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Muhammad Abdul Rashid Khan And Others v. Dilsukh Rai And Others
Judgment Summary — Stanley, C.J.
Factual and Procedural Background
The opinion concerns a dispute over the equity of redemption in mortgaged land following a sale dated 20 August 1881. Plaintiffs Nos. 1–3 had purchased a 7-biswa share (out of a 10-biswa share subject to the mortgage) from Ram Bakhsh. The plaintiffs' father had purchased a separate portion described as 2 biswas, 19 biswansis, 10 kachwansis; on his death his daughters (plaintiffs Nos. 4 and 5) became entitled to one-fourth of that share (the opinion states this share to be not more than about 47 bighas).
The plaintiffs-appellants 1–3 applied to set aside the 20 August 1881 sale for alleged inadequacy of price; that application was rejected and the sale confirmed on 9 February 1882. In an objection petition of 30 October 1897, some appellants acknowledged that the equity of redemption had passed to Debi Das by the 20 August 1881 purchase. Several appellants (including Musammat Ummatul Rasul and Musammat Altaf Begam) were minors in 1881 and were not parties to an earlier suit for redemption (filed in 1877 in the court of the Subordinate Judge of Mainpuri); other appellants were also minors and sued under the guardianship of their mother, Miriam-un-nissa.
The appellants challenged the sale on the ground that a mortgagee, in execution of a decree not passed upon the mortgage itself, cannot bring to sale and then personally purchase the equity of redemption, asserting such a purchase is void and the equity remains outstanding in the mortgagor. The action contested in this appeal ultimately resulted in a dismissal of the appeal on procedural grounds by the court.
Legal Issues Presented
- Whether a mortgagee who causes the equity of redemption to be sold in execution of a decree (not a decree instituted on the mortgage debt) may purchase that equity and thereby be freed from his obligations as mortgagee.
- Whether the sale of 20 August 1881 (by which Debi Das acquired the equity of redemption) was void or otherwise open to being set aside after the confirmation of sale and the subsequent lapse of time.
- Whether the absence (non-joinder) of the legal representatives of Debi Das (the purchaser at the execution sale) is fatal to the plaintiffs' suit seeking a declaration that the sale of 20 August 1881 is null and void.
- Whether minors (who were not parties to the prior redemption proceedings) are bound by that sale and, if not, whether they retain a right to redeem their respective shares.
Arguments of the Parties
Appellants' Arguments
- The mortgagee (Debi Das) could not, in execution of a decree not founded on the mortgage, both bring the equity of redemption to sale and then purchase it himself; such a purchase is void and the equity of redemption would remain outstanding in the mortgagor.
- They relied on authority (Martand Balkrisktia Bhat v. Dhondo Damodar Kulkarni and Bhuggobutty Dossee v. Shama Chum Bose) supporting the proposition that a mortgagee cannot free himself from his liability as mortgagee by purchasing the equity at execution sale, because that would defeat the mortgagor’s equitable right to time and account to redeem.
The opinion does not contain a detailed account of the respondents' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Martand Balkrisktia Bhat v. Dhondo Damodar Kulkarni | Held that purchase by a mortgagee of property sold by him in execution of a money decree did not free him from liability to be redeemed; such a sale was rendered nugatory because a mortgagee cannot free himself by such a sale. | The appellants relied on this decision. The court discussed it as supporting the position that a mortgagee should not be allowed to evade equitable safeguards, but did not treat it as an absolute rule entitling the appellants to relief in the present case. |
| Bhuggobutty Dossee v. Shama Chum Bose | Proposition that a mortgagee is not entitled, by resort to a money decree on collateral security, to obtain a sale of the equity of redemption separately because this would deprive the mortgagor of the equitable privilege of time to redeem; principle linked to what became Section 99 of the Transfer of Property Act. | The opinion records that the judges in Martand adopted this proposition. The principle was discussed by the court as an important equitable safeguard, but the court also examined other authorities and did not accept that this proposition automatically invalidated every purchase by a mortgagee. |
| Sheodeni Tewari v. Ram Saran Singh | Held (by a Bench of the Calcutta High Court) that retrospective effect should be given to Section 99 and that a sale in contravention of that section is absolutely unlawful. | Cited as an authority that gave the section a retrospective and strict effect. The court noted the decision but also observed it was not consistent with other authorities; it did not adopt the view that all such sales are absolutely void in every context. |
| Tara Chand v. Imdad Husain | Held that where a mortgagor's interest was sold in execution contrary to Section 99, and that sale was upheld on appeal to the Board of Revenue, the decision was final between the judgment-debtor and judgment-creditor in the rent suit. | The opinion records this decision and observes that it "commends itself." The case was used to show conflicting authorities on the consequences of sales in contravention of Section 99; the court did not treat it as dispositive here. |
| Mayan Pathuti v. Pakuran | Held that a sale in execution contrary to Section 99 is not void but voidable; Section 99 was regarded as enacted for the benefit of a particular class (those with right to redeem) rather than as a rule of public policy making prohibited sales absolutely void. | The court relied on the reasoning that Section 99 protects a particular class and that contravening sales are voidable rather than automatically void. This authority supported the view that a mortgagee's purchase is not ipso facto void in every circumstance. |
| Khairaj Mal v. Daim (Privy Council) | The Privy Council rejected the absolute proposition that a mortgagee could not acquire the equity of redemption by purchase at a court sale except by a suit on the mortgage; nonetheless the Council recognized the equitable principle that a mortgagee cannot, by obtaining a money decree and taking the equity in execution, relieve himself of obligations as mortgagee or deprive the mortgagor of the right to redeem with accounts taken. | The court cited this Privy Council decision for the proposition that a mortgagee's purchase is not universally forbidden; it used the decision to support the view that where a purchase is made in good faith and without advantage taken of the mortgagor, it may be lawful. |
Court's Reasoning and Analysis
The court proceeded by evaluating (a) the nature of the decree under which the sale took place, (b) the precedents and statutory provision (Section 99, Transfer of Property Act) cited by the parties, and (c) procedural defects in the plaintiffs' litigation.
