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Fazal Rab Vs. Manzoor Ahmad - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1931All76
AppellantFazal Rab
RespondentManzoor Ahmad
Excerpt:
.....429 which is sometimes quoted as an authority for the proposition that mere silence of the prior mortgagee as -regards his rights under the prior mortgage and his failure to obtain recognition thereof have the effect of destroying such rights, depends upon the peculiar facts of the case and is not an authority for that broad proposition. nor can the auction purchaser plead want of notice of the prior mortgage and his own purchase in good faith where the prior mortgage is proclaimed by a registered instrument and possession of the prior mortgage and of the plaintiff subsequent to redemption. the defendant has failed to do so in this case. 37 of 1911, and are not satisfied the plaintiff's rights as a prior charge-holder were at all in question or whether he litigaged in that..........idi owned a 1-anna and 1-pie share in mahal idi, village ingua. his brother, rajab, owned a 6-pies share in the same mahal. by a deed dated 15th january 1866, idi mortgaged with possession a number of specified plots to one shamsuddin, agreeing to pay a certain rate of interest which could not be satisfied out of the usufruct of the mortgaged property. a balance of rs. 54-13-9 was therefore payable by the mortgagor every year out of his own pocket, which he agreed to pay with the principal at the time of redemption. subsequently, idi sold 7-pies out of his share to alopi and the remaining '6-pies to kanhai lal and jawahir lal.2. alopi sold the 7-pies share purchased by him to the plaintiff's father, madad ali, ilahi baksh, abdus shakur and raza. husain in equal shares, the share of.....
Judgment:

Niamatullah, J.

1. This is a plaintiff's appeal from the decree passed by the Additional Subordinate Judge of Allahabad upholding that of a Munsif of that District in a suit for declaration or, in the alternative, for possession, brought by the appellant, which has been 'dismissed by both the lower Courts. Idi owned a 1-anna and 1-pie share in mahal Idi, village Ingua. His brother, Rajab, owned a 6-pies share in the same mahal. By a deed dated 15th January 1866, Idi mortgaged with possession a number of specified plots to one Shamsuddin, agreeing to pay a certain rate of interest which could not be satisfied out of the usufruct of the mortgaged property. A balance of Rs. 54-13-9 was therefore payable by the mortgagor every year out of his own pocket, which he agreed to pay with the principal at the time of redemption. Subsequently, Idi sold 7-pies out of his share to Alopi and the remaining '6-pies to Kanhai Lal and Jawahir Lal.

2. Alopi sold the 7-pies share purchased by him to the plaintiff's father, Madad Ali, Ilahi Baksh, Abdus Shakur and Raza. Husain in equal shares, the share of the plaintiff's father being 1 3/4-pies. The vendees had no money of their own for payment of the consideration, Rs. 800, and executed for that sum a bond in favour of Alopi, the vendor, hypothecating the share purchased by them. Madad Ali died some time afterwards, and the plaintiff stepped in his shoes. Later on, the plaintiff purchased from Kanhar Lal and Jawahir Lal the 6-pies share which the latter had purchased from law. The plaintiff thus became owner of .7i-pies share in the mahal.

3. A partition was made of Mahal Idi some time before 1907. Seven pattis were formed of the entire mahal, three of which were: (1) patti belonging to the plaintiff; (2) patti Raza Husain, including his share and that of Abdus Shakur purchased from Alopi; and (3) patti Hafiz Ahmad, including the share of Ilahi Baksh purchased from Alopi. The plots mortgaged by Idi under the deed dated 15th January 1866, were distributed among all the seven pattis.

4. The plaintiff instituted Suit No. 61 of 1907 for redemption of the mortgage, dated 15th January 1866, and redeemed the mortgaged property on payment of Rs. 3,167-8-0 on 14th April 1911. The trial Court seems to have been in error in thinking that Alopi Din was not party to the redemption suit. It is conceded by the parties before us that he was. The plaintiff managed to obtain possession of all the lands which then lay in the seven pattis.

