Rameshwar Prasad Agarwala And Others v. Devendra Narayan Ojha And Others

Rameshwar Prasad Agarwala And Others v. Devendra Narayan Ojha And Others

(High Court Of Judicature At Patna)

| 19-08-1943

Monohar Lall, J.This is an appeal by a decree-holder who is dissatisfied with the order passed by the learned Subordinate Judge, first Court Arrah, dated 5th January 1942, by which he has been ordered to eon-tribute for the share of the mortgage security which he had purchased in the following circumstances. Pandit Sivendra Narain Ojha, Jai Ramendra Narain Ojha and Devendra Narayan Ojha are three brothers, who owned a number of properties including village Bhakura regarding which the question arises in this appeal. In the year 1929 during the pendency of a partition suit between these three brothers, a pleader receiver was appointed. After the brothers had become separate in law, Jai Ramendra Narain Ojha executed a mortgage bond on 3rd June 1929, with respect to his one-third share in three villages including village Bhakura for a sum of Rs. 3000 in favour of the appellant. The mortgagee obtained a final decree on the basis of this bond on 30th November 1939. In execution of this decree he purchased the properties including one-third share of his mortgagor in village Bhakura on 15th January 1937.

2. On 12th June 1929, the receiver with the sanction of the Court borrowed a sum of Rs. 1750 from the same mortgagee and executed a mortgage bond in which he gave in security 16 annas of village Bhakura to the mortgagee, that is to say, one-third share of each of the three brothers. It will be noticed that the mortgage bond by the receiver was subject to the earlier mortgage executed in favour of the mortgagee so far as one-third share of Bhakura was concerned. On the foot of this mortgage bond, the mortgagee obtained a decree against the receiver and the three brothers. The preliminary decree was passed on 2lst May 1935, but in appeal the decree was varied in favour of the decree-holder by adding some interest on 27th May 1937. A second appeal to this Court was also dismissed. The present question arises out of further proceedings in connexion with this decree. On 16th September 1929, Ram Shivendra Narain Ojha, executed a mortgage in favour of the same mortgagee with respect to his one-third share in this village and in other properties for Rs. 1500. On 12th February 1930, he executed another mortgage bond in favour of the same mortgagee to secure a further sum of Rs. 1000 in which also he gave as security his one-third share in some villages including his one-third share in village Bhakura. The mortgagee instituted a single suit on the basis of these two mortgage bonds against Ram Shivendra Narain and obtained a final decree on 14th July 1933. In execution of this decree, he purchased one-third share of Ram Shivendra on 3rd November 1935 in the village in question and in other villages. It will be noticed that the mortgagee thus became the purchaser of one-third share of Jai Ramendra Narain in execution of his mortgage decree obtained on the earliest bond and also of one-third share of Earn Shivendra Narain in execution of his decree on the last two bonds which were subject to the earlier two bonds.

3. After the preliminary decree on the foot of the mortgage bond of 12th June 1929 was affirmed by this Court, the mortgagee on 2nd September 1939 applied to have his preliminary decree made final. A number of objections were raised by Debendra Narain, but it is necessary now to consider only one objection. That objection was that after the passing of the preliminary decree the mortgagee having purchased two-third share of village Bhakura representing the share of the other two brothers namely Jai Ramendra and Ram Shivendra on 15th January 1987 and on 3rd November 1935, the mortgage decree should be held to be satisfied to the extent of two-thirds, and therefore the share of Devendra Narain was liable only to the extent of one-third of the mortgage debt and that the final decree should be passed to this effect. The Courts below overruled this contention on the ground that this would amount to going behind the decree which was affirmed by the High Court in second appeal. The matter came to this Court in second Appeal No. 996 of 1940 when after narrating the facts which I have stated above I delivered the judgment of the Division Bench the learned Chief Justice agreeing and held that this objection ought to have been entertained and remanded the case to be decided upon the merits by our order dated 10th November 1941. In pursuance of that order the learned Subordinate Judge has first considered whether Debendra Narain was or was not a party to the previous two mortgage decrees and points out that it was wrongly represented to us that Devendra Narain was not a party, and therefore he overruled this objection. This contention is not raised any longer before us. He then addressed himself to the question whether the mortgagee, who is the appellant before us, was liable to contribute rateably towards the final decree under consideration inasmuch as the mortgage security was split up. He held that the mortgagee was bound to contribute to the extent of two-thirds. Hence the appeal before us.

