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Bhagwan Sahai v. Bhagwan Din

Allahabad High Court
Nov 16, 1886
Smart Summary (Beta)

Structured Summary of the Court of Exchequer (Sir John Edge, C.J and Tyrrell, J.) — Appeal by Bhagwan Sahai

Factual and Procedural Background

This appeal arises from a judgment of the Subordinate Judge of Cawnpore dated 2nd August 1885, which decreed the plaintiffs' claim for possession of the property in suit on their paying to the defendant (the present appellant) Rs. 4,000 as the principal mortgage-consideration. The Subordinate Judge ordered that the parties bear their respective costs. Only Bhagwan Sahai, one of the defendants below, appealed from that judgment.

Material facts found in the opinion (as pleaded and established in evidence) include:

  • On 20 February 1835, several vendors (named in the opinion) sold the entire 16 annas zemindari interest in mauza Haribaspur to one Ganga Din for Rs. 4,000 by a sale-deed registered the next day.
  • Contemporaneously with that sale-deed, a separate document (referred to as the "contemporaneous deed") was executed by Ganga Din, agreeing, among other things, that if the vendors paid Rs. 4,000 within ten years in a lump sum and without interest, he would accept the sum and cancel the sale; Ganga Din would be in possession during that period. A copy of this contemporaneous deed was in the record and its existence was not contested before the court.
  • The plaintiffs asserted the transaction was a conditional sale or, in effect, a mortgage by conditional sale; the appellant admitted the correctness of this characterisation.
  • In 1840, Ganga Din's right (described in the opinion as "as mortgagee") was sold at auction for arrears of revenue (in respect of a different mauza, Sumerpur, zila Banda) to Sukh Din, who took possession. At the time from 1835 until Sukh Din's name was substituted in the Collector's register, Ganga Din appeared as proprietor in that register with no allusion there to a mortgage.
  • Subsequent transfers: in 1845 Sukh Din sold to Thakur Prasad (Rs. 3,000); two years later Thakur Prasad sold to Husain Ali (Rs. 3,000); in 1852 Husain Ali sold to Sheo Charan (Rs. 3,000); the appellant is the son and heir of Sheo Charan and is in possession. Each transferee's name was entered in the Collector's register as proprietor on transfer.
  • The plaintiffs (representatives of the original vendors) sued for redemption of the alleged mortgage and mesne profits; one defendant (Musammat Mathura, daughter and heiress of Ganga Din) admitted the plaintiffs' claim. Some heirs of one vendor did not join in the suit.
  • Contested matters included whether notice of the mortgaged character of the property was given at or prior to the auction, whether the contemporaneous deed had been abandoned, whether the suit was barred by art. 134, sch. ii of the Limitation Act (Act XV of 1877), and whether successive transferees were innocent purchasers for valuable consideration without notice.

Legal Issues Presented

  1. Whether art. 134, sch. ii of the Limitation Act, 1877, barred the plaintiffs' suit for redemption (i.e., did the limitation provision protect the subsequent purchasers)?
  2. Whether the contemporaneous deed (the agreement to accept Rs. 4,000 within ten years and cancel the sale) had been abandoned by the mortgagors or their representatives.
  3. Whether the auction purchaser (Sukh Din) and subsequent transferees (Thakur Prasad, Husain Ali, Sheo Charan) were innocent purchasers for valuable consideration without notice of the mortgage-equity (and hence protected), or whether they had actual or constructive notice or failed to take reasonable care.
  4. Whether, having regard to applicable regulations, the purchasers acquired an absolute title or merely the mortgagee's interest.

Arguments of the Parties

Appellant's Arguments

  • The appellant contended that no notice was given at or prior to the auction that the property was mortgaged or that Ganga Din's rights were merely those of a mortgagee, and that in the Collector's register Ganga Din appeared as proprietor.
  • It was argued that Sukh Din and the subsequent purchasers were purchasers for valuable consideration and without notice of the mortgage (i.e., innocent purchasers), and thus protected.
  • The appellant urged that the suit was barred by art. 134, sch. ii of the Limitation Act, 1877.
  • The appellant also contended that the contemporaneous agreement (the "contemporaneous deed") had been abandoned.
  • Cases relied upon by the appellant included Piarey Lal v. Saliga and Kamal Singh v. Batul Fatima (the appellant relied on these authorities for his legal positions).

