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Nannu Mal Vs. Ram Chander and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1931All277
AppellantNannu Mal
RespondentRam Chander and ors.
Excerpt:
- - there they succeeded, the learned judge of the lower appellate court holding that if plaintiff 1 wanted, to enjoy the benefit of the enhancement in the security due to the constructions made by the appellants, he would have to pay a sum of rs. (b) to section 70, makes it perfectly clear to my mind that the putting up of a building on a part of the mortgaged property amounts to an accession. jan bibi air1929all12 has been cited before us as an authority for the proposition that a subsequent purchaser, who is unaware of the existence of the prior mortgage, and who erects a building in good faith, is entitled to remove the building. beyond saying that they were transferees by auction sale in good faith they never said that they were not aware of the fact that there was a second.....ordermukerji, j.1. this is an offshoot, as it were, of second appeal no. 1490 of 1926 decided by us on 8th november 1929, nannu mal v. ramcharan lal a.i.r. 1930 all. it appears that in execution of a prior mortgage held by two persons ram charan lal and ganga sahai, the mortgaged property was sold and was purchased partly by the prior mortgagees and partly by defendants 4 to 7 in the suit. there was a second mortgage in favour of nannu mal the plaintiff, although the deed stood benami in the name of kundan lal plaintiff 2. the second mortgagee was not a party to the suit of the prior mortgagee. the auction-purchasers nos. 4 to 7 have built a small house on a part of the property purchased by them. their contention is that either the plaintiff nannu mal should pay them the value of the.....
Judgment:
ORDER

Mukerji, J.

1. This is an offshoot, as it were, of Second Appeal No. 1490 of 1926 decided by us on 8th November 1929, Nannu Mal v. Ramcharan Lal A.I.R. 1930 All. It appears that in execution of a prior mortgage held by two persons Ram Charan Lal and Ganga Sahai, the mortgaged property was sold and was purchased partly by the prior mortgagees and partly by defendants 4 to 7 in the suit. There was a second mortgage in favour of Nannu Mal the plaintiff, although the deed stood benami in the name of Kundan Lal plaintiff 2. The second mortgagee was not a party to the suit of the prior mortgagee. The auction-purchasers Nos. 4 to 7 have built a small house on a part of the property purchased by them. Their contention is that either the plaintiff Nannu Mal should pay them the value of the building erected by them which value has been estimated at Rs. 200 or these defendants should be allowed to remove the materials of the building before the sale takes place.

2. The Court of first instance did not accede to the request of the defendants and they appealed to the lower appellate Court. There they succeeded, the learned Judge of the lower appellate Court holding that if plaintiff 1 wanted,

to enjoy the benefit of the enhancement in the security due to the constructions made by the appellants, he would have to pay a sum of Rs. 200 to the appellants before the chabutra with the structures thereon is put up for sale otherwise the appellants would be entitled to remove the materials without causing 'any detriment to the chabutra.

3. The plaintiff in this second appeal contends that the building erected by the auction-purchasers was in the nature of an accession to the property and it is therefore under Section 70, T.P. Act, liable to be sold as a part of the mortgaged property. In my opinion there is no answer to this contention. Section 70 has been very widely worded: it does not say by whom the accession should be made. The accession may be the result of nature or it may be effected by the mortgagor or any representative of his. So long as the accession takes place to the mortgaged property, the mortgagee is entitled to it for the purposes of security. Illus. (b) to Section 70, makes it perfectly clear to my mind that the putting up of a building on a part of the mortgaged property amounts to an accession. The mere fact that a transferee, by auction sale of the mortgagor's interest, has put up the building makes no difference at all.

4. The case of Kalyan Das v. Jan Bibi : AIR1929All12 has been cited before us as an authority for the proposition that a subsequent purchaser, who is unaware of the existence of the prior mortgage, and who erects a building in good faith, is entitled to remove the building. To start with, in this particular case there is no material before us to show that the auction-purchasers were not aware of the fact that the registered mortgage in favour of Nannu Mal existed as a matter of fact. Beyond saying that they were transferees by auction sale in good faith they never said that they were not aware of the fact that there was a second mortgage. It is the duty of any person dealing with property to find out from the registration office what charges there are on the property. This Court has over and over again held that registration is notice to all subsequent transferees. Therefore it was necessary for the auction-purchasers to find out, in their own interest, from the registration office before they made the purchase whether any mortgage existed on the property or not. There is no finding of fact to support a plea akin to the plea of Section 51, T.P. Act. Besides with all respect, I discover that Section 70, T. P Act, was not pleaded before their Lordships who decided the case of Kalyan Das. On the facts, in my opinion this case is distinguishable from the decision quoted above. If that were not so I would have respectfully dissented from the opinion expressed in that case. But it is really not necessary in view of the fact that the pleadings do not justify the respondents in saying that they had no notice *of the mortgage of Nannu Mal, or that they believed in good faith that they were absolutely entitled to the property.

5. For the foregoing reasons I would allow the appeal and delete from the decree of the Court below the words:

If plaintiff 1 wishes ... without causing any detriment to the chabutra.

I would award the entire costs of this appeal to the plaintiffs as against the contesting respondents Ram Chander, Shib Chander and Dal Chand I would also allow the costs of this appeal and the costs in the lower appellate Court to the plaintiffs as against Ram Chander, Shib Chander and Dal Chand.

6. Before I leave this judgment it is necessary to point out a matter which has been taken by way of cross-objection by the three defendants, Ram Chander, Shib Chander and Dal Chand. They say that in constructing the building mentioned above, they have rested a beam of the new building on the wall of another building belonging to them. The object of the cross-objection was to obtain permission of the Court to remove the beam from the wall. This was a point which was mentioned in the written statement of the defendants, but no notice was taken of it by any of the Courts below. In my opinion, that is a matter which cannot be decided in this case. If defendants 2 to 7 pay up the plaintiffs' mortgage money no question of removing the beam will ever arise. If they do not pay, and if the plaintiff, after paying the prior mortgage money, brings the property to sale, it will be a question between the auction-purchaser and the defendants Ram Chander, Shib Chander and Dal Chand whether the beam will be allowed to rest on the wall of the defendants. It may be that the auction-purchaser will find some means of supporting the wall and would find it unnecessary to have the beam rest on the defendants' wall. All that the defendants are anxious about is that their claim should not be treated as res judicata in subsequent proceedings. As nobody has decided the point, and as I would leave the point undecided, no fear of res judicata will arise.

Niamatullah, J.

7. I regret I am not able to endorse the conclusion arrived at by my learned colleague. The facts are stated in full in his judgment but I would mention such of them as are necessary to elucidate the reasons on which I base my own views.

8. Ram Charan Lal, defendant 2, was a prior mortgagee under a deed, dated 1st April 1906, executed by Bihari, defendant 1. Nannu Mal, plaintiff-appellant, is a subsequent mortgagee from the same person under a deed, dated 12th November 1913. The prior mortgagee obtained a decree for sale on foot of his own mortgage without impleading the subsequent mortgagee (plaintiff-appellant). On sale of the mortgaged property in execution of that' decree a small part of it was purchased by Ram Charan and others, contesting respondents in this Court. It consisted of a chabutra adjoining their house. After the auction sale the contesting respondents raised a superstructure on the chabutra allowing the beams to rest on the wall of their own house. The plaintiff-appellant (the subsequent mortgagee) brought the suit, out of which the present appeal has arisen, for sale of the mortgaged property. It is no longer in dispute that they are entitled to treat the prior mortgage as a subsisting one, and the sale, held in execution of the decree passed on foot thereof, as a nullity, so far as their interests may be affected thereby. The only defence, which it is necessary to mention, is that the defendants-respondents (auction-purchasers) claim the right to remove the materials, leaving the chabutra as it was before the auction purchase, unless it is desired by the plaintiff-appellant or anyone who purchases the property in execution of decree for sale on foot of his mortgage, to pay the value of such materials which has been found by the lower appellate Court to be Rs. 200, a fact which is not disputed by the parties. The plaintiff-appellant, on the other hand, insists on the superstructure being treated as. accession to the mortgaged property and therefore part of the security for the money due under his mortgage deed so as to be liable to be sold with the site for satisfaction of his claim. The lower appellate Court upheld the defendants' plea, directing the plaintiff-appellant to pay the sum of Rs. 200 to the contesting respondents in case they desired to sell the chabutra with the existing construction, otherwise the right of the contesting respondents 'to remove the material without causing any detriment to the chabutra' is reserved to them.

