GOSWAMI MAHESPURI GURU RAMKRISHNAPURIJI Vs. RAMCHANDRA SITARAMJI

JUDGEMENT

(1.) THIS is an appeal by defendant 3. It arises out of a suit brought by respondent 1 to enforce a mortgage dated 17th November 1926, executed by Bindapuri in favour of the plaintiff's father and uncle (since deceased) for a consideration of Rs. 50,000. Bindapuri is dead. Defendant 1 who is his chela and legal representative has been joined as a party. Defendant 3 has been joined as a subsequent purchaser of one of the mortgaged properties, viz. 4 annas share in mouza Ubgi, which he purchased in auction on 5th February 1932. He denied the mortgage but admitted that he was a purchaser in auction sale held in execution of a decree in Civil Suit No. 14 of 1924. He, however, pleaded that the decree which he had obtained in Civil Suit No. 14 of 1924, was one declaring a charge over this 4 annas share in mouza Ubgi and hence he was a prior charge-holder and the plaintiff on the basis of the mortgage executed subsequent to the charge-decree was not entitled to enforce it as against him. His second contention was that when he wanted to sell the property charged by his decree in Civil Suit No. 14 of 1924, the plaintiff preferred an objection on the basis of the mortgage, in suit and wanted the property to be sold subject to the mortgage, that the objection was disallowed but the plaintiff did not file any suit under Order 21, Rule 63, for setting aside that order, and that therefore the present suit to enforce the mortgage did not lie.

(2.) THE plaintiff in reply pointed out that Civil Suit No. 14 of 1924 was for recovery of an unsecured debt of Rs. 10,232-11-9; that suit was compromised between the plaintiff and Bindapuri, and a decree in terms of the compromise was passed making the amount due payable in 4 annual instalments; it was further agreed that the debt so made payable would be a charge on the 4 annas share of mouza Ubgi, which could be sold in default of payment as agreed; the charge so created was not effected by a registered instrument, nor was the decree registered; the charge was never disclosed by the mortgagor, and on inquiries the mortgagees were satisfied that the property offered for mortgage was not in any way encumbered and thus they were bona fide transferees for value without notice of the alleged charge; the mere fact that the charge was prior to the mortgage did not in any way affect the rights of the mortgagees to enforce their mortgage against the property covered by the mortgage. It was further contended that a charge does not create any interest in immovable property and that on that ground also defendant 3 as a mere charge-holder was not entitled to claim priority over the mortgagees. It was admitted that an objection had been filed by the plaintiff when defendant 3 wanted to have the charged property sold in execution of his decree and that it had been dismissed; but it was pointed out that the objection was dismissed because the Court held that it was not maintainable under Order 21, Rule 58 read with Rule 62, Civil P.C. Defendant 3, however, admitted in those objection proceedings that it was not necessary to decide the question of priority in those proceedings, and he stated that he had no objection if the Court mentioned the incumbrance in favour of the plaintiff in the sale proclamation so as to give notice to all intending purchasers that the property was mortgaged with the plaintiff for Rs. 50,000. On these pleas, it was stated, a suit under Order 21, Rule 63, Civil P.C., was not necessary, and the fact that such a suit was not instituted was not fatal to the plaintiff's suit as against this defendant. These pleadings between the plaintiff and defendant 3 gave rise to issues 11, 12 and 13, which are as follows: 11. (a) Whether a suit under Order 21, Rule 63, Civil P.C., was necessary for setting aside the order dated 10th February 1930, passed by the executing Court against the mortgagees? (b) What is the effect of that order on the present claim? 12. Was the charge compulsorily registrable? 13. Did the mortgagees take the mortgage for valuable consideration and bona fide without notice of defendant 3's charge? If so, how would defendant 3's claim to priority be thereby affected?

(3.) THE findings given by the Court below against defendant 3 were all challenged in the memorandum of appeal; but at the stage of argument the learned Counsel for the appellant did not challenge the finding under issue 11. It was conceded that the plaintiff's suit on the basis of the mortgage was maintainable and that it was not necessary for the plaintiff to have instituted a suit under Order 21, Rule 63, Civil P.C., for setting aside the order dated 10th February 1930. The respondent-plaintiff did not contend that under the Registration Act as it then stood the decree declaring a charge in favour of defendant 3 required registration. The findings on issues 11 and 12 therefore were not contested before us by any party. The appellant, however, challenged the finding under issue 13 that the mortgagees took the mortgage for valuable consideration bona fide and without notice of defendant 3's charge, and contended that even if it be so held defendant 3 as a holder of a charge created by the decree was entitled to priority irrespective of the question of notice. We take up the question of notice first.