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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 5 of 155)
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This bond was duly registered.

On the 9th September 1879, Baldeo Das mortgaged the same
shop to Dal Chand. On the 27bh January 1883, Nathu Ram, in a suit
brought by him against Baldeo Das and Dal Ghand, obtained a decree
upon his bond of the 18th October 1875. This decree directed the sale
of the shop, in the terms of a decree for enforcement of a simple mortgage.
Before any steps were taken in execution of this decree, the same shop
was on the 4th March 1885, sold in execution of a simple money-decree
held by one Hazari Mai against Baldeo Das, and was purchased by the
present plaintiff, Kishan Lai, who, on the 9th July 1885, obtained posses-
sion. At the sale in execution of Hazri Mai's decree, no notification was
made of the bond of the 18th October 1875, or of the decree obtained there-
on by Nathu Ram on the 27oh January 1883. It appeared that the Sub-
Registrar in whose office the bond was registered had erroneously reported
that there were no incumbrances on the property, being apparently misled
by the aliases of the obligor.

Some time subsequent to the 9th July 1885, Nathu Ram put his decree
in execution and caused the shop to be attached in the bands of Kishen
Lai under his purchase. Kishen Lai objected to this attachment, but his
objeefrion was overruled by the Court executing the decree, on the
27th September 1885. On the 30th October 1886, he instituted
tjbe present suit under a. 283 of the [31] Civil Procedure Code, in the Court
of the Subordinate Judge of Aligarh, to establish his right in the shop
.under his purchase of the 4th March 1885, and to have it declared that

19



1890
JUNE. 24.

APPEL-
LATE
CIVIL,

13 A. 28 =
10 A W,K.
(1890) 216,



13 All. 32



INDIAN DECISIONS, NEW SERIES



[Vol.



1890 fche shop was not liable to attachment in execution of Nathu Eam's decree
JUNE 34, f tne 27th January 1883, and was not subject, as against him, either to

that decree or to the bond of the 18th October 1875, which it enforced.

APPEL- The defendants were the representatives of Nathu Earn.

LATE The Court of first instance (Subordinate Judge of Aligarh) held that

OlVIL ^ e Plki^iff's purchase of the 4th March 1885 was subject to the inoum-

' brance created in favour of Nathu ]iam by the bond of the 18th October

13 A. 28= 1875 and to the decree thereon of the 27th January 1883, and that the
10 A.W.N. shop was liable to attachment and sale in execution of the decree. He
(1890) 216. accordingly dismissed the suit.

On appeal by the plaintiff, the District Judge of Aligarh found that
there was "not the least reason for believing that the plaintiff did know
that the respondent had any lien on the shop " at the time of his purchase,
and that he was " a bona fide purchaser for a good consideration without
notice." On the other hand, the Court also found that Nathu Earn was
not " guilty of any negligence in failing to notify his lien when the sale
of the shop took place," and that at the time of the sale Nathu Earn was
a mortgagee with an antecedent lien on the property established by a
decree of the Civil Court." The Court observed " I apprehend that in
a Court of equity in England the appellant would be protected from the
attachment of the property by the respondent, but from the case Durga
Prasad v. Shambhu Nath (1) it appears that this principle is not followed
in the Courts in India, and that therefore the appellant's suit must fail.
The judgment of the lower Court must be affirmed, and the appeal must
be and is hereby dismissed."

The plaintiff appealed to the High Court.

Mr. A. Strachey and Munshi Ram Prasad for the appellant.
[32] Munshi Kashi Prasad and Babu Jogindro Nath Ghaudhri for
the respondents.

For the appellant, it was contended that the rights created in favour
of NatbuEam by the instrument of the 18th October 1875, and the decree
thereon were those of the holder of a charge only as distinguished from
the holder of a simple mortgage , that to constitute a simple mortgage, as
defined in s. 58 (b) of the Transfer or Property Act (IV of 1882), words ex-
presBly or impliedly conferring upon the obligee a right of sale (which
right, it was admitted, could only be exercised through a suit in Court) in
default of payment were essential ; that the words "arh" and "mustagh-
rag" (unlike the word rehn) did not constitute a mortgage because they
did not expressly or impliedly refer to sale or give the right of sale on de-
fault, but merely effected a charge upon the property within the meaning of
s. 100 of the Transfer of Property Act ; and that the rights of a charge-holder,
as distinguished from a simple mortgagee, amounted only to an equitable
lien, or a trust, which could not be enforced as against a bona fide purchaser
for value without notice. In support of these propositions the following
authorities were cited: Transfer of Property Act, ss. 40. 58, 69, 100;
Rangasami v. Muttu Kumarappa (2), Aliba v. Nanu (3), Khemji Bhag-
vandas Gujar v. Rama (D.Govind Bhaichand v. Kalnak (5), Moti Ramv.
Vitai (6), Gopal Pandey v. Parsotam Das (7), Sheoratan Euar v. Mahipal
Kuar (8), Sheo Dayal Mai v. Hari Ram (9), Bunseedhur v. Eeera (10),



<1) 8 A. 86.

