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Chhaggan Lal Minor, Through Musammat Lachhi Vs. Muhammad HussaIn Khan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Judge
Reported inAIR1919All105; 51Ind.Cas.133
AppellantChhaggan Lal Minor, Through Musammat Lachhi
RespondentMuhammad HussaIn Khan and ors.
Excerpt:
mortgage - merger of mortgage in decree, effect of--decree-holder taking fresh mortgage---priority--prior mortgage paid off--mortgagee, position of. - - it may, however, be well to summarise the result of the findings of the court below upon the issues referred in conjunction with the statements made by the learned counsel upon each side as to the mortgages. in the mortgage of the 17th of may 1904 one sixth of this khata (instead of one-third) is mortgaged and some additional property as well. whether this was actually done or not, it is clear that in 1904 after the mortgage was executed it was never intended that the decree should be further executed and if the decree was not certified as satisfied, it should have been so certified. this principle is obviously applicable to the case..........decree of 1898. on the other band the contention for the plaintiffs-respondents is that where a prior mortgagee obtains a decree upon his prior mortgage and in lieu of the amount of that decree he obtains a subsequent mortgage of the same property from the mortgagor, the prior mortgage enures to his benefit and he can hold it up as a shield against the puisne mortgagee whose mortgage is of a date subsequent to that of the prior mortgage, and if it is to the benefit of the prior mortgagee to keep alive that mortgage, it would be presumed that he kept it alive. in support of this contention several cases have been cited by the learned counsel for the plaintiffs-respondents. the principal case upon which reliance is placed is a case of this court reported as kanhaiya lal v. chhidhu singh.....
Judgment:

Henry Richards, C.J.

