1. This appeal has been brought in a suit which aros out of the following facts:
On the 19th April 1878, Mussammats Habiban and Bina made a simple mortgage of 544 bighas 2 biswas in favour of Kaim Ali Khan, Mazhar Ali Khan and Nazar Ali Khan for Rs. 1,500, and on the 29th January 1886, Habiban alone mortgaged a fourth share of the same property to one Gobind Bam, She subsequently made two other mortgages, to which it is not necessary to refer.
2. The first mortgagees brought a suit upon their mortgage against one of the mortgagors and the heirs of the other, and obtained a decree for sale on the 1st August 1889. The decree is No. 72 of 1889, and the amount of it was Rs. 3,306-14-6. The puisne mortgagees were not joined as parties to the suit.
3. Bansidhar, one of the defendants in the present suit, held a simple decree for money against Kaim Ali and others, the first mortgagees, and in execution thereof caused the aforesaid decree to be attached. As attaching creditor he took out execution of the decree, caused the mortgaged property to be sold by auction on the 24th March 1894, and purchased it himself for Rs. 1,050. On the 24th November 1894, he sold the said property to Wahid-un-nissa and Jan Muhammad, defendants, for Rs. 4,400, and those persons, on the same date, made a usufructuary mortgage of it to Dungar Singh and others, defendants, fourth party, for Rs. 6,000. These defendants are admitted to be in possession of the property.
4. Gobind Ram, the second mortgagee, brought a suit for sale upon his mortgage, and obtained a decree on the 23rd February 1892. When, in execution of that decree, he sought to bring the mortgaged property to sale, he was not permitted to do so by reason of the prior sale of the 24th March 1894. He thereupon assigned his decree to the present plaintiff, Gobardhan Das, on the 4th November 1894, and the latter, as the assignee of the decree, brought the present suit on the 7th December 1894.
5. The ground of his claim is that, as Gobind Ram was not made a party to the suit brought by the first mortgagees, the decree obtained in that suit, and the auction sale held in execution of the decree, are not binding on him; that, as subsequent mortgagee of the property, he had still the right to redeem the first mortgage, and that by virtue of the assignment made to the plaintiff, the plaintiff is entitled to redeem the said mortgage. He prayed for a decree for redemption of the mortgage of 1878 upon payment of Rs. 1,050, the amount of sale consideration paid for the mortgaged property, or such other sum as the Court might declare to be payable, and for possession of the property comprised in the first mortgage.
6. On the 17th December 1894, that is, after the institution of the present suit, the first mortgagees, Kaim Ali and others, conveyed to Prasadi Lal all their rights under the mortgage of 1878, and the decree obtained upon that mortgage. Prasadi Lal was thereupon added as a defendant to the suit and is now arrayed as defendant, fifth party.
7. Wahid-un-nissa and Jan Muhammad denied the right of Gobind Ram and the plaintiff to redeem the first mortgage and asserted that as Gobind Ram was the mortgagee of only one-fourth of the property, the claim to redeem the remaining three-fourths was not maintainable and that redemption could take place, if at all, upon payment of the whole amount due under the mortgage of 1878, which they alleged to be Rs. 9,182-0-6, and not upon payment of the sale price.
8. The defence of Dungar Singh and others, mortgagees from the above defendants, was very similar, the only difference being that they alleged a larger sum to be due upon the first mortgage.
9. Prasadi Lal urged that the plaintiff was not entitled to redeem except upon payment of the whole amount due upon the mortgage, and he claimed to be entitled to the whole of that amount with the exception of Rs. 1,050, the amount of consideration paid by Bansidhar.
10. The Court of First Instance was of opinion that as Gobind Ram was the mortgagee of a fourth share of the property, the plaintiff was entitled to redeem that share only, on payment of a fourth part of the mortgage money, which the parties admitted amounted to Rs. 10,000 on the date of the decree of that Court. The claim for possession was dismissed, and a decree was made for sale upon payment of Rs. 2,500, to which it declared Prasadi Lal not to be entitled.
11. From this decree the plaintiff appealed, and Prasadi Lal preferred objections under Section 561 of the Code of Civil Procedure.
