Translate
Text Highlighter

Bookmark

PDF

Share

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

Concise Analytical Summary of the Opinion

Factual and Procedural Background

This appeal arises from a complicated set of interrelated mortgages and subsequent execution sales. The material facts (as set out by the judges) include multiple mortgages effected by Amir Husain over three villages (Bilaspur, Dandhera, and Kheri Dudadhari) at different times (1883, 1885 and 1887). The plaintiff purchased at auction the interest in part of Bilaspur under an execution sale and later alleged that his property (Bilaspur) had borne more than its rateable share of two mortgage debts. Sales in execution of mortgage decrees produced proceeds that discharged the decrees and left a surplus which, the plaintiff alleges, was paid out to other parties (notably Nihal Chand and his representatives) despite the plaintiff's objection. The trial court held that the plaintiff had no proprietary charge but only a personal right of contribution, and that any personal claim was barred by limitation; the trial court dismissed the suit. The present appeal challenges that decision. The appellate court considered whether the plaintiff had a statutory charge under section 82 of the Transfer of Property Act and whether the claims (both for enforcement of a charge and for a personal money decree) were barred by the Limitation Act. The appellate court ultimately allowed the appeal, set aside the decree below, and remanded the case for trial on the merits.

Legal Issues Presented

  1. Whether the owner of a property, mortgaged together with other properties to secure a single debt, obtains a charge against the other properties when his property has been sold in execution and has contributed more than its rateable share, where he has neither redeemed the mortgaged property nor caused the mortgage decree to be discharged solely from the sale of his property.
  2. If two properties are mortgaged to secure one debt and both are sold in execution, whether the owner of the property which bore more than its rateable share has a right to a personal decree against the owner of the other property that bore less than its rateable share, where the latter has received the surplus proceeds of sale.

Arguments of the Parties

Plaintiff's Arguments

  • The plaintiff contends he has a charge (a lien) under section 82 of the Transfer of Property Act against the property represented by defendants 1, 2 and 6 (and originally also against property represented by defendants 3 to 5), because his property (Bilaspur) contributed more than its rateable share of the mortgage debts.
  • As to defendants 3 to 5, the plaintiff claimed that the surplus proceeds of the sale of their property were paid over to them without providing for payment to him for the excess for which he alleges his property was made liable; he sought a simple money decree against them (after abandoning enforcement by sale against that property).

Defendants 1, 2 and 6 (and their contentions)

  • These defendants argued that because the plaintiff did not redeem the mortgaged property and the mortgage decree was not discharged solely from proceeds of the plaintiff's property, the plaintiff had no proprietary charge against their property; at most he had a personal right of contribution.
  • They further contended that any personal right of contribution was barred by limitation (relying on Articles 61 and 99 of the Limitation Act as applied by the trial court).
  • They relied on dicta of Stanley, C.J., in Ibn Hasan v. Brijbhukhan Saran to support the contention that section 82 must be read with section 95 and that a charge cannot arise unless the claimant has redeemed or the mortgage has been discharged in a particular way (as argued by them).

Defendants 3 to 5 (and their contentions)