9. The lower appellate Court has based its view on Section 63, T.P. Act, treating the contesting respondents as mortgagees in possession. That section cannot in terms apply to the facts of the present case. This is not a case 'where mortgaged property in possession of the mortgagee had, during the continuance of the mortgage', received an accession. The contesting respondents may in one sense be considered to represent the prior mortgagee on the one hand and the mortgagor on the other by virtue of their auction-purchase, assuming, of course, that the proceedings on foot of the prior mortgage can be recognized against the plaintiff-appellant; but, as already stated, the prior simple mortgage has to be assumed as a subsisting mortgage, and the auction sale following the decree passed on foot thereof has to be ignored. Besides, Section 63 contemplates a case of accession to the mortgage property when the mortgagee, as such, was in possession. I think for these reasons it is not correct to invoke the aid of Section 63, T.P. Act, in affording relief to the contesting respondents.

10. While I do not accept the reasons on which the decree passed by the lower appellate Court proceeds, I think the conclusion reached by it is correct. The defendants' case on the face of it is so reasonable and in accord with general law that it must be allowed to prevail unless there is something positively to the contrary in any rule of law applicable to the circumstances of this case. As was laid down in a somewhat old case, which however has stood the test of time, and has never been departed from, that

according to the usages and the customs of this country, buildings and other such improvements made on land do not, by the mere accident of their attachment to the soil, become the property of the owner of the soil;

and we think it should be laid down as a general rule that, if he who makes the improvement is not a mere trespasser, but is in possession under any bona fide title or claim of title, he is entitled either to remove the materials, restoring the land to the state in which it was before the improvement was made, or to obtain compensation for the value of the building if it is allowed to remain for the benefit of the owner of the soil, the option of taking the building, or allowing the removal of the material, remaining with the owner of the land in those cases in which the building is not taken down by the builder during the continuance of any estate he may possess : per Sir Barnes Peacock in Thakoor Chunder Poramanik v. Ramdhone Bhuttacharjee 6 W.R. 228. The same doctrine was enunciated in Mill v. Hill [1851] 3 H.L.C. 828. These cases were followed by a Division Bench of this Court recently in Kalyan Das v. Jan Bibi. My learned brother thinks that Section 70, T.P. Act, was not brought to the notice of the learned Judge who decided that case and that the result would have been different if that section had not been overlooked. A case should be treated as an authority for what it decides; and if the parties, or any of them, did not, for reasons of their own, rely on Section 70, T.P. Act, the decision on the question actually heard is a good authority for the proposition enunciated therein. Besides, as will appear from the passage quoted by me at length, the view accepted in that case is in consonance with justice and common sense; and I have no hesitation in accepting it for myself,

11. I do not think that the action of the contesting respondents in making the constructions was otherwise than in good faith and in the belief that they had the right to do so. The expression 'good faith' in this connexion is to be understood not in any technical sense but as denoting honest intention on the part of the person in possession making the construction in question. Even where the words occur in a statute they have to be understood as defined in the General Clauses Act, Section 3 (20), under which

a thing shall be deemed to be done in good faith where it is, in fact, done honestly whether it is done negligently or not.

12. The contesting respondents purchased the chabutra in question at a public sale held in execution of a decree passed by a Court of justice at whose instance the sale took place. It is true they did not search the registration office to find other incumbrances; but an omission to do so cannot make their action subsequent to the purchase otherwise than honest. The plaintiff-appellant did not take exception to any construction being made or warned them against possible consequences clue to the existence of the subsequent mortgage in his own favour. Under these circumstances I hold that the action of the contesting respondents in raising the superstructure in question in this case was bona fide within the meaning of the rule already referred to. The contesting respondents cannot be . said to be trespassers during the time they were in possession of the chabutra which they purchased at the auction sale held in execution of the decree passed on foot of the prior mortgage. Their title may not altogether be indefeasible; but their possession was at least under a 'bona fide claim of title.' Unless therefore the plaintiff-appellant can invoke the aid of some rule of law to the contrary, I am clearly of opinion that the defendants-respondents are entitled to remove the materials if the plaintiff-appellant is not ready and willing to pay for them.

13. Apart from what I have said in respect of the defendants' right, it seems to me that we are, in the first instance, concerned with the plaintiff's right, if any, to the constructions made on the side which had been hypothecated to him. He desires to treat it as part of his security and to have it sold for satisfaction of his claim arising out of the mortgage in his favour. He must therefore make out his right to do so. It-is not sufficient for him merely to attack the defendants' right. If he fails to establish his own present right to the superstructure in dispute in the present case, no decree for sale thereof can be passed, regardless of the question whether the defendants have an indefeasible right to it. Assuming, for the sake of argument, that the defendants were not justified in making the constructions, we cannot ignore the fact that they are in actual possession of the site which they can be deprived of only when it is sold in execution of the decree in favour of the plaintiff-appellant, who is himself a simple mortgagee. Till then it is open to them to remove their materials, unless the plaintiff can establish his right to object to the defendants doing so. Such right will depend upon the validity or otherwise of the plaintiff's claim to the superstructure on the ground that it is an accession to what had been originally mortgaged. The first question therefore which falls to be considered is Whether it should be regarded as an accession, in which case, of course, the defendants cannot remove it any more than they could have done so if the construction had been made by the mortgagor and had existed at the date of the mortgage. Even if we assign the worst position to the defendants in this matter, and treat them as trespassers, the plaintiff's case, if he fails to make out a case of accession, cannot improve.

14. Reliance is placed on behalf of the plaintiff-appellant on the provisions of Section 70, T.P. Act, and it is contended that the superstructure in question in this case must be regarded as an accession to the mortgaged property to which the security arising from the mortgage in his favour would fasten. The word ' accession ' occurring in that section, and in the cognate Section 63, T.P. Act, has a technical meaning. Every addition to or improvement on the mortgaged property by whomsoever made, cannot be regarded as an 'accession.' An addition made to a mortgaged property by natural causes, such as the one mentioned in Illus. (a), Section 70, requires no discussion and can admit of no doubt. As regards additions or improvements due to human agency it depends upon the circumstances of each case whether the addition or improvement should be regarded as accession or otherwise. Illus. (b) to that section, which is relied on before us, refers to the case of a mortgagor building a house on the plot mortgaged. There can be no doubt that the house, as laid down in the illustration, is an accession to the mortgaged property. It has been argued that the contesting respondents being transferees of the rights of the mortgagor which they purchased at the auction sale are in the same position as the mortgagor himself as regards additions to the mortgaged 'property made by them. In other words, having purchased the equity of redemption they became the mortgagors with reference to the mortgaged property. The argument is, to my mind, based on an obvious fallacy.

