The circumstances which have given rise to the litigation out of which the present appeal arises, are not disputed before this Court and lie in a narrow compass. On the 15th July 1889, two brothers, Ramhari and Ram Sundar, now represented by the first eleven Defendants, executed a usufructuary mortgage in favour of the Plaintiff in respect of Mouzah Chilbilla which appertains to Mehal Balbhadrapur bearing Touzi No. 7062 of the Collectorate of Arrah. The sum advanced on the mortgage was Rs. 6,000 and the mortgagee was to remain in possession of the property comprised in the security from 1297 to 1315. It was agreed that interest would run at the rate of 12 per cent per annum and Rs. 825 was settled as the amount of properties to be set off annually against the mortgage debt, principal and interest. The schedule to the deed showed that on the basis of this calculation the whole of the mortgage-debt would be satisfied in the course of the year 1315 and the mortgagee undertook to restore the property at the end of that year to the mortgagors together with a sum of Rs. 661 which he would have received in excess of his dues. The deed further provided that if the mortgagee lost possession of the property during the term, either the mortgagors or the mortgagee would have recourse to law to restore possession to the mortgagee but the mortgagors would be liable for the costs and interest. The deed also provided that if the mortgagee did not get possession or lost possession interest would rim at the rate of 2 per cent per mensem from the date of dispossession until realization, and if by reason of the failure of the mortgagors to pay the Government revenue, the entire estate was sold, the mortgagee would be entitled forthwith to recover what was due, together with interest at two per cent per mensem. It was further provided that the property was to remain pledged for the payment of whatever might at any time be due upon the mortgage, and, in the event of a sale of the estate for arrears of Government revenue, the mortgagee would be entitled to realize his dues from the surplus sale-proceeds. Under this document, the mortgagee got into possession and remained in occupation from 1297 to 1305. In the beginning of 1306, however, he lost possession of one-half of the property in the manner following. The half share which belonged to Ramhari had been previously mortgaged to one Madan Mohan Mitra, who enforced his security, obtained a decree, got the property sold, purchased it himself on the 5th April 1898, and obtained delivery of possession through Court on the 12th October 1898. The mortgagee consequently remained in occupation of one-half of the property during the years 1306 to 1308, when, it is alleged, a further disturbance of his possession took place. It appears that on the very day on which the usufructuary mortgage in favour of the Plaintiff was executed, another mortgage was executed in favour of certain persons, called the Sahus, in respect of the entire estate Balbhadrapur. The mortgagees sued to enforce their security, obtained a decree on the 15th June 1897, and had the property sold which was purchased by the Plaintiff on the 8th August 1900; the property so purchased was an one-fourth share out of a half of Balbhadrapur which belonged to Ram Sundar, and the Plaintiff alleges that he was placed in possession as purchaser from the beginning of 1309. The Plaintiff asserts that from that date he ought to be treated as if he was in possession of a six annas share only under the usufructuary mortgage of 15th July 1889 and of a two annas share as purchased under the mortgage executed on the same date in favour of the Sahus. On the 30th September 1904, the Plaintiff commenced this action upon the allegation that he had lost possession of a substantial portion of his security, that he had repeatedly called upon the mortgagors either to pay up the debt or to furnish additional security but to no purpose, and that, therefore, he was entitled to recover one-half of the mortgage money with interest from 1306 to 1308 and five-eighths of the mortgage money with interest from 1309, to the date of the institution of the suit. The claim was resisted by Defendant No. 12 alone who had been made a party as a puisne incumbrancer. He contended that the suit could not be maintained to realize a portion of the mortgage money, that it was premature as it had been instituted before the expiry of the term, and, that in any event the mortgagee could not obtain a decree for sale against the mortgaged property. The Subordinate Judge gave effect to these contentions and rejected an application which was made by the Plaintiff for leave to amend the plaint, so as to include in the suit a claim for the whole of the sum due upon the mortgage. In this view of the matter, he dismissed the suit with costs. Against this decree, the Plaintiff preferred the present appeal to this Court on the 13th November 1905. During the pendency of the appeal, the entire estate Balbhadrapur was sold for arrears of Government revenue on the 25th August 1906. This fact was proved before us by an affidavit filed on behalf of the Appellant, and the learned vakil for the Respondent, puisne encumbrancer, has, after enquiry, admitted the truth of this allegation. The result of the sale, of course, has been that the purchaser has taken the property free from all encumbrances, including the usufructuary mortgage of the Plaintiff and it is said that the Plaintiff has already lost possession of the share of which he was in occupation. Under these circumstances, it is obvious that a discussion of two of the three questions raised in the Court below, namely, whether the Plaintiff could sue before the expiry of the term, and whether he could obtain a decree for sale of the mortgaged property, becomes of no practical importance. It was faintly suggested, however, by the learned vakil for the Respondent that the case must be tried on the facts as they stood at the date of the institution of the suit and that it is not competent to this Court as a Court of Appeal to take cognizance of events which may have happened since then. The first question, therefore, which requires consideration, is whether it is open to this Court, though it is a Court of Appeal, to take notice of the fact that the disputed property has been sold for arrears of revenue and is no longer available for the satisfaction of the claim, if any, of the Plaintiff mortgagee and to mould the relief to be granted to the Plaintiff accordingly.
