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Hari Ram Vs. Munshi Singh and anr. - Court Judgment

LegalCrystal Citation
Subject Property
CourtAllahabad
Decided On
Reported inAIR1939All660
AppellantHari Ram
RespondentMunshi Singh and anr.
Excerpt:
- - it is contended that the view of law taken by the court below is erroneous and that the right to redeem enjoyed by a subsequent mortgagee is a right which can be exercised only at his option and at will. in that case, like the present, the prior mortgagee insisted that his mortgages must be redeemed before the property mortgaged could be sold. this apprehension in my opinion is not well founded. the prior mortgagee will not be disturbed in his possession unless all the prior encumbrances have been fully satisfied by the plaintiff, the subsequent mortgagee, or his representative......the mortgaged property in suit unless and until he pays the money due to munshi singh under the prior mortgages standing in favour of munshi singh. the plaintiff has preferred an appeal from the decree of the court below. it is contended that the view of law taken by the court below is erroneous and that the right to redeem enjoyed by a subsequent mortgagee is a right which can be exercised only at his option and at will. he cannot be forced to redeem against his will. it appears that there are three mortgages standing in favour of munshi singh. the first is a usufructuary mortgage dated 3rd may 1909; the remaining two are simple mortgages dated 22nd july 1925 and 4th may 1926. munshi singh by virtue of his possessory mortgage has been in possession of the property ever since 1909 and.....
Judgment:

Mohammad Ismail, J.

1. This is a plaintiff's appeal arising out of a suit brought for the enforcement of a mortgage dated 29th November 1930 executed by Bhartu in favour of the plaintiff. Munshi Singh was impleaded in the suit as a defendant as on 20th May 1932 ho had purchased the mortgaged property in execution of a simple money decree No. 726 of 1930. The suit was resisted mainly by Munshi Singh who pleaded inter alia that the mortgaged property could not be sold without his mortgages being paid first. The trial Court decreed the suit. On appeal the learned Civil Judge modified the decree of the Court of first instance and directed that the plaintiff shall not be entitled to sell the mortgaged property in suit unless and until he pays the money due to Munshi Singh under the prior mortgages standing in favour of Munshi Singh. The plaintiff has preferred an appeal from the decree of the Court below. It is contended that the view of law taken by the Court below is erroneous and that the right to redeem enjoyed by a subsequent mortgagee is a right which can be exercised only at his option and at will. He cannot be forced to redeem against his will. It appears that there are three mortgages standing in favour of Munshi Singh. The first is a usufructuary mortgage dated 3rd May 1909; the remaining two are simple mortgages dated 22nd July 1925 and 4th May 1926. Munshi Singh by virtue of his possessory mortgage has been in possession of the property ever since 1909 and since he purchased the equity of redemption in execution of a simple money decree he has become full proprietor of the property subject to certain obligations under the mortgage dated 29th November 1930 in favour of the plaintiff.

2. A large number of authorities have been cited by learned Counsel on behalf of the parties. Before examining the case law I proceed to consider the statutory provisions on the subject. It is not disputed that the plaintiff is a subsequent mortgagee and his mortgage is the last in point of time. It is open to a subsequent mortgagee to redeem a prior mortgagee. It is also open to him to sue for foreclosure or for sale without making the prior mortgagee a party to the suit. Nor is it necessary for a puisne mortgagee to implead a prior mortgagee in a suit to redeem a subsequent mortgagee : see Order 34, Rule 1, Explanation. In the present case however the prior mortgagee is a party and the question is whether it is permissible for the plaintiff to sell the property mortgaged to him subject to the prior incumbrances under the earlier mortgages without redeeming those mortgages. Section 101, T.P. Act, provides:

Any mortgagee of or person having a charge upon, immovable property, or any transferee from such mortgagee or charge holder, may purchase or otherwise acquire the rights in the property of the mortgagor or owner, as the case may be, without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee of or person having a subsequent charge upon the same property and no such subsequent mortgagee or charge holder shall be entitled to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto.

