ASIT MUKHERJEE Vs. BIBHABATI DASI

JUDGEMENT

(1.) The only question that is involved in this appeal is whether an equitable mortgage by deposit of title deeds created by an undischarged insolvent is legal and valid.

(2.) One Benoy Krishna Ghatak, since deceased, who was the owner of the disputed property, which is a four-storied building, being premises No. 151E, Raja Dinendra Street, Calcutta was declared an insolvent on Aug. 6, 1953 by the Court of the District Judge at Alipore, 24-Parganas, in Insolvency Case No. 14 of 1952. After he was declared an insolvent, he mortgaged the disputed property by way of equitable mortgage in favour of the plaintiff on Sept., 23, 1953 to secure repayment of a loan of Rupees 14,500/-. In the Insolvency case, the Official Receiver was appointed the Receiver of the estate of the insolvent. A scheme for composition was filed bv the insolvent and it was accepted by the said Court on June 16, 1955. The Official Receiver was directed by the Insolvency Court to give effect to the scheme of composition. In terms of the said scheme of composition, the disputed property along with some other was sold by the Official Receiver to the defendant No. 1, Sm. Bibhabati Dasi by a deed of sale dated Oct. 14, 1955. The said Benoy Krishna Ghatak, however, died before the said sale. There is no dispute about these facts. The present suit was instituted by the plaintiff for the recovery of the sum of Rs. 25,540/-on account of principal and interest due under the mortgage, by the sale of the disputed property under the provisions of Order 34, Rule 4 of the Civil P. C.

(3.) The defendants are the heirs and legal representatives of the said Benoy Krishna Ghatak. The defendant No. 1 is his widow and the defendants Nos. 2 to 5 are his sons. The suit was contested by the defendant No. 1 alone, the other defendants did not appear in the suit. She denied that any equitable mortgage was created by her husband Benoy Krishna Ghatak in favour of the plaintiff. It was asserted by her that she had purchased the property from the Official Receiver and her purchase not being subject to the alleged mortgage, the plaintiff was not entitled to recover any amount from her.