Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Smart Summary

Analytical Summary of the Provided Opinion

Factual and Procedural Background

The deceased Ramalingam Pillai (father of the plaintiff, a minor) on 21 June 1896 obtained from the first defendant a bond for Rs. 5,000 secured by hypothecation of certain lands. Those lands were interests of a joint family to which the first defendant and the two sons of his deceased brother (including a nephew who retained one-third) were entitled. By purchase from one nephew, the first defendant came to hold a two-thirds share (instead of one-half). Defendants Nos. 2 to 7 include persons who hold equities of redemption in some of the mortgaged properties, acquired at Court sales in execution of decrees against the first defendant; defendants Nos. 8 and 9 are holders of prior mortgages on those properties.

The plaintiff's suit sought a decree against the first defendant but only against the two-thirds share vested in him (now held by defendants Nos. 2 to 7), expressly excluding the nephew's one-third share because the plaintiff apprehended difficulty in establishing that the debt bound that nephew's share.

The Subordinate Judge overruled objections by the appellants (defendants Nos. 2 to 5) to the framing of the suit that excluded the nephew's share, and granted the decree as prayed by the plaintiff. The appellants appealed against that decision.

Legal Issues Presented

  1. Whether, in the circumstances of this case, the plaintiff (mortgagee) may proceed against the two‑thirds share of the mortgaged property (which had vested in the mortgagor and passed to defendants Nos. 2 to 7) to the exclusion of the one‑third share belonging to the nephew.
  2. Whether the framing of the suit excluding the nephew's third share contravened Section 85 of the Transfer of Property Act and therefore required the nephew to be made a party so that the debt could be apportioned (i.e., whether the court should have ordered the nephew to be impleaded and allowed the appellants to raise the issue as to the nephew's liability).

Arguments of the Parties

Appellants' Arguments

  • The appellants contended that by excluding the nephew's one-third share from the suit the plaintiff (or the next friend of the minor plaintiff) intended to throw the entire debt upon the share purchased by the appellants and to save the nephew's share from its proper liability.
  • They argued that the nephew might be able to produce evidence showing his one‑third share was bound by the mortgage, and therefore the plaintiff should have impleaded him so that the issue could be litigated and, if found against the nephew, directions could be given to distribute the mortgage debt proportionately.
  • Relying on a literal reading of Section 85 of the Transfer of Property Act, Mr. Krishnaswami Aiyar (for the appellants) argued that the nephew should have been made a party and the matter of the nephew's liability litigated in the present suit.

Plaintiff's Position (as presented in the opinion)

