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T. Venkatagiri Aiyar and ors. Vs. P. Sadagopachariar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1912)22MLJ129
AppellantT. Venkatagiri Aiyar and ors.
RespondentP. Sadagopachariar
Cases ReferredVenkataramana Iyer v. Gompertz I.L.R.
Excerpt:
- - is not difficult to show that they are based on perfectly sound reasons. 7. the plaintiff's claim is clearly not resjudicata. and that if he failed to do he must surrender possession, and he also argued that, by reason of his purchase, he acquired the right of foreclosure. 108. these cases have not been overruled by the full bench and no reasons are given why these decisions should not be accepted as good law. and as this decision has been declared good law by the full bench, the decisions above referred to, as they are inconsistent with rangayya chettiar v. it will be observed that the first mortgagee's purchase was to stand good or the properties were to be sold only on condition of his mortgage-debt being discharged......a decree for the sale of the hypothecated property subject to the lien of lakshmana goundan, the prior mortgagee, who was the 8th defendant in the suit, and brought the equity of redemption to sale in 1905. he says he got possession in 1906.3. the defendant was not a party to the prior mortgagee's o.s. no. 8 of 1881. in the district court the question was raised whether lands in suit were included in the mortgage of 1877. it was disallowed by that court and we see no reason to allow it.4. on these facts it is contended on behalf of the defendant, who is the appellant before us, that the plaintiff has no right to the possession of the property against him and he is not, therefore, entitled to the declaration and injuction sought for.5. in venkatanarasammah v. ramiah i.l.r. (1879) m. 108.....
Judgment:

1. The lands in suit were hypothecated to Lakshmana Goundan in 1877. He brought a suit (O.S. No. 8 of 1881) to enforce that mortgage, obtained a final decree in 1890 and purchased it in 1895. The plaintiff is his assignee: he obtained possession in 1897. He now sues the defendant for confirmation of, and injunction against, any disturbance of his possession.

2. The defendant obtained a simple mortgage of the same lands in 1880. He sued in O.S. No. 12 of 1886 to enforce his claim, obtained a decree for the sale of the hypothecated property subject to the lien of Lakshmana Goundan, the prior mortgagee, who was the 8th defendant in the suit, and brought the equity of redemption to sale in 1905. He says he got possession in 1906.

3. The defendant was not a party to the prior mortgagee's O.S. No. 8 of 1881. In the District Court the question was raised whether lands in suit were included in the mortgage of 1877. It was disallowed by that court and we see no reason to allow it.

4. On these facts it is contended on behalf of the defendant, who is the appellant before us, that the plaintiff has no right to the possession of the property against him and he is not, therefore, entitled to the declaration and injuction sought for.

5. In Venkatanarasammah v. Ramiah I.L.R. (1879) M. 108 there were sales in execution of decrees obtained by two simple mortgagees ; neither made the other a party to his suit. It was held by Innes and Kenan JJ. that the plaintiff, who was the prior mortgagee and first sold the property, was entitled to possession under the sale; the reason being that after the first sale to the plaintiff there was no right or interest in the mortgagors left to sell and the purchaser under the second sale, therefore, acquired no interest against the first mortgagee-purchaser. It was also held that the defendant's interest as mortgagee was not affected by the sale to the plaintiff. It will be observed that neither the plaintiff nor the defendant was usufructuary mortgagee and that, though the plaintiff was the prior mortgagee, nothing turned on the priority of the mortgage, but the priority of the sale determined the right to possession. It was accordingly held by Benson and Moore JJ., following this ruling, that a puisne simple mortgagee who first sold the property and obtained possession was entitled to retain possession against a prior mortgagee whose sale was subsequent in time, neither mortgagee being a party to the other's suit Akatti Moidin Kutty v. Chirayil Ambu I.L.R. (1902) M. 486 The decisions in Nanack Chand v. Teluckdyr Koer I.L.R. (1879) C. 265 and Dirgopal Lal v. Bolakee Koer I.L.R. (1879) C. 269 were also cited therein in support of this view. These decisions were followed by the Chief Justice and Abdur Rahim J. in Kutti Chettiar v. Subramania Chettiar I.L.R. (1909) M. 485. The ground of decision is thus in our opinion correctly, stated: 'Both the mortgagees have an equal right to sell the property, and once it is sold at the instance of one mortgagee, there is no further saleable interest left in the judgment debtor to be sold again.' It was not argued before us that these cases were wrongly decided. It. is not difficult to show that they are based on perfectly sound reasons. The first simple mortgagee has a right to sell the mortgagor's interest. The latter is entitled to carve out an interest in favour of any persons by granting him a simple mortgage which carries with it the right of redeeming the first mortgage. The mortgagor's interest which the first mortgagee is entitled to sell is thus vested by the creation of the subsequent incumbrance in such mortgagee and the mortgagor. The prior mortgagee thus becomes entitled to enforce his claim against the mortgagor and the puisne incumbrancer, and he is entitled in a suit brought for sale to compel the puisne mortgagee to exercise hi? right to redeem him or in default to sell the entire mortgagor's interest as it stood at the date of his mortgage. But if he does not make the second mortgagee a party to his suit for sale, he cannot thereby affect the interest vested in him as against himself, but there is nothing to prevent him from enforcing his claim against the residue of the interest that remains in the mortgagor after the creation of the second incumbrance and continues in him at the time of the sale, and such sale is valid to convey that interest. The second mortgagee has the same right to sell the mortgagor's interest. As both of them are entitled to do so the first sale puts an end to the mortgagor's interest and conveys it to the purchaser. If, therefore, the first mortgagee sells the property before the puisne mortgagee, then there is nothing for the latter to sell. And in the case before us the plaintiff's assignor, the first mortgagor, first sold the equity of redemption in 1895 and obtained possession in 1897. When the defendant, therefore, sold the property in 1905, there was no interest vested in the mortgagor for him to sell and the sale, therefore, conveyed no interest as against the mortgagee, Lakshmana Goundan, who first purchased and who by his purchase became entitled to the possession of the property which was vested in the mortgagor, neither of the mortgages being usufructuary.