5. Dakhni Din, son of Alopi, brought suit No. 37 of 1911 (his father having died in the meantime) for enforcement of the mortgage, dated 9th September 1882, against the representatives of the mortgagors, including the plaintiff, whose 1 3/4 pies share had been hypothecated under the deed. The suit was decreed, the property was sold in execution of the decree and purchased by the defendant Manzur Ahmad, who took possession of the shares belonging to the mortgagors, viz., 13/4 pies out of the plaintiff's patti, entire patti Baza Husain, entire patti Hafiz Ahmad. In doing so he attempted to take possession of the plots which the plaintiff had redeemed from Shamsuddin, the mortgagee under the deed of 5th January 1866, and which partly lay in the three pattis. He struggled to retain his hold on these plots by resisting the claim of the defendant before the revenue Courts in suits for arrears of rent, but eventually failed in his effort to keep possession. This is the finding of the Courts below, though the plaintiff's case still is that he is in possession. We must accept the finding that he is not in possession. On 15th January 1926, the plaintiff brought the suit out of which the present appeal has arisen for the declaration that he is entitled to possession of the plots he redeemed from the mortgagee under the deed of 1866, which had priority over all other subsequent deeds. In the alternative, he claimed that if he be found to be out of possession, a decree for possession be passed in his favour.

6. The principal defences which it is necessary to mention at this stage are: (1) the plaintiff omitted to disclose in Dakhni Din's suit (No. 37 of 1911) the fact that he had redeemed the mortgage of 1866 and did not assert his right to remain in possession till he was paid the amount of prior incumbrance apportion-able on the land purchased by the defendant in good faith without knowledge of any charge in plaintiff's favour; (2) the plaintiff being the owner of the property redeemed by him, the mortgage ceased to exist by operation of the rule of merger .... the plaintiff not having kept alive the charge to set it up as a shield. We have stated the defence in substance. The written statement is a confused mass of pleas jumbled up in a manner which makes it difficult to disentangle them one from another. In giving effect to the defendant's pleas the Courts below do not formulate the law on which they profess to base their view. We shall endeavour to mention their opinion on each point as it is discussed by us.

7. But before we do so, it is desirable to restate, as briefly as possible, the position of the parties in relation to the land in dispute. Idi owned a 13-pies fractional share of the entire mahal, which was joint. He mortgaged in 1866, to Shamsuddin, a number of specified plots. Of the 13-pies to which the mortgaged plots appertained, the plaintiff acquired 7f-pies and the remaining 5 1/4-pies became vested in other persons. A second mortgage was made of 7-pies by those other persons and the plaintiff, who hypothecated 1 3/4-pies out of his 7-pies. The plots mortgaged in 1866, so far as they appertained to the 7-pie share, became subject to a second mortgage; but the plaintiff's 6-pies share was free from the second mortgage and therefore the plots, so far as they appertained to this 6-pies share, was not subject to any second mortgage. The plaintiff redeemed the mortgage of 1866 and obtained possession on 14th April 1911. It was thus a case of one of several mortgagors re-deeming the whole of a mortgage. Then the second mortgagee enforced his mortgage and 7-pie share was sold and purchased by the defendant. The plaintiff, who was a party to the suit of the second mortgagee did not assert his right to retain possession which he had obtained by redeeming the prior mortgage of 1866. The defendant dispossessed the plaintiff. The question is whether the plaintiff is entitled to possession of so much of the land as appertained to the 7-pie share sold to the defendant, till he (the plaintiff) is paid a proportionate amount of what he had to spend in obtaining redemption of the mortgage of 1866.

