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Muhammad HusaIn Khan and anr. Vs. Chhagan Lal and - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Judge
Reported in(1919)ILR61All456
AppellantMuhammad HusaIn Khan and anr.
RespondentChhagan Lal and ;mamraj and anr.
Excerpt:
mortgage - prior and subsequent mortgagees--decree obtained on prior mortgage--fresh mortgage executed in consideration of balance due under the decree--provision in deed that the decree shall be deemed discharged--effect of decree absolute as regards extinction of the security. - - there had been a decree in the year 1898 to realize the amount due on both mortgages and the decree had been entered as satisfied. if the plaintiffs had sued on the basis of either of the mortgages of 1893, they would clearly have been defeated on the ground of res judicata. that decree has been certified as satisfied, and yet in truth the plaintiffs are suing a second time in respect of these two mortgages. they are not merely holding up the previous mortgages as a 'shield,'they come into court as.....henry richards, kt., c.j.1. this appeal arises out of a suit, brought to recover the amount alleged to be due upon foot of a mortgage, dated the 17th of may, 1904. portion of the property comprised or alleged to have been comprised, in this mortgage, originally belonged to one mamraj. on the 11th of july, 1893, mamraj mortgaged a one-third share in a certain khata in favour of chajju khan. on the 29th of november, 1893, he made a mortgage in favour of the plaintiffs. exactly what property was comprised in this second mortgage is not very clear. on the 21st of august, 1894, he made a third mortgage in favour of amolak. we are again uncertain what was the exact property that was mortgaged in this last mentioned mortgage or whether it was the same as was mortgaged in one or other or both of.....
Judgment:

Henry Richards, Kt., C.J.

1. This appeal arises out of a suit, brought to recover the amount alleged to be due upon foot of a mortgage, dated the 17th of May, 1904. Portion of the property comprised or alleged to have been comprised, in this mortgage, originally belonged to one Mamraj. On the 11th of July, 1893, Mamraj mortgaged a one-third share in a certain khata in favour of Chajju Khan. On the 29th of November, 1893, he made a mortgage in favour of the plaintiffs. Exactly what property was comprised in this second mortgage is not very clear. On the 21st of August, 1894, he made a third mortgage in favour of Amolak. We are again uncertain what was the exact property that was mortgaged in this last mentioned mortgage or whether it was the same as was mortgaged in one or other or both of the mortgages of 1893. The plaintiffs instituted a suit on foot of their mortgage of the 29th of November, 1893, and obtained a decree. They made Chajju Khan a party, and the decree directed that the plaintiffs should redeem Chajju's mortgage and that then they would be entitled to sell the property for the total amount due on foot of the two mortgages. The decree was made absolute, and certain payments were made on foot thereof. The property was never actually sold on foot of this decree. On the 17th of May, 1904, a fresh mortgage was made in favour of the plaintiffs. This is the mortgage upon which the present suit is based. The consideration for this mortgage was the amount that remained due on foot of the decree, namely, Rs. 156 (the decree of course included costs). A further sum of Rs. 94 also is alleged to have been advanced in cash. The property mortgaged was one-sixth of khewat No. 28 and a considerable amount, of other property. It is not clear whether the one-sixth mortgaged in this mortgage was identical with the one-third mortgaged by the first mortgage or whether it was identical with the property mortgaged in the second mortgage. In the meantime Amolak had brought a suit on foot of his mortgage of the 21st of August, 1894. He omitted to make the plaintiffs a party to his suit, perhaps not unnaturally because prima facie these two prior mortgages had been discharged. There had been a decree in the year 1898 to realize the amount due on both mortgages and the decree had been entered as satisfied. Amolak got a decree and purchased the whole or part of the property in his mortgage. The plaintiffs have now instituted the present suit. They claim as against the minor son of Amolak, that they are entitled to priority in respect of the two mortgages of 1893. In other words they seek to get a second decree for the sale of the same property for which a decree for sale was previously obtained. The court below has decided in favour of the plaintiffs. Reliance is placed on the decision in Kanhaya Lal v. Chhida Singh (1910) 7 A.L.J.,984, and the decision in Rahim-un-nissa v. Badri Das (1911) I.L.R., 33 All., 368, which followed the first mentioned decision. I must confess that I have very grave doubts as to the soundness of the decision in Kanhaya Lal v. Chhida Singh (1910) 7 A.L.J.,984 and its application to the present case. If the plaintiffs had sued on the basis of either of the mortgages of 1893, they would clearly have been defeated on the ground of res judicata. A suit was brought upon foot of one of these mortgages, and a decree was made to sell the property for the amount due on both, the decree-holder having redeemed the earlier. That decree has been certified as satisfied, and yet in truth the plaintiffs are suing a second time in respect of these two mortgages. They are not merely holding up the previous mortgages as a 'shield,' They come into court as plaintiffs asking that their mortgage of 1904 should be treated as if it was a mortgage of 1893. It seems to me that when a suit) is brought on foot of the mortgage and a decree is obtained, the mortgage-debt merges in the decree and the mortgage is satisfied. In the present case the court below has actually allowed the plaintiffs (that is the very persons who obtained the decree on foot of the mortgages of 1893), interest at the contractual rate stipulated for in these mortgages, that is to say, interest at 15% per annum compound interest; a rate of interest which under no circumstances could have been payable under the decree. Furthermore, payments had been made and there was only a small balance due on the decree, the amount of which, as I have already said, included costs. Had interest at 15% compound interest not been allowed to the plaintiffs, the probabilities are that the mortgaged property other than the share purchased by Amolak, would have been amply sufficient to satisfy any balance that was due on the decree. No doubt it has been held that where property is purchased at auction sale in execution of a decree upon a prior mortgage and the puisne incumbrancer has not been made a party to the suit, the purchaser is allowed to hold up the prior mortgage as a 'shield' against the puisne incumbrancer, whose only right was to redeem the prior mortgage; but in such a case the purchaser at the auction sale acquires all the rights of the original mortgagee and all the rights that were left belonging to the mortgagor. All that he did not acquire was the right of the puisne incumbrancer to redeem, The purchaser in such a case is a defendant defending his possession, not a plaintiff suing on a mortgage. In the present case no one is attacking the plaintiffs. On the contrary, they are the attacking parties. It is not even certain that they have exhausted the other property comprised in the mortgage of 1904 before seeking to take that purchased by Amolak. I, of course, feel that if the facts of this case turn out to be identical with the facts in Kanhaya Lal v. Chhida Singh (1910) 7 A.L.J., 984, this Court ought either to follow that decision or refer the case to a larger Bench. Before making further orders in the appeal, I think certain issues ought to be referred:

