BARABONI COAL CONCERN, LTD Vs. DEBA PRASANNA MUKHERJEE

JUDGEMENT

(1.) This appeal is concerned with the rights of the parties in a 5/16 share of certain coal-bearing lands known as Mauza Monaharbahal. The transactions out of which the litigation arises are complicated, and bring in at different stages other properties and interests with which the appeal is not concerned. They are referred to in detail in the judgments below, but it will be sufficient for the judgment of the Board to confine the narration to the 5/16 share of Monaharbahal. The second respondent is the present owner of the Searsole estate, in which the said share is comprised. On 10 August 1908, his predecessors in title executed a deed in favour of Mukhunda Lal Laik, by which they demised the said share to him on a 999 years' lease for coalmining purposes, upon certain terms and conditions including the payment of royalties at varying rates which were charged upon the leasehold interest. By the same deed the lessors, in consideration of the sum of Rs. 1,00,000 advanced to them by the lessee, mortgaged the demised premises to him to secure repayment of this advance with interest. Mukhunda Lal Laik was in this transaction admittedly acting on behalf of the firm of Laik Banerjee and Co., in which he and certain other persons were partners. It will be convenient hereafter to refer to them collectively as the Laiks.

(2.) By another Bengali deed of a date equivalent to 20 May 1909, the Laiks mortgaged their interests under the former deed to Tara Prasanna, the father of respondent 1, to secure repayment of Rs. 2,00,000 advanced to them by Tara Prasanna. In 1911 Tara Prasanna instituted a suit against the Laiks for realization of the moneys due under the 1909 mortgage. A preliminary mortgage decree was passed in the same year and some time in 1912 a final decree for sale. In the meantime some of the Laik partners had been adjudicated insolvents, and the Official Assignee of Bengal was brought on the record of the suit in their place. Tara Prasanna then took proceedings in execution to enforce his decree. The Official Assignee resisted the sale, and being dissatisfied with the order of the executing Court, appealed. In November 1913, during the pendency of the appeal, an agreement was made, in which all the parties interested (including Tara Prasanna) joined, for the sale of the Laiks' leasehold interest to the appellant company for the sum of Rs. 1,00,000, to be paid to Tara Prasanna in reduction of his mortgage claim. This sum was duly deposited with the Official Assignee, and the company was in April 1914, put in possession of the property. The formal completion of this transaction was delayed for some time by the death of Tara Prasanna, whose interests devolved upon his son, respondent 1, then a minor. Eventually however the Official Assignee's appeal was compromised on the terms of the agreement with the sanction of the Court; the money was paid over to the guardian of the minor; and on 22 June, 1917, an assignment of the leasehold premises to the company was executed by all the parties concerned.

(3.) It is admitted that by the terms of this document the property so assigned was freed from all claims under the 1909 mortgage, but that the company took subject to the covenants by the Laiks for payment of the royalties and to the other conditions of the original lease the assignment and the corresponding liabilities of the company taking effect as from 1 April 1914. Execution proceedings were then resumed under the decree in Tara Prasanna's suit, respondent 1 being substituted as his representative, and on 9 February 1920 the right title and interest of the Laiks in the mortgage of 1908 was brought to sale and purchased by respondent 1, for Rs. 1,10,000. On 31 March 1922, the suit out of which the present appeal arises was instituted by the mother and guardian of respondent 1, in the Court of the Subordinate Judge of Asansol. The defendants were (1) respondent 2, and his mother (since deceased), as representing the mortgagors, the claim against them being the ordinary mortgage decree, and (2) the appellant company, against whom an alternative claim was made under the following circumstances. The company were as above stated liable for the royalties reserved by the lease of which they were the assignees. It is not alleged that they had attorned to respondent 1, and therefore their liability would be prima facie to pay the sums due in this respect to their lessor, i. e., respondent 2. But by the terms of the deed of 1908 the royalties, which were charged on the leasehold premises, were made part of the mortgage security, and the following provision was incorporated in the mortgage part of the deed: "And it is hereby expressly agreed by and between the parties hereto that the moneys hereby secured shall be primarily payable out of the rents and royalties hereby transferred and charged and for that purpose so long as any money shall remain due and owing on the security of these presents to the transferee" (meaning the Laiks) "he the transferee shall be at liberty to appropriate or recover and receive the said rents and royalties payable by him to ... the owners" (meaning the mortgagors) "as and when they shall become due in respect of the said principal money and in the next place of the said principal money for the time being due on the security of these presents."