3. It will be observed that under the first part of the Section the prior mortgagee namely the respondent, can set up his prior mortgages as a shield against the subsequent mortgagee and the mere fact that the equity of redemption has been purchased by the respondent will not be deemed to extinguish the mortgages in his favour. Even if some of the mortgages are barred by limitation the prior mortgagee can insist on their being paid by the subsequent mortgagee if the latter wants to dispossess him. The latter part of the Section deals with the right of the subsequent mortgagee and the Section provides that the subsequent mortgagee shall not be entitled to sell such property as is mentioned under the earlier part of the Section without re-deeming the prior mortgage or otherwise than subject thereto. It has been contended by learned Counsel for the appellant that the law provides two alternatives for his client. The one alternative is to redeem the prior mortgages and the other is to sell the property subject to those prior mortgages. It is contended that the Court below has erred in limiting the right given to the subsequent mortgagee under the Section by directing him to redeem the mortgages. Several cases have been cited by learned Counsel in support of his contention. In Chinnu Pillai v. Venkatasamy Chettiar (1917) 4 A.I.R. Mad. 751 it was held:

Where a prior mortgagee sued for sale on his mortgage without making a puisne mortgagee a party to the suit and obtained a decree and in execution of the decree property was sold and purchased by a third person the puisne mortgagee is entitled to sue for sale on his mortgage subject to the prior mortgage after making the purchaser a party to the suit.

4. The principle laid down in this case helps the contention of learned Counsel for the appellant, but this ruling is prior to the Transfer of Property (Amendment) Act of 1929 when the present Section 101 of the Act was enacted. In Sarju Kumar v. Dwarka Prasad : AIR1929All296 it was held that the subsequent mortgagee on the foot of the mortgage of 1918 could sell the mortgage property subject to the mortgage of 1895, that the only right obtained by the prior mortgagee was a right to the security furnished by the mortgage of 1895, that he could not insist on being paid and that he must allow the property to be sold subject to the mortgage in his favour. In that case, like the present, the prior mortgagee insisted that his mortgages must be redeemed before the property mortgaged could be sold. This contention did not find favour with the Bench deciding that case. Here again, Section 101 of the present Act was not considered as the suit was instituted prior to the passing of the Amendment Act. The facts in Lachmi Narain Das v. Hirdey Narain : AIR1926All480 are distinguishable and do not help the plaintiff. In that case the subsequent mortgagee purchased the mortgaged property in enforcement of his mortgage and obtained possession of it. The prior mortgagee brought a suit on the basis of his mortgage without impleading the subsequent mortgagee and obtained a decree thereon. Only formal possession by virtue of his purchase was given to the prior mortgagee. He thereupon brought a suite for possession against the defendant (subsequent mortgagee) offering the defendant an opportunity to redeem the plaintiff. The suit was dismissed on the ground that the mortgages in favour of the prior mortgagee were time-barred and that they could be set up as a shield only against the subsequent mortgagee for defensive purposes and could not be the basis of a suit after the expiry of the time allowed for the enforcement of the mortgage. That ruling therefore is no authority for the proposition advocated by learned counsel. In the Full Bench case in Debendra Narain Roy v. Ramtaran Banerji (1903) 30 Cal. 599 it was held:

A puisne mortgagee is entitled to a sale of the property secured by his mortgage subject to the rights of the first mortgagee even if the property has been sold in execution of a decree obtained by the first mortgagee in a suit to which the puisne mortgagee was not a party.

5. This case no doubt helps the plaintiff but this was also before the passing of the Amendment Act. In Salig Ram v. Jangjit Bahadur Singh (1935) 22 A.I.R. Oudh. 411 Srivastava and Ziaul Hasan, JJ. had to interpret Section 101 of the present Act. The learned Judges held that

this Section allowed two alternative courses to the subsequent mortgagee, namely either to redeem the prior mortgage, or to take the property subject to that mortgage. The words 'or otherwise than subject thereto' refer to the second eventuality mentioned in the Section, namely that of the subsequent mortgagee trying to sell the property and not to that of his seeking foreclosure. No doubt a subsequent mortgagee who has obtained a decree for sale can avail himself of the two alternatives provided for in the Section, namely he can either redeem the prior mortgage or sell the property subject to that mortgage.

