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Hukum Singh Vs. Lallunjee and ors. - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported inAIR1921All339; 61Ind.Cas.942
AppellantHukum Singh
RespondentLallunjee and ors.
Cases ReferredJanki Prasad v. Kithen Dat
Excerpt:
.....procedure code (act v of 1908), order xxxiv, rule 5 - mortgages, prior and subsequent--suit on prior mortgage--subsequent mortgagee not impleaded, effect of--suit by subsequent mortgagee--prior mortgagee impleaded as defendant--relief, nature of, to which subsequent mortgagee entitled. - - the munsif came to the conclusion that the prior mortgagee having failed to impaled the plaintiff in his suit for sale, that decree was not binding on the plaintiff and a fresh suit on the prior mortgage being now barred by time, the plaintiff was entitled to the decree clalmed. the question raised in the case, put shortly, domes to this, what is the effect of the failure of a prior mortgagee to impaled a subsequent encumbrance in his suit for sale? jones in his well-known work on the law of..........to the effect that the property was not liable to sale in execution of the decree obtained by the prior mortgagee defendant and also prayed for a permanent injunction restraining him from executing the decree. in the alternative the plaintiff asked for such relief as the court might think he was entitled to. the suit was defended by the prior mortgagee alone, who pleaded inter alia that unless the amount due to him was paid, the clalm could not be maintained. the munsif came to the conclusion that the prior mortgagee having failed to impaled the plaintiff in his suit for sale, that decree was not binding on the plaintiff and a fresh suit on the prior mortgage being now barred by time, the plaintiff was entitled to the decree clalmed. this judgment has been affirmed on appeal by the.....
Judgment:

1. This appeal arises out of the following circumstances. It appears that Mata Prasad and Devi Prasad, defendants Nos. 1 and 2, executed a simple mortgage of certain property in favour of one Sanwalia, defendant No. 4, and his brother on the 29th of June 1896. In the year 1907 the mortgagors made a simple mortgage in favour of Lallunji, the plaintiff respondent. Sanwalia, defendant No. 4, brought a suit for sale on his mortgage on the 1st of December 1908 and obtained a decree for sale under the provisions of Section 88 of the Transfer of Property Act, No. IV of 1882, on the 23rd of December 1908. Later on he applied for and obtained an absolute decree for sale. The date of this decree does not appear from the Board, but the decree must have been passed under the provisions of the present Code of Civil Procedure, whish had come into force on the 1st of January 1909. To this suit and the subsequent proceedings Sanwalia, defendant No. 4, had omitted to impaled Lallunji, the second mortgagee. When be proceeded to sell the property, the present suit was instituted by the second mortgagee for sale of the property on his mortgage, and a declaration was also sought to the effect that the property was not liable to sale in execution of the decree obtained by the prior mortgagee defendant and also prayed for a permanent injunction restraining him from executing the decree. In the alternative the plaintiff asked for such relief as the Court might think he was entitled to. The suit was defended by the prior mortgagee alone, who pleaded inter alia that unless the amount due to him was paid, the cLalm could not be maintained. The Munsif came to the conclusion that the prior mortgagee having failed to impaled the plaintiff in his suit for sale, that decree was not binding on the plaintiff and a fresh suit on the prior mortgage being now barred by time, the plaintiff was entitled to the decree cLalmed. This judgment has been affirmed on appeal by the learned Judge of the lower Appellate Court on the strength of the case of Janki Prasad v. Kishen Dat 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310, The defendant first mortgagee tomes here in second appeal, and his contention is that the plaintiff is not entitled to sell the property without redeeming his prior mortgage. This appeal same up before a learned Judge of this Court who, having regard io the importance of the question raised in this appeal and the doubt expressed in some eases about the correctness of the view expressed in the case of Janki Prasad aforesaid 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310, referred the matter to a larger Bench. The question raised in the case, put shortly, domes to this, what is the effect of the failure of a prior mortgagee to impaled a subsequent encumbrance in his suit for sale? Does it result in the total destruction of his rights as a mortgagee so far as the poise encumbrance is concerned, or does this omission simply amount to this that the rights of the poise inoutnbranoer to challenge the validity and binding effect of the prior charge remain unaffected because he has had no opportunity to contest it, and, therefore, the only right which the second mortgagee has is to have the question tried out? In our opinion there is no warrant for holding that the mere omission would result in the total extinction of the rights of the prior mortgagee. That this is so would appear from case in which it has been held that a person who has purchased mortgaged property at a sale in execution of a decree on a prior mortgage to which the second mortgagee was no party, is entitled to set up the prior mortgage as a shield in a suit for sale brought by the second mortgagee and the second mortgagee has in those oases been held to have a right to sell the property in satisfaction of his mortgage, only on the condition that he pays up the prior mortgage. See chulam Safdar Khan v. Sukhi 38 Ind. Cas. 573 : 15 A.L.J. 190 and compare Gokaldas Gopaldas v. Purina Premsuhhdas 10 C. 1035 (P.C.) : 11 I.A. 126 : 8 Ind. Jur. 396 : 4 Sar. P.C.J. 543 : 5 Ind. Dec. (N.S.) 692, Bahimunnissa v. Bairi Das 9 Ind. Cas. 205 : 33 A. 368 : 8 A.L.J. 112 We have now to see whether the mere fact that the prior mortgagee has not yet sold the mortgaged property, makes any difference in his rights. We are not aware of any principle on which a distinction can be made between the rights of a decree holder prior mortgagee and a prior mortgagee who has purchased the property in execution of his own decree on the mortgage.