(4) 10 B. at pp. 526, 527.

(7) 5 A. at pp, 127, 128.



(2) 10 M. 509.
(5) 10 B. 592.
(8) 7 A. at pp, 262, 265.
(10) 1 N.W.P.H.O.R. 74.



(3) 9 M. 218.

(6) 13 B. at pp. 99. 100,

(9) 7 A. 590.



20



IfH] KISHEN LAL V. GANGA BAM 13 All. 34

Ramsidh Pande v. Balgobittd (1), Varden Seth Sam v. Luckpathy Eoyjee 1890
Lallah (2), Kinlock'v. The Collector of Etawah (3) read with s. 56 of JUNE 24.

Act XVIII of 1873, Dayal Jairaj v. Jivraj Ratansi (4), Girdhar

Ratichoddas v. Hakamchand, Evachand (5) ; Raahbehary Ghose's Law of APPEL-
Mortgage in India (second ed.), pp. 124, 125, 323-325, 445, [33] 446, LATE
447, 499, Shephard and Brown's Commentaries on the Transfer CIVIL

of Property Act, pp. 107-109, 188, 189 ; Fisher on Mortgages, vol. i ; '

Snell's Principles of Equity (15th ed.), pp. 333-336 ; Story's Equity 13 A. 28=
Jurisprudence (Grigsby's ed.), pp. 331,332, 856,857,348; Addison on 101.W.N.
Contracts, pp. 593, 619, Indian Trusts Act (II of 1882), ss. 63, 64. (1890)218,
With reference to the extent to which various equitable liens are enforce-
able against subsequent bona fide transferees, the following authorities
ware quoted : Transfer of Property Act, ss. 39, 55 (4) (b), (6) (c) ; White
and Tudor's Leading Cases in Equity, vol. i, p. 267 ; Easbbehary Ghose,
pp. 322, 333, 440, and Shephard and Brown, pp. 44, 94.- Shib Lai v.
Ganga Prasad (6) was distinguished, upon the construction of the deed
by the majority of the Full Bench in that case at p. 553. It was con-
tended that in Durga Prasad v. Shambhu Nath (7) the principle applied by
Courts of equity was wrongly stated ; but in any event that case was
distinguishable, the transaction there being undoubtedly a mortgage.

JUDGMENTS.

YOUNG, J. Kishen Lai, appellant, was auction-purchaser in 1885
(4th March) of a shop belonging to one Bladeo alias Bal Kishen, of which
he got possession on the 9th July, 1885.

The said Baldeo had previously, viz., on the 18th October 1875,
hypothecated the same shop to one Nathu Earn (whose representatives
are the present rescondents). He had also mortgaged it to one Dalchand
for a large sum in 1879.

On 27fch January 1883, Nathu having sued Baldeo (alias Bal Kishen)
and Dalchand on the above bond of the 18th October 1875, obtained a
decree against them and proceeded to attach the shop in execution of his
decree. Kishen Lai objected that he had bought it at auction in execution
of Hazari Lai's simple money-decree against Baldeo Das.

The lower appellate Court finds that Natbu Earn is not chargeable
with fraud, deceit or laches, and that he was not bound to disclose
his prior lien to the appellant. On the other hand, the Court finds
as a fact that appellant was an innocent purchaser for value without
[34] notice. The Court following the ruling in Durga Prasad v. Sham-
bhu Nath (7) dismissed plaintiff's appellant's appeal.
Against that decision the present appeal is brought.
The sale at the auction in 1885 was the sale of the debtor's interest
at that time and no more. That interest in 1885 was subject to the
respondent's lien under the bond of the 18th October 1875, which lien
had been affirmed by the decree of January 1883.

It is, however, strongly urged upon us here that the bond of the
18th October 1875, did not amount to a simple mortgage, as defined in
the Transfer of Property Act (IV of 1882), s. 58, and merely created a
charge of the character described in s. 100 of that Act, and that
such charge would not be enforceable as against a subsequent innocent

(1) 9 A. 158. (2) 9 M. I. A. at p. 307. (3) 3 A. 433.

(4) 1 B. 237. (5) 8 B. H. 0. R. 75. (6) 6 A. 551.