1. The facts connected with this appeal are stated in my judgment delivered on the 1st of August 1916 and it is unnecessary to repeat them. It may, however, be well to summarise the result of the findings of the Court below upon the issues referred in conjunction with the statements made by the learned Counsel upon each side as to the mortgages. It appears that the principal property mortgaged in the mortgage of the 11th of July 1893 was a one third share in a certain Khata. The property hypothecated in the mortgage of the 29th of November 1893 was practically the same. In the mortgage of the 21st of August 1894 the same share in this Khata was mortgaged, and there was some additional property. In the mortgage of the 17th of May 1904 one sixth of this Khata (instead of one-third) is mortgaged and some additional property as well. The plaintiffs obtained a decree on foot of the mortgage of the 29th of November 1893, where by they were ordered to redeem the mortgage of the 11th of July 1893 when they would be entitled to sell the property for the aggregate amount of these two mortgages. That decree duly was made absolute and was put into execution and the greater part of the mortgage debt was realised, leaving only a balance of Rs. 156. The property was, however, never brought to sale. The mortgage on foot of which the present suit is based is the mortgage of the 17th of May 1904. The consideration for that mortgage was the Rs. 156 which still remained unpaid on foot of the mortgage decree which the plaintiffs obtained on their previous mortgage plus an additional sum of Rs. 94. The question which the plaintiff sought to have decided in his favour as against the appellant here was that he should obtain priority in respect of this Rs. 156 against the defendant appellant and that he should be at liberty to sell a one-fourth share which the appellant had purchased to realise this Rs. 153 and interest. The circumstances under which the 1/4th share was purchased are as follows: Amolak (the father of the appellant) obtained a decree on foot of the mortgage of the 21st of August (sic) The property was put up to sale and the defendant purchased one-fourth of the Khata (No 27), being the Khata which is common to all four mortgages. Reading the mortgage of the 17th of May 1904 it is abundantly clear that it was intended that this mortgage should discharge and he in satisfaction of the decree. On the face of it it is stated that the decree is discharged. On a previous occasion when the case was before the Court, it was stated that the decree had been certified as discharged. Whether this was actually done or not, it is clear that in 1904 after the mortgage was executed it was never intended that the decree should be further executed and if the decree was not certified as satisfied, it should have been so certified. If it was necessary, I should hold that under the circumstances of the present case no presumption arises that the plaintiff intended to keep alive either the mortgage of the 11th of July 1893 or the mortgage of the 29th of November 1893. I think there is express evidence that the intention was that these mortgages and the decree were to be treated as discharged. It must be admitted that if the plaintiff's claim in the present suit is to date from the 17th of May 1904 when he took the new mortgage, the appellant has priority over him because the plaintiff's purchase and possession must be attributed to the mortgage of the 21st of August 1894. It is said, however, that as against the defendant-appellant the plaintiff has priority to the extent of Rs. 156 and interest as of July and November 1893. This contention is based upon the presumption that because it was for the interest of the plaintiffs to keep alive the securities of 1893 it must be presumed they intended to do so and in fact did so. I have already stated my opinion as to this matter. It seems to me, however, that in any event the two mortgages of 1893 merged in the decree which the plaintiff obtained on foot of the mortgage of the 29th of November 1893 and that those mortgages were discharged and extinguished. If the plaintiff bases his claim on either of these mortgagee, he is at once met with a number of defences. In the first place, it can be said that a suit was brought on foot of these mortgages and a decree obtained for the sale of the mortgaged property and that a second decree cannot be made. In the next place, if the plaintiffs were suing on foot of one or other or both these mortgages the suit would be barred by limitation. If the plaintiff bases his claim on the fact that he is a decree-holder, the answer is, that the present proceeding is not an application to execute a decree but a suit asking for a decree directing the sale of the property. In the present case it happens that the plaintiff was the decree-holder who obtained the mortgage decree on the mortgage of November 1893 but if he happened to be a third party who had paid off a prior incumbrance, I do not think that a third party has any higher right than the original mortgagee would have had. I may quote here the words of Mr. Justice Warrington in the case of Ellis v. Ellis (1905) 1 Ch. 613 at p. 619 ; 74 L.J.Ch. 296 ; 53 W.R. 617 ; 92 L.T. 727: 'The plaintiffs then contend that George Ellis, having paid off the debt for the benefit of the estate, was entitled to stand in the place of the creditor, and that he transferred that right to James Ellis, who actually found the money. But, granting that such would be the right of George Ellis and that the plaintiffs could assert that right by subrogation, any claim founded on it would be barred by the Statute of Limitations. The debt is of course long since birred, and all claims under the original security are no v barrel also, for in this aspect of the case the payment of the interest was made by a stranger, and was not such a payment as would prevent the Statute from running.' It is said that because the plaintiffs omitted to make the appellant a defendant to their suit on their mortgage, they can bring a second suit on their mortgage as against the appellant. I think this very doubtful. But even if they could the present suit is based on the mortgage of 1904, not on the mortgage of 1893. In my previous judgment I have pointed out the distinction between a plaintiff seeking to sell property simply by reason of his having discharged a prior incumbrance and a defendant defending his possession or position in a suit brought against him. The very metaphor of the shield indicates the distinction. A man does not attack with a shield, he defends with it. Reliance was placed on behalf of the respondents on certain remarks of Mr. Justice Mookerjee in the case of Dhakeswar Prosad Singh v. Harihar Prosad Narain Singh 27 Ind. Cas. 780 ; 21 C.L.J. 104. At page 110 of the report that very learned Judge says: This principle is obviously applicable to the case before us, although the mortgage debt was satisfied by a purchaser of a portion of the mortgaged property after a decree had been obtained on the mortgage. The purchaser who redeemed the mortgage was, for the purposes of the rule, in the same position as if he were one of two joint mortgagors. The fact that a decree had been obtained on the mortgage was also immaterial, because a decree obtained on a mortgage does not extinguish the security, though the security may be merged in the decree and the judgment recovered in any form of action is still but a security for the original cause of action until it be made productive in satisfaction to the judgment creditor.

2. The facts of the case in which this judgment was delivered were different from the facts of the present case; but it seems to me that if it be taken that the mortgages of 1893 merged in the decree obtained by the plaintiff, then the plaintiff's remedy was no longer that of a mortgagee but that of a person who held a decree under which he was entitled to bring certain property to sale. If he wished to retain this position, he should not have taken a fresh mortgage the consideration for which was the decree--he should have executed his decree. It may be that where a person pays off a prior incumbrance before a decree has been made on foot of it and either expressly or by implication retains the benefit of that prior incumbrance, he can be treated as if he were the assignee of the prior incumbrance and if the prior incumbrance is not barred by limitation, he may be able to bring a suit just as the transferee of the prior incumbrance might have done. But it seems to me that the person paying off a prior incumbrance without taking a deed of transfer can be in no higher position than the prior incumbrancer would have been. If a decree has been obtained on foot of the prior incumbrance, then it seems to me that the prior incumbrance as such is discharged and from thenceforward the remedy is under the decree, I have pointed out that the question between the parties to this appeal was whether or not the plaintiff could insist on priority against the appellant. The plaintiffs have made no claim to redeem the appellant. I think, therefore, that the decree of the Court of first instance should be restored.

Rafique, J.