  • Defendants 3–5 argued that the plaintiff had abandoned any claim against their property and that his present claim should therefore be treated as a personal claim for contribution which arose when the plaintiff's property was made liable for more than its rateable share; that personal claim, they argued, was barred by limitation.
  • They also implicitly relied on the contention that the surplus proceeds paid to them extinguished or defeated any proprietary claim the plaintiff may have had.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ibn Hasan v. Brijbhukhan Saran Earlier authority holding that until the entire mortgage debt has been satisfied, a claim for rateable contribution could not be enforced; some dicta suggested redemption may be necessary in certain circumstances. The court analysed this case and treated it as not deciding the present point where the mortgages have been fully paid. The judges explained Stanley, C.J.'s dicta as limited to the situation where the mortgage had not been wholly satisfied and did not preclude acquisition of a charge once the mortgage debt was discharged.
Muhammad Yahiya v. Rashid-ud-din Clarification of Ibn Hasan: where a mortgage has been wholly satisfied a co-mortgagor who has discharged more than his rateable portion may be entitled to contribution/charge. The court relied on this case to resolve doubts arising from Ibn Hasan and to support the proposition that a charge/criminal right of contribution arises where the mortgage has been satisfied and a co-mortgagor has borne more than his share.
Guru Das Pyne v. Ram Narain Sahu (Privy Council) Distinguished whether a suit is one for money had and received or an equitable suit to follow proceeds; held the claim there was an equitable claim to follow proceeds (not money had and received) because the defendant had sold timber as agent for another. The court discussed and distinguished this decision: it supported the view that a suit to follow proceeds may be equitable, but the facts differed here (no fiduciary relation). The Privy Council case was used to illustrate limits of treating the claim as money had and received.
Berhamdeo Pershad v. Tara Chand Principle that a puisne incumbrancer's equitable right to follow surplus sale proceeds survives sale and is not extinguished by withdrawal of funds from court by a party having notice of that right. Banerji, J. invoked this authority to support the proposition that the plaintiff's lien attached to the surplus proceeds and that the withdrawal/appropriation of the surplus by the purchaser with notice did not defeat the plaintiff's equitable right to recover the surplus.
Gosto Behary Pyne v. Shiv Nath Dut Illustrative authority that in suits under section 73 the plaintiff has been granted a decree for recovery of surplus proceeds even when proceeds have been withdrawn by third parties. Banerji, J. cited this as supporting precedent for allowing recovery of surplus proceeds despite withdrawal by third parties.
Kamala Kant Sen v. Abul Barkat Similar support to Gosto Behary Pyne: plaintiffs have been granted recovery of surplus proceeds under analogous circumstances. Cited as additional authority consistent with the proposition that equitable liens survive and permit recovery of surplus proceeds.
Mahomed Wahib v. Mahomed Ameer Collected cases on classification of suits governed by article 62 (money had and received) for limitation purposes. Banerji, J. relied on the compilation in this judgment to justify treating the present money claim (against those who received the surplus) as one within article 62, if appropriate facts were present.
Rajputana Malwa Railway Co-operative Stores, Ltd. v. Ajmer Municipal Board Held that a suit to recover sums wrongfully levied by a Municipal Board was a suit for money had and received governed by article 62. Banerji, J. used this recent authority to support the classification of the plaintiff's claim for the surplus as within article 62 (or, alternatively, within other applicable articles), and therefore not barred by limitation when brought within the relevant period.
The Rajah of Vizianagram v. Rajah Satrucherla Somasekhararaz; Bhagwm Das v. Har Dei Authority for the proposition that article 99 of the Limitation Act applies to suits for personal decrees for contribution, not to suits to enforce a proprietary charge. Banerji, J. invoked these cases to support the view that article 99 was inapplicable to a suit to enforce a charge under section 82; accordingly the trial court erred in applying article 99 to bar the charge claim.

Court's Reasoning and Analysis

The court's analysis proceeded along two parallel lines: (1) whether a proprietary charge arises under the Transfer of Property Act when one mortgaged estate has borne more than its rateable share; and (2) whether the plaintiff's claims (both for enforcement of a charge and for a personal money decree in respect of surplus proceeds) were barred by limitation.

On the nature and source of the right (statutory charge):

  • All judges agreed that section 82 of the Transfer of Property Act codifies the equitable rule that where several properties are mortgaged for one debt they are liable to contribute rateably. The judges treated section 82 as creating a statutory proprietary charge (or lien) on the other mortgaged properties in favor of a proprietor whose estate has paid more than its rateable share.
  • Both Richards, C.J. and Banerji, J. emphasised that section 82 creates a charge on the properties and does not necessarily impose a personal liability upon co-owners. Richards expressly stated that section 82 "creates what I may call a statutory charge on the other properties" and "creates no personal liability against the owner of the property." Banerji reiterated that the liability to contribute is of the estates and not a personal liability.
  • The court rejected the argument that section 82 must be read as qualified or superseded by section 95 in all cases. The judges held sections 82 and 95 are independent: section 95 applies only to a particular class of cases and does not preclude acquiring a charge under section 82 in other cases.

On limitation and the appropriate limitation provision:

  • For enforcement of the charge under sections 82 and 100, Banerji, J. held that article 132 of Schedule I to the Limitation Act applies and that the claim to enforce that charge (as against defendants 1, 2 and 6) was within time. He reasoned that the charge is proprietary and the claim is therefore governed by the article appropriate to suits to enforce a charge.
  • The court held article 99 of the Limitation Act (relied upon by the trial court and defendants) to be inapplicable to a suit to enforce a charge under section 82; article 99 applies to suits for personal contribution only.
  • As to the money claim against defendants 3–5 for the surplus proceeds, Banerji, J. reasoned that the plaintiff's lien attached to the surplus proceeds once the property was sold. That lien could be followed into the hands of the person who received the surplus with notice. He treated the claim as falling under article 62 (suits for money had and received) if it is characterized that way; alternatively article 120 (equitable claims) or article 132 would also render the suit within time. In any of these permutations, the cause of action was held to be within the prescribed limitation period.
  • Richards, C.J. raised doubts whether the plaintiff had a fresh cause of action against the recipients of the surplus after the property was sold and the surplus paid out, because (in his view) no fiduciary relationship existed and the surplus was the defendants' money subject only to the plaintiff's lien. Nonetheless Richards did not dissent from granting a personal decree against defendants 3–5, noting his colleagues favoured that outcome and limiting the decree to the amount of surplus actually paid out to them.