(1) What was the property mortgaged in each of the mortgages of the 11th of July, 1893; 29th of November, 1893; 31st of August, 1894, and the 17th of May, 1904?

(2) Was the property situate in Khewat No. 28 now number (No. 27 old number), mortgaged in all or any, and if so, which of the above mentioned mortgages; and was it the same share that was mortgaged in each of these mortgages?

(3) What was the original share of Mamraj in old No. 27, and what was his or his successors' share in this khata after partition?

(4) What is the proportionate value of the property mortgaged in each of the four mortgages? The values may be taken as of the present time.

Rafiq, J.

2. I express no opinion for the present as to the question of law raised in the case. I, however, agree to the remitting of the issues to the lower appellate court for trial, upon the return of which I think the question of law can be more satisfactorily decided.

3. After return of the findings by the lower appellate court, the case was ultimately referred to a Bench of three Judges, consisting of Richards, C.J., Rafiq, J., and Lindsay, J.

4. Munshi Girdhari Lal Agarwala, for the appellant.

5. The two mortgages of 1893, to which the plaintiffs seek to make their claim relate back, were merged in the decree which was obtained on foot of them and were extinguished thereby. Thereafter, the only manner in which the mortgagees could proceed in respect of those mortgage transactions was to execute their decree. They could not again claim to enforce the securities by a fresh suit. In other words, the securities as such had come to an end and been merged in the decree; so that, there remained no prior incumbrancI.L.R.e which the plaintiffs, by virtue of paying off the decree, could seek to enforce. This view is supported by the case of Nakta Ram v. Moti Ram Weekly Notes, 1906, p 191. The ruling in Kanhaya Lal v. Chhida Singh (1910) 7 A.L.J., 934, which was followed in the case of Rahim-un-nism v. Badri Das (1911) I.L.R., 33 All., 368, certainly supports the respondents' claim, but it is submitted that the decision is not correct. It merely adopts, without any discussion, the view of the Madras High Court in Purnamal Chund v. Venkata Subbarayalu (1897) I.L.R., 20 Mad., 486, namely, that the fact of the earlier security having taken the form of a decree makes no difference regarding the question of priority. It is submitted that the circumstances are very much changed when a security takes the form of a decree for sale, so that it cannot be enforced a second time. Further, in some of the cases it has been held that where there is nothing to show what the parties intended the law will presume that a subsequent mortgagee who pays off a prior incumbrance intends not to extinguish it but to keep it alive if it is to his benefit to do so. But there is no room for any such presumption in the present case because here the intention was clearly expressed in the mortgage-deed of 1904, that the decree was to be deemed discharged and extinguished