15. The plaintiff-appellant has made it the very foundation of his case that the prior mortgage is a subsisting mortgage and that the prior mortgagee's suit on foot of that mortgage, 'the decree passed therein, and the sale in execution of such decree, should be treated as a nullity against the plaintiff-appellant. In fact he insists on the relations subsisting before the suit on the prior mortgage to be recognized as subsisting. He treats the prior mortgage as, an outstanding charge and the auction sale as conveying no title so far as he is concerned. He is entitled to treat accomplished facts as fiction, but must maintain that fiction throughout. He cannot be allowed to approbate and reapprobiate by first assuming that the prior mortgage still subsists, and in the next breath asserting that a sale took place in execution of a decree on foot of that mortgage under which the contesting respondents became transferees of the mortgagor and are therefore themselves the mortgagors. In deciding this case we must assume, as the plaintiff-appellant is entitled to ask us to assume, that nothing has taken place in enforcement of the prior mortgage. On that supposition we cannot assign the position of a mortgagor or his representative-in-interest to the contesting respondents. For these reasons, I hold that the constructions made by the latter are no more an ' accession ' to the mortgaged property than they would be if made by a third person in temporary possession honestly believing to be entitled to make them. This being so, Section 70, T.P. Act, does not apply to the circumstances of this case, and the respondents' right to the materials, according to the general law explained before, is unaffected by any equity in favour of the plaintiff-appellant, who is in no way damnified by the action of the contesting respondents. According to the decree passed by the lower appellate Court, the mortgaged property, namely the chabutra, is to be restored exactly as it was before the construction made by the respondents, unless, of course, the plaintiff-appellant chooses to compensate them, as directed by the lower appellate Court. In the view of the case that I have taken, I would uphold the decree of the lower appellate Court and dismiss the appeal with costs.

16. As there is a difference of opinion among the members constituting this Bench, we refer the following point of law for decision to a Bench of three Judges, having regard to the importance of the question:

Is an auction-purchaser at a sale, held in execution of a decree passed on foot of a prior mortgage to which the second mortgagee was no party, entitled to remove the materials of the building erected by him on a site, included in the mortgaged property purchased by him, or is the building liable to be sold, as an accession to the mortgaged property for satisfaction of the second mortgage

17. The record will be laid before the Hon'ble the Chief Justice for orders.

Sulaiman, J.

18. The facts of this case may be briefly stated as follows:

The owner of certain houses and sites including an open piece of ground in the form of a platform (chabutra) made a simple mortgage of them in favour of Ram Charan in 1906, and then again mortgaged the same properties to Behari in 1913. The prior mortgagee sued on his mortgage and, without impleading the second mortgagee, obtained a decree for sale. He put it in execution and purchased part of the properties himself, and the platform in question was purchased by the present defendants 5, 6 and 7. The purchasers of the platform put up a construction in the form of a building which has been valued by the Courts below at Rs. 200. I take it that it is not a structure of a temporary nature. The present suit was instituted by the second mortgagee. He impleaded the prior mortgagee as well as the purchasers of the platform. These latter defendants pleaded inter alia that the property could not be put up for sale without Rs. 200 being paid as compensation.

19. The first Court held that the construction on the platform had become part of the security and could be sold, and the defendants could not claim the compensation. The lower appellate Court has held that the position of the defendants is that of a mortgagee in possession, and they can claim compensation under Section 63, T.P. Act. In second appeal the learned Judges, who have referred the case to us, differed in their opinions. They both were inclined to the view that Section 63 does not apply to the facts of the case. Mukerji, J., however considered that the construction was an accession to ,the mortgaged property and could be sold as a part of the security without payment of its value. Niamatullah, J., thought that Section 70 was not applicable inasmuch as the defendants were on the same footing as a third party who is not bound; the learned Judge applied an equitable principle analogous to that contained in Section 51 and held that the defendants could remove the materials unless the plaintiff chooses to compensate them.

20. It may also be noted that the two learned Judges were not agreed as to whether the auction-purchasers should or should not be deemed to have constructive notice of the second mortgage. Mukerji, J., thought that it was their duty to find out from the registration office what charges there were on the property before they made the purchase and that registration was notice to all subsequent transferees. Niamatullah, J., considered that an omission to search the registration office to find out incumbrances did not make the defendant's action subsequent to the purchase otherwise than honest.

21. It cannot be disputed that if Section 70 were in terms applicable to the facts of the present case, no general equitable doctrine would override that statutory provision. But before I consider the phraseology of that section it would be convenient to dispose of a few points which have been urged at the Bar. Before the Transfer of Property Act, the rule was generally accepted that a building erected on any person's land under a bona fide belief of title could either be removed or compensation for it claimed : per Sir Barnes Peacock in Thakoor Chunder Pora-maniak v. Ramdhone Buttacharjee. This general doctrine has been restated by Sen and Weir, JJ., in Kalyan Das v. Jan Bibi.

22. This doctrine, in a restricted form, is now embodied in Section 51, T.P. Act, under which a transferee making an improvement, and believing in good faith that he is absolutely entitled thereto when evicted therefrom, has a right to claim the value of the improvement as compensation from the person causing his eviction. This section does not in terms apply to the present case because, in view of the provisions of Section 2, Sub-section (d), Ch. 2 in which the section occurs, it is not applicable to a transfer in execution of a decree. It is also clear that the present claim is for a decree for sale of the property and not, at least in the present case, for the eviction of the defendant, it is not possible to anticipate what will ultimately happen, i. e. whether the defendants will redeem the plaintiff, or the decree will be satisfied by the sale of the property other than the platform and the construction thereon, or whether this last item of the mortgaged property will also be sold and ultimately the auction-purchaser will dispossess the present defendants. I therefore doubt if the stage for considering any claim for compensation for the improvement, either under Section 51 or under any equitable principle analogous to it has yet arisen.

23. Section 63 obviously applies to the case where the accession takes place during the continuance of the mortgage when the mortgaged property is in the possession of the mortgagee. The accession goes to the mortgagor with the property. In case the accession has been acquired at the expense of the mortgagee, then if it is capable of a separate possession or enjoyment without detriment to the principal property, the mortgagor desiring to take the accession must pay the expenses of acquiring it; but if such separate possession or enjoyment is not possible the accession must be delivered with the property. If however the accession was necessary to preserve the property from destruction, forfeiture or sale, or was made with the assent of the mortgagor, he must pay its proper costs.

24. It has been held in several cases that a house standing on a site or a grove on a land is an accession capable of separate possession or enjoyment. These cases are referred to in the judgment reported in Parmanand Pandit v. Mata Din Rai : AIR1925All427 . The same view appears to have been reaffirmed in the case of Gopi Lal v. Abdul Humid : AIR1928All381 , but in Parmanand Pandit v. Mata Din Rai : AIR1925All427 I expressed a contrary view. It seems to} me unnecessary to discuss this matter at length over again. I would only add that I am still of the opinion that, when a house or a grove has become an accession to a land, the separate possession or enjoyment of the house or the grove means the possession or enjoyment of them as such, that is of the possession and enjoyment of the house as a residential building or of the grove as a garden yielding annual produce. The accession is a good deal more than the mere building materials in the one case, or the cut timber in the other. A building or a grove is an accession to the land not capable of possession or enjoyment as a, building or grove separate from the land itself. It therefore follows that the mortgagor can insist on the whole accession being delivered with the mortgaged property at the time of the redemption; and the mortgagee cannot be allowed to say that he would separately enjoy the building materials or the cut timber. The right to take the accession with the mortgaged lands vests in the mortgagor and the mortgagee has no option to refuse to deliver up the accessions. He can claim compensation only in cases mentioned in the section.

