Citation Codes

Equivalent Citations

citation codes

Judges

Charles Arnold White, Kt., C

Acts

Section 58, Sub-section (b), of the Transfer of Property Act.
SECTION 100 TRANSFER OF PROPERTY ACT
SECTION 61 TRANSFER OF PROPERTY ACT
Property Act, 1881 (44 and 45 Viet, Cap, X 41),

See more information ...

Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The events relevant to this appeal are stated succinctly in the opinion. In February 1873 the plaintiff's vendor executed a mortgage of a house in favour of the 1st defendant's predecessor in title (referred to as Exhibit I). In June 1873 the same parties executed another transaction (Exhibit II), under which a further advance was made by the 1st defendant's predecessor. In 1889 the 1st defendant's predecessor granted a sub-mortgage to a subsequent predecessor in title of the second defendant. In 1904 the plaintiff purchased the equity of redemption.

At trial (the Munsif) the judge held that Exhibit II was a mortgage and decided in favour of the 2nd defendant. The lower appellate court reversed that finding as to Exhibit II, holding it to be neither a charge nor a mortgage and therefore decided against the 2nd defendant's contention that he was entitled to be redeemed in the plaintiff's suit. The present opinion is an appellate consideration of those questions, including the legal character of Exhibit II and related issues of priority and notice.

Legal Issues Presented

Whether Exhibit II is a mortgage, a charge, or neither.
Assuming Exhibit II is a mortgage, whether the 2nd defendant (a subsequent or sub-mortgagee) is entitled to insist upon being redeemed by the mortgagor pursuant to Section 61 of the Transfer of Property Act.
Whether limitation (the law of limitation) affects the 2nd defendant's rights as to Exhibit II and whether limitation prevents him from relying on Exhibit II to show mortgage rights were not extinguished.
Whether the plaintiff's registered sale deed has priority over Exhibit II (which is unregistered), and if the plaintiff had notice of Exhibit II at the time of purchase.

Arguments of the Parties

The opinion records a number of positions and arguments made in the course of the litigation. The text does not always identify party names for every submission; the following summarizes the arguments as presented in the opinion.

