DATTATREYA SHANKER MOTE Vs. ANAND CHINTAMAN DATAR

JUDGEMENT

(1.) In Both these appeals by certificate the question of competing priorities between a charge created by a decree and a subsequent simple mortgage has to be determined. The appellants had filed Civil Suit No. 741 of 1938 for recovery of a sum of Rs. 1,34,000. 00 with interest from respondents Nos. 1 to 7. On 31/03/1941 a compromise decree was passed under which a charge was created for the decretal amount on three pieces of property belonging to the said respondents Nos. 1 to 7. These properties comprise a house in Shukrawar Peth and Kakakuva Mansion in Budhwar Peth both at Poona and a chawl in Kalyan. This decree was registered on 7/04/1941, but due to inadvertence the charge on the Kakakuva Mansion in Budhwar Peth at Poona was not shown in the Index of registration. The significance of this omission will become evident when the full facts are narrated. Thereafter on 27/06/1949 the respondents Nos. 1 to 7 mortgaged the Kakakuva Mansion to the plaintiff-respondent No. 14 for a sum of Rs. 1 lakh. The respondents created a further charge on 13/09/1949 in favour of the said plaintiff-respondent No. 14 for Rs. 50,000. 00. On 7/07/1951 a charge was created by a decree in favour of respondent No. 15 for a sum of Rs. 59,521/11/- under an award decree. In the meantime the appellants had recovered some amounts by execution of their decree in Civil Suit No. 741 of 1938 by sale of the property at Shukrawar Peth at Poonaand the chawl at Kalyan. In spite of these sales a large balance was still due, and in order to recover the balance of Rs. 1,57,164. 00 appellants filed Darkhast No. 32 of 1952 in the court of the Third Joint Civil Judge, Senior Division at Poona for the sale of Kakakuva Mansion over which, as we have said earlier, there was a charge created in favour of the appellants by the decree of 31/03/1941. Notices were issued under Order 21, Rule 66 of the Code of Civil Procedure to respondent No. 14 and other respondents. The Executing court, however, held that the presence of plaintiff-respondent No. 14 was not necessary for the purposes of effecting the sale on the Darkhast of the appellants and accordingly, it vacated the notices. Against the said order of the Executing court respondent No. 14 filed First Appeal No. 668 of 1957 in the High court of Bombay, and he also filed on 5/06/1958 Civil Suit No. 57 of 1968 in the court of the Joint Civil Judge, Senior Division at Poona for a recovery of a sum of Rs. 2,18,564. 00 alleged to be due to him under the two mortgages dated 27/06/1949 and 13/09/1949.

(2.) It may be mentioned that while Suit No. 57 of 1958 was pending the property the subject-matter of that suit was put up for sale on the appellants' Darkhast and it was purchased by the appellants with the leave of the court. In view of this development respondent No. 14 impleaded the appellants in the said Suit No. 57 of 1958 as the purchasers of the equity of redemption. The appellants resisted the suit on the ground that they had a prior charge in their favour and the mortgage of respondent No. 14 was subject to that charge. It was also contended that S. 100 of the Transfer of Property Act, 1882 (hereinafter referred to as 'the Act') regarding notice was not obligatory in respect of the interest created in favour of respondent No. 14. The trial Judge by his judgment dated 21/07/1959, while decreeing the suit of the plaintiff-respondent No. 14 for recovery of Rs. 2,18,564. 00 held that the appellants had a prior charge over the property and were bound by the mortgage in favour of the plaintiff-respondents Nos. 14 and 15 (defendant No. 8 in the suit). It further held that the rights of a simple mortgagee are not "property in the hands of" the mortgagee who could not be protected by the proviso to S. 100 of the Act.

(3.) Against the decree of the trial Judge, respondent No. 14 filed First Appeal No. 40 of 1960 in the High court of Bombay. The two First Appeals, one arising out of the Darkhast filed by the appellants and the other arising out of the suit filed by respondent No. 14 were heard together on 12/11/1962. The High court of Bombay by its judgment modified the decree of the trial Judge holding that as the mortgage in favour of respondent was protected under the proviso to S. 100 of the Act it is free from the charge in favour of the appellants. It also gave priority to respondent No. 15 for its dues, though it had not filed any appeal. Against this judgment and decree two appeals were filed, one in respect of First Appeal No. 40 of 1960 and the other in respect of First Appeal No. 668 of 1957.