25. In the present case both the learned Judges were inclined to think that Section 63 was inapplicable. There is however this much to be said that the defendants having purchased the property in execution of a prior mortgage decree may. in one sense be said to have stepped into the shoes of the mortgagee and therefore entitled to retain possession of the same until their money has been paid. A purchase at auction in execution of a prior mortgage decree, to which a subsequent mortgagee is not a party does not confer on the purchaser any right to enforce the mortgage by a suit against the subsequent mortgagee, not impleaded. It may give the former the right to redeem the latter. But where the purchaser has succeeded in obtaining actual possession, Courts in India have allowed to him the equitable right of holding up the discharge of the prior mortgage as a shield for purposes of defence. Section 74, T.P. Act, conferred the right of subrogation on subsequent mortgagees, but the equitable principle underlying that section has been applied to all subsequent transferees; on the strength of the rule of equity laid down by their Lordships of the Privy Council in Gokaldas Gopaldas v. Puranmal Premsukh Das [1884]10 Cal. 1035 at pp. 1045-46 But a shield is purely a weapon of defence and not of attack.

26. The defendant's possession might therefore be analogous to that of a mortgagee in possession. If there were nothing else, the principle underlying Section 63 might have been applicable because the second mortgagee, when suing has been ordered to redeem them before putting up the property for sale. The section however does not apply because in my opinion the house is not capable of separate possession or enjoyment as the construction was neither made with the mortgagor's assent nor was it necessary to preserve the land from destruction, forfeiture or sale. Therefore the defendants can neither remove the materials nor claim compensation under Section 63. They must deliver the platform together with the accession.

27. The real difficulty in the way of the appellant is the provision contained in Section 70. It is a curious fact that, although there have- been a large number of cases similar to the one before us, in none of them Section 70 was referred to or discussed. Even in Kalyan Das v. Jan Bibi the counsel did not refer to the provision of this section.

28. Section 70 is in the following terms:

If, after the date of a mortgage, any accession is made to the mortgaged property, the mortgagee, in the absence of a contract to the contrary, shall, for the purposes of the security, be entitled to such accession.

29. Illustration (a) to the section shows that it applies to a. natural accession, e. g., by alluvion. Illus. (b) shows that the erection of a house on a mortgaged plot' of land is an accession within the meaning of the section. The illustration however is only of an erection made by the mortgagor himself. This section, along with a few preceding sections is under the heading 'Rights and Liabilities of Mortgagees. ' It undoubtedly regulates the rights of the mortgagor- and the mortgagee inter se and of course applies to their representatives. The words ' in the absence of a contract to the contrary ' also suggest that the parties who are bound by the contractual relations of the mortgagor and mortgagee are contemplated by the section. Similarly the words ' for the purposes of the security ' indicate that the claim to the accession is to be considered when the question of claiming the security arises. The mortgage security can be enforced against the mortgagor and his representatives only, and not against independent third parties. In view of these circumstances, I am clearly . of opinion that the provisions of Section 70 apply as between the mortgagor and mortgagee or their representatives. Third parties who have nothing to do with the security and between whom and the mortgagor and the mortgagee there is no privity of contract, are not affected by this provision of the law. I therefore do not think that against third parties, who are perfect strangers, this section could be applied.

30. If a stranger under a bona fide but mistaken belief that he has an absolute title to the land puts up a building upon it he would be entitled to remove the materials of the building, though he may be liable to pay damages for wrongful occupation. I do not think that the mere fact that he has under a mistake put up construction or fixtures on another's land would make them, by the mere accident of their attachment) to the soil, the property of the owner of the soil. This rule is not in harmony with the absolute rule of English Common law, but was held to be a general rule according to the usages and customs of the country in the Full Bench-case of Thakur Chunder v. Ramdhone. That rule should . stand as long as it is not superseded by any statute. In the same manner, I do not think that the position of such a stranger acting bona fide and in the honest belief of title is made any the worse if it so happens that the land on which he builds had been previously mortgaged to another person. This circumstance would not destroy his right to remove the materials which he has put on the land under a mistake, and the building so put up by him would not automatically become a part of the security under the mortgage of which he had no knowledge. I would therefore be inclined to hold in such a case that the mortgagee cannot claim this building as a part of his security against this stranger third party; although if the third party chooses to leave the construction on the spot the mortgagee could claim it as an accession against the mortgagor.

31. Although I think that Section 70 is applicable as between the mortgagor and the mortgagee only and not as against third parties, I see no reason for restricting the scope of the section to accessions made by the mortgagor personally. The representatives of the mortgagee and the mortgagor would be governed equally by the rule, it being immaterial whether they are merely heirs or subsequent transferees. If it had been possible to do so, I would have been inclined to interpret Sections 63 and 70 in a way to protect representatives of the original parties, who have acted in good faith and without notice of the mortgage, by saying that a building put on land, not known to be already mortgaged, is not intended to be an accession to the mortgaged property. But the expressions ' the property receiving any accession ' and ' any accession is made to the property ' do not necessarily involve any intention on the part of the person making it. Full knowledge of the mortgage, at the time of making an accession by the mortgagor or mortgagee does not seem to be necessary. Possibly the legislature intended that the representatives of the parties to the mortgage ought to know the existence of the mortgage and that want of notice in their case should be no excuse. The fact that the section is applicable even to natural accessions shows conclusively that is not confined to accessions made by the mortgagors personally nor to the existence of actual notice of the mortgage. No matter how and under what circumstances the accession has been received by the property or made to it, it is an accession to the mortgaged property, and the mortgagor cannot claim it without redeeming the property nor can he resist the mortgagee's claim to sell the accession along with the mortgaged property. At the same time, when the time for redemption comes the mortgagor can insist on its delivery along with the mortgaged property if it is not capable of separate possession or enjoyment. Of course, where only a temporary structure is put up without any intention that it should be a permanent fixture to the land, it would be difficult to call it as an accession to the mortgaged property within the meaning of either Section 63 or Section 70.

32. The contesting defendant purchased this platform in execution of a decree on a previous mortgage obtained without impleading the subsequent mortgagee. It seems to me that the auction-purchasers are representatives of both the prior mortgagee and the mortgagor. As representing the prior mortgagee, they are entitled to insist that the subsequent mortgagee should redeem them by paying the previous debt, or that at any rate the property should be sold subject to their lien to remain in possession until they are paid by the future purchaser.

33. They have also undoubtedly acquired the interest of the mortgagor in the property. No doubt the decree on the previous mortgage is not binding on the subsequent mortgagees, who had not been, impleaded, to this extent that their rights' under their mortgage have not been extinguished, as would have been the case if they had been impleaded and had not redeemed the prior mortgagee. But it is not correct to say that the previous proceedings are totally a nullity. As between the prior mortgagee and the subsequent mortgagees the previous proceedings are ineffective, but that does not imply that the mortgagor's interests could not have been sold by the prior mortgagee behind the back of the subsequent mortgagees; but subject to their subsequent mortgage. The mortgagor's interest in the property validly passed to the auction-purchasers no matter whether the subsequent mortgagees were parties to the suit or not. The auction purchasers cannot be in a worse position than a private transferee from the mortgagor in this sense that the defendants are undoubtedly the representatives' of the mortgagor qua the property which is now in suit. After the payment of the amount of the previous mortgage decree the subsequent mortgagees can enforce their own mortgage against them, treating them as the representatives of their mortgagor. The construction made by them after the auction purchaser would be in the capacity of either prior mortgagee's representatives or representatives of the mortgagor. I have already given reasons for holding that they cannot remove the building in their capacity as mortgagees under Section 63. The subsequent mortgagees are entitled to treat the accession as a part of the security under Section 70, treating the defendants as representatives of their mortgagor.

