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Case Number
Attorney(S)
  • A.K Ray, for the appellants.
  • Abani Bhushan Mukerjee and U.N Banerji, for the respondent.
Judges
  • Adami
  • Kulwant Sahay, JJ.
Acts
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • A.K Ray, for the appellants.
  • Abani Bhushan Mukerjee and U.N Banerji, for the respondent.
Judges
  • Adami
  • Kulwant Sahay, JJ.
Acts
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Smart Summary

Structured Summary of the Opinion (Kulwant Sahay, J.; Adami, J. concurring)

Factual and Procedural Background

This opinion concerns a dispute over redemption rights in relation to a mortgage. A mortgage suit was instituted by Guhi Ram in 1908. A decree in that suit, dated 14 July 1908, ultimately led to a sale which in fact occurred in February 1912. The present proceedings are an appeal from a Subordinate Judge's decree which had fixed the amount the plaintiff must pay to redeem. The Subordinate Judge held that the plaintiff must pay a proportionate share of the mortgage debt as fixed by the mortgage decree (decree amount Rs. 494-3-6), found the plaintiff's proportionate share to be Rs. 277-9-3, deducted six years' profits (Rs. 246-10-6) and arrived at Rs. 30-14-9 as the redemption amount. The plaintiff repudiated the mortgage decree and relied on the terms of the original mortgage bond dated 4 September 1898. The appeal challenges the Subordinate Judge's calculation and legal basis for the redemption amount.

Legal Issues Presented

  1. Whether, under the law applicable at the time of Guhi Ram's suit and the subsequent proceedings, the plaintiff (or his father) was a necessary party to the earlier mortgage suit such that the decree in that suit could bind the plaintiff.
  2. On what basis and in what amount the plaintiff should be allowed to redeem — whether the redemption amount should be calculated with reference to the mortgage decree obtained by Guhi Ram or with reference to the original mortgage bond dated 4 September 1898 (with appropriate adjustments).

Arguments of the Parties

Appellants' Arguments

  • Relying on section 85 of the Transfer of Property Act as it stood before amendment by the Code of Civil Procedure (1908), the appellants contended that because Guhi Ram's mortgage suit was instituted in 1908 (before Order XXXIV of the CPC 1908 came into force), the plaintiff or his father were not necessarily required to be joined as parties unless it was shown that Guhi Ram had notice of their purchase. Thus, the appellants argued the plaintiff was not necessarily a necessary party and could not now raise lack of notice for the first time in this Second Appeal.
  • Implicitly, the appellants relied upon the mortgage decree and its quantified amount (Rs. 494-3-6) as the relevant starting point for assessing the plaintiff's redemption liability, as the Subordinate Judge did.

