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1906 DIGILAW 101 (ALL)

Gajadhur Lal v. Alliance Bank of Simla, Limited

1906-05-14

BANERJI, STANLEY

body1906
JUDGMENT : STANLEY, J. This is an appeal by the defendants against an order passed against them under section 90 of the Transfer of Property Act. On the 4th of February, 1895, the defendant-appellant executed a mortgage in favour of the Simla Alliance Bank Limited to secure advances to the extent of Rs. 80,000. The property comprised in the mortgage were a factory and a house situate in Cawnpore and also 172 shares of £.10 sterling each in the Delhi Umballa Kalka Railway Company Limited. Oil foot of this mortgage the Bank instituted a suit for sale of the mortgaged property and obtained a decree for sale under section 88 of the Transfer of Property Act of the property comprised in the mortgage including the Railway shares. This decree was made absolute on the 22nd of March, 1901. The defendants being apprehensive that an advantageous sale of the shares could not be had in India applied to the court to permit these shares to be sold in England through a broker. To this the Bank offered no opposition and an order permitting the sale of the shares in England was accordingly passed on the 16th of April, 1901. The shares had at this time been converted into stock. It appears that shortly after the execution of the mortgage, namely, on the 17th of April, 1895, the defendant, Gajadhar Lal, gave a power of attorney in favour of the Bank empowering it to sell or transfer any shares or stock in any public Company standing in his name and also to receive all dividends on such shares or stock. On the 10th of June, 1901, the factory and house property comprised in the mortgage were sold and were purchased by the Bank but the proceeds of the sale proved altogether insufficient to satisfy the amount due. In May, 1901, with a view to the sale of the stock in London the Bank remitted to their London agents the stock certificate as also the power of attorney to which we have referred and a transfer in blank of the stock certificate but the Railway Company declined to act upon the power of attorney or the blank transfer. In May, 1901, with a view to the sale of the stock in London the Bank remitted to their London agents the stock certificate as also the power of attorney to which we have referred and a transfer in blank of the stock certificate but the Railway Company declined to act upon the power of attorney or the blank transfer. Consequently on the 20th of May, 1902, the Bank instituted a suit in the Chancery Division of the High Court of Justice in England against the defendants-appellants and the Railway Company for the sale of the Railway stock and for other relief which it is unnecessary here to specify. Gajadhur Lal filed a defence and set up amongst others the plea that the Railway stock in question was not comprised in the Bank's mortgage. A decree was passed in favour of the Bank whereby it was ordered that an account should be taken of what was due to the Bank on foot of its mortgage and that on failure by the defendants-appellants to pay that amount the Railway stock should be sold and out of the proceeds the Bank should be at liberty to retain whatever sum should be certified to be due to them. It was found that on the 4th of January, 1905, a sum of £4531-4-0 would be due to the Bank on foot of their mortgage. The proceeds of the sale fell short of satisfying this sum by a sum of about Rs. 95,000. Accordingly the Bank applied for a decree under section 90 of the Transfer of Property Act with a view to the payment of this balance. The appellants objected to the order on two grounds—first, that the execution of the decree was time-barred, and secondly, that the whole of the mortgaged property not having been sold by an auction in this country under section 89 of the Act the plaintiff Bank was, not entitled to obtain a decree under section 90. The court overruled the objections and hence this appeal. 2. The court overruled the objections and hence this appeal. 2. The contention on behalf of the appellants before us was that the property ordered to be sold was not exhausted by proceedings taken in this country under section 89 and that consequently a decree could not be passed under section 90; also that the sale which was carried out in this country under section 89 took place on the 10th of June, 1901, and that the application under section 90 not having been made until 5th of May, 1905, that is more than three years from the date of the sale, was barred under article 178 of the Limitation Act, It was also contended that the Bank was debarred by its conduct in instituting a suit in England from obtaining a decree under section 90. We are of opinion that there is no force in any of these contentions and that the Court below acted rightly in passing the decree complained of. 3. As regards the first objection to the order which was pressed by Mr. Moti Lal, the answer to it is, that, rightly or wrongly, a decree was passed against the defendants-appellants for sale not merely of the factory and house property, the subject matter of the mortgage, but also of the Railway stock and that, according to the rulings of this High Court, a decree could not be obtained under section 90 until the whole of the mortgaged property directed to be sold had been sold [See Muhammad Akbar v. Munshi Ram(1) and Badri Das v. Inayat Khan, [1900] I.L.R., 22 All., 404]. In the interests and at the instance of the defendants-appellants themselves the Railway stock was not sold under the decree. Permission was given to the parties to effect a sale of it in England; but instead of co-operating with the Bank in such sale the defendants-appellants opposed the sale and went so far as to deny that the stock was mortgaged at all. We must, we think, treat the sale which took place in England as a sale had in connection with the decree passed in this country but carried out by the parties independently of the court in this country at the express instance of the defendants-appellants and that they cannot be heard to say that the sale was not in pursuance of the order for sale passed under section 89. 4. 4. As regards the question of limitation which has been raised it appears to us that if the Bank applied for a decree under section 90 before the Railway stock was sold, the defendants-appellants might have successfully objected to the application on the ground that all the property ordered to be sold had not been sold. Only when the Railway stock was sold could it be ascertained that the net proceeds of the sale directed by the Court were insufficient to pay the amount due on the mortgage. We, therefore, are of opinion that the application for a decree under section 90 was not barred by limitation. 5. As regards the remaining objection, we can discover nothing in the conduct of the Bank which disentitles it to the relief asked for. It acceded to the wish of the defendants-appellants to have the Railway stock sold in England. It was owing to the misconduct of the defendants-appellants that the Bank found it necessary to take proceedings in the High Court of Justice in England and to have the sale carried out by that Court. Under the circumstances the defendants-appellants have no ground for complaint. 6. For these reasons we dismiss the appeal with costs including fees in this Court on the higher scale.