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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Sarat Chandra Bose (with Mr. Apurba Charan Mukherjee) for the Appellant.
  • Mr. Gunada Charan Sen (with Mr. Narendra Krishna Bose) for the Respondents.
  • Mr. Surja Kumar Aich for the Minor Respondents.
Judges
  • B.B Ghose
  • Panton, JJ.
Acts
  • provisions of sec. 9 of the Revenue Sale Law (Act XI of 1859)
  • sec. 72 of the Transfer of Property Act
  • 4th clause of sec. 9 of Act XI of 1859
  • clause of sec. 9 of Act XI of 1859
  • TRANSFER OF PROPERTY ACT
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Sarat Chandra Bose (with Mr. Apurba Charan Mukherjee) for the Appellant.
  • Mr. Gunada Charan Sen (with Mr. Narendra Krishna Bose) for the Respondents.
  • Mr. Surja Kumar Aich for the Minor Respondents.
Judges
  • B.B Ghose
  • Panton, JJ.
Acts
  • provisions of sec. 9 of the Revenue Sale Law (Act XI of 1859)
  • sec. 72 of the Transfer of Property Act
  • 4th clause of sec. 9 of Act XI of 1859
  • clause of sec. 9 of Act XI of 1859
  • TRANSFER OF PROPERTY ACT
See more information ...
Smart Summary

Structured Summary of the Opinion (B.B. Ghose, J.)

Factual and Procedural Background

Defendant No. 7 held a usufructuary mortgage over certain properties that belonged to Defendants Nos. 1 to 6. Those properties (together with other properties) were mortgaged to the Plaintiff by a deed dated 30 January 1905. After that deed, the mortgagors executed several further mortgages in favour of Defendant No. 7.

The Plaintiff sued on his mortgage in Suit No. 90 of 1918 and obtained a final decree on 8 January 1920. He put that decree in execution (Execution Case No. 253 of 1922) but did not proceed to sell the mortgaged properties. The properties included two revenue-paying estates with separate accounts for co-sharers. There was default in payment of revenue for the shares belonging to the mortgagors, and the Plaintiff deposited sums of money in March 1923 and March 1924 which included revenue and cess payable on account of the mortgagors' shares.

In the meantime Defendant No. 7 had obtained four decrees on the several mortgages he held (one decree from a suit of 1917 and three decrees from suits of 1920), granted in respect of mortgages obtained between 30 January 1905 and the dates when the Plaintiff made the deposits.

The present suit (the suit out of which this appeal arises) was brought by the Plaintiff to recover the sums he paid in March 1923 and March 1924 for preserving the properties from sale. He sought a decree declaring a charge for principal and interest according to the Revenue Sale Law and prayed that, if the properties were sold in execution of his earlier mortgage decree (Suit No. 90 of 1918), he should be entitled to realize the amount claimed out of the surplus sale proceeds to the exclusion of Defendant No. 7.

The Subordinate Judge gave a partial decree for the Plaintiff: holding that the Plaintiff could not recover the cess but was entitled to a charge for the revenue paid, and making an ordinary mortgage decree in favour of the Plaintiff against all Defendants including Defendant No. 7. The Subordinate Judge did not direct how the money was to be realized (specifically whether from surplus sale proceeds in execution of Suit No. 90 of 1918). Defendant No. 7 appealed. The mortgagors (Defendants Nos. 1–6) appeared as respondents but did not contest the appeal.

Legal Issues Presented

  1. Whether a mortgagee (the Plaintiff) who deposits revenue and cess to prevent a revenue sale may, under sec. 9 of the Revenue Sale Law (Act XI of 1859), have the amount added to his original mortgage lien when the mortgagee has already obtained a decree on his mortgage.
  2. Whether such sums (deposited by the Plaintiff) can be claimed as a separate debt with priority over intervening mortgagees (here, Defendant No. 7) after the mortgagee has already obtained a decree on the mortgage.
  3. Whether the Plaintiff is entitled to recover the cess paid in addition to the revenue, and whether the Plaintiff's deposit gives him priority to realize the amount out of surplus sale proceeds to the exclusion of Defendant No. 7.

Arguments of the Parties

Appellant (Defendant No. 7) — Principal Contentions

  • The Plaintiff need not have deposited the revenue because the Plaintiff's mortgage interest would not have been affected by a revenue sale of a separate account: a purchaser at a revenue sale would take the share subject to the Plaintiff's mortgage.
  • Under sec. 9 of the Revenue Sale Law (Act XI of 1859) the amount paid by the Plaintiff (as mortgagee) cannot be added to the amount of the original lien since the original lien had been perfected by the decree of the Court.
  • In any event, the Plaintiff cannot obtain priority over Defendant No. 7 for the advances made to preserve the property.