(7) 8 A. 86.

21



13 All. 35



INDIAN DECISIONS, NEW SEEIES



[Vol.



1890 purchaser for value without notice although a mortgagee under a
JUNE 24. simple mortgage would be so preferred. It was contended that the

law on this matter in force prior to the passing of Act IV of 1882,

APPEL- was practically the same as that which was formulated by that Act,

LATE and the learned Counsel for the appellant endeavoured to establish

CIVIL. ^ n8 Proposition that documents wherein the power of sale was not

expressly given did not amount to mortgages, but only created a charge

18 A. 28= or lien on the property in question. Mr. Strachey (for appellant) admitted

10 l.W.N. that the word "rehan" occurring in a document to denote the nature of the

(1890) 2t6. incumbrance created, would suffice to show it was a mortgage, and would

give the prior incumbrancer a preferential title to the subsequent innocent

purchaser for value without notice.

But he contended that no such inference would arise where the docu-
ment used words such as are here employed, viz., " arh " and " musta-
ghraq" and, as here, conveyed^no express power of sale in case of default.

The whole subject was considered by us at much length, and the very
numerous authorities quoted by the learned Counsel for the appellant and
the able argument based by him thereon were carefully weighed.

[35] The primitive meanings of words sometimes assist in the better
comprehension of their secondary significations. I do not know that we are
much aided in the present instance by the original derivations of the terms
used in the documents before us. " Arh " denotes a " support " or
" propping up," "mustaghraq" is literally "submerged."

There is a clause against alienation during the continuance of the
debt, but the document contains no express provision conferring the power
of sale in default. I give the document itself as follows : (His Lordship
here read the bond of the 15th October 1875 above set forth, and
continued :

The learned Counsel Mr. Strachey for appellant contended that the
bond of 1875 in favour of Nathu Earn did not transfer any interest in the
property to the obligoe and merely amounted to a charge thereon, and
that on this ground the appellant, the innocent purchaser without notice,
had a preferential claim to the respondent whose incumbrance amounted
(as he alleged) to a mere lien on the property. He pointed out that the
remedy by sale of the property would be alike whether the incumbrance
were by way of mortgage or by mere charge on the property.

He admitted that where the transaction amounted to a mortgage,
and certainly if the word " rehan " was used to denote the nature of the
incumbrance, there the incumbrancer had a preferential title to the inno-
cent purchaser without notice ; but he contended that the words employ-
ed in the document of 1875, " arh " and " mustaghraq " did not amount
to a mortgage, and merely constituted a lien or charge on the property
which would not give respondent any perferential title to the appellant.

The principles laid down in the Transfer of Property Act (IV of
1882) were examined, and the term "simple mortgage, " as defined in
e. 58 of that Act, was considered and contrasted with " charge " as defined
in s. 100 of the Act.

S. 58 lays down that a simple mortgage is " where without giving
possession of the mortgaged property the borrower agrees [36] expressly
or impliedly that in the event of bis failing to pay 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 in
payment of the mortgage-money."

22



YII]



KISHBN LAL V. GANGA RAM



13 All. 37



A " charge " is defined as follows in s. 100 :

" Where immoveable property of one person is by act of parties or
operation of law made security for the payment of money to another and
the transaction does not amount to a mortgage, the latter person is said
to have a charge on the property."

The words "hypothecation " and " lien" which were also freely used
during the argument, do not appear to be terms used in the Transfer of Pro-
perty Act. A " charge" in strictness riot only empowers its possessor in many
cases to bold the property charged, if in his possession, but also gives him
the right to come into Court aod sue actively for the satisfaction of his claim.
A "lien" strictly is neither a jus in re nor a jus ad rem, but is a simply a right
to possess and retain property until some charge attaching to it is paid or
discharged (Story, Equity Jurisprudence, s. 506 ; V. S. Doraiswami Aiyar,
Commentary on Act IV of 1822, p. 140) Rangasami v. Muttu Kumarappa
(1) was quoted, where the question was whether a certain bond amounted
to a mortgage or not. The document being in a language prevalent in
Madras, it is, of course, only possible to judge of its tenor from the English
translation given of it in the judgment,' and this is the less satisfactory in
regard to the question of its applicability to the case before us, as the point
in issue before us is as to the scope and significance of the words "arh"
and " mustaghraq," employed in the deed of 1875, it being admitted that
if the word " rehan " bad been employed instead of " arh " and musta-
ghraq, " then no doubt could have remained asto the document amounting
to a mortgage. In the Madras case just cited, the bond, which was of the
1st June 1862, is called a hypothecation bond and runs : " Having
pledged to you this day, &c., &c., the brickbuilt house &c., &o" No power
of sale was expressly given.

