Copyright
Chas. A. Stevens & Bros.

The Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) online

. (page 46 of 155)
Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 46 of 155)
Font size
QR-code for this ebook


share in mau;-a Bhisia Kattiya together with certain small shares in two
other villages. The money thus borrowed was promised to be repaid
within three months, and in default of such payment it was covenanted
inter alia that the properties hypothecated were to be held as security for



1891

JULY 25.



FULL
BENCH.

13 A. 432
(F.B.).



A VII- 38



297



13 All. 468



INDIAN DECISIONS, NEW SERIES



Yol.



1891

JULY 25.

FULL
BENCH.

13 A. 432

(F.B.).



repayment of the loan and that till such repayment had taken place, the
hypothecated properties could not be alienated by the mortgagor. The
terms of the covenants contained in this hypothecation deed are of special
importance because the suit from which this appeal has arisen is based
upon this document. In view of this circumstance and with reference to
what may follow in this judgment it is necessary to point out that the 4-
annas share of mouza Barwa Kutwa, which formed Dart of the property
hypothecated in this bond by the mortgagor Kazim Husain (defendant) is
the same 4-annas shares as that which, he, conjointly with his brother
Nadir Husain, had already hypothecated to Hari Prasad by the two
earlier deeds which I have mentioned, namely, the simple mortgage-deeds
of the 10th September, 1882, and the 23rd February, 1884.

(4) The fourth transaction is a simple mortgage executed by Nadir
Husain alone on the 12th August, 1885, whereby in lieu of Es. 1,999
he hypothecated his very same 4-annas share of mauza [468) Barwa
Kutwa to Hari Prasad, defendant, along with other property of which
specific mention is not necessary. It is also needless to say tha,t* Hari
Prasad, the mortgagee '(defendant), already held t this 4-annas share of
Nadir Husain in mortgage under his two earlier deeds of the 10th
September, 1882, and the 23rd February, 1884. But I may mention here
that the deed of the 12th August, 1885, contains a covenant to the effect
that the money was to be repaid within one year, and that till such
repayment, the mortgagor would not alienabe the mortgaged property.

(5) The fifth transaction is another simple mortgage executed by
Kazim Husain alone in favour of Mata Prasad, alias Chingan Bam, who is
plaintiff in the suit out of which the connected S. A. No. 1213 of 1888,
has arisen. The deed is dated the 21st August, 1885, and the amount
for which it was executed is Rs. 999 and as a security for the repayment
of the money the same 4-annas share in mauza Barwa Kutwa, as that
which was covered by the abovementioned mortgages of the 10th
September, 1882, the 23rd February, 1884, in favour of Hari Prasad, and
the 6th August, 1885, in favour of Mata Din Kasodhan, was given as
mortgage security along with some other property. The term for repay-
ment of this loan was fixed to be three months, and tbe deed whilst
containing the ordinary covenants in a hypothecation bond also'covenants
that till repayment of the loan the hypothecated properly could not be
alienated by the mortgagor. This deed is the basis of tbe suit out of
which the connected S.A. No. 1213 of 1888 has arisen.

(6) Then comes the most important transaction which affects these
two connected suits and which indeed is probably the main reason why
this case has been required to be considered by a bench consisting of all
the members of the Court. The transaction is a deed of sale executed by
the abovementioned brothers Kazim Husain and Nadir Husain jointly on
the 20th September, 1886, in favour of the abovementioned Hari Prasad
(defendant), whereby they in lieu of Bs. 14,530, stated in the deed to be
the amount then due to the abovementioned mortgagee Hari Prasad
under the abovementioned hypothecation bonds of the 10th September,
[469] 1882, the 23rd February, 1884, and the 12th August, 1885, sold
their rights and interests in the 8-annas share of mauza Barwa Kotwa
which already stood mortgaged not only to Hari Prasad, the vendee under
the hypothecation deeds mentioned, but also to Mata Din Kasodhan under
Kasim Husain's deed of 6th August, 1885, and to Mata Prasad under the
deed of 21st August, 1885, so far as the 4-annas share of Kazim Husain
was concerned. And for the sake of clearness I may say here in passing:

298



yii]



MATA DIN KASODHAN V. KAZIM HUSAIN



13 All. 470



that so far as Nadir Husain's 4-annas share in mauza Barwa Kotwa is
concerned, the transactions which I have mentioned only show that, under
the mortgages of the 10th September, 1882, the 23rd February, 1884, and
the 12th August, 1885, and the sale-deed of the 20tb September, 1886, the
defendant Hari Prasad alone is concerned both as mortgagee and as vendee
and neither of the plaintiffs in these connected suits has any interest in
that 4-annas share.

