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Smart Summary

Factual and Procedural Background

The suit concerned possession of certain zamindari property or alternatively recovery of Rs. 8,548-0-6 from several defendants. Plaintiffs alleged that on 11th September 1874, the ancestors of defendants Nos. 1 to 9 mortgaged part of the property in village Chandpur to Gokul Prasad, who obtained a decree and conducted an auction sale on 25th June 1919, purchasing the mortgaged property. Plaintiffs, holding money and mortgage decrees over adjacent property, deposited the decretal amount of Rs. 4,519-12-4 on 17th July 1919 under Order XXI, Rule 89 of the Code of Civil Procedure and had the sale of 25th June 1919 set aside. Plaintiffs claimed possession or repayment with interest at 12% from the date of payment. Defendants Nos. 1 to 9 contended the suit was barred by limitation, argued plaintiffs knew of prior charges and were liable to pay them, and challenged the interest rate as excessive. The Subordinate Judge rejected the limitation plea, held defendants as heirs could not raise rateable contribution, and granted plaintiffs a decree for the deposited amount with 6% interest, treating the sum as a charge on the property held by defendants.

Legal Issues Presented

  1. Whether the plaintiffs' claim was barred by limitation under Article 61 of the Limitation Act.
  2. Whether the property held by the plaintiffs and defendants should contribute rateably to the claim of the prior mortgagee, Gokul Prasad.
  3. Whether the payment made by the plaintiffs constituted redemption of the mortgage given the timing of the auction sale and confirmation under the Code of Civil Procedure.
  4. The applicability of principles under Sections 56 and 81 of the Transfer of Property Act to the parties' respective liabilities.

Arguments of the Parties

Defendants' Arguments

  • The plaintiffs' claim was barred by limitation under Article 61 of the Limitation Act.
  • The payment made by plaintiffs was not a redemption payment as the mortgage subsisted until the actual sale, which occurred before plaintiffs' payment.
  • The property in defendants' hands was liable rateably towards the claim, invoking the principle of rateable contribution.

Plaintiffs' Arguments

  • Payment under Order XXI, Rule 89 was made to set aside the sale and thus extinguished the mortgage rights of the decree-holder.
  • The claim was not barred by limitation as the right of redemption continued until the sale was confirmed by the court.
  • The defendants, as heirs of the original mortgagors, could not invoke rateable contribution.
  • The interest rate should be 6% and the plaintiffs were entitled to recover the amount deposited as a charge on the property.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Shah Mehdi Hasan v. Ismail Hasan Clarification that under the Code of Civil Procedure, the mortgagor's right is not extinguished by the final decree alone but only after actual sale. The court distinguished the present case from the precedent, noting that in the precedent no sale had taken place, while here the sale was held but not confirmed; thus, the right of redemption was not extinguished.
Bisheshur Dial v. Ram Sarup Principle that when multiple parcels of property secure one debt, each parcel is liable for the whole debt to the mortgagee, but owners contribute rateably among themselves. The court applied this principle to hold that plaintiffs and defendants must contribute rateably to the claim of the prior mortgagee, modifying the decree accordingly.

Court's Reasoning and Analysis

The court analyzed whether the plaintiffs' claim was barred by limitation, concluding that the right of redemption subsisted until the sale was confirmed by the court and not merely upon the decree or auction sale date. It emphasized that the sale was not absolute until confirmed under Order XXI, Rule 92, and the plaintiffs' payment under Rule 89 set aside the sale, preserving their right. Consequently, Article 61 of the Limitation Act did not apply.

Regarding rateable contribution, the court accepted the defendants' contention that both plaintiffs and defendants must contribute proportionally to the payment made to the prior mortgagee. The court rejected the respondents' plea that the defendants could not raise this issue, noting deficiencies in the plaint and the absence of original mortgage evidence. It also held that Section 56 of the Transfer of Property Act did not apply to an auction sale context here. Applying the principle from Bisheshur Dial v. Ram Sarup, the court apportioned liability according to possession shares: plaintiffs holding 19 pies and defendants 17 pies of the mortgaged property. The decree was modified to reflect this proportionate liability with interest and costs accordingly.