12. The Lower Appellate Court referred certain issues to the Court of First Instance under Section 566 of the Code, and ultimately held that the plaintiff was entitled to redeem the whole of the property in suit upon payment of Rs. 10,000 admitted to be due upon the first mortgage on the 30th September 1896, and further interest on the said amount up to the date of the decree of the appellate Court. The learned Judge next proceeded to consider the respective rights of the rival defendants to the said amount, and came to the conclusion that the present appellants were entitled to Rs. 1,050 paid by Bansidhar and interest on that amount, and that Prasadi Lal, as representing the first mortgagees, was entitled to the balance. He also held that the plaintiff should be granted a decree for sale, and accordingly made the decree from which this appeal has been preferred.
13. Various pleas were taken in the memorandum of appeal, but most of them have been abandoned. The pleas which the learned Counsel for the appellants has urged before us are the third, the sixth and the seventh.
14. It is contended that, as the suit was one for redemption, a decree for sale should not have been made. This might have been a valid plea had the appellants not submitted to the decree for sale made by the Court of First Instance. They did not appeal from that decree, and it appears from the judgment of the Lower Appellate Court that in the first Court they consented to a decree for sale being passed. Further, as the plaintiff, as representing the puisne mortgagee, is not entitled, according to the rulings of this Court, to sell under his mortgage without redeeming the prior mortgage, and as the ultimate object of his suit was that he might be in a position to sell under his mortgage, a decree for sale in the present suit would not prejudice any of the parties, and would prevent further litigation. I am not therefore prepared to accept this plea of the appellants.
15. The seventh plea, which is to the effect that Prasadi Lal, defendant, had mo locus standi in the suit is, in my opinion, untenable. As has been already stated, the decree obtained by the first mortgagees, Kaim Ali Khan and others on the 1st August 1889, upon their mortgage of the 19th April 1878, was for Rs. 3,306-14-6. Bansidhar, who caused that decree to be attached and the mortgaged property to be sold, realized Rs. 1,050 only out of the amount o that decree. This sum appears to have sufficed to satisfy his own decree, but a large amount was still due upon the decree to which the first mortgagees Kaim Ali Khan and others, were entitled. Both parties admitted in the Courts below that Rs. 10,000 was recoverable under the said decree. It cannot there-'fore be said that the first mortgagees had no right left which they purported to transfer on the 17th December 1894 to Prasadi Lal. After the sale, which Bansidhar caused to be effected on the 24th March 1894, the first mortgagees had subsisting rights under their decree of the 1st August 1889; and as they transferred those rights to Prasadi Lal, the latter has stepped into the shoes of the first mortgagees, and is now their representative in interest. This representative status of Prasadi Lal was, I may observe, never questioned in either of the Courts below, and no issue was raised on that point. The only question which was discussed in the Lower Appellate Court as affecting Prasadi Lal was, whether he was entitled, as the representative of the first mortgagees, to any part of the mortgage money which the plaintiff was bound to pay for redeeming the first mortgage. That is the question to which counsel on both sides chiefly confined their able and elaborate arguments in this Court, and that is the principal question which we have to determine in this appeal.
16. In my opinion it was not necessary, for the purpose of granting the relief to which the plaintiff was entitled, to determine the rival claims of the persons who allegad that they were entitled to the mortgage money. It was enough for the plaintiff to pay that money into Court, leaving it to the claimants of that money to have their respective rights to it determined in a suit of their own. This would have obviated the necessity of following the ordinarily unusual course of determining the rights inter se of persons arrayed in the suit as co-defendants. However, as the Lower Appellate Court has apportioned the mortgage money between different sets of defendants, and as both parties desire that the matter should be determined in this suit so as to avoid further litigation, I do not think we should decline to decide the question of apportionment.