  • The plaintiff (through the next friend) deliberately refrained from impleading the nephew because there were genuine difficulties and doubts about proving that the debt was binding on the nephew's one‑third share; the next friend acted in the interests of the minor plaintiff by seeking relief against the share which was unquestionably liable.
  • The plaintiff sought to recover the full debt from those portions of the mortgaged property which he chose to include in the suit (the two‑thirds share), rather than await the resolution of a separate dispute between the appellants and the nephew.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Timmappa v. Lakshmamma, I.L.R. 5 Mad. 385 Held that a purchaser under a money decree (purchasing at a sale under a money decree) could not insist that the mortgagee first recover from other mortgaged properties; the purchaser was bound to pay the whole mortgage debt if he wished to redeem. The court relied on this decision to support the proposition that a mortgagee may realise his debt from parts of the mortgaged property and is not compelled to proceed first against portions not conveyed by the mortgagor; it favors the plaintiff's right to proceed against the two‑thirds share.
Lala Dilawar Sahai v. Deuan Bolaklram, I.L.R. 11 Calc. 258 Where the owner mortgages property and subsequently sells a portion to a purchaser, it is not incumbent on the mortgagee, in suing to enforce his mortgage, to proceed first against that portion which has not been sold by the mortgagor. Cited to support the view that mortgagee's right to realise his debt by sale of any portion of the land mortgaged is not curtailed because the mortgagor later sold a portion; used to back the plaintiff's entitlement to proceed against particular portions.
Roghu Nath Pershad v. Harlal Sadhu, I.L.R. 18 Calc. 380 The purchasers of the equity of redemption cannot insist that the mortgage debt be apportioned upon the portions held by each of them; the mortgagee is entitled to realise the whole debt upon the whole property; the right to contribution is only between defendants. Applied to disallow the appellants' contention that the debt should be apportioned among the different portions held by various purchasers; supports plaintiff's right to pursue recovery from the portions he selected.
Bhikari Das v. Duhp Singh, I.L.R. 17 All. 434 Decision of similar effect to the foregoing cases on a mortgagee's right to realise his debt from mortgaged property without being required to apportion first. Used as a further supporting authority for the proposition that the mortgagee's right to realise the debt is not curtailed by purchasers' claims to apportionment.
Rama Raju v. Subbarayudu, I.L.R. 5 Mad. 387 Cited among cases which (according to Dr. Ghose's critique) may go too far where the mortgagee refrains from proceeding against the portion retained by the mortgagor and instead seeks to realise debt only from portions conveyed by the mortgagor. The court noted Dr. Ghose's caution about these cases but distinguished the present case from the situations Ghose criticized, observing the present facts were different (the one‑third belonged to a third person and was disputed).
Flint v. Howard, (1893) 2 Ch. D. 54 Decision turned on special terms of contract between parties; not generally applicable to the present question. The court held this case had no real bearing on the present matter because it depended on special contractual terms.
Ram Dhun Dhur v. Mohesh Chunder Chowdhry, I.L.R. 9 Cal. 406 There the mortgagee was compelled to resort in the first instance to properties not parted with by the mortgagor — the decision occurred in execution of a decree where the Court exercised control as between parties before it. The court distinguished that execution context from the present suit and observed that the power of the Court in execution to control sale order is not the same as adjudicating the framing of an independent mortgagee's suit.
Jagat Narain v. Qutub Husain, I.L.R. 2 All. 807 Holds that if one party pays the whole debt and can show another portion was liable, he is entitled to contribution notwithstanding non‑inclusion of that portion in the original suit. Cited to support the proposition that appellants, if compelled to pay the whole debt and if they can show the nephew's share was liable, would be entitled to contribution from the nephew despite the nephew not being impleaded in the present suit.
Chayandas v. Gansing, I.L.R. 20 Bom. 615 Similar to Jagat Narain on the right to contribution despite non‑inclusion of a share in an earlier suit. Used to reinforce the court's conclusion that the omission to include the nephew's share does not preclude later claims for contribution by parties who satisfy the whole debt.

Court's Reasoning and Analysis

The court proceeded in several analytic steps, applying statutory provisions and authorities cited in the record:

  1. Identification of relevant statutory provisions: the court examined provisions of the Transfer of Property Act it thought potentially applicable (Sections 56, 60, 81, 82, 95 and 85). It concluded that none of Sections 56, 60, 81, 82 or 95 compels a mortgagee in the mortgagee's possession to distribute his debt rateably across the mortgaged property so as to preclude the mortgagee from proceeding against particular portions of the security.
  2. Application of authorities: the court surveyed decided cases which, it said, supported the plaintiff's position that a mortgagee may realise his debt upon portions of the mortgaged property and is not obliged to proceed first against particular portions merely because other portions remain in the mortgagor's hands or are in dispute. The cited decisions were held to support the plaintiff's right to proceed against the two‑thirds share.
  3. On the doctrine of marshalling: the court explained that the doctrine (which seeks to require a prior creditor to satisfy his claim out of particular funds so as to leave other funds for junior creditors) is inapplicable where the portion excluded belongs to a third party (the nephew) and where there is real doubt about that third party's liability. The nephew's share was not in the hands of the mortgagor and its liability was disputed; therefore marshalling could not be invoked to compel the mortgagee to postpone recovery from the two‑thirds share.
  4. Concerning Section 85: the court rejected a literal and expansive construction of Section 85 that would have required the nephew (a third party) to be impleaded in every case where some property comprised in a mortgage had previously been subject to litigation. The court observed that such a literal approach would produce "startling results" and would compel a mortgagee to await the outcome of separate litigation between others before realising his debt from portions of the mortgaged property that are clearly liable.
  5. On consequences of non‑inclusion and contribution: the court held that the plaintiff's omission to include the nephew's share did not extinguish the nephew's liability. If the appellants were compelled to pay the whole debt and could later establish that the nephew's share was liable, they would be entitled to contribution from the nephew notwithstanding the nephew was not included in the present suit (citing Jagat Narain and Chayandas).
  6. Balancing equities and litigation practicability: the court emphasized that forcing the mortgagee to make recovery of his debt dependent on the resolution of a separate dispute between the appellants and the nephew would be to give the mortgagee's suit an unwarranted turn and to prejudice the mortgagee's right to recover from those portions he chooses to include.