[37] Mr. Justice Kernan held it was not a mortgage adding how-
ever the significant remark " The term ' mortgage ' has not, I am in-
formed, any corresponding vernacular term denoting a transfer of land as
security." His Lordship expressed his dissent from the Allahabad High
Court's ruling in Shib Lai v. Ganga Prasad (2), but concurred with the
Bombay High Court in Lallubhai v. Narran (3). His Lordship Muttu-
swami Ayyar, J., said that the substantial question for consideration was
whether the hypothecation bond in suit operated " to create only a charge
on immoveable property or a simple mortgage within the meaning of the
Transfer of Property Act," and he concluded that it created a charge only.
With much respect to the learned Judges I venture to think that the
question before the Court was hardly whether the bond of 1862 operated
to create a charge or a simple mortgage, as defined by the provisions of
an Act which came into force twenty years subsequently ; but rather (as
indicated by the same Judge himself) what was the intention of the parties
at the date of the execution of the bond, and what was the proper con-
struction of the document, having regard to terms employed, and to
the sense in which such terms were ordinarily used at such date ; and
this seems to me precisely the question for determination in the case now
before us.

Another Madras ruling, to a similar effect to that in I.L.K., 10 Mad
just quoted, was also cited, Aliba v. 2Janu (4).

The learned Counsel for the appellant reiteraled his argument that
there must be a distinct grant of the power of sale in order to bind an



1890

JUNE 24.

APPEL-
LATE
CIVIL.

13 A. 28 =
10 A.W.M.
(1890) 216.



(1) 10 M. 509.



J2) 6 B. 719.



(3) 6 A. 551.



(!) 9 M. 218.



23



13 All. 38



INDIAN DECISIONS, NEW SERIES



[Yol.



1890 innocent purchaser for value without notice, and that a charge, while
JUNE 24. creating a trust against the obligor, went no further and could not be

enforced against an innocent purchaser for value without notice, and in

APPEL- support of these propositions quoted Story on Equity Jurisprudence,
LATK ss. 1217-1231 andDr.Rashbehary Ghose's Law of Mortgage in India, p. 322.
CIVIL Ehemji Bhagvandas Gujar v. Bama (I) was next cited. There the Court

' declined to recognise certain deeds as being mortgage-deeds, although they

13 A. 28= were so called in the deeds themselves, and the Court held that the creditor
10 A.W.N. had a [38] mere charge upon the property and that no interest " in the
(1890) 216. land was transferred to him such is is transferred by a power of sale in an
ordinary mortgage " (p. 527).

The next authority which came under our consideration was the Full
Bench ruling in Gopal Pandey v. Parsotam Das (2).

There the question was whether the hypothecation of his right of
occupancy by an occupancy tenant was or was not a "transfer" of such right
within the meaning of s. 9 of the N. W. P. Bent Act of 1873, and their
Lordships held (my brother Mabmood dissenting) that such hypotheca-
tion was not a " transfer ". In that case Mahmood, J., said (and with
that opinion I entirely concur): "But it may be safely taken that the
word 'transfer' is used in law in the most generic signification compre-
hending all the species of contract which pass real rights in property from
one person to another " (p. 337).

Another passage (p. 138) appears to me worthy of quoting. Mahmood,

. J., goes on to say : " 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 hypothecation, pledge or simple mortgage."

This appears to me to point to the right path to be taken an answer-
ing the question before us. What we have to see is not what is the
necessary and logial effect of the definitions of simple mortgage and
charge in the Transfer of Property Act, but what was the intention of the
parties in 1875 when they wrote fcbe deed before us.

And here I must remark that we have no right to assume that, prior
to Acb IV of 1882, the notions of "charge," " lien," "incumbrance,"
" hypothecation," familiar to English lawyers were equally familiar to the
native mind, much less that these terms bore precisely the same connotation
to native as toEngligh lawyers. Indeed if we examine s. 100 we shall
even yet fail to find a definition [39] of " charge" as contradistinguished
from " lien," the former denoting a result of the act of parties, while the
latter is restricted to a liability arising by statute. Nor could terms be
easily found in Urdu to express such distinctions except by a periphrasis.
I do not say that the idea of a charge is wholly unknown to native lawyers.
No doubt the claim of a Hindu widow to maintenance would be in the
nature of a charge or lien on the estate (so would be malikana and other
'haqg). It might be held that such a charge as that for maintenance by a
Hindu widow would not be preferred to the title of an innocent purchaser
for value without notice. But such a charge would certainly not be
described by the terms ' arh " and " istighraq."