4. Mr. S.N. Bose, who appears for the appellant, argues that the mortgagee is bound to contribute not to the extent of two-thirds but only to the extent of half. He puts his case in this way. He says that the bond of 3rd June 1929 was the earliest of the mortgage bonds, and therefore when the receiver mortgaged one-third share of village Bhakura on 12th June 1929 what he mortgaged was merely the equity of redemption so far as one-third share of Jai Ramendra Narain in village Bhakura was concerned, and as this one-third share of village Bhakura has been purchased by the mortgagee to satisfy his dues on the mortgage bond of 3rd June 1929 it ceased to form any part of the security on the mortgage bond of 12th June 1929 and that the dues of this bond must now be realised from the two-thirds share of the remaining two brothers, that is to say, Ram Shivondra and Devendra. As the mortgagee himself has purchased the one-third share of Ram Shivendra on 3rd November 1935, he is liable to contribute along with Devendra, that is to say, half and half. In my opinion this argument is sound and must be accepted. Dr. Ghosh in his well-known book on the Law of Mortgage in India, Vol. I, 1922, 5th Edn., says at page 398:

Where the properties are subject to two or more encumbrances the amount of any prior encumbrance is deducted from the value of the property subject to it. Thus, where three properties were twice mortgaged, and the second mortgagee afterwards at an execution sale purchased the interest of the mortgagor in two of the properties, each property was held liable to contribute rateably in proportion to its value, first to the debt due on the first mortgage and next to the debt due on the second mortgage. But if any of the parcels has been sold at the instance of a prior mortgagee, the purchaser cannot be called upon to contribute to the discharge of a subsequent mortgage.

5. The last sentence exactly represents the situation in the present case. This observation of Dr. Ghosh is completely covered by high authority. The case in Bohra Thakur Das v. Collector of Aligarh (1906) 28 All. 593 Knox and Aikman JJ. decided a similar question in these terms: I am reading from p. 599: The question is

whether the mortgagee, having himself purchased part of the mortgaged property, can throw the whole burden of the mortgage on the remainder of the mortgaged property. The answer to this question depends on the circumstances under which the purchase was made. Supposing A and B are mortgagors of certain property which they have jointly mortgaged to C. Now if C, the mortgagee himself, purchases the equity of redemption from A, it is clear that he cannot be permitted to throw on Bs share the whole burden of his mortgage. In such a case Bs share can only be saddled with the proportionate amount of the mortgaged debt. But if, as is the case here, Cs purchase was at a sale in execution of a decree obtained on a prior mortgage, the case is different. The learned Judge finds that the mortgagee bought the Kachaura property at an open sale and not subject to any charge and that he must be presumed to have paid fair value for it. The case then stands thus the whole of the Kachaura property has been swallowed up by the first mortgage and consequently the burden of the second mortgage falls entirely on the Agrana property.

6. The learned Judges referred to an unreported decision of their Court and also to the case in Sesha Ayyar v. Krishna Ayyangar (1901) 24 Mad. 96. This case went up in appeal to their Lordships of the Judicial Committee and is reported in Bohra Thakur Das v. Collector of Aligarh 32 All. 612. Mr. Ameer Ali, who delivered the judgment of their Lordships with regard to this particular question, observed as follows at page 188:

In the present suit the appellants seek to redeem the Agrana upon payment of a proportionate share of the Es. 5000; their contention is that as Nand Kishore purchased one of the properties on which the mortgage debt was secured, it was pro tanto satisfied and Agrana was only liable for the share legitimately chargeable on it. As Kachaura was sold and purchased by Nand Kishore in execution and part satisfaction of a decree obtained on the prior mortgage of 1868, the Courts have only properly overruled the appellants contention which has not been pressed before this board.

