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  • secs. 86 and 88 of the Transfer of Property Act.
  • sec. 86 of the Transfer of Property Act, 1882,
  • TRANSFER OF PROPERTY ACT
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  • secs. 86 and 88 of the Transfer of Property Act.
  • sec. 86 of the Transfer of Property Act, 1882,
  • TRANSFER OF PROPERTY ACT
Smart Summary

Factual and Procedural Background

This opinion, delivered by Jenkins, J., arises in an ordinary mortgagee's suit in which the Plaintiff sought to enforce her security. The sole question expressly identified in the opinion is whether the decree in such a suit should provide for the payment of subsequent interest (i.e., interest accruing beyond a date fixed within six months from the date of the decree under the Transfer of Property Act, 1882). The need for this clarification arose because of a decision of the Allahabad High Court in Amolakram v. Luchmi Naram, the head-note of which raised doubt about the power of courts to allow subsequent interest under sections of the Transfer of Property Act and the Code of Civil Procedure.

Legal Issues Presented

  1. Whether, in a suit for sale/foreclosure under the Transfer of Property Act, 1882, the Court has power to allow subsequent interest beyond the date fixed within six months from the date of the decree (i.e., whether a mortgagee is entitled to interest accruing after the date specified under section 86 of the Transfer of Property Act).
  2. Whether provisions of the Code of Civil Procedure (specifically sections 209 and 222 as considered in the cited authority, and the general powers under section 209) can operate so as to allow interest up to realization notwithstanding the special provisions of the Transfer of Property Act (i.e., whether the CPC affects or supplements the TP Act on this point).

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Amolakram v. Luchmi Naram (Allahabad High Court) The head-note and passages cited assert that (a) in a suit upon a mortgage for the sale of mortgaged property the Court has no power, under section 86 of the Transfer of Property Act, to allow interest in the account or declaration for any period beyond the date of payment which must be fixed within six months from the date of the decree; and (b) sections 209 and 222 of the Code of Civil Procedure do not affect the special provisions as to allowance of interest contained in the Transfer of Property Act. Jenkins, J. quotes and examines this authority closely. He records the Allahabad view but critiques it: he considers the Allahabad court's interpretation—that "what is so found due" in section 88 must be limited to amounts found due at the date indicated in section 86—to be erroneous in part. Jenkins, J. reasons from other sections of the Transfer of Property Act (notably sections 90 and 94) and from the procedural Code (forms and section 209) to conclude that the Transfer of Property Act does not exclude allowance of subsequent interest, and that the conclusion that section 209 cannot affect the TP Act is wrong.

Court's Reasoning and Analysis

The opinion proceeds through a textual and contextual analysis of the provisions of the Transfer of Property Act and the Code of Civil Procedure relied upon in the Allahabad decision and in the present controversy. The court's reasoning can be summarized in these steps, strictly reflecting the material in the opinion:

  1. Identification of the central statutory provisions: Jenkins, J. focuses on sections 86, 88 and 89 of the Transfer of Property Act (which govern the form and effect of decrees for foreclosure and sale), and also examines section 90, section 94 and section 97 for related adjustments and applications of sale proceeds. He also considers provisions of the Code of Civil Procedure, including sections 209 and 222 and the forms in the Fourth Schedule (specifically Form 109).
  2. Quotation and textual analysis of sections 86, 88 and 89: The judgment quoted the provisions that require the Court to either take an account of what is due "on the day next hereinafter referred to" or to declare the amount due at the date of the decree, and to fix a day within six months for payment. The Allahabad view was identified as interpreting the phrase "what is so found due to the Plaintiff" in section 88 as including not only heads of indebtedness but also the exact date specified in section 86, thereby disallowing subsequent interest.
  3. Linguistic and contextual counter-analysis: Jenkins, J. disputes the Allahabad interpretation. He points out that the first paragraph of section 86 itself contemplates two different references to time (the date for taking an account and an alternative declaration of the amount due "at the date of such decree"), which suggests that "so found due" in section 88 need not be strictly limited to the date specified in section 86.
  4. Reliance on section 90 and section 94 to support adjustment for subsequent amounts: The judge emphasizes section 90's phrase "the amount due for the time being on the mortgage," reading it as implying the possibility of adjustment beyond the initial account under section 86. Section 94 is noted as expressly mentioning a final adjustment; section 97's application-of-proceeds language is also referenced to support this view. These provisions, in the judge's view, make it difficult to reconcile the absolute exclusion of subsequent interest adopted by the Allahabad court.
  5. Consideration of procedural law and practice: Jenkins, J. observes that the Transfer of Property Act and the Civil Procedure Code were enacted in close temporal proximity and that the Fourth Schedule to the CPC includes forms (Form 109) whose prayer contemplates making the defendant personally liable for interest until realization if proceeds are insufficient. Because section 90 itself does not expressly provide for such interest, Jenkins reasons the power to include such interest in decrees may be derived from section 209 of the CPC.
  6. Correction of the Allahabad court's view concerning interaction of CPC and TP Act: Based on the forms, section 209, and the contextual reading of the various TP Act provisions, Jenkins, J. concludes that the earlier statement that sections 209 and 222 of the CPC do not affect the Transfer of Property Act is erroneous. He reasons that the provisions of the Transfer of Property Act are not necessarily exclusive and exhaustive on this point and that established practice (including that of the court delivering the present opinion) has allowed subsequent interest.
  7. Practical considerations: While the opinion acknowledges the practical inconveniences resulting from the Allahabad view (noting sale processes often involve delay and postponements), the judge emphasizes that interpretive conclusions must rest on the statutory language and its proper construction. After analysis, he finds support in multiple sections and in procedural practice for allowing subsequent interest.