Those words are to the best of my belief terms ordinarily employed by
native lawyers to denote a mortgage without possession. I consider that,
with this exception, they have as much force as the word. " rehan," and
imply the power of sale in default equally with that word. This to my



(1) 10 B. 519,



(2) 5 A. 121.



YII]



KISHEN LAL V. GANGA RAM



13 All. 41



mind is a complete answer to the question before us. If the terms em-
ployed impliedly give the power of sale, and I hold they do, then this
document is a simple mortgage even under the definition of a. 58 of Act
IV of 1882, and the incumbrancer holding under it has undeniably a pre-
ferential title to the innocent purchaser for value without notice.

Sheoratan Kuar v. Mahipai Kuar (1) was cited. I refer to ib chiefly
on the ground that it was therein held that " a simple mortgage is a trans-
fer, being a transfer of the right of sale." In that case it was held that a
simple mortgage was effected by the instrument, which was of similar
character to the one now before us, save that in the case I am quoting
(Sheoratan Kuar v. Mahipai Kuar) the word " rehan," i.e., "mortgage,"
was use'!. The case of Shib Lai v. Ganga Prasad (2) was much discussed.
The Pull Benh of this Court in that case held that; a similar instrument
to the one now before us operated to create a simple mortgage within the
meaning of the Transfer of Property Act. In that case mv brother Mah-
mood in interpreting the meaning of the terms used in [40] the document,
the basis of the suit, said as follows (v. p. 556) : " There can be no doubt
that the deed of the 20bh December 1869, to which this reference relates,
is a deed of hypothecation or simple mortgage, the covenant against
alienation taken with the word 'arh' which occurs in the deed placing
the master beyond question." InMotiram v. Vital (3) where certain lauded
property was mortgaged as security for a debt, but the deed contained
no express power of sale, it was held by the Full Bench that the docu-
ment was a mortgage and not a deed of charge merely.

In Varden Seth Samal. Luckpathy Bojee Lallah (4) their Lordships
of the Privy Council upholding an equitable lien by deposit of title deeds
as against one claiming to be a bona fide purchaser for value without
notice, remarked : " To give effect to the legal estate as against a prior
equitable title, would be an adoption of the English law, and to adopt it,
and yet reject its qualifications and restrictions, would be scarcely con-
sistent with justice."

In Durga Prasad v. Shambhu Nalh (5) the Court held that " the prin-
ciple on which Courts of Equity in England refuse to interfere against
bona fide purchasers for a valuable consideration without notice when
clothed with the legal title, has no applicability in our Courts."

The case so far differs from the present one, as in the former there was
no question that the document, the basis of the suife, created avalid mortgage.

A consideration of the foregoing cases and of the facts of the present
appeal leads clearly to the following conclusions.

The definitions of Act IV of 1882, however useful in illustrating prin-
ciples, can clearly net have retrospective effect and (as expressed by
Muttuswami Ayyar, -J., in I.L.E., 10 Mad. 515) "prior transactions must
be interpreted according to the intentions of the parties at the time they
were concluded."

Granting then that an innocent purchaser for value without notice
may well ba allowed preference where the nature of the [41] incumbrance
set up against him is merely that of a " charge " on the property not
amounting to a mortgage, and even further conceding that a mere cove-
nant against alienation without more will not suffice to constitute a
mortgage, we have still in this case to look at the terms of the docu-
ment of 1875, and to decide what was the intention of the parties at the
time they executed it.

(1) 7 A. 258. (-2) 6 A. 551. 13) 13 B. 90. (4) 9 M.I.A., p. 307. (5) 8 A, 86.

25
A VII 4



1890

JUNE air

APPEL-
LATE
CIVIL.

13 A. 28 =

10 A W.N.
(1890) 216.



13 All. 52



INDIAN DECISIONS, NEW SERIES



[Vol.



1890 Looking at the document as a whole and considering the meanings,

JUNE 24. both primitive and secondary, of the terms employed, viz., " arh " and

" mustaghraq," I have no doubt whatever that it was intended to effect a

APPBL- mortgage without possession of the property named therein, and I think it

LATE did effect such mortgage.

CIVIL. I fc bink the power of sale is impliedly given by reason of the force of

the words arh and mustaghraq themselves, and I think that to rule that

ISA. 28= these words merely constituted a charge on the property as a charge is

10 A.W.N. understood by English lawyers is to import a meaning into these Hindu-

(1890) 216. stani words which they were never intended to bear and which they do

not bear.

For these reasons I would confirm the judgment below, and dismiss
this appeal with costs.

MAHMOOD, J. This case have been very ably argued by Mr. Strachey



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 5 of 155)