has an interest cannot alter the plaintiff's position or confer on him any right of suit. A similar view was taken in Sayad Ali Hak v. Gulam Jilani. This view is not accepted by the Madras High Court in Krishna Boi v. Collector and Government Agent, Tanjor(4), and is opposed to the view taken of a similar rule, O. 16, R. 2 of the English Rules, in Hughes v. Pump House Hotel Co. (No. 2)(5). The case of Parmanand Misr v. Sahib Ali does not bear on the question of the joinder of a party as an additional plaintiff. The facts, however, in the above two Bombay cases were quite different from the present case. It cannot be said that the plaintiff is this case had no right of action at the time the suit was brought. The sale-deed was passed in his favour by defendant 8 as guardian on behalf of her son, defendant 9, who was described as a minor in the sale-deed.
3. The learned Subordinate Judge, however, held that defendant 9 was major at the date of the sale-deed. There is no finding by the lower appellate Court on this point. It appears that, after the institution of the suit, defendant 9 filed a suit against the plaintiff to set aside the sale-deed on 7th February, 1921, which ended in a compromise, Ex. 105, on 7th September, 1922, under which the defendant admitted the plaintiff's right to the sale-deed passed by his guardian during his minority. One of the houses, No. 158, was to be retained by defendant 9 and the other house No. 174 was to be retained by the present plaintiff, and defendant 9 was to receive from the present plaintiff a sum of Rs. 2,000. Defendant 9 gave his consent to the sale-deed and had no grievance in connexion therewith.
4. After this compromise defendant 9 made an application, Ex. 122, to be made a plaintiff, The learned Sub-ordinate Judge, however, rejected his application, but ordered his name to be joined as a plaintiff when passing the decree in favour of the plaintiff and defendant 9. Apparently under the sale-deed the plaintiff had a right to sue for redemption of the mortgage. In Nuri Mian v. Ambica Singh(6) it was held that ordinarily the decree in a suit should accord with the rights of the parties as they stand at the date of its institution, but where it is shown that the original relief claimed has, by reason of subsequent change of circumstances, become inappropriate, or that it is necessary to base the decision of the Court on the altered circumstances in order to shorten litigation or to do complete justice between the parties, it is incumbent upon a Court of justice to take notice of events which have happened since the institution of the suit and to would its decree according to the circumstances as they stand at the time the decree is made. This Court has also accepted the view that the Court can even in appeal take into consideration events subsequent to the decree: see Shankerbhai Manorbhai v. Motilal Ramdas(7); Rustomji v. Sheth Purshotamdas(8) and Sakharam Mahadev Dange v. Hari Krishna Dange(9). The effect of the compromise decree between the plaintiff and defendant 9 is that the plaintiff and defendant 9 are both entitled to the equity of redemption and the decree passed by the Subordinate Judge allowing redemption in favour of the plaintiff and defendant 9 seems unobjectionable. It was held by the Privy Council in Rani Mewa Kuwar v. Rani Hulas Kuwar(10) that the compromise is based on the assumption that there was an antecedent title of some kind in the parties, and the agreement acknowledges and defines what that title is. It cannot, therefore, be said that the plaintiff had no right or title at the date of the institution of the suit. Defendant 9 was the only person interested in objecting to the sale-deed passed by his mother, and he entered into a compromise with the plaintiff and both of them have been awarded the right to redeem the mortgage. The decree would, therefore, be binding not only as against the plaintiff but also against defendant 9. The power to add a party under O. 1, R. 10, can be exercised at any stage of the suit and the exorcise of this power could not be restricted in cases when justice requires a joinder of parties, even at a late stage. The order of the Subordinate Judge joining defendant 9 as a plaintiff at the time of the decree is not, therefore, opposed to the provisions of O. 1, R. 10, though I think that the learned Subordinate Judge would have exercised a wise discretion if he had acceded to the application made by defendant 9 at an earlier stage.
5. The next point urged on behalf of the appellants is that by virtue of the compromise there was a transfer of property in favour of the plaintiff by defendant 9 during the pendency of the suit which was invalid under Section 52 of the Transfer of Property Act, and reliance is placed on the decision in Ishwar v. Dattu(11) In that case there was a partition effected in the family of the mortgagee while the suit for redemption by the mortgagor was pending, and it was held that the right of redemption of the plaintiff-mortgagor could not be affected by the transfer made by the members of the mortgagee's family during the pendency of the suit for redemption. In the present case, there was no transfer during the pendency of the suit. The transfer in favour of the plaintiff was anterior to the suit but by virtue of the compromise the validity of the sale-deed was accepted by defendant 9, the parson entitled to dispute its validity. The compromise recognized partially the title of the plaintiff to institute the suit for redemption. Assuming, however, that the compromise decree effected a transfer of property, it would not in any way affect the right of the defendants-mortgagees, for defendant 9 has been made a plaintiff in the case and the decree pissed in the suit would be binding on both the plaintiff and defendant 9, and if any amount had been decreed as due on account of the mortgage, both the plaintiff and defendant 9 would have been bound to pay that amount. The rights established by the consent decree between the plaintiff and defendant 9 would in any event have been subservient to the rights of the defendants-mortgagees, and would not, in any way have affected their right to recover the money on the mortgage. We think, therefore, that Section 52 of the Transfer of Property Act does not apply to the facts of the present case. (After discussing evidence, His Lordship proceeded.) The last point urged on behalf of the appellants relates to the accounts taken by the lower Court. The mortgagors were entitled not only to possession but also to an account of the surplus profits from the date the mortgage amount was paid off: see O. 34, R. 9 of the CPC, and Kachu v. Lakshmansing(12). It is urged, however, on behalf of the appellants that the learned Subordinate Judge had no jurisdiction to pass a decree for Rs. 6,920-8-0 in favour of the plaintiff and defendant 9 as it exceeded the pecuniary jurisdiction of the Subordinate Judge. The jurisdiction of the Subordinate Judge depends on the valuation of the claim as made in the plaint, and especially in a suit for accounts, the jurisdiction to pass a decree for more than five thousand rupees is not excluded when it is found on taking accounts that a sum of more than five thousand rupees is due: see Shamrao Pandoji v. Niloji Ramji(13), Ramchandra Baba Sathe v. Janardan Apaji(14) and Ambadas v. Vishnu(15).