It may be taken as a well-settled principle that, as a general rule, a Court of Appeal in considering the correctness of the judgment of the Court below, will confine itself to the state of the case at the time such judgment was rendered, and will not take notice of any facts which may have arisen subsequently. But it is equally well-settled that the Court will, in exceptional cases, depart from this rule, specially where, by so doing, it can shorten litigation and best attain the ends of justice. As illustrations of the general rule, reference may be made to the cases of Govinda v. Perum Devi(1) [where it was held that a suit for a declaratory decree by a reversioner to impeach the validity of alienations by a Hindu widow is not affected by the death of the widow during the pendency of the litigation], Rama Nandan v. Pulikutti(2) [where a Plaintiff who had sued at a time when he had no subsisting title was not allowed the benefit of a title which had accrued to him during the pendency of the litigation] and Woman Rao v. Rustomji(3) [where a Plaintiff who had sued for a declaratory decree was allowed to proceed with the suit even after he had acquired title to the property and had become entitled to consequential relief.] As illustrations of cases in which the Court has taken cognizance of events since the filing of a suit or appeal, reference may be made to the decisions in Sakharam v. Hari(4) and Sangili v. Mookan(5) [where upon the death of a party to a suit for partition during the pendency of an appeal the Court was obliged to alter the shares and allotments], Ahmadjee v. Mahamadjee(6) [where in a suit for declaration that the Plaintiff was the senior heir to a certain person, upon the death, during the pendency of an appeal, of the only person alleged by the Defendant to be preferentially entitled to succeed, the Court made a decree in favour of the Plaintiff], Rustomji v. Sheth Purshotam Das(7) [where in a suit relating to a partnership business, the Court of Appeal varied the decree of the first Court by reason of events which had happened during the pendency of the appeal] and Balkishan v. Kishan Lal(8) [where a Court of appeal was obliged to reverse a judgment which had been based on another judgment which during the pendency of this appeal had been set aside by another Court]. This power of a Court of appeal to take cognizance of facts which have happened since the date of the judgment of the Court below has been widely recognised; and is stated by Mr. Justice Thayer in Ransom v. City of Pierre(9) to be based on the principle that “it is the duty of the Court which still retains control of the judgment, to take such action as will shorten litigation, preserve the rights of both parties and best subserve the ends of justice.” The principle which underlies the exercise of such a power was elaborately examined in the case of Mills v. Green(10) where Mr. Justice Gray in delivering the unanimous opinion of the nine Judges of the Supreme Court of the United States, affirmed the doctrine that it is not only in the power, but it may sometimes be the duty of a Court of Appeal to take notice of events which have happened during the pendency of the appeal and that such events when not appearing on the record may be proved by extrinsic evidence. Numerous illustrations were given of instances in which the adoption of such a course has been found necessary and it was pointed out that if the course was not followed, the Court might decide matters no longer in controversy or deliver a judgment which could not be carried into effect and could not in any manner affect the matter in issue in the case before it. Indeed circumstances have sometimes happened pending an appeal from the judgment of the lower Court and without any fault of either party to the litigation, which rendered it impossible for the Court, even if it should decide the case in favour of the Plaintiff, to grant him any effectual relief whatever, and the Court has been obliged to disallow the claim without a formal judgment. If there is any case to which the principle that a Court of Appeal may take cognizance of events which have happened since the filing of the appeal, may be rightly applied, the case before us is pre-eminently of that discription. If the fact of the revenue sale is ignored, if the contention of the Appellant prevails that he is entitled to a mortgage decree for whatever is due upon the usufructuary mortgage, and if this Court directs a sale of the mortgaged property, endless confusion may result; the decree might either prove infructuous and incapable of execution or the purchaser at the revenue sale might be driven to a suit for declaration that the property in his hands was not liable to be sold and for an injunction to stay proceedings. In the interests of justice, therefore, we are bound to take notice of the fact that the mortgage security has been sold for arrears of revenue during the pendency of this appeal.