On remedies and their nature:

  • The court treated suits like the present more accurately as suits to enforce an equitable/proprietary charge for rateable contribution rather than merely suits for personal contribution.
  • Where property remains unsold, the owner has a charge against the unsold property; if property is sold and there is a surplus, the lien attaches to the surplus proceeds and may be followed into the hands of recipients who received the proceeds with notice.
  • The court considered established authorities that equitable liens survive conversion of property into sale proceeds and that payment out by court to a person with notice of the lien does not extinguish the lien or bar recovery.

Holding and Implications

Holding: The appellate court ALLOWED the appeal, set aside the decree of the court below, and remanded the case to the trial court under Order XLI, rule 23 of the Code of Civil Procedure for trial on the merits. (Order as delivered: "Appeal allowed. The decree of the court below is set aside and the case is remanded ... for trial on the merits.")

Implications (direct effects based on the opinion):

  • The plaintiff's claim to enforce a proprietary charge under section 82 of the Transfer of Property Act against the co-mortgaged properties (represented by defendants 1, 2 and 6) is a proprietary claim, not merely a personal claim for contribution; enforcement of that charge is governed by the Limitation Act provision applicable to such proprietary claims (as the judges held, article 132 was applicable in Banerji, J.'s view), and the claim as presented was within time.
  • The plaintiff is entitled, in principle, to pursue a personal money decree against the parties who received the surplus proceeds (defendants 3–5) to the extent of the surplus actually paid out to them; the lien on surplus proceeds may be followed where the recipient had notice, and limitation does not bar the suit when measured from the date on which the surplus was received by the recipient (Banerji, J. applying article 62 or alternatively article 120 or 132).
  • The trial court's dismissal on the preliminary ground of limitation was erroneous; the cause must be remanded for determination of the factual issues (including the exact amounts and respective contributions, which the lower court had not found), and trial on the merits is required to quantify and enforce the plaintiff's rights.
  • The court's rulings clarify that section 82 operates to create a statutory charge enforceable against other mortgaged properties independently of section 95, and that article 99 of the Limitation Act does not apply to suits to enforce such a proprietary charge. (These are legal conclusions expressed in the opinion rather than the creation of an entirely novel principle.)

No other broader policy pronouncements or novel doctrine beyond the application and interaction of the cited statutory provisions and authorities were introduced; the matter was remitted for factual determination and trial on the merits.


Prepared strictly on the basis of the provided opinion; no information has been added beyond the text of that opinion.

    Bhagwan Das v. Karam Husain

    Richards, C.J:— The facts out of which this appeal arose are of a very complicated nature. They are, however, very fully set forth in the judgement of the learned Additional Judge, and I consider it only necessary to state the questions of law which admittedly are the questions which arise and have been argued on behalf of the parties before us. They are as follows:—

    (1) Has the owner of a property, which was mortgaged with other properties to secure a single debt, a charge against such other properties when his property has been sold in execution of a mortgage decree and has contributed more than its rateble share, but where the owner of the property claiming the charge has neither redeemed the mortgaged property, nor has the sale of his property alone been the means of discharging the mortgage decree?

    (2) If two properties are mortgaged to secure one debt, and both properties are sold in execution of a mortgage decree, has the owner of the property which has borne more than its rateable share a right to a personal decree against the owner of the property that has borne less than its rateable share of the debt, where the latter has actually received the surplus proceeds of the sale of his property?

    The plaintiff contends that he has a charge against the property represented by the defendants 1, 2 and 6, which has not been sold, and he seeks to enforce such claim by sale of the property.

    The defendants 1, 2 and 6 contend that, inasmuch as the plaintiff did not redeem the property and the mortgage decree was not discharged solely out of the proceeds of the sale of the plaintiff's property, the plaintiff has no charge against the property itself, that the only right that he ever had was a personal right of contribution, and that the last mentioned right is barred by limitation.

    As regards the defendants 3 to 5, the plaintiff, in his plaint, alleged that he had a similar charge which he sought to enforce by sale of certain other property. This position was, however, abandoned, at the trial in the court below. The plaintiff admitted that the entire property represented by the defendants 3 to 5, was, like his own, sold in execution of the mortgage decrees but he contends that the surplus proceeds of the sale having been paid over to the defendants without providing for payment to him of the excess for which he alleges his property was made liable, he is entitled to a simple money decree against the defendants 3 to 5.

    The defendants 3 to 5 contend that the plaintiff having abandoned his claim against the property, his present claim must be deemed to be a personal claim for contribution, which arose when the plaintiff's property was made liable for more than its rateable share of the mortgage debt, and that it is therefore barred by limitation.

    I think the plaint ought to be looked upon as amended and that the plaintiff's claim as against the defendants 3 to 5 should be dealt with as if he had alleged in the plaint that his property had to bear more than its rateable share, and the defendants escaped paying the rateable share which their property would have borne by reason of the fact that the surplus proceeds of the sale of their property was paid over to the defendants 3 to 5 without any regard being had to the plaintiff's claim, and that under these circumstances he is entitled to a personal decree. I propose so to deal with the plaintiff's claim as against the defendants 3 to 5.