Holding and Implications

Holding: The Subordinate Judge's decision was affirmed and the appeal was dismissed with costs.

Implications:

  • The plaintiff (mortgagee) was held entitled to proceed against the two‑thirds share of the mortgaged property (now held by defendants Nos. 2 to 7) to recover the mortgage debt, notwithstanding the exclusion of the nephew's one‑third share from the suit.
  • The omission to implead the nephew did not extinguish any liability that the nephew's share might bear; if other parties are required to pay the whole debt they retain a right of contribution against the nephew if they can establish his share was liable.
  • The court declined to give Section 85 an interpretation that would require the mortgagee to await or subsume the resolution of separate disputes involving third parties before seeking recovery from portions of the mortgage security that are clearly liable; the decision therefore affirms the mortgagee's practical right to select portions of the security in a suit subject to the ordinary rights of contribution among co‑liable parties.
  • The opinion did not purport to lay down a novel general precedent beyond applying and distinguishing existing authorities and statutory provisions in the facts of this case; the direct effect is to uphold the decree for the plaintiff and dismiss the appeal with costs.

This summary was prepared exclusively from the content of the provided opinion and does not add facts or inferences beyond what the opinion itself contains.

    Krishna Ayyar v. Muthukumarasawmiya Pillai

    1. Ramalingam Pillai, the deceased father of the plaintiff, a minor, obtained from the first defendant on the 21st June 1896, a bond for Rs. 5,000 on the hypothecation of certain lauds, to which the first defendant and the two sons of his deceased brother, members of a joint family, were entitled, the debt being recited to be one binding on all the members subsequent to the mortgage, the first defendant became by purchase from one of his nephews entitled to a two-thirds share in the joint property instead of to one-half as originally. Of the other defendants, the second to the seventh inclusive, are impleaded as persons entitled to the equity of redemption in some or other of the properties hypothecated to the plaintiff, they having acquired such interest in Court sales held in execution of decrees against the first defendant, and the eighth and the ninth defendants are holders of prior mortgages on the properties comprised in the plaintiff's mortgage. In the present suit the plaintiff prayed for a decree against the first defendant and only against his two thirds share of the mortgaged property, excluding the third share belonging to first nephew who had not parted with his interest, it being stated in the plaint that the plaintiff apprehended there were difficulties in establishing that the debt was binding on that nephew's share.

    2. The Subordinate Judge overruled the objection raised by the appellants (defendants Nos. 2 to 5) to the frame of the suit in so far at the nephew's third share was excluded, and granted a decree to the plaintiff as prayed for.

    3. It was said on behalf of the appellants that Ramalingam Pillai being the maternal uncle of the nephew, the object of the exclusion of his share from the suit was to throw the entire debt upon the share purchased by the appellants and save that of the nephew from liability to the debt to which it was justly subject. The evidence which the nephew may produce against the condition that his one-third share is bound by the debt not having been taken, no final conclusion on this point can be arrived at, and though the evidence on which the appellants rely tends to support their contention that the nephew's share also is bound yet the matter cannot be said to ha free from doubt. Consequently, it is not to be taken that the next friend of the plaintiff in refraining from impleading the nephew and from litigating the matter with him was acting otherwise than in the interests of the plaintiff.

    4. The question is whether in the circumstances of the case it is open to the plaintiff to proceed against the two-thirds share which had vested in the mortgagor and which has since passed to defendants Nos. 2 to 7 to the exclusion of the one-third share of the nephew.

    5. The answer to the question must, we think, be in the affirmative. The only sections of the Transfer of Property Act that can be thought of as having any sort of bearing on the present question are as pointed out by Sir V. Bhashyan Ayyangar, but four or five.