Holding and Implications

Holding:

The court held that the Transfer of Property Act does not exclude the allowance of subsequent interest, and directed that the decree in the present kind of mortgagee's suit shall follow the form and practice which has hitherto obtained in that Court (i.e., allowance of subsequent interest where appropriate).

Implications and consequences:

  • Direct effect on the parties in the case: The decree was directed to be drawn in the traditional form that permits allowance of subsequent interest (the practical effect being that the mortgagee may claim and recover interest accruing after the date referred to in section 86, subject to the established form of decree and adjustments described in sections such as 90 and 94).
  • Relationship between statutes: The Court rejected the view that sections of the Code of Civil Procedure (notably section 209 as read in conjunction with procedural forms) cannot influence how the Transfer of Property Act operates with respect to subsequent interest. The opinion explicitly characterizes the Allahabad court's contrary statement on this point as erroneous.
  • Precedential posture: The judgment endorses the long-continued practice of the Court permitting subsequent interest and directs continuation of that practice. The opinion critiques and departs from the reasoning in Amolakram v. Luchmi Naram on the specific point of exclusion of subsequent interest.
  • No additional broader policy or legislative change is decreed: The judgment stresses statutory construction and established practice; it does not purport to alter statute law but to interpret the existing statutory framework as permitting subsequent interest in appropriate circumstances.

Attorney noted in the opinion: Babu Hirendra Nath Dutt (Attorney for the Applicant).

    Achalabala Bose v. Surendra Nath Dey

    Jenkins, J.:— This is an ordinary mortgagee's suit in which the Plaintiff seeks to enforce her security, and the only question involved is whether the decree should provide for the payment of subsequent interest. The doubt is due to a decision of the Allahabad Court in the case of Amolakram v. Luchmi Naram , the head note of which is as follows:—

    “In a suit upon a mortgage for the sale of the property mortgaged, the Court has no power to allow in the account under sec. 86 of the Transfer of Property Act, 1882, or in its declaration, under that section, interest for a period beyond the date of payment which has to be fixed within six months from the date of the decree.

    “Secs. 209 and 222 of the Code of Civil Procedure, 1882, do not affect the special provisions as to allowance of interest contained in the Transfer of Property Act, 1882.

    “In construing a decree, the terms of which are ambiguous, such construction must, if possible, be adopted, as will make the decree in accordance with law, and not a decree, such as the Court soaking it had no power to pass.”

    The portion of the judgment which deals with this actual point is in these terms,

