1. The land which forms the subject-matter of this appeal was in 1917 in the possession of defendant 1. He mortgaged it in that year by Ex. B a simple mortgage deed to defendant 3. In October, 1919 Defendant 1 mortgaged this property amongst other items to Defendant 2's father by two usufructuary mortgage deeds (Exs. I and II), but by virtue of Ex. Ill, a lease deed of the same date as Ex. II, he himself remained in possession of the land. In March, 1920 defendant 1 sold the land to plaintiff l's mother (Ex, A) without apparently disclosing the existence of the usufrucuary mortgages and, in June, 1920 plaintiff's mother discharged the simple mortgage Ex. B. In 1925 Defendant 2 filed a suit upon the lease deed, Ex. Ill, obtained a decree, and in execution entered into possession of the land in 1926. In 1927 the plaintiffs, as heirs of plaintiff l's mother, filed the present suit, impleading the three Defendants, in which they claimed to enforce the mortgage Ex. B by sale of the mortgaged property. The learned District Munsiff of Sankaridrug gave plaintiffs a decree for the amount of the mortgage as claimed, less deduction of interest for the period from March, 1920 to April 1926. On appeal the learned Sub-Judge of Salem dismissed plaintiff's suit holding that plaintiff's mother, not being a charge-holder, had no right of subrogation, and that plaintiffs could not bring a suit of this nature when they were themselves the owners of the equity of redemption. The only character they can be said to possess is that of vendees, and not that of mortgagees.
2. In second appeal plaintiffs claim that they should be given a decree for the full amount of the mortgage as it stood on the date of their plaint. The appeal is resisted by Defendant 2, the usufructuary mortgagee who contends that the suit is not maintainable. Whether the suit is maintainable or not, is the main point for decision.
3. The first and extreme position taken up by the defendant 2 is that the plaintiffs are vendees, and vendees only, and acquire no rights whatever in virtue of their discharge of Ex. B. In support of this argument, we have been referred to three decisions in which a vendee who had discharged a mortgage claimed after the discharge to sue as mortgagee and it was held that he could not do so. In the 1st of these Arumugasundara Maharajah Pillai v. Narasimha Aiyar (1915) 29 M.L.J. 583, a mortgagee purchased the equity of redemption in the mortgaged property and some years later purported to sell the equity of redemption alone and reserve the mortgagee's rights in himself. When he sued on this mortgage right it was held that on the date when he purchased the equity of redemption his mortgage was extinguished. In Bhavoani Kuwar v. Mathura Prasad (1912) 23 M.L.J. 311 : 39 I.A. 228 : I.L.R. 40 Cal. 89 a decision of the Privy Council, the Respondent a mortgagee purchased certain villages in execution of his mortgage-decree which were subsequently sold for arrears of revenue. He claimed to be paid the mortgage money, but it was held that the mortgage was extinguished on the date of the purchase. The last case is Daso Polai v. Narayana Patro I.L.R.(1933) 57 Mad. 195 : 65 M.L.J. 819 where a mortgagee purchased the equity of redemption in the mortgaged property and in the next year filed a claim petition on the strength of his sale-deed. The petition was dismissed and the order of dismissal became final. The purchaser then sued on the footing of his mortgage. Here too it was held that the mortgage was extinguished on the date of his purchase.
4. It was easy, however, for Mr. Sitarama Rao for the Appellants to point out that these three decisions are for our present purpose, wholly irrelevant. In none of them was there any question of the existence of a subsequent mortgagee, and therefore the situation with which we have 'now to deal, and the question of the right of subrogation which involves the existence of two mortgages, the earlier of which has been discharged could not possibly arise. And this distinction is made quite clear in the judgment of the Privy Council at p. 103 of Bhazvani Kuzvar v. Mathura Prasad I.L.R.(1912) 40 C. 89.