34. In the present case the two learned Judges differed as to whether the auction-purchasers may be deemed to have constructive notice. Apparently the recent pronouncement of their Lordships of the Privy Council in Tilakdhari Lal v. Khedan Lal A.I.R 1921 P.C. 112 was not brought to their notice. As an auction-purchaser gets only the rights and interests of the judgment-debtor as existing at the time of the sale, his purchase is subject to all incumbrances even though not notified. But that is not the same thing as imputing to him knowledge of those incumbrances. There have been cases in this Court where a subsequent transferee by private treaty has been held to have a constructive notice of a previous incumbrance. The view taken in Calcutta was different. Their Lordships of the Privy Council seem to have ruled that registration by itself is not a general constructive notice to all subsequent transferees. Whether it is or is not ,a notice in any particular case is a question of fact dependent on its circumstances. It is however not necessary to enquire into this question as, in my opinion, the question of want of notice, although material for purposes of Section 51, is of no significance so far as Section 70 is concerned.

35. I further think that the provisions of Section 70 are in no way in conflict with the principle underlying Section 51. Under Section 70 the accession becomes a part of the security and therefore cannot be appropriated by the mortgagor or his representatives. It can be sold along with the mortgaged property and will pass to the purchaser, Section 5l does not entitle a person who has made improvements on another's land in good faith to retain the improvements or the accessions or to remove the building materials. Such constructions are deemed to vest in the owner of the land, but he is given a right to claim their value.

36. My conclusion is that the building being an accession has become a part of the security and cannot be removed by the defendants and can be put up for sale by the plaintiffs. My answer to the first, part of the question is in the negative, and to the second part in the affirmative.

King, J.

37. The following question has been referred for our decision:

Is an auction-purchaser at a sale, held in execution of a decree passed on foot of a prior mortgage, to which the second mortgagee was no party, entitled to remove the materials of the building erected by him on a site, included in the mortgaged property purchased by him, or . is the building liable to be sold as an accession to the mortgaged property for satisfaction of the second mortgage

38. The lower appellate Court took the view that the auction-purchaser, at the sale held in execution of the decree passed upon the prior mortgage, was in the position of the prior mortgagee and that he should be regarded as the mortgagee in possession. On this view the Court held that Section 63, T.P. Act, was applicable and the auction-purchaser was entitled to claim compensation for the building erected by him on the mortgaged property or in the alternative to remove the materials. He therefore amended the decree of the trial Court by ordering that the puisne mortgagee, if he wished to enjoy the benefit of the construction made by the auction-purchaser, would have to pay a sum of Rs. 200 to the auction-purchaser before the chabutra with the structures thereon is put up for sale, otherwise the auction-purchaser would be entitled to remove the materials with out causing any detriment to the chabutra.

39. In my opinion Section 63 has no application to the facts of this case. That section contemplates a case where a mortgaged property in the possession of the mortgagee receives an accession and provides that the mortgagor upon redemption shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession. Special rules are laid down in the section regarding accessions acquired at the expense of the mortgagee and capable of separate possession and enjoyment without detriment to the principal property.

40. Although the auction-purchaser is in one sense standing in the shoes of the prior mortgagee, and can sat up the prior mortgage as a shield, nevertheless it is clear in this case that the auction-purchaser did not enter into possession of the property as representative of the prior mortgagee. The auction-purchaser acquired the right, title and interest of the mortgagor and entered into possession as transferee or representative of the mortgagor, since the prior mortgagee never was in possession. I think it must be held therefore that the auction-purchaser was in possession of 'the property as representative of the mortgagor, and not as representative of the mortgagee. It is indeed the auction-purchaser's own case that he made the constructions upon the chabutra believing himself to be the absolute owner. He obviously did not make the constructions in the capacity of mortgagee. In the view I take of the case Section 63 has no application either in terms or in principle. If it were necessary to decide whether the constructions made by the auction-purchaser upon the chabutra are capable of separate possession or enjoyment without detriment to the principal property, I would answer that question in the negative. Both the learned Judges who made this reference were of opinion that Section 63 did not apply and I agree with them.

41. It has been suggested that the provisions of Section 51 of the Act will apply. That section contemplates a case where a bona fide transferee of property believing himself absolutely entitled thereto makes improvements on the property and is subsequently evicted by a person having a better title. It is clear that 3. 51 cannot in terms apply to the case of an auction-purchaser in view of Section 2 (d) which shows that Section 51 does not apply to a transfer in execution' of a decree' of a Court. It has been suggested however that although Section 51 does not apply in terms, the equitable principle underlying it may be applied to the facts of this case. In my opinion even the equitable principle of that section is not applicable. The auction-purchaser, when he made the constructions in question, was in fact the full owner of the property. There was no defect in his title. The sale proceedings under which he acquired his title have never been challenged or set aside. He may not have been aware that the property was subject to a second mortgage but the existence of the second mortgage did not constitute any flaw or defect in his title. I very much doubt whether the expression

believing in good faith that he is absolutely entitled thereto

means anything more than believing that he is what is usually termed in India a 'full proprietor' with a heritable and absolutely transferable estate as opposed, for example, to a person holding a life estate or a rent free grantee whose grant is liable to resumption. I do not think the phrase means that the person must * believe that the property is free from all encumbrances. Apart from this, there is no question of the auction-purchaser being evicted by a person having a better title. The second mortgagee cannot be said to have a 'better title' than the auction-purchaser. Moreover there is at present no question of evicting the auction-purchaser. The second mortgagee is only bringing a suit for sale of the mortgaged property and it remains to be seen whether the auction-purchaser, or the owner of the other portion of the mortgaged property, will redeem the second mortgage, or whether the second 'mortgagee will redeem the prior mortgage and so bring the property to sale. If the property is brought to sale it remains to be seen whether the mortgage decree will be satisfied by the sale of some other portion of the mortgaged property. If, as a matter of fact, the auction purchaser is dispossessed then it will be time to see whether there is any possibility of his claiming the value of the improvement from the person who actually evicts him from any other person. In the circumstances; of this case I think even the principle underlying Section 51 has no application.

42. The most important question is whether the case is not governed by the provisions of Section 70 which reads as follows:

If after the date of a mortgage any accession is made to the mortgaged property the mortgagee, in the absence of a contract to the contrary, shall for the purposes of the security be entitled to such accession.

43. Illustration (b):

A mortgages a certain plot of building land to B and afterwards erects a house on the plot. For the purposes of his security, B is entitled to the house as well as the plot.

44. In the present case the house was built by the auction-purchaser after the date of the second mortgage. Illus. (b) shows that a house built upon mortgaged property by the mortgager must be held to be an accession to the mortgaged property. This section is intended to lay down the mutual rights and liabilities of the mortgagor and mortgagee inter se, but I think it is clear that it does not regulate only the rights and liabilities of mortgagors and mortgagees personally, but must regulate the rights and liabilities of the representatives or successors in interest of the mortgagors and mortgagees respectively.

45. Suppose the mortgagor dies and after ' his death his son and heir builds a house upon the mortgaged plot without being aware of the existence of the mortgage. In such a case it appears to me that Section 70 would be applicable and the mortgagee would be entitled to the house for the purpose of his security. In other words, the mortgagee would be entitled to sell the house along with the land for the purpose of recovering his mortgage money. In my opinion no question of notice or knowledge of the mortgage arises. There is nothing in Section 70 to suggest that it is only applicable to cases where an accession is made with notice of the mortgage. Suppose again the mortgagor sells the property to a person who buys it believing it to be free from encumbrances and then proceeds to build a house upon it. In such a case also I think Section 70 would be applicable and the question of the buyer's knowledge of the mortgage would be immaterial.

