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1917 Supreme(SC) 75
Privy Council
Sir Lawrence Jenkins, Bart , Sir Walter Phillimore, Sir John Edge, Justice Lord Buckmaster, JJ.
Tarini Charan Sarkar -Appellant
Versus
Bishun Chand and other -Resopndent
Decided On : 26-11-1917
Nevill, Rogers , Barrow, E. Delgado, B. Dube, A.M. Dunne , J.M. Parikh, DeGruyther
Under the Land Revenue Sales Act, 1859, property purchased by the recorded proprietor at a revenue sale remains subject to all existing encumbrances. Fraudulent intent to defeat mortgagees does not alter this statutory effect or grant mortgagees rights beyond the Act's provisions.
Headnote:(A) Land Revenue Sales Act, 1859 - Sections 31 and 53 - Code of Civil Procedure, 1908 - Sections 107 and 151, Order XLI, Rule 33 - Revenue sale of property - Purchase by the recorded proprietor - Effect on existing encumbrances - Where the recorded proprietor purchases the estate in a sale for arrears of government revenue, the estate is acquired subject to all encumbrances existing at the time of the sale - The fraudulent motive of the purchaser to defeat the claims of mortgagees does not alter the statutory operation of the Act, nor does it increase the rights of the mortgagees beyond the statutory provisions. (Paras 15-18)
(B) Estoppel - A party is not estopped from challenging a sale merely because they were joined as a defendant in a separate proceeding where they had no control over the pleadings or the form of the suit. (Para 13)
(C) Appellate Jurisdiction - Under Sections 107 and 151 and Order XLI, Rule 33 of the Code of Civil Procedure, 1908, an appellate court has the power to pass any decree or order that ought to have been passed to ensure justice, including varying a decree based on facts established in related proceedings. (Paras 19-20)
Facts of the case:
The real owner of a property, seeking to discharge several heavy mortgages, intentionally allowed government revenue to fall into arrears to trigger a revenue sale. The owner then purchased the property himself, intending to obtain a title free from encumbrances. Mortgagees challenged this, alleging fraud. The lower courts found that the owner had acted dishonestly to defeat the mortgagees by concealing his original ownership during the sale.
Findings of Court:
The court found that the purchase was made by the real owner who acted as the recorded proprietor. Under the relevant revenue law, such a purchase does not extinguish existing encumbrances. The fraudulent intent of the purchaser does not grant the mortgagees additional rights beyond those provided by the statute, as the law already provides that the sale is of no effect regarding encumbrances.
Issues: Whether a revenue sale conducted by the owner to fraudulently defeat mortgagees results in the discharge of encumbrances, and whether the appellate court could vary a decree to reflect the true status of the property.
Ratio Decidendi: According to Section 53 of the Land Revenue Sales Act, 1859, when a recorded proprietor purchases the estate, it is acquired subject to all existing encumbrances. The court held that the statutory effect of such a sale is that it is of no effect regarding encumbrances, regardless of the purchaser's motives. Fraudulent conduct does not change the legal consequence of the statute nor create new penalties beyond the direct consequences of the fraud.
Result: Appeals dismissed.
Legal Category Hierarchy
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property law
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mortgages
- encumbrances
- redemption
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mortgages
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practice and procedure
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civil procedure
- appellate powers
- estoppel
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civil procedure
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administrative law
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land revenue
- revenue sales
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land revenue
Lord Buckmaster :-
These four appeals have been consolidated by order of the Board dated the 26th March, 1917, and have been brought on and heard together.
In three of them Tarini Charn Sarkar is the appellant and Babu Bishun Chand is one of the respondents, and in the fourth Babu Bishun Chand is the appellant and Tarini Charan Sarkar is a respondent.
All the appeals are against a judgment of the High Court of Calcutta dated the 25th April, 1912, and three decrees made by that Court consequent on the judgment.
The questions raised arise out of certain mortgage transactions affecting a Tahal Touzi No. 7062 and, though the facts and circumstances are complicated and involved, for the purpose of explaining the real issues that have to be decided they can he briefly summarised.
In the early part of 1904 the registered proprietors of the said Touzi were Ram Ratan Sarkar in respect of a 4 — annas share, and Sangam Sarkar in respect of the remaining 12-annas share. The Tonzi, however, was subject to certain mortgages, of which it is only necessary to mention the following: Zarpeshgi Thicca of the 15th July, 1889, in favour of Gajadhar Lal and Sri Kishun Lal to secure 11,506 rupees and interest at 9 per cent. per annum, a further mortgage in favour of the same mortgagees dated the 16th July, 1889, to secure 11,000 rupees and interest at the rate of 12 annas per cent. per month and a mortgage of the 10th February, 1896, in favour of the said Babu Bishun Chand to secure a loan of 5,999 rupees with compound interest at the rate of 24 per cent. per annum with half-yearly rests. In the year 1900 a 4-anna share of the estate was sold in execution of a mortgage decree and was bought on the 8th August, 1900, by Ram Ratan Sarkar, and on the 7th March, 1904, the said Touzi estate was purchased on a sale made in execution of a decree at the suit of another mortgagee by one Chatarbhuj Sahai in the name of one Mahanand Sahai, and he, on the 14th May, 1904, purported to sell the property to one Sangam Sarkar. Sangam Sarker was, however, but a mere name, it has been found, and it cannot now be questioned that the real purchaser was the appellant Tarini Charan Sarkar, who thus became the owner of the property subject to the mortgages.
On the 2nd June 1904, the first of the suits, out of which these appeals proceed, No. 39 of 1904, was instituted by Babu Bishun Chand seeking relief in respect of his mortgage of the 10th February 1896, against the representative of the original mortgagor and other parties. It would seem impossible that, any estate could bear for long the burden of a mortgage on which the debt was accumulating by a process of compound interest on the principal sum at the rate of 24 per cent. per annum: and it appears, that the appellant Tarini Charan Sarkar instead of adopting what might have then been the inconvenient process of redeeming the mortgage by payment, resorted to the device of causing the mortgaged property to be sold for arrears of Government revenue and himself becoming the purchaser. To secure this object he wilfully allowed the Government revenue to fall into arrear, and the property was in consequence sold by the Government on the 28th August, 1906, nominally as the property of Ram Ratan Sarkar and Sangam Sarkar the registered proprietors, and was purchased for 29,500 rupees by Tarini Charan Sarkar, the true owner. Had Tarini Sarkar been successful in concealing the fact of his ownership the result of this device would have been that the claim of all the mortgagees would have been thrown on to the balance left of the 29,500 rupees — after satisfying the Government debt, and he would have held the property free from the inconvenience of the many and heavy charges to which it was subjected. Directly after the sale — On 22nd October 1906. Sri Kishun Lal and others instituted proceedings (No. 258 of 1906,) to obtain payment in respect of the mortgage of the 15th July, 1889, seeking to obtain payment, out of the surplus proceeds
