Vaithiyam Nanjappa vs D. Ramanatha Chetti and Others

Ramachandhra Iyer, J.—The decree-holder in O.S. No. 206 of 1951 on the file of the District Munsif''s Court, Krishnagiri, is the petitioner

herein. This Revision Petition arises out of an order granting rateable distribution to the simple money creditors of the second respondent. The

second respondent had executed a mortgage in favour of the petitioner herein on the foot of which he filed the above suit and obtained a decree

against the second respondent and certain others in 1951. E.P. No. 425 of 1955 was filed for realization of one instalment of that decree amount

which was due to the petitioner under the provisions of Section 4(2) of the Madras Indebted Agriculturists (Repayment of Debts) Act, 1955 (Act I

of 1955). One item of the mortgaged property was old and a sum of Rs. 400 was realised by that sale and was deposited in Court. Meanwhile

certain simple money decree-holders-of the second Respondent applied for rateable distribution of the assets realised in E.P. No. 425 of 1955,

after paying the instalment of the decree amount that was due to the petitioner. The learned District Munsif has allowed rateable distribution in

respect of that amount. The mortgagee decree-holder in O.S. No. 206. of 1951 has filed this Revision Petition.

On behalf of the petitioner it is contended that as a result of the Court sale the security which the petitioner had over the mortgaged property

was; transferred to the proceeds of the sale and although the petitioner could not, by the disabling provisions of Act I of 1955, take the entire

amount in satisfaction of his decree, the surplus that would be left after payment of the instalment that was due to him, would still be part of his

security and cannot form the assets of the judgment-debtor which would be available for rateable distribution among his simple money decree-

holders. I think that this argument is well-founded. When property in execution of a mortgage decree is sold in Court auction, unless there is

anything in the order for sale, the property is freed from the mortgage as soon as it is sold. The security attaches itself to the proceeds. Therefore,

this surplus amount in Court, after paying the decree-holder one instalment of his decree debt, would still be subject to the security of the

mortgagee decree-holder which cannot be paid over either to the judgment-debtor or to his other creditors. It is true that under the provisions of

Act I of 1955 the mortgagee decree-holder may not be able to withdraw from the Court more than the instalment that was due to him. But security

over the money does not for that reason cease. The money will have to remain, in Court till the entire debt under the mortgage decree is

discharged.

Unfortunately in this case the respondents were not represented by counsel. I therefore requested Mr. P.S. Ramachandran to act as amicus

curiae on behalf of the respondents. Mr. Ramachandran argues that by the joint operation of the law of mortgage and the provisions of Madras

Act I of 1955, the integrity of the mortgage should be deemed to be broken and it should really be treated as four decrees for the instalments

payable under the Act. His further contention is that if in execution of the decree for realization of one instalment of the decree amount, properties

are brought to sale, the said properties will still be subject to the other-security in respect of future instalments and that the purchase money in

pursuances of the first sale would not be covered by the security. The result of accepting this argument would be that the property which was sold

in Court auction would in spite of the Court sale be subject to be proceeded against for the unpaid instalments, during the succeeding years, that is

to say, the unfortunate purchaser has got to'' pay the various instalments to the mortgagee decree-holder. In support of this, argument Mr.

Ramachandran cites the analogy of a maintenance decree which, charges certain properties. I cannot really appreciate how this analogy can apply.

In the case of a maintenance decree the liability is a recurring liability. The property that is sold is sold subject to the future charge so that the

purchaser when he purchases the property has notice of the future charge and the future charge attaches, itself to the property by virtue of the

decree itself. But in the present case there is RO such recurring charge. The mortgage was one and indivisible. No doubt it could be enforced only

in instalments by virtue of the provisions of Act I of 1955. Act I of 1955 could not be construed as effecting a greater inroad into the mortgage law

than is necessary for the purpose of working out that Act. I cannot accept the argument that the effect of Act I of 1955 is to make the mortgage

decree as four decrees each for one-fourth of the amount recurring every year in accordance with, the instalments: As stated already, I am of

opinion that as soon as the property was sold in execution of the mortgage decree, (subject to any conditions that may be imposed by Court) it

was sold free of the mortgage. The security attached itself to the proceeds and the proceeds being liable for the. security, cannot be paid over to

the simple money decree-holders of the second respondent, before the entire liability under the mortgage decree is discharged.

The Civil Revision Petition succeeds and is allowed with costs. Before concluding this case I must express my thanks to Mr. P.S.

Ramachandraft for the able way in which he argued the case on behalf of the respondents.