The question next arises, what course ought to be pursued with a view to effect a speedy adjustment of the rights of the parties. It has been suggested on behalf of the Respondent that this Court may, in the event which has actually happened, either dismiss the suit on the ground that the relief which was asked by way of sale of the property mortgaged cannot be granted or may allow the Plaintiff to withdraw from the suit, upon payment of all costs, with liberty to bring a fresh suit adapted to the present condition of things. There is, however, a third alternative, namely, to allow the Plaintiff to amend the plaint, and to make it a suit for the recovery of whatever is due upon the whole mortgage out of the surplus proceeds of the revenue sale. In our opinion, this is unquestionably the course which ought to be adopted specially when we remember that if the Plaintiff is driven to a new suit, the surplus proceeds may, in the meanwhile, be taken away by other creditors of the mortgagors including Defendant No. 12 himself, who has already sued to enforce his security. We further desire to observe that the Subordinate Judge did not in our opinion exercise a sound judicial discretion when he refused leave to the Plaintiff to amend the plaint so as to include a claim for the whole of his dues on the mortgage; the grant of the leave asked for would not have altered the nature of the suit, could not in any way prejudice the Defendant and would merely have given the Plaintiff a wider relief than he had originally sought; there can be no reasonable doubt that he had asked for a decree in respect of only half the mortgage money in the interest of the mortgagors themselves, and as soon as the Defendant took the objection, showed the utmost readiness to enlarge the scope of his claim; moreover, no question of limitation could arise as the Plaintiff was an infant at the date of the usufructuary mortgage as also at the time of the institution of the suit. We must, consequently, treat the suit as one for recovery of whatever is due to the Plaintiff upon the mortgage transaction.
Two questions have been raised as to the principle upon which the accounts are to be taken, namely, first, whether the Plaintiff is entitled to any, and if any, what interest from the date of dispossession, and, secondly, what is the effect of the purchase by the Plaintiff of a two-annas share of the entire estate on the 8th August 1900. Upon the first question, it was argued by the learned vakil for the Respondent upon the authority of the decision of their Lordships of the Judicial Committee in Partab Bahadur Singh v. Gajadhar(11), that as the mortgagee had acquiesced in the diminished security, he was not entitled to found a claim for interest on the fact of his dispossession. The case upon which reliance is placed, is, however, clearly distinguishable, because, here it was not argued that the mortgagee should enjoy the rents and profits instead of interest for his money, the principal meanwhile remaining undiminished. Nor can it be said in this case, that the mortgagee had not made any effort to obtain from the mortgagor an equivalent to the security of which he had lost possession, and there is no foundation for the suggestion that there has been any such acquiescence by the mortgagee in his diminished security as was established in the cases of Partab Bahadur v. Gajadhar and Khudabuksh v. Alimunnissa(12). It further appears that, in the present case, there was a covenant under which interest was to be calculated at a prescribed rate, and there does not appear to have been any similar provision in either of the two deeds upon the construction of which the cases to which we have just referred depended. We must hold, therefore, that the Plaintiff is entitled to interest from the date he lost possession of part of the security. The question consequently arises as to the rate of interest. The deed provides 12 per cent per annum for the purpose of taking the accounts for the period during which the mortgagee may be in possession of the entire security; it further provides for interest at 24 per cent per annum from the date of dispossession from either a part or the whole of the security. In this latter contingency, however, it does not provide, as it does for the former alternative, that the profits are to be taken at a fixed sum of Rs. 825. If the mortgagee, therefore, stands strictly upon his rights, he would be entitled to claim interest at 24 per cent per annum from the date, of dispossession, but he would be obliged to account for the actual profits, which would necessarily mean a protracted investigation. The parties have, therefore, adopted a very reasonable course and have agreed that the interest is to be calculated at 12 per cent per annum, and allowance is to be made for the profits on the assumption that the profits of the entire property amount to Rs. 825 annually.
