1. The simple question for consideration in this appeal is whether Chhotey Lal is entitled to the rights of a prior mortgagee as against Dharajit by reason of his having got a decree on that prior mortgage. The first mortgage was made in favour of Mt. Reoti who obtained a decree to which Dharajit was made a party in his capacity as a subsequent mortgagee. In execution of that decree the mortgaged property was put up to sale and purchased by Dharajit, but the sale was subsequently set aside on the mortgagor raising the amount required to pay up that decree by making a usufructuary mortgage in favour of Chhotey Lal. The mortgage deed executed in favour of Chhotey Lal provided that he shall step into the shoes of Mt. Reoti by reason of such payment.
2. An attempt is now being made by Dharajit to bring the mortgaged property to sale in execution of his decree obtained on foot of an intermediate mortgage. Mt. Reoti was no party to that decree. Chhotey Lal has been impleaded as a subsequent mortgagee in the execution proceeding but he sets up his right as a prior mortgagee under the mortgage held by Mt. Reoti which he claims to have paid. That claim is resisted by Dharajit. The trial Court found in favour of Chhotey Lal and directed that the property comprised in the decree of Dharajit shall be sold subject to the prior rights of Chhotey Lal under his usufructuary mortgage. The lower appellate Court however held that the prior mortgage held by Mt. Reoti had merged into a decree and the payment of the money of that decree did not give Chhotey Lal a right to keep alive the original mortgage. In coming to that conclusion it followed the decision of Het Ram v. Shadi Lal AIR 1918 PC 34 and Matru Mal v. Durga Kunwar AIR 1920 PC 79. But those decisions were based on the construction of Section 89 of the Transfer of Property Act which declared that on the passing of a decree for sale, the right of the mortgagor to redeem and the security shall both be extinguished. The corresponding rule of Order 34, Rule 5 of the Civil P.C. has altered the position in so far that those words no longer exist and as pointed out by their Lordships of the Privy Council in Sukhi v. Ghulam Safdar Khan AIR 1922 PC 11, it is now open to a person who is not a party to a decree to put up that decree as a shield against any intermediate mortgagee whose rights are not superior to those covered by the decree. Chhotey Lal has clearly acquired by the payment made by him of the decree of Mt. Reoti the rights which Mt. Reoti held in the property and the Court below was not justified in relegating him to an inferior position. Dharajit can only sell the property comprised in the mortgage decree of Mt. Reoti subject to the prior rights acquired by Chhotey Lal by virtue of his payment of that decree. The trial Court was equally wrong in declaring that Chhotey Lal was entitled to priority in respect of his subsequent usufructuary mortgage; for he could only claim priority in respect of the decree of Mt. Reoti which he had paid out of consideration of that mortgage. We allow the appeal accordingly; and setting aside the orders of the Courts below direct that Chhotey Lal is entitled to priority in respect of the property comprised in the mortgage decree held by Mt. Reoti to the extent of the money paid by him in satisfaction of that decree. The appellant in these circumstances will get his costs here and hitherto from the opposite party who will bear his own costs throughout. The fees in this Court will include fees on the higher scale.