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TMI Blog1964 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... tgage decree was passed on the 20th March 1950. It was followed by the final decree for sale on the 13th March 1952. The execution of the mortgage decree started on the 31st July, 1953, and the dues to the mortgagee-decree-holder were calculated to be Ks. 91t-5-3p. Thereafter, the significant event that took place was the nationalisation of lands. On the 15th April, 1955 the estates vested in the State of West Bengal under the West Bengal Estates Acquisition Act 1953. The result was that the mortgaged properties in this suit could no longer be sold under the mortgage decree What the mortgagee-decree-holder did was to make an application on the 13th November 1966 to sell the mortgagor's right to compensation that was payable to the mortgagor under that Act. On the 30th November, 1956 the sale proclamation was issued, as I have said, stating that what was to be sold was sale of the right to compensation valued at the said three figures of ₹ 450. ₹ 325 and ₹ 225. 3. Then begun the legal battles. The present appellant is the 5th judgment-debtor Abdul Khaleque. He filed an application under Section 47 of the Code of Civil Procedure taking the point thai si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor for satisfaction of his dues and (2) no distinction between a mortgage debt or any debt is made in the latter Act. On appeal, that decision was reversed and the judgment of the appellate Court is reported in 67 CWN 498 Cooch Behar Bank Ltd v. J.N. Ghosh. The appeal Court came to the decision that Section 26(1) of the West Bengal Estates Acquisition Act did not prevent the mortgagee decree-holder from recovering the mortgage money out of the compensation money awarded in respect of the mortgaged property. The principle on which the appeal Court proceeded was that when properties were compulsorily acquired and compensation was paid, the mortgage shifted and attached to the compensation money and the mortgagee's right to have recourse to the compensation monies is in no way abrogated or fettered by the provisions of Sub-section (1) of Section 26 of the West Bengal Estates Acquisition Act. It is also held by the appeal Court in that case that Section 26 (3) of the West Bengal Estates Acquisition Act did not protect an ad interim compensation money from the mortgage claim and the mortgage rights shifted and attached also to the ad interim compensation money and a Receiver might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Reforms Act. The Supreme Court there observes at page 1470 as follows: In the present case, the mortgaged property cannot be sold because it has vested in the State free of incumbrances, but in lieu of the mortgaged property, the respondent has become entitled to certain com pensation amount and the appellants are given the statutory right to receive the amount due to them from the said compensation amount under Section 24(5). This provision is somewhat similar to the provisions of Section 73(2) of the Transfer of Property Act which provides inter alia, that where the mortgaged property is acquired under the Land Acquisition Act, or any other enactment for the time being in force providing for the compulsory acquisition of immovable property the mortgagee shall be entitled to claim payment of the mortgage money, in whole or in part, out of the amount due to the mortgagor as compensation. In a sense, the compensation amount payable to the respondent may prima facie be treated to be. like a security substituted in the place of the original mortgaged property under Section 73(2) of the Transfer of Property Act However, that may be, the terms of the decree require that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principal money on the mortgage has not become due . In other words, what Subsections (2) and (3) of Section 73 of the T.P. Act do is (1) to give the mortgagee a right to satisfy his claim out of the compensation money and (2) to preserve his priority. But then the right to the compensation money to satisfy the mortgage does not mean that such right can be sold. It is a right to get money and nothing else The question here is Is such right to get that money saleable under a mortgage decree? 12. In my opinion the right to compensation cannot be sold under a mortgage decree. The mortgagor's right is preserved, but it is a new right to proceeds or to the compensation. In my view that is clearly recognised and established under Section 73 (2) and (3) of the Transfer of Property Act. A sale under the mortgage-decree is held under Order 34 of the Code of Civil Procedure which concerns suits relating to mortgage of immovable property . Order 34. Rule 4 dealing with the preliminary decree in a suit for sale makes it clear expressly that: the plaintiff shall be entitled to apply for a final decree directing that the mortgaged property or a sufficient part thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gor executed a mortgage after the declaration was made by Government for the acquisition of the property, he can now take advantage of his own fraud and compel the mortgagee to seek to recover the amount of the mortgage-debt from property other than that hypothecated under the mortgage-bond. In our opinion, when the property covered by the mortgage was, under the Land Acquisition proceedings, converted into money, the Hen which was attached to the property was transferred to that which then represented the property, viz., the compensation standing to the credit of the Collectorate; and, we can see no reason why the mortgagee in satisfaction of his decree should not be allowed to take out execution against the money in the Collectorate. The obvious object of Section 88 of the Transfer of Property Act is to secure the payment of the mortgage debt by transforming the mortgaged property into money, and the mere fact that the mortgaged property has been changed into money by some authority other than the Court, would not, in our opinion, disentitle the mortgagee from recovering the amount of his debt out of that money, or compel him, in order to obtain satisfaction of his debt, to obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the procedure for attachment and Receiver mentioned in the four Calcutta cases discussed above, can also be enforced through the well-recognised procedure under Order 21, Rule 46 of the Code of Civil Procedure. It lays down how a debt or share and other property not in possession of a judgment-debtor can be attached in execution of a decree and that attachment is made by a written order prohibiting, in the case of a moveable property other than a debt, or share, the person in possession of the same from giving it over to the judgment-debtor. The terms of the Calcutta Amendment in Rule 46-A are in addition to the provisions of Order 21, Rule 48 and therefore, the non-applicability of Rule 46-A to a debt secured by a mortgage is no obstacle. The prohibitory order on the Collector in this case preventing him from paying over the compensation money to the intermediary-mortgagor without leaving sufficient to satisfy the charge of the mortgagee decree-holder appears to be a sensible and practical remedy. 15. The Land Acquisition Act and some other statutes also make the express provision for preserving the mortgagee's rights. In fact, Section 24 (6) of the Bihar Land Reform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst this argument. 17. The appellant's argument on Section 26 of the West Bengal Estates Acquisition Act need not be considered in this appeal, first because there are Bench decisions of this Court to which reference has already been made and secondly because this is not a case of extent of the recovery of compensation money by attachment. Section 26 of the West Bengal Estates Acquisition Act is only concerned with the extent of recovery of compensation money by attachment. The point which this appeal raises is whether the right to compensation under this Act can itself be sold under a mortgage decree. On that point Section 26 gives no guidance. 18. Mr. Ghosh for the appellant has also contended before me that this right to compensation is similar to a kind of right to recover mesne profits and, therefore, is not transferable. He relies in this branch of his argument on the decision of this Court in Durga Chandra Roy v. Koilash Chunder Roy. 2 CWN 43. That decision turns on Section 6 of the Transfer of Property Act dealing with what properties can be transferred. It is not necessary in my view to deal with Section 6 of the Transfer of Properly Act and its various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties while selling the so-called right to compensation in respect of the mortgaged property. No such separation can be made in the scheme of compensation and its computation as envisaged and laid down in sections 14, 15, 16, 17, 19, 23 and 25 of the Act. To permit in such a case and in such a context, sale of the mere right to compensation which on the facts of this case itself is indeterminate, and when at the time the sale proclamation in 1956 was made, no compensation roll had even been prepared, would be to encourage speculation and trafficking in a new species of gambling Such a right to compensation due to its vague ness may be bought up by a handful of persons throughout the State to promote rampant speculation and the purchasers would not know what actually they are buying nor the sellers would get the value which has any relation to the reality. 20. On the authority, therefore, of the decisions noticed above and specially of the Supreme Court and for reasons stated both legal and practical, I am of the opinion that this appeal must succeed. 21. The appeal is, therefore, allowed The order and judgment of the lower appellate Court are set aside and I hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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