17. The learned Judge of the Lower Appellate Court has held that as the purchase of the mortgaged property by Bansidhar, whom the appellants before us represent, discharged the decree obtained by the first mortgagees upon their prior mortgage to the extent of Rs. 1,050 only, and as a large portion of the amount of that decree still remains unsatisfied, the present appellants are entitled only to the aforesaid sum of Rs. 1,050 and interest thereon, and that the balance of the mortgage money should be paid to Prasadi Lal, who now represents the first mortgagees. In support of that view he has referred to some observations made by my brother Aikman and myself in our judgment in the case of Dip Narain Singh v. Hira Singh (1897) I.L.R. 19 All. 527. In that judgment we said: 'Had a third party purchased the property and had his purchase money discharged the prior mortgage in full, he would undoubtedly have been entitled to claim that a subsequent mortgagee who, by reason of his not being a party to the prior mortgagee's suit, had the right to redeem him, must pay him the full amount of the prior mortgage. But if the purchase money paid by such a purchaser did not fully satisfy the amount of the prior mortgage, he is not entitled, upon redemption by a puisne mortgagee, to the whole amount of the prior mortgage. The subsequent mortgagee would, in our opinion, have to pay the full amount due upon the prior mortgage; but that amount would be apportioned between the purchaser, whose purchase money satisfied the mortgage in part, and the mortgagee to whom the balance of the mortgage money is due. When there are more purchasers than one, the apportionment should be made between them pro rata, and the balance should go to the mortgagee.' These observations fully bear out the conclusion of the learned Judge, which is further supported by the ruling of Edge, C.J., and myself in Baldeo Bharthi v. Hushiar Singh Weekly Notes 1895 p. 45. If the view expressed in the above oases is correct, the apportionment ordered by the Court below is unimpeachable, and this appeal must fail. It is, however, argued that the question before us did not directly arise in, at least, the first of the two cases referred to above, and being thus an open question, should be considered and decided by us again. This is no doubt true, but I consider it highly inexpedient that the decisions of the highest Court in the Province should be frequently altered, and title acquired on reliance on those decisions thus unsettled and shaken. Unless, therefore, it is established that a decision already given after careful consideration is grossly erroneous, I should be loath to depart from it, even if its correctness may be open to question, and even if the opinion expressed in it is only obiter. It is contended that the view taken in one of the two cases mentioned above by my brother Aikman and myself, and that taken by Sir John Edge and myself in the other, are erroneous and not warranted by law. No case, reported or unreported, has been cited to us in which this or any other High Court has held or expressed a different opinion, and no authority has been referred to-which bears directly on the point and shows conclusively that this Court erred in making the observations contained in the judgments pronounced in the two cases mentioned above. Speaking for myself, I must say that I have heard nothing in the argument addressed to us which induces me to alter the opinion I have already expressed on the point, and to think that it is contrary to any specific provision of law, or to any rule of justice, equity and good conscience, according to which the Courts in these Provinces are bound to act. And I may add that after an anxious consideration of all that has been said in this case I still adhere to that opinion.
18. I need hardly mention that in every suit for sale brought by a prior-mortgagee a puisne mortgagee, of whose interests the plaintiff has notice, should, under Section 85 of the Transfer of Property Act, 1882, be joined as a party in order that he may be afforded an opportunity to exercise the right of redeeming the prior mortgage which, as subsequent mortgagee, he possesses. Where therefore, a prior mortgagee has obtained a decree for sale without making the subsequent mortgagee a party to his suit, the right of redemption of the latter does not become extinct and he is entitled to exercise it even after a sale has taken place in execution of the decree obtained upon the prior mortgage. He must, according to the rulings of this Court, 'be placed in the same position he would have held had he been a party to that litigation.' Having been relegated to the position which he would have occupied had he been a party to the suit, he could redeem the prior mortgage only upon payment of the whole amount due upon the mortgage. This is conceded on both sides, and is what was held in Dip Narain Singh v. Hira Singh (1897) I.L.R. 19 All. 527. When such payment is made after a sale has taken place under the first mortgagee's decree, the question arises--Who is entitled to the amount paid? That is the question which we have to decide in this appeal.
