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TMI Blog1942 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ng other defences that the mortgage sued upon was void, having been made in circumstances which brought into operation para. 11 of Schedule 3, Civil P.C. 11--(I) So long as the Collector can exercise or perform in respect of the judgment-debtors immovable property, or any part thereof, any of the powers or duties conferred or imposed on him by Paras. 1 to 10, the judgment-debtor or his representative in interest shall be incompetent to mortgage, charge, lease or alienate such property or part except with the written permission of the Collector... 2. The learned trial Judge sustained this contention. He refused the plaintiffs a money decree upon the covenant on the ground that this cause of action had become barred by limitation. By his decree of 2nd August 1985, he dismissed the suit with costs. An appeal by the plaintiffs to the Chief Court was dismissed on 5th May 1937, the learned Judges (Thomas and Zia-ul-Hasan JJ.) agreeing with the trial Court on both of the grounds of his decision. They were asked to give the plaintiffs relief Under Section 65, Contract Act. 65. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied for leave to mortgage their respective villages but this was refused; and, on 14th June 1919, it was ordered that a sale should be held on 21st July; that the village Gadaryadih should be sold as the first lot and the village Mahona Poorab as the second lot, and that the other villages should only be sold if these two had not produced sufficient to discharge the debt. "As soon as by the last bid the full amount of demand is secured the auction will be closed. 5. On 18th July Iltifat made an application for leave to mortgage Mahona Poorab and another village so as to avoid a sale of the former; but this application was adjourned until the day of sale (2lst July), and, on that date was disallowed together with a similar application by Safuran Bibi. At the sale on 2lst July the terms of the order of 14th June were departed from: village Deokali was first sold for ₹ 45,000 and Gadaryadih next for ₹ 60,000. The order of 21st July recording the sale stated that "as the amount due to the decree-holder was satisfied so the remaining four villages were discharged from sale." The Nazir was directed to take one-fourth of the sale price (plus commission) fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht that the Collector's duties had come to an end as regards Mahona Poorab, or that by the sale on 21st July of the two other villages it had been exonerated under the order of the Collector from all claim in the execution proceedings. 7. Argument on these lines has been addressed to the Board, as it was to the Courts in India, and their Lordships have given it the careful consideration which it deserves. They are not however of opinion that on 12th August 1919, the Collector could no longer exercise or perform in respect of Mahona Poorab any of his powers or duties under paras. 1 to 10 of Schedule 3, and they are not of opinion that any written permission of the Collector has been shown. On the first point, Under Rule 996 to 1000 (which correspond to Order 21 Rules 89 to 94 of the Code) time has to be allowed after the sale for applications to set it aside, either (as in the present case) by way of allowing to the judgment-debtor a last chance to save his property or by reason of irregularity or fraud in the conduct of the sale. Not until this time has expired--it is 30 days from the date of sale Under Article 166, Limitation Act, 1908--can an order be made confirming the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incompetent to mortgage" Mahona Poorab. It becomes necessary to consider the effect of this conclusion upon the rights of the parties. 10. In Nisar Ahmad Khan v. Raja Mohan Manucha ('40) 27 AIR 1940 PC 204 already cited it was held by the Chief Court of Oudh and by the Board that the disability imposed by para. 11 affected the judgment-debtor's right to deal with his immovable property or part thereof, but did not take away his personal liability to repay the loan. In that case, two mortgages were held to have been obtained by undue influence, and one of these--namely Ex. 5, dated 14th August 1919--was also held to have been granted in violation of para. 11. The borrower's liability to repay the sum lent upon this latter mortgage remained notwithstanding its invalidity as a charge; but judgment had been given in the Chief Court, not for the full contractual sum, but in view of the finding of undue influence upon the footing of a refund with simple interest at 6 per cent., Under Section 65, Contract Act. This was also treated as a term which equity would impose as a condition of setting aside a transaction on the ground of undue influence. The claim upon the covena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has agreed to make a loan upon security and has paid the money, is not obliged to continue the loan as an unsecured advance. The bottom has fallen out of the contract and he may avoid it. If he does so avoid the contract, he brings himself within the terms of Section 65 and within the principle of restitution of which it is an expression--whether for all purposes adequate or exhaustive need not here be considered. In the present case, the loan was not to be repayable until after three years. It can hardly be thought that if the invalidity of the security had been established at the end of six months, the lender would have been obliged to allow his money to remain outstanding without security for the whole three years. Ordinarily, if the invalidity of the security is not suspected until after the time for repayment has arrived, the lender will have nothing to gain and something to lose by repudiating the contract at that stage. But that will not always be his position. In India the bar of limitation for a suit to enforce the security is imposed at the end of twelve years, and for a suit on the personal covenant at the end of six years. Not uncommonly it happens that a mortgagee rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;23) 10 AIR 1923 PC 189 at p. 244, however, the appellant had abandoned in the High Court his right to contend that an agreement was discovered to be void at a date later than the date at which it was entered into. The agreement was for the sale of the rights of certain persons as prospective reversioners to the estate of a deceased Hindu who was survived by two widows. The board in refusing to reopen the question, noticed that in Harnath Kuar v. Indar Bahadur Singh ('22) 9 AIR 1922 PC. 403 there were special circumstances and said that there has been no suggestion anywhere in the course of the present proceedings that any such facts occurred as could alter the view which must normally be taken of the meaning of the word 'discovery' and of the time at which that discovery must be held to have occurred. 13. In Hansraj Gupta v. Official Liquidators, Dehra-Dun-Mussoorie Electric Tramway Co. ('33) 20 AIR 1933 PC. 63 at p. 24 it was said: In the absence of special circumstances (and none exist here) the time at which an agreement is discovered to be void within the meaning of Section 65 is the date of the agreement. and Annada Mohan Roy v. Gour Mohan Mullick ('23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be gathered from unequivocal acts" (per Lord Dunedin: Abram Steemship Co. v. Westville Shipping Co. (1923) 1923 AC. 773 at page 779.) 14. With all due respect to the Chief Court, their Lordships think that their attitude towards the question of pleading was unduly rigid. A defendant who when sued for money lent pleads that the contract was void can hardly regard with surprise a demand that he restore what he received thereunder. What defence the respondents can have desired to make on this aspect of the case is not revealed by anything in the judgment of the Chief Court, apart from the question of limitation with which their Lordships have already dealt and from the contention that Section 65 cannot apply where there is a transfer of property and not a mere agreement. This last contention is a pure point of law and one which the Chief Court rightly regarded as without substance and contrary to authority. There is no reason to apprehend that by allowing the appellants to obtain relief Under Section 65 any injustice to the respondents can result. On the contrary, prima facie it is hardly just that the rights of the parties in respect of the transaction of 12th August 1919, sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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