MOHAMED MATHER Vs. K C IBRAHIMKUTTY MATHER

JUDGEMENT

(1.) A nice question arises in this second appeal as to the manner of working out the equitable principle of 'substituted security' when a portion only of the undivided share of a cosharer has been mortgaged but a different property is allotted to him in partition between the cosharers.

(2.) THE facts are not in dispute here. THE plaintiff and defendants 1 to 3 were cosharers of the properties described in plaint schedules A & B and others. Defendants 1 & 2 mortgaged their shares in the plaint A schedule property on February 1, 1947, to the plaintiff for a sum of Rs. 3000/ -. At the time of that mortgage, a suit for partition of the common properties of the plaintiff and defendants 1 to 3 was pending. By the final decree in that suit passed on September 19, 1947, the plaint A schedule property was allotted to the 3rd defendant; items 1 to 3 of the plaint schedule b were allotted to the 1st defendant; and a sum of Rs. 2625 odd was awarded to the 2nd defendant, to be collected from the plaintiff, the 1st defendant and the 3rd defendant in the sums of Rs. 366. 29 p. , Rs. 647. 86 p. & Rs. 1610. 86 p. respectively. THE present suit is to enforce the mortgage after setting off the sum payable by the plaintiff to the 2nd defendant (viz. , Rs. 366. 29 p. , therefrom. THE Munsiff decreed the claim against items 1 to 3 of plaint B schedule, giving a charge for Rs. 1610. 86 p. on the plaint A schedule property also. THE 1st defendant's appeal before the Subordinate Judge, Cochin, did not succeed. He has come up in second appeal; and the question here is whether the principle of substituted security entitles the plaintiff to a charge on all the properties allotted to the 1st defendant in partition even though the pre-partition mortgage was only of his undivided share in one of the common properties. THE Courts below have held him entitled to a charge on all the properties allotted in partition; and its correctness is challenged here.

(3.) MR. Justice Asutosh Mookerjee, with the concurrence of mr. Justice Holmwood, has explained the proposition very lucidly in Hakim Lal v. Ram Lal 6 C. L. J. 46 thus: "the mortgagee's, therefore, entitled to proceed against what may be called the substituted security. The question, however, arises how this substituted security is to be ascertained. To illustrate the principle applicable to cases of this description, we may, in the first place, take a case where a person mortgages the whole of his undivided share in an estate which comprises several villages say A, B, C, D, E, F. Upon partition, if the mortgagor gets a share in some of the villages only, - say, two, A and B - in lieu of his share in the six, it is obvious that the substituted security is his share in the two villages. The mortgagee in such a case would be entitled to proceed against the shares in A and B which might be allotted to the mortgagor. Next, take a case which is not quite so simple. Suppose a person mortgages, not his entire undivided share in the whole property of six villages, but only a fraction of his share. In such a case, the substituted security is clearly a corresponding fraction of the share allotted -to the mortgagor in the two villages; in other words, if the mortgage covers less than the entire interest of the mortgagor in the whole estate held in common, when the estate is divided, the mortgage will cover a proportional interest in the whole of the part allotted to the mortgagor. Next, take a case slightly more complex. Suppose a person mortgages his share in not all but some only of the villages comprised in the estate. Assume that he mortgages his share in A & B. If, upon partition, A and B are allotted to the mortgagor, but his shares in those two villages are enlarged because he loses his shares in C, D, E and F, the mortgagee is obviously entitled to proceed only against the original shares of A and B comprised in his security; clearly his security is not enlarged. The three illustrations we have just given appear to us to be based on perfectly intelligible grounds. The same view has been adopted in Torrey v. Cook (116 Mass. 163), Randell v. Mallet (14 Maine 51) and Howse v. Dew (90 alabama 178; 24 Am. St. Rep. 783) to which we refer, not as authorities binding on this Court, but only as indicating that the principles in question have been treated as consistent with equity, justice, and good conscience. Lastly, take a still more complex case which is the case now before us. Suppose the mortgage comprises the shares of the mortgagor in A and B. and that upon partition, the mortgagor is allotted shares in A, D, E and F. What is the substituted security in a case of this description, and how is it to be ascertained? Upon the anology of the principles deductible from the illustrations which we have just given the substituted security ought to be calculated as follows. Determine, in the first place, the value of the shares of A and B comprised in the mortgage security at the date of the partition. Be it observed, that it is not the value at date of the execution of the mortgage; because if between the date "of the mortgage and the date of the partition when the substitution takes place, there has been any accession to the property, the mortgagee is entitled to the benefit thereof. Determine, in the second place, the value of the shares allotted to the mortgagor upon partition in A, D, E and F. Ascertain, in the third place, what share of the villages A, D, E and F is equivalent in value to the shares of A and B comprised in the mortgage security. The shares in A, D, E and F so determined, may justly be assumed to be the substituted security against which the mortgagor is entitled to proceed. This is manifestly just. If the mortgagee is restricted in his remedy to any particular villages out of A, d, E and F, he may have just grounds for complaint. As a matter of principle, it cannot be asserted that the share in B which the mortgagor has lost is represented by a share of D, any more than by a share of E and F, and as upon partition he has been allotted shares in A, D, E and F, his shares in B and C have been transformed into and are represented by shares in A, D, E, F, unless his share in A, after partition, is precisely equal to his share in A before partition, in which event his interest in B and C would be represented by shares in D, E, and F. If this principle is applied to the facts of the case before us, the rights of the parties are easily adjusted . . . It is well settled that a mortgagee, who has a security upon two or more properties which he knows belong to different persons, cannot release his lien upon one so as to increase the burden upon the others without the privity and consent of the persons affected. "