Respondent (Plaintiff) — Principal Contentions / Position as found by the Subordinate Judge

  • The Plaintiff's interest in the mortgaged property was endangered by non-payment of revenue; he paid the sums in good faith to protect his own interest.
  • The Plaintiff fell within the description of a "person" entitled under the third and fourth paragraphs of sec. 9 of the Revenue Sale Law to make such a deposit to protect his lien.
  • The deposits were therefore made to prevent a sale that could have wiped out his mortgage, and the Plaintiff should be able to treat those payments as part of his claim to be secured.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Nugender Chunder Ghose v. Sreemuthy Kaminee Dossee (Privy Council) Illustrates that a mortgagee who pays revenue to prevent a taluk (estate) being sold may be entitled to a charge on the taluk for the amount paid; and that the mortgagee has two procedural options—either to tack the payments to a mortgage by suit or to proceed under the statutory provision (then s.9 of Act No.1 of 1845, now reflected in sec. 9 of Act XI of 1859). The Court treated the case as authoritative on procedure: it shows the mortgagee must either bring a suit to tack the preservation payments to the mortgage or proceed under the Revenue Sale Law, but cannot obtain a decree on the mortgage and thereafter, by separate suits or payments, create successive priorities over intermediate mortgagees. The case supported the Court's construction of the fourth clause of sec. 9 and the limits on treating payments as separate debts with independent priority.

Court's Reasoning and Analysis

The Court divided the analysis into two principal strands corresponding to the Appellant's contentions.

First, on whether the Plaintiff was acting to protect an interest and so fell within the class of persons who may deposit sums under sec. 9: the Court agreed with the Subordinate Judge that the Plaintiff's interest was endangered by the non-payment of revenue and that the Plaintiff paid the sums in good faith to protect that interest. The Court observed that it was not necessary that the immediate effect of the revenue sale would necessarily wipe out the mortgage; a mortgagee was not obliged to rely on the Collector's discretionary acceptance of payment after the last day for payment. On this point the Court rejected the Appellant's contention and held that the Plaintiff came within the description of "person" in the relevant paragraphs of sec. 9 and was justified in making the deposit to protect his interest.

Second, on the more substantive legal question under the fourth clause of sec. 9 (and by analogy to sec. 72 of the Transfer of Property Act): the Court analysed the nature of the remedy provided. It treated the fourth clause of sec. 9 as providing the same type of remedy as sec. 72 of the Transfer of Property Act (i.e., allowing a mortgagee who expends money in preserving the property to add that expenditure to the principal money in the absence of contract to the contrary). The Court relied on the Privy Council decision in Nugender Chunder Ghose v. Sreemuthy Kaminee Dossee to demonstrate that the remedy available is procedural as much as substantive: the mortgagee must adopt the correct procedure to enforce such a charge.

The Court concluded that a mortgagee who already has obtained a decree on his mortgage cannot thereafter treat subsequent preservation payments as a separate debt capable of creating priority over intermediate mortgagees by bringing fresh suits. Instead, the mortgagee must treat the whole claim to be realized from the mortgaged property as one entire sum and, where appropriate, must tack the payments to his original mortgage in a suit brought on that mortgage (or proceed under the specific statutory remedy). Allowing the opposite approach would permit a mortgagee to sit on a decree and, by successive preservation payments and separate suits, obtain priority over intermediate mortgagees—an outcome inconsistent with the legislative scheme and the authorities relied upon.

The Court also stated the practical duty of a mortgagee who has obtained a decree: to realize the mortgage money as soon as possible by sale of the mortgaged property; surplus proceeds, after satisfying prior claims, should be distributed among puisne mortgagees in accordance with proper procedure.

Holding and Implications

Holding: The Court modified the decree of the Subordinate Judge. The modification and orders were as follows:

  • The suit as against Defendant No. 7 is dismissed.
  • The Plaintiff is entitled to a decree for the money he paid (the preservation payments) as against Defendants Nos. 1 to 6.
  • The decretal amount constitutes a charge on the surplus sale proceeds of the properties, if any, after satisfying the prior mortgage decrees of the Plaintiff and Defendant No. 7; alternatively, the amount may be recovered against Defendants Nos. 1 to 6 personally.
  • Defendant No. 7 is entitled to his costs in this Court and in the Court below; the other respondents will bear their own costs.