6. It was contended that as Lakshmana Goundan was a party to O.S. No. 12 of 1886 it is not open to him to deny the validity of the sale in that Suit, and also that he took the property as purchaser in execution of his own decree subject to the result of that suit.

7. The plaintiff's claim is clearly not resjudicata. Lakshmana Goundan's right as mortgagee was preserved by the decree. He had not then purchased the property and it cannot, therefore, be successfully contended that by reason of that decree he cannot rely upon his purchase, which gives him the right to possession; nor is there anything in the judgment or decree which precluded him from enforcing his lien for which he had already brought a suit.

8. Lakshmaua Goundan's purchase is not affected by the doctrine of It's pendens. On this question there was no serious attempt to distinguish this case from the decision of the Chief Justice and Abdur Rahim J. in Kutti Chetfiar v. Subramania Chettiar I.L.R. (1909) M. 485 It was then argued that according to the opinion of the Full Bench in Mull a Veetil Seethiv. Achutain Nair : (1911)21MLJ213 the defendant's rights are in no way affected by the proceedings and sale in O.S. No. 8 of 181 to which he was not a party : he had, therefore the right to sell the equity of redmption : be had sold that right and is, therefore, the person rightfully entitled to possession. It will be observed that this contention does not turn upon the question whether the first mortgagee was a party to the suit of the puisne mortgagee, because he is not a necessary party to the suit which the puisne mortgagee is entitled to bring to sell the equity of redemption.

9. This was not the question referred to the Full Bench for their opinion. The facts did not raise it. In that case the puisne mortgagee, the first defendant, was entitled to possession as a usufructuary mortgagee and the plaintiff, the purchaser of the equity of redemption in execution of the prior simple mortgagee's decree for sale, did not, therefore, obtain the right to possession. The only question which the learned Judges considered of sufficient importance to refer to the Full Bench was whether the plaintiff was entitled to a decree for possession. The learned pleader for the plaintiff, 'the respondent in that case, however, argued that the first defendant had lost his right to possession by the plaintiff's purchase in execution of his decree and that he was only entitled to redeem the first mortgage; and that if he failed to do he must surrender possession, and he also argued that, by reason of his purchase, he acquired the right of foreclosure. There is scarcely any Madras authority in suprort of the view that a puisne mortgagee in possession under his mortgage loses his right to such possession and is bound to surrender his property to a purchaser in execution of a decree enforcing a prior mortgage, in a suit to which he was not a party. But in the judgment other questions are also discussed, and it was apparently decided that a puisne mortgagee may sue the purchaser of the equity of redemption without redeeming the prior mortgage ; and it is, therefore, contended that the defendant is entitled to sue the plaintiff for the sale of the equity of redemption purchased by him, and, as the plaintiff would not be entitled to retain possession after such sale his suit must be dismissed. Perhaps it is sufficient to point out in reply that, if the defendant 1ms got the right to sue the plaintiff as a purchaser, he has not yet exercised that right, his prior suit having been instituted before the purchase. The plaintiff was a party to it only as mortgagee, and according to the decisions of this court an unnecessary party. Mr. Justice Innes has expressed a doubt in Venkatanarsammah v. Ratniah I.L.R. (1879) M. 108 whether the second moitgagee could bring a fresh suit. The judgment in Muhammad Usan Rowthan v. Abdulla I.L.R. (1900) .M. 171 has been stated by the Full Bench to lay down the law correctly to the effect that a second suit will not lie. However that may be, till the defendant enforces his rights, and obtains the right to possession by sale of such right now vested in the plaintiff, the clainr of the latter must be upheld.

10. This is sufficient to dispose of this contention.

11. But it may also be pointed out that the cases above referred to have not been dissented from : on the other hand, they have been cited with appioval as laying down the law that the equity of redemption becomes vested in the purchaser in execution of the mortgage-decree, and that it could not be sold again by the puisne mortgagee as by the defendant in this case. Any general observations, therefore, that the mortgagee has the right to sell the property must be taken subject to the limitations imposed by the principles laid down in these cases. But it is true there are many observations which lead to the opposite inference, that is, that it is open to the puisne mortgagee to sue for the sale of the property or equity of redemption without redeeming the prior mortgagee. This seems opposed not only to the principles laid down in these cases, but also to almost all, if not all, the decisions of this court, and the following considerations have to be borne in mind when the question arises for final decision.