46. I think the auction-purchaser is in just the same position as the mortgagor's son or transferee in the cases which I have put, by way of example, above. The auction-purchaser is in fact the successor in interest of the mortgagor having acquired all the mortgagor's right, title and interest in the property. In the present case the auction-purchaser, acquired not merely the right of ownership but the right of possession which had previously vested in the mortgagor. It appears to me chat the auction-purchaser is clearly the representative of the mortgagor and if he builds a house upon the property which he purchases, then that house is an accession to the mortgaged property and the rule laid down in Section 70 is applicable. This was the view taken by Mukerji, J., with whom I agree. Niamatullah, J., took the view that Section 70 did not apply. He agreed, that Section 70 would apply to a house built upon mortgaged land by a representative of the mortgagor, but he held that the auction-purchaser in this case should not be treated as the representative of the mortgagor.. His reasoning was that the second mortgagee

made it the very foundation of his case that the prior mortgage is a subsisting mortgage, and that the prior mortgagee's suit on foot of that mortgage, the decree passed therein and the sale in execution of such decree should be treated as a nullity as against the plaintiff-appellant (second mortgagee) . . . He treats the prior mortgage as an outstanding charge and the auction sale as conveying no title so far as he is concerned. He is entitled to treat the accomplished facts as fiction, bat must maintain that fiction throughout.

47. I think it is going rather too far to say that the plaintiff (second mortgagee) treats the decree passed on the prior mortgage and the sale in execution of such decree as a mere nullity and as conveying no title to the auction-purchaser. The plaintiff's case is that as he was no party to the prior mortgagee's suit therefore the decree and subsequent proceedings upon the basis of that decree should not affect his rights under the second mortgage. His rights were to sue the mortgagor for sale of the property, subject to the first mortgage, or in the alternative to redeem the first mortgage and then sue the mortgagor for sale on both the mortgages. The plaintiff claims that he has not lost either of those rights merely because a decree has been passed behind his back in the prior mortgagee's suit and the mortgaged property has been sold in execution of that decree. The plaintiff does not treat all these proceedings as a nullity, but claims to have the same right as against the auction-purchaser as he would have had against the original mortgagor and the prior mortgagee. If the plaintiff had attempted to treat the prior mortgage decree and the sale held in execution thereof as mere nullities he might have ignored the auction-purchaser altogether and not even have made him a party to the suit. I think the plaintiff could not, and did not attempt to, ignore the existing facts in such a thorough-going manner. The plaintiff does not seriously challenge the auction-purchaser's title:

(he expressly describes the latter in para. 6 of the plaint as a subsequent transferee,)

but seeks the same remedy against the mortgaged property in the hands of the auction-purchaser as he would have sought against the property in the hands of the original mortgagor. In my view the contention that the auction-purchaser is the representative of the mortgagor is unanswerable, and as the auction-purchaser has made the building upon the mortgaged land as representative of the mortgagor it follows that the building must be held to be an accession and the provisions of Section 70 will apply.

48. I think it unnecessary to consider what the position would be if the building had been constructed by some person who did not derive title from the mortgagor. No such question has been referred to us nor does it arise from the facts and I think it is unnecessary to express any opinion on such a hypothetical question. The view which I take is supported by the decision of the Madras High Court in Rangayya Chettiar v. Parthasarathi Naickar [1897] 20 Mad. 120. The facts of that case were very similar and it was held that the auction-purchaser was not entitled to any allowance for improvements made by him upon the mortgaged property. The Court held that the auction-purchaser was in no other position than the mortgagor himself who may choose to spend money on his property. That ruling was followed in a later ruling of the same High Court in the case of Venkata Ramana Iyer v. Gompertz [1908] 31 Mad. 425. The ruling in Moithensa Routhan v. Apsa Bin [1911] 36 Mad. 194 is distinguishable. That was a case of an auction-purchaser who was evicted from the property owing to some defect or irregularity in the proceedings leading up to the sale. He had made improvements upon the property with an honest belief in the validity of his title. It was found that although Section 51 did not in terms apply to. the case of an auction-purchaser nevertheless the principle underlying it was applicable. In the case before us there is no question of the auction-purchaser being evicted on the ground of a defective title. That case was followed in A.I.R. 1926 Nagpur 160, which may be distinguished on similar grounds.

49. The only case which appears to me to support the auction-purchaser's claim for compensation for the improvements is the case of Kalyan Das v. Jan Bibi. The facts were very similar and it must be admitted that this decision does support the auction-purchaser's contention. That decision, however, was based upon equitable principles laid down in certain rulings, and the question whether the case was not governed by Section 70, T.P. Act, was not even discussed. For that reason this ruling is not of much help to us since, if Section 70 is applicable then it is undeniable that the Courts are bound to give effect to it and are not entitled to base their decision upon any equitable principle however just or admirable it may be. In my view it is impossible to escape the conclusion that Section 70 does apply, and I would answer the question referred to us by holding that the building is liable to be sold as an accession to the mortgaged property for the satisfaction of the second mortgage.

Sen, J.

50. One Behari, who owned some immovable property, executed a simple mortgage of this property in favour of Babu Ram Charan Lal and Ganga Sahai under a registered instrument, dated 1st April 1906. He subsequently mortgaged the same property to Kundan Lal, plaintiff on 12th November 1913. The prior mortgagees brought a suit for enforcement of the mortgage without impleading the puisne mortgagee. , They obtained a decree and in execution thereof, the property hypothecated was sold and was purchased partly by the mortgagees and partly by defendants 4 to 7, namely Babu Ram, Babu Ram Chander, Shib Chandar and Dal Chand. The property so purchased consisted of a chabutra adjoining the house of the auction-purchasers. The latter subsequently raised a superstructure on the chabutra, the beams of which they allowed to rest on the wall of their own houses. The suit, which has given rise to the present appeal, was brought by the puisne mortgagee who sought to enforce the mortgage dated 12th November 1913 by sale of the property originally mortgaged together with the super structure. The value of the superstructure has been found by the lower appellate Court to be Rs. 200.

51. The defendant auction-purchasers contended that the plaintiff was not entitled to sell the houses put up on the chabutra without paying the value of the materials and that the defendants were, in any case, entitled to remove the materials and leave this chabutra in status quo ante. The question in issue between the parties was whether the superstructure raised could be treated as an enlargement of the mortgaged security.

52. The Court of first instance dealt with this part of the case under issue 8 but its findings are not free from obscurity. The lower appellate Court was of opinion that Section 63, T.P. Act was applicable:

The improvements made were not necessary for the preservation of the property and hence the appellants cannot compel the plaintiffs to pay the costs of the improvements. But the improvements are of a lasting nature and they have clearly enhanced the selling value of the property. The plaintiffs cannot get the benefit of the 'improvements without paying for the outlay. In any case the materials can easily be removed without detriment to the property and hence if the plaintiffs do not like to get the benefit of the improvements, the appellants must be allowed to remove the materials.

53. On appeal by the plaintiffs to this Court, the Bench hearing the appeal was clearly of opinion that Section 63, T.P. Act, did not apply to the facts of this case. There was however a difference of opinion as to the applicability of Section 70, T.P. Act. Mukerji, J., held that the construction in controversy was 'an accession' to the mortgaged property within the meaning of Section 70, T.P. Act, and as such it was liable to be sold as part of the mortgage security without payment of its value. Niamatullah, J., held that the position of the auction-purchasers was not the same as, or even analogous to, that of the mortgagor; that Section 70 was not applicable; and that unless the plaintiff compensated the defendants, the latter were entitled to remove the materials. In support of this view reliance was placed upon the judgment of Sir Barnes Peacock in Thakur Chander Poramanick v. Ramdhone Bhattacharjee and also upon the decision of this Court: In re Kalyan Das v. Jan Bibi. Mukerji, J., was further of opinion that registration amounted to a constructive notice and that the auction purchasers must be deemed to have had constructive notice of the mortgage in suit.