2. The learned Judges who decided the case in Janki Prasad v. Kishen Dat 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310 seem to have overlooked totally this aspect of the question. Jones in his well-known work on the Law of Mortgages says: 'When a party in interest other than the owner of the equity of redemption is not made a party to the bill, the foreclosure is not generally for this wholly void. It is effectual as against those persons interested in the equity who are made parties. The sale vests the estate in the purchaser, subject to redemption by the person interested in it who was not made a party to the proceedings. His only remedy, however, is to redeem. He cannot maintain ejectment against the purchaser. He cannot have the sale set aside by intervening by petition in the foreclosure suit. His only right is the right of redemption' (Jones, paragraph 1395). To put it in other words, omission to join keeps infact the rights of persons not joined.'

3. There can be no doubt whatever that the cLalm put forward by the plaintiff-respondent is not one which upon merely equitable grounds is entitled to consideration. We consider that there is nothing to prevent the defendant from compelling the plaintiff-respondent to redeem him before the property can be sold to satisfy the plaintiff's mortgage. In this, case all the parties interested the mortgaged property are before the court and we think that the equities between them should be worked out and the plaintiff given an opportunity to redeem the mortgage of the defendant No. 4 before he can sell the property to satisfy his own mortgage, as was done in the case of Babu Lal v. Jalakia 37 Ind. Cas. 243 : 14 A.L.J. 1146 at P. 1154. The reasoning applied by this Court in the case of Bam. Prasad v. Bhihari Das 26 A. 464 at P. 467 : A.W.N. (1904) 108 might well be applied to the present case. In that case the mortgaged property had been sold in execution of a simple money decree and the purchasers were put in possession. Subsequently to this the mortgagees brought a suit for sale on their mortgage without imp leading the auction purchaser. They obtained a decree for sale, the property was sold and purchased by a third person. That third person brought a suit for possession of the property against the purchasers in execution of the simple money decree and prayed that the latter might be allowed to redeem him and if he failed to do so, his right of redemption be foreclosed and possession handed over to the plaintiff. He failed in the lower Court and tame up in appeal to this Court, The learned Judges observed in the course of their judgment:

In the present case the suit is one, as we have said, for foreclosure of the mortgaged property, and it is the duty of the Court to work out the equities between the parties and to give the respondents the opportunity which ought to have been afford-ed them, when the decree for sale was passed in Nath Mal's Suit, of redeeming his mortgage, The respondents are entitled to redeem, but they are not entitled to anything further by reason of the fact that the plaintiff in that suit omitted to impaled them as defendants. The omission to impaled them can neither improve their position nor the reverse. The plaintiff-appellant, who purchased the property at a Court sale in a suit in which the mortgagee Nath Mai was the plaintiff and the mortgagor was the defendant, purchased the property, that is, whatever rights the mortgagor and mortgagee then possessed, subject to the infirmity that the present respondents had not been imp leaded, and consequently he must suffer by reason of the neglect of the plaintiff to impaled the respondents. He did not get a clear title to the property, but he got all the title which Nath Mal and the mortgagor could give, and that was a title subject to the equity which the respondents had of redeeming Nath Mal's mortgage and preserving the property for themselves. That right will still be secured to him.

4. In our opinion, the only extent to which the appellant's right to sell the property is qualified is by a right of redemption in the plaintiff-respondent, which has not been affected in any way because he was not made a party to this suit.

5. On behalf of the plaintiff-respondent reliance has been placed on the case of Het Ram v. Shadi Ram 45 Ind. Cas. 798 : 45 I.A. 130 : 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 : 40 A. 407 : 9 L.W. 550 : 12 Bur. L.T. 73 (P.C.) as tending to show that the mortgage in favour of the defendant appellant has merged in the decree for sale and the only right left to the defendant is to execute his decree and as the decree is not binding upon the plaintiff, the defendant appellant is not entitled to set up his prior mortgage as a defense to the plaintiff's suit.