Plaintiff-Respondent's Arguments

  • The plaintiff repudiates the mortgage decree and asserts that he is not bound by it; his liability must be determined by the original mortgage bond dated 4 September 1898, not by the amount decreed in the mortgage suit.
  • The plaintiff relied upon the Privy Council decision in Matru Lal v. Durga Kunwar to support the proposition that where a decree under section 89 (order absolute for sale) was made before repeal, the decree could substitute the right to sale for the mortgagee's prior rights and thereby affect calculation of redemption on the basis of the decree.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Umes Chunder Sircar v. Zahur Fatima (Privy Council) Persons who take transfers of property subject to a mortgage cannot be bound by subsequent proceedings between prior mortgagee and mortgagor to which they were never made parties; the decree operates only between parties to that suit and those claiming under them. The Court relied on this principle to support the view that the plaintiff, who repudiates the decree and was not a party to Guhi Ram's suit, could not be compelled to redeem on the basis of the mortgage decree; his rights must be determined by the original mortgage bond.
Ganga Prashad Sahu v. The Land Mortgage Bank (Privy Council) Expresses the same view as Umes Chunder Sircar regarding the limits of a decree obtained in absence of a subsequent mortgagee. Used to reinforce the position that a subsequent transferee not made party cannot be bound by the decree and that the decree cannot be the basis for calculating redemption vis-à-vis such a person.
Matru Lal v. Durga Kunwar (Privy Council) Where a decree for sale under section 89 of the Transfer of Property Act had been passed, that order can substitute the right of sale for the mortgagee's prior rights and extinguish the latter rights; redemption could be calculated on the basis of the decree. The plaintiff relied upon this decision to argue that the decree (or order for sale) should govern calculation of redemption. The Court considered this authority but distinguished it on the basis of changes effected by the Civil Procedure Code 1908 and the timing of final orders/sale in the present case.
Het Ram v. Shadi Ram (Privy Council) Affirmed the principle (used in Matru Lal) that an order under section 89 could substitute the right of sale for the mortgagee's rights; authority followed in Matru Lal. Referenced as part of the line of Privy Council authority that supports calculation of redemption on decree basis in certain circumstances; the Court noted that other High Court rulings had not been brought to the Board's attention in these Privy Council decisions.
Bibi Jan Bibi v. Sachi Bewa (Full Bench, Calcutta High Court) Under section 89, the right to redeem was held not to be extinguished on the making of the order absolute for sale but upon the actual sale and its confirmation by the Court. Cited to demonstrate that several High Courts had taken a different view from the Privy Council authorities, and to show there was judicial divergence on the point; used to nuance application of Matru Lal/Het Ram.
Vanmikalinga Mudali v. Chidambara Chetty (referenced in other cases) Part of the High Court jurisprudence on section 89 and the effect of orders for sale on redemption rights (as referred to in later decisions). Referred to (via Sukhi) to show that some authorities and arguments were not before the Privy Council in Het Ram and Matru Lal and to indicate that Het Ram might not have been the only view.
Sukhi v. Ghulam Safdar Khan Noted that Vanmikalinga Mudali v. Chidambara Chetty was not brought to the Board's notice in Het Ram; signalled tension between authorities. Used to underscore that Het Ram might not have considered contrary High Court rulings when deciding the effect of orders under section 89.
Ram Narain Sah v. Sahdeo Singh Das Expressed doubts as to whether the Privy Council decision in Het Ram v. Shadi Ram was the final or conclusive position on the subject. Referenced to indicate judicial skepticism in later Indian decisions about the finality of Het Ram and the need to consider the statutory framework then in force (i.e., pre- or post-CPC 1908).

Court's Reasoning and Analysis

The Court proceeded in two discrete analytical strands corresponding to the two principal issues.

  1. On joinder and section 85 of the Transfer of Property Act:

    The appellants relied on the pre-1908 version of section 85 (subject to the Code of Civil Procedure, 1882, section 437) to contend that Guhi Ram was not bound to join the plaintiff or his father in the mortgage suit unless Guhi Ram had notice of the purchase. The Court observed that determining whether Guhi Ram had such notice would have required a factual finding which did not appear to have been raised in the Courts below. Both lower courts had assumed that the plaintiff's father was a necessary party. Because the point of notice was not raised below, the Court held that it was too late for the appellants to raise it for the first time in a Second Appeal. In short: the joinder/notice contention was forfeited by failure to raise it earlier.

  2. On the proper basis and amount for redemption:

    The Court held that the Subordinate Judge was wrong to base redemption upon the amount decreed in Guhi Ram's mortgage suit (Rs. 494-3-6). The Court accepted the plaintiff's position that he repudiates the decree and that his liability must be determined by the terms of the original mortgage bond dated 4 September 1898. The Court relied on Privy Council authority (Umes Chunder Sircar v. Zahur Fatima and Ganga Prashad Sahu) for the general proposition that a subsequent transferee not made a party to a mortgage suit cannot be bound by a decree in that suit; the decree operates only inter partes.