Respondents' (Plaintiffs') Contentions

  • The plaintiffs maintained that the 1835 transaction was a conditional sale or a mortgage by conditional sale and that the contemporaneous deed created a right of redemption on payment of Rs. 4,000 within ten years.
  • The plaintiffs alleged that Ganga Din went into possession as mortgagee and that at the auction in 1840 the property was sold subject to the mortgage; they also alleged that notice of the equity of redemption was given to each purchaser at the time of their respective purchases (a fact denied by the appellant).
  • The plaintiffs denied abandonment of the contemporaneous deed and relied on the assertion that the mortgagors (and their representatives) had not intended or acted so as to abandon their rights. They pointed to actions taken by Chedi Din on behalf of co-sharers to assert the equity of redemption.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Piarey Lal v. Saliga The appellant relied upon it for legal support concerning purchasers and notice. The court stated that, given the facts of the present case, the case cited did not appear to be an authority on the points of law the court had to decide.
Kamal Singh v. Batul Fatima Relied on by the appellant on points concerning purchase and protection of purchasers. The court found this case likewise not to be an authority for the legal points to be decided in the present case.
Radanath Doss v. Gisbome & Co. (Privy Council) Interpreted s.5 of Act XIV of 1859 (analogous to art. 134): to claim benefit under that provision a defendant had to show (1) he is a purchaser (in proper meaning), (2) bona fide purchaser, (3) purchaser for valuable consideration; also construed meaning of "purchaser" to exclude one who knowingly purchases a mortgage as a mortgage. The court applied the principle and reasoned that art. 134 should be construed similarly; on the facts they concluded art. 134 did not apply in this case and explained why a purchaser who bought from a mortgagee ought not to be protected where he bought in full belief he was getting an absolute title but facts showed otherwise.
Sobhag Chand Gulab Chand v. Bhai Chand Referenced regarding the question whether a purchaser at a formal auction can be said to buy without notice an absolute interest from a mortgagee. The court referred to judgments in this case to support doubt about treating an auction purchaser as buying without notice; used it to buttress conclusion that the auction purchaser here could not be treated as an innocent purchaser without notice.

Court's Reasoning and Analysis

The court addressed the contesting issues in sequence, dealing with limitation, notice, abandonment, and the status of purchasers.

  1. Limitation (art. 134, sch. ii):

    The court compared art. 134 of the Limitation Act, 1877 with s. 5 of Act XIV of 1859 as interpreted in Radanath Doss v. Gisbome & Co. The Privy Council had required three elements for a defendant to claim the benefit of that provision: (a) that he is a purchaser according to the proper meaning of that term; (b) that he is a bona fide purchaser; and (c) that he is a purchaser for valuable consideration. The court observed that the omission of the specific words "bona fide" and "purchaser" from art. 134 did not cause an essential difference in construction and concluded art. 134 was intended to protect a person who purchased, reasonably believing he was acquiring an absolute title from the vendor, not someone who purchased merely a mortgagee's interest.

    On the facts the court held that art. 134 did not apply to bar the plaintiffs' suit.

  2. Nature of the auction sale and legal effect (Regulation XI of 1822):

    The court relied on s.29 of Regulation XI of 1822 to the effect that when land of a defaulter is sold for revenue arrears (even where the arrears are not in respect of that land), the purchaser acquires only the rights and title that the defaulter had — "in like manner as if the land had been sold by private sale." From this the court concluded that what was sold to Sukh Din at the auction was the interest of Ganga Din as mortgagee and not an absolute proprietorship unaffected by the mortgage.

  3. Presumption of inquiries by auction purchaser and constructive notice:

    The court held that an auction purchaser such as Sukh Din must be presumed to have known the law and therefore to have made inquiries into the interest sold, unless he wilfully shut his eyes to such inquiries. The contemporaneous deed, which was registered within hours of the sale-deed, would have been discoverable by examining the local Registrar's books. The court also drew because of the low purchase-price (Rs. 3,000) an inference that Sukh Din must have known he was buying merely the mortgagee's interest.