54. The following questions have been referred to this Bench for decision:

Is an auction-purchaser at a sale held in execution of a decree passed on foot of a prior mortgage, to which the second mortgagee was not party, entitled to remove the materials of the building erected by him on a site, included in the mortgaged property purchased by him, or is the building liable to be sold as an accession to the mortgaged property for satisfaction of the second mortgage

55. It is clear that Section 51, T.P. Act, is not in terms applicable to the facts of the present case. The applicability of this section has been discussed by me at some length in In re Kalyan Das v. Jan Bibi (at pp. 456 and 457 of 51 All). The principles recognized in 3. 51 are based on obvious grounds of justice, equity and good conscience. These principles have been set forth in Stock v. Starr [1870] 1 Sawyer 15 and Bright v. Boyd 4 Fed. Cases 127, and these cases have been cited with approval in In re Kandarpanath Ghosh v. Jogindranath Ghose [1910] 6 I.C. 141 (12 L. J., 391) and in Moitheensa Routhan v. Apsa Bivy. It is settled law that Section 51, T.P. Act, is inapplicable to a purchaser at a Court sale. The provision of Section 2 (d), T.P. Act, is conclusive on the point:

But nothing therein contained shall be deemed to affect.... (d) save as provided by Section 57 and Oh. 4 of this Act, any transfer by operation of law or by or in execution of a decree or order of a Court of competent jurisdiction.

56. The matter therefore need not be pursued any further.

57. I am in entire agreement with the learned Judges who. made the reference that Section 63, T.P. Act, is not applicable to the circumstances of the present case. Assuming that the construction in controversy amounts to an accession Clause 1 is not applicable because it was a case of a simple mortgage and the mortgaged property was not in the possession of the mortgagee. Clause (2) is equally inapplicable because such accession' has not been acquired at the expense of the mortgagee. Equally, the accession was not necessary to preserve the property from destruction, forfeiture or sale, that it was not made with the consent of the mortgagor and was not capable of separate possession.

58. The puisne mortgagee in the present case had made no outlay to enhance the value of the mortgaged security. Also the original mortgagor had spent not a Single piece for the enlargement or betterment of the security. Apart from statute, if statute there is to favour the plaintiffs in the present case, there are clearly no equities in their favour which ex necessitate rei will justify the inclusion of the constructions in dispute in the mortgaged security.

59. It has been argued that Section 70, T.P. Act, is applicable to the circumstances of the case in hand. A clear provision of statute has to be followed and given effect to and it cannot be displaced by a mere equitable principle however wholesome it might be. The provision of this section is mandatory and runs as follows:

If, after the date of the mortgage, any accession is made to the mortgaged property the mortgagee, in the absence of a contract to the contrary, shall for the purposes of the security be entitled to such accession.

60. Section 70, T.P. Act, is one out of several sections under the heading 'Rights and Liabilities of Mortgagees.' The words of the section are general, but the words 'in the absence of a contract to the contrary' and 'for the purposes of the security' are indicative of the fact that the section was primarily intended to apply to persons in whom there existed a privity of contract. It may also be conceded that the section is to be availed of not only by the parties to an original contract but their successor-in-interest by inheritance or by voluntary transfer. Illus. (b) clearly contemplates an accession made by the mortgagor himself. No case has been cited to us and I am not aware of any in which the section has been applied to the case of the auction-purchasers like defendants 4 to 7. In Rangayya Chettiar v. Parthasarathi Naikar the facts are not dissimilar to those of the present case, but Section 70, T.P. Act, has neither been relied on nor applied. This case therefore is no authority for the proposition that Section 70, T.P. Act, is applicable to persons situated like defendants-respondents. The relevant portion of this judgment may be reproduced here:

The claim for alleged improvements said to have been effected by the first mortgagee since his purchase cannot, we think, be allowed. In this respect he is in no better position than the mortgagor himself who may choose to spend money on his property. We cannot accede to the view that the improvements were made by the mortgagor in the character of mortgagee, for in that capacity he is not shown to have been entitled to possession.

61. It appears that it was contended in this case that the legal position of the auction-purchaser was that of a mortgagee in possession. The point urged in the present case however is that he is the legal representative not of the mortgagee, but of the mortgagor himself. In Comgayam Venkataramana Iyer v. Henry James Golley Gompertz it was held that where the prior mortgagee obtained a decree for sale without making the second mortgagee a party, and himself purchased the property in execution, a purchaser of the property from him could not claim the value of improvements from the second mortgagee under Section 51, T.P. Act, in a suit by the second mortgagee to enforce the rights under the mortgage. Here again there is not oven a bare mention of Section 70, T.P. Act, in the judgment. Their Lordships observed:

There is no doubt that the plaintiff is entitled to, as a matter of law, to sell all the buildings.... For defendants 9 and 11 it is contended that, if the plaintiff sells the new buildings, they should be compensated under Section 31, T.P. Act, as for the improvements made by them in the belief that they were the owners of the land; but Section 51 does not apply to the facts and Rangayya Chettiar v. Parthasarthi Naikar, by which we are bound seams to be on all fours with the present case.

62. Further comments upon this case are unnecessary. The ruling in Buddhi Lal v. Administrator-General of Madras A.I.R. 1922 All. 104 is not very instructive. Not only Section 70 was not applied, but the entire decision exhausts itself in the following three sentences:

They also claim the amount spent by the auction-purchaser on improvements as payable before the plaintiff could bring the property to sale. As to the last contention we have not been referred to any rule of law under which the auction-purchaser could make such a claim. It has been decided in the negative by the Madras High Court in the case of Comgayam Ventakaramana Iyer v. Henry James Colley Gompertz.

63. It may be noticed in passing that in the aforesaid case it was not considered whether it was open to the auction-purchaser to remove the materials of the buildings put up by them.

64. There is no escape for the plaintiff from the hard logic of facts. According to him the earlier mortgage dated the 1st April 1906 subsists against him in its integrity. He was no party to the suit instituted by the prior mortgagees, and not bound by the decree or by the result of the execution proceedings. He is entitled to treat the decree in the former suit and the auction purchase in favour of defendants 4 to 7 as a nullity. He expressly says so in the plaint. For the purpose of this case, the position of defendants 4 to 7 could not be as legal representatives of the mortgagors because they happened to be the auction-purchasers under the decree on the prior mortgage. If the mortgage in favour of defendants 2 and 3 subsists, Behari still continues to be the mortgagor. It will be nothing short of an anomaly to treat the auction-purchasers as legal representatives of the original mortgagor Behari. The logic of the situation is inexorable and I am entirely in accord with the following reasoning of Naimatullah, J.:

The plaintiff-appellant has made it the very foundation of his case that the prior mortgage is a subsisting mortgage, and that the prior mortgagee's suit on' foot of that mortgage, the decree passed therein and the sale in execution of such decree should be treated as a nullity against the plaintiff-appellant. In fact, ha insists on the relations subsisting before the suit on the prior mortgage to be recognized as subsisting. He treats the prior mortgage as an outstanding charge and the auction sale as conveying no title so far as he is concerned. He is entitled to treat accomplished facts as a fiction but must maintain that fiction throughout. He cannot be allowed to approbate and reprobate by first assuming that the prior mortgage still subsists and in the next breath asserting that a sale took place in execution of a decree on foot of that mortgage under which the contesting respondents become transferees of the mortgagor and are therefore themselves the mortgagors.

