1. The following are the facts of this case:-- First defendant mortgaged the plaint house to 2nd defendant in 1884 under Exh. II for a sum of Rs. 350. Exh. II was written on the 28th July 1884, but was not signed by 1st defendant till 5th December of that year--after criminal proceedings had been instituted against 1st defendant by 2nd defendant for cheating (see Exh. W). On the 6th December 1884, 1st defendant's Vakil put in a statement (Exh. VI).admitting that 1st defendant had executed the document for Rs. 350, but pleading that she had only been paid Rs. .304-8-0. The complaint of 2nd defendant was thereupon dismissed, on the ground that the dispute between the parties was of a civil nature (Exh. T). 2nd defendant then presented the document for registration; but 1st defendant denied its execution and the District Registrar, after enquiry, declined to register it. This was on the 23rd April 1885. On the following day 1st defendant executed to the 1st plaintiff the document E mortgaging to the latter, with possession, a portion of the same house and several lands, for a sum of Rs. 1000.
2. In consequence of the District Registrar's refusal to register Exh. II 2nd defendant instituted a suit (No. 183. of 1885) for a decree directing its registration (under Section 77 of the Registration Act), and, though he failed in the Court of First Instance, he succeeded in the Appellate Court, (see Exh. XII). The document II was accordingly registered in December 1886; and O. S. No. 89 of 1887 was subsequently instituted thereon, and resulted in a decree in favor of 2nd defendant who caused the house in question to be sold in execution of the decree and himself purchased it at that sale on the 21st January 1889. First plaintiff was not made a party to the Suit No. 89 of 1887. Hence her suit out of which this second appeal has arisen, in which, claiming to be in possession as mortgagee under Exh. E, she prays (1) for cancellation of Exh. II as fraudulent; (2) for cancellation of the sale in execution of the decree obtained by 2nd defendant in O. S. No. 89 of 1887, as not binding on her 'even if it be held that the mortgage-deed of 28th July 1884 (Exh. II) is genuine;' (3) for a declaration that she is entitled to redeem the said mortgage on paying the said mortgage amount with interest up to date ; and (4) for costs and such other further relief as the nature of the case may require.
3. Second plaintiff, who is son of the 1st plaintiff, was added as a party in consequence of 2nd defendant's allegation in his written statement that the suit was really brought by this 2nd plaintiff, in the name of his mother but on behalf of his junior aunt the 1st defendant. It is further explained in the 2nd defendant's written statement that the reason of his not making 1st plaintiff a party to his suit No. 89 of 1887 was because the document E under which she claims, was 'executed fraudulently and without consideration;' and it is added that her son, the 2nd plaintiff, who contested that suit on behalf of his aunt, the 1st defendant, 'did not ask that plaintiff (i.e, 1st plaintiff) should be made a party thereto, nor did he say that he would pay the sum due to this defendant.'
4. The following issues were recorded by the District Munsif:
(1). Is the 1st plaintiff a bona fide mortgagee for valuable consideration from 1st defendant ?
(2). Is the mortgage in favor of 2nd defendant, on which decree has been passed in O. S. No. 89 of 1887, a true and valid transaction for valuable consideration ?
(3). To what relief, if any, are plaintiff's entitled ?
5. The District Munsif's finding on the 1st issue was in the negative and on the 2nd in the affirmative. He consequently dismissed the suit with costs.
6. On appeal the Subordinate Judge has found both E and II to be genuine and valid--and, on the ground that 1st plaintiff not having been a party to O. S. No. 89 of 1887 is not bound by the decree passed in that suit, he has set aside the decree of the Original Court and given one in favor of the plaintiffs, 'allowing them to redeem the 2nd defendant's mortgage by paying him what is due to him under his decree until his purchase.' He has also directed 2nd defendant to pay plaintiff's costs.
7. In this second appeal by 2nd defendant it is contended, firstly, that the plaint ought to have been rejected on the ground of inconsistency, seeking, as it did, to avoid the mortgage evidenced by Exh. II or to confirm the same and declare plaintiff's right to redeem. It has been held that it is open to 'a defendant who is a stranger to the transaction to raise inconsistent pleas as to matters not necessarily or properly within his knowledge,' Narayanasami v. Ramasami, I. L. K 14 M 172. Similarly, it must, I think, be open to a plaintiff, who is not a party to the transaction in respect of which the allegations are made, to come into court seeking relief in the alternative--dependant upon what may be found by the court to he the true facts of the case.
