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1912 Supreme(SC) 23
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD SHAW OF DUNFERMLINE, SIR JOHN EDGE, AND MR. AMEER ALI.
MUSAMMAT BHAWANI KUMAR - Appellant
Versus
MATHURA PRASAD SINGH - Respondents
On appeal from the High Court in Bengal.
Decided On : June. 25, 26, 27; July. 22. 1912.
Solicitors for appellant:T. L. Wilson & Co. Solicitors for respondent: Watkins & Hunter.
When a mortgagee purchases the mortgaged property in an execution sale, ownership transfers on the auction date. The mortgage is extinguished by merger, and the mortgagee cannot maintain it as an incumbrance to defeat the rights of a subsequent revenue purchaser.
Headnote:(A) Act XI of 1859, Section 54 - Sale of land for arrears of revenue - Purchaser acquires share subject to all incumbrances - Revenue vendee takes the rights and liabilities of the previous owner as they existed at the time of default.
(B) Mortgagee as purchaser in execution - Ownership of the property transfers to the purchaser on the date of the auction sale, not the date of formal confirmation - Any obligations or liabilities arising after the date of sale, including government revenue, fall upon the purchaser.
(C) Extinguishment of mortgage by merger - When a mortgagee purchases the mortgaged property in execution, they become the absolute owner on the date of sale - The mortgage is thereby extinguished and cannot be maintained as a subsisting incumbrance to defeat the rights of a subsequent revenue purchaser.
Facts of the case:
A mortgagee obtained a decree on a mortgage bond and subsequently purchased the mortgaged properties in an execution sale. After the auction sale but before the court's formal confirmation of the sale, government revenue on the estate fell into arrears. Consequently, the revenue authorities sold the properties to a third party. The revenue purchaser sought possession of the properties. The mortgagee contended that the title did not pass until the date of confirmation and that the property was sold by the revenue authorities subject to the mortgage debt as a subsisting incumbrance.
Findings of Court:
The court found that the transfer of ownership occurred on the date of the auction sale. The confirmation of the sale is a formality that confirms a transaction already completed. Therefore, the mortgagee became the owner on the date of the auction and was responsible for the revenue that fell into arrears. Once the mortgagee became the absolute owner, the mortgage ceased to be an incumbrance.
Issues: Whether the ownership of the property transferred to the mortgagee on the date of the auction sale or the date of confirmation, and whether the mortgage remained a subsisting incumbrance upon the property at the time of the revenue sale.
Ratio Decidendi: The ownership of the property transfers to the purchaser at the date of the auction sale. A mortgagee who purchases the mortgaged property in execution becomes the absolute owner on that date, which extinguishes the mortgage. Such a person cannot claim the mortgage as a subsisting incumbrance to shield the property from a subsequent revenue sale, as the revenue vendee acquires the property as it belonged to the former owner.
Result: Judgments of the Courts below reversed; plaintiff declared entitled to the lands in suit; possession to be delivered to the appellant.
Legal Category Hierarchy
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property law
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mortgages
- execution sale
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land revenue
- revenue sale
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mortgages
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civil procedure
- execution of decrees
Judgement
Appeal from a decree of the High Court (January 10, 1908) reversing a decree of the Subordinate Judge of Gaya (January 27, 1905).
The suit was brought by the appellant to obtain from the respondent possession of a certain share amounting to 5 annas 1 ½ pies in four villages situate in the Gaya district. That share had been mortgaged in 1886 to the mother of the respondent, and in the year 1899 the respondent obtained a decree against the mortgagors for Rs.18,973.6.3. In execution thereof the respondent caused the mortgaged properties to be sold, and on March 19, 1900, himself purchased them for Rs.9200, his purchase being subsequently confirmed by a certificate of the Court dated April 23, 1900, possession being given to the respondent.
On March 29, 1900, a date intermediate between the respondents purchase and its confirmation, the March instalment of Government revenue for the estate, which included the villages purchased,
16 Law. Rep. 39 Ind. App. 228 ( 1911- 1912) Musammat Bhawani Kumar V. Mathura Prasad Singh
117
become in arrear; and the whole thereof, including the said villages, was sold by the Collector to the appellants predecessor in title on June 6, 1900. This sale was carried out under the provisions (inter alia) of s. 54 of Act XI of 1859, according to which " when a share or shares of an estate may be sold .... the purchaser shall acquire the share or shares subject to all incumbrances."
On March 81, 1904, the appellant sued to recover possession from the respondent of the property purchased by him under his mortgage decree in respect of which he had been registered as proprietor in the collectorate.
The respondent pleaded (1.) that the rights which the appellant had acquired under the purchase at the revenue sale were governed by the provisions of s. 54 of Act XI. of 1859; (2.) that the property was sold subject to all incumbrances existing on March 28, 1900, the date of the default in payment of Government revenue, and that on that date the property in suit was subject to an incumbrance or debt of Rs.18,973.6.3 due on the mortgage to the respondent; (3.) that such property was purchased by the respondent for Rs.9200, leaving Rs.9773.6.3 still due on the mortgage decree, and that so long as the appellant did not redeem the mortgage by paying off the whole sum due under the said decree she could not bring a suit claiming possession of the property in suit; (4.) that as the proceedings, which terminated in the sale for arrears of revenue, were taken during the pendency of the execution case of the respondent, the doctrine of lis pendens applied, and the purchase by the appellant of the property in suit was, under the circumstances, wholly void.
The Subordinate Judge dismissed the suit. He held that so far as the mortgagors were concerned the title in the properties purchased by the respondent vested in him on April 23, 1900, the date of confirmation of the sale made on March 19, 1900, and not before, and that on March 28, 1900, the title to the disputed property was with the mortgagors, and that they were bound to pay the Government revenue. The Subordinate Judge also observed that the revenue was due for shares in seventy-one villages, and only four villages out of the seventy-one were purchased by the respondent. Even if he were aware of the default, he could not be expected "to pay revenue for the entire estate when he had but an imperfected title in only a fraction therein." He also decided (1.) that what was sold at the revenue sale, so far as the four villages were concerned, was the right, title, and interest of the mortgagors as it existed at the time of the default or of the sale, and that on June 6, 1900, the date of the revenue sale, the mortgagors had no title in the four villages; (2.) that the revenue sale did not extinguish the rights of the respondent under the mortgage and under the auction purchase in execution thereof.
The High Court held that the actual share of the mortgagors in the