5. Another argument on behalf of the Respondent that even if the plaintiffs have any right of subrogation they can avail themselves of it only in defending a suit, and not as the foundation of a plaint does not require much discussion as it has been answered only recently by a Bench of this Court in Palayya Dora v. Anantha Patro I.L.R. (1935) 59 Mad. 44 : 69 M.L.J. 903. It is there pointed out that, though there are obiter dicta to be found here and there in support of the argument, it has never been made the basis of any decision, and it is accordingly repelled by the learned Judges. Nor is this the only case in which a suit has been permitted to be filed upon a discharged mortgage. See Mulla Vittil Seethi v. Achuthan Nair : (1911)21MLJ213 Kutti v. Achutan Nair : (1911)21MLJ475 Rama Rao v. Mandachalagai : (1918)35MLJ467 , Venkata Reddi v. Kunjiappa Goundan (1923) P.L.R. 47 Mad. 551 : 46 M.L.J. 391, Venkatasami Chettiar v. Sankaranarayana Chettiar (1934) 69 M.L.J. 566 and Mangtulal Bagaria v. Upendra Mohan Pal Chaudhur I.L.R.(1929) 57 Cal. 82.
6. The next argument against the maintainability of the suit is that by the terms of Section 101 of the Transfer of Property Act as that section stood in 1920, first Plaintiffs mother, not being at any time a mortgagee or charge-holder in respect of this land, could acquire' no rights of subrogation. This is no doubt so, but the question here is whether first plaintiff's mother cannot be deemed to be the assignee in law of the mortgagee whose mortgage she paid off. In Venkat Reddi v. Kunjiappa Goundan (1923) P.L.R. 47 Mad. 551 : 46 M.L.J. 475 and Venkatasami Chettiar v. Sankaranarayana Chettiar (1934) 69 M.L.J. 566 which followed it, the plaintiffs who were permitted to file suits were not the mortgagees themselves, but purchasers of the mortgaged property at sales held in execution of the mortgage decrees, and these purchasers were deemed to be assignees of the mortgagee decree-holders. In Venkata Reddi v. Kunjappa Goundan (1923) P.L.R. 47 Mad. 551 : 46 M.L.J. 475 no doubt, there was no question of a subsequent mortgage, but in Venkatasami Chettiar v. Sankaranarayana Chettiar (1934) 69 M.L.J. 566 the contest was directly between the purchaser at the sale held in execution of the first mortgage and the purchaser at the sale held in execution of the subsequent mortgage. In this latter case therefore it can be said that the plaintiff though he discharged the first mortgage by his Court auction purchase, and was never himself a party to it, was permitted to avail himself of a right of subrogation and sue upon it. In our present case there have been no mortgage decrees and therefore no purchaser through the agency of the Court, but we can see no legal principle which prevents us from extending the same right of suit to a purchaser by private treaty. Whether the purchase is made through court or privately the principle is the same. The purchaser discharges what he thinks is the only mortgage and then discovers that a later mortgage interest still subsists. If in the case of a Court auction purchase the purchaser is in these circumstances permitted to sue upon the mortgage which he has discharged, we do not see why the private purchaser should be placed in any inferior position. We therefore hold that the language of Section 101 of the Transfer of Property Act is not a bar to the present suit.
7. Finally it was argued for the respondent that this suit cannot be maintained because the plaintiffs are themselves the owners of the equity of redemption. We see no force in this argument which was not supported by any authority in circumstances in which there is also a second mortgagee to be considered. Order 34, Rule 1 Civil Procedure Code, does not lay it down that in a suit on a mortgage the owner of the equity of redemption must always fill the role of defendant. It is enough if all the interests in the property are represented in the suit, as they undoubtedly-are here. Nor can we see any practical difficulties at all in conducting a suit like the present one, in granting a decree, and in executing it.
8. We are therefore of opinion that all objections to the maintainability of this suit have failed.
9. This appeal will therefore be allowed to the extent of setting aside the decree of the lower appellate Court which should restore the appeal to its file and dispose of it and the memorandum of cross-objections on the remaining issues. Respondent 6 must pay appellant's costs in second appeal, otherwise costs to abide the event. Court-fee to be refunded to appellants.