Judgement

Appeal (No. 92 of 1922) from a judgment and decree of the Chief Court of the Punjab (January 15, 1919) reversing a decree of the Subordinate Judge, Delhi.

The suit was brought in 1902 by the appellant (since deceased) against the respondents to recover money which he had paid to them under protest to release an attachment of immovable property, which he alleged belonged to him, under a decree obtained by the respondents against the Delhi Cotton Mills Co., Ld.

The circumstances in which the suit was brought appear from the judgment of the Judicial Committee. There had been two previous appeals to the Privy Council in the suit. In the first (reported at L. R. 37

I. A. 80), the Chief Court having dismissed the suit by an error of procedure, it was remitted for trial. In the second (reported at L. R. 40 I. A. 56) it was held, reversing the Chief Court, that the plaint showed a good cause of action; the suit was again remitted for trial.

The debentures held by the deceased appellant were issued on April 6, 1901, and were secured by a trust deed in favour of new trustees containing identically the same terms and conditions as those in the trust deed securing debentures originally issued by the company in 1891.

By that deed the company conveyed the property to the trustees on the usual trusts to be found in favour of trustees for debenture holders. One of the conditions was that if " an execution or attachment be issued out upon or against any of the property of the Company," the trustees were especially and fully empowered to enter upon and take possession of the mortgaged premises, and to sell the same at their discretion for the benefit of the debenture holders. The deed also empowered the trustees to delegate, by a general or special power of attorney or otherwise, all or any of their powers.

The new trial ordered by the Privy Council took place "before the Subordinate Judge, first class, of Delhi, who made a decree for the sum paid and interest.

Upon appeal to the Chief Court that decision was set aside. The learned judges held that the sale of the mortgaged property to the plaintiff was valid, and that consequently the attached property was his, and not the companys, at the time of the attachment. They found, however, that he had express knowledge of the companys debt to the bank before he made any advance. In their view he had improperly used his dual position as financier and controller of the company to defeat the banks rights as creditors, and the principles of s. 88 of the Indian Trusts Act, 1882, applied so as to preclude him from recovering in the suit.

1923. Feb. 27; March 1, 2, 5. De Gruyther K.C. and Parikh for the representatives of the appellant. It was established by the previous decision of the Board (L. R. 40 I. A. 56.) that the plaintiff had a good cause of action under s. 72 of the Indian Contract Act. The circumstances raised no equities in favour of the respondents, but in any case the plaintiffs right to recover being given by statute those equities were no defence to the suit.

Tomlin K.C., Dunne K.C. and E. B. Raikes for the respondents. At the date of the attachment the property still remained that of the company. The appellant was incompetent to buy, on the principle that a mortgagee cannot buy from himself Farrar v. Farrars, Ld. (( 1888) 40 Ch. D. 395, 409.); Hodson v. Deans. ([ 1903] 2 Ch. 647.) A sale involves a consensus of two minds, consequently the appellant could not be at once seller and buyer Henderson v.

Attwood([ 1894] A. C. 150.); National Bank of Australia v. United Hand in Hand, etc., Co. (( 1879) 4 App. Cas. 391, 404.) Secondly, the power of sale was invalid. In India generally a mortgagee cannot sell the mortgaged property, except by a sale under a decree of the Court. The Transfer of Property Act, 1882, s. 69, merely stated what was previously the law in India Balkishen Das v. Legge (( 1899)

L. R. 27 I. A. 58, 67.); Punjab Laws Act, 1872, s. 5. That the previously existing law