1961 Supreme(Pat) 118

PATNA HIGH COURT
Kanhaiya Singh and Ramratna Singh JJ.
Mt.Rajo Kuer
Versus
Brij Bihari Prasad
Appeal from Original Decree No. 104 of 1957 ;
Decided On : OCTOBER 31, 1961

A purchaser of a property subject to a mortgage is liable to contribute rateably to the debt secured by the mortgage, unless he purchased the property free from any encumbrance, that is, without any notice of the prior mortgages and unless there was any contract to the contrary between the mortgagor and the purchaser.

Headnote:

TRANSFER OF PROPERTY ACT - Section 82 - Contribution - Bona fide purchasers for value without notice - Constructive notice - Contract to the contrary - Valuation of mortgaged properties.

Fact of the Case:

Madho Prasad Singh executed three mortgage bonds in different years in respect of the same properties, which constituted the proprietary interest of the mortgagor in ten villages specified in Schedule A to the plaint. The bonds were executed on the 18th February, 1925, the 10th March, 1929 and the 14th December 1931 respectively for Rs. 8,000, Rs. 5,446 and Rs. 8,351, in all Rs. 21,797, in favour of Lakshmi Prasad Singh, Jagarnath Prasad Singh and Dhanukdhari Prasad Singh respectively. These mortgagees were members of a joint Mitakshara family. The mortgages were acquired on behalf of the family. On the 7th August 1936 the mortgagees instituted Mortgage Suit No. 23 of 1936 in the court of the Subordinate Judge at Arrah to enforce the three mortgage bonds; and on the 10th February, 1938, a preliminary decree was passed for a consolidated sum of Rs. 7,761/8/- besides costs and interest. The decree was made final on the 21st April 1939. In execution of the mortgage decree, the entire mortgaged property was sold and purchased by the decree-holders mortgagees on the 7th October 1939 for Rs. 38,165/3/5. In the meantime, Madho Prasad Singh preferred First Appeal No. 48 of 1939 in the High Court against the preliminary decree passed in the mortgage suit. This first appeal was allowed in part and thereafter Madho Prasad Singh filed an application under Sec.144, Civil Procedure Code, in 1941 before the executing court for setting aside the auction sale. But the application was dismissed on the 10th June 1941. Madho Prasad Singh then went up in appeal to the High Court against this order of dismissal; and this appeal was disposed of in terms of compromise arrived at between the mortgagor and the mortgagees. In accordance with the terms of this compromise, on the 9th April 1943, Madho Prasad Singh deposited Rs. 38,165/3/9 in the court of the Subordinate Judge and the mortgage decree was satisfied. Madho Prasad Singh died on the 12th January 1945. In the meantime, defendants 1 to 5, who are members of a joint family with defendant No. 1 (Brij Bihar Prasad) as karta obtained an ex parte money decree in the Munsifs court at Gopalganj in the district of Saron against Madho Prasad Singh in Money Suit No. 26 of 1936, on the 16th July 1937 for Rs. 1,203/15/3; and in execution of this decree the decree-holders purchased on the 26th April 1938 item No. 5 of the mortgaged property and the sale was continued on the 26th May 1933.

Finding of the Court:

The contesting defendants had constructive notice of the prior mortgages created by Madho Prasad Singh, their judgment-debtor. Therefore, they were not bona fide purchasers for value without notice. Consequently, the plaintiffs appellants would be entitled to claim contribution from these defendants unless there was any contract to the contrary between them and Madho Prasad Singh.

Issues: 1. Whether the contesting defendants were bona fide purchasers for value without notice? 2. Whether there was any contract to the contrary between Madho Prasad Singh and the auction-purchasers by which the former agreed to pay the entire mortgage dues? 3. Whether the plaintiffs are entitled to a decree for contribution against the contesting respondents?

Ratio Decidendi: 1. The definition of notice under Section 3 of the Transfer of Property Act includes actual knowledge and constructive knowledge. Constructive notice is deemed to have been given when a person, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, would have known the existence of the mortgage encumbrance. 2. The evidence of the contesting defendants showed that they did not act as prudent persons inasmuch as they had not asked Shamnarain Lal, their karpardaz, about his source of information and they could not say if Shamnarain Lal had made any inquiry about the existence of any encumbrance. Therefore, the defendants had constructive notice of the prior mortgages. 3. No express contract to the contrary was lifted on behalf of the contesting defendants. The sale proclamation and other documents of the money execution case did not amount to an implied contract, between Madho Prasad Singh and the auction-purchasers by which the former agreed to pay the entire mortgage dues. 4. On the plain language of Section 82 of the Transfer of Property Act, the plaintiff who are the heirs and legal representatives of Madho Prasad Singh, are entitled to a decree for contribution against the contesting respondents.

Final Decision: The appeal is allowed in part and the judgment and the decree of the lower Court are set aside. The suit is consequently decreed in part against defendants 1 to 5 for the said amount with corresponding costs of both the courts and furture interest at six per cent, per annum.