LORD LINDLEY, LORD MACNAGHTEN, SIR ANDREW SCOBLE, SIR ARTHUR WILSON, SIR JOHN BONSER
body1903
DigiLaw.ai
Judgement Appeal from a decree of the High Court (July 16, 1900) affirming a decree of the District Court of Chittagong (March 4, 1898). The suit was filed by Rai Golak Chunder Chowdhry, afterwards represented by some of the respondents (his heirs), against three co-owners of the estate in suit, named Assanulla, Rahimulla, and Basirulla, or their representatives. It was brought to enforce a mortgage thereof dated 21st Pous, 1298 (January 4, 1892), made by a manager appointed on September 20, 1890, under the Bengal Tenancy Act (VIII. of 1885), B. 95, which had been made, with the sanction of the District Judge, mainly for the purpose of paying off a previous mortgage (December 23, 1890) at higher interest to the appellant, made with the like sanction, for the purpose of paying Government revenue. The appellant was added as a party defendant on account of his having purchased " about the whole of the property in suit," the property purchased having been previously mortgaged to him (August 4, 1891) by Rahimulla, one of the three co-owners, to the extent of his share therein. He claimed by his written statement priority of the plaintiff, since his purchase, which was at a sale in execution of a decree on his own mortgage, was effected prior to the plaintiffs mortgage. Sect. 95 of the Bengal Tenancy Act (No. VIII. of 1885) provides that the District Judge, if a dispute exists among co-owners of an estate, may appoint a manager. Sect. 98 says, in clause 3, that the manager " shall, subject to the control of the District Judge, have, for the purposes of management, the same powers as the co-owners jointly might, but for his appointment, have exercised " ; and the section adds, " and the co-owners shall not exercise any such power." Sect.
Sect. 98 says, in clause 3, that the manager " shall, subject to the control of the District Judge, have, for the purposes of management, the same powers as the co-owners jointly might, but for his appointment, have exercised " ; and the section adds, " and the co-owners shall not exercise any such power." Sect. 100 enacts, " The High Court may from time to time make rules defining the powers and duties of managers under the foregoing sections." In pursuance of above power conferred by the Act, the High Court framed certain rules; one of them is as follows " No manager shall have power to sell or mortgage any property, nor shall he grant or renew any lease for any period exceeding three years, without the express sanction of the District Judge." The District Judge held that the words " for the purposes of management" in s. 98, sub-s. 3, included the power to mortgage; that the power to mortgage was conferred by the Act was shewn by the rules made by the High Court under s. 100; that under the proviso the power conferred on the manager was taken away from the co-owners. " I therefore hold that the mortgage created by Rahimulla is wholly invalid as against the present plaintiffs lien." He further held that even if it were valid it would only be a second mortgage, and the plaintiffs claim would have precedence ; that in law and equity the appellant was bound to treat the mortgage now in suit as prior to the mortgage upon which his title was based; that the suit brought by appellant on his mortgage was bad because he did not make plaintiff a party to it, although the evidence went to shew that he was aware of the circumstances. The High Court held that the two mortgages given by the manager were valid; that Rahimulla had no power of creating a mortgage; that the words used in the section were clearly prohibitive—that is to say, that while the common management existed, the powers of the co-owners must be regarded as in abeyance. It followed that the mortgage created by Rahimulla on August 4, 1891, cannot in any way interfere with or derogate from the rights created under any transaction made by the common manager with respect to the joint properties.
It followed that the mortgage created by Rahimulla on August 4, 1891, cannot in any way interfere with or derogate from the rights created under any transaction made by the common manager with respect to the joint properties. The Court also held that it was clear from the provisions of the mortgage bond executed by the manager in plaintiffs favour that plaintiff never intended to give up the benefit of the first mortgage to the appellant (which had been paid off with the proceeds of the mortgage to plaintiff). The words in the document were an indication that it was the intention of plaintiff to keep alive the security of appellant in his own favour, and the presumption, in the absence of evidence to the contrary, was that a person whose money goes to satisfy a prior mortgage intends to keep alive for his benefit that prior mortgage. Haldane, K.C., and Phillips, for the appellant, referred to ss. 93, 94, 95, and 96 of Act VIII. of 1885, and contended that the mortgage of August 4, 1891, was valid, and that the appellants decree and purchase thereunder passed to him Rahimullas share before the plaintiffs mortgage was executed, and entitled him to priority over that mortgage. Besides, the latter mortgage was invalid, for on the true construction of the sections referred to, and of s. 98, sub-s. 3, the power of a common manager appointed thereunder is confined to the management of the property, and does not include any powers of alienation. The rule made by the High Court was ultra vires so far as it contemplated such a power in the manager. Asquith, K.C., and C. W. Arathoon, for the respondents, were not heard. The judgment of their Lordships was delivered by SIR ANDREW SCOBLE. The Bengal Tenancy Act of 1885 by s. 93 provides that " when any dispute exists between co-owners of an estate or tenure as to the management thereof, and in consequence there has ensued or is likely to ensue (a) inconvenience to the public, or (b) injury to private rights, the District Judge may/ upon proper application and under certain specified conditions, appoint a manager.