    The court below has not come to any finding as to the respective values of the several properties. It has decided the case on a preliminary point holding that the plaintiff had no charge but only a right to sue as a personal claim for the excess, if any, his property was made liable to, and that such right was barred by articles 61 and 99 of the first schedule to the Limitation Act. The learned Additional Judge accordingly dismissed the suit against all the defendants.

    If we hold that he was wrong in point of law, the case will have to be remanded for disposal.

    For the purpose of disposing of the appeal I shall assume that the result of the sale of the plaintiff's property and the distribution of the sale proceeds was that the plaintiff's property had to bear more than the rateable share which it ought to have borne; but that he neither redeemed the mortgage nor paid up the decree, but allowed his own property and the prop arty of the defendants 3 to 5 to be sold. I shall also assume that the property represented by the two sets of defendants has borne less than the rateable share which their property ought to have borne. It also appears from the written statements of the defendants 3 to 5 that after the sale of their property on the 4th of May, 1905, the plaintiff filed an objection to the surplus being paid out and claimed that a portion of the surplus belonged to him and should be paid to him. His objection, however, was disallowed. There seems to me to be no room for doubt that where several properties are mortgaged to secure one debt, the owner of the property that has been made liable for more than its rateable proportion of the debt has a charge on the other properties. Section 82 of the Transfer of Property Act is a statutory enactment in India of a principle which has long been recognised to be founded on justice and equity. It is as follows:—“Where several properties, whether of one or several owners, are mortgaged to secure one debt, such properties are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, after deducting from the value of each property the amount of any other incumbrance to which it is subject at the date of the mortgage.” It seems to me that the section creates what I may call a statutory charge on the other properties. It creates no personal liability against the owner of the property. In some cases it might be most inequitable to make the owner personally liable. The liability might be greater than the interest in the property. In my opinion article 99 of the Limitation Act has no application whatever to a suit to enforce the right conferred by section 82. It makes no difference whatever, in my judgement, that the party claiming the charge did not redeem the mortgage or discharge the mortgage decree before the property was actually sold, nor does it make any difference that the amount of the mortgage or mortgage decree, was not entirely raised out of the plaintiff's property. I am of opinion that in considering whether or not the plaintiff has a charge, he need not and ought not to go outside the provisions of sections 82 and 100 of the Transfer of Property Act. There is, however, if it were needed, abundant authority for the proposition that the owner of property which, has had to bear more than its rateable value, has a charge. The cases will be found collected in the case of Ibn Hasan v. Brijbhukhan Saran and Muhammad Yahiya v. Muhammad Rashid-ud-din.

    In the first case a mortgagor, whose property had been made to bear more than its rateable share, sued his co-mortgagors in a suit like the present for the excess. The majority of the court were of opinion that the plaintiffs could not sue because the entire amount of the mortgage had not been satisfied. The question which was decided in that case does not arise in the present, because it is admitted that the result of the sales which have taken place is that the mortgages have been fully paid off and discharged. There are, no doubt, some dicta of Stanley, C.J, which suggest that he considered that it was necessary to sustain the plaintiff's claim that he should have redeemed the property and placed himself in the position of one of several mortgagors who has redeemed the mortgage (Section 95 of the Transfer of Property Act). However, it will be seen on a perusal of the judgement that the all important fact, in the opinion of the Chief Justice, was the fact that the mortgage had not been entirely satisfied. If there was any doubt upon the matter, it is set at rest by the remarks of the learned Chief Justice in the second case. There the suit was a suit exactly like the present. The property of some of the mortgagors had been made liable for the entire mortgage debt. The mortgagee had obtained a decree and had sold the property, and he claimed to be entitled to realize the excess for which his property had been made liable by a sale of the property which had not been sold. The case came before our brother Banerji and Stanley, C.J Our brother Banerji held that the plaintiff was entitled to a decree. At page 67, Stanley, C.J, says as follows:—, I agree. In my judgement in Ibn Hasan v. Brijbhukhan Saran, upon which reliance had been placed by the appellant's learned advocate, I did not decide, or intend to decide that, where a mortgage has been wholly satisfied, a co-mortgagor who has discharged more than his rateable portion of the debt is not entitled to contribution from his co-mortgagors. What was decided in that case was that until the entire mortgage debt has been satisfied a claim for rateable contribution could not be enforced.” It seems to me that some confusion has arisen from calling suits like the present “suits for contribution.” They would be better described as suits to enforce charges for rateable contribution between co-mortgagors. Defendants 1, 2 and 6, no doubt, rely very strongly on the dicta of Stanley, C.J, in Ibn Hasan v. Brijbkukhan Saran, and contend that section 82 must be read with section 95, and the plaintiff not having paid the decree himself in full and the amount not having been entirely realized out of his own property, he has no charge. In my opinion there is no justification whatever for this contention. In my opinion sections 82 and 95 are quite independent of each other.

