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1940 Supreme(Mad) 146

IN THE HIGH COURT OF MADRAS
Venkataramana Rao, J.
Chinni Venkatachalam Chetti
Versus
Athivarapu Venkatrami Reddi
Decided On : 26.04.1940

The main legal point established in the judgment is the entitlement of the mortgagee to enforce the mortgage security over the produce, considering the impact of notice on the rights of the parties involved.

Headnote:

mortgage - enforcement of mortgage security over produce - Transfer of Property Act, Section 3, Misri Lal v. Mozhar Hossain I.L.R.(1886)Cal. 262, Collyer v. Isaacs (1881) 19 Ch. D. 342, Baldeo Parshad Sahu v. A.B. Miller I.L.R.(1904)Cal. 667, Ex parte National Mercantile Bank In re Phillips (1880) 16 Ch. D. 104, Wilson v. Wilson (1872) L.R. 14 Eq. 32, Ex parte Official Receiver In re Morrit (1886) 18 Q.B.D. 222

Fact of the Case:

The appeal arises from a suit to enforce two deeds of mortgage executed by the deceased father of defendants 1 to 3 to the plaintiff, securing the immovable property and the produce realized therefrom. The question is whether the plaintiff is entitled to enforce the mortgage security over the net sale proceeds of the crops deposited into Court during the pendency of the suit.

Finding of the Court:

The court held that the plaintiff's title to the sale proceeds in Court must prevail over that of the sixth defendant, who took the assignment with notice of the mortgages in favor of the plaintiff.

Issues: The main issue was whether the plaintiff is entitled to enforce the mortgage security over the net sale proceeds of the crops deposited into Court during the pendency of the suit.

Ratio Decidendi: The court applied the principles from various legal provisions and cases to establish the plaintiff's entitlement to the sale proceeds, emphasizing the mortgagee's right to the produce and the impact of notice on the rights of the parties involved.

Final Decision: The judgment of the lower Court was set aside, and the appeal was allowed with costs to be paid by the respondent.

JUDGMENT

Venkataramana Rao, J.

1. This appeal arises out of a suit to enforce two deeds of mortgage dated 24th June, 1924 and 24th April, 1930, executed by the deceased father of defendants 1 to 3 to the plaintiff. Both the deeds of mortgage not only gave security to the plaintiff over the immovable property comprised therein but also over the produce realised therefrom every year.

2. The operative portions in the deeds of mortgage run thus:

The produce realised therefrom every year have been hypothecated to you.

3. The question for decision in this appeal is whether the plaintiff is not entitled to enforce his mortgage security over a sum of Rs. 364 which was deposited into Court during the pendency of the suit being the net sale proceeds of the crops of Fasli 1345 on lands which are items 1, 2, 8, 9, 10 and 11 of Schedule A to the plaint comprised in the deeds of mortgage. The question arises in this way. On the 14th of May, 1933, the father of defendants 1 to 3 executed a registered lease deed of the said lands in favour of defendants 7 and 8 for a period of five years commencing from Fasli 1343. The rent reserved thereunder was 10 putties of paddy and 80 bundles of hay worth Rs. 10. The sixth defendant in execution of a money decree obtained by him against defendants 1 to 3 as representatives of their father in O.S. No. 149 of 1934 on the file of the District Munsifs Court of Nellore attached the immovable properties which were comprised in the deeds of mortgage. Objections were raised as regards the sale of the properties in pursuance of that attachment and the matter was compromised by the mother of defendants 1 to 3 executing a deed of transfer of the said lease in favour of the sixth defendant for the unexpired period of three years in satisfaction of his decree and the sale and other proceedings were stayed. The deed of transfer is dated 24th September, 1935. The sixth defendant full1 well knew that the property comprised in the lease deed was subject to the two mortgages in favour of the plaintiff because it was distinctly recited in the counter-affidavit filed by the guardian of defendants 1 to 3 objecting to the sale that the property was subject to two mortgages in favour of the plaintiff. The plain tiff also obtained a money decree against defendants 1 to 3 in S.C.S. No. 117 of 1934 on the file of the District Munsifs Court of Nellore in respect of an unsecured debt due by their father and in execution of that decree attached the standing crops on the lands which were the subject-matter of the lease. Two claim petitions were put in, one by the tenants, defendants 7 and 8 and the other by the sixth defendant. Both the claims were allowed on the ground that the possession of crops was not with the plaintiff. The crops were thereafter harvested and before they could be removed they were again attached by the eleventh defendant in execution of a money decree. The plaintiff filed the present action and applied for the appointment of a receiver to take possession of the said crops. By an order dated 7th July, 1936, the crops were directed to be sold and after meeting certain outgoings the balance was directed to be deposited into Court and from and out of the amount so deposited defendants 7 and 8 were asked to take their lessees share. It is with respect to the remaining amount that a controversy has arisen between the plaintiff and the sixth defendant. Under both the deeds of mortgage the plaintiff is given security over the produce. Under Section 3 of the Transfer of Property Act immovable property does not include growing crops. Therefore the deeds of mortgage will operate in respect of the produce on the land as a mortgage of movable property. Under the Indian Law there can be a valid mortgage of movable property. Vide Misri Lal v. Mozhar Hossain I.L.R.(1886)Cal. 262. The moment the crop comes into existence the mortgagee gets title to the crop. The principle of law that is usually applied is that enunciated by Jessel,












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