8. It cannot be disputed that, on 14th April 1911, when the plaintiff redeemed the mortgage of 1866, the plots affected by that mortgage belonged to the owners of the 13 pies originally owned by Idi. The plaintiff, one of such cosharers, who redeemed the whole, became entitled to retain possession under Section 95, T. P. Act, till he is paid, by his co-mortgagors, their share of 'the expenses properly incurred by him in so redeeming and obtaining possession.' Referring to the rights of the plaintiff's co-mortgagors, the owners of pattis Hafiz Ahmad and Raza Husain, the lower appellate Court has ruled that the plaintiff had no doubt a right to claim a charge. But, in order to keep that charge alive, he ought to have maintained his possession and should not have given up possession till he was paid the proportionate mortgage money. But it seems that he never took care to remain in possession, and never during the course of all the proceedings and the cases that were fought between himself and the defendants he asserted that he was a charge-holder. Under Section 95, T. P. Act, in order to create a charge, it seems necessary that, possession should have been obtained. The learned Subordinate Judge is not quite clear about the facts on which he based this view. One is led to think from the concluding words of the passage quoted above that the plaintiff never obtained possession. On the other hand, the impression conveyed by the earlier part of the passage is that the plaintiff voluntarily gave up possession. It is inconceivable to us that one or the other of these hypotheses could hold good. That Shamsuddin, the mortgagee under the deed of 1866, was in full and effective possession is common ground; that the plaintiff obtained possession by redemption is equally beyond question; and that it was not till - 1918 that the defendant appeared on the scene after he purchased in execution of the decree obtained by the second mortgagee. Indeed the learned Subordinate Judge himself found at another place in his judgment that

after the purchase of the property by the defendant in the decree of Dakhni Din, he (plaintiff) was dispossessed from the property in spite of all his efforts to the contrary. He resisted the defendant in mutation and correction of papers proceedings unsuccessfully, but it is noteworthy that he never asserted that he was in possession of the property as a charge-holder .... Anyhow, it is perfectly . clear that the defendant took possession through Court and ever since 1918 has been obtaining and realizing decrees for arrears of rent.

9. Whatever may be said as regards the plaintiff's omission to set up his right as a charge-holder, it has to be accepted as a fact that he was in possession for several years after he redeemed the mortgage of 1866 before he was dispossessed by the defendant. The view that by forcibly dispossessing the plaintiff he (defendant) can extinguish the charge, which undoubtedly existed under Section 95, T. P. Act, is wholly unacceptable to us and has no warrant for it. We fail to understand how it commended itself to the learned Additional Subordinate Judge, apart from other considerations such as the operation of the rule of merger to which we shall advert presently. Again, the right to possession was vested in the prior mortgagee Shamsuddin, and redemption by the plaintiff from him could not give any right of possession to anyone else. Unless, therefore the defendant acquired such right by his purchase in execution of the decree obtained by mortgagee the second mortgagee his action in ejecting the plaintiff was wrongful.