7. In Raghunath Prasad v. Jamma Prasad (1907) 29 All. 233 the facts were that 16 villages were given in mortgage by two mortgages of different dates to the same mortgagees. The mortgagees by an earlier mortgage in suit obtained a decree and brought to sale 10 out of 16 villages and purchased them them selves. They then proceeded to sell the remaining six villages in satisfaction of the dues on the second mortgage. It was objected on behalf of the mortgagor that as the mortgagees had purchased 10 out of 16 villages which were the subject of the second mortgage the mortgagees were bound to contribute to the extent of their having purchased the 10 villages. But the contention was overruled and it was held that the remaining six villages were liable to the full extent of the second mortgage. The decision in Bohra Thakur Das v. Collector of Aligarh (1906) 28 All. 593 which I have considered above was followed. In Jasodha Kumar Dey Vs. Kali Kumar Dey and Others, a Division Bench of the Calcutta High Court after giving the same quotation from the judgment of their Lordships of the Judicial Committee supra observed at p. 675:

The question therefore resolves itself to this whether the purchase by the mortgagee of one of the five properties mortgaged to him was purchase of the equity of redemption or of the entire interest of the mortgagor in the property. The deed of sale of the property has been placed before us and we find nothing in it to show that the mortgagee purchased only the equity of redemption.... That being so the mortgagor is not entitled to claim in this suit that a portion of the mortgage debt should be held to be pro tanto extinguished by the purchase of one of the properties by the mortgagee.

8. As opposed to this strong and weighty authority the learned advocate for the respondent relied on the case in Mohamed Taki Reza v. W.A. Thomas (1906) 4 C.L.J. 317. The head-note supports the contention of the learned advocate, but it is wrong. At page 318 it is distinctly mentioned that on 3rd April 1902 the mortgagee when he applied for the execution of his decree stated clearly that the properties other than the four properties mentioned of which he purchased the equity of redemption under the sale in satisfaction of the first mortgage, should be sold first. In this case, therefore, merely the equity of redemption had been purchased by the mortgagee and not the mortgage property free from en-cumbrances. For these reasons I would uphold the contention of the appellant and direct that he is liable to contribute equally with Devendra Narain, that is to say, Rs. 1816-8-6 instead of Rs. 2422. The result is that I would allow the appeal and direct that a final decree should be passed in accordance with my decision above. The appellant is entitled to his costs in proportion to his success in this Court but full costs of the previous proceedings wherein this and other questions were raised.

Meredith J.

9. I agree, and I have only to add that the mortgagee decree-holder might have asked for the realisation of not half but two-thirds of the mortgage dues.

This result follows from a consideration of the various dates involved. To make things clear, it is convenient to set out the relevant facts in tabular form.

I designate these three mortgages respectively A, B and C.

10. Mr. Boses argument is this. When the appellant purchased the one-third covered by mortgage A, he purchased it out and out, and not merely the equity of redemption. He purchased the property free from all incumbrances and liabilities, inasmuch as this was a prior mortgage to B. The effect of the purchase was, therefore, to render this one-third no longer available for mortgage B. In fact, what the receiver had mortgaged under B was two-thirds of the property plus the equity of redemption as regards the remaining one-third already mortgaged under A. When this equity of redemption ceased to exist, the mortgaged property consisted only of the other two-thirds. The effect of the purchase was, therefore, that the entire mortgage dues of B became realisable out of two-thirds of the property.

11. The effect of the appellants purchase upon mortgage G, which was subsequent to B, was that he purchased merely the equity of redemption. He purchased one-third, but as the property mortgaged was then two-thirds, his purchase amounted to half the property then under mortgage. The effect was that he himself by his purchase became rateably liable for half of the mortgage, and consequently he can only realise half the mortgage dues from the last one-third of the original property.

12. This argument is correct so far as it goes, and must succeed. It ignores, however, one significant fact, that the purchase under C was prior to the purchase under A. If we keep this in mind, a different result emerges. When the appellant made his first purchase, namely, under C, he purchased one-third of the property mortgaged under B. The effect was to leave two-thirds of the B mortgage dues realisable out of the remaining two-thirds of the property. When later the appellant purchased under A, the effect was to leave that two-thirds of the B mortgage dues realisable out of the last remaining one-third of the property. Therefore, strictly speaking, the appellant would be entitled to realise two-thirds of his mortgage dues out of the respondents property under mortgage. As, however, he has asked only for realisation of one-half, the order proposed by my learned brother is, in my judgment, correct.

