Barhamdeo Prasad v. Tara Chand BS652390

Barhamdeo Prasad v. Tara Chand BS652390 PRIVY COUNCIL

Before:-Lord Moulton, Sir John Edge and Mr. Ameer Ali.

0 D/d. 10.11/ 01.12.1913.

Barhamdeo Prasad - Appellants

Versus

Tara Chand - Respondent

On Appeal from the High Court at Calcutta.

For the Respondents :- Eddis, was not called upon.

Solicitors for Appellants :- T.L. Wilson and Co.

Solicitors for Respondents :- Theodore Bell and Co.

Limitation - Mortgage - Balance of Sale Proceeds

Appeal from a decree of the High Court (August 10, 1905) confirming a decree of the Subordinate Judge of Monghyr (June 9, 1902).

The circumstances which led to the litigation were shortly as follows. On May 21, 1887, one Kalu Babu mortgaged Mauza Chak and other villages to the appellants. On September 19, 1887, he mortgaged Mauza Chak, with other properties, to the respondents and undertook to repay the mortgage in 1888. On July 19, 1889, he made a third mortgage of Mauza Chak, and other mauzas, in favour of the appellants. In 1890 the appellants filed a suit to enforce the mortgage of May 21, 1887, the respondents being made parties to the suit. On October 8, 1890, the appellants obtained a decree for sale of the mortgaged properties, including Mauza Chak. After payment of the moneys due the mortgage of May 21, 1887, there remained out of the sale proceeds a sum of Rs. 12,197, which was left on deposit in the Court of the Subordinate Judge. The respondents, though parties to the suit, took no steps to assert their claim under the mortgage to them of September 19, 1887, in regard to these surplus sale proceeds.

On January 14, 1891, the appellants obtained a decree on their mortgage of July 19, 1889, and on April 22, 1892, in satisfaction thereof they, with the permission of the Subordinate Judge, withdrew the above-mentioned sum of Rs. 12,197.

The respondents brought the present suit on November 19, 1900, claiming to recover the Rs. 12,197 with interest on the ground that the sale proceeds stood in the place of the property mortgaged to them on September 19, 1887.

The appellants (defendants) pleaded that the respondent had lost their lien owing to their negligence in not having taken proper steps to have the surplus sale proceeds applied to the satisfaction of the debt due under the mortgage to them, and they also contended that the sit was barred by limitation. The Subordinate Judge on June 9, 1902, decided that the plaintiffs were entitled to the surplus proceeds of sale, buy without interest.

The appellant appealed to the High Court and the appeal was heard on February 28, 1905, by a Division Bench (Henderson and Geidt JJ.). The learned judges differed in opinion. Henderson J. was of opinion that the suit was one to enforce payment of money charged upon immovable property and within art. 132 of Sched. II of the Indian Limitation Act, 1877, and that the period of limitation was twelve years; he also held that the appellants had acted fraudulently in withdrawing the money as they had done. He therefore found that the plaintiffs were entitled to recover. Geidt J. was of opinion that after the sale the plaintiffs' lien was gone, and that when the appellants withdrew the money a fresh cause of action arose which was not within art. 132, but was barred by art. 120.

The appeal was referred under section 575 of the Code of Civil Procedure, 1882, to Sale J., who on August 10, 1905, delivered judgment agreeing with Henderson J. The appeal was thereupon dismissed.

Ross, K.C., and Parikh, for the appellants. The suit falls within art. 120 of Sched. II of the Limitation Act, 1877, as on for which no period for limitation is provided elsewhere in the schedule. The period of limitation was therefore six years and the suit was barred. The suit was not one "to enforce payment of money charged upon immoveable property," and art. 132 does not apply. At the date of the suit the respondents' security upon the land had gone. The view taken by the majority in the High Court would have had great force if the respondents had applied in the suit in which the appellants obtained the second decree, and an order had been made declaring them entitled, upon their mortgage, to the sum in dispute. That, however, was not the case. The respondents' remedy was under the Code of Civil Procedure, 1882, section 295, and that remedy was barred by limitation. [Transfer of Property Act (IV of 1882), sections 85, 86 and 88; Code of Civil Procedure, 1882, section 295 (c); and Ramdin v. Kalka Pershad, (1884) L.R. 12 Ind. Ap. 12 were referred to].

Case Referred :-

Ramdin v. Kalka Pershad, (1884)L.R. 12 Ind. Ap. 12.

JUDGMENT

The judgment of their Lordships was delivered by

1913.Dec.1

Sir John Edge :- This appeal has arisen in a suit which was brought by the plaintiffs on the 17th November 1900, in the Court of the Subordinate Judge of Monghyr, to enforce payment of principal moneys and interest which were charged upon immovable property by a deed dated the 19th September 1887, by winch one Kalu Babu mortgaged to the plaintiffs Mouzah Chak and other properties. The mortgage money was repayable on the 18th November 1888. By the suit, so far as it concerned the defendants Barhamdeo Prasad and Ram Sumran Prasad, the plaintiffs sought a decree against them for Rs. 12,197-8-8, together with interest, on the ground that they were in possession of a sum of Rs. 12,197-8-3, which had been deposited in the Court of the Subordinate Judge of Monghyr, and was the balance remaining over of the purchase money of Mouzah Chak, after satisfying a decree for sale of that Mouzah of the 8th October 1890, such possession having been obtained by them wrongfully with full knowledge that it was affected with a charge to the plaintiffs under a mortgage of Mouzah Chak. Barhamdeo Prasad, now dead, is represented in this appeal by his brother, Ram Sumran Prasad. The only question in this appeal is whether the suit so far as it related to Barhamdeo Prasad and Ram Sumran Prasad was a suit to enforce payment of money charged upon immovable property within the meaning of Article 132 of the second schedule of the Indian Limitation Act, 1877, or was a suit to which Article 120 of that schedule applied.

