1. This appeal arises out of a suit for sale upon the basis of a mortgage dated 27th August 1915 executed by one Mehdi Ali Khan to secure a principal sum of Rs. 3,000. Defendants 1 to 4 were the heirs of the mortgagor and defendants 5 to 10 were subsequent transferees. Out of these defendants we are only concerned with Latta Prasad, defendant 7. He pleaded that he was a prior mortgagee under a deed executed by Mehdi Ali Khan on 11th July 1911. He claimed that no decree for sale could be given to the plaintiff, who was merely a subsequent mortgagee, except upon condition that the plaintiff should redeem the prior mortgage.
2. The trial Court decreed the plaintiff's suit but did not decide the issue regarding the priority of Lalta Prasad's mortgage, holding that it was unnecessary to decide that point for the purpose of deciding the suit. Lalta Prasad's interest as mortgagee were to remain unaffected. Lalta Prasad came to this Court in appeal and the Bench before whom the appeal was heard came to the conclusion that it would be expedient to decide the question of Lalta Prasad's priority, and his rights under the alleged prior mortgage, in this suit instead of compelling the parties to adjust their rights and liabilities ina separate suit. The Bench accordingly remitted an issue to the trial Court:
What was the amount, if any, due to Lalta. Prasad, defendant, on the basis of his mortgage of 11th July 1911 on the date of suit, namely 26th. August 1927 ?
3. The trial Court has come to a finding that the amount due on the date mentioned was Rs. 4,120. The respondent Kifayat Husain objects to that finding and argues that the amount due to Lalta Prasad is less than the amount found by the trial Court.
4. The first point taken is that the trial Court has not given credit for two items of Rs. 300 and Rs. 400 respectively said to have been paid to Lalta Prasad on account of his mortgage money. On. 11th July 1911, the very date on which the mortgage in Lalta Prasad's favour had been executed, a lease had also. been executed by the mortgagor in. Lalta Prasad's favour under which Lalta Prasad was entitled to possession of the property upon payment of Rs. 150 per annum as rent. Under the terms of the lease Lalta Prasad was not to pay the rent to the mortgagor in cash but was to credit the amount to the mortgagor on account of the mortgage money. The trial Court has credited to the mortgagor a sum. of Rs. 750 on account of the lease money for a period of five years. On 29th March 1917, the mortgagor Mehdi Ali Khan sold the property to Lachhmi Narain and after that date the rent due under Lalta Prasad's lease was paid to Lachhmi Narain and therefore was no longer taken into account. in payment of the mortgage money. It is contended that over and above this sum of Rs. 750 which has been credited, two items of Rs. 300 and Rupees 400 respectively, were paid in cash to Lalta Prasad and have not been credited.
5. Regarding the item of Rs. 300, reliance is placed upon a statement made by Lalta Prasad in cross-examination, 'I do not remember if I gave credit for Rs. 300 which I realised in cash from Mehdi Ali Khan.' It is contended that this amounts to an admission that Lalta Prasad did receive Rupees 300 in cash from Mehdi Ali Khan and that he does not remember whether he gave credit for that amount. In our opinion, the sentence cannot be clearly construed in this sense. It may be that he was asked whether he had given credit for a sum of Rs. 300 received in cash from Mehdi Ali Khan and he merely replied that he did not remember, meaning that he did not remember having received any such sum in cash. We think that no clear admission of the receipt of Rupees 300 in cash has been made by Lalta Prasad. As to the alleged payment of Rs. 400 Lalta Prasad clearly, stated that he does not remember whether an item of Rs. 400 was paid to him. We find that the alleged payment of these two items has not been proved.
6. The next point is that the trial Court has credited the rent due under the lease up to the end of 1323-F., that is, up to 14th September 1916 only. As the sale in favour of Lachhmi Narain took place on 29th March 1917, it is argued that the proportionate, rent for the period from 14th September 1916 up to 29th March 1917 should have been credited by Lalta Prasad towards repayment of the mortgage money. It is not clear whether the' annual rent was to be paid by 6 monthly instalments or whether it was to be paid once a year at: the end of the Fasli year. If the latter arrangement was in force, then we consider that Lalta Prasad would have been entitled, and indeed bound, to pay the rent to the zamindar who was in possession at that time. As Lachhmi Narain had obtained possession under the sale-deed before the end of the Falsi year, we think Lalta Prasad was entitled to pay the whole amount to him. If any different arrangement had been come to between the buyer and the seller, then it was a question of adjustment between them, but in our opinion, Lalta Prasad was not bound to credit any part of the rent for the year 1324 F towards the repayment of the mortgage money.