The powers and duties of the manager are mainly to be found defined in s. 98, sub-s. 3 of which provides that " he shall, subject to the control of the District Judge, have, for the purposes of management, the same powers as the co-owners jointly might but for his appointment have exercised, and the co-owners shall not exercise any such power." By sub-s. 8 of the same section, " he shall be removable by the order of the District Judge and not otherwise." And by s. 100, " the High Court may from time to time make rules defining the powers and duties of managers under the foregoing sections." Under this section the High Court made a rule that "no manager shall have power to sell or mortgage any property, nor shall he grant or renew any lease for any period exceeding three years, without the express sanction of the District Judge." Mr. Haldane took a preliminary objection that this rule was ultra vires, sale and mortgage not being included in the terms " for the purposes of management" contained in s. 98, sub-s. 3, of the Act. There is no definition in the Act of what is to be included in the word " management," and it must, therefore, be construed with reference to the subject-matter of the Act itself. Their Lordships agree with the learned judges of the High Court at Calcutta in the opinion that " to hold that the manager has no power to sell or mortgage would have the effect of frustrating the object for which, generally speaking, a common manager is appointed." In India, u the management of a property carries with it the obligation of paying the dues accruing upon it; and for the payment of the dues which may accrue from time to time, it may become necessary either to sell, mortgage, or grant a lease. To hold that a common manager may grant a lease, but may not sell or mortgage, would have, in our opinion, the effect of nullify ing the provisions made by the Legislature for the purpose indicated in the Act." Passing now to the facts of the case, it appears that on September 20, 1890, a manager was appointed under the Act of an estate in Chittagong belonging to three co-owners named Rahimulla, Assanulla, and Basirulla.
There was a con siderable amount of Government revenue due on the estate, and on December 23, 1890, the manager, with the sanction of the District Judge, borrowed from the present appellant, Amar Chunder, the sum of Rs. 6200 at 1 ¼ per cent, per month interest, in order to pay off these arrears. To secure the advance he gave the appellant a mortgage on the property under his management. On November 24, 1891, finding he could borrow at a lower rate of interest than that charged by the appellant, he obtained the sanction of the District Judge to carry out this purpose; and on January 4, 1892, he executed a mortgage in favour of one Golak Chunder for the sum of Rs. 6700, with interest at 1 per cent, per month. "With the money thus obtained he paid off the appellants mortgage. In the meanwhile, on August 4, 1891, the appellant obtained from Rahimulla, one of the co-owners, a mortgage of his own share in the property; and subsequently brought a suit and obtained a decree against Rahimulla alone, in execution of which decree he purchased Rahimullas share. The estate having been released from management under the Act, the heirs of Golak Chunder, on April 2, 1897, brought the present suit in the Court of the District Judge of Chittagong to establish their claim under the mortgage of January 4, 1892. To this suit the appellant was made a party, and the sole question on this appeal is whether the mortgage of Rahimullas share to him gives him any right as against the mortgage of the whole property by the manager to Golak Chunder. It appears to their Lordships that all that the appellant obtained under the mortgage by Rahimulla or his subsequent purchase of Rahimullas interest was that he should be substituted as a co-owner in the place of Rahimulla, and that whatever he took, whether under the mortgage or by reason of the purchase, was subject to any charge on the estate that might be properly incurred by the manager during the period of management. In this view, no question of priority or subrogation arises, and it is unnecessary to do more than inquire whether the mortgage to Golak Chunder was a valid charge upon the estate. As already intimated, their Lordships think that it was.
In this view, no question of priority or subrogation arises, and it is unnecessary to do more than inquire whether the mortgage to Golak Chunder was a valid charge upon the estate. As already intimated, their Lordships think that it was. The question raised in the Courts below " whether Rahimulla had the power of creating a mortgage while the properties were in the hands of the common manager " has, in their Lordships’ opinion, been incorrectly decided by the High Court. Rahimulla, no doubt, had no power of creating a mortgage on the whole estate; but there is nothing in the Act to take away his power of dealing with his own share. The words of s. 98, sub-s. 3, give to the manager " the same powers as the co-owners jointly might but for his appointment have exercised," and the co-owners are prohibited from exercising " any such power"—that is, any power which they might jointly have exercised had no manager been appointed. The restraint upon them is co-extensive with the power conferred on the manager ; it does not extend to the exercise of individual rights. In the view which their Lordships take, the acquisition of Rahimullas share in the property by the appellant made the appellant a co-owner of the property under the manager, and as such co-owner he is entitled to the benefit of the decree for redemption which has been passed in the suit, with such alteration of the date for redemption as the High Court may find proper. Their Lordships will humbly advise His Majesty that the appeal should be dismissed. The appellant must pay the costs of the appeal.