    6. Now Section 56, as its very position, as part of chapter III shows, lays down a rule governing the rights and obligations as between the buyer and the seller with reference to the instance provided for the section. Section 81 deals with marshalling of securities where the owner of two properties mortgages them both to one person and then mortgages one of the properties to another person who has not notice of the former mortgage, Section 82 provides that, where several properties, whether of one or of several owners, are mortgaged to secure one debt, such properties are, in the absence of a contract to the contrary, liable to contribute ratably to the debt secured by the mortgage, according to the net value of the properties at the time, this provision being inapplicable to a property liable under Section 81 to the claim of a second mortgagee. Section 95 gives to one of several mortgagors who redeems the mortgaged property a charge on the share of each of the other co-mortgagors for his proportion of the expenses, properly incurred in redeeming and obtaining possession. Section 60 of the Act confines the right of a person interested in but a share of the mortgaged property to redeem his share only to cases where the mortgage has acquired in whole, or in part, the share of a mortgagor. It is scarcely necessary to say that there is nothing in any of these sections suggesting the view that as between a mortgagee in the possession of the plaintiff and holders of the equity of redemption such as the appellants are, the law compels the former to distribute his debt, upon the mortgaged property rateably so as to entitle the latter to insist upon their interest not being proceeded with until after the nephew's one-third share has been proceeded against. Passing to the decided cases cited by Sir V. Bhashyam Ayyangar they more than support the conclusion in favour of the plaintiff. In Timmappa v. Lakshmamma I.L.R. 5 Mad. 385 the mortgagee had obtained a decree for the sale of the mortgaged properties on account of the mortgage debt. After the decree was passed the equity of redemption in one of the properties was purchased at a Court sale in execution of a money decree against the mortgagor, Subsequent to this Court sale, the property, thus sold, was sold in execution of the mortgage decree and purchased by the mortgagee himself. It was held that the purchaser under the money decree was not entitled to insist on the mortgagee recovering what was due to him from the other mortgaged properties and that the purchaser at the money decree sale was bound, if he wished to redeem of pay the whole mortgage debt. In the other case, the Court laid down that a mortgagee's right to realise his debt by sale of any portion of the land mortgaged to him cannot be curtailed by the fact that the portion of the land he elects to sell has been sold by the mortgagor subsequent to the date of the mortgage. Lala Dilawar Sahai v. Deuan Bolaklram I.L.R. 11 Calc. 258 is to the same effect; and it was there held that where the owner of certain property mortgages it to A and afterwards sells a portion of the mortgaged property to B, it is not incumbent on A. in suing to enforce his mortgage to proceed first against that portion of the mortgaged property which has not been sold by the mortgagor. Roghu Nath Pershad v. Harlal Sadhu I.L.R. 18 Calc. 380 proceeds on the same principle, and the contention of the purchasers of the equity of redemption from the mortgagors that the debt should be apportioned upon the portions held by each of them, was disallowed, it being pointed out that the mortgagee was entitled to realise the whole debt upon the whole property, the right to contribution being only as between the defendants Bhikari Das v. Duhp Singh I.L.R. 17 All. 434 is a similar decision. Dr. Rash Behari Ghose apparently considers that Lala Dilwar Sahai v. Dewan Bolakiram I.L.R. 11 Calc. 258 and Rama Raju v. Subbarayudu I.L.R. 5 Mad. 387 and the cases following them go too far. We should be disposed not to rely on the authority of the said decisions when the mortgagee refrains from proceeding against the portion of the mortgaged property which the mortgagor has not parted with, and when he seeks to realise the entire debt from those portions only of the mortgaged property which have been conveyed by the mortgagor, subsequent to the mortgage to a purchaser without any contract affecting the purchaser's right to have the charge satisfied out of the portion retained by the mortgagor, in other words where the mortgagor conveys not merely the equity of redemption but the property itself free from any liability to contribute to the mortgage debt. That, in such a case, the purchaser may insist upon the mortgagee proceeding in the first instance against the mortgaged property which is in the mortgagor's hands would seem to be consonant alike with sound principle and the weight of authority (Ghose on 'Mortgage,' 3rd edition, p. 436). The present, of course, is altogether a different case : not only are the appellants not purchasers of the property free from the mortgage, but the one-third not proceeded against does not belong to and is not in the hands of the mortgagor, but is the property of a third party who is sought to be affected by a transaction entered into, so far at he is concerned, by another, purporting to act under the power incident to the position of the mortgagor of a joint family under the Hindu Law. The doctrine of marshalling on the principle of which the appellant's contention virtually rests is not applicable to such a case. Even in the eases to which that doctrine in all its strictness is applicable Dr. Ghose points out

    "but there can be no doubt that, as a rule, marshalling cannot be enforced against the prior mortgagee where there is any doubt of the sufficiency of the fund upon which the junior creditor has no claim or where the prior creditor is not willing to run the risk of obtaining satisfaction out of that fund, or where that fund is of a dubious character or is one which may involve him in litigation to realise, Jones Section 1628"
    (Ghose on 'Mortgage' at p. 874).