    “Now it is contended on behalf of the decree-holders that the decree gave them interest on the principal amount beyond the date of the expiration of the six months which the Court fixed as the time when the payment should be made. We must see what would have been a legal decree in this case. A decree for sale can only be made under the Transfer of Property Act, 1882. It is as well to bear that in mind. The decree, which can be made in a case like this, is that which is specified in sec. 88 of that Act. A decree for sale according to sec. 88 shall be to the effect mentioned in the first and second paragraphs of sec. 86 of that Act, ‘and also ordering that in default of the Defendant paying, as therein mentioned, the mortgaged property, or a sufficient part thereof, be sold, and that the proceeds of the sale (after defraying thereout the expenses of the sale) be paid into Court and applied in payment of what is so found due to the Plaintiff, and that the balance, if any, be paid to the Defendant or other persons entitled to receive the same.’ In order to see what would be a decree to the effect mentioned in sec. 88, we must look at sec. 86. We find that by the first paragraph of sec. 86, the Court shall make a decree ordering that an account be taken of what will be due to the Plaintiff for principal and interest on the mortgage and for his costs of the suit, if any, awarded to him, on, the day next hereinafter referred to, or declaring the amount so due at the date of such decree. It is obvious that the words of sec. 88 “what is so found due to the Plaintiff” must mean the amount referred to in the first paragraph of sec. 86, that is, either the amount found due by the account directed to be taken in that section, or the amount which the Court, at the time of passing its decree, declares to be due. It is also obvious that under sec. 86 no future interest, beyond a date within six months of the date of the decree, can be entered in the account or declared by the Court; and from sec. 88, it is obvious that the proceeds of the sale decreed under that section must be applied after payment of the expenses of the sale, in payment of ‘what is so found due to the Plaintiff,’ and that the balance, if any, must be paid to the Defendant or other person entitled to receive the same. The section clearly shows that it is only the amount originally declared at the time of making the decree, or found to be due under the account provided for by sec. 86, which the Court can pay over to the Plaintiff out of the proceeds of the sale, and that the Court has no power to allow in the account under sec. 86, or in its declaration under that section, interest beyond the date which has to be fixed within six months from the date of the decree. In certain events, in adjusting the amount to be paid to a mortgagee, certain additional costa are to be added under sec. 94 of the Act, to the mortgage-money; but there is absolutely no provision, that we are aware of, for adding additional interest.

    “Now it appears to us that the granting of interest on the costs decreed was in contravention of sec. 86. The power exercised by Courts to grant interest up to realization under the Code of Civil Procedure appears, in the case of decrees for sale, to be excluded by secs. 86 and 88 of the Transfer of Property Act. It would be well, if Courts, whether of first instance or of appeal, in cases arising under the Transfer of Property Act, would read and consider the sections of that Act, which contain the law on the subject which the Legislature in India has thought it necessary to enact. We have no power, as Judges in India, to alter the Statute Law; and we have no power to make decrees which are not in accordance with that Statute Law, when the Statute Law provides for the form of the decree to be made. It is not safe to assume that the Law of the Transfer of Property Act is the law which was administered in the Courts of Chancery in England.”

    On the serious practical inconveniences resulting from this decision, it is needless to enlarge, as it is matter of common knowledge, that the sale under a decree invariably and of necessity involves some decree of delay, and that it frequently happens that a postponement is as necessary in the interests of the mortgagor as of the mortgagee; still this cannot control the proper construction of the Act if its language is clear and plain. The sections to which reference seems to have been made in that case are the 86th, 88th and 89th of the Transfer of Property Act, and the 209th and 222nd of the Code of Civil Procedure; but it appears to mo that for the purpose of arriving at the true meaning of the Legislature, regard must he had to other part of both these Codes.

    Now sec. 88 provides:—

    “In a suit for sale, if the Plaintiff succeeds, the Court shall pass a decree to the effect mentioned in the first and second paragraphs of sec. 86, and also ordering that, in default of the Defendant paying as therein mentioned, the mortgaged property or a sufficient part thereof be sold, and that the proceeds of the sale (after defraying thereout the expenses of the sale) be paid into Court and applied in payment of what is so found due to the Plaintiff, and that the balance, if any, be paid to the Defendant or other persons entitled to receive the same.

    “In a suit for foreclosure, if the Plaintiff succeeds and the mortgage is not a mortgage by conditional sale, the Court may at the instance of the Plaintiff, or of any person interested, either in the mortgage-money or in the right of redemption, if it thinks fit, ass a like decree (in lieu of a decree for foreclosure) on such terms as it thinks fit, including, if it thinks fit, the deposit in Court, of a reasonable sum, fixed by the Court, to meet the expenses of sale and to secure the performance of the terms.”

    To ascertain then the full effect of sec. 88, recourse must he had to sec. 86, which provides:—

    “In a suit for foreclosure, if the Plaintiff succeeds, the Court shall make a decree, ordering that an account be taken of what will be due to the Plaintiff for principal and interest on the mortgage, and for his costs of the suit, if any, awarded to him, on the day next hereinafter referred to, or declaring the amount so due at the date so such decree.

    “And ordering that, upon the Defendant paying to the Plaintiff or into Court the amount so due, on a day within six months from the date of declaring in Court the amount so due, to be fixed by the Court, the Plaintiff shall deliver up to the Defendant or to such person as he appoints, all documents in his possession or power relating to the mortgage property, and shall transfer the property to the Defendant free from all incumbrances created by the Plaintiff or any person claiming under him, or where the Plaintiff claims by derived title, by those under whom he claims, and shall, if necessary, put the Defendant into possession of the property.”