10. We have next to consider the question whether the plaintiff's omission to disclose his prior charge and right to possession over the shares of his co-mortgagors in the second mortgagee's suit and to have it declared in the execution proceedings that followed had the effect of extinguishing that charge and of depriving him of the right to possession. The answer to this question will depend on a consideration of the pleadings and the adjudication in the second mortgagee's suit for enforcement of his mortgage. In general, a prior mortgagee is not a necessary party to such an action. If for any reason he is a party he need not assert his rights as a prior mortgagee, unless he has reason to think that his rights are called in question. It is only if the prior mortgage is expressly or by necessary implication impugned that he is called upon to defend his right as a prior mortgagee. Under ordinary circumstances, a puisne mortgagee is entitled to sell the right, title and interest of his mortgagor as they were on the date of his own mortgage, i. e., in this case subject to the prior charge; and the purchaser will get no more than such rights whether the property is specifically sold subject to such charge or no mention is made of it. It is otherwise if the existence of the prior mortgage or its validity is denied by the puisne mortgagee and the prior mortgagee being a party does not assert his rights and allows the former's allegation to, prevail in which case the decree of the Court may be open to the construction that the mortgaged property is to be sold free from incumbrance. In any subsequent conflict between the prior mortgagee and the auction-purchaser as to whether the property was taken by the latter free from incumbrance, the dispute has to be settled by an appeal to the rule of res judicata. This view is in conformity with what has been laid down by their Lordships of the Privy Council in Radha Kishun v. Khurshed Hossein A.I.R. 1920 P.C. 81. The earlier ease Sri Gopal v. Pirthi Singh [1902] 24 All. 429 which is sometimes quoted as an authority for the proposition that mere silence of the prior mortgagee as -regards his rights under the prior mortgage and his failure to obtain recognition thereof have the effect of destroying such rights, depends upon the peculiar facts of the case and is not an authority for that broad proposition. It was quoted before their Lordships in course of the argument in Radha Kishun v. Khurshed Hossein A.I.R. 1920 P.C. 81 but has not been noticed in the judgment. Explanation to Order 34, Rule 1, Civil P.C., was added for the first time in 1908: but we do not think that Sri Gopal v. Pirthi Singh [1902] 24 All. 429 is based on the absence of a statutory rule of that kind. Nor can the auction purchaser plead want of notice of the prior mortgage and his own purchase in good faith where the prior mortgage is proclaimed by a registered instrument and possession of the prior mortgage and of the plaintiff subsequent to redemption. The least effort on his part could bring to light the existence of the prior mortgage and of the charge in favour of the redeeming co-mortgagor.

11. To revert to the circumstances of the case before us: we have to observe that there is no difference in principle whether the rights of the prior mortgagee himself or those of the person subrogated to his position by redemption of the prior mortgage, are called in question by the auction-purchaser. The latter must satisfy the Court that such rights were in question in the puisne mortgagee's suit and should be deemed to have been negatived. The defendant has failed to do so in this case. The question is not whether the plaintiff set up his prior rights. but whether the puisne mortgagee expressly or by necessary implication impugned them and the Court expressly or impliedly gave effect to his plea. We have not been referred to the pleadings or to the judgment in Suit No. 37 of 1911, and are not satisfied the plaintiff's rights as a prior charge-holder were at all in question or whether he litigaged in that character. He was a party' because he was the representative of one of the mortgagors under the deed sought to be enforced. There was no occasion for him to make mention of the mortgage of 1866. He was entitled to presume that those concerned have acquainted themselves with it. There is nothing to show that the Court intended to sell and did sell the property free of incumbrance. Apparently the Court did not apply its mind to that question as it was not before it. Under these circumstances, the defendant cannot maintain that he purchased free from all obligations arising out of the mortgage of 1866. The following remarks made by their Lordships of the Privy Council in Radha Kishun v. Khurshed Hossein (1) at p. 669 (of 47 Cal.) are apposite to the case before us:

Bakhtaur Mull's position, therefore, was that he was a prior mortgagee with a paramount claim outside the controversy of the suit unless his mortgage was impugned. Consequently, to sustain the plea of res judicata, it is incumbent on the Sahus in the circumstances of this case to show that they sought in the former suit to displace Bakhtaur Mull's prior title and postpone it to their own. For this it would have been necessary for the Sahus as plaintiffs in the former suit to allege a distinct case in their plaint in derogation of Bakhtaur Mull's priority.

But from the records of this suit it does not appear that anything of the kind was done, and, as has been observed, of things that do not appear and things that do not exist the reckoning in a Court of law is the same.

The Sahus, therefore, have failed to establish the conditions essential to their plea, and they alone are responsible for this defect. The plaint in Suit No. 100 of 1906, has not been produced, and his omission is not supplied by the summary of the plaint set out in the extract from the decree: Ex. J 37 C. That summary still leaves the contents of the plaint a matter of mere conjucture and certainly does not show that Bakhtaur Mull's mortgage was attacked.

12. The defendant merely relied on the plaintiff's inability to show that he asserted his rights and made no effort to show that his rights were impugned in the pleadings or the judgment and the decree passed in the case.