First, the court distinguished the present sale from the classic situation addressed by some authorities: the equity of redemption in this case was sold in execution of a decree for costs and mesne profits, not under a money decree obtained for the mortgage debt itself. That factual distinction reduced the force of authorities treating every mortgagee purchase in execution of a money decree as automatically void.
Second, the court surveyed conflicting authorities. It acknowledged the equitable principle that a mortgagee should not be allowed to use execution proceedings to defeat a mortgagor's right to redeem (as stated in Martand and Bhuggobutty), and it noted Section 99's enactment embracing that principle in a statutory form. But the court also relied on authorities (notably Mayan Pathuti and the Privy Council in Khairaj Mal v. Daim) which restrain from treating every such purchase as absolutely void, instead characterizing some sales as voidable, and recognizing that a purchase by a mortgagee may be valid if made in good faith and without abuse of position.
Third, having examined the legal principles, the court turned to procedural and practical considerations specific to this litigation. The plaintiffs unsuccessfully attempted at the time to set aside the sale; the sale had been confirmed and more than twenty years had passed. The court expressed difficulty in seeing how the appellants could successfully assert the sale was a nullity after such a lapse of time.
Finally, the court found a decisive procedural objection: the legal representatives of Debi Das (the purchaser at the execution sale) were not impleaded. The court concluded that it could not declare the 20 August 1881 sale a nullity in the absence of parties interested in upholding it. On the ground of non-joinder of necessary parties alone, the court held the suit failed.
The court did consider the appellants' contention that some of them (specifically the two daughters who were minors at the time of sale and not parties to the redemption suit) might not be bound by the prior proceedings; the court stated that they might be entitled to redeem their small portion but expressly declined to express any conclusive opinion on that point in the present proceeding.
Holding and Implications
APPEAL DISMISSED
Holding: The court dismissed the appeal with costs and held that, because the legal representatives of Debi Das were not impleaded, the plaintiffs in this suit could not obtain the relief sought (a declaration that the sale of 20 August 1881 was null).
Implications:
- The immediate practical consequence is that the plaintiffs' attempt in this suit to set aside the 20 August 1881 sale failed; the appeal was dismissed and costs were awarded against the appellants.
- The court did not establish a new broad rule invalidating every mortgagee purchase at execution sale; it expressly discussed conflicting authorities and indicated that purchases by mortgagees are not automatically void where made in good faith, particularly where the sale arose under a decree for costs and mesne profits rather than a money decree for the mortgage debt.
- The court declined to finally decide whether minors not made parties to earlier proceedings are necessarily bound; it noted that those minors might have separate rights to redeem but expressed no definitive view in this suit.
Disposition recorded in the opinion: Appeal dismissed with costs.