Holding and Implications

The appeal was partly allowed by modifying the decree to require proportionate contribution from plaintiffs and defendants towards the mortgage debt, reducing the amount payable by defendants to Rs. 2,835 with interest at 6% per annum.

The direct effect is that the defendants are liable only for their proportional share of the mortgage debt rather than the entire amount previously decreed. The court also ordered proportionate costs and fixed a payment date six months hence. No new precedent was established beyond the application of existing principles on limitation, redemption rights, and rateable contribution.

    Naubat Lal v. Mahadeo Prasad

    Banerji and King, JJ.:— This is a defendants' appeal under the following circumstances:—

    The suit was for possession of certain zamindari property or in the alternative for recovery of a sum of Rs. 8,548-0-6 against a number of persons. The plaintiffs alleged that on the 11th of September, 1874, the ancestors of defendants Nos. 1 to 9, who are appellants before us, mortgaged 3 as. 1.33 pies in the village Chandpur to one Gokul Prasad. Gokul Prasad obtained a decree on foot of this mortgage and an auction sale in execution of that decree took place on the 25th of June, 1919, when Gokul Prasad bought the property mortgaged. The plaintiffs, who were purchasers under money decrees and mortgage decrees of a. 7.33 pies in the village, deposited the whole of the decretal amount which was Rs. 4,519-12-4 on the 17th of July, 1919, under order XXI, rule 89 of the Code of Civil Procedure, and got the sale of the 25th of June, 1919, set aside. They in the present suit claim possession over the property which is not in their possession and was hypothecated in the deed of the 11th of September, 1874, or the amount of money paid thereon together with interest at 12 percent, from the date of payment. Defendants Nos. 1 to 9 pleaded that the plaintiffs' suit was barred by limitation and that the plaintiffs knew of the prior charge and hence they were liable to pay the same and the defendants were not bound to pay it. They also pleaded that the interest was excessive. The learned Subordinate Judge repelled the contention that the claim was barred by limitation and held that as the defendants Nos. 1 to 9 were heirs of the original mortgagors, they could not raise the question of rateable contribution, and granted a decree to the plaintiffs for the amount deposited together with interest at 6 percent, holding that sum was a charge on the property in the hands of the defendants.

    The defendants have come in appeal in this Court and it is contended by the learned advocate for the appellants that the plaintiffs' claim was barred by article 61 of the Limitation Act, and that the property in the hands of the appellants was liable rateably to the claim of the plaintiffs.

    With regard to the first point, the case for the defendants is that the payment made by the plaintiffs was not a payment made for redemption of any mortgage and that the mortgage subsisted only till the date of the actual sale of the property. The learned advocate contends that under the Transfer of Property Act, section 89, the right of redemption was barred on the passing of the final decree, but under order XXXIV, rule 5, the mortgage subsisted only till the date of the actual sale and that the sale having taken place before the date of payment made by the plaintiffs, such payment could not be treated as a redemption of the mortgage. In support of his argument, reference is made to a passage in the case of Shah Mehdi Hasan v. Ismail Hasan, :—“Under the present Code of Civil Procedure, which repeals section 89, the mere passing of a final decree does not extinguish the mortgagor's right until a sale has actually taken place in pursuance of the decree.” It must be stated that in that case the point raised was different and that as a matter of fact no sale had actually taken place on the material date. In the present case, no doubt, the auction sale had been held and the property had been purchased by the decree-holders. A reference to rule 92 of order XXI, shows that a sale cannot become absolute until it is confirmed by the court, and in fact when a deposit is made under rule 89 the court makes an order setting aside the sale. It is only when a sale has become absolute that the court grants a certificate specifying the property sold and that certificate bears the date on which the sale became absolute. We are of opinion that until the sale is confirmed it does not transfer the interest of the judgement-debtor to the auction purchaser, and where in a case that interest is never transferred by the order of a court, it cannot be said that the right of redemption had come to an end. In fact the payment made in this case was made by a person who was owner of the property and interested in it as a purchaser of the equity of redemption. Rule 89 had not on the date of this sale been amended by the rule making powers of this Court to include the judgement-debtor and we cannot accept the contention that the payment made was not made by the mortgagor or his transferee, but as a judgement-debtor. We are, therefore, of opinion that the plaintiffs' claim is not barred by limitation and that article 61 of schedule II of the Limitation Act does not apply to the facts of the present case.