6. Mr. Hameed-ullah, (with him Mr. Shamnath Mushran), for the respondents:

7. The passing of the decree on foot of the prior mortgages did not extinguish the security, though the security was merged in the decree; and when the plaintiffs paid off the decree, the incumbrances in respect of which the decree was passed enured to his benefit Reference was made to the following cases: Shyam Lal v. Bashir-ud-din (1906) I.L.R., 28 All., 778 Rahim-un-nisaa v. Badri Das, (1911) I.L.R., 33 All., 368 Kanhaya Lal v. Chhida Singh (1910) 7 A.L.J., 984 Surjiram Marwari v. Barhamdeo Persad (1905) 20. L.J., 202 (214) and Mahalakshmanimal v. Sriman Madhwa Siddhanta Oonnahini Nidhi (1911) I.L.R., 35 Mad., 642. The facts of the last mentioned case were exactly similar to those of the present case. I am further supported in principle by the ruling in Bibijan Bibi v. Sachi Bewah (1904) I.L.R., 31 Calc., 863 which lays down that even after the passing of the order absolute for sale and until actual sale the security is not extinguished. I rely on the reasoning of Mookerjee, T., in the case in Surjiram Marwari v. Barhamdeo Persad (1905) 20. L.J., 202 (214) cited above, The mere fact of a charge having been paid off does not decide the question whether it is extinguished. Whether a mortgage debt which has been satisfied is to be construed as extinguished or kept alive for the benefit of the person who makes the payment is a question of intention to be determined with reference to the surrounding facts; and the law will impute to him the intention to act according to his benefit. I rely on the principles laid down by and deducible from the following cases-Adams v. Angell (1877) L.R., 5 Ch. D., 634 (645), Gokaldas Gopaldas v. Puranmal Premsukhdas (1884) I.L.R., 10 Calc., 1035, Purnamal Chund v. Venkata Subbarayalu (1897) I.L.R., 20 Mad., 486, Dinobundhu Shaw Chowdhry v. Jogmaya Dasi (1901) I.L.R., 29 Calc., 154 and Mahomed Ibrahim Hossain Khan v. Ambika Pershad Singh (1919) I.L.R., 39 Calc., 527 (554).

8. As to whether a second suit can be brought on the two prior mortgages on which a suit had already been brought and a decree obtained, it is submitted that the third mortgagee, Amolak Ram had not been made a party to the former suit. As against him, therefore, a second suit can be brought on the same mortgage. The present suit is principally against Amolak Barn or his representative in interest, and it is against him that the priority is claimed on the basis of subrogation.

9. In answer to a plea of limitation the plaintiffs can rely on the acknowledgment of the mortgages of 1893, contained is the mortgage-deed of 1904. Such acknowledgment would relate back to the mortgages on which the decree was passed.

10. The case of Ramkruhna Sadashiv v. Chothmal (1888) I.L.R., 13 Bom., 348 was distinguished in Mahalakshmammal v. Sriman Madhwa Siddhanta Oonnahini Nidhi (1911) I.L.R., 35 Mad., 642 cited above. Further, no express condition for subrogation is required; the law imputes the intention to exercise the right. The case of Our Narain v. Shadi Lal (1911) I.L.R., 34 All., 102 held expressly that the right of priority derived from subrogation could be enforced both by a plaintiff suing for sale as well as by a defendant resisting a suit for sale.