13. The next question that has to be considered is whether, after the redemption of the mortgage of 1866, the resultant charge in favour of the plaintiff was kept alive or merged in the plaintiff's ownership. Reference has been made in this connexion to Section 101, T.P. Act. In the first place, that section does not in terms apply, as this is not a case in which:

the owner of the charge or other incumbrance on immovable property is or become absolutely entitled to that property.

14. Here the plaintiff was already the owner of part of the property before he redeemed, and the remaining part thereof never became vested in him. The section, like the general rule of merger, applies to cases where the whole property subject to the incumbrance in favour of a person is acquired by him in full ownership. In the second place, the charge is not extinguished if the continuance of the charge or incumbrance is to his benefit. There is no evidence of any declaration, express or implied, by the plaintiff keeping the charge alive; but in view of the existence of a second mortgage it was obviously to his benefit that he should keep it alive.

15. As already mentioned, this is a case of the owner of part of the mortgaged property acquiring a charge on the whole property. In other words, it is a case of one of several co-mortgagors redeeming the whole and the proper rule to apply is Section 95, T. P. Act, which, unlike Section 101, does not impose any condition of the charge being kept alive. It is a necessary corollary from the general rule of contribution contained in Section 82, T. P. Act. This being so, the plaintiff was entitled to remain in possession of the plots which he had redeemed and which were assigned to the pattis of his cosharers, viz. pattis Raza Husain and Hafizuddin, till payment by the defendant who had acquired the interests of his co-mortgagors. It is clear to us that the defendant cannot have better rights than those whose interest he purchased.

16. As regards the plots lying in the plaintiff's own patti, the position is somewhat different. Of the 7i pies share 6 pies were free from the second mortgage. The plots included in this patti, so far as they appertain to such 6 pies share are not affected by the auction sale in favour of the defendant, who is not, in any case, entitled to exclusive possession of them. As to whether the defendant is entitled to possession of those plots to the extent of 1 3/4 pies share purchased by him, our answer is in the affirmative. The plaintiff cannot invoke the aid of any statutory rule contained in the Transfer of Property Act or in any other enactment. The doctrine of subrogation is subject to important equitable exceptions, and is not ordinarily applied in favour of a mortgagor paying off a prior incumbrance, which he was personally bound to pay, or against an intermediate charge-holder, to whom he is personally bound to pay. The plaintiff, whose father merely purchased the equity of redemption of Idi and paid off the prior mortgagee (Shamsuddin), cannot be said to have paid what he was personally bound to pay. The purchaser of the equity of redemption, unless he expressly saddled himself with the personal obligations of the mortgagor, cannot be deemed to be personally liable to the prior mortgagor, assuming the mortgage deed contained a personal covenant to pay. He has to discharge the incumbrance as the property of which he has become the owner is subject to it. The mortgage in favour of Shamsuddin was usufructuary, and we have not been shown anything to indicate that there was a personal covenant to pay.

17. The plaintiff was certainly bound personally to pay the simple mortgage in favour of Alopi, whose son enforced it by sale of the mortgaged property. Before such sale, at which the defendant purchased it, the plaintiff had discharged the prior incumbrance in favour of Shamsuddin. The question is whether the plaintiff can set up the charge so far as it rested on his own property against his own subsequent mortgagee, whom he was personally bound to pay. Though there is no statutory provision applicable to a case like this, their Lordships of the Privy Council have laid down a rule of justice, equity and good conscience which ought to determine the rights of the parties before us. In Gokaldas Gopaldas v. Puranmal Premsukhdas [1884] 10 Cal. 1035, where

the mortgagor's right, title and interest in certain immovables in the Deccan, subject to a first and a second mortgage, were sold in execution of a decree to a purchaser who afterwards paid off the first mortgage

it was held that

as he had a right to extinguish the prior charge, or to keep it alive, the question was what intention was to be ascribed to him; and that, in the absence of evidence to the contrary the presumption was that he intended to keep it alive for his own benefit.