Implications: The decision denies the Plaintiff the route of treating preservation payments made after obtaining a mortgage decree as separate debts with priority over intervening mortgagees. It enforces the procedural limitation that such payments must be tacked to the original mortgage in a proper suit or addressed under the statutory scheme. The opinion does not purport to create a new precedent beyond applying existing authorities and statutory provisions.

End of summary.

Show full summary ...

    Hazarimull Babu v. Monohar Das Mohanta Maharaj

    The Judgment of the Court was as follows:—

    B.B Ghose, J.:— This is an appeal by Defendant No. 7 which arises out of a suit to enforce a charge by the Plaintiff on certain properties under the following circumstances: Defendant No. 7 had a usufructuary mortgage of the properties in question which belonged to Defendants Nos. 1 to 6. The mortgage was made by some of them and the predecessors of others. These properties with other properties were subsequently mortgaged to the Plaintiff by a deed, dated the 30th January 1905. Subsequent to that the mortgagors executed several other mortgages in favour of Defendant No. 7. The Plaintiff brought a suit on his mortgage which was numbered 90 of 1918 and obtained a final decree on the 8th January 1920. He put the decree in execution under Execution Case No. 253 of 1922 but did not proceed to sell the properties mortgaged. The mortgaged properties included two revenue paying estates. There were separate accounts opened with regard to the estates for the shares belonging to the mortgagors. There was default in payment of revenue with regard to the shares belonging to the mortgagors of the revenue paying estates and the Plaintiff deposited certain sums of money in March 1923 and March 1924 which included the revenue as well as cess payable on account of the mortgagors' shares. In the meantime, Defendant No. 7 obtained four decrees on the several mortgages that he had obtained from the mortgagors between the 30th of January 1905 and the dates when the money was deposited by the Plaintiff for preventing the revenue sale. Those decrees were in one suit of 1917 and three suits of 1920. The Plaintiff brought the suit out of which this appeal arises for the recovery of the money that he paid in March 1923 and March 1924 for preserving the properties from sale and he asked for a decree declaring a charge for the principal amount and interest according to the provisions of the Revenue Sale Law and also prayed that a decree may be passed to the effect that if the properties in suit be sold in execution of his mortgage decree obtained in suit No. 90 of 1918, then the Plaintiff will be entitled to realize the amount claimed in the present suit out of the surplus sale proceeds to the exclusion of Defendant No. 7 who had other mortgages on the properties. Defendant No. 7 objected to the claim on the ground that the Plaintiff need not have deposited the revenue as his mortgage interest would not have been affected by the sale as the sale would have been of the separate account belonging to the mortgagors and the purchaser would get the properties subject to his mortgage. It was further argued that under the provisions of sec. 9 of the Revenue Sale Law (Act XI of 1859) the amount paid by the Plaintiff as mortgagee cannot be added to the amount of the original lien, as the original lien has been perfected by the decree of the Court. It was further argued that in any case the Plaintiff cannot have a priority over Defendant No. 7 for these advances made. The learned Subordinate Judge has made a decree partially in terms of the prayers made by the Plaintiff. He has held that the Plaintiff cannot get any charge for the cess paid but that he was entitled to a charge for the amount of revenue paid in priority over the claim of Defendant. No. 7. It ought to be stated here that certain other persons were made Defendants viz., Nos. 8 to 10 who have now no interest in the properties in question. The Subordinate Judge has made an ordinary mortgage decree in favour of the Plaintiff as against all the Defendants including Defendant No. 7 and has not given any direction as to how the money should be realised, whether from the surplus sale proceeds on a sale being held in execution of the Plaintiff's decree in suit No. 90 of 1918 or not. Defendant No. 7 has preferred this appeal against that decree. The mortgagors also appear as Respondents but they do not contest the appeal of Defendant No. 7 who is only resisted by the Plaintiff.