From the transactions which I have just described two suits have
arisen, namely, the following :

(1) A suit instituted by Mata Din Kasodhan on the hypothecation deed
of the 6th August, 1885, and the object of the suit, as represented in the
prayer contained in the plaint, is that the property covered in that bond
should be brought to sale by enforcement of hypothecation lien, and that
so far as the sale-deed of the 20th September, 1886, can be considered in
defeasance of the plaintiff's title, it should be set aside. 1

(2j The second suit is one filed by Mata Prasad on his hypothecation
bond of the 21st August, 1885, of which the terms have already been
mentioned by me, seeking recovery of money by sale of the property
included in his hypthecation bond by enforcement of lien.

In the Court of the Subordinate Judge which was the Court of first
instance, the parties arrayed as defendants in the suitof Mata DinKasodhan,
plaintiff, were Kazim Husain, the executant of the hypothecation deed of
the 6th August, 1885, upon which the suit was based, and also Hari Prasad,
the mortgagee of the 10th September 1882, and the 23rd February, 1884,
and vendee of the 4-annas [470] share in mauza Barwa Kotwa included in
the sale-deed of the 20fch September, 1886.

Similarly in the suit by Mata Prasad, the parties impleaded as defend-
ants were the same Kazim Husain and the same Hari Prasad, and both
these persons were impleaded as defendants for the same reason.

From what I have already stated it will be clear that both these suits
were suits of an ordinary character seeking to recover money advanced
upon a simple mortgage by sale of the properties covered and hypothecated
in the deeds upon which the suits respectively proceeded, that is to say,
in the case of Mata Din Kasodhan, plaintiff, the properties mentioned in
the hypothecation deed of the 6th August 1885 (S. A. No. 1210 of 1888)
and in the case of Mata Prasad (S. A. No. 1213 of 1888) the hypotheca-
tion deed of the 21st August, 1885.

The suits being thus arrayed and the reliefs prayed for in them being
thus similar, Kazim Husain, the mortgagor, did not appear to defend
either of them, buc naturally Hari Prasad, whose interests in the
4-annas share of Kazim Husain in mauza Barwa Kotwa has already
been described by me (with reference to the hypothecation deeds of the 10th
September, 1882, and the 23rd February, 1884, and also the sale-deed of the
20th September, 1886), appeared to resist both actions relying upon his-
mortgages of the lObh September, 1882, and the 23rd February 1884, and
also on his sale-deed of the 20th September, 1886.

The Court of first instance decreed the claim of Mata Din Kasodhan,
plaintiff so far as the mortgagor Kazim Husain (defendant) was con-
cerned in respect of the hypothecated properties other than the 4-annas
share in mauza Barwa Kotwa, but dismissed the suit so far as it sought to
bring to sale the share abovementioned and which had been purchased
by the defendant Hari Prasad under the sale-deed of the 20th September.
1886.



1891

JULY 25.

FULL
BENCH.

13 A. $32

(F.B.j.



299



13 All. 471



INDIAN DECISIONS, NEW SERIES



[Yol.



1891

JULY 25.

FULL
BBNCH.

13 A. 432

(F.B.).



For similar reasons that Courl passed a similar decree in the suit
of Mata Prasad, which is the subject of the connected appeal (S. A.
No. 1213 of 1888).

[471] From the decrees passed by the Court of first instance in these
two connected suits, the plaintiff Mata Din Kasodhan appealed to the lower
appellate Court upon grounds similar to those upon which in the con-
nected case the plaintiff Mata Prasad appealed-

Bofch these appeals were before the learned Judge of the lower
appellate Court and he has dealt with them in one and the same judgment,
with the result that he upheld the decrees of the Court of first instance and
dismissed both the appeals.

From the decrees thus passed 'both Mata Din Kasodhan plaintiff,
appellant in the case, and Mata Prasad, plaintiff, appellant in the con-
nected case (S.A. No. 1213 of 1888), have appealed to this Court,. and
these two appeals have-been considered together by the Full Bench.