3. I am also of opinion that this appeal should prevail. It appears that originally Mohar Singh (the father of Mamraj and the grandfather of Hoshiar, defendants Nos. 3 and 4 in the first Court) executed a mortgage on the 11th of July 1893 in favour of Chhaggan Khan (the father of Muhammad Hussain Khan) and Masitullah--Muhammad Hussain Khan and Masitullah are the plaintiffs in the present suit. By way of security he (Mohar Singh) hypothecated a Khata. About 4 months after he executed another hypothecation bond in farvour of Chajju Khan in respect of the same Khata. On the 21st of August 1894 he gave a third mortgage-deed to Amolak (the father of the contesting defendant Chhaggan Lal). In the deed of 1894 the same property that was mortgaged in the deeds of 1893 was hypothecated together with some other property which need not be mentioned here. In 1898 Muhammad Hussain Khan (one of the plaintiffs in the present suit) sued on the mortgages of 1893 and obtained a decree for sale against both Mohar Singh and his son Mamraj. The decretal amount not having been paid an order absolute was made on the 13th of March 1899. Amolak subsequent to these proceedings brought a suit on the basis of his mortgage of 1894. Muhammad Hussain alleges that he applied to be brought on the record as a party but his application was rejected. The case proceeded to trial and a decree was passed in favour of Amolak for the sale of the hypothecated property. In execution of the decree part of the property was sold and purchased by Amolak, namely, one-fourth of Khata No. 27, that is, the property which was hypothecated in both the bonds of 1893 and 1894. On the 17th of May 1904 Mamraj executed a further deed of mortgage in favour of Muhammad Hussain Khan for Rs. 250. Out of the sum of Rs. 250 Rs. 156 were credited towards the decree of 1898 in full discharge as part of the decree had already been paid up. In the bond of 1904 a portion of Khata No. 27 was mortgaged by way of security together with property in other Khatas. On the 2nd of January 1904 the suit out of which this appeal has arisen was brought by Muhammad Hussain Khan and Masitullah Khan against Chhaggan Lal (the son of Amolak) and against Mamraj and his minor son Hoshiar for the recovery of the money due on the bond of the 17th of May 1904 by sale of the property hypothecated in the said bond. Chhaggan Lal resisted the claim on various pleas, one of which was that the property which his father had purchased in execution of his decree was not liable to sale under the decree if passed in favour of the plaintiffs on the bond of the 17th of May 1904. The plaintiffs in rejoinder contended that as part of the consideration of the bond of the 17th of May 190* was the money due on the decree of 1898, and the latter decree was on the basis of the bonds of 1893, they (the plaintiffs) had priority over Amolak's mortgage of 1894. The Court of first instance accepted the contention for the defence and disallowed the claim of the plaintiffs for priority as against the defendant appellant. On appeal the learned Subordinate Judge disagreed with the first Court and following a ruling of this Court decreed the claim of the plaintiffs against the property that had been purchased by Amolak in execution of his decree. In second appeal to this Court the contention on behalf of Amolak's son is that the plaintiffs had no priority over him inasmuch as their mortgages of 1893 had merged into the decree of 1898. On the other band the contention for the plaintiffs-respondents is that where a prior mortgagee obtains a decree upon his prior mortgage and in lieu of the amount of that decree he obtains a subsequent mortgage of the same property from the mortgagor, the prior mortgage enures to his benefit and he can hold it up as a shield against the puisne mortgagee whose mortgage is of a date subsequent to that of the prior mortgage, and if it is to the benefit of the prior mortgagee to keep alive that mortgage, it would be presumed that he kept it alive. In support of this contention several cases have been cited by the learned Counsel for the plaintiffs-respondents. The principal case upon which reliance is placed is a case of this Court reported as Kanhaiya Lal v. Chhidhu Singh 7 Ind. Cas. 468 ; 7 A.L.J. 984. It is unnecessary to refer to the other cases cited on behalf of the respondents, as there is no doubt that there is authority in support of the contention. But I think as far as this case is concerned none of those cases is applicable. The facts of this case are quite different. If it be conceded that where a prior mortgagee obtains a decree upon his prior mortgage and in lieu of the decretal amount gets a subsequent mortgage of the same property from the mortgagor, the prior mortgage enures to his benefit and he can enforce it against the property in preference to the subsequent mortgagee, it has still to be seen whether in the present case there was an intention on the part of Chajju Khan or Mohammad Hussain Khan to keep alive the prior mortgage, or under the circumstances of the present case we can presume such intention. On reference to the deed of the 17th of May 1904 it is clear that there was no intention to keep the mortgages of 1893, or the decree of 1893, alive for the benefit of the mortgagee. In fact the wording is such that a contrary intention is expressed. It is distinctly stated there that the mortgage was taken partly in satisfaction of the decree of 1898 which bad been put into execution, upon which payments had been made and which after the execution of the mortgage had been certified as discharged. In the deed of the 17th of May 1904 only a portion of the property that was mortgaged in the deeds of 1893 was taken by way of security (and other property of higher value was also taken by way of security). I would also note here that this case is to be governed by the provisions of Act IV of 1882.