The second question which requires consideration is as to the effect of the purchase by the Plaintiff of a two annas share of the entire estate on the 8th August 1900. As we have already stated, this sale took place in execution of a decree on a mortgage which bore the same date as the usufructuary mortgage of the Plaintiff. It is contended on behalf of the Plaintiff that he ought to be regarded as dispossessed of a two annas share of the property comprised in the usufructuary mortgage. It is argued on behalf of the Defendant that the purchase has not affected the position of the Plaintiff at all. In our opinion, both these contentions are erroneous. The general rule is, in a case of competition between several securities, that he, whose security is created first in the order of time, shall be entitled to be paid out of the lands in priority to those whose securities are later; this principle is recognised in sec. 48 of the Transfer of Property Act. But where two instruments are executed on the same day, that which was executed first takes priority, and evidence may be given to ascertain which was in fact executed first, Gartside v. Silkstone, etc., Iron Co.(13). Where, however, as in the case before us, it cannot be ascertained which security was executed first, the mortgagees would take as joint tenants or tenants in common. This is illustrated by the decision of Vice-Chancellor Wood in Hopgood v. Ernest, in which that learned Judge held that where the order of execution of two mortgages executed on the same day could not be ascertained and the deeds were delivered simultaneously, the two mortgages took effect at once and were payable pari passu. It may be observed that the actual decree made by Wood, V.C, in the case referred to, was reversed by Lords Justices Turner and Kight Bruce, upon a ground immaterial for our present purposes, but the view of the Vice-Chancellor upon this particular point was not questioned. [The principle applicable to cases of simultaneous mortgages is lucidly explained in the commentaries of Voet, Book XX; Tit. IV, sec. 29 (Berwick's Translation, p. 420); see also Burge on Colonial Law, Vol. III, p. 217.] It follows, therefore, that the mortgage for the satisfaction of which the Plaintiff purchased, as also his usufructuary mortgage, must take effect simultaneously and neither can claim priority over the other. Strictly speaking, therefore, each mortgage ought to operate rateably according to the amount due under it; there are, however, no materials on the record which would enable us to make an accurate calculation on this footing. The justice of the case would be met, if we hold that each of the mortgages operated to an equal extent upon the disputed share of two annas. Accounts must, therefore, be take on the assumption that the effect of the purchase by the Plaintiff on the 8th August 1900 was to deprive him of possession of an one anna share only of the property covered by the usufructuary mortgage. An account taken on these principles showed that Rs. 5,675-6 was due to the Plaintiff on the 25th August 1906 when the revenue sale took place. The Plaintiff will have a decree for this sum which will carry interest at 6 per cent from the 25th August 1906 up to the date of realization. He will be entitled to recover his dues from the surplus proceeds of the revenue sale, over which he has a charge under the mortgage contract, as also under sec. 73 of the Transfer of Property Act, to the extent of the value of the village Chilbila which was mortgaged to him. Upon this question of value, however, there is no evidence on the record. The case will, therefore, have to be remanded, to the Subordinate Judge, so that he may determine upon evidence to be adduced by both sides what portion of the surplus sale-proceeds now in deposit in the Collectorate, the whole of which represents the value of the entire estate, may be fairly taken to represent the value of the Mouzah Chilbila which alone is covered by the usufructuary mortgage. If the amount for which the Plaintiff now obtains a decree is less than the amount which represents the value of Chilbila, the Plaintiff will have his dues satisfied from such amount. If, on the other hand, the amount due to the Plaintiff exceeds the value of Chilbila, he will be entitled to take out execution for the balance against Defendants Nos. 1 to 11, the representatives of the mortgagors, to the extent of the assets, if any, in their hands. As regards the costs of this litigation, the Plaintiff will have half his costs, both here and in the Court below. The amount of costs allowed will be added to the sum found due to the Plaintiff, will carry interest at the same rate from this date till the date of realization, and will be realizable in the same manner. The decree of this Court will specify the amount which the Plaintiff is entitled to recover. The appeal will, therefore, be allowed, the decree of the Subordinate Judge reversed and the case remitted to him for determination of the question of the precise amount of the surplus sale-proceeds against which the Plaintiff may execute the decree of this Court. We further direct that the balance of the surplus sale-proceeds do stand to the credit of Defendant No. 12, till he obtains a decree on his security and is in a position to enforce it.
N.G
Appeal allowed.
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