SACHINDRA NATH ROY Vs. MAHARAJ BAHADUR SINGH

JUDGEMENT

(1.) THE financial dealings between the several parties concerned, out it of which the appeals in this case have arisen, are somewhat complicated. It is, however, necessary to examine them in order to understand clearly the points calling for decision. Or the 8th March 1886, the 12th May 1887, and the May, 1892, the predecessors-in-title of the appellants in this litigation, styled the Roys, borrowed from one Dhanpat Singh three sums of Rs. 3,00,000; Rs. 20,000 and Rs. 15,000 respectively, and secured the repayment thereof with interest at the rates stipulated by three mortgages bearing the above respective dates of certain immoveable property belonging to them, the Roys. These mortgages were presumably in the "ordinary form conveyances of the absolute interest in the property pledged with the usual provision for redemption, coupled with covenants by the mortgagors to pay the debt due under them. The Transfer of Property Act permits in Calcutta the creation of equitable mortgages by deposit of deeds. Accordingly, Dhanpat Singh, of the 3rd June 1893, created at Calcutta an equitable mortgage of the property of the Roys, comprised in these mortgage deeds, by depositing these latter documents with a firm trading at Calcutta as the waram with Canad, hereinafter styled "the firm," to secure there-payment of Rs. 70,000 rent by them to him, with interest till paid. It is not clear whether, at this particular date, the Roys had notice of this transaction. Early in the year 1894, Dhanpat Singh, instituted two ordinary mortgagees suits, against the Roys to recover the amount secured by the three first mentioned mortgages. The equitable mortgagees, the firm, were not made parties to these suits or either of them. The Roys contested these suits and ultimately a settlement was come to whereby Dhanpat Singh accepted a sum of Rs. 1,20,000 in full satisfaction and discharge of the amount due to him for principal and interest on the three legal mortgages. The Roys had not this sum of Rs, 1,20,000 available.

(2.) THEY were, in consequence, obliged to raise the money to pay Dhanpat Singh the arranged sum of Rs. 1,20,000. They accordingly borrowed from the Eastern Mortgage Agency Company, hereinafter styled "the Company" a sum of Rs. 2,00,000 and secured the re-payment of it with interest by executing to this Company a mortgage, dated the 23rd April 1894, of property comprised in the three first mentioned mortgages. By reason, apparently of the existence of the equitable mortgage" created by the deposit of the mortgage deeds, an expedient was adopted. A deed of even date with the mortgage, namely, the 23rd April 1894, was executed by Dhanpat Singh, by which he after acknowledging the receipt of the sum stipulated for, released the lands and premises motioned in the three mortgages from all claims, etc., under these instruments and protected the Roys by a covenant M the words following from all claims, which might be made against them, in respect of any, of the matters therein mention The covenant ran thus: 2. The mortgagee both hereby for himself, his heirs, executors, administrators, representatives and assigns cover art with the mortgagors, their heirs, executors, administrators, representatives and assigns in manner following :

(3.) ON the, 11th May 1897, the firm instituted a suit against the Roys and the Company in the Court of the Subordinate Judge of Murshidabad to recover the sum due under their equitable mortgage, which latter they claimed, bad priority over the legal mortgage executed to the Company on the 23rd April 1894, and further, to it they were entitled to enforce their chains against the properties comprised in the three original mortgage-deeds deposited with them, and also against the Roys personally. The heirs and personal representatives Dhanpat Singh, deceased, were, by the order of the High Court, made defendants in the suit. They are the first four respondents in the present appeals. The Rs 03 and the Company contested this suit, and, on the 28th February 1903, the Subordinate Judge delivered judgment in favour of the plaintiff firm, holding that they, under their equitable mortgage, were, as regards the Roys, entitled to the sum of Sections. 47,223-4-9 roar principal, interest and costs with interest at 6 per cent, till paid. subject to the mortgage to the Company of the 23rd April 1894, which he held had priority over the equitable mortgage of the firm. He made the decree usual in ordinary mortgage-suits that the Roys should pay the sums found to be djie, with 6 per cent, interest, within six months from the date of the decree, failing which the properties covered by the three first-mentioned mortgages should be sold subject to the lien of the Company.