6. This case goes the whole length in supporting the contention put forward by learned Counsel for the appellant. Learned Counsel for the respondent has relied on several cases of this Court in support of the decree of the Court below. All of these cases were instituted before the Transfer of Property Amendment Act came into force : see Manohar Lal v. Ram Babu (1912) 34 All. 323, Sarda Prasad v. Kanhaiya Lal : AIR1933All412 and Phul Chand v. Mt. Surji (1923) 10 A.I.R. All. 457. It is possible to distinguish the facts of some of these cases, but it appears to me unnecessary to do so because the present Section 101, T.P. Act, has prescribed the procedure to be followed by a subsequent mortgagee who brings a suit for the enforcement of his mortgage. There is no doubt that before the passing of the Act there was considerable amount of conflict of judicial opinion on this point. The Section apparently was enacted to clarify the law and to lay down the correct procedure to be followed in future. Under these circumstances, the earlier authorities do not furnish a true guide to the Courts. I am bound to interpret the law as it stands at present and in my opinion the plaintiff cannot be compelled to redeem the earlier mortgages as directed by the Court below. Learned Counsel for the respondent contends that his client is likely to suffer if the property is allowed to be sold subject to the earlier mortgages. He apprehends that the plaintiff will redeem only the usufructuary mortgage and will not redeem the subsequent mortgages which have become time-barred. This apprehension in my opinion is not well founded. It is settled law that a prior mortgagee who has purchased the equity of redemption is entitled to remain in possession of the property until the subsequent mortgagee has redeemed the prior mortgages irrespective of the question of limitation. In Ram Sarup v. Ram Lal (1922) 9 A.I.R. All. 457 at page 662 Lindsay and Kanhaiya Lal, JJ. observed:

The shield of a subsequent mortgagee who acquires the; right of a prior mortgagee is essentially different in character from the shield of a mortgagee who acquires the rights of a mortgagor. The former can protect himself so long as the rights under the earlier mortgage subsists. In the case of the latter, his rights as a mortgagee merge in those of the mortgagor, or remain in suspense, as it wore, till they are needed for purposes of defence. So long as he represents the rights of the mortgagor ho is not affected by any question of limitation for, as pointed out in Laxman Ganesh v. Mathurabai (1914) 1 A.I.R. Bom. 25 at p. 372 he cannot be required to sue for the recovery of the money due on his mortgage from his own property. Indeed, being both the mortgagee and the mortgagor, he cannot have any cause of action against him.

7. There are several other authorities to the same effect. It is manifest therefore that the respondent has nothing to lose if the properties in suit are allowed to be sold subject to the prior mortgages. The prior mortgagee will not be disturbed in his possession unless all the prior encumbrances have been fully satisfied by the plaintiff, the subsequent mortgagee, or his representative. The procedure which in my opinion should be followed was adopted in the Full Bench case reported in Tota Ram v. Ram Lal : AIR1932All489 . In that case a third mortgagee kept in his own hand a part of the mortgage money in order to pay off the first and second mortgages but paid only the first mortgage. The second mortgagee brought a suit to enforce his mortgage. It was held that the third mortgagee was subrogated to the position of the first mortgagee and he was allowed to sell the property subject to the charge created in favour of the prior mortgagee. It is not possible to dispose of this appeal finally because the Court below has not determined the amount due under the mortgages of 3rd May 1909, 22nd July 1925 and 4th May 1926. I therefore remit the following issues to the lower Appellate Court: What is the exact sum due under the mortgages dated 3rd May 1909, 22nd July 1925 and 4th May 1926 for which the property in suit is liable. The interest should be calculated up to the date of delivery of possession under the auction sale in favour of Munshi Singh. The parties shall be allowed to produce fresh evidence. The finding should be returned within two months. The usual ten days shall be allowed for objection.


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