  4. Subsequent purchasers' duties and knowledge:

    The court found it practically inconceivable that the subsequent purchasers (Thakur Prasad, Husain Ali, Sheo Charan) did not make reasonable inquiries as to the title of their vendor or examine the register for encumbrances. Noting that each also paid Rs. 3,000, the court concluded these purchasers either knew, or might or ought to have known (absent wilful abstention from inquiry), that they were purchasing only the mortgagee's interest. Therefore they were not innocent purchasers without notice; alternatively, they failed to take reasonable care or to act in good faith if they purported to buy more than a mortgagee's interest.

  5. Abandonment of the equity of redemption:

    The court found no evidence that the mortgagors or their representatives intended to or in fact abandoned their rights under the contemporaneous deed. On the contrary, the court found that Chedi Din and co-sharers had from time to time taken steps, as a needy man could, to assert the equity of redemption.

  6. Right of redemption period (Regulation XVII of 1806):

    The court noted that under Regulation XVII of 1806 mortgagors were entitled to redeem within sixty years in such a case, and on that basis held that the respondents were entitled to redeem the property.

  7. Disposition of the legal authorities relied on by appellant:

    The court observed that the cases cited by the appellant (Piarey Lal v. Saliga and Kamal Singh v. Batul Fatima) were not, on the facts before the court, authorities for the points of law the court had to decide.

Holding and Implications

Holding: APPEAL DISMISSED. The court dismissed the appeal with costs.

Implications and direct consequences:

  • The respondents (the plaintiffs below), being representatives of the original vendors-mortgagors, are entitled to redeem the mortgaged interest on the terms decreed by the Subordinate Judge (payment of Rs. 4,000 as principal mortgage-consideration), and they have the opportunity of redeeming on those terms because the respondents did not appeal from the judgment below.
  • The court held that the auction purchaser and the subsequent purchasers were not innocent purchasers for valuable consideration without notice and therefore were not protected from the mortgagors' equity of redemption.
  • The court applied existing statutory and regulatory provisions (art. 134, Regulation XI of 1822, Regulation XVII of 1806) and relevant precedents (notably the Privy Council decision in Radanath Doss v. Gisbome & Co.) to reach its conclusions; the opinion does not state that it establishes any novel legal principle beyond the application of these authorities to the facts found.

Note: The opinion confines its disposition to the facts as found and the applicable statutory/regulatory framework; it does not state any broader rule beyond those applications, and does not indicate that a new precedent was intended to be set.

Appeal dismissed.
Show all summary ...

Sir John Edge, C.J and Tyrrell, J.:— This is an appeal by Bhagwan Sahai, one of the defendants in the Court below, from the judgment of the Subordinate Judge of Cawnpore, dated the 2nd August, 1885, by which he decreed the claim of the plaintiffs, the now respondents, for possession of the property in suit on their paying to the defendant, the now appellant, Rs. 4,000, principal mortgage-consideration. The Subordinate Judge ordered that the parties should bear their respective costs. From this judgment the plaintiffs have not, nor have the defendants, other than Bhagwan Sahai, appealed. The plaintiffs' claim in the action was for the redemption of an alleged mortgage and for mesne profits; and their case was, that Alam Singh, Chandi Singh, Bhawani Din, Manna Singh, Durjan Singh, Ghasi Singh, Siva Din, Ishri Singh, Pranu, Dina, and Gulam, sold the entire 16 annas zemindari interest in mauza Haribaspur, pargana Gatampurzila Cawnpore to one Ganga Din, for the sum of Rs. 4,000, by executing a sale-deed in his favour on the 20th February, 1835, and causing its registration on the following day. The execution and registration of the sale-deed were admitted. The plaintiffs also alleged that Ganga Din contemporaneously with the execution of the sale-deed executed a deed in favour of the vendors, which we shall refer to as the “contemporaneous deed,” by which he, amongst other things, agreed that if the vendors should, within ten years from the 20th February, 1835, pay Rs. 4,000 in a lump sum and without interest, he would accept the same and cancel the sale, and that he should be in possession during that period. The fact that Ganga Din had contemporaneously with the execution of the sale-deed executed the “contemporaneous deed” in question, a copy of which appears at page 12 of the appellant's book, was not contested on behalf of the appellant before us.

