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1901 Supreme(Cal) 41

CALCUTTA HIGH COURT
K.C.I.E., C.J, Rampini, J., Pratt, J., Francis W. Maclean, J., Banerjee, J., Ameer Ali, J.
Paresh Nath Singha - Appellant
Versus
Nabogopal Chattopadhya - Respondent
Decided On : 31-07-1901

Headnote:

Mortgagee - Sale of Mortgaged Property - CPC Section 310A - A mortgagee of a tenure or holding sold in execution of a decree for arrears of rent due in respect of it is entitled to make an application u/s 310A of the CPC as being a "person whose Immovable property has been sold" within the meaning of that Section. The court held that the mortgagee's interest in the property is Immovable property and that the sale of the property affects the mortgagee's interest, making them a person whose Immovable property has been sold within the meaning of Section 310A.

Fact of the Case:

The case involved an application by mortgagees to set aside the sale of a tenure or holding under the Bengal Tenancy Act. The mortgagees claimed to be simple mortgagees of the property sold. The lower court found that the mortgage was a benami transaction and rejected the application. The mortgagees appealed to the High Court.

Finding of the Court:

The Full Bench of the High Court held that a mortgagee of a tenure or holding sold in execution of a decree for arrears of rent due in respect of it is entitled to make an application u/s 310A of the CPC as being a "person whose Immovable property has been sold" within the meaning of that Section. The court held that the mortgagee's interest in the property is Immovable property and that the sale of the property affects the mortgagee's interest, making them a person whose Immovable property has been sold within the meaning of Section 310A.

Issues: The main issue before the court was whether a mortgagee of a tenure or holding sold in execution of a decree for arrears of rent due in respect of it is entitled to make an application u/s 310A of the CPC as being a "person whose Immovable property has been sold" within the meaning of that Section.

Ratio Decidendi: The court held that the mortgagee's interest in the property is Immovable property and that the sale of the property affects the mortgagee's interest, making them a person whose Immovable property has been sold within the meaning of Section 310A. The court reasoned that the mortgagee's interest is a benefit to arise out of land and that the sale of the property passes the mortgagee's interest to the purchaser, even though the purchaser may have the option to annul the incumbrance.

Final Decision: The Full Bench of the High Court held that the rule should be made absolute, setting aside the order of the lower court confirming the sale and setting aside the sale complained of u/s 310A.

JUDGMENT

Maclean, C.J. - The question submitted to us, which I arises upon the present rule is, `whether a mortgagee of a tenure or holding, sold in execution of a decree for arrears of rent due in respect of it, is entitled to make an application u/s 310A of the Code of Civil Procedure, as 'being a person' whose Immovable property has been sold' within the meaning of that Section." The reference has been made owing to a conflict between the cases of Hamidal Huq v. Matangini Dassi (1898) 2 C. W. N. 8, and Nityananda Patra v. Hira Lal Karmakar (1900) 6 C. W. N. 63. It is clear that, in a sale under these circumstances, the mortgagee, unless he can come in u/s 310A, runs a very serious risk of losing the' benefit of his security, as the auction-purchaser is entitled to annul it. Here the mortgage was a simple mortgage, and, u/s 58 of the Transfer of Property Act, "a mortgage is the transfer of an interest in specific Immovable property for the purpose of securing the payment of money," That the mortgagee has or at least may have a very substantial interest in the tenure sold is obvious, for if the tenure were mortgaged up to its full value, the whole interest would virtually be his. A mortgagor, whose tenure has been mortgaged up to the hilt, would have no interest in defending the suit, or resisting the sale, and, if the mortgagee cannot intervene, his security would probably be lost. Nor, on the other hand, is the auction-purchaser or the decree-holder in any wise prejudiced by the deposit being made by the mortgagee, for it can make no difference to J either of them whether it is made by the mortgagor, or by the mortgagee. These considerations lead me to think that the language of the Section ought to be liberally construed.

2. The opposite party is reduced to the position that the words in question refer to the judgment-debtor alone. This can hardly be so, for, if this had been intended, it is difficult to suppose that the Legislature would not have used the expression the judgment-debtor instead of the wider and more general expression which we find in the Section. And, if persons other than the judgment-debtor are included in the language " any person whose Immovable property has been sold," it is not very reasonable to say that the mortgagee of the tenure sold in execution of a decree for arrears of rent does not come within the category. If it apply to persons other than the judgment-debtor, but not to a mortgagee of the tenure, we have not been told to whom the words can apply. A simple mortgagee, as in the case here, has undoubtedly an interest in the tenure sold: to the extent of that interest it may fairly be said within the meaning of the Section that it is his Immovable property which has been sold. Do the words of the Section compel us to say that it is only the owner of the whole interest in the property sold, who can apply under it? I think not. Apart from authority, I should have been prepared to hold that such a mortgagee, as we find in the present case, is entitled, in a sale such as the present, to apply u/s 310A.

3. I. will refer briefly to the authorities. In Rakhal Chunder Bose v. Dwarka Nath Misser (1886) I. L. R. 13 346, the mortgagee was held entitled to amply u/s 311 of the Code, the language of which is identical, on this point, with Section 310A. There, no doubt, the mortgagee had obtained a decree for foreclosure, but, as it had not been made absolute, at the time of that application, u/s 311 I do not think that circumstance can, in principle, differentiate the case from the present. In the case of Hamidal Hug v. Matanging Dusi (1898) 2 C. W. N. 3, it was expressly decided that the mortgagee could apply and the same view was held in Rule No. 770 of 1900, decided or the 27th July 1900, but unreported. In the case of Srinivasa Ayyangar v. Ayyathorai Pillai ILR (1897) 21 416 a similar view was held. On the other hand reliance is placed upon the case referred to in the reference, and reported in 5 C. W. N

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