Arguments described in the opinion

The 2nd defendant contended that he was entitled to be redeemed (i.e., to insist on redemption) if Exhibit II amounted to a mortgage; the court considered the contention assuming Exhibit II was a mortgage and assuming limitation posed no obstacle.
It was argued for the respondent that Exhibit II could not be construed as a mortgage because it did not in express terms confer a power to sell; no authority was cited in support of the strict proposition that express words of power of sale were necessary.
In reply, Mr. Srinivasa Aiyangar (counsel whose submissions are recorded) cited a Privy Council decision (Sri Raja Papamma Rao v. Sri Virapratapa H.V. Ramachandra Razu) in which a power of sale was inferred from words not in express terms; he also referred to a Bombay case (Motiram v. Vitlal) in which language similar to Exhibit II was held to amount to a mortgage.
A limitation argument was raised: even if Exhibit II created only a charge and the 2nd defendant could not recover on it because of limitation, it was argued that he might nevertheless rely on it to show that his mortgage rights were not extinguished by the operation of the law of limitation; cases were cited in support of that strand of argument.
With respect to priority, it was pointed out in argument that a sub-mortgage in favour of the 2nd defendant's predecessor was registered in 1886 and therefore was anterior in point of time to the plaintiff's sale deed; hence priority and the effect of registration and notice were raised as matters to be determined.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Doraisamy v. Venkataseshayya (1901) I.L.R. 25 M. 108	Interpreting Section 61 of the Transfer of Property Act: that while the Act abolishes consolidation doctrine over different properties, it implies that where different mortgages affect the same property a mortgagor cannot redeem one without redeeming additional mortgages; a subsequent mortgagee of the same property can insist on being redeemed.	The court relied on a passage from this judgment to support the proposition that Section 61 permits a subsequent mortgagee of the same property to insist on redemption.
Vithal Mahadeo v. Dand Mahamed Hensen (1869) 6 B.H.C.R. (A.C.) 90	Illustrative of the pre-Transfer of Property Act doctrine of consolidation of mortgages over different properties (historical context).	Cited in the passage quoted from Doraisamy to explain the historical doctrine that Section 61 displaced as to different properties; used for background rather than as a controlling authority.
Madho Misser v. Sidh Binaick Upadhya (1887) I.L.R. 14 C. 687	Calcutta decision that the instrument did not create a charge at execution but operated as a charge only upon non-payment (i.e., made the charge arise on default).	The appellate court below relied on this decision; the present court distinguished the language of Exhibit II from the Calcutta case and expressed doubt about the Calcutta court's reasoning that a charge cannot be created conditionally and only upon the occurrence of the debtor's default.
Soobramania Aiyar v. Poovan (1902) I.L.R. 27 M. 28	Cited in support of submissions relating to the effect of limitation on rights arising from an instrument that may be a charge rather than a mortgage.	Referred to as part of the authorities put forward on the point of limitation, though the court did not express a final opinion on the limitation issue because the court concluded Exhibit II was a mortgage.
Lakshmi Doss v. Roop Lal (1906) I.L.R. 30 M. 178	Cited in support of submissions on the question whether limitation extinguishes remedies but may leave subsisting certain rights for purposes such as showing a mortgage claim.	Listed among authorities referred to on limitation; not finally decided upon because of the court's conclusion that Exhibit II is a mortgage.
In re Marshfield (1887) L.R. 34 Ch. D. 721	An English decision cited in the course of the limitation argument.	Referred to as part of the limitation-related authorities; not applied to resolve the limitation point (no final opinion expressed).
Sri Raja Papamma Rao v. Sri Virapratapa H.V. Ramachandra Razu (Privy Council) (cited)	Authority where a power of sale was inferred from words which did not give the power in express language.	Used in reply submissions to show that a power of sale (or an effective mortgage) can be inferred from language that does not use express words of sale; the court regarded this as supportive of construing Exhibit II as a mortgage despite lack of express power-of-sale words.
Motiram v. Vitlal (1888) I.L.R. 13 B. 96	Bombay case in which language similar to Exhibit II was held to amount to a mortgage.	Cited by counsel and relied upon by the court as an authority where similar language was held to create a mortgage; used to support the conclusion that Exhibit II is a mortgage.
Royguddi Sheik v. Kali Nath Mookherjhee (1906) I.L.R. 33 C. 985	Calcutta case cited by the respondent in support of the contention that the document was not a mortgage.	The court observed that this decision and a related Calcutta decision did not provide much assistance to the respondent's contention and did not adopt them as persuasive authority for the present facts.
Gobinda Chandra Pal v. Dwakanath Pal (1908) I.L.R. 35 C. 837	Another Calcutta decision relied on by the respondent.	The court noted it did not find much assistance from this decision for the respondent's case.
Harjas Roi v. Naurang (1906) 3 A.L.J. 220 (Allahabad)	Described as taking a similar view to the Calcutta High Court about the impossibility of creating a charge on a condition (as a matter of principle).	The opinion records the existence of this authority but notes the facts are distinguishable and that the principle does not commend itself to the judge who dissented from the subordinate judge's view.
Cooling v. Saravana (1888) I.L.R. 12 M. 69	Decision of this Court mentioned as based upon recognition of a charge created on the happening of a condition.	Referred to in support of the view (expressed by one judge) that there is nothing opposed to the principle that a charge may be created on the happening of an after event or condition.
Datto Dudheswar v. Vithu (1895) I.L.R. 20 B. 408	Authority said to carry the proposition about what is necessary to constitute a simple mortgage somewhat further than the Privy Council decision.	The court followed this authority (together with Privy Council authority) and relied on it in concluding that the transaction in this case is a mortgage.

Court's Reasoning and Analysis

The court's analysis proceeded in a series of discrete steps, each based on the language of Exhibit II, statutory provisions, and prior authorities cited in the record. The opinion tracks both general principles and the particular facts of the instrument before the court.

General principle under Section 61, Transfer of Property Act:
The court began by considering Section 61 (Transfer of Property Act) which, the court explained, entitles a mortgagor seeking to redeem any one mortgage (in the absence of contrary contract) to do so without paying money due under any separate mortgage made by him over property other than that comprised in the mortgage sought to be redeemed. The court inferred from the section that, conversely, where the mortgages affect the same property a subsequent mortgagee is entitled to insist on being redeemed.