    The question whether or not the plaintiff is entitled to a simple money decree is not free from difficulty. I have already pointed out that the plaintiff's right originally was not a personal right for contribution. He had a charge on the property which had borne less than its rateable share of the mortgage debt. He could enforce this right so long as the property of the defendants 3 to 5 remained unsold; and any right that be had against that property would attach to the surplus proceeds of sale after the property had been sold. The property, however, having been sold and the surplus proceeds paid out, the plaintiffs right, if any, has now completely changed. In my opinion he has no right now, unless it can be said that the payment out of the surplus proceeds to the defendants 3 to 5 under the peculiar circumstances of the present case gave him a new cause of action. I feel difficulty in seeing what cause of action he has. The surplus proceeds of the sale belonged to the defendants 3 to 5 subject to the plaintiff's charge. No fiduciary relation existed between the plaintiff and the defendants 3 to 5, although it may be that after the plaintiff had filed an objection to the payment out of the money to the defendants 3 to 5, the court was wrong in allowing the payment to be made without providing for the plaintiff's charge. It seems to me that this claim can hardly be regarded as a claim for money had and received by the defendants 3 to 5, to the use of the plaintiff. The money was not the plaintiffs money: he merely had a charge or lien upon it: see Guru Das Pyne v. Ram Narain Sahu. In that case their Lordships of the Privy Council had to consider whether the claim of the plaintiff was a claim for money had and received. The claim would have been barred if it was a claim for money had and received. Their Lordships held that the suit was not a suit for money had and received. At page 864 their Lordships say:—“When he sold the timber he was selling it as the agent of Moti Dasi, and he received the money for her. The suit is to enforce an equitable claim on the part of the plaintiffs to follow the proceeds of their timber, and finding them in the hands of the defendants to make him responsible for the amount.” Of course if the claim of the plaintiff, a now put forward against the defendants 3 to 5, can be regarded as a suit to enforce an equitable claim to follow the surplus of the proceeds of the property into the hands of the defendants 3 to 5, the case is an authority in favour of the plaintiff. On the other hand it seems to me that the case is an authority in favour of the defendants that the suit cannot be regarded as a claim for money had and received. The facts of the case were peculiar. It is quite clear that the High Court (whose judgement was affirmed by their Lordships) felt justified in giving the plaintiff a decree because they held that the defendant had sold timber which belonged to the plaintiff and received the purchase money. At page 863 their Lordships quote from the judgement of the High Court:—“It is quite clear that in this case the plaintiffs did rely in their plaint upon the fact that the defendant had sold the timber and received the proceeds.” Under the circumstances of the case the court considered that the plaintiff was entitled to a personal decree against Guru Das, and their Lordships, describing the suit as a suit to enforce an equitable claim on the part of the plaintiffs to follow the proceeds of their timber in the hands of the defendant, Guru Das, and to make him responsible for the amount, affirmed the decree of the High Court. It seems to me that the facts of the present case are different. No fiduciary relationship of any kind ever existed between the plaintiff and the defendants 3 to 6. There was no fraud in their obtaining payment of the surplus proceeds of the sale of the property. The money was the money of the defendants 3 to 5 subject only to the lien of the plaintiff. The most that can be said in favour of the plaintiff is that the decision of the court that directed or allowed the money to be paid out notwithstanding the plaintiff's objection was incorrect. I am inclined to think that the plaintiffs proper remedy would have been to have instituted a suit for rateable contribution and when the suit was instituted to have applied for an injunction to restrain the payment out of the money pending the hearing of the suit. Both my learned colleagues think that the plaintiff should have a personal decree against the defendants 3 to 5. Notwithstanding the doubts I have expressed, I am not disposed to record a dissentient judgement on the point. The decree that the plaintiff may have against the defendants 3 to 5 will, of course, in no event exceed the amount of the surplus paid out to them.

    Banerji, J.:— This appeal arises out of a suit for contribution brought by the plaintiff appellant under the following circumstances:—

    Amir Husain, the ancestor of the first two defendants, owned shares in three villages,—namely, (1) Bilaspur, khewats 1, 2 and 3, (2) Dandhera and (3) Kheri Dudadhari.

    On the 17th of March, 1883, he made a usufructuary mortgage of his property in Kheri Dudadhari in favour of Rai Bahadur Nihal Chand, the predecessor in title of the defendants Nos. 3 to 5. In 1891, the mortgagee purchased the equity of redemption of the mortgagor in execution of a simple money decree and thus became the absolute owner of the property.

