Patna High Court
Mukhram Marwari And Ors. vs Bateswar Mahtont And Ors. on 31 August, 1936
Equivalent citations: 169IND. CAS.805, AIR 1937 PATNA 307
JUDGMENT Varma, J.
1. This is an appeal on behalf of the defendants 1st party. The plaintiffs filed a suit for recovery of Rs. 196-5-9 which was withdrawn by the defendants 1st party out of the sale proceeds in deposit in Rent Execution Case No. 716 of'1928 after a declaration that the defendants 1st party had no right tc withdraw any portion of the surplus sale proceeds and that the plaintiffs had a right to withdraw all the surplus she proceeds. In order to understand the case fully, it is necessary to give a few important details. On December 3, 1921, the defendants 2nd party executed a usufructuary mortgage bond in favour of plaintiff No. 1 who is a member of a joint family. On February 19, 1928, the plaintiff sued upon the mortgage bond and got a decree On September 25, 1928, it appears that the property was sold he execution of a rent decree and was purchased by one Nathu Mahto who is not a party. After satisfying the amount due in the rent decree it appears that a surplus of Rs. 458 odd remained. It is said that the plaintiffs came to know of the sale on August 7, 1929, and on August 8, 1929, they applied for an injunction against the second party restraining him from withdrawing the surplus money. While the defendants second party and plaintiffs were fighting each other it appears that on September 29, 1928, the defendants 1st party having obtained a money decree against the defendants 2nd party actually withdrew Rs. 196-5-9 out of the surplus Rs. 458 odd. The suit was evidently under Section 73. Transfer of Property Act, and was contested by the defendants 1st party alone. The contention of the defendants 1st party was that the plaintiffs' mortgage bond was not a genuine document and was without consideration, that the plaintiffs were not entitled to recover the amount which had been withdrawn by them out of the surplus sale proceeds, and that the plaintiffs were not entitled to get any interest and that the rate of interest was excessive. The Munsif who originally tried the case dismissed the suit.
2. As a particular incident has occupied this Court a long time in discussing I had better mention it here. It appears that a certain document (which is now Ex. 6) was filed before the trial Court but no use seems to have been made of it in that Court. When the plaintiffs went in appeal before the lower Appellate Court they prayed that these documents be exhibited on their behalf. On April 3, 1933, this prayer was rejected because on that date the then respondents (who are now the present appellants) were not present in Court. We are not concerned with the story as to how the appeal was re-heard, but it appears that the arguments in this case were begun on September 12, 1933 and finished on September 13, 1933. From Ex. H it appears that it was marked as such on September 13, 1933. On appeal the lower Appellate Court has decreed the suit of the plaintiffs and allowed interest at the rate of 12 per cent, per annum simple from September 29, 1929, till the date of the suit. Against this judgment of the lower Appellate Court the defendants 1st party have crane up in second appeal.
3. Mr. Yasin Yunus appearing on behalf of the appellants has very clearly put the points of law that he has argued before me. Broadly speaking he has taken up two points; one is whether in a case like this the plaintiffs could take advantage of Section 73, Transfer of Property Act, when their right as a mortgagee was not in jeopardy; in other words, if a sale takes place without annulling an encumbrance, the incumbrancer has no light to proceed under Section 73 of the Act, and the second point is, that the lower Appellate Court has allowed the plaintiffs to exhibit a document at a very belated stage of the case, which apart from being against the provisions of Order XLI, Rule 27, Civil Procedure Code, has materially prejudiced his clients.