The court relied on a passage from Doraisamy v. Venkataseshayya to support this construction and to explain that Section 61 abolished consolidation over different properties while preserving the effect that multiple mortgages over the same property could not be separately redeemed without accounting for the other mortgages.
Whether Exhibit II is a charge or a mortgage:
The court examined the language of Exhibit II and compared it with the Calcutta decision in Madho Misser v. Sidh Binaick Upadhya, where the Calcutta court treated an instrument as not creating a charge at execution but operating to create a charge only upon default.

The present court distinguished the language of Exhibit II from the Calcutta instrument: whereas the Calcutta instrument stated that the mortgagee "shall take possession" on non-payment, Exhibit II contained words such as "In default I shall on the security of the house site belonging to me ... pay and make good ... the principal and interest." The court concluded that a distinction in language could be drawn and expressed doubt about accepting the Calcutta authority's general principle that a charge cannot be created conditionally and only upon occurrence of default.

The court also questioned whether on the Calcutta court's ground alone the instrument could properly be held not to create a charge within the meaning of Section 100 of the Transfer of Property Act.
Limitation argument:
Argument was made that if Exhibit II were only a charge and not a mortgage, even if the 2nd defendant's personal remedy were time-barred, he might nevertheless rely on Exhibit II to show that his mortgage rights were not extinguished by limitation. The court noted authorities cited on this point (including Soobramania Aiyar v. Poovan, Lakshmi Doss v. Roop Lal, and the English case In re Marshfield) but declined to express a final view because the court concluded Exhibit II is a mortgage.
Statutory requirement and conclusion that Exhibit II is a mortgage:
The court concluded Exhibit II satisfied the requirements of Section 58, sub-section (b) of the Transfer of Property Act (as to what constitutes a mortgage). The court observed the respondent's argument that the document did not in express terms confer a power to sell but noted no authority was cited to compel a rule that express words of power-of-sale were necessary. The court accepted the line of authority (including Privy Council and a Bombay case, Motiram v. Vitlal) that a power of sale may be inferred from appropriate language and that similar language had been held to create a mortgage. Ultimately the court held that the instrument amounted to a mortgage.
Distinct judicial views and reasoning recorded:
One judge explicitly stated disagreement with the Calcutta High Court's reasoning (Madho Misser) that a charge cannot be created on condition; that judge relied on Sections 5 and 21 of the Transfer of Property Act and prior decisions (including Cooling v. Saravana) to support the view that a conditional charge may be valid and that a charge can be created by the happening of a condition.

Another judge analysed the conceptual distinction between a simple mortgage and a charge, concluding that a covenant to pay is an essential element of a simple mortgage and that a simple mortgage need not contain express words of a power of sale. That judge followed Datto Dudheswar v. Vithu and Privy Council authority in holding the transaction to be a mortgage.
Remittal of factual issue on priority and notice:
The court did not finally determine the relative priority between the plaintiff's registered sale deed and Exhibit II (unregistered). It noted arguments that a registered sub-mortgage dated 1886 might have priority over the plaintiff's sale deed and that whether the plaintiff had notice of Exhibit II at the time of purchase was not previously raised.

Consequently the court remitted an issue to the Subordinate Judge to try: whether the plaintiff's purchase is free from the mortgage under Exhibit II as against the 2nd defendant by reason of the plaintiff's sale being registered and Exhibit II being unregistered, and whether the plaintiff had notice of Exhibit II at the time of purchase. The Subordinate Judge was directed to take further evidence and return a finding within eight weeks, with ten days allowed for objections.

Holding and Implications

Holding: The court determined that, on the facts and language before it, Exhibit II amounts to a mortgage.