18. Where property is subject to a succession of mortgages, and the owner of an ulterior interest pays off an earlier mortgage, it is a matter of course, according to the English practice, to have it signed to a trustee for his benefit, as against intermediate mortgagees, to whom he is not personally liable. But in India a formal transfer for the purpose of a mortgage is never made, nor is an intention to keep it alive ever formally expressed:

It was ruled in the English Court of Chancery in Toulmin v. Steere [1817] 3 Mer. 210, that the purchaser from an owner of equity of redemption, with actual or constructive notice of another intermediate incumbrance, is precluded, in the absence of any contemporaneous expression of intention, from alleging that as against such other incumbrance, the prior mortgage, paid off out of the purchase money, is not extinguished. That case was not identical with this where the prior mortgage was not paid off out of the purchase money but was paid afterwards by the purchaser. The above ruling, however, is not to be extended to India, where the question to ask is, in the interest of justice, equity and good conscience there applicable....; what was the intention of the party paying off the charge?

19. In a comparatively recent case, viz., Ayyareddi v. Gopalkrishnayya A.I.R. 1924 P.C. 36, their Lordships treated it as settled law:

that where in India there are several mortgages on a property, the owner of the property, subject to the mortgage, may, if he pays off an earlier charge, treat himself as buying it and stand in the same position as his vendor, or to put it in another way, he may keep the incumbrance alive for his benefit and thus come in before a later mortgagee. This rule would not apply if the owner of the property had covenanted to pay the later mortgage debt, but in this case there was no such personal covenant. It is further to be presumed, and indeed the T. P. Act, Section 101, so enacts, that if there is no indication to the contrary, the owner has intended to have kept alive the previous charge if it would be for his benefit.

20. Applying the above rule to the case before us, the conclusion arrived at is that on the redemption by the plaintiff of the mortgage of 1866, he acquired under Section 95, T. P. Act, a right to retain possession of the shares of his co-mortgagors till he was paid their portion of the expenses properly incurred by him in redeeming their shares; but in so far as the charge apportionable on his own share was concerned, he could not keep it alive as against Alopi, the second mortgagee, to whom he was personally liable to pay. The charge to that extent should be deemed to have been extinguished. It may be said, though it was not argued before us, that the plaintiff, who was one of the mortgagors personally liable to pay the mortgage money due to the second mortgagee, was so liable to pay the whole amount due to such mortgagee and could not claim a charge as against the second mortgagee, nor against the defendant, who purchased at a sale held in execution of a decree obtained on foot of the second mortgage. We do not think such a contention is sound. In the first place, Section 95, T. P. Act, embodying as it does a statutory rule, cannot be affected by any rule of equity, which can prevail only in the absence of a statutory rule and cannot override an imperative provision of the kind enacted in that section. In the second place, the rule which has been given effect to by their Lordships applies only so far as the property of the person paying is concerned. It is only an application of the general rule of merger which presupposes the coincidence of title to the property and the charge to which it was subject being vested in one and the same individual.

21. In view of the conclusions arrived at by us, this appeal must succeed to a large extent. The plaintiff has been found to be put out of possession by the Courts below and we must accept that position. The relief to which he is entitled is not declaration but possession of the property from which he has been wrongfully dispossessed. He has claimed such a relief in the alternative. Accordingly, we decree the plaintiff's claim to possession of all the plots in dispute, except those lying in his own patti, (i. e., patti Fazli Rab), as to which he is entitled to joint possession with the defendant, their shares in them being respectively 6 pies and 13/4 pies. The defence having partly succeeded, parties, should, under ordinary circumstances, receive and pay costs in proportion to success and failure. To prevent minute distribution on that basis we think justice would be done in the case if we direct the plaintiff to receive half of his costs in all the Courts and the defendant to bear his own throughout. Counsel's fees to be taxed on the higher scale. Let a decree embodying these terms be prepared.


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