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Ram Saran and anr. Vs. Abdul Ghaffar and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1928All378; 114Ind.Cas.38
AppellantRam Saran and anr.
RespondentAbdul Ghaffar and anr.
Excerpt:
.....mata din v. 4. i concur, but i would like to point out the present effect of the decision in sundar singh v. the reason for the latter opinion was clearly the decision in matadin kasodhan v. bholu is no longer, in my opinion, good authority for holding that the holder of two mortgages can sue on his first mortgage without disclosing the second, or, even if he discloses the second, can put the property up for sale on the first mortgage without forgoing all his rights under the second mortgage. that may have been good law at the time when the decision was passed, but it ceases to be good law by reason of the provision of rule 1, section 34, which while it allows a second mortgagee to sue on his mortgage without joining the first mortgagee as party, on the other hand does not allow the..........on the basis of the second mortgage he proclaimed the existence of the first mortgage over the property mortgaged. if a mortgagee having two mortgages over the same property puts the later mortgage into suit and discloses the existence of the first mortgage and obtains a decree for sale on the basis of the second mortgage for sale of the property subject to the prior mortgage, and that decree is put into execution and the property is sold subject to the prior mortgage, the auction-purchaser purchases the property subject to the first mortgage, and it is not open to him to resist a suit for sale on the basis of the first mortgage on the ground that the property once having been sold in execution of the decree obtained by the mortgagee on the basis of the second mortgage, is not liable.....
Judgment:

Iqbal Ahmad, J.

1. This appeal must be allowed and the decision of the trial Court must be restored. There is nothing in law to prevent a person holding two independent mortgages over the same property from putting the subsequent mortgage into suit first and then bringing a second suit on the basis of the first mortgage held by him, provided that while bringing a suit on the basis of the second mortgage he proclaimed the existence of the first mortgage over the property mortgaged. If a mortgagee having two mortgages over the same property puts the later mortgage into suit and discloses the existence of the first mortgage and obtains a decree for sale on the basis of the second mortgage for sale of the property subject to the prior mortgage, and that decree is put into execution and the property is sold subject to the prior mortgage, the auction-purchaser purchases the property subject to the first mortgage, and it is not open to him to resist a suit for sale on the basis of the first mortgage on the ground that the property once having been sold in execution of the decree obtained by the mortgagee on the basis of the second mortgage, is not liable again to be sold in execution of the decree obtained on the basis of the first mortgage. The proposition of law enunciated above finds support from the Full Bench decision of this Court in Sundar Singh v. Bhalu [1898] 20 All. 322. It is to be noted that the observation of the learned Judges in that case that

one thing is quite clear, that the plaintiffs cannot sell the property twice over, and they cannot sell under the second decree subject to the first

cannot now be held to be good law inasmuch as that observation was based on the Full Bench decision of this Court in Mata Din v. Kazim Husain [1891] 13 All, 432 (F.B.), and the binding nature of that decision has been taken away by the later Full Bench decision of this Court in Ram Shankar Lal v. Ganesh [1907] 29 All. 385. In view of the provisions of Order 34, Rule 1, Civil P. C, it cannot be doubted that it is open to a subsequent mortgagee to put his mortgage into suit without impleading the prior mortgage. That being so, it is open to a person holding two mortgages over the same property to put his second mortgage into suit without claiming to enforce his first mortgage provided he expressly declares his intention of reserving his rights as a prior mortgagee and claims to sell the property in enforcement of the second mortgage subject to his rights as a prior mortgagee.

2. In the suit giving rise to the present appeal it was agreed in the Courts below that the plaintiff had four mortgages over the property in dispute. He put the last mortgage into suit and obtained a decree. In suing on the last mortgage he had disclosed existence of the previous mortgages and prayed for sale of the property subject to the encumbrance evidenced by those mortgages. A decree was eventually passed in his favour and in execution of that decree the property in dispute along with some other property was sold subject to the prior mortgages. The property in dispute was purchased by defendant 2 who is the contesting respondent before us. Then the plaintiff brought the suit giving rise to the present appeal for enforcement of an earlier mortgage held by him. The trial Court held that he was entitled to a decree for sale of the property purchased by the contesting respondent in terms of the reliefs prayed for in the plaint.