Direct implications for the parties

The primary legal consequence is that Exhibit II is treated as a mortgage, which brings into play the mortgagor/mortgagee rights and the consequences of Section 61 discussed in the opinion (so that a subsequent mortgagee over the same property may insist on being redeemed).
The court did not finally decide on relative priority between the plaintiff's registered sale deed and Exhibit II (which was unregistered). That factual issue — including whether the plaintiff had notice of Exhibit II at the time of purchase — was remitted to the Subordinate Judge for trial.
The 2nd defendant is afforded an opportunity (on remittal) to raise the plea of notice and to prove whether the plaintiff purchased free of Exhibit II; further evidence and findings are to be returned within the time frame directed by the court.

Broader implications and precedential effect

The court's decision applies established statutory interpretation and precedents cited in the opinion (notably the authorities relied upon to infer a power of sale and to delineate the distinction between a charge and a mortgage). The opinion analyzed and distinguished a Calcutta decision it found unpersuasive for the present facts, and it followed authorities (including Privy Council and Datto Dudheswar v. Vithu) in concluding Exhibit II is a mortgage.

The opinion does not announce a broad new rule of law beyond the application of existing authorities to the instrument in question; its immediate effect is the characterization of Exhibit II as a mortgage and the remittal of priority/notice issues to the Subordinate Judge for further factual determination.

Show full summary ...

Balasubramania Nadar v. Sivaguru Asari And Anr.

1. The facts necessary for determining the question which has been argued in this appeal may be put quite shortly thus : In February 1873 there was a mortgage of a house by the Plaintiff's vendor to the 1st defendant's predecessor in title (Exhibit I). In June of the same year there was a transaction (Exhibit II) between the same parties under which a further advance was made by the 1st defendant's predecessor in title. In 1889 there was a sub-mortgage by the 1st defendant's predecessor to the and defendant's predecessor in title. In 1904, the plaintiff purchased the equity of redemption. With regard to Exhibit II the Munsif held that the instrument was a mortgage and decided in favour of the 2nd defendant. The lower appellate court took the view that it was neither a charge nor a mortgage and accordingly decided against the 2nd defendant's contention that he was entitled to be redeemed in the plaintiff's suit.

2. Before passing to the question of the legal effect of Exhibit II, I propose to say one or two words with regard to the general question which was raised and that is to say, as to the power or right of the 2nd defendant to insist upon his being redeemed, and for the purpose of dealing with this question, I assume that Exhibit II amounts to a mortgage and I also assume that the law of limitation places no obstacle in the way of the 2nd defendant.

3. Now Section 61 of the Transfer of Property Act says that a mortgagor seeking to redeem any one mortgage shall, in the absence of a contract to the contrary, be entitled to do so without paying any money due under any separate mortgage made by him or by any person through whom he claims, or property other than that comprised in the mortgage which he seeks to redeem. That section does not say so, in so many words, but I think the inference is clear, that where the property is the same the subsequent mortgagee is entitled to insist on being redeemed.

4. The point is discussed in all the text books and it is pointed out that one view is taken in Bombay and Madras and another view in Allahabad. It seems to me that the law upon this point, so far as this Presidency is concerned, is well settled. I do not think it necessary for me to discuss all the authorities which have been cited in the course of the argument and I content myself with referring to a passage in a judgment of this Court in the case of Doraisamy v. Venkataseshayya (1901) I.L.R. 25 M. 108. The passage is as follows and it is found at p. 115 : "Section 61 of the Transfer of Property Act, which is the same as Section 17 of the Conveyancing and Law of Property Act, 1881 (44 and 45 Viet, Cap, X 41), "no doubt abolishes the doctrine of consolidation of mortgages" over different properties which doctrine was recognized by the courts in India, before the Act was passed Vithal Mahadeo v. Dand Mahamed Hensen (1869) 6 B.H.C.R. (A.C.) 90. But that very section implies - as is shown by the illustration, that if there are different mortgages in favour of one and the same person, not in respect of different properties, but the same property, the mortgagor cannot seek to redeem any one mortgage without redeeming the additonal mortgages also. The same principle will be equally applicable to a mortgagee having several mortgages over the same property, seeking to obtain an order for sale on one mortgage only. That seems to be a correct exposition of the law with regard to this question so far as this presidency is concerned.