19. There can be no doubt that if the first mortgagee himself has purchased the mortgaged property, he alone is entitled to the mortgage money. It is also beyond question that if a stranger, i.e., a person other than the mortgagee, becomes the purchaser, and the price paid by him fully satisfies the amount of the mortgage debt, the whole of the mortgage money should go to him alone, the mortgagee having no longer any right to that money. It is contended that he would be equally entitled to the whole of the mortgage money even if the price paid by him satisfied the mortgage only partially. The reasons advanced in support of this contention are, that upon the making of an order for sale under Section 89 of the Transfer of Property Act, 1882, the mortgage security becomes extinct; that after an auction sale has taken place in pursuance of the order, the mortgagee ceases to have any right in respect of the property sold; that the rights of the mortgagor and mortgagee pass to the purchaser, and that therefore, upon redemption, the purchaser alone is entitled to the mortgage money. In the first place, this argument assumes that the purchaser is in substance an assignee of the mortgage, which he certainly is not. In the next place, it overlooks the very nature of a mortgage and the rights of the mortgagee. Every mortgage presupposes the existence of a debt, and it is for the purpose of securing the repayment of the debt that a mortgage of property is made. In every simple mortgage, unless there is a specific covenant to the contrary, there is a personal obligation upon the mortgagor to pay the debt, and there is also the liability of the mortgaged property for the debt. So that the security for the debt is two-fold, namely, first, the personal security of the mortgagor, and next, the security of the property. The liability of each kind of security is to the extent of the whole amount of the debt. It is for this reason that, when a person entitled to redeem seeks to redeem the mortgage, he must pay the whole amount due for the time being upon the mortgage. It is for the same reason that when the proceeds of the sale of the mortgaged property are insufficient to pay the amount due on the mortgage, the mortgagee is declared entitled to obtain under Section 90 of the Transfer of Property Act a decree for the balance, provided, of course, that his right to the balance has not been extinguished by the operation of limitation or for any other reason. The debt, that is, the principal money advanced by way of loan and interest thereon, called the mortgage money in Section 58 of the said Act, being the sum which must be paid in order to obtain redemption, the creditor, that is, the mortgagee, is the person who would ordinarily be entitled to get that sum. If a person other than the mortgagor entitled to make such payment, e.g., a purchaser of the mortgaged property, has paid off the whole amount of the debt, he, and not the mortgagee, would be entitled to the whole of the money paid for redemption. But if such other person has paid only a part of the debt due to and recoverable by the mortgagee, I fail to see under what principle of law or equity he would have the right to appropriate any sum in excess of the amount paid by him. If the appellants' contention is correct, such person would be entitled to the whole of the money paid for redemption. As, however, in the case supposed, a part only of the debt due to the first mortgagee had been discharged, the right of the first mortgagee to recover the balance due to him would still subsist. When, therefore, he realizes the amount of the balance, as he is entitled to do, the result will be that the amount of the same debt will have been recovered twice over--a result which no Court of Justice should countenance or sanction. Another and a more serious anomaly will arise if the appellants' contention be accepted. The subsequent mortgagee who redeems a prior mortgage is entitled to add to the amount of his own mortgage the amount of the prior mortgage and to recover the total sum from his mortgagor and the mortgaged property. If the proceeds of the sale of the mortgaged property prove insufficient for the realization of that sum, he will be able to recover the balance from the mortgagor by obtaining a decree under Section 90 of the Transfer of Property Act. If the whole amount of the prior mortgage be paid to the purchaser of the property, the first mortgagee, whose debt would remain unsatisfied, would, according to the learned Counsel for the appellants, also have the right to realize, by means of a decree under Section 90, the balance due to him. This right, the learned Counsel said, was a safeguard of the interest of the first mortgagee. So that the mortgagor may have to pay the same amount twice over, that is, once to the first mortgagee and again to the subsequent mortgagee. I need hardly say that I do not feel myself justified in adopting a view which will work such injustice.
20. If, again, we turn to the case of the mortgagee, similar injustice will be done to him in the event of the whole of the mortgage money being paid to the auction purchaser. When the subsequent mortgagee has redeemed the first mortgage by paying into Court the whole of the purchase money, the first mortgagee is not, in my opinion, entitled to obtain a decree under Section 90, on the ground that he has realized by the sale of the mortgaged property only a part of the debt; for when the mortgage has been fully redeemed by payment of the mortgage money into Court, it cannot possibly be said that a balance is still due upon the mortgage. The consequence will therefore be that, although the first mortgagee to whom a portion of the debt is due has not actually realized it, he will be wholly without a remedy in respect of that portion.