The plaintiffs contended that the sale was a conditional sale or a mortgage by conditional sale. The correctness of this contention was admitted on behalf of the appellant. The plaintiffs also alleged that Ganga Din went into possession as mortgagee, and subsequently in 1840, the right of Ganga Din “as mortgagee” in mauza Haribaspur was sold by auction for arrears of revenue due by him in [100] respect of mauza Sumerpur, zila Banda, to one Sukh Din who took possession of the property in suit: and that the fact of the property being subject to the mortgage was proclaimed at the auction-sale. It was common ground that from 1835 until Sukh Din's name was substituted in the register, Ganga Din appeared as the proprietor in the Collector's register, in which no allusion was made to a mortgage. The appellant contended, that at or prior to the auction-sale no notice was given that the property was subject to a mortgage, or that Ganga Din's rights and interests were those only for a mortgagee, or that Ganga Din was anything else than the proprietor, which so far as the Collector's register was concerned, he appeared to be, and that Sukh Din was a purchaser for valuable consideration and without notice of the mortgage. It was also common ground that in 1845 Sukh Din sold the property for Rs. 3,000 to one Thakur Prasad, who took possession, and two years subsequently sold it for Rs. 3,000 to one Husain Ali, who, in 1852, sold it for Rs. 3,000 to one Sheo Charan, deceased, who was succeeded by the appellant as his son and heir, and that the appellant is in possession; and that on the occasion of each transfer the name of the transferee was entered in the Collector's register as that of the proprietor.

It was alleged by the respondent that at the time of each transfer by sale a notice on behalf of those claiming the equity of redemption in the mortgaged premises was given to each purchaser, including Sukh Din. This was denied by the appellant. It was also common ground that no application for foreclosure had been made. The plaintiffs—Bhagwan Din, Kampta, Mathura, Lochi, Bhairon Singh, Prayag, Gulab. Bhawani Din, Manna Singh, Ratwan, Hira Lal, Badalu, Puran, Ganga, Anganu, Lalman, and Lala—are the representatives of the vendors-mortgagors. The plaintiffs Durga Prasad and Madho Prasad, eight days before the institution of this suit purchased from the other plaintiffs an 8 annas 7 pies and 4 krants share of the interest (if any) which such other plaintiffs had or alleged they had in the entire 16 annas Znmindari interests of mauza Haribaspur. Musammat Mathura, one of the defendants below, is the daughter and heiress of Ganga Din. She admitted the plaintiffs' claim. The defendants, Jaur and Khusbal, who were heirs of Siva Din, one of the vendors-mortgagors, party to the sale-deed of [101] 1835, did not join in the suit. It has not been proved that any one gave notice at, or prior to, the auction-sale that the property was mortgaged or that it was the mortgagee's interest only which was about to be, or was being sold. It was contended on behalf of the appellant, and denied on behalf of the respondents, that the suit was barred by art. 134, sch. ii of the Limitation Act,—Act XV of 1877—that the agreement contained in the “contemporaneous deed” had been abandoned; and that Sukh Din, Thakur Prasad, Husain Ali, and Sheo Charan, were respectively innocent purchasers for valuable consideration without notice, who had purchased in each case from the person who was, with the consent, express or implied of the persons for the time being interested, the ostensible owner of the property; that the transferee in each case had, prior to his purchase, taken reasonable care to ascertain that his transferor had power to make the transfer, and had anted in good faith.

The appellant relied upon the cases of Piarey Lal v. Saliga, and the case of Kamal Singh v. Batul Fatima. It is sufficient to say that, holding the views which we do of the facts of the present case, the cases cited do not appear to us to be authorities on the points of law which we have to decide.