5. Now, passing to the legal effect of Ex. II is it a charge or a mortgage or is it neither? The lower appellate court relied upon a decision in Madho Misser v. Sidh Binaick Upadhya (1887) I.L.R. 14 C. 687. In that case the argument was that the instrument was a mortgage and if it was not a mortgage it was a charge. The court held that it was not a charge and the reason the} gave for so holding was this : "This document seems to us not to create a charge at the time of its execution, but to operate only as a charge upon the land in question upon the non-payment of the principal." That is the ground of decision given by the Calcutta judgment. I think a distinction may be drawn between the language of the instrument in the Madho Misser v. Sidh Binaick Upadhyaya (1887) I.L.R. 14 C. 687 and the language of the instrument before us. In the Calcutta case the instrument runs thus : "* * If I do not pay the money according to the stipulation, then I declare in writing that I shall lose my right to 1 bigha and 7 cotas of Guzasta land situated in mouzah Kuthar. If I do not pay money according to the promise then the aforesaid Misser shall take possession of the land." In the document before us the words are "In default I shall on the security of the house site belonging to me * * * * pay and make good * * * the principal and interest."

6. Moreover I feel some doubt as to whether I should be prepared to follow the decision of the Calcutta High Court based as it was upon the ground that the instrument did not create a charge at the time of its execution, but that it only operated so as to bring the charge into existence on non-payment of the principal money, that is on default. The contingency which the learned Judges had in view was the contingency of the mortgagor not fulfilling his covenant to pay.

7. I should doubt, if on that ground alone, the instrument could be properly held not to create a charge within the meaning of Section 100 of the Transfer of property Act.

8. As regards the question of limitation it was argued that in the view that the instrument merely created a charge although the 2nd defendant could not have recovered on it, his remedy being time-barred, he might rely on it for the purpose of showing that his mortgage rights were not extinguished by the operation of the Law of Limitation. In support of that argument we were referred to the case of Soobramania Aiyar v. Poovan (1902) I.L.R. 27 M. 28 and Lakshmi Doss v. Roop Lal (1906) I.L.R. 30 M. 178; to an English decision In re Marshfield (1887) L.R. 34 Ch. D. 721.

9. Again with regard to this question it is not necessary for me to express any final opinion because in my view the instrument is a mortgage. It seems to me it satisfies the requirements of Section 58, Sub-section (b), of the Transfer of Property Act. In support of the contention raised on behalf of the respondent that it was not a mortgage, we were referred to two Calcutta cases Royguddi Sheik v. Kali Nath Mookherjhee (1906) I.L.R. 33 C. 985 and Gobinda Chandra Pal v. Dwakanath Pal (1908) I.L.R. 35 C. 837 I do not think that we get much assistance from either of these decisions. It was argued on behalf of the respondent that the document could not be construed as a mortgage because it did not in express terms, confer a power to sell. No authority was cited in support of this proposition. On the other hand Mr. Srinivasa Aiyangar was able in his reply to call our attention to a decision of the Privy Council in Sri Raja Papamma Rao v. Sri Virapratapa H.V. Ramachandra Razu 6. It is true the words of the instrument there in question were not the same as the words here. The words in the Privy Council case no doubt come much nearer to a power of sale than the words in the instrument before us. But in the Privy Council case a power of sale was' inferred from the words which did not give the power in express language.

10. Mr. Srinivasa Aiyangar was also able to call our attention to a Bombay case Motiram v. Vitlal (1888) I.L.R. 13 B. 96 in which the language of the document was the same as in the case before us. In that case it was held that the instrument amounted to a mortgage.

13. I think the court of first instance is right and that the instrument amounts to a mortgage. An issue will have to go back to the lower appellate court. I leave my learned brother to deal wth this.

Krishnaswami Aiyar, J.

