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Kerala High Court · body

1954 DIGILAW 65 (KER)

Kesavan v. Sarojini

1954-03-23

VITHAYATHIL

body1954
Judgment :- 1. The first defendant is the appellant in this second appeal. The facts of this case, so far as they are relevant for the purpose of this second appeal are the following: Plaint schedule property belonged to one Palpan who mortgaged it to the first defendant. Subsequently the first defendant and Palpan jointly executed a hypothecation bond, Ext. B, in favour of the deceased karnavan of the plaintiffs charging the first defendant's mortgage right and Palpan's equity of redemption. For the interest due under this hypothecation bond Palpan alone executed two puravaipa deeds, Exts. III and IV, in favour of the first plaintiff charging the equity of redemption. In family partition the rights under these bonds were allotted to the share of the second plaintiff. For amounts due under Exts. III and IV plaintiffs instituted a suit as O.S. No. 92 of 1112 of the Trivandrum District Court and obtained a decree. In execution of that decree the second plaintiff purchased in court auction the equity of redemption of the property. Plaintiffs brought the present suit for the amount due under the hypothecation bond (Ext. B) claiming a charge on the first defendant's mortgage right in the property. Defendants 2 and 3 are the legal representatives of deceased Palpan. The first defendant raised various contentions in the suit. One of the contentions was that his mortgage right in the property was liable only for a proportionate part of the hypothecation amount, the proportion being determined with reference to the respective value of the mortgage right and the equity of redemption. The second defendant also contested the suit. 2. All the contentions raised by the defendants were repelled by the trial court and the suit was decreed. Interest was, however, disallowed from the date of suit to the date of decree on the ground that the plaintiffs were not entitled to more than a moiety of the principal as interest till the date of decree. The first defendant filed an appeal from this decree as A.S. No. 355 of 1119 while the plaintiffs filed A.S. No. 348 of 1119 as regards the portion of the interest disallowed by the trial court. The District Court dismissed A.S. No. 355 of 1119 and allowed A.S. No. 348 of 1119. The 1st defendant preferred a second appeal in the Travancore High Court as S.A. No. 416 of 1121. The District Court dismissed A.S. No. 355 of 1119 and allowed A.S. No. 348 of 1119. The 1st defendant preferred a second appeal in the Travancore High Court as S.A. No. 416 of 1121. The only contention urged in the second appeal was that the plaintiffs should be allowed to recover only a proportionate part of the hypothecation amount charged on the first defendant's mortgage right in the property. Since this question was not dealt with by the District Court the High Court set aside the decree of that court and remanded the case for fresh disposal. In the remand order the High Court observed that, though the Transfer of Property Act was not as such law in the State the principle contained in S.82 of the Act could be applied as a rule of equity. 3. After remand the District Court held that the principle embodied in S. 82 of the Transfer of Property Act relating to contribution did not apply to the facts of this case. That court took the view that the section related only to contribution between mortgagors inter se and that it would not apply to a claim by the mortgagee for the amount due under the mortgage. A.S. No. 355 of 1119 was, therefore, dismissed with costs, and A.S. No. 348 of 1119 was allowed. Interest was allowed on the principal amount at 6 per cent per annum from the date of suit till 31.1.1116 and thereafter at 4 per cent per annum. 4. The only point urged in the second appeal relates to the question whether the mortgage right of the first defendant in the plaint property is liable only for a proportionate part of the plaint claim. No attempt was made by learned counsel for the appellant to make out that the decree of the court below awarding interest from the date of suit till the date of decree is wrong. That portion of the decree has, therefore, to be confirmed. 5. I have no doubt that the court below has gone wrong in holding that the principle underlying S. 82 of the Transfer of Property Act will not apply to this case. That portion of the decree has, therefore, to be confirmed. 5. I have no doubt that the court below has gone wrong in holding that the principle underlying S. 82 of the Transfer of Property Act will not apply to this case. The relevant portion of the section is: "Where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date". It is true that the section as such applies only to contribution between mortgagors inter se and does not affect the mortgagee's right to enforce his mortgage against all or any of the properties mortgaged to him. But, when the mortgagee himself purchases a charge in the equity of redemption the mortgage becomes split up under the principle contained in the last clause of S. 60 of the Act. That clause is as follows: "Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgage, or, if there are more mortgagees than one, all such mortgagees has or have acquired, in whole or in part the share of a mortgagor". The effect of the mortgagee becoming the owner of a portion of the equity of redemption is the merger of the mortgage and the equity of redemption to the extent of that portion. In other words, it will amount to a discharge or satisfaction of a proportionate part of the mortgage debt. The principle is stated thus in Bisheshur Dial v. Ramsarup (22 Allahabad 284 (FB)). In other words, it will amount to a discharge or satisfaction of a proportionate part of the mortgage debt. The principle is stated thus in Bisheshur Dial v. Ramsarup (22 Allahabad 284 (FB)). "When the mortgagee buys at auction the equity of redemption in any part of the mortgaged property, such purchase has, in the absence of fraud, the effect of discharging and extinguishing that portion of the mortgage debt which was chargeable on the property purchased by him, that is to say, a portion of the debt which bears the same ratio to the whole amount of the debt that the value of the property purchased bears to the value of the whole of the property comprised in the mortgage". This principle is so well settled that it is not necessary to discuss the same with reference to other decided cases. Reference may, however, be made to Kumari v. Joseph (1948 TLR 435), Serja Kumar v. Thakur Prasad (42 Allahabda 344) Lakshmidas v. Jamnadas (22 Bombay 304 (FB)), Ponnambalam Pillai v. Annamalai Chettiar (43 Madras 372 (FB)) and Raghavachariar v. Kandaswami (1947 Madras 277). 6. It follows that the portion of the debt under the hypothecation bond. Ext. B, which bears the same ratio to the whole of the amount of the debt that the value of the equity of redemption bears to the value of the whole of the property comprised in the hypothecation bond must be deemed to have been discharged by reason of the purchase of the equity of redemption by the second plaintiff. For deciding the quantum of the debt so discharged it is necessary to ascertain the value of the equity of redemption of the property in relation to the value of the mortgage right in favour of the first defendant. The value will have to be determined as on the date of the hypothecation bond, Ext. B. The case will have to be sent back to the trial court determining this question. I, therefore, set aside the judgments and decrees of the courts below and send back the case to the trial court for fresh disposal according to law and in the light of the observations made above. The finding of the lower appellate court regarding the plaintiffs' claim for interest from the date of suit will stand. I, therefore, set aside the judgments and decrees of the courts below and send back the case to the trial court for fresh disposal according to law and in the light of the observations made above. The finding of the lower appellate court regarding the plaintiffs' claim for interest from the date of suit will stand. Costs incurred till now will be costs in the cause except the court fee paid on the memorandum of second appeal which will be refunded to the appellant. The second appeal is allowed in the manner stated above. Allowed.