Upon the facts of the case as I have stated them taken with the
pleading of the parties, and the arguments which have been addressed to us
in the Full Bench, the following questions of principle as to the law of
mortgage as prevailing in this part of the British India have to be con-
sidered :

(1) What are the legal incidents of- a simple mortgage or hypo-
thecation as understood in the law governing this part of the country ?

(2) Does the mere fact of the existence of a prior simple mortgage
or hypothecation debar a puisne mortgagee or hypothecates from enforcing
his lien by bringing the property to sale under order of the Court irre-
spective of the desire or willingness of the prior mortgagee ?

(3) When a purchaser of the equity of redemption being himself
a, first mortgagee takes the purchase in payment of bis first mortgage,
does such payment defeat the puisne and mesne incumbrancer's rights
in the same property or otherwise affect them ?

(4) In a suit such as this has the plaintiff a right to claim a decree
for the sale of the hypothecated property without rednring himself liable
to pay up the prior incumbrances or to any other [472] qualification as
to the prayer contained in his plaint fora decree for sale?

Before dealing with these questions, I wish to observe that I have
had the great advantage of perusing the judgment which the learned Chief
Justice has prepared in this case, and I may say at once that I entirely
agree with him in thinking that the principle of the Full Bench ruling of
this Court in Ganga Sahai v. Kishen Sahai (1), and of the Full Bench
ruling of the Calcutta High Court in Bhobo Sundari Debi v. Rakkal
Ghunder Bose (2) renders the Transfer of Property Act (IV of 1882) appli-
cable, so far as the question of reliefs and procedure is concerned, to mort-
gages executed before that Act came into force. In the present case all
the transfers were made subsequent to the enforcement of the Transfer of
Property Act, but I have made this observation with reference to another
appeal which has been argued before the Full Bench and to which the
learned Chief Justice has alluded in his judgment. I may also premise
here that upon the points above enunciated by me, numerous rulings were
cited in the course of the argument. All those cases have been dealt with
by the learned Chief Justice in his judgment so exhaustively that it
relieves me of the necessity of having to refer to them all in my judgment,
I shall therefore refer only to such cases as are required for the purposes



(1) 6 A. 262.



(2) 12 C, 583.



300



YII]



MATA DIN KASODHAN V. KAZIM HUSAIN



13 All. 474



of explaining my views upon the questions of law which have to ba
decided as already enunciated by me.

Dealing with this case in this manner, I think in considering the first
question, it is necessary to express my views as to the exact meaning of the
word "Property 11 as it occurs in the preamble of the Transfer of Propety
Act (IV of 1882j and throughout that enactment. This is a question of
interpretation, pure and simple, which must necessarily be guided by the
context of the enactment in which the word is employed. I take it as a
general rule of interpretation that words when employed in a statute must
be understood in their most generic sense unless a restricted meaning is
indicated by some provision in the same statute or in any other governing
former [473] statute. The rule is too well known to require any citation
of authorities, and I have thus to resort to statute law for the purpose of
ascertaining whether or not the word "Property" has been used in its most-
generic and comprehensive legal sense in the Transfer of Property Act
(IV of 1882). Unfortunately that enactment contains no scientific or com-
prehensive definition of the term ; but that enactment must be read subject
to the interpretation required by the "General Clauses Act" (I of 1868).
In clauses (5) and (6) of section (2) of that enactment, definitions of im-
moveable and moveable property have been attempted though in an incom-
prehensive manner. In the Transfer of Property Act itself in section 3,
the phrase immoveable property is not fully explained any more than the
word "property" itself. But I think that section 6 of that enactment in
making exceptions to the capability of transfer of property must be under-
stood to use the term property in its widest and most generic legal sense,
for otherwise the exceptions would be wholly unnecessary. That sense is,
I think, well represented in the meaning assigned to the word in Wharton's
Law Lexicon where it is represented to mean : "the highest right a man can
have to anything, being used for that right which one has to lands or
tenements, goods or chattels, which does not depend on another's
courtesy, property is of three sorts : absolute, qualified, and possessory."

And I may say that, so far as questions of possession are dealt with
in the Act, it appears to me that " possession " in those provisions is not
to be restricted merely to actual physical possession but should be under-
stood to mean such possession as the nature of the property is susceptible
of, for otherwise many classes of transfer, resting for their validity upon
possession, would become invalid, a view consistent with the principle
of Palani v Selambara (1) and what was said by Prinsep, J., in Narain
Chunder Chukerbutiy v. Dataram Boy (2) as to zemindari estates of
which the land is in actual possession of tenants.