    On the 29th of August, 1885, Amir Husain made a simple mortgage of the villages Dandhera and Kheri Dudadhari and khewat No. 1 of Bilaspur in favour of one Makhan Lal.

    On the 3rd of March, 1887, he mortgaged his interests in all the three villages to the aforesaid Makhan Lal.

    On the 20th of June, 1894, the plaintiff purchased at auction the whole of Amir Husain's interest in the village Bilaspur in execution of a simple money decree.

    Mansamrath Das, the son of Makhan Lal, first brought a suit on the third mortgage mentioned above, namely, that of the 3rd of March, 1887, and obtained a decree for sale on the 31st of May, 1890. In execution of that decree he caused khewat No. 3 of Bilaspur, the village purchased by the plaintiff, to be sold by auction on the 20th of November, 1903. The proceeds of the sale discharged the decree in full and a surplus of Rs. 165 was received by the plaintiff.

    Mansamrath Das obtained a decree for sale on the 5th of September, 1895, on the basis of the mortgage of the 29th of August, 1885, and in execution thereof caused khewat No. 1 of Bilaspur to be sold by auction on the 20th of June, 1895. The proceeds of this sale were insufficient to satisfy the decree, and therefore on the 21st of January, 1907, he caused the village Kheri Dudadhari to be sold and Nihal Chand purchased it. After satisfying the decree in full, the sale proceeds left a surplus of Rs. 4,542-14-0 which was paid over to Nihal Chand some time after the 4th of May, 1907, in spite of plaintiffs protests, on the ground that he was the owner of the village sold.

    The plaintiff instituted the present suit on the 6th of August, 1909, on the allegations that the proportionate liability of his village Bilaspur for the two mortgages in favour of Makhan Lal was Rs. 9,430-5-0; that by the auction sale of his village Bilaspur a sum of Rs. 14,255 was realised; that the said village has therefore contributed more than its share of liability and that he is entitled to recover the excess amount so contributed from the villages Dandhera and Kheri Dudadhari. In the plaint, as originally framed, he claimed to recover Rs. 4,659-3-0 and interest by sale of the two villages mentioned above, on which he stated he had a charge under Section 82 of the Transfer of Property Act. By a petition, dated the 4th of February, 1910, he amended his plaint and abandoned his claim for enforcement of a charge on the village Kheri Dudadhari and prayed for a money decree against the defendants Nos. 3 to 5, the legal representatives of Nihal Chand, for Rs. 2,417-2-0 and interest.

    The court below has dismissed the claim on the ground that the plaintiff acquired no charge on the property of his co-mortgagors and that his suit was time-barred, as it was brought after three years from the date of the sale of his village Bilaspur.

    The plaintiff has preferred this appeal and the question to be determined is, whether the whole or any part of the claim is barred by limitation.

    The suit embraces two branches, first, the claim against the defendants Nos. 1 and 2, the legal representatives of the original mortgagor, Amir Husain, and defendant No. 6, who is a subsequent mortgagee of the village Daadhera, for enforcement of a charge on that village; and secondly, the claim to obtain a money decree against the defendants Nos. 3 to 5, the legal representatives of Nihal Chand. I shall consider each branch of the claim separately.

    As regards the first branch of the claim, I am of opinion that by virtue of the provisions of sections 82 and 100 of the Transfer of Property Act a mortgagor, or his representative in interest, whose property has contributed more than its proportionate share of the mortgage debt, is entitled to a charge on the remainder of the mortgaged property which has not discharged its own share of the debt. Section 82 gives legislative effect to the well-known rule stated in Fisher on Mortgages (6th edition, p. 688) in the following terms:—“If several estates (whether of one or several owners) be mortgaged for or subject equally to one debt, * * * the several estates shall contribute rateably to the debt; being valued for that purpose, after deducting from each estate any other incumbrances by which it is affected.” This rule “rests upon the principle that the fund, which is equally liable with another to pay the debt shall not escape because the creditor has been paid out of that other fund alone,” (p. 688). The liability to contribute is that of the estates subject to the mortgage, and where those estates have passed to a purchaser or to the heirs of the mortgagor, it is not a personal liability. The necessary effect of the provisions of section 82, therefore, is that where one of the mortgaged estates has contributed more than its own quota of liability, the owner of that estate is entitled to recover the excess from the other estates subject to the mortgage, and acquires a charge on those estates. This charge is created by the provisions of section 82, read with section 100. I stated my views on the point at length in my judgement in Ibn Hasan v. Brijbhukhan Saran, and I do not think any useful purpose will be served by reiterating them. Section 95 of the Transfer of Property Act was relied upon by the learned counsel for the defendants Nos. 1, 2 and 6, but that section, in my opinion, provides for only one class of cases and does not preclude the acquisition of a charge in any other case to which section 82 applies. (See Ghose on Mortgages, 4th edition, p. 371, and the cases cited in the foot note.) If, therefore, the plaintiff's property has contributed more than the amount for which it was propoti onately liable, he has a charge on the other mortgaged properties which have been relieved of the burden which lay on them. The claim being to enforce that charge, article 132 of the first schedule to the Limitation Act applies, and the claim, as against the defendants Nos. 1, 2 and 6, is clearly within time.

