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HIGH COURT OF CALCUTTA
P. B. Mukharji
ABDUL KHALEQUE - Appellant
Versus
MEDASWAR HOSSAIN - Respondent
A. F. A. O. 137 Of 1960
Decided On : DECEMBER 18, 1964
INTERMEDIARY'S RIGHT TO COMPENSATION - WEST BENGAL ESTATES ACQUISITION ACT - SECTIONS 2 (1), 3, 14, 15, 16, 17, 19, 21, 23, 25, 26, 28 - TRANSFER OF PROPERTY ACT - SECTIONS 6, 73, 78, 90 - CODE OF CIVIL PROCEDURE - ORDER 21, RULE 46, 46-A, 48 - ORDER 34, RULE 4, 6 - The right to compensation under the West Bengal Estates Acquisition Act cannot be sold under a mortgage decree at the instance of the mortgagee.
Fact of the Case:
The mortgagor failed to pay the debt and a suit was brought by the mortgagee upon that mortgage. A preliminary mortgage decree was passed on the 20th March 1950. It was followed by the final decree for sale on the 13th March 1952. The execution of the mortgage decree started on the 31st July, 1953, and the dues to the morgagee-decree-holder were calculated to be Ks. 91t-5-3p. Thereafter, the significant event that took place was the nationllsation of lands. On the 15th April, 1955 the estates vested in the State of West Bengal under the West Bengal Estates Acquisition Act 1953. The result was that the mortgaged properties in this suit could no longer be sold under the mortgage decree. What the mortgagee-decree-holder did was to make an application on the 13th November 1966 to sell the mortgagor's right to compensation that was payable to the mortgagor under that Act. On the 30th November, 1956 the sale proclamation was issued, stating that what was to be sold was "sale of the right to compensation" valued at the said three figures of Rs. 450. Rs. 325 and Rs. 225.
Finding of the Court:
The right to compensation cannot be sold under a mortgage decree. The mortgagor's right is preserved, but it is a new right to proceeds or to the compensation. In my view that is clearly recognised and established under Section 73 (2) and (3) of the Transfer of Property Act. A sale under the mortgage-decree is held under Order 34 of the Code of Civil Procedure which concerns "suits relating to mortgage of immovable property". Order 34. Rule 4 dealing with the preliminary decree in a suit for sale makes it clear expressly that:"the plaintiff shall be entitled to apply for a final decree directing that the mortgaged property or a sufficient part thereof be sold and the proceeds of the sale (after deduction therefrom of the expenses of the sale) be paid into Court and applied in payment of what has been found or declared under or by the preliminary decree due to the plaintiff, together with such amount as may have been adjudged due in respect of subsequent eosts. charges, expenses and interest and the balance, if any, be paid to the defendant or other persons entitled to receive the same". That means, in my judgment, that the pro perly is being sold under the mortgage decree only with a view to realise the proceeds of the sale of that mortgaged property out of which the mortgage-debt has to be discharged. When there is no question of any sale of the mortgaged properly but by operation of law the proceeds or compensation are available on compulsory acquisition of the mortgaged property, then no further question of sale of "immovable property" arises in terms of Order 34, Rule 4.
Issues: Whether the intermediary's right to compensation under the West Bengal Estates Acquisition Act can be sold under a Mortgage decree at the instance of the mortgagee with whom the intermediary mortgaged the three items of properties in suit.
Ratio Decidendi: The right to compensation under the West Bengal Estates Acquisition Act cannot be sold under a mortgage decree because: * The right to compensation is a new right to proceeds or to the compensation that is preserved under Section 73 (2) and (3) of the Transfer of Property Act. * A sale under a mortgage decree is held under Order 34 of the Code of Civil Procedure, which concerns "suits relating to mortgage of immovable property". * When there is no question of any sale of the mortgaged property but by operation of law the proceeds or compensation are available on compulsory acquisition of the mortgaged property, then no further question of sale of "immovable property" arises in terms of Order 34, Rule 4.
Final Decision: The appeal is allowed. The order and judgment of the lower appellate Court are set aside and I hold that the right to the compensation money cannot be sold under the mortgage decree. This is without prejudice to the rights of the respondent to proceed and take appropriate legal steps for satisfaction of his mortgage debt from the compensation money.
( 1 ) THE main and significant question of law raised by this second appeal is whether the intermediary's right to compensation under the West Bengal Instates Acquisition Act can be sold under a Mortgage decree at the instance of the mortgagee with whom the intermediary mortgaged the three items of properties in suit. The sale proclamation in this case under the mortgage decree relates to three items--Hems Nos. 1. 2 and 3 valued respectively at Rs. 450. Rs. 325 and Rs. 225 amounting altogether to a sum of Rs 1000.
( 2 ) THE facts giving rise to this question of law may be briefly stated al the outset. The mortgage in this case is dated 17th August 1934. The mortgagor failed to pay the debt and a suit was brought by the mortgagee upon that mortgage. A preliminary mortgage decree was passed on the 20th March 1950. It was followed by the final decree for sale on the 13th March 1952. The execution of the mortgage decree started on the 31st July, 1953, and the dues to the morgagee-decree-holder were calculated to be Ks. 91t-5-3p. Thereafter, the significant event that took place was the nationllsation of lands. On the 15th April, 1955 the estates vested in the State of West Bengal under the West Bengal Estates Acquisition Act 1953. The result was that the mortgaged properties in this suit could no longer be sold under the mortgage decree What the mortgagee-decree-holder did was to make an application on the 13th November 1966 to sell the mortgagor's right to compensation that was payable to the mortgagor under that Act. On the 30th November, 1956 the sale proclamation was issued, as I have said, stating that what was to be sold was "sale of the right to compensation" valued at the said three figures of Rs. 450. Rs. 325 and Rs. 225.
( 3 ) THEN begun the legal batlles. The present appellant is the 5th judgment-debtor Abdul Khaleque. He filed an application under Section 47 of the Code of Civil Procedure taking the point thai since the land vested in the State of West Bengal the mortgagee-decree-holder could not put the disputed properties to sale any more and that the deeree-holder was not entitled to put to sale the right to the entire compensation. It was also contended in that application that the decree-holder had not adopted the right procedure for sale of the right to compensation. It was contended that the right to compensation could not he sold under the law. The learned Munsif who dealt with that application, under Section 47, rejected it. The judgment-debtor appealed to the District Judge. The learned District Judge dismissed the appeal. From that decision the present appellant filed this Second Appeal raising the question stated above. The learned District Judge records the faet that no specific sum of money has reached the hands of the Collector on account of compensation for the disputed properties and in fact the amount of compensation has not yet been fixed. That was the record of fact on the 30th March, 1960 when the lower appellate Court dismissed the appeal.
( 4 ) I do not know of any decided cases which have held or decided that a right to compensation or to get some money can be sold. Reliance has been placed on four decisions of this Court.
( 5 ) THE first decision is in Re: Cooch Behar Bank Ltd. , 62 Cal WN 911 holding that Section 26 (1) of the West Bengal Estates Acquisition Act, 1953, exempts 50 p. c. of the compensation money from being attached in execution of a decree and that Section 26 (3) of that Act puts a restriction upon the decree-holder to realise the decretal dues by execution by providing that all sums recoverable under an order of attachment shall be deducted from the amount of compensation money payable in non-ncgoliable bonds under Subsection (2) of Section 23. In other words, no execution can be levied on the amount of compensation which is paid or payable in cash according to the table laid down in Section 23. It is also held in that decision that ad interim payments
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