VAITHIYAM NANJAPPA Vs. D. RAMANATHA CHETTI AND ORS.

JUDGEMENT

(1.) THE decree -holder in O.S. No. 206 of 1951 on the file of the District Munsif's Court, Krishnagiri, is the petitioner herein. This Revision Petition arises out of an order granting rateable distribution to the simple money creditors of the second respondent. The second respondent had executed a mortgage in favour of the petitioner herein on the foot of which he filed the above suit and obtained a decree against the second respondent and certain others in 1951. E.P. No. 425 of 1955 was filed for realization of one instalment of that decree amount which was due to the petitioner under the provisions of Section 4(2) of the Madras Indebted Agriculturists (Repayment of Debts) Act, 1955 (Act I of 1955). One item of the mortgaged property was old and a sum of Rs. 400 was realised by that sale and was deposited in Court. Meanwhile certain simple money decree -holders -of the second Respondent applied for rateable distribution of the assets realised in E.P. No. 425 of 1955, after paying the instalment of the decree amount that was due to the petitioner. The learned District Munsif has allowed rateable distribution in respect of that amount. The mortgagee decree -holder in O.S. No. 206. of 1951 has filed this Revision Petition.

(2.) ON behalf of the petitioner it is contended that as a result of the Court sale the security which the petitioner had over the mortgaged property was; transferred to the proceeds of the sale and although the petitioner could not, by the disabling provisions of Act I of 1955, take the entire amount in satisfaction of his decree, the surplus that would be left after payment of the instalment that was due to him, would still be part of his security and cannot form the assets of the judgment -debtor which would be available for rateable distribution among his simple money decree -holders. I think that this argument is well -founded. When property in execution of a mortgage decree is sold in Court auction, unless there is anything in the order for sale, the property is freed from the mortgage as soon as it is sold. The security attaches itself to the proceeds. Therefore, this surplus amount in Court, after paying the decree -holder one instalment of his decree debt, would still be subject to the security of the mortgagee decree -holder which cannot be paid over either to the judgment -debtor or to his other creditors. It is true that under the provisions of Act I of 1955 the mortgagee decree -holder may not be able to withdraw from the Court more than the instalment that was due to him. But security over the money does not for that reason cease. The money will have to remain, in Court till the entire debt under the mortgage decree is discharged.

(3.) THE Civil Revision Petition succeeds and is allowed with costs. Before concluding this case I must express my thanks to Mr. P.S. Ramachandraft for the able way in which he argued the case on behalf of the respondents.