21. Now, let us see whether the view adopted by the learned Judge will lead to similar injustice or anything approaching it. The learned Judge has directed that the appellants should get the amount which Bansidhar, their predecessor in title, paid for the property, and interest on that amount from the date of his purchase. He has thus awarded the sum by which the purchaser was actually out of pocket. The purchaser has suffered no loss, and his only loss, if it may be called a loss, is that of the gain which he expected to derive from an apparently speculative purchase. When property is purchased under circumstances similar to those of the present case, the purchaser makes his purchase subject to the risk of its being defeated by the second mortgagee who was omitted from the first mortgagee's suit, and to the risk of his having to surrender the property upon the first mortgage being redeemed by the puisne mortgagee. It is not likely that a purchaser under such circumstances would pay full value for the property. If he has to give up the property for which, in the ordinary course of things, he must have paid inadequate value, and he is compensated by the payment to him of the money which he paid as the value of the property, I do not see that any hardship is done to him. If the property is of large value, sufficient to cover the amounts payable under both the first mortgage and the second mortgage, and he prefers to retain it and for that purpose has to pay the amounts of the two mortgages, he suffers no loss, because he receives back the amount of the purchase money already paid by him, and for the balance begets an adequate equivalent in the property itself. The present case appears to me to be an apt illustration in point. Bansidhar purchased the property in question after Gobind Ram, the second mortgagee, had obtained his decree. That decree was apparently in course of execution when the auction sale at which Bansidhar purchased took place, for we find that the said sale was confirmed after the postponement of the sale which had been ordered in execution of Gobind Ram's decree. Bansidhar, who, as attaching creditor, was himself executing the decree obtained on the first mortgage, must have known that in making the purchase he was undertaking a risk, namely, that of the sale being ignored by Gobind Ram, who was not a party to the first mortgagee's suit. He paid for the property a price which was evidently much below its proper value. Ho himself sold it immediately afterwards for more than four times the value he had paid for it, and it appears to have been admitted in this suit that the property was well worth Rs. 10,000. A person who purchased property of such value for Rs. 1,050 only cannot reasonably complain if he has to surrender the property upon getting back what he actually paid. And the appellants are in no better position than the person from whom they derive their title. It is true that if, under such circumstances, the purchaser has to surrender the property, he derives no benefit, but as he sustains no loss and as the benefit he expected to derive was that arising from a speculative purchase, he is not entitled to any sympathy. In my opinion the mode in which the Court below has apportioned the mortgage money is more in consonance with justice and equity than that contended for on behalf of the appellants.
22. It is strenuously argued on behalf of the appellants that after the sale under the first mortgage the first mortgagee ceased to have any right to the property, that it is because the property has passed to the purchaser and he objects to its being sold in satisfaction of the second mortgage that the second mortgagee is under the necessity of redeeming the first mortgage, that the mortgage money paid by the second mortgagee is paid by him in order to make the property available to him for the realization of the amount of his mortgage, and that the person who holds the property is therefore the only person who is entitled to the mortgage money paid by the second mortgagee. It is further urged that when the mortgagee asks for any portion of that money he seeks to resort to a source which he has already exhausted by causing the property to be sold. This contention might probably have been valid had the property been the only security for the mortgage debt, and the only source from which that debt could be recovered. But as has been already said, the security for the mortgage debt is, in the absence of a specific contract to the contrary, not only the security of the property, but also the personal obligation of the mortgagor to pay the debt, and the liability for the whole amount of the debt attaches to each of these securities.
23. A puisne mortgagee who was not a party to the first mortgagee's suit and had no opportunity of redeeming the first mortgage has to pay the full amount of the debt because he is bound to pay the amount which he would have had to pay had he been made a party, and there can be no question that he would have had to pay the full amount of the mortgage money due for the time being, inasmuch as that amount would have been recoverable from the property also. Where the first mortgagee has realized only a part of the debt by the sale of the property, that is, by enforcing the security of the property, there is still a balance due to him which he can realize by enforcing the other security. It follows that when the subsequent mortgagee pays the full amount of the debt and thereby totally discharges the debt, the person to whom the balance is due, that is, the first mortgagee, is the person who has the right to appropriate that portion of the money paid by the subsequent mortgagee which represents the balance, the purchaser whose purchase money has satisfied the remainder of the debt being entitled to the remainder of the money paid by the subsequent mortgagee. There can be no doubt that if in such a case the purchaser cannot hold up the payment made by him as a shield for his protection to the full extent of the mortgage money, he is not entitled to the whole of that money. It is, however, said that such a purchaser is entitled to use the