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1905 DIGILAW 40 (ALL)

Sham Sunder v. Mohammad Ihtisam Ali

1905-02-18

AIKMAN, BURKITT, STANLEY

body1905
JUDGMENT : STANLEY, C.J.:— The question raised in this appeal is one upon which a divergence of opinion is to be found in the decisions of the several High Courts. The facts are shortly as follows:— The respondent, Muhammad Ihtisam Ali, instituted a suit for foreclosure of mortgage by which the mortgagors purported to hypothecate five villages. The title of the mortgagors to two of the villages was successfully impeached in the suit, and on the 19th of June, 1899, a decree was passed under section 86 of the Transfer of Property Act for foreclosure as regards three only of the villages mentioned in the deed of mortgage, in default of payment by the defendants of a sum of Rs. 39,584-6-8 on or before the 19th of December, 1899 The plaintiff, being dissatisfied with the exclusion from the operation of this decree of two of the villages purported to have been hypothecated by the mortgage, preferred an appeal against so much of that order as dismissed his suit in respect of two of the mortgaged villages. This appeal was dismissed on the 4th of August, 1902. No part of the mortgage debt was paid, and on the 15th of September, 1903, the decree-holder applied under section 87 of the Transfer of Property Act for an order absolute for foreclosure. To this application the judgment-debtors objected on the ground that the decree passed on the 19th of June, 1899, became absolute on the 19th of December, 1899, the date fixed for payment, and that on the last mentioned date the plaintiff became entitled to file an application for an order absolute under section 87, and that the application for such order, which was filed on the 15th of September, 1903, more than three years after the 19th of December, 1899, was barred by article 178 of Schedule ii of the limitation Act. The learned Subordinate Judge held that the starting-point for computing limitation was the 4th of August, 1963, the day on which the decree of the High Court was passed and that therefore the application of the decree-holder was within time. The learned Subordinate Judge held that the starting-point for computing limitation was the 4th of August, 1963, the day on which the decree of the High Court was passed and that therefore the application of the decree-holder was within time. The order absolute for foreclosure was accordingly passed on the 23rd of November, 1903, From this order the present appeal has been preferred, and as the question involved in it is one upon which the authorities are not in accord, it was referred for determination to a Bench of three Judges. 2. All the authorities have been laid before us, but I do not think that any useful purpose would be served by lengthened-comment upon them. The question involved appears to me to be one of principle, which can best be solved by keeping in view the true nature of a mortgage security and the remedies for the enforcement of that security which are provided by law. A mortgage in equity is a debt, the payment of which is secured upon land. In England, upon the death of a mortgagee, the benefit of the security devolves upon the personal representative of the mortgagee and not upon his heir; but in this country in which the personal representatives are also the heirs, the devolution is to the heirs. Payment of the debt may be enforced by sale or by foreclosure of the mortgaged property. 3. Upon foreclosure the security is converted into land and the debt is discharged, the effect of the order absolute being to vest the equitable estate of the mortgagor in the mortgagee as effectually as if it had been conveyed by deed. In England the quality of personal estate is not lost until the final order for foreclosure has been passed, (Thompson v. Grant, [1819] 4 Mad., 438.). In that case LEACH, V.C. observes that “there is neither authority nor principle for stating that the order of foreclosure relates back to the decree for the account,” that is to the decree nisi. It is only when an order absolute has been passed that the property becomes real estate and as such devolves upon the heir. So, in this country the security in the hands of the mortgagee changes its character and becomes the immoveable property of the mortgagee only, I think, when the order absolute has been passed. 4. It is only when an order absolute has been passed that the property becomes real estate and as such devolves upon the heir. So, in this country the security in the hands of the mortgagee changes its character and becomes the immoveable property of the mortgagee only, I think, when the order absolute has been passed. 4. The contention on behalf of the appellants in this appeal is that the case is governed by article 178 of Schedule ii to the Limitation Act, and that the right of the decree-holder to apply for an order absolute accrued on the 19th of December, 1899, the date fixed by the decree of the court of first instance for payment of the mortgage debt, and that the fact that the decree-holder had preferred an appeal in respect of the villages which had been excluded from the operation of the decree, did not impose any stay upon the execution of so much of the decree as was not affected by the appeal; that, in other words, the decree-holder was bound to apply for an order absolute within 3 years from the passing of the decree nisi, notwithstanding the pending of his appeal in regard to the villages which were excluded from the operation of the decree. I am