6. In the case above-mentioned their Lordships of the Privy Council were considering the effect of Section 89 of the Transfer of Property Act and having regard to the wording of that section, came to the cirmclusion that on the passing of an order absolute for sale the defendant's right to redeem as well as the security were both extinguished and that for the right of the mortgagee under a security there was substituted the right to a sale conferred by the decree. As we have stated above, the final decree for sale in the present case was passed after the Code of Civil Procedure, Act V of 1908, came into force. Order XXXIV, Rule 5, of the present Code, which has replaced Section 89 of the Transfer of Property Act, IV of 1882, contains no such provision about the estimation of the right of redemption and the security as soon as the final decree is passed. Another point which distinguishes the Privy Council case from the present one is that in the former the execution of the decree on the basis of the prior mortgage had become barred by time, whereas in the present case the decree it alive but its execution has been stayed at the instance of the plaintiff in the present suit. Another Privy Council case on which reliance has been placed by plaintiff respondent in support of his claim is to be found reported as Matru Mai v. Durga Kunwar 55 Ind. Cas. 969 : 18 A.L.J. 396 : 42 A. 364 : (1920) M.W.N. 228 : 38 M.L.J. 419 : 11 L.W. 529 : 2 U.P.L.R. (P.C.) 75 : 22 Bom. L.R. 553 : 32 C.L.J. 121 : 47 I.A. 71 : 27 M.L.T. 319 : 25 C.W.N. 397 (P.C.). That case also depended upon the interpretation of the wording of Section 89 of the Transfer of Property Act and their Lordships followed the case of Ret Bam v. Shadi Ram 45 Ind. Cas. 798 : 45 I.A. 130 : 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 : 40 A. 407 : 9 L.W. 550 : 12 Bur. L.T. 73 (P.C.) just mentioned. These two oases, therefore, do not in any way improve the plaintiff's position. The correctness of the decision in the case of Janki Prasad v. Kishen Dot 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310 was doubted by Sir Arthur Starchy, late Chief Justice, and Mr. Justice Banner in the case of Deohali Kunwar v. Almunnissa Bibi A.W.N. (1901) 22 . In the course of his judgment commenting upon the Case of Janki frosad v. Kithen Dat 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310, the Chief Justine says: In that ease no doubt the learned Judge held that where a prior mortgagee who has notice of a subsequent mortgage obtains a decree for sale without making the cabaaqutrat mortgagee a party to the suit as required by Section 85 of the Transfer of Property Act, 1882, he is not entitled to bring the mortgaged property to sale, and it is not the proper course to allow the sale to take place subject to the subsequent mortgagee brag given an opportunity of redeeming the degree-holders mortgage. I must say that I feel considerable doubt as to the soundness of that decision:

I should have thought that the guiding principle was that where a subsequent mortgagee has not boon made a party to a suit upon a prior mortgage, his interest should be protected by putting him on, as nearly as possible, the same footing as if be had been made a pity under Section 85 of the Act. The object of making him a party under Section 85 is to give him an opportunity to redeem the prior mortgage, and if ho was not given that opportunity in the prior mortgagee's (suit I should have thought the proper course would have bean, when he brought his suit, to treat him as if he had bean made such a party, and to give him the same right and same opportunity to redeem as ought to have been given has in the former suit. The result of that view would be to allow the sale to take plague in execution of the prior mortgagee's decree subject to the subsequent mortgagee's right of redemption. That would give full effect to the object of the Legislature in passing Bastion 85 of the Transfer of Property Ass, and would also prevent unnecessary multiplicity of suits. However, it was dreaded otherwise in the case of which I have referred, I think dough ill to follow that decision, though, should the matter aver soma before a Full Pencil, I shall then to for to reconsider the mattes: in a way whish is not open to me in this case.

7. That time has now come and we are in full accord with the reasons given by Sir Arthur Strachey for doubting the correctness of that case and the reasons given by Banerji, J, in his dissentient judgment in the case of Bhawani Prasad v. Kaliu 17 A. 537 (F.B.) : A.W.N. (1895) 212 : 8 Ind. Dec. (N.S.) 670 for arriving at the same conclusion. In our opinion the case of Janki Prasad v. Kithen Dat 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310 has been wrongly decided and is against the principles of law regulating the relation between a prior and a subsequent mortgagee as administered by the Courts. Equity also is not on the side of the plaintiff, We are of opinion that the plaintiff's claim for an injunction restraining the defendant prior mortgagee from executing his decree for sale must be dismissed and his claim for sale under his mortgage decreed subject to his paying up the amount due under the plaintiff's decree on the prior mortgage within nine months from the, date of the passing of the decree. The mortgagor judgment-debtor must pay up the amount due to the plaintiff within six months of this dale, and in Case of his failure to do so the plaintiff will pay the amount due under the decree on the prior mortgage in favour of the defendant appellant, and in that event he will be entitled to realize the amount so paid and the amount due on his mortgage by sale of the mortgaged property. In ease of his failure to redeem the property as aforesaid, his suit for sale will stand dismissed, with costs in all Courts. The defendant appellant is entitled to his costs in all Courts.


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