Basmati Devi Vs. Chamroo Sao and ors. - Court Judgment

Excerpt:
property - mortgage - section 76 of transfer of property act - appeal arises from suit for redemption of large number of usufructuary mortgages in favour of defendants - trial judge held that plaintiff failed to show auction purchasers benamidars of mortgagees - district judge set aside order of trial judge and passed decree of redemption - high court declared section 90 did not apply and restored decree of trial judge - question in appeal is that whether mortgagee has taken advantage of his position as mortgagee - default in payment of rent made by both mortgagor and mortgagee which led to sale of property for arrears of rent - when property purchased by him at sale gained advantage by availing of his position as mortgagee - apex court allowed appeal and restored order of district judge. - sections 35, 36 & 36-b to 38: [s.b. sinha & dr. m.k. sharma, jj] professional misconduct/breach of confidentiality - presumption as to, if any, where the two lawyers engaged by the respective parties in a case were practicing from the same chamber held, v and the appellant were sisters. the submission that v (who was party to the two compromise petitions relating to succession to their fathers property involved herein) and the appellant were in the same boat as would appear from the fact that they had engaged lawyers from the same chamber and, in fact, the lawyer of the appellant had no independent practice itself would go to show that the appellant knew about both the compromise petitions, cannot be accepted. a counsel appearing for a party is expected to be independent. there is no presumption that only because two lawyers are practicing from the same chamber, they would breach their confidentiality or commit some act which would amount to professional misconduct. thus, only because two compromise petitions were filed on the same day or v was a party to both of them, would not by itself lead to any inference that the appellant also knew about the second compromise through her counsel. judicial process :[s.b.sinha & dr.m.k.sharma,jj] duty of court to prevent injustice held, the court has a duty to prevent injustice to any of the parties to the litigation. it cannot exercise its jurisdiction to allow the proceedings to be used to work as substantial injustice sections 33, 2(2) & order 23 rule 3 & section 9 & order 9 rule 13: [s.b. sinha & dr. m.k. sharma,jj] setting aside of void/voidable decree bar of limitation against - applicability of held, if an order/decree is void or voidable, the same must be set aside. there is no law that where the decree is void, no period of limitation for setting aside thereof shall be attracted at all. thus, the compromise decree in the present case, even if void, was required to be set aside by seeking remedy therefore within the limitation contained under the limitation act, 1963. in view of the facts and circumstances of the case, first part of article 123, limitation act, 1963 prescribing reckoning of period of limitation (30 days) from the date of the decreed passed ex parte, was applicable. setting aside of decree was sought for after four years of passing of the same. hence, the same was barred by limitation under article 123 of limitation act, 1963. sections 152,151,33 & 2(2) and order 20: [s.b. sinha & dr. m.k. sharma, jj] amendment or modification of decree - applicability of doctrine of ratification held, the submission that by reason of conduct of the appellant, she would be deemed to have ratified the second compromise also, cannot be accepted. it is not a ratification of a contract. if ratification has to be done, all should be parties thereto. if the court had no jurisdiction to accept the compromise in defiance of the mandatory provisions contained in order 23 rule 3 cpc, the question of invoking the doctrine of ratification would not arise. the doctrine of ratification may be applicable in the realm of private law regime but not for the purpose of amendment or modification of a decree. order 1 rule 10 & order 23, rule 1-a: [s.b. sinha & dr. m.k. sharma, jj] transposition of a defendant as a plaintiff on withdrawal of suit - held, appellant being entitled to a share in the suit property, even if order 23 rule 1 cpc permitting withdrawal of suit was applicable in present case, in terms of order 23 rule 1-a cpc, the appellant as a defendant in the suit could have applied for being transposed as a plaintiff in terms of order 1 rule 10 cpc and the court would have been bound to pass an order having due regard to the question as to whether she had a substantial question to be decided as against any of the other defendants. order 23, rule 1: [s.b. sinha & dr. m.k. sharma, jj] exercise of right to withdraw a suit - precondition held, a suit cannot be withdrawn by a party after it acquires a privilege. right to withdraw a suit of the party bringing the suit would be unqualified, if no right has been vested in any other party. order 23 rules 1 & 3: [s.b. sinha & dr. m.k. sharma, jj] withdrawal