wholly unable to accede to this contention. If it be well founded, then it seems to me to follow that, two decrees for foreclosure can be passed in respect of one and the same mortgage. This, as it appears to me, cannot be. If Muhammad Ihtisam Ali had applied for and obtained an order absolute under section 87 in respect of the three villages ordered to be foreclosed, I fail to see how it would have been open to him thereafter, if he succeeded in his appeal, to obtain an order absolute for foreclosure of the remaining portion of his security. Section 87 provides that on the passing of an order under the second paragraph’ of this section (i.e., an order for foreclosure) the debt secured by the mortgage shall be deemed to be discharged’ The discharge of the debt would surely furnish a good answer to any subsequent application for foreclosure. Section 87 provides that on the passing of an order under the second paragraph’ of this section (i.e., an order for foreclosure) the debt secured by the mortgage shall be deemed to be discharged’ The discharge of the debt would surely furnish a good answer to any subsequent application for foreclosure. Again, if Muhammad Ihtisam Ali, had, as it is said he was bound to do, obtained an order absolute for foreclosure in respect of the three villages within three years from the date fixed for payment by the decree of the 19th of June, 1899 and had become possessed of these three, villages, and he afterwards succeeded in the appeal preferred in respect of the other two villages, then the court would, according to the argument of the learned Vakil for the appellants, have been bound to pass a decree nisi under section 86, for foreclosure as regards these last mentioned villages, in default of payment of a debt which had been satisfied, or at least partially satisfied, by the operation of the order absolute already granted. Further, assuming that a decree nisi was passed for foreclosure of the villages, which were excluded from the operation of the decree nisi first obtained, and that the mortgagors desired to redeem, they must do so apparently on payment of the entire amount of the debt, notwithstanding that the debt had been satisfied by the operation of the earlier order absolute. In such case also the mortgagors could not, so far as I can see, recover the villages which had already been foreclosed. It appears to me that the contention put forward on behalf of the appellants cannot be supported. So long as a decree nisi passed under section 86 is under appeal, the mortgagee, in my opinion, cannot obtain an order absolute under section 87 unless he first abandons his appeal. Until an order absolute has been obtained, the property is redeemable by the mortgagor (Rakam Ilahi Khan v. Ghasita, [1897] I.L.R., 20 All, 375 and Poresh Nath Mojumdar v. Ramjodu Mojumdar, [1839] I.L.R., 16 Cal., 24.. Until an order absolute has been obtained, the property is redeemable by the mortgagor (Rakam Ilahi Khan v. Ghasita, [1897] I.L.R., 20 All, 375 and Poresh Nath Mojumdar v. Ramjodu Mojumdar, [1839] I.L.R., 16 Cal., 24.. It is unnecessary, as it appears to me, to consider whether article 178 or article 179 has any application to a case of this kind, If it were necessary to decide this, we are confronted with the decision of a Full Bench of this Court in the case of Oudh Behari Lal v. Negeshar Lal, [1890] I.L.R., 13 All., 278., in which it was held that an application for an order absolute for sale under section 89 of the Transfer of Property Act is a proceeding in execution and subject to the rules of procedure governing such matters. By that decision we are bound, but I confess that I have grave difficulty in following the reasoning of the learned Judge (STRAIGHT, J.) who delivered the judgment of the Court. He seems to me to have misapprehended the scope and object of sections 86 and 88 of the Transfer of Property Act. In the course of his judgment he observes, “where a decree had been passed under sections 86, 87, 88, 89, or 92, directing payment into court by a specified date of a sum of money, and, in the event of it not being paid, declaring that foreclosure or sale shall follow, or a right to redeem shall be barred, it would, in my opinion, be a misnomer if payment is made, to describe such payment as other than one made in execution of decree. On the other hand, it appears equally clear to me that if such payment is not made, the consequences which follow are also matters concern ned with the execution of the decree, flowing as a matter of course out of the decree itself, vis., to give it effect against the judgment-debtor for having failed to satisfy the conditions of the decree If decrees are properly [prepared tinder sections 86, 88, and 92, they should fully set out these conditions and declare the consequences that will follow if they are or are not fulfilled.” Sir JOHN EDGE, C.J., TYRRELL and KNOX, JJ., contented themselves by expressing their concurrence in the judgment of STRAIGHT, J. while MAHMOOD, J., delivered a short judgment in which, among other things, he said, “I also agree in my brother STRAIGHT'S judgment and also in everything he has said.” Now I may first point-out that a decree nisi passed under section 86 for foreclosure or under section 88 for safe of mortgaged property, does not direct the payment into court of the mortgage debt. What is directed by section 86 is that an account shall be taken of what is due to the plaintiff for principal and interest on his mortgage, or declaring the amount due at the date of the decree and ordering that upon