Stanley, C.J:— [His Lordship, after stating the facts as given above, continued.] It will be observed from the foregoing statement of the facts that the plaintiffs Nos. I to 3 were the purchasers from Ram Bakhsh of a 7 biswa share out of a 10 biswa share which was the subject-matter of the mortgage. Their father only purchased a 2 biswas, 19 biswansis, 10 Kachwansis share. Consequently, upon the death of Zahur Ahmad Khan, his daughters, the plaintiffs Nos. 4 and 5, became entitled to a share in the share so purchased by him, that is, one-fourth, between them of this share, The area of’ this share is stated to be not more than about 47 bighas. The plaintiffs-appellants 1 to 3 applied to the court to have the sale of the 20th of August, 1881, set aside on the ground of alleged inadequacy in the price, but this application was rejected and the sale was confirmed on the 9th of February, 1882. Later on, in a petition of objection filed by some of the appellants on the 30th of October, 1897, to an application which was made by the respondents for mutation of names, these appellants acknowledged that the equity of redemption in the mortgaged property had passed to Debi Das on the purchase of the 20th of August, 1881. They alleged that on that date Debi Das had only a title as such purchaser, and that the mortgage rights, of which the petitioners claimed to be purchasers, were extinguished on the 20th of August, 1881. The appellants, Musammat Ummatul Rasul and Musammat Altaf Begam, were minors in 1881, and they were not parties to the suit for redemption which was filed in the court of the Subordinate Judge of Mainpuri in 1877. The other appellants were also minors at the date of this suit. They sued under the guardianship of their mother, Miriam-un-nissa.’ The contention on behalf of the appellants now is that a mortgagee cannot in execution of a decree obtained by him, not being a decree passed upon his mortgage, bring to sale and himself purchase the equity of redemption of his mortgagor; that such a purchase is void, and that the equity of redemption notwithstanding such sale would still remain outstanding in the hands of the mortgagor. As authority for this contention the case of Martand Balkrisktia Bhat v. Dhondo Damodar Kulkarni(1) is relied on. In that case it was held that the purchase by a mortgagee of property sold by him in execution of a money decree did not free him from liability to be redeemed as mortgagee, that the sale to him was rendered nugatory by the impossibility of a mortgagee by such a sale and purchase freeing himself from the liability to be redeemed”. The Judges who decided this case adopted the proposition laid down in the case of Bhuggobutty Dossee v. Shama Chum Bose(2), namely, that “mortgagee is not entitled by means of a money decree obtained on a collateral security, such as a bond or covenant, to obtain a sale of the equity of redemption separately, because by so doing he would deprive the mortgagor of the privilege which, upon the principle of considering the estate as a pledge, a Court of Equity always accords to a mortgagor, namely, a fair allowance of time to enable him to discharge the debt and recover the estate. This privilege is an equitable incident of the contract of mortgage and it would be inequitable to permit the mortgagee to evade it, to do that circuitously which he could not do directly.” Then the learned Judges observe that “that is the principle which in an extended form is enacted as law in Section 99 of the Transfer of Property Act.” Later on they observe as follows:— ” In the present case it seems impossible to say that the mortgagee did not avail himself of his position to obtain an undue advantage in the purchases or other wise act mala fide:” They then say that “the question is one of difficulty and doubt, but seeing that the Legislature has now adopted the principle in its widest aspects, we think that we are justified in acting upon it. A Bench of the Calcutta High Court held in the case of Sheodeni Tewari v. Ram Saran Singh(3) that retrospective effect ought to be given to Section 99 on the ground that the mode of enforcing a decree is a matter of procedure and that a sale in contravention of the section is absolutely unlawful. This is not consistent with the view taken by a Bench of this High Court in the case of Tara Chand v. Imdad Husain(4). In that case, Edge, C.J, and Blennerhassett, J., held that where a mortgagor's interest in property was sold by a Revenue Court in execution of a decree for rent in contravention of the provisions Section 99, and the sale was upheld on appeal to the Board of Revenue, the decision was final as between the judgment-debtor and the judgment-creditor in the rent suit. The decision commends itself to us. In the case of Mayan Pathuti v. Pakuran, this question was considered and it was held that the sale in execution of a decree obtained by the mortgagee not connected with the mortgage was contrary to the provisions of section 99, yet that the sale was not void but voidable. Subrahmania Ayyar, J., in his judgment observed that “the sale which is impeached is doubtless contrary to the provisions of Section 99 of the Transfer of Property Act. The first point for determination is, whether,- as contended for the appellants, the mortgagors, the private sale is altogether null and void. The argument that in allowing the sale to take place against the provisions of the said section, the court acted without jurisdiction is obviously unsustainable. Still if the above section were enacted for the protection of public interests and the law were to be regarded as laying down a rule of general policy rendering the prohibition absolute, the sale would be void;’ but if the section in question has been introduced for the benefit only of a particular class of persons, the sale would be but voidable.” The learned Judge refers to some text-books in support of this, and continues, “that it is of the latter description is apparent, the object being to protect only persons concerned with the right to redeem mortgaged property. The sale cannot therefore be held to be void.” The learned Judge guarded himself from its being understood that he laid down that a mortgagor would