first mortgage as a shield to the extent of the whole amount of that mortgage, but no authority has been cited in support of this contention. The contrary view was held in Baldeo Bharthi v. Hushiar Singh Weekly Notes 1895 p. 45. It does not appear to me to be reasonable that the purchaser should be awarded an amount which he never paid. The money paid by the second mortgagee does not consist of the proceeds of the mortgaged property, nor is it paid as an equivalent of the value of the said property. That money cannot, therefore, be regarded as derived from the source which has already been exhausted by the auction sale which has taken place in execution of the first mortgagee's decree. This case is not a case in which, under the contract of mortgage, the property was the only security for the debt. The second mortgagee, it is true, pays the mortgage money because of his interest in the property, but, as has been already pointed out, he does not pay it as solely representing the value of the security of the property. The fact of his ignoring the auction sale and offering to redeem the first mortgage does not revive the debt, because the debt had never been extinguished, and it is not on the ground of the revival of the debt that the first mortgagee can get the balance due to him. A comparison of the provisions of Section 89 of the Transfer of Property Act with those of Section 87 shows that an auction sale of the mortgaged property does not extinguish the debt, although it extinguishes the security as between the mortgagor and the mortgagee. No doubt the first mortgagee cannot proceed against the mortgaged property any longer, but I see no reason why he should be deprived of the money which is undoubtedly due to him because the person who purchased the mortgaged property took with his eyes open a defeasible title, and evidently paid for the property a value much below the value which it would otherwise have fetched. For the above reasons I see no valid grounds for departing from the view which my learned colleague and myself expressed, after careful and mature consideration, in Dip Narain Singh v. Hira Singh (1897) I.L.R. 19 All. 527, at p. 534. I am not aware of any ruling in which a different view was adopted, and, as I have already said, none was cited to us at the hearing. All the cases bearing on the point which I have been able to find in the reports are oases in which the purchaser had fully discharged the prior mortgage. I am unable to hold that upon considerations either of law or of equity the conclusion at which the Court below has arrived as to the apportionment of the mortgage money is erroneous. I would therefore dismiss the appeal with costs.
24. The objections preferred under Section 561 of the Code of Civil Procedure by the plaintiff and by Prasadi Lal are, in my judgment, untenable. As the plaintiff in his claim distinctly asked for possession, to which, it is admitted, he was not entitled, the learned Judge was justified in refusing to allow him his costs of the suit.
25. I think the award of interest on the purchase money paid by Bansidhar which has been decreed to the appellants was under the circumstances of the case, equitable. I would therefore also dismiss the objections under Section 561 with costs.
26. I would extend the time for payment to the 15th of January 1901.
27. The facts which gave rise to the suit out of which this appeal has arisen are somewhat complicated. On the 19th of April 1878, the owners of certain property situated in the village of Barka, in the Aligarh district, mortgaged it to Kaim Ali Khan and two others, described in the plaint as defendants, first party, as security for a loan of Rs. 1,500. On 29th January 1886, one-fourth of the same property was mortgaged to one Gobind Bam as security for a loan of Rs. 325.
28. On 1st August 1889, the first mortgagees got a decree for sale on their mortgage in a suit to which they had not made Gobind Ram a party.
29. On 23rd February 1892, Gobind Ram in a suit in which he impleaded Ganga Ram and Dungar Singh, in whose favour mortgages of portions of the property had been executed subsequent to his mortgage, obtained a decree for sale under his mortgage of the 29th January 1886.
30. The decree obtained by the defendants, first party, was attached by one Bansidhar, defendant, second party, in execution of a simple money decree he held against them. The mortgage decree was put in execution, and on the 24th March 1894, the mortgaged property was sold by auction and purchased by Bansidhar for the sum of Rs. 1,050.
31. Eight months afterwards Bansidhar sold the property for Rs. 4,400 to Jan Muhammad Khan and Musammat Wahid-un-nissa, defendants, third party, who forthwith executed a usufructuary mortgage of it in favour of Dungar Singh and others, defendants, fourth party.
32. On 4th December 1894, Gobind Ram, the second mortgagee, sold his decree to Gobardhan Das, the plaintiff in the present suit, for Rs. 840-6-9. The plaintiff alleges that Gobind Ram not having been made a party to the suit in which the decree on the first mortgage was obtained, did not lose his right to redeem that mortgage, which right has passed to him, the plaintiff.
33. The relief which the plaintiff asked for in this suit was a decree for possession of the property covered by the first mortgage on payment of Rs. 1,050, the amount fetched at the auction sale, or any sum the Court might adjudge to be proper. To this prayer the words 'and by redemption of the mortgage' are added. The plaintiff also adds a prayer for any other relief which, under the circumstances of the case, he might be held entitled to.
34. The present suit was instituted on the 8th December 1894. On the 17th December 1894, the defendants, first party, sold to one Prasadi Lal any rights they had under their mortgage deed of 19th April 1878, and decree of 1st August 1889, and Prasadi Lal was made a defendant to the suit. On 8th February 1894, he filed a written statement, alleging that the sum of Rs. 9,590-4-0 was due under the mortgage deed, and that plaintiff was not entitled to redeem the mortgaged property until he had paid him (Prasadi) that amount.
