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1918 Supreme(SC) 31
Privy Council
Ameer Ali, Sir John Edge , Sumner, Lords Dunedin , Justice Viscount Haldane, JJ.
Lala Kalyan Das and others -Appellant
Versus
Sheik Maqbul Ahmad and others -Resopndent
Privy Council Appeals Nos. 131 and 132 of 1915
Decided On : 18-04-1918
Nevill, Rogers, Barrow, Douglas Grant, B. Dube, DeGruyther , W. Garth
An appellate court cannot review a point not raised in the intermediate appellate court. In usufructuary mortgages, where profits are agreed as remuneration for the loan, no additional interest is payable absent an express contract.
Headnote:(A) Usufructuary Mortgage - Redemption - Redemption of a mortgage that has effectively ceased to exist - Where a mortgagee has already purchased the mortgagor's equity of redemption and become the full owner, a subsequent sale of the property described as "mortgagee rights" (due to outdated revenue records) cannot be treated as a valid mortgage for redemption by the former owner's representatives against third parties who were not parties to the original mortgage. (Paras 6, 7)
(B) Appellate Procedure - Scope of Review - An appellant, when bringing a decree for review before a higher court, shall not be allowed to challenge a decision of a subordinate court if that specific point was never submitted to the intermediate appellate court for its consideration. (Para 11)
(C) Usufructuary Mortgage - Interest and Profits - In a usufructuary mortgage where the parties agree that the profits of the property shall be the remuneration for the loan, the mortgagee is not entitled to claim additional interest on the mortgage money, nor is the mortgagor entitled to interest on payments made prematurely, in the absence of an express contract. (Paras 16, 17)
Facts of the case:
A mortgagee purchased the mortgagor's equity of redemption in 1881, becoming the full owner of the property. In 1897, the property was sold to third parties to satisfy a different mortgage. Due to outdated revenue records, the sale proclamation described the interest being sold as "mortgagee rights" rather than full proprietary ownership. The representatives of the former owner later filed a suit to declare the sale a nullity or, in the alternative, to redeem the "mortgagee rights" sold.
Findings of Court:
The court found that the claim to declare the sale a nullity could not be raised as it was not pressed in the intermediate appellate court. Regarding the claim for interest on funds withdrawn decades prior, the court held that the terms of the usufructuary mortgage provided that profits served as the sole remuneration for the loan, and no express or implied contract existed to justify additional interest.
Issues: Whether a sale of property described as "mortgagee rights" could be redeemed as a mortgage; whether a higher appellate court can review a point not raised in the intermediate appellate court; and whether interest is payable on mortgage funds in a usufructuary mortgage where profits are the agreed remuneration.
Ratio Decidendi: An appellate court will not overrule a decision on a matter never submitted to the intermediate appellate court to ensure fairness to the court appealed from. In a usufructuary mortgage, if the contract specifies that the mortgagee's right to profits is the remuneration for the loan, no additional interest can be claimed as a matter of law without an express contract.
Result: Decree varied by allowing credit to the appellants for an additional sum of Rs. 1,000, but otherwise affirmed, and appeals dismissed with costs.
Legal Category Hierarchy
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property law
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mortgages
- usufructuary mortgages
- equity of redemption
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sale of property
- sale proclamations
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mortgages
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practice and procedure
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appellate procedure
- scope of review
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appellate procedure
Lord Sumner:-
In 1863 Debi Das lent Rs. 7,700 to Ram Baksh on a usufructuary mortgage of his half share in a mauza called Lodha Mai, in the district of Etah. Debi Das died a good many years ago, and the present appellants, the plaintiffs in the suit, are his representatives-in-interest. A suit was begun in 1877 for redemption of this mortgage, and a decree was made on payment of 6,988 rupees, which sum was brought into Court. Debi Das appealed on the ground that this sum was not enough, and it was increased by a further sum of Rs. 8,956. While the appeal was pending he had managed to take the money out of Court, and the mortgagors had then got possession. They paid, however, no more, and accordingly, in 1879 their redemption suit stood dismissed. Debi Das then applied to be, and was, replaced in possession, and, having sued for mesne profits during the time he was out of possession, he got a decree in 1881, in execution of which the Court sold the mortgagor's equity of redemption at auction. Debi Das being the buyer, was put into possession as full owner in 1883.
It might have been supposed that this was the end of the mortgage of 1863, but, strange as it may seem, this appeal is now brought to determine upon what terms the appellants, the representatives of Debi Das, are to be allowed to redeem it, as mortgagors some thirty years after he bought in the mortgagor's equity of redemption as mortgagee. This paradoxical result has come about as follows:-
Debi Das continued in possession of the property as owner till 1897, and as owner he mortgaged it in 1886 to Sagar Mal. There is no copy of this mortgage forthcoming. Debi Das got behind with his payments, and in 1897, on the application of Sagar Mal, the property was put up for sale. The respondents, the defendants in the suit, or their predecessors-in-interest, bought it and duly obtained possession.
The proclamation of sale was dated the 27th of February, 1895. Though Debi Das had brought the equity of redemption of the 1863 mortgage in 1881 and had had possession of the property since 1883, his name, from indifference or neglect, continued to be recorded in the revenue papers as mortgagee. This may account for the wording of the proclamation of sale. The entry in the column for the description of the property was
"zamindari property in mauza Lodha Mai, out of which the shares entered as holding Nos. 1, 2 and 3 are mortgaged with possession to Debi Das, under a mortgage-deed, dated the 5th of February, 1863."
The column headed "extent of interest of judgment-debtors in the property as far as it has been ascertained by the court" was filled up thus:
"(b) mortgagee right in a 7 biswa share, entered as holding No. 1 in the 10 biswa mahal, patti Debi Das; (c) mortgagee right in a 1 biswa, 9 biswansi, 15 kachwansi share entered as holding No. 2; (d) ditto, ditto, entered as holding No. 3."
These fractions, with another not included in the present proceedings, make up the half share originally mortgaged by Ram Bakhsh. The application for execution of the decree for sale had contained a "specification of the property sought to be sold by auction" in similar terms and the list of bids and the sale certificate, dated the 2nd of August, 1897, followed the same formula. It certified that the respondents' predecessor was declared to be the purchaser of property, specified as "mortgagee rights in holdings Nos. 1, 2 and 3 in the 10-biswa mahal, patti, Debi Das." The documents were all in regular form. There is nothing to show that there was anything in the mortgage to Sagar Mal to account for this mode of describing the subject-matter of the sale, and in the proceedings below Sagar Mal's mortgage is stated to have been secured on the 10 biswa share, of which Debi Das had become proprietor in 1881. Most probably it was the result of slavishly following the entry in the revenue papers, which had ceased for many years past to represent the true position of Debi Das towards the property.
The present sui