65. This view is obviously based on a long current of authorities including some Privy Council cases though they have not been cited and on the allegations contained in the plaint in this case. The precise questions which made it necessary to determine the rights and obligations of a puisne mortgagee who was not made a party to the suit of the prior mortgagee were (1) whether it was open to him to treat the decree and sale in such a suit as a nullity so far as he is concerned and (2) if so, and having done so, whether it was open to him to treat them as subsisting for any other purpose. In all these cases he sought to avoid the decree and sale thereunder and to treat the prior mortgage as subsisting but attempted to take advantage of the decree for limiting the contractual rate of interest only up to the. date of the decree and to escape liability to pay interest at the rate stipulated for in the deed of prior mortgage for the period intervening between the decree and his own suit. He was not allowed to take such inconsistent positions even though he would not have been liable to pay interest at that rate after the decree if he had been impleaded in the suit of the prior mortgagee. In Umes Chander Sircar v. Zahur Fatima [1891] 18 Cal. 164 at p. 181 which was a suit of that kind their Lordships of the Privy Council observed:

The decree can only operate between the parties to the suit and those who claim under them. The plaintiff getting the security of a decree has his interest reduced in the generality of cases, But the plaintiff in this ease comes to take away the benefit of the decree. It would be unjust if he could use the decree to cut down her interest, while ho deprives her of the whole advantage of it. His case is that as to him Zahur is still but a mortgagee and if so she should be allowed such benefit as her mortgage gives her. If Zahur had not got a decree and the plaintiff had come to redeem the mortgage he must have paid whatever interest her contract entitled her to, and the Court would have had no jurisdiction to cut it down, and that is the position in which the parties are placed by the decree in this suit.

66. Zahur was the prior mortgagee who purchased in execution of his own decree on foot of a prior mortgage. The plaintiff of that case was a puisne mortgagee who had not been made a party. It should be noted that the case arose before the Transfer of Property Act was passed. In cases to which that Act applied it was held that the effect of the proviso to Section 89,.T.P. Act, was that on a decree on foot of a prior mortgage being passed the mortgage would be extinguished even though the puisne mortgagee was not a party: see Het Ram v. Shadi-Ram A.I.R. 1918 P.C. 34 and Matru Mal v. Durga Kunwar A.I.R. 1920 P.C. 79. .... This proviso was omitted from the provisions corresponding to Section 89 when the Civil Procedure Code of 1908 was enacted : (see O.34, Rule 5, Civil P. C). Accordingly the Privy Council held in a subsequent case that:

now the words (Proviso to Section 89) being gone, their Lordships feel no difficulty in holding that the law remains as it certainly was before the Transfer of Property Act 1882.

67. In Dip Narain Singh v. Hira Singh [1897] 19 All. 527 (at p. 529) a Division Bench of this Court held that:

as the plaintiffs (puisne mortgagees) wore not joined as parties to the defendants suit for sale, as required by Section 85, Act 4 of 1882, they are, notwithstanding the sale in execution of the defendant's decree in the same position in which they would have been, and have still the same rights which they would have had, if they had been made parties to that suit, that is to say their right to redeem the prior mortgage of the defendant is saved to them.

68. In the Full Bench case of Wahidunnissa v. Gobardhan Das [1903] 25 All. 388, Blair, J. observed at p. 400:

That Bansidhar had notice, actual or constructive, that he was purchasing a defeasible title must be taken for granted. He must be taken to have known that the sale at which he bought was voidable at the will of the second mortgagee, who had only to redeem the first mortgage to enable him to put up the property for sale in satisfaction of both incumbrances. As against the second mortgagee he had acquired absolutely no title.

69. Burkitt, J., who was one of the three Judges composing the Full Bench concurred in these as in other remarks. Stanley, C. J., substantially took the same view in a separate judgment.

70. In Jnanendra Nath Singh v. Shorashi Charan Mitra A.I.R. 1922 Cal. 23 (at p. 64`4 of 49 Cal.) a Division Bench of the Calcutta High Court held that:

so far as the plaintiff (puisne mortgagee) is concerned the mortgage of the defendant subsists and that the plaintiff should not be allowed to approbate and reprobate the decree in the previous suit and he can only be allowed to redeem on the terms of the mortgage and on payment of interest at the rate payable under the mortgage up to the date of redemption to be fixed in this case.

71. In Thenappa Chettiar v. Marimuthunandan [1904] 31 Mad. 258 it was held that:

when in a suit by a prior mortgagee a decree for sale is passed which fixes the rate of interest after the date for redemption, the rate so fixed is not binding as between the prior mortgagee, who was not made a party to the suit. In a suit by such puisne mortgagee for redemption against the prior mortgagee, the mortgage will he considered as subsisting and interest will be awarded on the footing of the mortgage without reference to the decree in the prior suit.

72. It is clear to my mind that if the puisne mortgagee who was not made a party to the suit of the prior mortgagee elects to treat the decree in that suit, and what followed it, as not binding on him they have to be treated as nullity, not in the sense of being void ab initio but so far as his rights may be affected thereby. If he does so elect, the whole case shall have to be dealt with as if the prior mortgage is subsisting in which case, as already stated, no question can arise as to whether anyone became a purchaser at an auction sale held in execution of a decree passed on foot of the prior mortgage which ex hypothesi is subsisting.

73. We should next consider how the plaintiff has treated the decree in the prior mortgagee's suit and the sale held thereunder. In this connexion para. 5 of his plaint is conclusive and runs thus:

Defendant, second party, had not made the plaintiff a party to the suit. Hence all the proceedings taken in the suit by him, defendant second party, are null and void as against the plaintiff, but the plaintiff has in order to avoid dispute and for final settlement makes defendant second party and all the purchasers a party to his suit so that the Court might settle all the points in one attempt.

74. Paragraph 5 of the plaint cannot lend itself to any construction other than what is obvious from its language; and the significance of this paragraph cannot be overlooked. It is obvious that the plaintiff repudiates the position of the respondent as auction-purchaser in execution of the decree passed on foot of the prior mortgage and impleads him only to avoid future disputes. He is perfectly within his rights to do so but he should not be allowed to do otherwise if it suits him for deriving some other advantage. He cannot be permitted to turn round and treat him as an auction-purchaser so as to make him the representative of the mortgagor and to claim improvements made by him as accessions to the mortgaged property. The legal position of the defendants-respondents is therefore that of third persons in temporary possession who put up constructions in the honest belief that they were entitled to make the constructions.

75. It ought to be borne in mind that mere registration of a mortgage under the Registration Act is not per se constructive notice of the mortgage: Tilukdhari Lal v. Khedan Lal. No legal obligation was cast upon the auction-purchaser to search the registry before his bid at auction.

76. 'Good faith' as defined in Section 3, Clause (20), General Clauses Act (Act 10 of 1897), is equivalent to honesty of dealing and did not entail upon the auction-purchaser the necessity of searching the registry. Even assuming that there were facts indicative of negligence in investigating title, that by itself is not predicative of a lack of bona fides. It may be incidentally mentioned that Niamatullah, J., does not base his view upon the doctrine of notice but upon the broader ground of structure being put up in good faith. I am of opinion that the questions for determination have to be answered upon the principles laid down by Sir Barnes Peacock in 6 Weekly Reporter, p. 228. My answer therefore to the first part of the reference is in the affirmative and to the second part of the reference is in the negative.

77. The answer to the first part of the question is in the negative and to the second part in the affirmative.


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