    7. Even if the facts of the present case were such as otherwise to admit of the application of the doctrine of marshalling, the existence of the dispute as to the liability of the nephew's share would take the case out of it. Flint v. Howard (1893) 2 Ch. D. 54 on which Mr. Krishnasami Aiyar laid stress has no real bearing upon the present question. The decision was with reference to the special terms of the contract between the parties. In Ram Dhun Dhur v. Mohesh Chunder Chowdhry I.L.R. 9 Cal. 406, no doubt, the mortgagee was compelled to resort in the first instance to properties not parted with by the mortgagor. There, however, the question was in execution of a decree and it was quite competent to the Court to exercise the control, which it did so as to bring the different items of property comprised in the decree to sale in a particular order with a view properly to adjust the equities possessed by the parties who were before it and who were all the parties interested in the different items constituting the security. It was urged by Mr. Krishnaswami Aiyar that the frame of the present suit was in contravention of the rule in Section 85 of the Transfer of Property Act and that with reference to that section, the Subordinate Judge should have ordered the plaintiff's nephew entitled to the third share not comprised in the suit to be made a party, and allowed the appellants to raise the issue as to whether the mortgage was not binding upon that one-third share also, and, in the event of the finding being in their favour, given directions in the decree which would have the effect of distributing the mortgage debt proportionately. The literal construction of Section 85 pressed by Mr. Krishnaswami Aiyar cannot but lead to startling results. Suppose, for instance, some part of the property comprised in a mortgage is made the subject of litigation between, on the one hand, a party denying the mortgagor's title thereto and on the other the mortgagor and the mortgagee and the mortgagor's title is finally negatived, it would be necessary to make such third person a party to the suit brought by the mortgagee against the mortgagor, if the words of Section 85 are to be taken literally, inasmuch as the previous adjudication would not under the property adjudicated upon any the less "property comprised in the mortgage," Section 85, as has been pointed out more than once but reproduces a rule as to parties which had of course been even previous to the Transfer of Property Act held applicable to mortgage suite, viz., that all persons interested in the actual subject of the suit should be before the Court in order that as far as possible as between them complete justice might be done. That rule was never understood as authorizing the Court to complicate a suit by a mortgagee by introducing into it controversy in which the mortgagee upon the frame of his plaint in itself unobjectionable, is really uninterested. Now the consequence of allowing Mr. Krishnaswami Aiyar's contention under consideration would, at least, be to oblige the plaintiff to await the result of this controversy in all its stages between the appellants on the one hand and the nephew interested in the one-third on the other for the realization of his debt from so much of the property as is unquestionably liable for it and against which alone he wishes to proceed and as shown above is entitled to proceed. In these circumstances to make the recovery of the plaintiff's debt to any extent dependent upon the settlement of the dispute between the appellants and the nephew would be to give the mortgagee's suit a turn to which he has a right to object.

    8. It remains only to observe that, if the action of the mortgagee had had the effect of extinguishing the mortgage lien upon any portion of the mortgaged property so as to relieve it from the liability to bear its proportion of the debt, he cannot recover more than what the property he proceeds against would be rateably liable for. Such is not the case, for the omissions of the plaintiff to include the nephew's share did not affect the liability thereof to bear its proportion of the debt. In the event of the appellants being obliged to pay the whole debt and being able to show that the nephew's share was also liable, they would be entitled to contribution from him notwithstanding the non-inclusion of his third share in the present suit Jagat Narain v. Qutub Husain I.L.R. 2 All. 807 and Chayandas v. Gansing I.L.R. 20 Bom. 615. And, so long as the equities in the matter of contribution as between these parties are thus unaffected by the act of the plaintiff, the latter's right to be paid the whole of his debt from whatever portion of the mortgaged properties he wishes to comprise in his suit cannot be questioned.

    9. The decision of the Subordinate Judge is therefore right and the appeal is dismissed with costs.

    Use AI to get other relevant cases.

    Comments

    Krishna Ayyar v. Muthukumarasawmiya Pillai
    (Nov 21, 1905)