4. Under Section 89 of the said Act when the order absolute is made, the right to redeem and the security of the mortgage are both extinguished. I am aware of the fact that in spite of the language of Section 89 the Courts have allowed redemption, and in the cases cited on behalf of the plaintiffs-respondents the mortgage security is said not to have been extinguished. With due deference to the learned Judges I would say that the language of the section is quite clear and distinct, and the mortgage security is extinguished when after a decree is passed on a mortgage an order absolute is made. The mortgagee instead of having the mortgage as a security on getting a decree has his right of sale under the decree. Their Lordships of the Privy Council in the case of Het Ram v. Shadi Ram 45 Ind. Cas. 798 ; 40 A. 407 ; 5 P.L.W. 88 ; 16 A.L.J. 607 ; 35 M.L.J. 1 ; 24 M.L.T. 92 ; 28 C.L.J. 188 ; (1918) M.W.N. 518 ; 20 Bom. L.R. 798; 22 C.W.N. 1033 ; 45 I.A. 130 (P.C.) say: 'The Section then provides that the defendant's right to redeem and the security shall both be extinguished.' The construction which their Lordships put on the language so used is that on the making of the order absolute the security as well as the defendant's right to redeem are both extinguished, and that for the right of the mortgagee under his security there is substituted the right to a sale conferred by the decree. After this expression of opinion it can hardly be contended that if a prior mortgagee obtains a decree and that decree is made absolute and then he takes a fresh mortgage, he can still fill back upon his first mortgage as against intermediate mortgagees. I would, therefore, hold that the plaintiffs respondents have no priority over the defendant-appellant in respect of the property purchased by his father. I would, therefore, allow the appeal.

Lindsay, J.

5. I agree that this appeal should be allowed. The suit out of which it has arisen has been brought by the plaintiffs-respondents for the purpose of recovering a debt secured by a mortgage executed in their favour in the year 1904. They are seeking to recover the mortgage money out of property which is in the possession of the defendant-appellant, under a title which runs back as far as the year 1894. It is admitted that the appellant's father got a mortgage of the property in 1894, and afterwards brought a suit for sale upon the mortgage and purchased the property himself. It is plain, therefore, that the mortgage upon which the present suit has been brought is posterior in date to the date of the mortgage under which the defendant-appellant has acquired his title. The case for the plaintiffs, however, is that by reason of certain previous mortgages with which they were concerned they have acquired priority over the defendant-appellant in respect of a sum of Rs. 155 which formed part of the consideration of the mortgage now in suit. Reference has already been made in the judgments of my learned colleagues to the history of the litigation prior to the year 1904. In the mortgage now in suit a reference is made to the suits brought by the present plaintiffs respondents in respect of the two mortgages of 1893, It is stated in the document that a preliminary decree was obtained by the present plaintiffs in the year 1893 and that an order absolute was passed in their favour in March 1899. It may, therefore, be conceded that just before the mortgage of 1904 the plaintiffs-respondents had security for the previous mortgage debts. Whether or not that previous security was kept alive after the document of 1904 was written is a question of the intention of the parties. Where there is no evidence either way it is settled law that the presumption is that the parties act for their own benefit; and so it may be said in the present case that inasmuch as a sum of Rs. 156 was still owing to the plaintiffs-respondents under the decree obtained by them in the year 1899, it was to their benefit to keep the decree alive when they took the mortgage of 1904. On the other hand the presumption arising out of the assumed benefit may be overturned by direct evidence, and I agree with my colleagues that in the document of 1904 there is language which precludes the notion that it was the intention of the plaintiffs-respondents to keep the previous security alive. I fail to understand how in the face of the language which has been used in this document, where we have an express recital to the effect that the decree had been fully paid off, it is possible for the plaintiffs-respondents here to contend that it was in their minds at the time that the previous security should be maintained.

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

7. By the Court.--The order of the Court is that the appeal is allowed, the decree of the lower Appellate Court set aside and the decree of the Court of first instance restored with costs in all Courts, Costs in this Court will include fees on the higher scale.


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