MAKHAN LAL Vs. KESHABDEO

JUDGEMENT

(1.) This and the connected appeal arise out of proceedings under the Encumbered Estates Act. There were three mortgages on the basis of which three simple money decrees had been passed under Section 14 by the learned Special Judge. The learned Special Judge had placed them all in class (4). An application was made by Seth Keshabdeo that as his mortgage was of an earlier date the decree in his favour should be ranked higher for payment than the decrees on the other two mortgages. The learned Special Judge carefully went into the question and realised the difficulty in ranking the three debts inter se inasmuch as in all of them there were some properties that were common and some other properties which were not included in the other two mortgages. He, however, thought that the provisions of Section 16 made it incumbent upon him to rank them in some order and he tried to adjust the equities by ranking the three mortgages in order of date and then directing that the first mortgage would have priority only to the extent of the property which was included in. all the three mortgages.

(2.) Two appeals have been filed against the order by the other two mortgagees.

(3.) Mr. K.B. Asthana on behalf of the respondents has admitted that the learned Special Judge could not earmark items of property for particular debts. Under the scheme of the Encumbered Estates Act, the Special Judge has to send a list of the debts arranged in order of priority and a list of the properties mentioned in the notice under Section 11 which he has found to be liable to attachment, sale and mortgage in satisfaction of the debts of the applicant. This is provided for in Section 16. The Encumbered Estates Act does not seem to have given the Special Judge the right to earmark any property from which any special debt was to be satisfied. On learned counsel's admission that this is not possible, the question arises how the three mortgages can be ranked without, in any way, going against any well established principle of law and without causing injustice to any party. We agree with the learned Special Judge that it is the duty of the Special Judge to rank the debts, but we would draw his attention to a decision of this Court in Sant Prasad Sahu V/s. Ballu Sahu ( 47) 1947 A.L.J. 176 and to point out that ranking of debts under Section 16 does not necessarily mean that the debts have to be arranged in order of date even where it is not possible to rank them in that order under the law. Where the debts are to be paid pro rata, ranking only means that they are to be bracketed together for rateable payment.