The facts, briefly stated, are as follows: On the 21st May 1887, Kalu Babu mortgaged Mouzah Chak and other properties to Barhamdeo Prasad and Ram Sumran Prasad. On the 19th September 1887, Kalu Babu mortgaged Mouzah Chak and other properties to the plaintiffs, and on the 19th July 1889, Kalu Babu further mortgaged Mouzah Chak to Barhamdeo Prasad and Ram Sumran Prasad. On the 8th October 1890, Barhamdeo Prasad and Ram Sumran Prasad obtained a decree for sale on their mortgage of the 21st May 1887. To the suit in which that decree Was obtained the plaintiffs in this suit were made parties, but they did not appear. In execution of the decree of the 8th October 1890, Mouzah Chak was sold. After satisfying that decree a balance amounting to Rs. 12,197-8-3 of the moneys which were realised by the sale of Mouzah Chak remained, and that balance was deposited in the Court of the Subordinate Judge of Monghyr. On the 11th January 1891, Barhamdeo Prasad and Ram Sumran Prasad obtained a decree for sale on their mortgage of the 19th July 1889, and in execution of that decree they, on the 22nd April 1892, drew out of Court the balance of Rs. 12,197-8-3 which had been deposited in Court. Barhamdeo Prasad and Rain Sumran Prasad were well aware of the existence of the plaintiffs' mortgage and that it had priority to the charge they were seeking to enforce, but they did not make the plaintiffs parties to the suit, nor did they give them notice that under the decree of the 14th January 1891 they were drawing out of Court the balance of Rs. 12,197-8-3.

On behalf of Barhamdeo Prasad and Ram Sumran Prasad it was contended in the Court of the Subordinate Judge that this suit, so far as it related to the claim of the plaintiffs against them in respect of the Rs. 13,197-8-3, surplus moneys of the sale of Mouzah Chak, was barred by limitation; their contention on the point of limitation was that Article 120, and not Article 132, of the second schedule of the Indian Limitation Act, 1877, applied to that claim. They also raised various other contentions in the Court of the Subordinate Judge to which it is not now necessary to refer. The Subordinate Judge held that the surplus sale proceeds of Mouzah Chak were part of the mortgage security to which the plaintiffs were entitled under their mortgage, and gave the plaintiffs a decree. From that decree of the Subordinate Judge Ram Barhamdeo Prasad and Ram Sumran Prasad appealed to the High Court at Calcutta. In that appeal two learned Judges, Henderson and Sale, JJ., held that the surplus sale proceeds of Mouzah Chak were portion of the security to which the plaintiffs were entitled to look for satisfaction of their mortgage, and that they were entitled to follow that mortgage security in the hands of Barhamdeo Prasad and Sumran Prasad. Mr. Justice Henderson also suggested that Barhamdeo Prasad and Samran Prasad, having obtained possession of the surplus proceeds which had been deposited in Court with the knowledge that they were subject to the claim of the plaintiffs in priority to their own claim and that they had abstained from giving notice of that suit to the plaintiffs, might be taken to hold the surplus proceeds under an implied trust for the plaintiffs. The High Court, holding that the suit was a suit to enforce a claim for money charged upon immovable property and had been brought within time, dismissed the appeal. From that decree of the High Court this appeal has been brought.

Before this Board it was contended on behalf of the appellants that this suit, so far as it related to the appellants, was not a suit to enforce payment of money charged upon immovable property, and that it was a suit to which Article 120 of the second schedule of the Indian Limitation Act, 1877, applied, and consequently that the suit was not brought within time. It was also contended by one of the counsel of the appellants that as the Rs. 12,197-8-3, surplus assets, had been received by Barhamdeo Prasad and Ram Sumran Prasad, who were not entitled to receive such surplus assets, the case came within Section 295 of the Code of Civil Procedure, 1882, and the remedy of the plaintiffs by a suit under that section was barred by time. As to the last-mentioned contention, it is sufficient to say that the facts of this case show that Section 295 of the Code of Civil Procedure, 1882, does not apply.

If Mouzah Chak had not been sold under the decree for sale of the 8th October 1890 it could not be suggested that the plaintiffs could not by suit, subject to the rights of the prior mortgagees, have enforced payment of the money charged upon that Mouzah by their mortgage of the 19th September 1887. Mouzah Chak was sold under the decree for sale of the 8th October 1890, which Ram Barhamdeo Prasad and Ram Sumran Prasad had obtained on their prior mortgage, and the surplus moneys of that sale represented the security which the plaintiffs had under their mortgage of the 19th September 1887, and did not cease to represent that security owing to the fact that Ram Barhamdeo Prasad and Ram Sumran Prasad had wrongfully and in fraud of the plaintiffs drawn them out of the Court in which they had been deposited. Their Lordships do not think that it is necessary to decide the point referred to in the judgment of Mr. Justice Henderson, viz., that under the circumstances of this case the money in the hands of the appellants was saddled with a charge in favour of the plaintiffs to the amount of their charge, but they do not wish to be understood to express dissent from that view. For the decision of this case, it suffices to say that in their Lordships' opinion this is a suit to enforce payment of money charged upon immovable property within the meaning of Article 132 of the second schedule of the Indian Limitation Act, 1877, and having been brought within twelve years from the time when the money sued for became due is within time. The appeal fails.

Their Lordships will humbly advise His Majesty that this appeal should be dismissed. The appellants must pay the costs of the appeal.