4. In support of his contention Mr. Yunus has relied upon the decision in Beni Prasad Sinha v. Rewat Lal 24 C. 746 where it was held that a sale purporting to be under Section 161 and subsequent sections of the Bengal Tenancy Act, does not ipso facto cancel encumbrances unless steps are taken under Section 167, Bengal Tenancy Act. Section 73, Transfer of Property Act, only gives a right to the mortgagee for the residue of the sale proceeds and refers to cases where the law otherwise provided that the effect of the sale was to nullify a mortgage. It was further held that Section 73 was not intended in any way to enlarge the interest of a purchaser at a sale for arrears of revenue or rent. The Courts below have referred to this decision but they have relied on a subsequent case of the Calcutta High Court in Gobind Sahay. Sibdut Ram 33 C. 878. There, the suit was to enforce a mortgage and the property mortgaged was sold under a decree in a rent suit. After paying off the arrears of rent there was a surplus of the sale proceeds and the mortgagee wanted to get hold of the surplus under Section 73, Transfer of Property Act. Evidently one of the arguments advanced was that unless the purchaser tries to get the property free from the encumbrance, the incumbrancer has no right to proceed against the sale proceeds. Maclean, C.J. in delivering the judgment of the Court said ands follows:
It is not apparent, and I do not see that it makes any difference, whether under the decree in the rent suit the property was put up for sale with power to the purchaser to avoid encumbrances or not. Under the provisions of Section 73, Transfer of Property Act, the plaintiff has a charge on the surplus sale proceeds, and I do not think that Sections 159, 161 to 167, Bengal Tenancy Act, can in any way 'prejudice the plaintiff's right in that respect.
5. The judgment further emphasizes the point that it was not suggested that the sale was caused by any negligence on the part of the mortgagee and that the mortgagor himself did not contest but a third party who bad purchased the property. That is the position in the Calcutta High Court up to the year 19C6. The present Section 73, Transfer of Property Act, has assumed its present form by Act XX of 1929. We are chiefly concerned with Section 73 (1) which provides:
Where the mortgaged property or any part thereof or any interest therein is sold owing to failure to pay arrears of revenue or other charges of a public nature or rent due in respect of such property, and such failure did not arise from any default of the mortgagee, the mortgagee shall be entitled to claim payment of the mortgage money in whole or in part, out of any surplus of the sale proceeds remaining after payment of the arrears and of all charges and deductions directed by law.
6. Now the question is whether, on the facts mentioned in the present case the mortgagee is entitled to get the surplus of the sale proceeds. There was a mortgage decree and the mortgaged property was sold. On the wording of the section itself, I do not see why the mortgagee should be forced to defer his remedy till the encumbrance is annulled. 1 am of opinion that it would be reading something in the section which is not there. Of the two Calcutta decisions I would adhere with due respect of the reassuming adopted in the case in Gobind Sahay v. Sibdut Ram 33 C. 878. But I may add that so far as this Court is concerned, in Kapuri Sahu v. Mathura Das Marviari 148 Ind. Cas. 972 148 Ind. Cas. 972 : A.I.R. 1934 Pat. 209 : 15 P.L.T. 95 : 6 R.P. 524, although the sale was under the revenue sale law the same considerations seem to have weighed with their Lordships of this Court. His Lordship, the Chief Justice, who delivered the judgment of the Court after referring to the wordings of the section and comparing with the old section as it stood, said as follows :
The new section, therefore, gives to the mortgagee rights against the sale proceeds. If the sale was of the whole of the estate, then the rights given under the section as in the case of the section which it replaced corresponded with the right of substitution. Where, however, the right of substitution did not exist and where the sale 'was of a portion of the mortgaged property, nevertheless the right of the mortgagee to go against the sale proceeds was conferred by the Act. Nothing is said in the section against the contention of the right of the mortgagee in addition to such rights as were conferred by the section to proceed against the mortgaged property.
Mr. Yasin Yunus has referred to several other cases in support of his contention in this connection, but I need not refer to them when I find that a Division Bench of this Court has expressed its opinion definitely. I am afraid the contention must fail. I now come to the next question with regard to the admission cl Ex. 6 in evidence at a late stage of the case. It is really with the object of expressing my opinion on this part of the argument that I have given the various dates in the beginning of this judgment. It is argued that the document should not have been taken in evidence because of the provisions of Order XLI, Rule 27, Civil Procedure Code, and that the document does not show how it was connected with the rent execution case No. 746 of 1928. Mr. Yunus contends that the non-recording of reasons for admitting the document is illegal. He has relied on a decision of this Court in Kandhdeo Narain Singh v. Dewa Singh 36 Ind. Cas. 955 36 Ind. Cas. 955 : A.I.R. 1916 Pat. 319. In that case their Lordships in disapproving of the admission of evidence in the Appellate Court said that the opposite party against whom the evidence was used should have been given an opportunity of rebutting the evidence. In Satis Chandra Base v. Thakurdas Mandal, 39 Ind. Cas. 886 39 Ind. Cas. 886 : A.I.R. 1917 Cal. 711 : 25 C.L.J. 473, their Lordships of the Calcutta High Court observed that the expression "substantial cause" in Order XLI, Rule 27, does not include a case where the only ground assigned is that the evidence already adduced by the aggrieved party is not satisfactory and sufficient; in other words, as the section itself says it is for the purpose of enabling the Court to pronounce judgment and not for the' purpose of filling up gaps in the case of any of the parties.