11. Munshi Girdhari Lal Agarwala, was not heard in reply.

Richards, C.J.,

12. The facts connected with this appeal are stated in my judgment delivered on the 1st of August, 1916, and it is unnecessary to repeat them. It may, however, be well to summarize the result of the findings of the court below upon the issues referred in conjunction with the statements made by the learned Counsel upon each side as to the mortgages. It appears that the principal property mortgaged in the mortgage of the 11th of July, 1893, was a one-third share in a certain khata. The property hypothecated the mortgage of the 29th of November, 1893, was practically the same. In the mortgage of the 21st of August, '894, the same share in this khata was mortgaged, and there was some additional property. In the mortgage of the 17th of May, 1904, one-sixth of this khata (instead of one-third) is mortgaged and some additional property as well. The plaintiffs obtained a decree on foot of the mortgage of the 29th of November, 1893, whereby they were ordered to redeem the mortgage of the 11th of July, 1893, when they would be entitled to sell the property for the aggregate amount of these two mortgages. That decree was duly made absolute and was put into execution and the greater part of the mortgage debt was realized, leaving only a balance of Rs. 156. The property was, however, never brought to sale. The mortgage on foot of which the present suit is based is the mortgage of the 17th of May, 1904. The consideration for that mortgage was the Rs. 156 which still remained unpaid on foot of the mortgage decree which the plaintiffs obtained on their previous mortgage plus an additional sum of Rs. 94. The question which the plaintiff sought to have decided in his favour as against the appellant here was that he should obtain priority in respect of this Rs. 156 against the defendant appellant and that he should be at liberty to sell a one-fourth share which the appellant had purchased to realize this Rs. 156 and interest. The circumstances under which the one-fourth share was purchased is as follows. Amolak (the father of the appellant) obtained a decree on foot of the mortgage of the 21st of August, 1894. The property was put up to sale and the defendant purchased one-fourth of the khata (No. 27) being the khata which is common to all four mortgages. Reading the mortgage of the 17th of May, 1904, it is abundantly clear that it was intended that this mortgage should discharge and be in satisfaction of the decree. On the face of it, it is stated that the decree is discharged. On a previous occasion when the case was before the Court it was stated that the decree had been certified as discharged. Whether this was actually done or not, it is clear that in 1904 after the mortgage was executed it was never intended that the decree should be further executed and if the decree was not certified as satisfied, it should have been so certified. If it was necessary I should hold that under the circumstances of the present case no presumption arises that the plaintiff intended to keep alive either the mortgage of the 11th of July, 1893, or the mortgage of the 29th of November, 1893. I think there is express evidence that the intention was that these mortgages and the decree were to be treated as discharged. It must be admitted that if the plaintiffs' claim in the present suit is to date from the 17th of May, 1904, when he took the new mortgage, the appellant has priority over him because the appellant's purchase and possession must be attributed to the mortgage of the 21st of August, 1894. It is said, however, that as against the defendant appellant the plaintiff has priority to the extent of Rs. 156 and interest as of July, and November, 1893. This contention is based upon the presumption that because it was for the interest of the plaintiffs to keep alive the securities of 1893, it must be presumed they intended to do so and in fact did so. I have already stated what my/opinion is as to this matter. It seems to me, however, that in any event the two mortgages of 1893 mortgaged in the decree which the plaintiff obtained on foot of the mortgage of the 29th of November, 1893, and that those mortgages were discharged and extinguished. If the plaintiff bases his claim on either of these mortgages, he is at once met with a number of defences. In the first place it can be said that a suit was brought on foot of these mortgages and a decree obtained for the sale of the mortgaged property and that a second decree cannot be made. In the next place, if the plaintiffs were suing on foot of one or other or both these mortgages, the suit would be barred by limitation. If the plaintiff bases his claim on the fact that he is a decree-holder, the answer is that the present proceeding is not an application to execute a decree but a suit asking for a decree directing the sale of the property. In the present case it happens that the plaintiff was the decree-holder who obtained the mortgage decree on the mortgage of November, 1893. But if he happened to be a third party who had paid off a prior incumbrance, I do not think that a third party has any higher right than the original mortgagee would have had. I may quote here the words of Mr. Justice Warrington in the case of Ellis v. Ellis (1905) 1 Ch. D., 613: 'The plaintiffs then contend that George Ellis having paid off the debt for the benefit of the estate was entitled to stand in the place of the creditor, and that he transferred that right to James Ellis, who actually found the money. But, granting that such would be the right of George Ellis and that the plaintiffs could assert that right by subrogation, any claim founded on it would now be barred by the statute of limitations. The debt is of course long since barred, and all claims under the original security arc now barred also, for in this aspect of the case the payment of the interest was made by a stranger, and was not such a payment as would prevent the statute from running.'

