FANNY SKINNER Vs. BANK OF UPPER INDIA, LTD

JUDGEMENT

(1.) This is an appeal from a decree of the High Court at Allahabad, in a mortgagee Bank's suit to realize its security. In decreeing the suit the Court reversed a decree of the Subordinate Judge of Meerut, who had dismissed it. The suit was commenced on 8 December 1923. The mortgage had been granted, on 8 December 1911, by a Mrs. Fanny Skinner, to the Bank of Upper India Limited. The deed was in the ordinary form of a simple mortgage with a covenant on the part of the mortgagor for payment of the mortgage debt with compound interest at the rate of 7 per cent per annum. In default of payment, the mortgagee Bank had the ordinary right of proceeding by Court sale to realise its security. The property comprised in the mortgage included, among other items, a one-eighth undivided share of the mortgagor in the village of Siswal and a one-tenth similar interest in the village of Badopal. The mortgagor's brother, the second appellant, another brother and her sister were the cosharers with her in these villages. The further relevant facts with reference to them will be alluded to later. The Bank of Upper India was in 1911 still a going concern. Subsequently it went into liquidation, and the suit when brought in 1923 was commenced by the Bank acting through its liquidator. Fanny Skinner, the mortgagor, was then still alive, but she has died since the decree of the High Court was made and her interests are now represented by the two first appellants, who are her heirs. To the suit as brought there was at first only one substantial defence put forward by Fanny Skinner.

(2.) It was that she was a purdanasheen lady; that the mortgage had been procured from her by her brother (not the second appellant), whom she had entrusted with her power of attorney, that he had by means thereof obtained in her name from the Bank an advance of 15,000 rupees; that no part of that advance was ever received by her; that in point of fact she had not desired to go into the transaction at all, and that there was insufficient compliance with the formalities and conditions requisite before a mortgage executed by a purdanasheen lady can be enforced against her. That was, in the first instance, the only substantial defence Fanny Skinner put forward to the suit. Subsequently, and in the course of the proceedings, on her statement that the fact had only just come to the knowledge of her legal advisers, she was allowed to put forward a further defence, to the effect that the plaintiff bank was not entitled to sue by reason of the fact that there had been in 1917 an arrangement come to between the bank by that time in liquidation and its creditors by virtue of which the whole of the assets of the bank had been transferred to a purchasing company, the Trust of India Limited; that all interest in this mortgage debt had passed to the Trust, so that the Bank had no longer any right to sue in respect of it. Accordingly the following further issue was settled for decision: Were the assets of the Upper India Bank transferred to the Trust of India Limited; if so, is the plaintiff entitled to bring the present suit ?

(3.) There was a separate defence put forward by the mortgagor's brother hereinafter referred to as the second appellant. He had since the date of the mortgage acquired in severalty the entire village of Siswal. In that character he and twenty-two purchasers from him were made defendants to the suit as persons interested, subject to the mortgage, in the one-eighth undivided share of the village included therein. His separate defence was that after the date of the mortgage of her undivided interest in the two villages by Fanny Skinner there had been a partition between the cosharers, with the result that Siswal had passed to the brothers as representing their several interests in the entirety, while the second village, Badopal, had passed to the mortgagor and her sister. Since that partition the second appellant had acquired his brother's entire interest in the village, Siswal. Accordingly, his contention was that as a result two things had happened: The first that the sisters had no longer any interest in Siswal, and the second, that he now owned the entire village in severalty and owned it free from any charge or any interest therein created by the mortgage deed in suit. If any decree was made for the realisation of the bank's security, that decree should exclude entirely from its operation any interest whatever in the village Siswal. in that record the suit came on for trial, and the Subordinate Judge dealt with the three defences in this way: With regard to the mortgagor's defence which may be called the defence of disability, he held that the lady knew all about the transaction and that the evidence satisfied him that she was in all respects bound by it. He rejected that defence. The second defence however he held to be well founded. He was of opinion that the bank had no right to sue. He came to the conclusion that under the arrangement made in 1917 all the assets of the bank included in the sale had in truth and in fact passed to the Trust of India, and that no right of action remained in the bank in respect of any of these assets. Accordingly, as in his judgment the mortgage debt in suit was one of the assets of the bank included in the sale of transfer, it followed that the suit failed. He dismissed it.