35. The Lower Appellate Court has made a decree in favour of the plaintiff, declaring that if he pays into Court the sum of Rs. 11,020 in discharge of the first mortgage, he shall be entitled to bring to sale the property covered by the first mortgage in order to realize both this sum of Rs. 11,020 and the amount due under the decree of 23rd February 1892, which was passed in favour of plaintiff's predecessor in title, the second mortgagee. Out of the amount of Rs. 11,020 directed to be paid into Court in redemption of the first mortgage, the Lower Appellate Court has ordered that the representatives of the auction purchaser under the decree on the first mortgage shall receive only the amount paid at the auction sale with interest, and that the balance shall go to Prasadi, the assignee of the rights of the first mortgagees. The representatives in title of the auction purchaser come here in second appeal.
36. The main plea urged in this appeal is that the apportionment of the Rs. 11,020 made by the Lower Appellate Court is wrong. It is contended that the assignee of the first mortgagees is not entitled to any part of this amount, the whole of which, it is urged, should go to the representatives in title of the auction purchaser. The question as to who is entitled to the money to be paid in redemption of the first mortgage was the subject of long and able argument at the bar.
37. The learned District Judge refers in support of his decision to a passage in a judgment of this Court in case of Dip Narain Singh v. Hira Singh (1897) I.L.R. 19 All. 527. The passage relied upon by the District Judge is as follows: 'If the purchase money paid by such a purchaser (i.e., a third party buying at a sale in execution of a decree on a prior mortgage) did not fully satisfy the amount of the prior mortgage, he is not entitled, upon redemption by a puisne mortgagee, to the whole of the amount of the prior mortgage. The-subsequent mortgagee would, in our opinion, have to pay the full amount due upon the prior mortgage, but that amount would be apportioned between the purchaser, whose purchase money satisfied the mortgage in part, and the mortgagee to whom the balance of mortgage money is due.' Now it must be admitted that the above passage fully supports the order which the District Judge has made as to the apportionment of the money to be paid in redemption of the first mortgage. But a reference to the rest of the judgment will show that the opinion expressed in the passage cited was not necessary for the decision of the case before the Court, and must therefore be looked upon as obiter dictum. I was a party to the judgment in Dip Narain Singh v. Hira Singh (1897) I.L.R. 19 All. 527. The able argument of the learned Counsel for the appellants has satisfied me that the opinion expressed in the passage cited as to how the money should be apportioned is erroneous.
In order to explain the reasons for the view I now take, I will state the present case as follows, disregarding the various devolutions of interest which have taken place, as they only complicate matters and do not affect the decision of the question at issue.
38. There are on a certain property two mortgages. The holder of the prior mortgage obtains a decree on his mortgage in a suit to which he does not make the second mortgagee a party. This decree is put into execution, the property is sold and purchased by a third party. The puisne mortgagee, not having been made a party to the suit on the first mortgage, has not lost his right under his mortgage. The right is to bring the property to sale in order to realize the amount due on his mortgage. But, as held by this Court, he cannot bring the property to sale until he has redeemed the first mortgage. It has been decided in the case cited above and in other cases that what the puisne mortgagee has to pay is not the amount which the property fetched at auction, but the amount which he would have had to pay had he been made a party to the suit brought by the first mortgagee, that is, the full amount of the mortgage money due on the first mortgage. The question is--Who is to get this amount? It appears to me that the first mortgagee can have no claim whatever to it, and for the following reasons. When the property was sold in execution of a decree passed on the first mortgage, the purchaser got a complete title to the property so far as the first mortgagee and the mortgagor were concerned. The rights of the mortgagor in the property entirely passed away with the sale, and, whatever rights the first mortgagee may have to proceed against the other property of the mortgagor, he has no right to get anything more out of the mortgaged property when once it has been sold in execution of the decree upon his mortgage. The only defect in the purchaser's title to the property is that the property is still liable for the amount of the second mortgage, owing to the second mortgagee not having been made a party to the suit on the first mortgage. When the second mortgagee pays the amount due under the first mortgage, that is only a condition precedent to his getting payment of his money by having the property sold if necessary. Supposing the amount due under the first mortgage is Rs. 10,000, and the amount due under the second mortgage Rs. 800. When the second mortgagee pays in Rs. 10,000 he is entitled to have the property sold, and out of the proceeds he gets Rs. 10,000 plus Rs. 800, the amount of his own debt. It is clear, therefore, that all that he has got is Rs. 800, the amount of his own debt. If he is paid the amount of his own debt, he has no right to proceed against the mortgaged property. As said above, his redemption of the first mortgage is only a step towards getting in his own money. It is a remarkable fact that in this case the representatives of the auction purchaser in their written statement distinctly said that they were willing to pay any amount found due to the second mortgagee, but no notice whatever is taken by the Courts below of this offer, and the fact that the Courts did not take notice of it is not made a ground of appeal in this Court.