payment by the defendant to the plaintiff or into court of the amount so found to be due, within a time fixed by the courts, the plaintiff is to deliver up to the defendant all documents in his possession relating to the mortgaged property and transfer the property to the defendant and, if necessary, put the defendant into possession. The decree passed under that section is not a money decree no more is the order absolute which is passed under section 87. The decree passed under that section is not a money decree no more is the order absolute which is passed under section 87. That order is an order absolute for foreclosure and, so far from directing the payment of the mortgage debt, has the effect of discharging the debt, CHITTY, J., in the case of Burrows v. Holby, [1887] L.R., 35 C.D., 123., says in regard to an order for foreclosure absolute, “I need hardly say that an order absolute for foreclosure is not a money judgment or anything like it;” Then STRAIGHT, J., observes that if payment is made by the mortgagor of the money found to be due, it would be “a misnomer to describe such payment as other than one made in execution of decree,” Now the decree not being a money decree and not directing the payment of money, I fail to see how any payment which the mortgagor may voluntarily make in order to preserve his property can properly be described as a payment made in execution of the decree. If in a foreclosure suit the mortgagor thinks fit to pay the mortgage debt, and thus save his interest in the property, he does so by reason of the obligation which he undertook when be executed the mortgage security, and with a view to preserve the property, and not in obedience to any order of the court. The decree nisi puts him under no obligation to pay the debt, but simply declares what the consequences of non-payment will be. Similar observations apply to the order contemplated by section 88 of the Act. As I have endeavored to point out, the mortgage security does not lose its character until an order absolute for foreclosure has been passed, It remains a debt secured upon land. It is only when the order absolute for foreclosure has been passed that the debt is discharged and in lieu, of it the mortgagee acquires the absolute ownership of the land. The ruling in the case of Oudh Behari Lal v. Nageshar Lal, [1890] I.L.R., 13 All., 278., renders unauthoritative the decision of my brother BURKITT in the case of Runbir Singh v. Drig Lal, [1893] I.L.R., 16 All., 23., a decision which was approved of by a Bench of the Calcutta High Court in the case of Tilak Singh v. Parsotam Parshad, [1895] I.L.R., 22 Cal., 924.. It was held by my brother AIKMAN in. Mul Chand v. Mukta Pal, [1896] 26 A.W.N., 100., and by my brothers BANERJI and AIKMAN, in the case of Mahabir Parshad v. Sital Singh, [1897] I.L.R., 19 All. 520, that the period of limitation for the execution of a decree for sale under section, 88 of the Transfer of Property Act, begins to run from the date of the granting of the order absolute for sale under section 89, without which order the decree cannot be executed, and not from the date of the decree itself. In these rulings I entirely agree, For the reasons which I have stated, I would dismiss the appeal with costs. BURKITT, J.:— I also am of opinion that this appeal should be dismissed. 5. I concur with the learned Chief Justice, for the reasons so fully set out by him, in holding that there cannot be two foreclosure decrees in respect of one and the same mortgage, and that the, plaintiff-respondent here could not during the pendency of his appeal as to the two villages which had been excluded from his foreclosure decree, have applied for an order absolute for foreclosure of the three villages as to which he had obtained a decree nisi for foreclosure. Had he applied for and obtained that order, the result, as pointed out by the learned Chief Justice, would have been the discharge of the mortgage debt. 6. Further it seems to me that when the High Court by its appellate decree of August 4th, 1902, decided that the plaintiff was entitled to a foreclosure decree in respect of three villages only, affirming the decision of the lower Court in respect of the other two, that decree became the only decree in the suit which was capable of execution, the earlier decree of June, 1899, for foreclosure of the three villages being merged in it. It follows, there-fore, that the application made by the mortgagee on September 15th, 1903, for foreclosure of the three villages was not time-barfed. AIKMAN, J.:— I am of the same opinion. No doubt, the ordinary rule is that the institution of an appeal does not prevent execution of the decree or order which is under appeal. It follows, there-fore, that the application made by the mortgagee on September 15th, 1903, for foreclosure of the three villages was not time-barfed. AIKMAN, J.:— I am of the same opinion. No doubt, the ordinary rule is that the institution of an appeal does not prevent execution of the decree or order which is under appeal. But the difficulties of applying this rule to decrees in foreclosure suits have been well pointed out by the learned Chief Justice and his argument appears to me unanswerable, Proceedings to foreclose must be proceedings to foreclose the mortgage as a whole. 7. In the present case it was not until the 4th of August, 1902, that there was any final decision as to the property to be foreclosed, and this being so, I have no hesitation in holding that the respondent's application of 15th September, 1903, for a decree absolute was within time.