BENGAL COAL CO LTD Vs. SITA RAM CHATTERJEE

JUDGEMENT

(1.) This is an appeal by defendant 11, Bengal Coal Co. Ltd. from a preliminary decree in a suit to enforce a mortgage security. The suit was commenced by the plaintiff to recover a sum of Rs. 16,900 alleged to be due on mortgage bond executed on 24 January 1915, by one Ram Saday Nayek, who is the father of defendant 1, and father-in-law of defendant 2. He executed the mortgage in favour of Pran Krishna Chatterjee who was defendant 14 to the suit. The principal amount secured by the mortgage was Rs. 6,700 and the interest was to run at the rate of 12 per cent per annum. The properties which were hypothecated by the deed of mortgage consisted of 19 items which are mentioned in the schedules to the plaint. At the time of the execution of the bond Pran Krishna happened to be a member of a joint Hindu family, governed by Dayabhaga School of Hindu law, consisting of himself, his brothers and his nephews. He had accordingly one sixth share, according to the defence case, in the mortgage money. On 1 September 1919 there was an agreement between him and his five cosharers in which it was recited that the parties had separated in June 1919. It was also recited in the said agreement that all the properties acquired and the monies lent were ejmali properties and whatever would be acquired in future would be separate properties of each individual party who would acquire them. It is said that Pran Krishna had no more than one sixth of the mortgage money after this agreement. He was no longer the karta and it is said that he had nothing more than his individual share. On 1 October 1925, Pran Krishna assigned his rights as mortgagee to the plaintiff Sita Ram Chatterjee, who is a cousin of Pran Krishna Chatterjee. The total sum due on that date was Rs. 15,075 and in that document it was recited that Rs. 8,375 of that amount were kept in deposit to carry on litigation, and the balance of Rs. 6,700 was fixed as consideration of the mortgage bond.

(2.) It is said that the plaintiff took the conveyance in the benami of his brother defendant 13. It is now necessary to indicate the position of different defendants with reference to this mortgage. Defendants Nos. 1 and 2 are heirs of the original mortgagor. Defendants 3 to 11 are purchasers of the equity of redemption in the several mortgaged properties. It may be noted here that defendant 10, one of the purchasers of the equity or redemption, is the wife of the plaintiff. Defendant 12 is a lessee under defendant 1, of some portion of the equity of redemption. Defendant 13 is the brother of the plaintiff. Defendant 14 is Pran Krishna Chatterjee, the original mortgagee. Lastly defendants 15 to 19 are the cosharers of Pran Krishna Chatterjee. The plaintiff alleges that no portion of the mortgage money was paid and prays for an ordinary mortgage decree for sale. The defences of defendant 11 who is the appellant are first that if the assignment were legal and valid it could not give the plaintiff more than one-sixth share of his rights as mortgagee in the mortgage security as this was the share which Pran Krishna had in the mortgage bond when the assignment took place of the mortgage money. It is said that at the time of the assignment he lost his representative character as karta. With regard to this defence the Subordinate Judge has found that Pran Krishna had only one sixth share in the mortgage money and the finding on this point is in favour of the defendants. He has however held that the defendants are precluded from saying that Pran Krishna had no larger interest or interest in the whole of the mortgage money but that he was only entitled to the one-sixth share of the mortgage money. The Subordinate Judge has also found that the other brothers of Pran Krishna who are parties to the present proceeding do not say that they have got any interest in the mortgage money.

(3.) The Subordinate Judge also finds that the co-sharers of Pran Krishna are estopped from contending that Pran Krishna alone was not entitled to the mortgage money or that the assignment was not in respect of the whole of the mortgagee's right by reason of Section 41, T.P. Act. The second defence raised is that the assignment was not valid as there was no consideration for it and that it was really a collusive document executed with the sole intention of cheating the creditors or defeating the rights of the creditors. The third defence" is that defendant 10, who is a purchaser of a portion of the equity of redemption is the wife of the plaintiff and is really his benamidar in the matter of the purchase and it is contended that the mortgagee himself being a purchaser of a portion of the equity of redemption, the integrity of the mortgage has been broken and that the purchasers of this portion are entitled to redeem on payment of a proportionate share of the mortgage money. The finding of the Subordinate Judge is that benami character of the transaction has not been established. The fourth defence taken by defendant 11 is that the company is entitled to rely on the doctrine of marshalling having regard to the provisions of Section 56, T.P. Act as it stood before its amendment by the Act of 1929. The Subordinate Judge has come to the conclusion that right of marshalling is not available to defendant 11 as it is not shown that he has purchased the equity of redemption without notice. The fifth defence is that one Dukharam Banerjee was a necessary party to the suit, that he was a purchaser of a portion of the equity of redemption of property No. 12 of the Schedule to the plaint, that the plaintiff had full knowledge of his purchase, and that as the plaintiff had not impleaded him in the suit, there should be a proportionate abatement and apportionment of the mortgage money. The Subordinate Judge has not acceded to this contention but has granted decree to the effect that the mortgaged properties other than the eight annas share of property No. 12 which belongs to Dukharam will be applied towards the satisfaction of the decree. As has already been stated, the Subordinate Judge has granted a preliminary decree on the lines indicated in the judgment of the Subordinate Judge. See p. 112, of 1 part of the paper book.