7. In Mahesh Chandra Shaw v. Bepin Behari Khan, 49 Ind. Cas. 510 49 Ind. Cas. 510 : A.I.R. 1919 Cal. 170, which also a Calcutta case, the non-recording of reasons for accepting evidence in the Appellate Court was held to be illegal and their Lordships laid stress on the provision that whenever additional evidence is allowed to be produced in the Appellate Court, the Court shall record the reasons for its admission, and they referred to the earlier decision in Gajadhar Prasad v. Lohia 35 Ind Cas. 898 35 Ind. Cas. 698 : A.I.R. 1917 Cal. 201 : 24 C.L.J. 457, where it was held that the omission of the learned Judge to record any reason for the admission of the additional evidence was alone a sufficient ground for allowing the appeal. The strongest case cited by Mr. Yunus is the one in Baijnath Manjhi v. Dip Lal Mader, 57 Ind. Cas. 843 57 Ind. Cas. 843 : A.I.R. 1920 Pat. 235, in which it was held that Order XLI, Rule 27, allows the parties to produce evidence in the Appellate Court, if the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment or for any other substantial cause, but this did not mean that in order to enable the Appellate Court to pronounce judgment in favour of a particular party additional evidence should be admitted in appeal, and it only meant that where there was a lacuna in the evidence which precludes the Appellate Court from pronouncing judgment on the evidence which is already on the record, additional evidence should be allowed to be adduced. As against that Mr. Satya Sunder Bose has advanced various arguments for holding, firstly, that the lower Appellate Court was justified in taking the document into evidence, secondly, that the reasons are apparent from the judgment itself and thirdly that the defendant first party, the appellants, are estopped from raising any of these objections in the light of the pleadings and the issues that were framed in the case.
8. Dealing with the point as to whether or not the appellants are entitled to raise objection he has referred to paras. 7 and 9 of the written statement. But before I proceed any further I think it will be better to explain how the points raised by Mr. Bose arise. In the course of the trial it appears that the defendant first party raised the question that the mortgagee was not entitled to the surplus money because it was on account of his default that the property was sold for arrears of rent. Now the case of the mortgagee was that he was dispossessed in the year 1332 or in the end of 1331, Fasli, and the rent suit referred to was after he was dispossessed. The trial Court disbelieved the karpardas who was examined on behalf of the plaintiff-mortgagee and it appears somehow the document which is now marked as Ex. 6 was not marked in the trial Court. From the trend of Mr. Bose's argument it appears that it was after the learned Munsif accepted the contention of the defendant 1st party that the sale was due to the negligence of the mortgagee that this document assumed special importance. To proceed with the argument of Mr. Bose, referring to paras. 7 and 9, he says that all that the defendants 1st party contended was that the decree was not a rent decree and that the document was not a genuine mortgage deed. He argues that they themselves not having raised the point in the pleading and this point not having been in issue in the trial Court, it does not lie in the mouth of the defendant first party to object. If they themselves had raised the point against the plaintiffs, the plaintiffs wanted to meet their contention. He proceeds further and says that even the grounds of appeal do not show that they objected to taking of the evidence and they did not raise the question that they were taken by surprise. He has also drawn my attention to the fact that in the list of documents taken in against this document it is written without objection and that there is no affidavit on the record to show that any objection was raised.