These contentions, which involve issues of law and of fact, we shall deal with in their order. As to the question of limitation we find that in the case of Radanath Doss v. Gisbome & Co. their Lordships of the Privy Council had under their consideration s. 5 of Act XIV of 1859, which with the exception that it contained the words “bona fide” and “purchaser,” which do not appear in art. 134, sch. ii of the Limitation Act, 1877, was practically the same as art. 134 above referred to. Their Lordships held there that a defendant, in order to claim the benefit of s. 5 of the Act of 1859, had to show three things:— “First, that he is a purchaser according to the proper meaning of that term; second, that he is a bona fide purchaser; and third, that he is a purchaser for valuable consideration.” They say further:— “Now, what is the meaning of the term ‘purchaser’ in this section? It cannot be a person who purchases a mortgage as a mortgage, because [102] that would be merely equivalent to an assignment of a mortgage; it would be the case of a person taking a mortgage with a clear and distinct understanding that it was nothing more than a mortgage. It therefore, must mean, in their Lordships' opinion, some person who purchases that which de facto is a mortgage upon a representation made to him, and in the full belief, that it is not a mortgage, but an absolute title.” Can the omission of the word “purchase” from art. 134 cause any essential difference in this respect between the construction which we should place upon art. 134? We think not. In our opinion it could not have been intended that property which would pass on the sale by the mortgagee of his interest, should come within the meaning of art. 134. That article was, we believe, intended to protect, after the expiration of twelve years from the date of a purchase, a person who, happening to purchase from a mortgagee, had reasonable grounds for believing, and did believe, that his vendor, who professed by the conveyance to convey, had the power to convey, and was conveying to him, an absolute interest and not merely the interest of a mortgagee. Otherwise it is difficult to conceive why sixty years should be the period of limitation under art. 148, and twelve years the period under art. 134. Under art. 148 the term “mortgagee,” having regard to the sixty years' period of limitation, must be held to include an assignee of a mortgage. Construing as we do art. 134, we come to the conclusion on the facts as we find them, that art. 134 does not apply in this case. By s. 29 of Regulation XI of 1822, it is provided that in “cases in which any land belonging to a defaulter or his surety may be sold for the recovery of an arrear of revenue, not being the land on account of which the arrear may have accrued, then whether the said land sold bemalguzari, or lakhiraj, the purchaser shall only be held to have acquired the rights, interests, and title possessed by the said defaulter or surety, in like manner as if the land had been sold by private sale or under a decree of Court in liquidation of a private debt.” Consequently the interest of Ganga Din, which was sold to Sukh Din at the auction, was that of mortgagee. Further, Sukh Din, the auction-purchaser, who must be presumed to have known the law, must also be presumed to have made inquiries as to the interest which Ganga Din had in the property, unless he [103] wilfully shut his eyes and abstained from all reasonable inquiry. An inquiry at the auction-sale must have disclosed what Ganga Din's interest was; and although Ganga Din appeared in the Land Register as proprietor, still an examination of the local Registrar's books would have disclosed the fact that the “contemporaneous deed,” which constituted the transaction of 1835 a mortgage transaction, had been registered, which we find it had been within a few hours of the execution and registration of the sale-deed. Besides this, it is open to doubt whether a person who purchased at a formal auction-sale such as that in question, could be set to have purchased without notice an absolute interest from the mortgagee—see the case in the Privy Council above referred to and the judgments in Sobhag Chand Gulab Chand v. Bhai Chand. We also draw an inference from the fact that Sukh Din paid only Rs. 3,000 for the interest that he purchased, that he must have known that he was purchasing merely the mortgagee's interest in a property liable to be redeemed at any moment. It is practically inconceivable that Thakur Prasad who purchased in 1845, Husain Ali who purchased two years later, or Sheo Charan who purchased in 1852, made no reasonable inquiry as to Sukh Din's title or omitted to examine the register to ascertain whether or not any encumbrances had been registered affecting the property which they were buying; and it is to be noticed in each of the cases that the purchase-money was Rs. 3,000. We come to the conclusion that Sukh Din, Thakur Prasad, Husain Ali, and Sheo Charan knew, or might, or ought to, have known, unless they wilfully abstained from inquiring, that the interest which they respectively were purchasing was that of a mortgagee merely.

There is no evidence that the mortgagors or their representatives intended to abandon, or did in fact abandon, their rights, or allowed any one to believe that they had abandoned them. On the contrary, we find it proved that Chedi Din, on behalf of himself and his co-sharers in the equity of redemption, from time to time took such steps as a needy man acting for needy co-sharers had it in his power to take, to assert his and their right to the equity of redemption. As to the other points raised by the appellant, we, consistently with the views which we have already expressed on the [104] facts, hold that Sukh Din, Thakur Prasad, Husain Ali, and Sheo Charan, were not innocent purchasers without notice; that if they were not aware of the interest which they respectively purchased as we believe they must have been, they respectively took no reasonable care to ascertain what their respective vendors' titles were, and that if they assumed to purchase more than a mortgagee's interest they did not act in good faith. As by Regulation XVII of 1806 mortgagors in such a case as the present were entitled to redeem within sixty years, we hold that the respondents were entitled to redeem. We dismiss this appeal with costs, and as the respondents have not appealed from the judgment or order below, the respondents have the opportunity of redeeming on the terms decreed.

Appeal dismissed.