7. The next point taken is that the Court below has calculated the mortgage money according to a wrong principle. The Court has reckoned interest at the contractual rate up to the date fixed, that is, up to 26th August 1927. It has been argued for the respondent that the respondent is only liable to pay the amount which he would have had to pay for redemption if he had been a party to the suit filed by the prior mortgagee. He has sought to establish that the amount which would have been payable by him on 1st June 1925 (that is, the date of the final decree in the prior mortgagee's favour), would have been only Rs. 3,584. It is contended that only this amount is payable plus interest at 6 per cent per annum from 1st June 1925 up to the date of payment. In support of this contention reliance has been placed on Matru Mal v. Durga Kumar AIR 1920 PC 79. This is a pronouncement of their Lordships of the Privy Council, but it is based upon the law, as it stood under the Transfer of Property Act and it is conceded that the provisions of the law on this point have been somewhat modified since the provisions were removed from the Transfer of Property Act and incorporated in the Code of Civil Procedure. The ruling in Sukhi v. Ghulam Safdar Khan AIR 1922 PC 11 is also relied upon as a decision by the Privy Council based upon the law incorporated in the Code of Civil Procedure. There are certain observations made by their Lordships in that judgment which do appear to support the respondents' contention, but we find that the Privy Council rulings have been discussed in detail by the Calcutta High Court in Jnanendra Nath v. Shorashi Charan AIR 1922 Cal 23. In that case it was held that, when a person insists upon the right to redeem on the ground that he was not made a party to and therefore not bound by the decree in the mortgage suit, he can be allowed to redeem only 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 the case. All the arguments which have been advanced before us on behalf of respondents have been considered in this case and we see no reason to come to a different conclusion. In accordance with this decision it is clear that the respondents as subsequent mortgagees are bound to redeem the prior mortgagee in accordance with the terms of the mortgage, and on payment of the interest fixed in the mortgage itself up to the date of redemption to be fixed in this case. No ruling of this Court has been shown to us which dissents from the view taken in the Calcutta ruling and we think we may safely follow it.
8. Another point argued for the respondents was that under the terms of the sale-deed in favour of Lachhmi Narain Rs. 3,000 out of the sale consideration was left with Lachhmi Narain for redemption of the subsequent mortgage, but this sum in fact was never paid. It is argued that, as Lachhmi Narain did not pay the whole of the sale consideration Lalta Prasad should not have paid to him the whole of the lease money. We are not prepared to accept this contention. The mere fact that some portion of the sale consideration remained unpaid did not affect the validity of the transfer in favour of Lachhmi Narain, and he was entitled to receive the whole of the lease money. Lalta Prasad could not have refused to pay the whole of the lease money to Lachhmi Narain on the ground that the latter had not paid the whole sale consideration to Mehdi Ali Khan.
9. Lastly, it is argued that as Lalta Prasad has obtained possession of the property no interest should be allowed to him from the date of his obtaining possession. We think there is no force in this contention as Lalta Prasad obtained possession of the property not as mortgagee but as an auction-purchaser in execution of his own mortgage decree. In our opinion, the trial Court has correctly decided that Rupees 4,120 was due to Lalta Prasad on 26th August 1927.
10. The result is that the decree of the trial Court is modified to this extent that the plaintiff's suit is decreed with costs in the terms specified in the trial Court's decree on condition of his paying a sum of Rs. 4,120, together with simple interest at 2 per cent per mensem on Rs. 1,000 from 26th August 1927 up to 15th May 1933, on or before the 15th of May 1933. If the plaintiff fails to pay this amount on or before the date fixed then Lalta Prasad shall be at liberty to apply that the suit be dismissed. If the sum is paid by the plaintiff on or before 15th May 1933, then 15th June 1933 is fixed for payment of the mortgage money by the defendants and in default the plaintiff will be entitled to apply for a final decree. Let the office prepare a fresh decree accordingly. The appellant will have his costs of this appeal.