9. In reply to the argument that the non-recording of reasons was illegal, Mr. Bose has drawn my attention to the construction of the Civil Procedure Code. He says that the rules framed in the Civil Procedure Code are not so imperative as the main sections of the Code. This line of argument of Mr. Bose does not commend itself to me. If rules have been framed and have the force of law they should be observed. But he is on a better ground when he says that the lower Court has given reasons. The only point is that it is not in the order-sheet but it is in the judgment where it is said :
The plaintiff no doubt should have exhibited this document before the lower. Court though it was produced there but being a public document material for the purpose of this case I allow it to be exhibited on the side of the plaintiffs.
10. The general trend of the Evidence Act, Mr. Bose argues, is to admit evidence and not to reject evidence, end in support of his contention he cites Gopika Raman Roy v. Atal Singh 56 I.A. 119 : 114 Ind Cas. 561 : A.I.R. 1929 P.C. 99 : 56 C. 1003 : 33 C.W.N. 46S : 29 L.W. 674 : 49 C.L.J. 327 : 10 P.L.T. 301 : 31 Bom. L.R. 734 : (1929) A.L.J. 246 : 56 M.L.J. 562 (P.C.). Mr. Bose further argued that even if it be held that this document is inadmissible in evidence or should not have been admitted, the lower Appellate Court has come to its finding without the aid of ijais document, because once it believes the karpardaz examined on behalf of the plaintiffs the plaintiffs' case is made out. Mr. Yasin. Yunus has relied on the Privy Council decision in Parsotim Thakur v. Lal Mohar Thakur 10 Pat. 654 : 132 Ind. Cas. 721 : A.I.R. 1931 P.C. 143 : 58 I.A. 554 : 33 Bom. L.R. 1015 : (1931) A.L.J. 513 : 35 C.W.N. 786 : Ind. Rul. (1931) P.C. 209 : 34 L.W. 76 : 54 C.L.J. 1 : 12 P.L.T. 683 : (1931) M.W.N. 929 : 61 M.L.J. 489 (P.C.) to show that the evidence should not have been taken unless the Court had recorded its reasons to the effect that the evidence was necessary to pronounce judgment. So far as the point raised by Mr. Yasin Yun us, that this document does not connect itself with the rent execution case No. 746 of 1928, Mr. Bose frankly confesses that there is nothing on the record by which it can be connected, but he still maintains that no point has been raised as against this in the grounds of appeal. To my mind this seems to be the most formidable objection to the taking in of the document, but it seems to me that although it may be in this Court that this document is not connected with tb6 rent execution case, the parties in the lower Court had no doubt about it, because it does not appear that any objection was raised on these lines before the lower Appellate Court or that this was not relevant or was not connected with the rent execution case.
11. There is one more point raised by Mr. Yasin Yunus that the money has already been withdrawn by the defendants 1st party; no authority has been cited by the respondents that the money could be followed in the hands of a third party and as a matter of equity he says that the mortgagee should be satisfied with the money that is already to possession of the Chart. To my mind the particular section is to protect the mortgagee's rights in the secured property. He should be in a position to realize his dues from the property mortgaged. If portions of the property are converted into cash that cash also should be available', to him as a part of the security, because Section 73 says that if any part of the property or interest in the property is sold, the mortgagee's right comes into play to realize the money. It is either the property or any part of it or any interest in the property, that is to say, the whole object is that the mortgagee's security should not be diminished and the moment there is any attempt to diminish it his remedy comes in. A situation somewhat similar to this arose in Goes to Behary Pyne v. Shib Nath Dut where the various decree-holders had taken away their cash on the sale of a patni taluk and it was held that the plaintiff was entitled to realize the balance due to him out of the whole of the surplus and, therefore, he could proceed against any of the individuals who had withdrawn the money.
12. These are the points urged by Mr. Yasin Yunus and I am afraid although he has argued very vigorously and put his case very clearly before me, I fail to accept his contention. The appeal, therefore, fails.
13. There is a cross-appeal. The lower Appellate Court has granted interest from September 29, 1929 up to the date of the suit. Evidently this is due to an oversight. He should have allowed the rate of interest from September 29, 1923 till the date of the judgment. In this case it will be the date of the present judgment. Subsequent interest will be at the Court-rate up to realization. There will be no order as to costs. Leave to appeal under the Letters Patent refused.