f suit on basis of compromise between parties - permission of court bar of limitation - which of the two rules i.e. rules 1 and 3 applicable in such a case? held, if a suit is to be decreed or dismissed on the basis of a compromise, even if permission is sought to withdraw the suit pursuant thereto, order 23 rule 1 cpc may not have any application. even in such a case, a permission to withdraw the suit could have been given only with notice to the respondents who had become entitled to some interest in the property by reason of a judgment and decree passed in the suit. the court for the purpose of allowing withdrawal of a suit after passing the decree viz. at the appellate stage, is required to consider this aspect of the matter. the present suit was dismissed as withdrawn on the basis of a compromise (to which the appellant and certain others were not parties) entered into before the appellate court. the appellant claimed and was found to have rightly claimed as share in the suit property. having got a decree in her favour, she was entitled to protect the same. by reason of an agreement between some of the parties or otherwise, she cannot be deprived of the fruits of the decree. however, the appellants challenge to the said compromise decree was time-barred. limitation act is a statute of repose. if a suit is not filed within the period of limitation, the remedy would be barred. if an order is void or voidable, the same must be set aside. thus, the compromise/consent decree, which is as good as a contested decree, even if void was required to be set aside. if the compromise has been accepted in absence of all the parties, the same would be void and the decree based thereupon must be set aside. the compromise may be void or voidable but it is required to be set aside by filing a suit within the period of limitation. a consent/compromise decree must be set aside if it has been passed in violation of law. for the said purpose, the provisions contained in the limitation act, 1963 would be applicable. it is not the law that where the decree is void, no period of limitation shall be attracted at all. in the present case, since summons were served upon the appellant and she had appeared in the appeal (where the decree based upon the impugned compromise was passed), the first part of article 123, limitation act, 1963 [prescribing reckoning of period of limitation (30 days) from the date of the decree passed ex parte] shall apply. the impugned compromise decree was passed in april 1998 by advancing the appeal fixed for hearing in july 1998. the challenge to the compromise decree was made on 28.2.2002 i.e. after a gap of four years. there is no reason as to why the factum in regard to passing of the decree could not have been known in july 1998 (when the case was fixed for hearing) or soon thereafter. the high court has arrived at a finding of fact that the appellant cannot be said to have acquired knowledge about the passing of the decree on 7.2.2002. there is no error in the finding of the high court that the appellant had knowledge of the passing of the compromise decree much earlier. order 23, rule 1-a & order 1 rule 10 :[s.b.sinha & dr.m.k.sharma,jj] transposition of a defendant as a plaintiff on withdrawal of suit - held, appellant being entitled to a share in the suit property, even if order 23 rule 1 cpc permitting withdrawal of suit was applicable in present case, in terms of order 23 rule 1-a cpc, the appellant as a defendant in the suit could have applied for being transposed as a plaintiff in terms of order 1 rule 10 cpc and the court would have been bound to pass an order having due regard to the question as to whether she had a substantial question to be decided as against any of the other defendants. order 23 rule 3: [s.b. sinha & dr. m.k. sharma, jj] resolving suits by entering into multiple compromises/agreements - necessity of parties to sign all compromises/agreements - held, if the parties enter into more than one agreement such that both the agreements are independent of each other, then signing of both the agreements by the parties or their counsel must be held to be imperative in character. while entering into a comprehensive agreement, the parties are bound to see that terms of one agreement do not come in conflict with the terms and conditions of the other. in present case, two compromise petitions filed separately in two different suits. signatures of appellant and certain others not obtained on one of the compromise petitions. both the compromise petitions did not refer to each other hence, plea that parties had entered into a comprehensive agreement covering both the suits id unacceptable. decree based on compromise which was not signed by appellant and others is void and liable to be set aside. order 23 rule 3: [s.b. sinha & dr. m.k. sharma,jj] consent /compromise decree held, a consent decree is merely an agreement between the parties with the seal of the court superadded to it. order 23 rule 3 cpc provides that a compromise decree is not binding on such