13. It is said that because the plaintiffs omitted to make the appellant a party to their suit on their mortgage they can bring a second suit on their mortgage as against the appellant. I think this very doubtful. But oven if they could, the present suit is based on the mortgage of 1901, not on the mortgage of 1893. In my previous judgment I have pointed out the distinction between a plaintiff seeking to sell property simply by reason of his having discharged a prior incumbrance and a defendant defending his possession or position in a suit brought against him. The very metaphor of the shield indicates the distinction. A man does not attack with a shield; he defends with it. Reliance was placed on behalf of the respondents on certain remarks of Mr. Justice Mookerjee in the case of Dhakeswar Prosad Singh v. Harihar Prosad Narain Singh (1914) 21 C.L.J., 104. At page 110 of the report that very learned Judge says: 'This principle is obviously applicable to the case before us, although the mortgage debt was satisfied by a purchase of a portion of the mortgaged property after a decree had been obtained on the mortgage. The purchaser who redeemed the mortgage was for the purposes of the rule in the same position as if he wore one of two joint mortgagors. The fact that a decree had been obtained on the mortgage was also immaterial, because a decree obtained on a mortgage does not extinguish the security, though the security may be merged in the decree and the judgment recovered in any form of action is still but a security for the original cause of action until it be made productive in satisfaction to the judgment-debtor.' The facts of the case in which this judgment was delivered were different from the facts of the present case; but it seems to me that if it be taken that the mortgages of 1893 merged in the decree obtained by the plaintiff, then the plaintiff's remedy was no longer that of a mortgagee but that of a person who held a decree under which he was entitled to bring certain property to sale. If he wished, to retain this position he should not have taken a fresh mortgage, the consideration for which was the decree, he should have executed his decree. It may be that where a person pays off a prior incumbrance before a decree has been made on foot of it and either expressly or by implication retains the benefit of that prior incumbrance, he can be treated as if he were the assignee of the prior incumbrance; and if the prior incumbrance is not barred by limitation, he may be able to bring a suit just as the transferee of the prior incumbrance might have done. But it seems to me that the person paying off a prior incumbrance without taking a deed of transfer can be in no higher position than the prior incumbrancer would have been. If a decree has been obtained on foot of the prior incumbrance, then it seems to me that the prior incumbrance as such is discharged, and from thence forward the remedy is under the decree. I have pointed out that the question between the parties to this appeal was whether or not the plaintiff could insist on priority against the appellant. The plaintiffs have made no claim to redeem the appellant. I think, therefore, that the decree of the court of first instance should be restored.

Muhammad Rafiq, J.