    As regards the second point, we are of opinion that the contention of the learned advocate for the appellants must be accepted that the property in the hands of the plaintiffs and the defendants appellants must contribute rateably to the claim of Gokul Prasad. The learned advocate for the respondents has urged that in view of the provisions of section 81 of the Transfer of Property Act, his client being a subsequent mortgagee and purchaser under his decree was entitled to set up the plea that the property in the hands of defendants Nos. 1 to 9 was responsible for the payment of the claim of Gokul Prasad under a prior mortgage. One of the essential points for, putting forward the above plea is that the subsequent encumbrancer does not know of the existence of the prior encumbrances and, as there are no materials on the record of the case, it is urged that an opportunity should be given to the plaintiffs to produce the original mortgage in his favour and to prove that he had no notice of the prior mortgage. We cannot permit fresh evidence to be adduced at this stage. It was for the plaintiffs to make out the case that is now attempted to be made out by their learned advocate in the plaint that he filed in the case. The plaint is so carelessly drawn up that the learned advocate himself cannot see how the plaintiffs were entitled to the first relief, nor can the defendants clearly set forward in their written statement the plea that the plaintiffs knew of the prior mortgage, and unless the original mortgage deed is laid before the court, no court can decide what was the contract entered into by the plaintiffs and the appellants when the mortgage in favour of the plaintiffs was executed.

    Mr. Iqhal Ahmad further contends that under the principles underlying the provisions of section 56 of the Transfer of Property Act, he was entitled to plead that the appellants should pay up the whole of the mortgage of Gokul Prasad inasmuch as the plaintiffs were second mortgagees. The provisions of section 56 of the Transfer of Property Act can have no application to a case of an auction sale and in the absence of facts even the principles of that section cannot be applied to the present case. The property in the hands of the plaintiffs and the defendants appellants was liable to the extent of Rs. 4,519-12-4. In the case of Bisheshur Dial v. Ram Sarup , it has been laid down that “When several parcels of property are mortgaged to secure one debt, every parcel is liable to the mortgagee for the whole amount of the debt; but as between themselves each parcel is liable, in the absence of a contract to the contrary, to contribute to the debt in the proportion which its value bears to the value of the whole property comprised in the mortgage…. The primary liability on each of several properties included in a mortgage being thus a proportionate share of the mortgage debt, every person who purchases one of those properties incurs a liability to that extent…. If any such purchaser has to discharge the whole of the mortgage debt, he is entitled to claim contribution from the owners of the remainder of the mortgaged property.” We are, therefore, of opinion that the plaintiffs were only entitled to a proportionate share of the money that they paid to the prior mortgagee. It is not denied that the proportion in which the parties are in possession of the property mortgaged under the deed of the 11th of September, 1874, is that the plaintiffs are in possession of 19 and defendants in the possession of 17 pies each. The plaintiffs are therefore liable to that extent for the decree of Gokul Prasad and the defendants are liable in proportion. We modify the decree of the court below and declare that instead of the sum of Rs. 6,005 we substitute Rs. 2,835. Under order XXXIV, rule 4, a decree will be prepared for Rs. 2,835 with proportionate costs and with pendente lite and future interest at 6 percent, per annum against the defendants appellants.

    The parties will pay and receive costs in proportion to their success and failure in this Court and the court below. The office will fix a date six months from hence for payment.

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    Comments

    Naubat Lal v. Mahadeo Prasad
    (Jan 24, 1929)