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TMI Blog1946 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed in the second schedule to the instrument of mortgage. The terms of the instrument of deposit are not very material, but it may be observed that the security was for the principal sum together with interest thereon at the rate of seven and a half per cent, per annum and that, following the customary form, the mortgagors (whom, to save confusion, we shall hereinafter refer to as the "principal mortgagors") undertook at the request of the Benares Bank at any time to execute a mortgage over the properties in the English form. The date for the repayment of the debt was expressed to be the 31st December, 1938. On the 24th April, 1939, the Benares Bank, being itself then in need of money, either borrowed from, or were then themselves indebted to the Bank of Bihar Limited (hereinafter called the "Bihar Bank") in a sum of forty thousand rupees, for which on that date a promissory note was executed by the Benares Bank in favour of the Bihar Bank. At the same time, as security for the payment of this sum of forty thousand rupees by the Benares Bank to the Bihar Bank the former executed what is described as a "deed of assignment," which is set out at page 35 of our paper book. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , secondly, for liberty to apply, in the event of there being a deficiency after sale, for the usual personal decree against the original mortgagors. It is to be noted that these two prayers which are numbered ( a ) and ( b ) in the plaint are based upon the footing that the plaintiffs were seeking to enforce their security constituted by the sub-mortgage against the properties comprised in and charged by the original mortgage. The third item of relief which the plaintiffs claimed was that "if for any reason the plaintiff be not deemed entitled to the relief's claimed above" meaning relief on the footing of the sub-mortgage "then a decree for Rs. 40,000 as principal and Rs. 1,559-11-9 interest " This obviously was a claim on the personal covenant to pay, but the plaint omitted to state against whom the claim was made. The next material event which occurred was that on the 1st March, 1940, a compulsory winding-up order was made in this Court against the Benares Bank. On the making of the winding-up order, it was obvious that the suit, so far as it was a suit against the Benares Bank, could not proceed without the leave of the winding-up Court under section 171 of the Indian C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the prescribed fee. On the 8th May another form was substituted by the Benares Bank, but this too was rejected by the Registrar on the ground that the form was obsolete. On the 11th May one of the directors of the Benares Bank went and saw the Registrar at Lucknow and on that day lodged the particulars with him on the correct form. The Registrar actually examined the original of the instrument of charge and, having stamped it, returned it to the director of the bank. That, it is to be observed, was well within the period of 21 days from the date of the execution of the charge. It seems that the prescribed fee had still not been paid and, on the 15th May, a sum of Rs. 10 was sent to the Registrar, but, after a delay of six weeks, the Registrar pointed out that this was not enough and that a further sum of Rs. 20 was necessary. This led to a wrangle between the bank and the Registrar after which the whole matter went to sleep until the 24th September, 1941, when, as a result of renewed proceedings, the charge was actually registered by the Registrar. Finally, the Registrar issued a certificate of registration of the sub-mortgage, the actual date of which is immaterial, under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 4, of the Civil Procedure Code, but it subsequently made a prayer for a simple money decree in the event of a mortgage decree not being granted. During the course of arguments, the learned counsel of the plaintiff did not press for a mortgage decree and did not argue that he was entitled to one. On the other hand, he argued that the mortgage decd be regarded as a simple money bond for the purpose of his claim. The question of admissibility of the assignment in evidence, therefore, does not arise. The plaintiff was assigned only the debt and not the security by the assignment. Such an assignment does not require registration and can be admitted in evidence : Gopinath v. Bekali [1935] AIR 1935 All. 837, at p. 838 . The transfer was legal. The issues are decided according to this finding in favour of the plaintiff." It would certainly appear from this that at the trial the plaintiffs abandoned their claim under the security and relied entirely on their claim to have a decree on the debt. Again, it is not clear from the language the learned Judge has used whether what they were claiming was a simple money decree against the Benares Bank or against the original mortgagors. We p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our judgment the matter is not quite so complicated as it seems; and we propose to try to clear the ground by taking the questions which have been canvassed point by point. There is no dispute but that the so-called assignment of the 24th April, 1939, was executed by the Benares Bank in favour of the Bihar Bank. And there is no dispute but that a sum of Rs. 41,559-11-9 was due from the Benares Bank to the Bihar Bank at the date of the commencement of the suit. The first thing that is said on behalf of the Benares Bank, who are the only appellants in this case, is that, by virtue of the provisions of section 17 of the Indian Registration Act, the Bihar Bank cannot rely on the security of the sub-mortgage at all because it was not registered. It is admitted that it never has been registered and the only question is what is the effect of that. We entirely agree with the view of the liquidator that as a security over the land comprised in the deposited title deeds this objection is fatal to the sub-mortgage of the 24th April, 1939. Nor do we think that Dr. Kailash Nath Katju on behalf of the Bihar Bank seriously contends otherwise. But what Dr. Katju dues say is that, notwithstanding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Bank, including the immovable property over which it held security, the Imperial Bank had a charge over the debts due to the Bengal National Bank, whether secured or not, and were entitled to the benefit of all sums received in reduction of those debts, whether from the realization of securities or otherwise. We think, therefore, that, if one thing is more clear than another in this case, it is that the security of the plaintiffs, the Bihar Bank, over the principal debt was not affected by the non-registration, and consequent failure of the charge over the security constituted by the immovable property. As we have already pointed out, in the events which occurred no question arose at the hearing as to how those debts should be realised in favour of the Bihar Bank, since, as a result of the compromise, they had then come to be represented by the single sum of fifty thousand rupees standing in Court to the credit of the suit. The whole matter had thereby become very much simplified. We accordingly hold that the result of the non-registration of the sub-mortgage of the 24th April, 1939, was not to destroy the security of the Bihar Bank over the debt due to the Benares Bank and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ju when he says that the Benares Bank had complied with the condition of the section when it finally sent in the particulars of the charge on the nth May. There is the further subsidiary point made by Dr. Katju that the Registrar did actually, though later, issue a certificate under section 114. While it may be a matter of grave doubt whether such a certificate could ever render valid something that had already been declared void by section 109, we think, at least, that in face of the certificate it is no longer open to the Benares Bank to challenge any of the mechanical steps of registration, including the delivery of particulars and the payment of the prescribed fee [see In re Yolland [1908] 1 Ch. D. 152, at p. 159 and National Provincial Union Bank of England v. Charnley 3 ]. As a result of these findings, we are compelled to hold that the security of the sub-mortgage dated the 24th April, 1939, in favour of the Bihar Bank, so far as it was a security over the debt, was at the date of the winding-up order a valid and subsisting security. We think that, subject to one or two subsidiary points, this disposes of the appeal. We still have to deal with that curious p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given leave under section 171 of the Indian Companies Act to prosecute a simple money claim against the Benares Bank would have constituted a formidable difficulty. In the view we have taken, however, these questions do not arise. In the result, therefore, we think that this suit succeeds to the extent at any rate that the decree must be varied. For the reasons we have expressed above we think that the decree of the learned Judge should be set aside and the following decree should be passed : "1.There will be a declaration that the plaintiffs, the Bank of Bihar Limited, are entitled to a valid and subsisting charge by virtue of the instrument of the 24th April, 1939, over the debt of Rs. 47,112-0-0 mentioned in paragraph 5 of the plaint and over the proceeds thereof in the hands of the Benares Bank Limited (in liquidation), which said debt and proceeds are now represented by the sum of fifty thousand rupees standing in Court to the credit of this suit. 2.A decree for the payment out of Court to the plaintiffs, out of the said sum of fifty thousand rupees, of the sum of Rs. 41,559-11-9 together with interest thereon at the rate of three per cent, per annum from 5th February, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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