    Thence, 89 provides:—

    “If any case under sec. 88, the Defendant pays to the Plaintiff or into Court on the day fixed as aforesaid the amount due under the mortgage, the costs, (if any) awarded to him, and such subsequent costs as are mentioned in sec. 94, the Defendant shall (if necessary) be put in possession of the mortgaged property; but if such payment is not so made, the Plaintiff or the Defendant, as the case may be, may apply to the Court for an order absolute for sale of the mortgaged property, and the Court shall then pass an order that such property, or a sufficient part thereof, be sold, and that the proceeds of the sale be dealt with as is mentioned in sec. 88, and thereupon the Defendant's right to redeem and the security shall both be extinguished.”

    It will be seen from the judgment, to which I have referred, that according to the view expressed by the Allahabad High Court, the expression “what is so found due to the Plaintiff” in sec. 88 means the amount referred to in the 1st para, of sec. 86, in other words that the word “so” refers not merely to the different heads of indebtedness mentioned in that para., i.e, principal interest and costs, but also to the date there indicated. It appears to me that to attribute this force to the word so is opposed to that which is apparent from the first paragraph itself, for it will be noticed that in that paragraph the expression “so due at the date of the decree” must refer to a point of time other than that by reference to which the account mentioned in the earlier part of the clause is to be taken. This of itself would seem to justify the conclusion that the expression “so found due” in sec. 88 does not necessarily and obviously mean found due at the date indicated in sec. 86.

    But if one locks at sec. 90, it is difficult to reconcile its provision with the view, that a mortgagee is not entitled to subsequent interest. That section provides that “when the nett proceeds of any such sale are insufficient to pay the amount due for the time being on the mortgage if the balance is legally recoverable from the Defendant otherwise than out of the property sold, the Court may pass a decree for such sum.”

    The expression “the amount due for the time being on the mortgage” to my mind implies that there is to be an adjustment over and above the account mentioned in sec. 86, and this view receives confirmation from sec. 94, which expressly mentions a final adjustment, and also from the application of proceeds mentioned thirdly in sec. 97.

    On the other hand, if the interpretation applied in the Allahabad case is adopted, a mortgagor would not be entitled to credit in respect of any subsequent payment made by him, or even in respect of subsequent rents received by a mortgagee in possession and it would be almost doubtful whether the proceeds of sale mentioned in sec. 89 would be applicable in payment of subsequent costs, though mentioned in the earlier part of the section, because those proceeds are to be applied as mentioned in sec. 88; and if the expression “so found due” is to have the meaning attributed to it at page 177 of the report, it would exclude subsequent costs. With all deference I cannot suppose that such results could have been intended, or is required by the words of the Transfer of Property Act.

    Then the Code of Civil Procedure is not without its bearing, on the point. The Transfer of Property Act was passed on the 17th of February 1832, and the Procedure Code, a month later, i.e on the 17th of March, in the same year.

    In the 4th schedule to the Procedure Code are set out the forms of pleadings and decrees, which sec. 614 of the Code ordains, shall be used for the respective purpose mentioned in that schedule; and it is fair to assume that those forms do no exceed that which is permissible. Form 109 contains the plaint to be used in an action for foreclosure and sale, and it is clear from the prayer there stated that in case the proceeds of sale are insufficient to pay the amount due to the Plaintiff, the Defendant may be made personally liable to pay interest until realization. Now sec. 90, under which this part of the decree is made, does not provide for the payment of such interest, so that the power to include it in the decree must apparently be derived from sec. 209 of the Code of Civil Procedure.

    If this be so, then the opinion expressed at page 180 of the report, to the effect that sec. 209 of the Code of Civil Procedure cannot affect the special provisions of the Transfer of Property Act, would seem to be erroneous. The inference would rather appear to be that the provisions of the Transfer of Property Act are not exclusive and exhaustive, and, further, that it never was contemplated that a mortgagee in a suit, which in its origin at any rate was founded on equitable principles as firmly established in this Court as in the Court of Chancery in England should be mulcted of his interest when his mortgagor is in default.

    The conclusion then to which I come is that the Transfer of Property Act does not exclude the allowance of subsequent interest, and I see no reason for departing from the long-continued practice of this Court sanctioned, as it is, by the rules of Court, and I accordingly direct that the decree shall be in the form which has hitherto obtained.

    Babu Hirendra Nath Dutt, Attorney for the Applicant.

    J.C

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    Achalabala Bose v. Surendra Nath Dey
    (Jul 13, 1897)