    The Court then considered the plaintiff's reliance on Matru Lal v. Durga Kunwar (and Het Ram v. Shadi Ram), where the Privy Council had held that an order under section 89 (order absolute for sale) could substitute the mortgagee's right of sale for the mortgagee's prior rights and thus alter the rights of a subsequent mortgagee not made a party. The Court noted that some High Court authorities had taken a different view (e.g., Bibi Jan Bibi v. Sachi Bewa) holding that the right to redeem was not extinguished until actual sale and confirmation. The Court also noted that the language of section 89 which speaks of extinguishment does not give rise to the same difficulty under the present law contained in Order XXXIV, rule 1, of the Code of Civil Procedure, 1908.

    Critically, the Court observed that the timing of the final order for sale in Guhi Ram's case was not shown: the decree was dated 14 July 1908 but the Civil Procedure Code of 1908 came into force on 1 January 1909 and the actual sale took place in February 1912 (well after the Code of 1908). Given the sale occurred after the CPC 1908 came into force, it was reasonably arguable that the case was governed by the provisions of the Code of 1908 (Order XXXIV, rule 1) rather than by section 89 of the Transfer of Property Act as it stood previously.

    Applying these conclusions, the Court held that redemption should be allowed only on payment of the amount due under the original mortgage of 4 September 1898 with interest at the bond rate up to the date of redemption, less the annual sum of Rs. 41-1-9 which the plaintiff was entitled to recover from defendants 1 and 2 from the year 1326 B.S. The account taken under orders of the Munsif showed an amount of Rs. 1,306-13-6 due, and the plaintiff would be bound to pay that sum before being allowed to redeem. However, because the appellants had limited the value of their appeal to Rs. 617, the Court limited the redemption amount to the value of the appeal.

    The Court therefore varied the Subordinate Judge's decree, changing the redemption amount from Rs. 30-14-9 to Rs. 617, granted the plaintiff two months to deposit that sum in Court, and ordered that failure to deposit would result in dismissal of the suit. The Court also ordered that each party bear their own costs in the appeal.

Holding and Implications

Holding: The Court varied the decree of the Subordinate Judge. It declared that the plaintiff is entitled to redeem only on payment of Rs. 617 (instead of Rs. 30-14-9 as ordered by the Subordinate Judge). The plaintiff was given two months to deposit this amount in Court, failing which the suit would be dismissed. Each party was ordered to bear their own costs in the appeal. Adami, J. concurred.

Implications:

  • The direct operational effect on the parties is a variation in the redemption amount (fixed at Rs. 617 for the purposes of this appeal) and the requirement that the plaintiff deposit that sum within two months or lose the suit.
  • The Court emphasized that a subsequent transferee not made a party to an earlier mortgage suit is not automatically bound by the decree in that suit, and that, depending on the governing procedural regime (pre- or post-CPC 1908), different rules may determine whether a decree/order for sale extinguishes redemption rights. However, the opinion does not purport to lay down a novel, broad precedent beyond its application to the facts of this case; it applied existing Privy Council and High Court authorities to the facts and procedural posture before it.

Note: This summary is strictly limited to the content and reasoning appearing in the supplied opinion and does not add any facts or inferences not explicitly stated therein.

Show full summary ...

    Jageswar Mandal v. Sridhar Lal Aditya Deb

    Kulwant Sahay, J.:— (After stating the facts as set out above, proceeded as follows:)

    As regards the first point reliance is placed upon the terms of section 85 of the Transfer of Property Act. The contention is that the mortgage suit was instituted by Guhi Ram in the year 1908 when the Civil Procedure Code (Act V of 1908) with the provisions contained in Order XXXIV had not come into force and section 85 of the Transfer of Property Act had not been repealed. The suit of Guhi Ram was, therefore, governed by the Transfer of Property Act as it stood before its amendment by the Code of Civil Procedure of 1908. section 85 of the Transfer of Property Act provided: subject to the provisions of the Code of Civil Procedure (1882), section 437, all persons having an interest in the property comprised in a mortgage must be joined as parties to any suit under this Chapter relating to such mortgage: provided that the plaintiff has notice of such interest. (This proviso does not find a place in Order XXXIV, rule 1, of the Code of Civil Procedure, 1908.) It is therefore contended that Guhi Ram was not bound to make the plaintiff or his father a party to his mortgage suit unless it was shown that he had notice of his purchase. This contention requires a finding on the question whether or not Guhi Ram had knowledge of the purchase of the plaintiff's father. It requires a finding on a question of fact which does not appear to have been raised in either of the Courts below. Both the Courts below proceeded on the assumption that the plaintiff's father was a necessary party in the mortgage suit of Guhi Ram. It is too late now for the appellants to contend that it had not been shown that Guhi Ram had notice of the plaintiff's purchase. The question ought to have been raised in the Courts below so that evidence might have been given on the point. The appellants, therefore, cannot be allowed to raise this question for the first time in Second Appeal.