39. Now, supposing the second mortgagee pays in the amount due under the first mortgage, from what source will this amount ultimately come? It is clear that it will come out of the property, for unless the property is of sufficient value to satisfy both the first and the second mortgagees, the second mortgagee will not, in order to recover, a comparatively small sum, as in this as in this case, risk the loss of a very large amount. Now, if the amount paid in by the second mortgagee on account of the first mortgage comes out of the property, what right has the first mortgagee to receive any portion of it? As said above, when property was sold in execution of the decree on the first mortgage, the right of the first mortgagee to receive anything more out of the property came to an end. I have no hesitation in holding that the first mortgagee is not entitled to receive any part of the sum paid by the second mortgagee in order to obtain the privilege of bringing to sale in satisfaction of his own debt a property in which the first mortgagee has ceased to have any interest, and which belongs solely to the auction purchaser, subject only to the liability to satisfy the second mortgage.
40. In the course of the argument stress was laid on the fact that the auction purchaser bought the property, when sold in execution of the decree on the first mortgage, for a very low price. I do not think this ought to affect the question we have to decide. He bought at a public auction--no fraud is attributed to him, and if he got a valuable property at a small price, that was his good fortune. For aught we know, Prasadi, who purchased the decree-holders' rights during the pendency of this suit, may have paid a still smaller price, but what the price was we are unable to say, as the copy of the sale-deed filed by him has somehow disappeared from the record.
41. It was also urged in argument that payment of the whole amount to the auction purchaser would affect the first mortgagee's rights under Section 90 of Act No. IV of 1882. In my judgment the first mortgagee's rights under Section 90 would not be affected. But whether or not, he is not, in my opinion, entitled to get any further sum out of the mortgaged property than was realized when it was sold in execution of the decree on his mortgage.
42. For the respondent, Prasadi, reliance was placed on a decision of this Court in the case of Baldeo Bharthi v. Hushiar Singh Weekly Notes 1895 p. 45. The facts of that case differ from those of the present, for, as is observed n the judgment, the first decree was not a decree for sale.
43. In this case the plaintiff as assignee of a second mortgagee, who had lent a sum of Rs. 325 on the security of one-fourth of the property mortgaged in the first deed of mortgage, prayed to be put in possession of the whole of the mortgaged property on payment of the amount realized at the auction sale. The second mortgage was a simple mortgage, and the above relief was one to which it is clear the plaintiff was not entitled. But he also asked for any other relief to which, under the circumstances of the case, he might be found to be entitled. With reference to this prayer I am of opinion that the Court below was justified in passing a decree for sale on redemption of the first mortgage. But, as set forth above, I differ from the Lower Appellate Court as to the manner in which the money to be paid by the plaintiff before he can sell the property in satisfaction, should be disposed of. I would sustain the, 6th arid 7th grounds of the memorandum of appeal to this Court, and hold that the money ought to go to the representatives of the auction purchaser, inasmuch as Prasadi by his sale-deed only acquired such rights as the first mortgagees may have to proceed under Section 90 of the Transfer of Property Act, and did not acquire any right to money which would come out of the mortgaged property, seeing that any rights which his assignors had over that property disappeared when it was sold in execution of their decree.
44. I would modify the decree of the lower Court by directing that the whole of the money to be paid by the plaintiff for redemption of the first mortgage shall go to the appellants, the representatives of the auction purchaser, and I would allow them the costs of their appeal.
45. There is an objection filed by the plaintiff-respondent to the order of the flower Court in regard to costs. I would not interfere with that order, which was within the discretion of the lower Court, and would dismiss the objection with costs.
46. Under the second paragraph of Section 575 of the Code of Civil Procedure the decree of the Court below is affirmed, and the appeal and the objections under Section 561 are dismissed with costs. The time for payment of the mortgage-money is extended to the 15th of January 1901.