    The grounds urged on behalf of Defendant No. 7, the Appellant, are the same as taken in the Court below. With regard to the first ground, the Subordinate Judge has held that the interest of the Plaintiff was endangered by the fact of non-payment of revenue and he paid the money in good faith for the purpose of protecting his own interest. As the Subordinate Judge puts it, that if by sale of the share of the mortgagors in the estate the arrears had not been realised, then the Collector would have proceeded under sec. 14 of the Act and if any co-sharer had refused to purchase the share in default, then the Plaintiff would have no opportunity to make the deposit and the entire estate would have been sold by the Collector which would have the effect of wiping out Plaintiff's mortgage. The Plaintiff therefore was interested in making the deposit and he comes within the description of the “person” referred to in the third and fourth paragraphs of sec. 9 of the Revenue Sale Law. It seems to me that the learned Subordinate Judge was right in his view. It is not necessary that the immediate effect of the sale would be such as to wipe out the mortgage. Although it is contended that even if the co-sharers had refused to purchase the defaulting share, the Collector could under the law accept payment of the revenue in arrears from the mortgagee, still the mortgagee was not bound to run the risk of the Collector's refusal to accept any payment from the mortgagee after the sunset of the last day of payment. This point, therefore, must be decided against the Appellant.

    The next contention seems to me to be of more substance. What the fourth clause of sec. 9 of Act XI of 1859 provides for is that “if the party so depositing, whose money shall have been credited, shall prove before such a Court, that the deposit was necessary in order to protect any lien he had on the estate or share or part thereof, the amount so credited shall be added to the amount of the original lien.” Now, what is the remedy which is given to a mortgagee under this clause? It is the same as is given under sec. 72 of the Transfer of Property Act to a mortgagee who spends money for the preservation of the property as provided in that section. There also it is provided that the mortgagee in the absence of a contract to the contrary is entitled to add the expenditure incurred to the principal money. The remedy in such cases given to the mortgagee is in accordance with the decision of their Lordships of the Privy Council. In the case of Nugender Chunder Ghose v. Sreemuthy Kaminee Dossee (1) their Lordships observed thus: “Considering that the payment of the revenue by the mortgagee will prevent the Talook from being sold, their Lordships would, if that were the sole question for their consideration, find it difficult to come to any other conclusion than that the person who had such an interest in the Talook as entitled him to pay the revenue due to the Government, and did actually pay it, was thereby entitled to a charge on the talook as against all persons interested therein for the amount of the money so paid. But their Lordships are of opinion, that this is not the form in which the question comes before them, and that what they have to decide, is not whether such a charge existed, or whether it does now subsist, but whether the Appellant can enforce such a charge in the present suit.” Their Lordships next said this (and this is important for the purpose of this case): “There were two courses open to her (the mortgagee): She might have instituted a suit to enforce the mortgage and to tack to the mortgage the amount of the revenue paid by her to save the estate, and to have the estate sold to pay that amount; or she might proceed under the ninth section of Act No. 1 of 1845 (now repealed by Act XI of 1859).” This last passage prescribes the procedure which a mortagee is entitled to adopt when he makes any payment for the preservation of the mortgaged property and it seems that the 4th clause of sec. 9 of Act XI of 1859 has been enacted in accordance with it. It cannot be said that the mortgagee can bring one suit on his mortgage and obtain a decree on it and another suit for the money which according to the provisions either of the Revenue Sale Law or of the Transfer of Property Act he is entitled to add to his mortgage money. He must treat the whole amount which he is entitled to get out of the mortgaged property as one entire sum. If it were otherwise, then the mortgagee after obtaining a decree on his mortgage may remain idle for any length of time and by making periodical payments for the purpose of the preservation of the property may bring any number of suits to enforce his charge and obtain priority over all intermediate mortgagees by such different suits. That does not seem to me to be the right view of the provisions under the fourth clause of Act XI of 1859. When a mortgagee obtains a decree, his first duty is to realise the mortgage money as soon as possible by sale of the mortgaged property and after realisation the surplus proceeds may be distributed among the puisne mortgagees but by the procedure that this mortgagee has adopted he desired to squeeze out all the intermediate mortgages. I do not think that is the meaning of the provision of the law which entitles him to add the money paid to the amount of the original mortgage lien. It cannot be claimed as a separate debt which could have a priority over all other mortgages but such payments the mortgagee could tack to his original mortgage in a suit brought on his mortgage.

    The result, therefore, is that the decree made by the Subordinate Judge should be modified to this extent that the Plaintiff would get a decree for the money as against Defendants Nos. 1 to 6 and the suit as against Defendant No. 7 should be dismissed. The decretal amount would be a charge on the surplus sale proceeds of the properties if any after satisfying the prior mortgage decrees of the Plaintiff and the Defendant No. 7, and it may also be recovered against Defendants Nos. 1 to 6 personally. Defendant No. 7 is entitled to his costs in this Court as well as in the Court below. The other Respondents will bear their own costs.

    Panton, J.:— I agree.

    S.C.M

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    Comments

    Hazarimull Babu v. Monohar Das Mohanta Maharaj
    (Mar 27, 1929)