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Cangayam Venkataramana Iyer Vs. Henry James Colly Gompertz and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1908)18MLJ298
AppellantCangayam Venkataramana Iyer
RespondentHenry James Colly Gompertz and ors.
Cases Referred and Rangayya Chettiar v. Parthasarathi Naicker I.L.R.
Excerpt:
.....that before us will ordinarily lie for redemption by the second mortgagee and then for sale if the prior mortgagee as purchaser of the equity of redemption does not redeem the second mortgage (jones on mortgages, section 1075) and the rule there seems to be that when the prior mortgage is not due at the date of the second mortgagee's suit he can obtain a decree for sale subject to the prior mortgage, but when the prior mortgage is due he may redeem and sell the estate to obtain the redemption money as well as his own claim -jones, section 1580. 6. this practice not only gives effect to the policy of the law and the rights of the different parties, but also secures for the mortgagor the best chance of obtaining a good price for the property at the sale, and prevents the necessity of..........the two sucesssive mortgagees, both of whom hold simple mortgages, insist, in a suit to which the prior mortgagee is a party, on obtaining from the court a decree for sale subject to the prior mortgage?2. it is unnecessary, in considering the question, to decide whether or not the prior mortgagee can make him a party simply to enable the court to determine what is due to him. in this case the plaintiff has not stated that this was the only purpose for which the prior mortgagee was made a party; he has in fact offered, as an alternative to his first prayer, to accept a decree for redemption of the prior mortgage. it is, of course, the case that the plaintiff could not here avoid making the prior mortgagee a party, for as purchaser in the sale on his mortgage he unites in himself the.....
Judgment:

1. The principal question in this appeal may be shaped as follows:

Can the second of the two sucesssive mortgagees, both of whom hold simple mortgages, insist, in a suit to which the prior mortgagee is a party, on obtaining from the Court a decree for sale subject to the prior mortgage?

2. It is unnecessary, in considering the question, to decide whether or not the prior mortgagee can make him a party simply to enable the Court to determine what is due to him. In this case the plaintiff has not stated that this was the only purpose for which the prior mortgagee was made a party; he has in fact offered, as an alternative to his first prayer, to accept a decree for redemption of the prior mortgage. It is, of course, the case that the plaintiff could not here avoid making the prior mortgagee a party, for as purchaser in the sale on his mortgage he unites in himself the interests of the mortgagor and mortgagee in the property. That, however, does note affect the question. All the interested parties being before the Court it is the duty of the Court, if it can do so, to make a decree which shall deal finally with the questions between them and shall preclude the necessity of further litigation for the enforcement of any right arising out of the mortgage or mortgages in question in the suit. This is the obvious intent of Section 85 of the Transfer of Property Act, and is clearly a desirable and proper intent. It may be that there will be found cases in which the Court will be unable finally to close the matter without doing injustice to the prior or puisne mortgagee (see remarks in Ghose on Mortgages, 3rd edition at p. 738); but those cases must be treated as exceptional and will, no doubt, having regard to the fact that the second mortgagee before advancing his money, knows of his existence and the nature of the burden on the property which must be removed before he can be paid, be very few in comparison with those in which justice can best be done by requiring redemption by the second mortgagee, or directing a sale free of all encumbrances.

3. Moreover, it is the right of the prior mortgagee to require the second mortgagee to redeem him or submit to a sale of whatever interest he holds in the property - see Section 75 of the Transfer of Property Act - and the decree must give effect to this right, unless by doing so it unnecessarily deprives the second mortgagee of any right of his own.

4. It is the rule in England that when the prior mortgagee is made a party, the plaintiff must be ready to redeem him (Daniell's Chancery Practice, 7th edition p. 217) and on the original side of this Court it appears to be the ordinary practice to require redemption in such suits (vide Form 52, Original Side Rules.)

5. In America, too, the decree in a suit like that before us will ordinarily lie for redemption by the second mortgagee and then for sale if the prior mortgagee as purchaser of the equity of redemption does not redeem the second mortgage (Jones on Mortgages, Section 1075) and the rule there seems to be that when the prior mortgage is not due at the date of the second mortgagee's suit he can obtain a decree for sale subject to the prior mortgage, but when the prior mortgage is due he may redeem and sell the estate to obtain the redemption money as well as his own claim - Jones, Section 1580.

6. This practice not only gives effect to the policy of the law and the rights of the different parties, but also secures for the mortgagor the best chance of obtaining a good price for the property at the sale, and prevents the necessity of further, proceedings against the mortgagee; and if it is not in any particular case to be adopted, it is for the second mortgagee to show sufficient reason for making an exception to it. In this case the second mortgagee prefers a sale subject to the prior mortgage, but that is not a sufficient reason.

7. Section 96 of the Transfer of Property Act does not support the view that the puisne mortgagee is not required to redeem the prior mortgagee when the latter is a party to the suit. The prior mortgagee may no doubt consent to a sale free of encumbrances, but it is not impossible that the section was intended to cover cases in which the prior mortgagee is not a party to the suit but intervenes after the decree, and it does not seem to answer the present question even indirectly.

8. Mr. Subrahmanya Aiyar relied on Debendra Narain Roy v. Ramtaran Banerjee I.L.R. (1903) C. 599 but the point decided in that case was that the right of a puisne mortgagee was not affected by the proceedings taken in a suit to which he was not a party. It was contended that in the absence ot a sale in the prior mortgagee's suit the second mortgagee would be entitled to a sale subject to the prior mortgage. Nor does Ram Shankar Lal v. Ganesh Prasad I.L.R. (1907) A. 385 cover the present case, for it is not there decided what form the decree should take when the prior mortgagee is made a party to the suit.

9. The decree made by the Subordinate Judge is, we think, substantially correct, but the form of the opening direction 'that defendants 9 and 11 do pay to the plaintiff, etc., etc.,' is open to the objection that it may be construed as a decree against those defendants personally. It is better to follow the form sketched in Section 86 of the Transfer of Property Act, and commence by declaring the amount due; and the decree in that respect must be altered.

10. The plaintiff contends next, if we understand Mr. Subrahmanya Aiyar aright, that the amount payable by him for redemption of the prior mortgage, should de calculated not on the mortgage money, but on the amount paid by the 8th defendant to the original first mortgagee for his rights. No authority was cited for this proposition, and we think it is unsound. The 8th defendant bought the rights of the original mortgagee, and the price which he paid for them is no concern of the plaintiffs. This is not a case in which the plaintiff has to compensate the 8th defendant for a payment made to redeem a mortgage which otherwise the plaintiff would have had to redeem. The mortgage remains, and the plaintiff must redeem it.

11. The next contention is that all the buildings on the land ought to be included in the decree for sale, and this is, in our opinion, a sound contention. It is clear, we think, that the plaintiff intended to describe all the buildings in the schedule to his plaint and that the 9th and nth defendants understood that he had done so and framed their defence accordingly. There is no doubt that the plaintiff is entitled as a matter of law to sell all the buildings and the decree must be modified so as to make it clear that he is at liberty to do so.

12. For the 9th and nth 'defendants it is contended that if the plaintiff sells the new buildings they should be compensated under Section 51, Transfer of Property Act, as for improvements made by them in the belief that they were the owners of the land; but Section 51 does not apply to the facts, and Rangayya Chettiar v. Parthasarathi Naicker I.L.R. (1896) M. 120, by which we are bound, seems to be on all fours with the present case.

13. The decree subject to the modifications we have stated, ought to be confirmed. The parties will bear their own costs of the appeal.

14. Time for redemption will be extended by six months from this date.


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