8. It is next contended that as the suit was brought for a declaration merely, the Appellate Court was not justified in giving a decree for redemption. The Subordinate Judge has referred as authority for his procedure to the case reported in I. L. R 7 B 146, Sankana Kalana v. Virupakshapa Ganeshapa. It is to be observed, however, that the procedure was acceded to even in that case by Pinhey J, one of the two judges who took part in it, with an expression of disapproval and only because 'the thing had been allowed so often in the Bombay High Court' that he did 'not consider it either necessary or advisable to formally differ ' from his brother judge on the point in that case. In this Court, however, the only authority that I have been able to find is against the indulgence allowed to the plaintiffs by the Subordinate Judge. See Venkatanarasammah v. Ramiah, I. L. R 2 M 108.
9. It has, however, been further contended on behalf of the appellant that as only a portion of the plaint house is included in 1st plaintiff's mortgage-deed E, the Subordinate Judge is in error in giving to plaintiffs a decree for redemption of the whole of the house. Further, stress is laid on the circumstance that 2nd defendant has by reason of his purchase at the court-sale acquired, in addition to the interest possessed by him as mortgagee under Exh. II, also the right of redemption which includes the right to redeem the mortgage to 1st plaintiff under Exh. E.
10. Although in consequence of 1st plaintiff not having been made a party to O. S. No. 89 of 1887 (as required by Section 85 of the Transfer of Property Act) she is not affected by the decree in that suit, yet 2nd defendant, as purchaser of the right of redemption which belonged to the mortgagor, is entitled to all the equities that belonged to the said mortgagor. If the mortgagor had by private sale transferred his interest in the property to 2nd defendant, 1st plaintiff could not have maintained a suit for redemption against the latter and I am of opinion that she is equally unentitled to maintain a suit for redemption against 2nd defendant, the purchaser at the court-sale, who now stands in the shoes of the motgagor. All that 1st plaintiff is entitled to is to retain possession of the share of the house mortgaged to her till it is redeemed by 2nd defendant. Of. Raghunath Prasad v. Jurawan Rai I. L. E 8 A 105.
11. I would therefore allow this appear, and, setting aside the decree of the Lower Appellate Court, restore that of the District Munsif and direct plaintiffs to pay 2nd defendant's costs throughout.
Muthusami Aiyar, J.
12. I am also of opinion that upon the facts found the declaratory decree for redemption cannot be supported. Ordinarily, a 2nd mortgagee has a right to redeem the 1st mortgage, but this right ceases when the 1st mortgage ceases. When the right arising from the 1st mortgage is united with the mortgagor's equity of redemption by purchase at a court-sale, a confusion of the two rights arises by their vesting in one and the same individual. The doctrine that a purchaser who pays off a pre-existing mortgage can use it as a shield only keeps the security alive for his protection. Again, the 2nd mortgagee's right to redeem the prior mortgage is in its nature a right to consolidate the two securities into one as against the mortgagor and to hold them together until they are redeemed and there can be no right to consolidate when the 1st security ceases to exist by payment or by a court-sale which extinguishes the first mortgage. At the date of the court-sale in O. S. No. 89 of 1887, three distinct rights were in existence, those founded on the first and second mortgages and the mortgagor's equity of redemption. The interest which passed by the court-sale was whatever the mortgagor and the 1st mortgagee could convey together and the result is that the rights that survived the actual sale are only two; viz., the equity of redemption vested in the original owner against the 2nd mortgagee and the latter's right to be redeemed by him. Otherwise, there would be this anomaly: if the 2nd mortgagee is allowed to redeem the 1st mortgage and purchaser by paying him the purchase money, there would be no one entitled afterwards to redeem the 2nd mortgage. The original mortgagor cannot redeem because as between him and the 1st mortgagee, he ceases to be the owner by the sale of his whole interest in the property. If the purchaser can redeem the 2nd mortgage, the latter can have no right to redeem the former. The sale under the order of the court extinguishes the 1st mortgage and the only right which survives it in the 2nd mortgagee is the right to be redeemed. The case should be treated as if the original mortgagor conveyed his whole interest in the property by a voluntary sale in extinction of the first mortgage. Moreover, the plaintiff is a usufructuary mortgagee in possession of the house and, as such, he is not entitled to redeem after the extinction of the 1st mortgage. For these reasons I concur in the decree proposed by my learned colleague.