Therefore such indications as s. 6 of the Transfer of Property Act
affords, induce me to hold that the phrase " transfer of [474] property "
as it occurs in s. 5 and the phrase " an interest in specific immoveable
property " as it occurs in s. 58 of the Transfer of Property Act include
what is known to the English Law as the " Equity of redemption, " that
is to say, such rights and interests as still remain to the owner of the
property after he has executed a mortgage of any kind. It is a misfortune
that the phrase "Equity of redemption" was ever introduced inter the
Mufassil Courts of British India, for that phrase is an extremely technical
phrase of the English Law of real property, and owes its origin and
has reference to the various procedures which at one time drew a hard-and,-
fast distinction between the procedure of the Courts of Common Law and



1891

JULY 25.

EOLL

BENCH.

13 A. 432

(F.B.).



.(1) 9 M, 267,



(2) S C. 597 (611).



301



13 All. 475



INDIAN DECISIONS, NEW SERIES



[Yol.



1891

JULY 25.

FULL
BENCH.

13 A. 432



of the Courts of Chancery in England. The phraae also has reference to
the peouliarities of the English system of mortgages, vastly different from
the Indian system of the mortgages, and I think it has been wisely
avoided in the Transfer of Property Act. Now, I will not go to the
original text-books of the English Law of mortgages for showing what a
mortgage means there, because the definition of an English mortgage as
contained in clause (e) of s. 58 of the Transfer of Property Act helps me
with a specific definition of what I understand by an English mortgage.
The clause runs as follows :

" Where the mortgagor binds himself to repay the mortgage-money
on a certain date, and transfers the mortgaged property absolutely to the
mortgagee but subject to a proviso that he will re-transfer it to the mort-
gagor upon payment of the mortgage- money as agreed, the transaction is
called an English mortgage."

Now, although this kind of mortgage may resemble, in some respects,
the Indian baibilwafa or mortgage by conditional sale as defined in clause
(c) of s. 58 of the Transfer of Property Act, one thing is certain, viz., that
an Indian mortgage of any kind does not mean the conveyance of
"property absolutely to the mortgagee" so that even if the English technical
phrases "legal estate " as distinguished from " equitable estate " were to be
imported into the Indian Law of mortgages, it must be held that notwith-
standing the execution of a mortgage of any kind, the " legal estate " vesta
not in the mortgagee but remains in the hands of the mortgagor, for [475]
he continues to be the owner of the property, entitled to deal with it as he
likes, subject, of course, to the incidents of the mortgage which he has al-
ready executed. If any authority is necessary for sustaining the proposi-
tion I willingly go back as far as the 30th April, 1858, when three Judges
of the Calcutta Sudder Diwani Adalat in the case of Sadat Ali Khan and
others v. The Gallector of Sarun and others (1), concurred in saying that :

" It is quite clear that, under the Mufassil Law of mortgages, the
right of ownership in the mortgaged property does not pass to the mort-
gagee, leaving only the equity of redemption in the mortgagor ; the right
of ownership together with the right of redemption remain with the mort-
gagor and until the property be actually foreclosed, and the sale become
absolute, the right of ownership does nob pass. This doctrine holds equally
applicable to conditional sales or usufructuary mortgages ; it follows,
that the mortgagee in the present suit, who, whatever the nature of the
mortgage, were in possession, were simply usufructuaries, and as such,
they enjoy no right of ownership."

I have cited this authority in order to make a marked distinction
between the English Law of mortgages and the Indian Law, not only over
the question of legal and equitable estates but also over the doctrine of
tacking to which I shall have to refer later on.

Leaving that question alone for a while, it is important for me in
considering the first question, as enunciated by me, to realize the exact
legal incidents of a simple mortgage or hypothecation, as understood in our
law. And I am afraid, since this is a Full Bench case, I must repeat what
I said in my dissentient judgment in another Full Bench case Gopal
Pandey v. Parsotam Das (2) where I had to consider the same question,
without having the benefit of knowing whether my views as to the nature
of simple mortgage or hypothecation were approved by the majority of
the Court. At the risk of prolixity and in order to avoid re- writing the same



(1) Calcutta B. D, A (1858), 840 (at p. 844).

302



(2) 5 A, 121 (pp, 137-140.)



