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Judgment
Best, J.—The appellant (who was 3rd defendant in the Court of First Instance) is the holder of the [222] decree in Original Suit No. 57 of
1880 on the file of the Subordinate Court of Madura (West). He is minor under the guardianship of his mother Lingammal.
The property of the judgment-debtors was attached and about to be sold in execution of the decree, when they put in a petition No. 636 of
1886 asking for postponement of the sale, and a certificate u/s 305 of the Code of Civil Procedure, and on 11th December 1886 were granted the
certificate E authorizing them to raise the balance of the decree amount by private sale mortgage, &c., of the properties under attachment within
20th December 1886. On the 22nd December 1886 the 1st defendant was granted a second certificate D in the same words, but extending the
time to ""within two months from this date.
Exhibit B is the petition of 1st defendant (dated 22nd December 1886) in compliance with the request contained in which the second certificate
was granted.
From B it is seen that Rupees 4,000 were then produced as obtained from the present 3rd and 4th respondents (plaintiffs in the Court of First
Instance) with whom, it is stated, "" a contract has been negotiated requiring them to pay the balance and satisfy the decree in full."" Hence the
certificate E.
The time allowed by this certificate expired on 22nd February 1887, but no further payment was made into Court till 7th September 1887,
when the petition A was filed by the pleader of the 3rd and 4th respondents stating that the judgment-debtors had executed to the plaintiffs a
document mortgaging the attached property kv a sum of Rupees 5,000 (including the Rupees 4,000 already paid) and tendering the balance
Rupees 1000, with a prayer for an order that this sum of Rupees 1,000 be received and the mortgage deed accepted and for stay of the sale
which was fixed for the 26th of that month.
On the same day that A (dated 3rd September 1887) was filed by the plaintiffs, the petition C (dated 6th idem) was also filed by 1st defendant,
(judgment-debtor) objecting that the mortgage bond had been obtained by plaintiffs fraudulently--the Rs. 4,000 first paid being, in fact, the money
of the judgment-debtors themselves, and not of the alleged mortgagees, and praying that the bond be not accepted.
These two petitions were disposed of by the order at foot of A, rejecting the mortgage for the reasons (1) that the judgment-debtors objected
to it as having been fraudulently obtained, (2) that "" the petitioners have not complied with the provisions of Section 305"" and (3) "" that neither the
balance nor the deed itself was produced within the time limited by the certificate.
Hence the suit out of which this Second Appeal has arisen (a) for cancellation of the order last reterred to, and (d) for a declaration that the
mortgage (filed as Exhibit F) executed by the 1st defendant (who is also the guardian of the 2nd defendant a minor) is true and valid. Both the
lower Courts have decreed, in favor the plaintiffs.
The present Appeal is by the 3rd defendant, the decree-holder who contends (inter alia) that the Lower Appellate Court ""did not sufficiently
distinguish between the case of the 1st defendant and that of the 3rd defendant.
This is, I think, a valid objection to the decree not only of the Lower Appellate Court but also to that of the Court of First Instance, for, it by
no means follows that because the mortgage is found to be good and valid as against 1st and 2nd defendants, the judgment-debtors, it must
therefore be held to be good in toto also as against the decree-holder, the 3rd defendant. I say in toto because in the circumstances of this case,
the mortgage to plaintiffs must, I think, be upheld even as against 3rd defendant in so far as it gives the plaintiffs a lien on the property for the
Rupees 4,000, found to have been paid by them and which has been accented as part satisfaction of the decree. To this extent plaintiffs are, I think
entitled to a declaration that they have a lien upon the property and that the Rupees 4,000 paid by them in satisfaction of 3rd defendant''s decree is
a first charge on the property. But this I think is the utmost relief to which plaintiffs are entitled as against the 3rd defendant. Section 305 expressly
states that "" no mortgage, lease or sale under this section shall become absolute until it has been confirmed by the Court;""and it is quite clear that
the Court could not confirm under the section any mortgage, lease or sale unless it satisfied the decree in full. It is only if there is reason to believe
that the "" amount of the decree,"" may be raised by mortgage or lease or private sale that the Court is authorized to give time and grant a certificate
u/s 305 and, as a matter of fact, both the [224] certificates granted in this case D and E expressly state that it is for paying the ""balance of the
decree amount"" by the sale mortgage, &c, of the property attached that sanction for a private arrangement is thereby granted. It has been held that
in acting u/s 305 of the Code of Civil Procedure, the Court should exercise a reasonable discretion and should not postpone the sale unless the
judgment debtor can show that the creditor will not suffer--Baku Bam Button Neogy v. The Land Mortgage Bank (1872) 17 W.R. 193; and even
then the postponement should be only for a reasonable period--Atchuta Bamayya v. Khaja Mahomed Amir Khan (1871) 6 M.H.C.R. 272. Three
or six months have been held to be reasonable, but a year has been held to be, unreasonable--see Fyzoodeen v. Girandh Singh (1870) 2 N.W.P.
Such being the case, the arrangement under Exhibit F by which, after only partly satisfying the judgment debt, the mortgagees are given the
property to possess it for ten years must certainly be held to be far beyond the limits of what is a reasonable time. The District Judge is in error in
thinking that 3rd defendant stood, and looked on at all that was being done in the matter of the mortgage."" It is seen from the Sub-Judge''s order in
Exh. IV that her Vakil ""strongly opposed"" the application of 1st defendant (dated 6th December 1886) on which the certificate E was granted ;
and by her Petition, Exhibit V (dated 9th April 1887), she prayed that before any arrangement of the kind was sanctioned notice should be given
to her, I see no reason for allowing the appellant''s contention that the suit brought by plaintiff for a declaration was not maintainable.