14. I wish to add a few words. I am unable to agree with the decision of the Calcutta High Court in Madho Misser v. Sidh Binaik Upadhyaya (1887) I.L.R. 14 C. 687. Although it is possible to distinguish the facts of that case from those of the present it must be admitted that the Calcutta case proceeds upon the principle that it is impossible to create a charge on a condition and the charge will not be effective on the happening of that condition. The Allahabad High Court also in Harjas Roi v. Naurang (1906) 3 A.L.J. 220 appears to take the the same view. The facts of that case are also distinguishable. But although the facts are so distinguishable, the principle laid down in that case does not commend itself to me. Sections 5 and 21 of the Transfer, of Property Act seem to me to recognise the principle of a valid charge being created on the happening of a condition. The decision of this Court in Cooling v. Saravana (1888) I.L.R. 12 M. 69 is based upon it. I see nothing opposed to any principle of law that there should be a charge created on the happening of a condition where the condition itself is first stipulated and the condition happens afterwards. That being my view I dissent from the conclusion arrived at by the Subordinate Judge.

15. Now the next question to be dealt with is whether the instrument in the case creates a mortgage or a charge. The distinction between mortgage and charge is rather fine sometimes. Of course, there is no difficulty in distinguishing a mortgage by conditional sale from a charge. But the difficulty arises where a distinction has to be drawn between a simple mortgage and a charge. A charge is said be created by act of parties or by operation of law.

16. In so as far as it is created by operation of law, that is a circumstance which distinguishes a charge from a mortgage which is created by act of parties. But there are cases where a charge is created by the act of parties and the question is, what is the distinction between a charge and a mortgage, where the mortgage is a simple mortgage and the charge is created by the act of parties. I have been in considerable doubt during the course of the argument as to whether we have succeeded in getting hold of any principle by means of which we could distinguish a mortgage from a charge. But having heard the matter fully discussed by Mr. Srinivasa Aiyangar, I have B been able to make up ray mind and I wish to express the conclusion at which I have arrived. I think a covenant to pay is an essential element of a simple mortgage. It has been held that it is not necessary that there should be a formal transfer of any interest in property in words. And I think the authority of the Privy Council decision in Sri Rajah Papamma Rao v. Sri Vira Pratap H.V. Ramachendra Razu (1896) I.L.R. 19 M. 249 goes so far as this. Then it is also not necessary to constitute a simple mortage that the instrument should state that the mortgagee shall recover his money by sale of the mortgaged property. The decision in Datto Dudheswar v. Vithu (1895) I.L.R. 20 B. 408 carries the matter a little further than the Privy Council case and I venture to think that it carries it as far as it is necessary to go for the purpose of this case. Therefore following the authority of Datto Dudheswar v. Vthu (1895) I.L.R. 20 B. 408 I hold that the transaction in this case is a mortgage.

17. Now the question remains as to what we shall do in this case. The Subordinate Judge in paragraph 8 of his judgment refers to the question as to the priority of plaintiff's sale over Exhibit II. The plaintiff's sale deed is registered and Exhibit II is unregistered. It has been pointed out by Mr. Srinivasa Aiyangar that his sub-mortgage which is registered is dated 1886 and anterior in point of time to the plaintiff's sale deed and that he would still be in a position to claim priority over the plaintiff's sale deed. Well, that is a question for the Subordinate Judge to decide. We should probably have considered it ourselves and decided it here but for the fact that Mr. Srinivasa Aiyangar raises also another question as to whether plaintiffs sale was not with notice of Exhibit II. No doubt, this question was not raised before; but having regard to the fact that the plaintiff only claimed in the appellate court priority in respect of his instrument being registered andthesecoqd defendant's document Exhibit II, being unregistered we ought not to deny the second defendant an opportunity of proving that the plaintiff had notice of Exhibit II.

18. The issue that we shall remit to the Subordinate Judge to try will be whether the plaintiff's purchase is free from the mortgage under Exhibit II as against the 2nd defendant by reason of the sale being registered and Exhibit II being unregistered. The and defendant will be at liberty to raise in his plea of notice to the plaintiff at the time of his purchase of Exhibit II, and the Subordinate Judge will take further evidence on the issue and return his finding in 8 weeks from this date when there will be 10 days for objections.

[The appellant having died no further action was taken in the case. - ED.]

"Section 61 of the Transfer of Property Act,

Balasubramania Nadar v. Sivaguru Asari And Anr.

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Arguments described in the opinion

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Direct implications for the parties

Broader implications and precedential effect

Balasubramania Nadar v. Sivaguru Asari And Anr.

Comments