Advocate List
Bench
  • HON'BLE JUSTICE Monohar Lall, J
  • HON'BLE JUSTICE Meredith, J
Eq Citations
  • AIR 1944 PAT 179
  • LQ/PatHC/1943/55
Head Note

Mortgage — Priority — Order for contribution — One-third share of village Bhakura purchased by mortgagee in execution of his mortgage decree obtained earlier — Later the mortgagee purchased two-thirds of the same village in the proceedings of two different mortgage decrees obtained by him subsequently — Mortgagee having purchased the whole of the mortgaged property in execution of these subsequent mortgage decrees — Held, mortgagee liable to contribute rateably towards the final decree in the mortgage suit wherein one-third share of the village was sold — Mortgage of June 3, 1929, created a first charge on the whole village — Sale of one-third of the village in execution of the decree obtained on the said mortgage extinguished the mortgage to that extent — Sale of other two-thirds in execution of decrees obtained on mortgages subsequent to June 3, 1929 mortgage, did not extinguish the mortgage charge thereon — Decrees, dated May 21, 1935 and July 14, 1933, were passed in mortgage suit — Mortgage bond of 12th June, 1929, was subject to the June 3, 1929 mortgage bond which was the foundation of the mortgage suit — Separate suits instituted by mortgagee and decrees obtained therein by the mortgagee were not in respect of the same items of security and the principle of res judicata would not apply in the facts of the case — Transfer of Property Act (4 of 1882), S. 69\n(Paras 4, 5, 7, 8 and 10)\n The petitioners in this petition are persons detained under the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances (PITNDPS) Act. They have filed this writ petition claiming that detention under the Act is not constitutional and that, as a result, their continued detention is not lawful.\n\nThe Court has examined the provisions of the Act and finds that it was enacted in the context of India having become a party to the Single Convention on Narcotic Drugs, 1961, and the Convention on Psychotropic Substances, 1971. The Act was brought into force on 23-09-1988. The Act is intended to implement the treaties, conventions, and protocols to which India is a party. The Court also observed that apart from the treaties and conventions, there are a number of recommendations made by the UN and other bodies that India is fully committed to implementing.\n\nThe Court recorded that the contraband recovered in the present case comes under the categories of drugs or psychotropic substances and that the petitioners were engaged in selling or distributing the same. The Court also noted that although the Act lays down certain norms to be followed in the cases of detention, the provisions do not forbid detention altogether.\n\nThe Court also mentioned that there have been judgments and orders passed by this Court and other High Courts highlighting the menace of drugs and the need to curtail the involvement of persons in the trade of drugs and psychotropic substances. The Court stated that it is a known fact that this State, particularly the coastal districts, has become a hub of drug smuggling activities. The Court further observed that the petitioners who are citizens of India have a role to play in eradication of the menace of drug trafficking.\n\nThe Court further observed that the law relating to drug offences is not confined to India. It is observed that most of the countries are signatories to the treaties and conventions entered into for controlling illegal trafficking of narcotic drugs and psychotropic substances.\n\nThe Court was not inclined in entertaining the writ petition and stated that it was of the view that in a situation where the menace of drugs has been extensively dealt with by the Supreme Court of India as also by the High Courts and acknowledged as a global problem, it cannot strike down the Act and the provisions relating to preventive detention altogether.\n\nThe Court, however, directed the competent authority to consider the representation of the petitioners with regard to their illegal detention if it has been over 3 months. If there has been a breach of the norms provided in the Act, the competent authority has been directed to comply with the same. Preventive Detention — Narcotic Drugs — Constitutionality of provisions — Held, provisions for preventive detention under the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances (PITNDPS) Act, 1988, are not unconstitutional — Directions issued to the competent authority to consider the petitioners' representation regarding their illegal detention if it has been over 3 months and to comply with the norms provided in the Act.