    The second question relates to the amount on payment whereof the plaintiff ought to be allowed to redeem. The learned Subordinate Judge has held that the plaintiff must pay his proportionate share of the mortgage debt due under the mortgage decree in favour of Guhi Ram minus the profits which he would have received in respect of his share from the year 1326 when he was entitled to possession in terms of his kebala. The amount due under the mortgage decree was Rs. 494-3-6 and he found the proportionate share due from the plaintiff in respect of the 5 annas 1 pies was Rs. 277-9-3. From this he deducted a sum of Rs. 246-10-6 being six times Rs. 41-1-9 the annual rent which the plaintiff was entitled to recover from Guhi Ram as the mukarraridar for the six years 1326-1331, and he found the balance of Rs. 30-14-9 to be the amount which the plaintiff was liable to pay in order to redeem the mortgage. In this the learned Subordinate Judge is clearly wrong. The plaintiff repudiates the mortgage decree. He says he is not bound by it. The amount for which the mortgage decree was made cannot be the amount which the plaintiff inbound to pay. His liability rests on the terms of the mortgage bond itself. He says he is not bound by the decree; and consequently, he cannot be allowed to take advantage of the terms of the decree. We are not aware how the sum of Rs. 494-3-6 was found due upon the mortgage of Guhi Ram. It may be that Guhi Ram had remitted a portion of the mortgage debt. In any event the amount decreed in the mortgage suit cannot be the basis upon which redemption can be allowed. So far as the plaintiff is concerned his rights and liabilities must be determined by the terms of the original mortgage bond of the 4th of September 1898.

    This view was taken by the Privy Council in Umes Chunder Sircar v. Zahur Fatima. In that case Lord Hobhouse said: “Persons who have taken transfers of property subject to a mortgage cannot be bound by proceedings in a subsequent suit between the prior mortgagee and the mortgagor to which they are never made parties.” And then in considering the question on what terms the redemption was to be made his Lordship observed: “the decree” which the prior mortgagee had obtained in the absence of the subsequent mortgagee “can only operate between the parties to the suit, and those who claim under them. The plaintiff getting the security of a decree has his interest reduced in the generality of cases. But the plaintiff in this case comes to take away from Zahur the benefit of the decree. It would be unjust if he could use the decree to cut down her interest, while he deprives her of the whole advantage of it. His case is, that as to him Zahur is still but a mortgagee, and if so, she should be allowed such benefit as her mortgage gives her. If Zahur had not got a decree, and the plaintiff had come to redeem her mortgage, he must have paid whatever interest her contract entitled her to, and the Court would have had no jurisdiction to cut it down; and that is the position in which the parties are placed by the decree in this suit.” The same view was taken by the Privy Council in Ganga Prashad Sahu v. The Land Mortgage Bank.