defendants who are not parties thereto. thus, if a compromise is to be held to be binding, it must be signed either by the parties or by their counsel, failing which order 23 rule 3 cpc would not be applicable. compliance with the requirements laid down in order 23 rule 3 cpc is imperative in character. a compromise of satisfaction stated there under must satisfy the conditions of a lawful agreement. family arrangement/settlement: [s.b.sinha & dr. m.k. sharma,jj] requirements of -held, a family arrangement must be entered into by all the parties thereto. hence the compromise in present case, which was not signed by appellant sister, could not be said to be a family arrangement. hearing: [s.b.sinha & dr.m.k.sharma,jj] advancement/preponement of hearing-procedure to be followed held, if the hearing of a case is advanced, it should be done with notice to all the parties. notice/knowledge of proceedings:[s.b. sinha & dr. m.k.sharma, jj] sharing of chambers by advocates - plea that appellant knew about the relevant proceedings in the case (i.e. compromise proceedings) through its own counsel in view of the fact that the lawyer of the appellant and the lawyer of the other party appearing in the said proceedings were carrying on practice from the same chamber - held, the said plea could not be accepted since a counsel appearing for a party is expected to be independent and there is no presumption that only because two lawyers are practicing from the same chamber, they would breach their confidentiality or commit some act which would amount to professional misconduct. sections 15 & 16:[s.b. sinha & dr. m.k. sharma,jj] ownership and title held, title to a property must be determined in terms of applicable statutory provisions. if a party relinquished his or her right in a property, the same must be done by a registered instrument in terms of provisions of registration act. if by reason of provisions of hindu succession act, 1956 the appellant derived title to property along with her brothers and sisters, she could not be deprived thereof by reason of an agreement entered into by and between her plaintiff sister and the contesting defendants, without the appellant being a party thereto. limitation act (36 of 1963)sections 5 & 3 & article 123 :[s.b.sinha & dr. m.k.sharma, jj] condonation of delay - absence of application for effect held, in the absence of any application for condonation of delay, the court has no jurisdiction in terms of section 3, limitation act, 1963 to entertain the application filed for setting aside of decree after expiry of period of limitation. limitation act (36 of 1963)article 123 :[s.b.sinha & dr.m.k.sharma,jj] reckoning of limitation under -applicability of the two parts of article 123, distinguished and explained. indian evidence act, 1872 section 115; [s.b. sinha & dr. m.k. sharma, jj] applicability of doctrine of estoppel/election/approbate or reprobate - held, it is subject to exceptions. there is no estoppel against statute. - 4. the trial court held that the plaintiff had failed to show that the auction purchasers were benamidars of the mortgagees and in that view dismissed the suit. 90 of the trusts act would operate to keep the equity of redemption alive in cases where the sale took place due to the default of the mortgagor as well as the mortgagees, the default on the part of the mortgagees, who purchased the properties at the sale being also substantial. 90 of the trusts act did not apply to cases where the sale took place due to the default of the mortgagor as well as the mortgagee, the high court appears to have followed a number of previous decisions of the same high court. 10. in support of the appeal it is urged that the view taken by the high court in the present case as well as the pervious decisions of the patna high court is incorrect and defeats the very object of s. ' 11. the question for consideration is whether in circumstances like the present where the decree and the sale in execution of it are brought about by the default of both the mortgagor and the mortgagee, the mortgagee can be said to have taken advantage of his position by purchasing the property at the sale. when therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee. sarjoo prasad, who appeared before us on behalf of the respondents, tried to persuade us that in any case the plaintiff's suit should fail as regards the lands recorded in khata no. as the oral and documentary evidence on the paper book prepared in the appeal did not clearly show whether or not these two holdings had become one, we called for one of the documents, ex. 17. as the suit as also the appeal before the district judge had been brought in forma pauperis the high court made an order directing the plaintiff to pay the court-fee on the plaint as well as on the memorandum of appeal.das gupta, j.1. this appeal arises out of a suit for redemption of a large number of usufructuary mortgages in favour of the defendants. the plaintiff who owned 1.67 acres of lands which were recorded in khata 56 and 10.56 acres in khata 57 in village sarifabad gave 1.27 acres out of khata 56 and 8.24 acres out of khata 57 lands in mortgage to the several defendants by separate mortgage bonds. part of the remaining land was sold by him and the rest settled by him with the first defendant on batai terms. 