be precluded from redeeming the property, and says, it may be “that the sale in question cannot affect that right of the appellant owing to the impossibility of the respondent, as the mortgagee, freeing himself by such a sale and purchase from the liability to be redeemed.” Independently of the provisions contained in Section 99 of the Transfer of Property Act; we are not prepared to hold that a mortgagee is precluded by law from purchasing the equity of redemption and freeing himself from his liability to be redeemed, provided that the purchase is carried out in complete good faith, and no advantage is taken by him of his position as mortgagee. We are not aware of any principle “upon which such a sale can be impeached merely on the ground that the purchaser was a mortgagee of the purchased property, In the recent case of Khairaj Mal v. Daim, which came before their Lordships of the Privy Council, their Lordships in the course of their judgment observe. “But the Judge has made a decree for redemption of the whole estate on the ground that the mortgagees could not acquire the equity of redemption directly or indirectly by purchase at a court sale, except by a suit brought on the mortgage, on account taken, and time specially allowed for redemption. Their Lordships cannot concur in this view which they think is based on a misapplication of a sound principle of equity. Their Lordships throw no doubt on the principle, which has been acted on in many cases in India, that a mortgagee cannot by obtaining a money decree for the mortgage debt and taking the equity of redemption in execution, relieve himself of his obligations as mortgagee or deprive the mortgagor of his right to redeem on accounts taken, and with other safe-guards usual in a suit on the mortgage.” Their Lordships here reject the notion that mortgagees cannot acquire the equity of redemption in mortgaged property by purchase at a court sale except by a suit brought on the mortgage, though they recognize the principle of equity that a mortgagee cannot by obtaining a money decree for the mortgage debt and taking the equity of redemption in execution, relieve himself of his obligations as mortgagee or deprive the mortgagor of his right to redeem. In the case before us, the equity of redemption was not sold in execution of a money decree obtained, for the mortgage debt. It was sold in execution of a decree for costs and mesne profits. The plaintiffs, Abdul Rashid Khan, Abdul Aziz Khan, and Muhammad Khan, as we have pointed out, endeavoured to have the sale to Debi Das set aside, but failed in that attempt”, We are at a loss to see how after a lapse of more than 20 years these appellants can now successfully set up the case that the sale was a nullity.
2. But there seems to us to be a fatal objection to the suit of the plaintiffs-appellants, and that is to be found in the fact that legal representatives of Debi Das have got been impleaded, The Court cannot declare that sale of the 20th of August, 1881, to be a nullity in the absence of the parties who are interested in upholding it. On the ground of non-joinder of necessary parties alone we think that the suit fails, and that the appeal must be dismissed. But it is contended that as the plaintiffs, Musammat Altaf Begam and Ummatul Rasul, were not parties to the suit for redemption instituted by their brothers, the sale in execution of the decree for costs and mesne profits in that suit is a nullity as regards them at least, and that they are entitled (To redeem. Reliance is placed in support of this contention on the decision of their Lordships in the case to which we have just referred, in which it was pointed out that where a court purported to sell in execution of a decree the equity of redemption in mortgaged property, some of the owners of which were not parties to the proceedings or properly represented on the record, “as against such persons the decrees and sales purporting to be made would be nullity and might be disregarded without any proceedings to set them aside.” It may be that Musammat Altaf Begam and Musammat Ummatul Rasul are in no way bound by the sale of the 20th of August, 1881, and that they are entitled to redeem the small portion of the mort gaged property to which, they became entitled on the death of their father in a suit properly constituted for that purpose; but we express no opinion as to this.
3. They, as also their brothers, were minors when the suit for redemption was brought in the name of, their brothers by their mother as guardian, and it may be that under such circumstances it would be held that the estate of Ram Bukhsh, the mortgagor, was sufficiently represented in the redemtion proceedings. In the case before the Privy Council to which we have referred, their Lordships say. “The Indian Courts have properly exercised a wise discretion in allowing the estate of a deceased mortgagor to be represented by one member of the family, and refusing to disturb judicial sales on the mere ground that some members of the family, who were minors, were not made parties to the proceedings, if it appears that there was a debt ‘ justly due from the deceased and no prejudice is shown to the absent minors.” We, however, decide nothing as to this. We may point out, too, that this is not the case which these ladies set up in their claim. They made common cause with their brothers, the other plaintiffs, and claimed a redemption of all the property comprised in the mortgage of the 5th of February, 1863. As the integrity of the mortgage was broken by the purchase by Debi Das, the mortgagee, of the equity of redemption in part of the mortgaged property, these appellants would only be entitled in any case to redeem their own share, that is, the one-fourth of 2 biswas, 19 biswansis, 10 kachwansis. To the obtaining, however, of this relief, there is the objection that they have not impleaded the legal representatives of Debi Das, the original mortgagee. We hold, therefore, that in the present suit, in which the legal repre sentatives of Debi Das have not been impleaded, the plaintiffs cannot obtain any relief. We accordingly dismiss the appeal with costs.
M.L.NAppeal dismissed.
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