BANK OF BENGAL Vs. WILLIAM ARRATOON LUCAS

JUDGEMENT

(1.) This is an appeal by the plaintiff to enforce a charge upon immovable property for the realisation of a sum of Rs. 78,504-10-2 with interest pendente lite and costs. The transactions which have led up to this litigation are evidenced by four deeds, whose substance must be stated concisely for the elucidation of the points in controversy.

(2.) Lucas, the first defendant, is a dealer in jute. On the 6 April, 1908, he executed an equitable mortgage (which for the sake of brevity may be called A) by deposit of title-deeds in favour of his broker, Thaddeus, who financed him in his business. On the 8 July, 1910, Lucas executed in favour of Vertannes and Bertram, an English mortgage (which for the sake of brevity may be called B) of the properties covered by A. According to the recitals in this document, Lucas was indebted to Thaddeus under A to the extent of Rs. 63,560 approximately. The arrangement was that the mortgagees should be the sole brokers of the mortgagor during the continuance of the security, and that they should secure an advance of Rs. 50,000 by means of drafts to be drawn by one of them in favour of the other and to be discounted by the Bank of Bengal. On the 26 June, 1911, a supplemental indenture of mortgage (which for the sake of brevity may be called C) was executed. According to recitals in this deed, there was due to Thaddeus, under A, a sum of Rs. 65,000 approximately, and to Vertannes and Bertram, under B, a sum of Rs. 10,755-15-0. The arrangement was that Thaddeus should be paid off, the requisite money to be provided by the Bank of Bengal by way of cash credit to Lucas. A promissory note was given by Lucas to Vertannes and Bertram and was endorsed by them to the Bank of Bengal. The Bank placed Rs. 65,000 in the hands of Lucas, and with this sum Thaddeus was fully paid off. Thaddeus at the same time executed a deed of release in favour of Lucas. Vertannes and Bertram simultaneously executed a deed of guarantee in favour of the Bank for the sum advanced to Lucas, and Lucas executed a deed of further charge in favour of Vertannes and Bertram in order to enable them to execute the deed of guarantee. Bertram died on the 27 of December, 1912, and letters of administration in respect of his estate were taken out by the Administrator-General on the 17 January, 1913. On the 4 February, 1914, a fresh deed was executed which (for the sake of brevity may be called D). This purports to be supplemental to B and C, and the parties to the document were Lucas, Vertannes, the Administrator-General and the Bank of Bengal. The document was neither stamped nor attested as a mortgage, but was treated as a transfer of mortgage. The recitals show that at the time there was due to the Bank a sum of Rs. 74,017- 1-4, namely, Rs. 13,084-13-7 on account of drafts discounted in conformity with the arrangements embodied in B, and Rs. 60,932 on the cash credit opened on the basis of C. The Bank, it is recited, had called upon Lucas, Vertannes and the representatives of Bertram to furnish further security in respect of this sum. The arrangement was that Vertannes and the Administrator-General should transfer to the Bank the full benefit of the securities created by B and C, and that in consideration of such transfer, the Bank should release Vertannes and the representatives of Bertram from all liability under the drafts discounted by the Bank, as also under the promissory note and the guarantee. Lucas had not satisfied the debt due to the Bank; thereupon the present suit was instituted by the Bank on the 20 December, 1917. Lucas was made the first defendant. Puisne mortagees from Lucas, the proprietors of a firm named Gourchandra Das, were joined as defendants Nos. 2 to 16. Vertannes and the Administrator-General were placed on the record as pro forma defendants Nos. 17 and 18. In the plaint as originally framed, the claim was founded on D, the deed of the 4 February, 1914. The plaint was however subsequently amended on the 6 January, 1919, so as to enable the Bank to take advantage of B and C, the mortgages, dated the 8 July, 1910 and the 29 June, 1911. The defendants contested the claim on every conceivable ground as will appear from the eighteen issues raised: I Has the plaintiff Bank of Bengal cause of action? II Is the suit maintainable in its present form? III. Is the suit for sale based on the document of the 4 February, 1914, maintainable and enforceable against the defendant No. 17? Is the deed as pleaded by the defendant No. 1 an English mortgage and is it sufficiently stamped and attested? If so, has this Court jurisdiction to entertain the suit on such a mortgage? IV. Have the rights, titles and interests of the defendants Nos. 17 and 18 been legally transferred to the plaintiff Bank? If not, can plaintiff proceed with the suit? V. Was there any contract between the parties relating to the law charges? Are they correct and are they recoverable in the present suit? VI. Was there any contract between the parties as to insurance charges? If not, is the same maintainable and recoverable in the present suit? VII. Was the plaintiff's agent authorised to make any payment for insurance charges and can any such payment be a charge on the mortgaged properties? VIII. Was there any contract for payment of compound interest and is it recoverable? Is the account annexed to the plaint correct? IX. Has the sum of Rs. 7,543-15-0 been paid to the defendants Nos. 17 and 18 by the defendant No. 1? If so, is anything due by the defendant to the plaintiff under the indenture of 1910? X. Is the account contained in the document of 1914 correct and due by the defendant? Can it be a charge on the mortgaged properties? XI. Is the Indenture, dated 4 February, 1914, properly drafted, endorsed, signed and stamped with the knowledge of the defendant? Were the properties described in Schedule A and B mortgaged to the plaintiff Bank? XII. To what relief, if any, is the plaintiff entitled? XIII. Did the plaintiff Bank advance Rs. 65,000 on the security of the immovable properties to the defendant No. 1? If not, can the Bank enforce the claim under law? XIV. Was the bond of 1911 legally attested and presented for registration and did any consideration pass under the same? Can the plaintiff enforce any lien under the same? XV. Has the plaintiff acquired any right under the deed of 1914 with respect to the deed of 1911? XVI. Can the plaintiff enforce the lien in respect of the bond of 1908 in favour of Thaddeus? Is that lien still alive? XVII. Is the claim of the plaintiff on the basis of pro-note barred by limitation? XVIII. Should the suit fail for non-substitution of the legal representatives of the defendant No. 12 in time?

(3.) The Subordinate Judge has dismissed the suit. On the present appeal, the decision of the Subordinate Judge has been assailed as erroneous, both on the facts and in law. I shall first consider the three substantial questions of fact which have merged from the arguments addressed to us, namely, first, was the Bank of Bengal the real mortgagee under the deed of the 29 June, 1911; secondly, was the mortgage of the 29 June, 1911, duly executed and attested : and thirdly, was the indenture of the 4 February, 1914, executed by Lucas under circumstances which entitle him to treat it as inoperative in so far as he is concerned. In my judgment, the conclusions of the Subordinate Judge upon each of those points are erroneous and cannot be supported.