2. the plaintiff's case is that under the terms of the mortgage bonds the mortgagees were liable to pay rent to the landlord. the mortgagees however defaulted in the payment of rent for some years. a suit for the arrears of rent was brought by the landlord and a decree obtained. in execution of the decree the lands were sold. the purchasers were one besolal and mst. kirti kuer, who according to the plaintiff, were only benamidars of defendants 1 and 2 and other mortgagees. it is his case that this purchase enured for the benefit of the mortgagor, that is, the plaintiff, and so the right of redemption of the mortgagees has not been affected. the prayers were for a declaration that the purchase was for the benefit of the plaintiff and for redemption of the mortgagees. 3. the suit was contested by defendants 1 and 2 only. of these defendants, chamroo sao is the purchaser, and besolal, defendant 2 is the son of the other purchaser mst. kirti kuer. they denied the allegation that besolal and mst. kirti kuer were their benamidars and contended that the right of redemption has been extinguished by the court sale. 4. the trial court held that the plaintiff had failed to show that the auction purchasers were benamidars of the mortgagees and in that view dismissed the suit. 5. on appeal, the additional district judge, patna, came to a contrary conclusion. he held that the purchase, though in the name of besolal and mst. kirti kuer was really by the first and the second defendants. he also accepted the plaintiff's case that under the terms of the mortgage bonds the mortgagees were liable to pay the rent and the rent sale having been brought about due to the default of the mortgagor and the mortgagee they could not be allowed to take advantage of the sale. so, according to the learned judge, the equity of redemption in favor of the plaintiff still subsisted and that he was entitled to redeem the mortgaged property. accordingly, he set aside the judgment of the trial court and passed a preliminary decree for redemption. 6. against this decree the two defendants appealed to the high court of patna. the appeal came up for hearing in the first instance before a single judge (mr. justice sahai). on a consideration of the evidence, he was of opinion that the liability of rent of 2.67 acres was upon defendant 1 and that payment of rent of .87 acres which was purchased and 1.76 acres which was taken in ijra, the total being 2.43 acres, was upon defendant 2, that for payment of rent of 3.83 acres was upon the other defendants, and the plaintiff was liable to pay the rent of only about 3.39 acres out of the entire area of 1.67 ares of khata no. 56 and 10.65 acres of khata no. 57. the question which therefore arose was whether s. 90 of the trusts act would operate to keep the equity of redemption alive in cases where the sale took place due to the default of the mortgagor as well as the mortgagees, the default on the part of the mortgagees, who purchased the properties at the sale being also substantial. the learned judge referred this point for decision to a division bench. 7. the division bench of the high court held that s. 90 of the trust act did not apply to these circumstances. in this view the high court allowed the appeal, set aside the decree of the first appellate court and restored the decree of the trial court. 8. the present appeal by mst. basmati devi, who is the legal representative of the original plaintiff who was substituted in his place, is against the high court's decision dismissing the suit. 9. in coming to a conclusion that s. 90 of the trusts act did not apply to cases where the sale took place due to the default of the mortgagor as well as the mortgagee, the high court appears to have followed a number of previous decisions of the same high court. 10. in support of the appeal it is urged that the view taken by the high court in the present case as well as the pervious decisions of the patna high court is incorrect and defeats the very object of s. 90 of the indian trusts act. section 90 of the indian trusts act is in these words :- 'where a tenant for life, co-owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage.' 11. the question for consideration is whether in circumstances like the present where the decree and the sale in execution of it are brought about by the default of both the mortgagor and the mortgagee, the mortgagee can be said to have taken advantage of his position by purchasing the property at the sale. the high court appears to think that unless the sale was brought about by the default of the mortgagee alone the mortgagee cannot be said to have taken advantage of his position in making the purchases. what seems to have weighed with the learned judges is that even if the mortgagee had done his duty by paying the rent he was liable to pay, the sale would still have taken place as the mortgagor did not pay that potion of the rent which he was liable to pay. so, they thought that the mortgagees, though they took advantage of the fact that the property had been brought to sale, could not be said to have taken advantage of their position as mortgagees. 