The issues of fact as against the judgment-debtors (now 1st and 2nd respondents) have been found in favor of the plaintiffs (3rd and 4th
respondents), and are neither objected to by them, nor do I think they are open to objection. But the case of the judgment-creditor (the Appellant)
is not identical with that of the judgment-.debtors. Against the latter the mortgage bond F may be held to be binding as a whole, but as against the
appellant it can be held to be good only in so far as it makes the Rupees 4,000 paid by plaintiffs in satisfaction of the appellant''s own decree, a
charge and a first charge on the land mortgaged. But only to this extent can it be held to affect the appellant''s right to proceed against the said
property in execution of her. decree.
I would therefore modify the Lower Court''s decrees as above [225] and direct the Respondents 3 and 4 (plaintiffs) to pay the appellants, i. e.,
3rd defendant''s costs throughout. 1st and 2nd defendants must pay the plaintiff''s costs in the two Lower Courts and bear their own costs in both
those Courts and also in this Court.
Muthusami Aiyar, J.
The appellant is the decree-holder and respondents 1 and 2 are the judgment-debtors in O.S. 57 of 1880, and the question of law arising for
decision upon the facts found by the Courts below is whether the mortgage executed by the latter in favour of respondents 3 and 4 for Eupees
5,000 on the 4th January 1887 can be upheld as against the former.
Both the Lower Courts have found that the mortgage was true, that the consideration money was paid, and that it was a bona fide transaction.
Upon those findings the mortgage would no doubt be valid as between the mortgagors and the mortgagee, but they are clearly not sufficient to
support the transaction as against the appellant who was no party to it and who was proceeding in execution against the mortgaged property. It
must appear further that the mortgage was concluded in strict conformity to the provisions of Section 305. That the property in question was
attached by the appellants in execution of his decree so early as 1881, that the attachment continued in force when the mortgage was concluded,
and that the decree debt remained to be paid to the extent of more than Rupees 10,000, are facts about which there is no dispute. The substantial
question for decision was whether the Court authorized the mortgage which was actually concluded u/s 305, and whether the order of the 7th
September 1887 refusing to confirm the mortgage was in contravention of the authority previously granted by the Court. Section 305 ought to be
read together with Section 276 of the CPC and when so read, it is clear that when property is attached in execution, any private alienation of the
same is void against any claim enforceable under the attachment unless such alienation is specially authorized u/s 305. It must be remembered that
u/s 276, the decree-holder has a lien on the property under attachment in respect of the whole of the decree debt and not simply of a part'' of it. It
is therefore provided by Section 305 that when there is reason to believe that the amount of the decree may be raised by private alienation of the
property advertized for sale or of some part thereof or of any other [226] Immovable property of the judgment-debtor, the Court may postpone
the sale of the property comprised in the order for sale in view to enable the judgment-debter to raise the amount. In such a case, the section
proceeds to direct the Court to grant the certificate authorizing the judgment-debter to make the proposed mortgage and to provide that no such
mortgage shall become absolute until it has been confirmed by the Court.
The intention is to prevent the sale of the attached property when the whole decree can be satisfied within a reasonable period by private
alienation, and at the same time to protect the lien which the judgment-creditor has under - 276 by prescribing two conditions viz., that the
mortgage actually concluded must be previously. proposed to and authorized by the Court, and that the mortgage must be confirmed after it is
concluded. The real question was whether the facts of this case show that the mortgage concluded was the mortgage proposed to and authorized
by the Court u/s 305. The first certificate granted by the Subordinate Court is Exhibit E, dated 11th December 1886. It recites that there is reason
to believe the balance of the decree amount might he raised by private alienation and then purports to authorize the judgment-debtor to make the
proposed alienation within 20th ? December 1886 to raise the said amount. The second certificate granted on the 22nd December 1886 is Exhibit
D. It is in the same terms as Exhibit E with this difference., viz., that two months time was granted from that date, the mortgage authorized being
still a mortgage of the attached properties whereby there was reason to believe that the balance of the decree amount might be raised. Again,
Exhibit B is the petition upon which the certificate D was granted. (His Lordship set out the petition.)
It is clear that the representation made to the Court; was that negotiations were in progress whereby the whole balance of the decree debt
would be paid up if time was granted.
What was the transaction since concluded and what was its result? The mortgage which the Court was asked to confirm was a mortgage for
Rupees 5,000, which was considerably below the balance due under the decree, and no other arrangements were made for satisfying the decree in
full, it being represented on one �side that no larger amount could be raised on the properties [227] attached and on the other that the mortgage
was fraudulent. It appears to me to be open to no doubt, that permission to raise money by mortgage was asked for with the representation that
the balance of the decree debt would be paid in full, either by means of the mortgage or by it and other arrangements in progress, and that
permission was granted to make the mortgage on the assurance that the whole decree debt would be satisfied.
The order therefore refusing to confirm the mortgage is perfectly correct for the simple reason that the condition subject to which the certificate
was granted, viz., satisfaction of the decree in full, was not complied with either by the mortgage or otherwise as represented to the Court. The
question of the validity of the mortgage is not one of bonafides between the mortgagor and mortgagee, but one of statutory authority sufficient to
take away the prior lien which the appellant had.
For these reasons I am also of opinion that the mortgage cannot be upheld as against the appellant.
I am further of opinion that the plaintiffs must be declared to be entitled to have a charge upon the property in dispute for Rupees 4,000 paid
into Court on account of the appellant''s decree between the date of their application for a certificate u/s 305 and the order of the 7th September
1887. This declaration is necessary to restore the parties to their original position and the appellant can only set aside the mortgage and make the
property available for his decree subject to that charge.
I agree, therefore, to the decree proposed by my learned colleague.