    As regards the mortgage of 1887, which was satisfied by the proceeds of the sale of the plaintiff's property alone, he has undoubtedly a right to contribution and to enforce the charge which he has acquired in respect of the amount for which he is entitled to contribution, on the property of the defendants Nos. 1, 2 and 6, as the said property was not sold in execution of the decree obtained on the aforesaid mortgage.

    As for the mortgage of 1885, it is urged that as by the sale of the plaintiff's property only a part of the amount of that mortgage was realized, the plaintiff has not acquired a charge. In support of this contention the decision of Stanley, C.J, in Ibn Hasan v. Birjbukhan Saran has been referred to. All that was held by the learned Chief Justice in that case was that a right of contribution and a charge do not arise until the whole mortgage is discharged. This was explained by Sir John Stanley in his judgement in the later case of Muhammad Yahiya v. Rashid-ud-din. In the case before us the full amount of the mortgage of 1885 has been satisfied. Therefore, if the plaintiff's property has contributed a larger amount than that for which it was rateably liable, he has acquired a charge for the excess amount contributed by him, on Dandhera, the village of the defendants 1 and 2, which contributed nothing. Whether, therefore, the charge came into existence on the 20th of June, 1905, when the plaintiff's property was sold, or on 20th of January, 1907, when the decree upon the mortgage of 1885 was satisfied in full, the claim to enforce the charge is within rime, under article 132 of schedule I of the Limitation Act. Article 99 is, in my opinion, applicable to a suit for a personal decree for contribution and not to a suit to enforce a charge. This was so held in The Rajah of Vizianagram v. Rajah Satrucherla Somasekhararaz and Bhagwm Das v. Har Dei. The court below was wrong in applying that article and in holding the claim against the defendants Nos. 1, 2 and 6, to be time-barred.

    The second branch of the claim, namely, that directed against the defendants Nos. 3 to 5, the legal representatives of Nihal Chand, involves somewhat different considerations. As this part of the claim now stands, the plaintiff does not seek to enforce a charge on immovable property, but prays for a money decree. The ground on which he does so is this:—Upon the sale of his village Bilaspur in 1903 for the realization of the amount of the mortgage of 1887 he acquired a charge on the village Kheri Dudadhari, which was also comprised in that mortgage and was not sold; that this charge was subject to the earlier mortgage of 1885; that a charge also arose when the plaintiff's property was sold in 1905, in execution of the decree obtained on the mortgage of 1885; that, as the village Kheri Dudadhari was comprised in that mortgage and was sold in execution of the aforesaid decree, the plaintiff's charge or lien attached to the surplus sale proceeds, and that, as the surplus sale proceeds were withdrawn from court and appropriated by the predecessor in title of the defendants Nos. 3 to 5, he was liable to repay to the plaintiff that portion of the surplus which is equivalent to the amount for which the plaintiff had a charge. This contention is, in my judgement, well founded. As the village Kheri Dudadhari was also comprised in Makhan Lal's mortgage of 1887 and the whole amount of that mortgage was realized from the property of the plaintiff alone, he acquired a charge on the said village for the excess amount contributed by him. This charge, however, was subject to the prior mortgage of 1885 in which the village Kheri Dudadhari was also included. Similarly, the charge which arose in plaintiff's favour in 1905, when according to him his village contributed more than its share of liability, was subject to the said mortgage. Therefore, in spite of the charge the village was liable to be sold in execution of the decree obtained on the mortgage and was accordingly sold. Had the whole amount of the sale proceeds been appropriated to the discharge of the mortgage, the charge would have been of no effect. But as there was a surplus, the charge attached to the surplus. Had a part only of the property been sold for the satisfaction of the mortgage, the plaintiff would have been entitled to enforce his charge on the remainder of the property; but, as the whole property was sold and the purchaser of it acquired it free from the charge, the plaintiff could not follow it into the hands of the purchaser. His lien would attach to the surplus sale proceeds into which the property was converted. Those proceeds are substituted for the property itself and are therefore subject to the lien to which the property itself was subject. This principle is recognised in section 73 of the Transfer of Property Act. It arises out of equitable considerations, and the lien acquired is an equitable and not a possessory lien. The fact, therefore, of the withdrawal from court of the money to which it attaches cannot extinguish or affect it. The plaintiff is, in my opinion, entitled to follow the money into the hands of the defendants, whose predecessor in title received it with notice of the plaintiff's lien. The plaintiff applied to the court for payment of the surplus sale proceeds, but the court rejected his application, and despite his protests paid over those proceeds to Nihal Chand. So that the plaintiff did all that he could possibly have done under the circumstances. I fail to see on what principles of justice or equity the defendant can claim that the plaintiff has lost his lien on the money and his right to recover it, simply because it has been paid over to the defendant's predecessor in title. In Berhamdeo Pershad v. Tara Chand, certain property was sold under a decree on a first mortgage and after the mortgage was satisfied there remained a surplus which was received by the first mortgagee, who also held a third mortgage. The second mortgagee of the property then brought a suit claiming to recover the surplus proceeds so withdrawn. It was held that the right of the puisne incumbrancer “to follow the surplus sale proceeds is an equitable right, equity regarding his right as not extinguished or discharged by the sale but as transferred thereby to the surplus sale proceeds, which would be treated as part of his mortgage security, and his right to follow the money or the nature of the suit to enforce such right cannot be affected by the fact that the money had been withdrawn from the court by a party having notice of the plaintiff's right.” The principle of this ruling fully applies to the present case and supports the view I have expressed above. I may point out that in suits to which section 73 of the Transfer of Property Act applies, the plaintiff has always been granted a decree for recovery of the surplus proceeds, although the proceeds may have been withdrawn from court by third parties (see Gosto Behary Pyne v. Shiv Nath Dut and Kamala Kant Sen v. Abul Barkat. For the above reason I am of opinion that the plaintiff is entitled to maintain a money claim against the defendants Nos. 3 to 6.