12. with this view we are unable to agree. in our opinion, the fact that the mortgagor had made a default, does not alter the position that the mortgagee had also defaulted in paying the rent he was liable to pay. by his default he has contributed to the position that a suit had to be brought for arrears of rent and ultimately to the position that the property was put to sale in execution of the decree obtained in the suit. this contribution to the bringing about of the sale was a direct result of his position as a mortgagee. when therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee. 13. this, in our opinion, is the position in law even if the mortgagee's liability was to pay less than the major portion of the rent of the holdings. whether this would be true even where the portion which the mortgagee is liable to pay is so very small that the property is not ordinarily likely to be brought to sale for that amount, it is unnecessary for us to decide in the present case. 14. in the present case, the finding is that the liability of the defendants 1 and 2 was to pay a substantial portion of the rent. to say in such circumstances that they did not take advantage of their position as mortgagees is entirely unrealistic such a construction would put a premium on dishonesty on the part of mortgagees whenever the entire burden of payment of rent was not left squarely on the mortgagee as under the provision of s. 76 of the transfer of property act. 15. mr. sarjoo prasad, who appeared before us on behalf of the respondents, tried to persuade us that in any case the plaintiff's suit should fail as regards the lands recorded in khata no. 57. as, according to him, these mortgagees were not at all liable to pay any portion of the rent of this holding. he drew out attention in this connection to ex. 2, the mortgage bond executed in favour of chamroo sao, and to the statement made therein : 'annual rent payable to the zamindar is the concern of me, the executant'. this argument proceeds on the basis that the holding recorded in khata no. 57 continued to be separate and distinct from the khata no. 56. it is thus in direct conflict with the plea of these very defendants in their written statement that the two holdings had been consolidated into one holding with one rental. as the oral and documentary evidence on the paper book prepared in the appeal did not clearly show whether or not these two holdings had become one, we called for one of the documents, ex. b which seemed likely to throw some light on the matter. the document has now been received. it is the copy of a judgment of a suit between these parties in which this very question, viz, whether the two holdings had been consolidated into one or not, was raised. it was decided that such consolidation had taken place. it is clear that it was after such consolidation that the second rent suit was brought in respect of that consolidated holding and it was that consolidated holding which was sold in execution of the decree. it is clear therefore that the mortgage bonds ex. 2 in which the mortgagor accepted liability to pay rent to the zamindar in respect of the mortgaged land in khata no. 57 does not affect the correctness of the high court's finding that the liability to pay rent of the holding that was sold was partly of the mortgagor and partly of the mortgagees and that it was the default of both the mortgagor and the mortgagees that brought about the sale. 16. accordingly, we allow the appeal, set aside the judgment and decree of the high court and restore the decree made by the additional district judge, patna. a pleader commissioner shall be appointed by the trial court on a deposit of rs. 50/- as his fees by the present appellant within two months from this date for taking accounts as to the amount due to the defendants on the date of the decree. a preliminary decree for redemption shall be passed in the usual terms. 17. as the suit as also the appeal before the district judge had been brought in forma pauperis the high court made an order directing the plaintiff to pay the court-fee on the plaint as well as on the memorandum of appeal. that order is set aside. instead, we order the first and the second defendants in the suit to pay the court-fee payable on the plaint as also on the memorandum of appeal. the present appeal to this court has also been brought by the appellant as a pauper. as she has succeeded in the appeal, we order the contesting respondents, i.e., the first and the second defendants, to pay the court fee payable on the memorandum of appeal to this court. the appellant will get her costs from the first and the second defendants throughout. 18. appeal allowed.