14. I am also of opinion that this appeal should prevail. It appears that originally Mohor Singh (the father of Mararaj and the grandfather of Hoshiar, defendants 3 and 4 in the first court) executed a mortgage on the 11th of July, 1893, in favour of Chhagan Khan (the father of Muhammad Husain Khan) and Masit-ullah. Muhammad Husain Khan and Masit-ullah are the plaintiffs in the present suit. By way of security he (Mohor Singh) hypothecated a khata. About four months after he executed another hypothecation bond in favour of Chajju Khan in respect of the same khata. On the 21st of August, 1894, he gave a third mortgage-deed to Amolak (the father of the contesting defendant, Chhagan Lal). In the deed of 1894 the same property that was mortgaged in the deeds of 1893 was hypothecated together with some other property which need not be mentioned here. In 1898 Muhammad Husain Khan (one of the plaintiffs in the present suit) sued on the mortgages of 1893 and obtained a decree for sale against both Mohor Singh and his son, Mamraj. The decretal amount not having been paid, an order absolute was made on the 13th of March, 1899. Amolak subsequently to these proceedings brought a suit on the basis of his mortgage of 1894, Muhammad Husain alleges that he applied to be brought on the record as a party, but his application was rejected. The case proceeded to trial and a decree was passed in favour of Amolak for the sale of the hypothecated property. In execution of the decree part of the property was sold and purchased by Amolak, namely, one-fourth of khata No. 27, that is, the property which was hypothecated in both the bonds of 1893 and 1894. Mamraj executed a further deed of mortgage in favour of Muhammad Husain Khan for Rs. 250. Out of the sum of Rs. 250, Rs. 156 were credited towards the decree of 1898 in full discharge as part of the decree had already been paid up. In the bond of 1904 a portion of khata No. 27 was mortgaged by way of security together with property in other khatas. On the 2nd of January, 1904 the suit out of which this appeal has arisen, was brought by Muhammad Husain Khan and Masit-ullah Khan against Chhagan Lal (the son of Amolak) and against Mamraj and his minor son, Hoshiar, for the recovery of the money due on the bond of the 17th of May, 1904, by sale of the property hypothecated in the said bond. Chhagan Lal resisted the claim on various pleas, one of which was that the property which his father had purchased in execution of his decree was not liable to sale under the decree passed in favour of the plaintiffs on the bond of the 17th of May, 1904. The plaintiffs in rejoinder contended that as part of the consideration of the bond of the 17th of May, 1904, was the money due on the decree of 1898, and the latter decree was on the basis of the bonds of 1893, they (the plaintiffs) had priority over Amolak's mortgage of 1894. The court of first instance accepted the contention for the defence and disallowed the claim of the plaintiffs for priority as against the defendant appellant. On appeal the learned Subordinate Judge disagreed with the first court and following a ruling of this Court, decreed the claim of the plaintiffs against the property that had been purchased by Amolak in execution of his decree. In second appeal to this Court the contention on behalf of Amolak's son is that the plaintiffs had no priority, over him, inasmuch as their mortgages of 1893 had merged into the decree of 1898. On the other hand, the contention for the plaintiffs respondents is that where a prior mortgagee obtains a decree upon his prior mortgage and in lieu of the amount of that decree obtains a subsequent mortgage of the same property from the mortgagor, the prior mortgage enures to his benefit and he can hold it up as a shield against the puisne mortgagee whose mortgage is of a date subsequent to that of the prior mortgage, and if it is to the benefit of the prior mortgagee to keep alive that mortgage, it would be presumed that he kept it alive. In support of this contention several cases have been cited by the learned Counsel for the plaintiffs respondents. The principal case upon which reliance is placed is a case of this Court--Kanhaya Lal v. Chhida Singh (1910) 7 A.L.J., 984. It is unnecessary to refer to the other cases cited on behalf of the respondents as there is no doubt that there is authority in support of the contention. But I think, as far as this case is concerned, none of those cases is applicable. The facts of this case are quite different. If it be conceded that where a prior mortgagee obtains a decree upon his prior mortgage and in lieu of the decretal amount gets a subsequent mortgage of the same property from the mortgagor, the prior mortgage enures to his benefit and he can enforce it against the property in preference to the subsequent mortgage, it has still, to be seen whether in the present case there was an intention on the part of Chajju Khan or Muhammad Husain Khan to keep alive the prior mortgage, or under the circumstances of the present case we can presume such intention. On reference to the deed of the 17th of May, 1904, it is clear that there was no intention to keep the mortgages of 1893, or the decree of 1898, alive for the benefit of the mortgagee. In fact the wording is such that a contrary intention is expressed. It is distinctly stated there that the mortgage was taken partly in satisfaction of the decree of 1898, which had been put into execution, upon which payments had been made and which after the execution of the mortgage had been certified as discharged, In the deed of the 17th of May, 1904, only a portion of the property that was mortgaged in the deeds of 1893 was taken by way of security--(and other property of higher value was also taken by way of security). I would also note here that this case is to be governed by the provisions of Act IV of 1882. Under Section 89 of the said Act when the order absolute is made the right to redeem and the security of the mortgagee are both extinguished. I aim-aware of the fact that in spite of the language of Section 89 the courts have allowed redemption, and in the cases cited on behalf of the plaintiffs respondents the mortgage security is said not to have been extinguished. With due deference to the learned Judges, I would say that the language of the section is quite clear and distinct, and the mortgage security is extinguished when after a decree is passed on a mortgage an order absolute is made. The mortgagee, instead of having the mortgage as a security, on getting a decree has his right of sale under the decree. Their Lordships of the Privy Council in the case of Het Ram v. Shadi Ram (1918) I.L.R., 40 All.,.407 say: 'The section then provides that the defendant's right to redeem and the security shall both be extinguished. The construction which their Lordships put on the language so used is that on the making of the order absolute the security as well as the defendant's right to redeem are both extinguished, and that for the right of the mortgagee under his security there is substituted the right to a sale conferred by the decree.' After this expression of opinion it can hardly be contended that if a prior mortgagee obtains a decree and that decree is made absolute and then he takes a fresh mortgage, he can still fall back upon his first mortgage as against intermediate mortgagees. I would, therefore, hold that the plaintiffs respondents have no priority over the defendant appellant in respect of the property purchased by his father. I would therefore allow the appeal.