    The only question which remains to be considered is whether this part of the claim is time-barred, as argued by the defendants. The determination of this question depends on the date on which the plaintiff's right to sue accrued and the article of schedule I of the Limitation Act which governs the suit. In my judgement the plaintiff's cause of action arose when Rai Nihal Chand withdraw from court the surplus sale proceeds, that is, after the 4th of May, 1907, and the suit is governed by article 62 of schedule I of the Limitation Act. That article provides for suits “for money payable by the defendant to the plaintiff for money received by the defendant to the plaintiff's use,” that is, for the class of suits well known as suits for money had and received. Under this category of suits are included actions for money wrongfully received by the defendant to which the plaintiff was in justice and equity entitled. The cases on the point are collected in the judgement of Mookerjee, J., in Mahomed Wahib v. Mahomed Ameer, and the latest case in this Court is that of The Rajputana Malwa Railway Co-operative Stores, Limited v. The Ajmer Municipal Board. In that case a Municipal Board, in disregard of certain lawful orders of the Government of India, levied upon a company trading within municipal limits certain sums by way of octroi duty over and above what they were entitled to. It was held that the suit to recover from the Board the sums so levied was one for money had and received to the use of the plaintiff within the meaning of article 62. The principle of these rulings applies to the present case, and this suit may, in my opinion, be regarded as a suit of the description mentioned in article 62. The learned vakil for the defendants referred to the decision of their Lordships of the Privy Council in Guru Dass Pyne v. Ram Narain Sahu. That case seems to me to be distinguishable. Their Lordships observed that when the defendant sold the plaintiff's timber, he was selling it as the agent of Moti Dasi and received the money for her and not for the plaintiff, and therefore article 62 did not apply. Their Lordships held that the suit was one “to enforce an equitable claim on the part of the plaintiffs to follow the proceeds of their timber and finding them in the hands of the defendants to make him responsible for the amount,” and that it was governed by article 118 of Act IX of 1871, which corresponds to article 120 of the present Act. If, as I hold, article 62 applies, limitation would run from the date on which the surplus sale proceeds were received by Rai Nihal Chand, and the suit, having been brought within three years from that date, is not time-barred. If the claim be regarded as one to enforce an equitable right, it is governed by the six years' rule of limitation provided in article 120, and is within time, whether the cause of action arose on the 20th of November, 1903, and the 20th of June, 1905, when the plaintiff's property was sold, or in May, 1907, when the money was withdrawn. According to the Calcutta High Court a suit of this description is governed by article 132. I, however, express no opinion on the point. If that article applies, the suit is clearly not statute-barred. Therefore, whether we apply article 62 or 120 or 132, the claim is within time. Article 61 which provides the limitation for suits “for money payable to the plaintiff for money paid for the defendant,” relied upon by the learned vakil for the defendants is clearly inapplicable.

    For the above reasons I am of opinion that neither branch of the claim is barred by limitation and the decision of the court below is erroneous. I would allow the appeal and remand the case to the court below for trial on the merits.

    Chamier, J.:— I agree with the judgement of my brother Banerji, and have nothing to add.

    By the Court:— The order of the Court is that the appeal is allowed, the decree of the court below is set aside and the case is remanded to that court under order XLI, rule 23, of the Code of Civil Procedure for trial on the merits.

    Appeal allowed.

    Use AI to get other relevant cases.

    Comments

    Bhagwan Das v. Karam Husain
    (May 29, 1911)