12. Either the prior mortgagee or the puisne mortgagee may sell the property to enforce his claim, and the purchaser under the first sale acquires a title to hold it against the purchaser in execution of a decree to enforce the other mortgage. This seems to lead to the necessary inference that after the purchase the other mortgagee is entitled to sue the mortgagor for sale, though he was not a party to the proceeding which deprived him of his right to sue. The right to sell was only against the mortgagor and not against the prior mortgagee-Order xxxiv, rule, 1 The purchaser takes the right which the prior mortgagee and the mortgagor could convey to him; he cannot, therefore, be disturbed so long as 'the first mortgagee's right to convey the title vested in himself and the mortgagor subsists, that is, until the first mortgage is redeemed. This right to redeem the first mortgagee is, therefore, the right vested in the puisne mortgagee. If the second mortgagee again could sell the equity of redemption subject to the claim of the prior mortgagee, the latter could again sell it--each mortgagee might go on ad infinitum without making the other a party, and it was, therefore, held by our High Court in a course of decisions that in such cases the puisne mortagagee's proper course is to redeem the first mortgagee--Krishnan v. Chadayam Kuth Haji (1892) I.L.R.I. 7 M. 17 and Muhammad Usan Rowthan v. Abdullah I.L.R. (1900) M. 171 followed in later decisions hereinafter referred to. Then, the purchaser in execution of the decree on the first mortgage may redeem the two mortgages vested in the same person.--see Sivaratnan Chelty v. Kuppumuthu Cketty I.L.R. (1902) M.L.J. 72 (Bhashyam Aiyangar and Moore JJ.), Govardhana Doss v. Veerasamy Chetty I.L.R. (1902) M. 637 (Chief Justice and Moore, J., coifiunmg a judgment of Boddam, J.), Venkataramana Iyer v. Gompertz I.L.R. (1908) M. 425 (Chief Justice and Miller J.)--and if the purchaser does not redeem the puisne mortgagee who has obtained by redemption the right of the first mortgagee, the properties may be sold, the mortgagees paid and the balance paid to the purchaser, as the representative of the mortgagor--see Venkataramani Iyer v. Gompsrtz I.L.R. (1908) M. 425 and Nagammal v. Venkatagiri Aiyar (1897) 8 M.L.J. 299. As pointed out by Mr. Justice Shephard in Muhammad Usan Rowthan v. Abdulla I.L.R. (1900) M. 171, this seems to follow from the decision in Venkatanararammah v. Ramiah I.L.R. (1879) M. 108. These cases have not been overruled by the Full Bench and no reasons are given why these decisions should not be accepted as good law. The puisne mortgagee got a right to sell the property even after sale by the first mortgagee as shown above, but he can exercise that right only after redeeming the prior mortgagee. It is clear that the prior mortgagee cannot be deprived of his rights to require the puisne mortgagee to redeem him and in default to enforce his right under his instrument of mortgage by sale or foreclosure, and there is no reason why he should not be allowed to do this even as a defendant in a mortgage suit.

13. It was argued that the decision in Rangayya Chettiar v. Parthasarathi Naicker I.L.R. (1896) M. 120 recognises the right of the puisne mortgagee to sue for a sale of the property subject to the prior mortgagee's claim even after it has been sold by the first mortgagee; and as this decision has been declared good law by the Full Bench, the decisions above referred to, as they are inconsistent with Rangayya Chettiar v. Par thamrathi Naicker C.R.P. No. 574 of 1910 should no longer be followed. The decree in the case in Rangayya Chettiar v. Parthatarathi Naickar I.L.R. (1896) M.120 was that the property which had been already purchased by the defendants Nos. 3 to 6, the prior mortgagees, in execution of their decree, should be put up to sale, and 'if the property be not bid for more than the amount due to them' the sale should be stopped and the defendants Nos.3 to 6 should, by virtue of their purchase, hold the property and the suit of the puisne iucumbrancer be dismissed, otherwise out of the sale amount the mortgagees to be paid in their order. This decree was confirmed by the High Court. It will be observed that the first mortgagee's purchase was to stand good or the properties were to be sold only on condition of his mortgage-debt being discharged. There was no sale subject to his mortgage. Certain observations in this judgment are apt to mislead as pointed out by the same learned Judge who delivered that judgment in his later judgment in Muhammad Usan Rowthan v. Abdulla I.L.R. (1900) M. 171, nor is this case followed in Venkataramana Iyer v. Gompertz I.L.R. (1908) M. 452, on this point as erroneously stated in the Full Bench judgment. It was followed only with reference to the question of improvements. For these reasons, we would dismiss the second appeal with costs.

14. It is conceded by the pleaders that, in accordance with the judgment in S.A. 1789 of 1908, these second appeals also must be dismissed. They ate accordingly dismissed with costs.


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