6. It is further urged that on taking accounts interest on the surplus amount ought to have been awarded not from the date of the payment of the mortgage but from the date of the suit, and reliance is placed on the decision in the case of Janoji v. Janoji(16). The case of Janoji v. Janoji has been commented upon by Telang, J. in Haji Abdul Rahman v. Haji Noor Mahomed(17) where the learned Judge has referred to the change in the new edition of Seton on Decrees where it is said that
“a mortgagee in possession who holds over after he has been paid his debt and all arrears of interest will be charged with the excess received and interest at four per cent on the balance.”
7. It is urged that in that casa the mortgagee sold the mortgaged property under his power of sale and knew that the mortgage amount was paid, and that he was bound to refund the surplus money remaining in his hand, but in the present case, until the account was taken, it was not ascertained when the mortgage amount was paid off and that it would be equitable to charge interest only from the date of the suit. Fisher in his Law of Mortgage para. 1810, p. 911, lays down as follows:
“The mortgagee in possession who holds over after payment of everything due to him, will be charged with subsequent receipts and interest from the date at which the mortgage debt was paid, with annual rests.” See Ashworth v. Lord(18).
8. The same view is expressed in Hals-bury's Laws of England, Vol. 21, para. 402, pp. 220-221; and Coote on Mortgages, 9th Edn p. 1235. We think, therefore, that the interest was rightly calculated from the date when the mortgage amount was paid. It is further urged that four per cent, or at the most six per cent ought to have been awarded as the rate of interest. The lower Court has awarded interest at the rate of nine per cent which was provided for in the mortgage bond as interest on the mortgage amount. We do not think we should interfere with the discretion of the lower Court in awarding the rate of interest. On these grounds we think that the decree of the lower appellate Court is correct and this appeal must be dismissed with costa.
9. Murphy, J.:— (His Lordship, after stating facts, proceeded.) It is true that in the case of a plaintiff who has no title when he institutes the suit, even the addition as a co-plaintiff of one who has such title, confers no right on the plaintiff who lacks it. This view has been taken by this Court in the case of Sayad Abdul Hak v. Gulam Jilani, though the Madras High Court has not acceded to it. But it can hardly be said that in this suit the original plaintiff had no title—he had a clouded or disputed one, which he cleared in the course of the suit by means of the compromise decree, and this Court has held that, though in the ordinary way the decree should decide the parties' rights as they were at the institution of the suit, yet events occurring in the course of the litigation, where their recognition is in the interest of justice, or would avoid further litigation, should not be ignored: Shankerbhai Manorbhai v. Motilal Ramdas.
10. Since plaintiff's title has been cleared and there is no farther dispute on the point between him and the original defendant 9, I agree that defendants 1-3, whose only interest is the repayment of their mortgage amount, cannot be allowed to defeat the claim on this ground. As to defendant 9's belated transfer to the plaintiff's side, it clearly would have been better to have made this change when it was applied for, but the power can, under O. 1, R. 9, be exercised at any stage of a case. The second main contention is that the compromise between plaintiff and defendant 9 effected during the pendency of the suit, offends against Section 52 of the Transfer of Property Act I think the question really turns on whether the other side's rights are effected by such a transfer. In the case relied on, Ishwar v. Dattu the transfer was a partition in the mortgagee family. Here, if there was a transfer, it did not affect the mortgagees, for their only interest wag to be redeemed. But as pointed out by my learned brother Patkar, J. it is doubtful if there really was a transfer. What occurred was an arrangement by which defendant 9 withdrew his objection to the validity of this sale-deed do not think S. 52 affects this transaction. (After considering the evidence, His Lordship proceeded): The last objection taken to the lower Court's decree is on the point of the amount found overpaid. The suit was tried by a Second Class Subordinate Judge and the decree made by the District Judge exceeds his jurisdiction of Rs. 5,000; but there are numerous authorities to the effect that, if in taking accounts the sum found due is greater than the maximum jurisdiction of the trying Court, its power to pass such a decree is not thereby affected. For these, and the farther reasons given is the judgment just delivered by my learned brother Patkar, J., I agree that the decree does not need amendment on the point of interest, and that what is given is reasonable. The lower Court's decree must, therefore, be affirmed and the appeal be dismissed with costs.
S.N/R.K
11. Appeal dismissed.
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