Lindsay, J.

15. I agree that this appeal should be allowed. The suit out of which it has arisen has been brought by the plaintiffs respondents for the purpose of recovering a debt secured by a mortgage executed in their favour in the year 1904. They are seeking to recover the mortgage money out of property which is in the possession of the defendant appellant, under a title which runs back as far as the year 1894. It is admitted that the appellant's father got a mortgage of the property in 1894, and afterwards brought a suit for sale upon the mortgage and purchased the property himself. It is plain, therefore, that the mortgage upon which the present suit has been brought is posterior in date to the date of the mortgage under which the defendant appellant has acquired his title. The case for the plaintiffs, however, is that by reason of certain previous mortgages with which they were concerned, they have acquired priority over the defendant appellant in respect of a sum of Rs. 156, which formed part of the consideration of the mortgage now in suit. Reference has already been made in the judgments of my learned colleagues to the history of the litigation prior to the year 1904. In the mortgage now in suit a reference is made to the suits brought by the present plaintiffs respondents in respect of the two mortgages of 1893. It is stated in the document that a preliminary decree was obtained by the present plaintiffs in the year 1898 and that an order absolute was passed in their favour in March, 1899. It may, therefore, be conceded that just before the mortgage of 1904 the plaintiffs respondents had a security for the previous mortgage debts. Whether or not that previous security was kept alive after the document of 1904 was written is a question of the intention of the parties. Where there is no evidence either way, it is settled law that the presumption is that the parties act for their own benefit; and so it may be said in the present case that, inasmuch as a sum of Rs. 156 was still owing to the plaintiffs respondents under the decree obtained by them in the year 1899, it was to their benefit to keep the decree alive when they took the mortgage of 1904, On the other hand, the presumption arising out of the assumed benefit may be overturned by direct evidence, and I agree with my colleagues that in the document of 1904 there is language which precludes the notion that it was the intention of the plaintiffs respondents to keep the previous security alive. I fail to understand how in the face of the language which has been used in this document, where we have an] express recital to the effect that the decree had been fully paid off, it is 'possible for the plaintiffs respondents here to contend that it was in their minds at the time that the previous security should be maintained.

16. Even if it could be assumed in favour of the plaintiffs that there was any such intention on their part, the question remains--what was the prior security upon which they were entitled to rely? The nature of this security is determined by the fact that an order absolute under Section 89 of the Transfer of Property Act was made in their favour in the year 1899. As my learned colleague Mr. Justice Rafiq has pointed out, their Lordships of the Privy Council in the case to which he has referred have defined the nature of the security which is left to a mortgagee after he has obtained the order absolute described in Section 89 of the Transfer of Property Act. The right of the mortgagee under the security is extinguished and there is substituted therefor a right to a sale conferred by the decree. In other words, the only right which is left to a mortgagee after such in order has been passed is the right to execute the decree. This being the nature of the security which was left to the plaintiffs respondents after the order absolute was passed in their favour in 1899, if they now seek to maintain that that security is alive, then the only remedy for them is to take out execution of the decree. Instead of doing so, they have resorted to the present suit which it was not competent for them to do. Mr. Hameed-ullah, who appears for the plaintiffs respondents, has pointed out that, unfortunately, it would be impossible for his clients to take out execution of the decree of 1899 against the defendant appellant on the ground that neither he, nor his father, was a party to the decree obtained by the plaintiffs on the mortgages of 1893, All that need be said in this connection is that, if such is the case, the plaintiffs have only themselves to blame. Under Section 85 of the Transfer of Property Act they ought to have made Amolak (the subsequent mortgagee) a party to the suit which they brought on the mortgage and if they omitted to do so, they cannot now correct their error by trying to go behind the decree and instituting a suit upon a mortgage which has become extinguished. I think this is all that is necessary for me to say with regard to the question of law which is before us. I would allow the appeal, set aside the decree of the lower appellate court and restore the decree of the court of first instance.

17. The order of the Court is that the appeal is allowed, the decree of the lower appellate court set aside, and the decree of the court of first instance restored with costs in all courts.


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