YII]



MATA DIN KASODHAN V. KAZIM HUSAIN



13 All. 477



views in other words I auote the following passages from my judgment
[476] in the above mentioned case. There I said referring to simple
mortgages :

" Now the word " transfer " has longjbeen recognised to be a technical
term of law in all countries where English is the language of the Legislature
and of the Courts of Justice. It is often used as a convertible term with
" alienation, " " conveyance " and assignment." Whether any distinction
exists between the technical meanings of these expressions, and if so, what
that distinction is it is not necessary exactly to determine. But it may
be safely taken that the word " transfer " is used in law in the most
generic signification, comprehending all the species of contract which pass
real rights in property from one person to another.

" In considering the question immediately before us, it seems to me
necessary to bear in mind that we are not at present concerned with
transfers which take place by judicial process, but with such transfers onlyas
take place between living parties by virtue of their own act. In this significa-
tion the term cannot be defined better than by saying that it means
an act by which a living person conyeys the whole or part of the right of
ownership of property in present or future, to one or more other living
persons. This being my view, the next question to consider is the exact
nature of Indian mortgages in general. Mortgage as understood in this
country cannot be defined better than by the definition adopted by the
Legislature in s. 58 of the Transfer of Property Act (IV of 1882). That
definition has not in any way altered fche law,'. but, on the contrary, has
only formulated in clear language the notions of mortgage as understood
by all the writers of text-books on Indian mortgages. Every word of the
definition is borne out by the decisions of the Indian Courts of Justice as

fully explained in Macpherson's celebrated work on Indian mortgages.

******

A mortgage, then, is the transfer of an interest in specific immove-
able property for the purpose of securing the payment of money ad-
vanced or to be advanced by way of loan, an existing or future debt, or
the performance of an engagement which may give [477J rise to a
pecuniary liability. The transferor is called a mortgagor, the transferee
a mortgagee. Now. hypothecation is only a species of mortgage. It has
in India been used in the sense of a pledge, and the proper term for it is
simple mortgage.

" What, then, is the nature of a simple mortgage ? I again borrow
the definition from the Transfer of Property Act, solely for the sake of
convenience, and wholly irrespective of its legislative authority. Where,
without delivering possession of the mortgaged property, the mortgagor
binds himself personally to pay the mortgage-money, and agrees expressly
or impliedly that in the event of his failing to Spay according to his
contract, the mortgagee shall have a right to cause the mortgaged property
to be sold and the proceeds of sale to be applied, so far as may be necessary,
inpayment of the mortgage- money, the transaction is called a simple
mortgage.

"Now, it is quite clear to my mind that the most essential of the
elements which constitute the simple mortgage is the right to cause the
property to be sold a right without which the transaction, whatever else
it may be, certainly cannot be called a hypothecation, pledge, or simple
mortgage. This right does not come into existence when the actual sale
takes place by virtue thereof, but it comes into existence at the time when
the mortgage is made : it subsists in the property ever afterwards so long



1891

JULY 25.

FULL
BENCH.

13 A. $32



303



13 All. 478



INDIAN DECISIONS, NEW SERIES



[Yol.



1891

JULY 35.

FULL
BENCH.

13 A. 432

(F.B.).



as the mortgage-money remains unpaid : it limits the interests of the
mortgagor as they were at the time of the mortgage. Jurisprudence
recognises it as one of the various species of Jura in re aliena, or estates
carved out of the full ownership of property. It may happen that the
right, though not apparently, but in reality, is tantamount to absolute
transfer in its virtual effect. For instance, when land of the value of
Ks. 100 is pledged by hypothecation in lieu of a debt amounting to Rs. 101,
the mortgagor is simply a nominal owner, and his nuda proprietas is
worth less than zero. I am, therefore, of opinion that the rights created
by hypothecation in this country amount to nothing more or less than a
transfer of an estate amounting to a transfer of immoveable property [478]
though of course not an absolute transfer. The feature which distinguishes
hypothecation from other forms of mortgage consists in the fact that it does
not entitle the mortgagee to enjoy the physical qualities of the subject of
the mortgage. That this distinction does not alter the nature of the
transaction so as to take it out of the category of transfer is clear to me from
the manner in which the right is treated by jurisprudence. The reason of
the juristic view is well described by a modern writer on jurisprudence.
' The right of sale is one of the component rights of ownership and may be
parted with separately in order thus to add security to a personal obliga-
tion. When so parted with it is a right of pledge, which may be defined as
a right in rem realizable by sale, given to a creditor by way of accessory



Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 46 of 155)