3. The lower appellate Court agreed with the findings of the trial Court on all points except one. It held that the plaintiff was not entitled to sell the property in dispute a second time in enforcement of his prior mortgage and as such was not entitled to get a decree against the contesting respondent. In view of this finding the lower appellate Court reversed the decree of the trial Court and dismissed the plaintiff's suit. I have given my reasons for disagreeing with the view of law taken by the lower appellate Court and for agreeing with the trial Court in holding that the plaintiff is entitled to get a decree for sale of the property purchased by the contesting respondent and to enforce the decree by sale of the property in his hands. The other points on which the suit of the plaintiff was resisted by the contesting respondent in the Courts below were found against him by both the Courts below and the findings of those Courts have not been assailed in argument before us. The result is that I would allow the appeal, set aside the decree of the lower appellate Court and restore the decree of the trial Court with costs in all Courts.

Ashworth, J.

4. I concur, but I would like to point out the present effect of the decision in Sundar Singh v. Bholu (1). That decision was to the following effect:

The holder of two independent mortgages over the same property, who is not restrained by any covenant in either of them may obtain a decree for sale on each of them in a separate suit.

5. It was expressed in the same judgment as an obiter dictum that, if two such separate decrees were obtained, the decree-holder could not sell the property twice over. The reason for the latter opinion was clearly the decision in Matadin Kasodhan v. Qazim Husain [1891] 13 All, 432 (F.B.) that what is sold must be the property itself and not the equity of redemption.

6. The case of Sundar Singh v. Bholu is no longer, in my opinion, good authority for holding that the holder of two mortgages can sue on his first mortgage without disclosing the second, or, even if he discloses the second, can put the property up for sale on the first mortgage without forgoing all his rights under the second mortgage. That may have been good law at the time when the decision was passed, but it ceases to be good law by reason of the provision of Rule 1, Section 34, which while it allows a second mortgagee to sue on his mortgage without joining the first mortgagee as party, on the other hand does not allow the first mortgagee to sue without joining the second mortgagee. The obiter dictum no longer holds good. It relied upon Matadin Kasodhan's case which has been overruled by the Full Bench decision of Ram Shankar Lal v. Ganesh Prasad [1907] 29 All. 385. In that decision it is held that the words 'mortgaged property,' as used throughout Ch. 4, T.P. Act, means the interest in specific immovable property which the mortgagor professes to transfer whatever that interest may be. It follows that the equity of redemption may be sold apart from the corporeal property. It is to be observed that none of the decisions quoted apply to a case where the holder of two mortgages sues on the second mortgage without disclosing the first mortgage. In such a case, in my opinion, it should be held that he is estopped from pleading that what was sold was a mere equity of redemption if he allows the sale proclamation to be issued as if the actual property and not merely the equity of redemption was being sold. In such a case the holder of two mortgages suing on the second mortgage occupies a different position to the holder of a second mortgage where a different person is the holder of a first mortgage. In the later case a purchaser is put on his guard to see what property is sold. When one person is holder of both the mortgages and sells property under the second mortgage without any mention of his own prior incumbrance, the purchaser is entitled to treat the 'sale proclamation as an assurance by the mortgagee that he, the mortgagee, has no prior incumbrance over the property.

7. The state of law then appears to me to be this: Where a person holds two mortgages over the same property, he cannot sue on the first mortgage alone without forgoing the second mortgage. He can, however, sue and sell on a second mortgage provided that he declares the existence of a first mortgage and has it entered in the sale proclamation. If he does not do this, then he must be deemed to have forgone the first mortgage.


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