SETH KISHORI LAL Vs. HAJI MUHAMMAD NAZIR

JUDGEMENT

(1.) Seth Kishori Lal and Seth Babu Lal, as mortgagees under a mortgage deed executed by Yusuf Ali Khan on 23rd February 1929, with respect to Khewat No. 24 in mohal Naukheel village, Sikandra Rao filed their written statement of claim in proceedings under the Encumbered Estates Act on the application of Yusuf Ali Khan. Haji Mohammad Nazir and Mohammad Basbir also filed their written statements of claim on the basis of mortgage deeds executed in their favour in 1931, and later with respect to khewat 24 of mohal Naukheel and other property. Money decrees were passed on the basis of these claims by the Special Judge, and the debts in favour of these mortgagees were ranked in class 4, without any ranking inter se among those debts in class 4. It was ordered that all the debts of class 4 would be treated as of equal rank. It is against this order of the Special Judge, first grade, that this appeal has been filed by Seth Kishori Lal and Seth Babu Lal.

(2.) The contention for the appellants is that the debt due to them should have been given priority in class 4 over the debts due to the other mortgagees in view of Section 48, Transfer of Property Act. We are not inclined to agree with this contention.

(3.) The cases of Sant Prasad v. Dallu Sahu, 1947 A. L. J. 176 and Makhan Lal v. Keshabdeo, 1947 A. L. J. 588: (A. I. R. (35) 1948 ALL. 133), do not support the appellants' contention. In those cases it was held that debts falling under the same class need not be ranked inter se, if that was not possible under any recognised principle of law, and that the Special Judge would just group them as a class and that in that case all those debts would be paid off pro rata if there was not sufficient money to pay them in full. The views expressed in these cases were accepted in Madan Lal v. Chhotey Lal, Civil Revn. No. 273 of 1946 by a Bench of which one of us was a member, and it was observed in that case : "Section 16 of the Act does not indicate any principles on the basis of which each individual debt should get a definite place for itself in order of priority. Except for Section 48, Transfer of Property Act, no other provision of law has been shown to us which could be helpful in determining the priority of various debts. Even Section 48, Transfer of Property Act, which applies to debts on mortgages, would not apply to all such debts It applies only to such mortgage debts which are over the same property. The only practical way of ranking other debts in the same class inter se can possibly be to rank them according the dates of the debts, but even this will fail if several debts of the same class are of the same date. It, therefore, appears that the provision in Section 16 requiring the Special Judge to rank all debts for priority does not necessarily mean that the Special Judge must give one particular place to each debt and that he cannot in any circumstance bracket or group together several debts."