LALA BALMUKAND Vs. SETH BIRJ LAL

JUDGEMENT

(1.) THIS appeal arises under the following circumstances. A number of persons had mortgages or alleged that they had mortgages on the property of one Kanbaiya Lal who is defendant No. 5 to the present suit. Kanbaiya Lal became an insolvent and Babu Sri Ram was appointed Receiver over his estate Some form of notice was served by the Receiver on the plaintiff and other mortgagees to show cause why the property should not be sold free from incumbrances or why they should not consent to the property being sold. It is unnecessary for us to consider or express any opinion as to the regularity of this notice The plaintiff raised an objection to the property being sold contending that his mortgage of the 23rd of August 1913 had priority over the other mortgages by reason of the fact that out of the money advanced by him an earlier mortgage of the 21st of June 1912 due to one Santi Prasad, had been paid off Apparently but for this question of alleged priority all parties were prepared that the property should be sold and the money distributed according to the face priority of the different mortgages. An application was made to the District Judge in the insolvency matter that a declaratory suit might be brought by the plaintiff in the present suit to have this question settled. Leave was granted and the present suit was accordingly instituted. Is sues were fixed by the Court below dealing with the specific question of the plaintiff s alleged priority and also as to the genuineness of his mortgage. No specific is sues was raised as to whether the suit could be maintained regard being had to the provisions of Section 42 of the Specific Relief Act. The Court below has not decided any question as to the validity and genuineness of the mortgage or the question of priority. It has dismissed the suit solely on the ground that it is barred by the provisions of Section 42 of the Specific Relief Act.

(2.) IT appears from the record itself in the present case that some portion of the property has been sold, and it has been stated by Mr. Agarwala who appears on behalf of the appellant that the entire property has been sold that some of the creditors have been paid and that a sum of Rs. 6,500 has been retained in Court ready to be paid to the person or persons who shall establish their title thereto The only question which we have to decide is whether or not we are bound (no matter how unfortunate such a decision might be) to accept the ruling of the Court below that Section 42 of the Specific Relief Act bars the present suit. IT must be borne in min I that all the creditors who opposed the plaintiff s contention that he had a valid mortgage with certain priority were parties to the insolvency matter. IT is quite obvious that rightly or wrongly the plaintiff thought that it was necessary before he took any proceedings against the insolvent that he should obtain the leave of the Court under Sections 16, 31 C. 965. To a very considerable extent all persons interested submitted themselves to the orders of the Judge in the insolvency matter. We think that under the very peculiar circumstances of this case and in particular that the suit was brought after the leave of the Judge had been obtained with the acquiescence of the other creditors including the secured creditors on this very property the present suit can not be said to be barred by Section 42. This obviously meets the justice of the case and will enable the parties to have the questions between them decided without further litigation in which the innocent purchaser would be necessarily involved, Mr. Agarwala has in open Court on behalf of his client most properly stated that his client will not pursue any remedy except to take all and every necessary step to obtain the money which has been retained in Court in the event of the plaintiff being successful in establishing the validity of his mortgage and the priority he claims. We allow the appeal, set aside the decree of the learned Subordinate Judge and remand the case with directions to re-admit the suit on its original number and to proceed to hear and determine the same according to law. Cosbs here and heretofore will be costs in the cause. As the money is lying idle in Court we think it desirable that the case should be taken up at as early a date as possible