    The plaintiff-respondent, however, relies upon the decision of the Privy Council in Matru Lal v. Durga Kunwar. In this case the decree on the mortgage of the prior mortgagee to which the second mortgagee was not a party had been passed before the year 1909 when section 89 of the Transfer of Property Act was repealed by the Civil Procedure Code of 1908. In this case it was held that an order made under section 89 of the Transfer of Property Act for the sale of the mortgaged property has the effect of substituting the right of sale thereby conferred upon the mortgagee for his rights under the mortgage, and the latter rights are extinguished. Where, therefore, a first mortgagee brought a suit for sale under the Transfer of Property Act on his mortgage without making a second mortgagee of the same property a party to his suit, and obtained a decree for sale and purchased the property under that decree, and the second mortgagee afterwards sued on her mortgage, the amount to be paid by the second mortgagee was to be calculated on the basis of the decree and not with regard to the amount due on the prior mortgage, and their Lordships followed a previous decision of the Privy Council in Het Ram v. Shadi Ram. These two decisions of the Privy Council proceeded on a construction of section 89 of the Transfer of Property Act under which on the making of the order absolute for sale the security as well as the defendant's right to redemption were held to be extinguished and for the right of the mortgagee under his security there is substituted the right to a sale conferred by the decree. In none of these two decisions the several rulings of the High Courts in India on the interpretation of section 89 of the Transfer of Property Act was brought to the notice of their Lordships. It was held under section 89 of the Transfer of Property Act that the right to redeem was not extinguished on the making of the order absolute for sale under section 89 of the Act but upon the actual sale and confirmation thereof by Court [vide the Full Bench decision of the Calcutta High Court in Bibi Jan Bibi v. Sachi Bewa and several rulings of the Madras, Bombay and Allahabad High Courts referred to therein]. In Sukhi v. Ghulam Safdar Khan Lord Dunedin referred to Vanmikalinga Mudali v. Chidambara Chetty and observed that this case does not seem to have been brought to the notice of the Board in Het Ram's case. In Ram Narain Sah v. Sahdeo Singh Das, J., doubts that the decision of the Judicial Committee in Het Ram v. Shadi Ram is the last word on the subject. The difficulty created by the words

    “and thereafter the defendant's right to redeem and the security shall both be extinguished”

    occurring at the end of section 89 of the Transfer of Property Act does not arise under the present law contained in Order XXXIV, rule 1, of the Code of Civil Procedure, 1908, and it is clear that if the decree had been passed under the Civil Procedure Code of 1908 the plaintiff could not be heard to say that the redemption should be ordered on the basis of the mortgage decree obtained by Guhi Ram and not on the basis of the mortgage bond. In the present case it has not been shown when the final order for sale was passed in Guhi Ram's case. We have got the date of the decree, viz., the 14th of July 1908. The Civil Procedure Code of 1908 came into force from the 1st January 1909, and it is possible that the order absolute for sale, which under the Code of 1908 has to assume the form of a final decree for sale, might have been passed after the Civil Procedure Code of 1908 came into force. The sale actually took place in February, 1912 long after the Code of 1908 had come into force, and it can reasonably be contended that the present case is governed by the provisions of the Code of 1908 and not by section 89 of the Transfer of Property Act.

    Under the circumstances of this case it is clear that the order made by the Subordinate Judge was incorrect and redemption should be allowed only on payment of the amount due under the mortgage of September 1898, with interest calculated thereon at the bond rate up to the date of redemption, from which should be deducted the sum of Rs. 41-1-9 per year being the amount which the plaintiff was entitled to recover from the defendants 1 and 2 from the year 1326, B.S This account was taken under orders of the Munsif and the amount found due was Rs. 1,306-13-6 and the plaintiff would be bound to pay this sum before he can be allowed to redeem. The appellants, however, have valued their appeal at Rs. 617 only, and, therefore, the amount must be limited to the value of the appeal. The decree of the Subordinate Judge is, therefore, varied and it is declared that the plaintiff is entitled to redeem on payment of the sum of Rs. 617 instead of the sum of Rs. 30-14-9 as ordered by the Subordinate Judge. With this variation of the amount the decree of the Subordinate Judge will stand. The plaintiff will have two months to deposit this amount in Court, otherwise the suit will stand dismissed.

    As each, party has succeeded to a certain extent the parties will bear their own costs in this appeal.

    Adami, J.:— I agree.

    Decree varied.

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    Comments

    Jageswar Mandal v. Sridhar Lal Aditya Deb
    (Jul 5, 1928)