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1939 Supreme(SC) 26
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD THANKERTON, LORD PORTER, AND SIR GEORGE RANKIN.
MONGHIBAI - Appellant
Versus
COOVERJI UMERSEY - Respondents
On appeal from the High Court at Bombay.
Decided On : May. 2. 1939.
Solicitor for appellant:Harold Shephard. Solicitors for respondent: T. L. Wilson & Co.
A suit for joint property is maintainable if all interested parties are before the court, whether as plaintiffs or defendants. Furthermore, a registered assignment of interest executed pendente lite does not render a suit defective and allows the assignee to recover the property.
Headnote:(A) Indian Registration Act, 1908 - Section 17(1)(b) - Code of Civil Procedure - Order I, Rule 10 and Order XXII, Rule 10 - Transfer of interest in immovable property - Registration requirements - Maintainability of suit - Joinder of parties - Assignment pendente lite - A document purporting to assign interest in immovable property of a value of Rs. 100 or more must be registered under Section 17(1)(b) of the Indian Registration Act, 1908; otherwise, it is inoperative as a transfer and inadmissible in evidence.
(B) Joinder of parties - Under Order I, Rule 10 of the Code of Civil Procedure, the court has the power to add or substitute parties to determine the real matter in dispute. Where several persons are jointly interested in property, an action can be brought by one or more of them, and the remaining interested parties may be joined as plaintiffs or defendants. Once all necessary parties are before the court, the court can grant appropriate relief.
(C) Assignment pendente lite - A suit does not become defective by the assignment of an estate or title during the pendency of the proceedings. Under Order XXII, Rule 10 of the Code of Civil Procedure, a suit may, by leave of the court, be continued by or against the person to whom such interest has devolved.
Facts of the case:
A partnership firm lent money secured by a pledge of goods and an equitable mortgage of two houses. Following the retirement of several partners, an unregistered document was executed to assign the partnership assets, including the mortgage, to the remaining partners. A suit was filed to enforce the mortgage. The appellant challenged the maintainability of the suit on the ground that the unregistered assignment was ineffective and the retiring partners were not joined as plaintiffs. During the proceedings, the retiring partners were added as defendants, and subsequently, a registered deed of assignment was executed in favor of the respondent.
Findings of Court:
The court found that while the initial unregistered document was ineffective to transfer the mortgage rights, the subsequent joinder of all interested parties as defendants brought all necessary persons before the court. Furthermore, the registered assignment executed during the pendency of the suit legally transferred the right to recover to the respondent.
Issues: Whether the suit for enforcement of a mortgage was maintainable when the transfer of interest from retiring partners to the plaintiffs was initially based on an unregistered document, and whether the subsequent joinder of parties and a registered assignment pendente lite cured the defect in title.
Ratio Decidendi: The court held that the power to add parties under Order I, Rule 10 of the Code of Civil Procedure allows the court to settle the dispute once all interested parties are present, regardless of whether they are joined as plaintiffs or defendants. Additionally, an assignment of interest during the pendency of a suit (pendente lite) does not render the suit defective, and the assignee may continue the action.
Result: Appeal dismissed.
Legal Category Hierarchy
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practice and procedure
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civil procedure
- joinder of parties
- assignment pendente lite
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civil procedure
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property law
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mortgages
- equitable mortgage
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mortgages
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registration law
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indian registration act
- compulsory registration
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indian registration act
-
partnership law
- dissolution and retirement
Judgement
Appeal (No. 51 of 1938) from a judgment and decree of the High Court in its appellate jurisdiction (March 16, 1937) affirming a decree of the High Court in its ordinary original civil jurisdiction (July 30, 1936).
The question for determination in this appeal was whether the suit out of which it arose was maintainable. The facts were not in dispute.
Cooverji Umersey & Co., a firm carrying on business in partnership in Bombay as merchants, commission agents and shroffs (native bankers), consisted in 1925 of nine partners, Cooverji Umersey, the respondent, and his father, Umersey Katchra, and seven others, who were defendants Nos. 4 to
10. On September 30, 1925, one Mawji Waghji and Monghibai, his wife (the appellant), borrowed Rs. 1,20,000 from the firm of Cooverji Umersey & Co., with whom Waghji had had joint ventures in cotton. A promissory note for Rs. 1,20,000 was executed in favour of the firm by Waghji and his wife, and 676 bales of cotton were hypothecated to the firm as security for the loan. In addition to those bales, the title-deeds of two houses belonging to the appellant and her husband, and situate at King Lane and Borah Bazar Street, were deposited with the firm as equitable mortgage security. In default of payment the firm was to have recourse to the pledge on the bales in the first instance, and to proceed against the house property for any deficiency.
On default in the payment the firm sold the bales for about Rs. 55,000. It was the appellants opinion that the sale was for a sum far below their market value.
In November, 1926, seven of the partners of the firm, defendants Nos. 4 to 10, retired from the firm. On November 6, the tenth defendant by oral agreement released all his interest in the assets of the firm to the respondent and his father. On November 17, 1926, the other six retiring partners executed a document purporting to assign their interest in the partnership property to the respondent and his father. That document, which included their interest in mortgage securities, was not registered as required by s. 17, sub-s. 1 (b), of the Indian Registration Act (XVI. of 1908). The respondent and his father continued the business in the firm name.
On January 21, 1927, the firm as then constituted brought the suit giving rise to this appeal against Waghji and his wife, claiming that they were equitable mortgagees of the two houses, for an order that the defendants pay them Rs. 1,33,500, with interest on Rs. 1,20,000 at 9 per cent, per annum from January 1, 1927, until judgment, and that in default of payment the mortgaged properties might be sold and the proceeds applied in and towards payment of the plaintiffs claim. The defendants filed a joint written statement and counterclaimed in respect of the loss alleged to have been sustained by them on the 676 bales of cotton sold by the firm. Their main objection to the suit was that the action was not maintainable, the contention being that the document of November 17, 1926, which purported to assign the interest of the retiring partners in the mortgaged property to the plaintiffs, was a document requiring registration, and, not having been registered, it was inadmissible in evidence. They submitted that the mortgage rights in the house property still remained in the nine original partners, and that the plaintiffs could not enforce the mortgage security. Waghji was adjudicated an insolvent in 1930, and the Official Assignee was substituted as defendant No. 3. Umersey Katchra died pending the trial of the action.
The trial judge (Wadia J.) in an interim judgment on July 9, 1934, was of opinion that the document of November 17, 1926, was one which required registration, and he also expressed the opinion that a partner has an interest in the immovable property of a partnership, which would include a mortgage executed in favour of the partnership, and any assignment of such interest, if of the value of Rs. 100 or more, must be created by a registered instr
