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Pingali Venkataramana Reddi by His Authorised Agent Brahmanda Narasimha Rau Vs. Kotigari M. Rangiah Chetti and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1922Mad249; (1921)41MLJ399
AppellantPingali Venkataramana Reddi by His Authorised Agent Brahmanda Narasimha Rau
RespondentKotigari M. Rangiah Chetti and ors.
Cases ReferredKalidas Chaudhuri v. Prasannakumar I.L.R.
Excerpt:
- - 5. as usual in these cases involving conflicts between the rights of prior and subsequent mortgagees and between persons claiming to represent them partially or wholly and especially where the transactions have been numerous and several years old, the complexity and abstract nature of the legal rights and ideas involved make it difficult to hold clearly in the mind and arrive at a correct conclusion and the difficulty of expressing in clear and accurate language with all the necessary qualifications the reasons for arriving at a conclusion even after arriving at what one feels to be a correct conclusion, is also not inconsiderable. 1035 (the well known case of gokul doss) should, in my opinion, be construed and applied as liberally as possible and it was so construed and applied by.....sadasiva aiyar, j.1. the facts are set out in the opinion of my learned brother and i shall not repeat them. i entirely agree with my learned brother on the question of us pendens and that we should follow the decision of our own court in veerankutty koundan v. ramasami asari (1915) 32 i.c. 431 in preference to the decision in tilakdhari singh v. gourtiarain (1920) 5 p.l.j. 715.2. the question which remains for consideration is whether the 25th defendant, the appellant, is entitled to stand in the shoes of the decree-holder in o.s. no. 6 of 1890 (whom i shall call the prior mortgagee) so that he (the appellant) can set up those rights as a shield against the plaintiff's claim to proceed against the sum of rs. 3,000 which now represents item 2 of the mortgaged properties, the said item 2.....
Judgment:

Sadasiva Aiyar, J.

1. The facts are set out in the opinion of my learned brother and I shall not repeat them. I entirely agree with my learned brother on the question of Us pendens and that we should follow the decision of our own court in Veerankutty Koundan v. Ramasami Asari (1915) 32 I.C. 431 in preference to the decision in Tilakdhari Singh v. Gourtiarain (1920) 5 P.L.J. 715.

2. The question which remains for consideration is whether the 25th defendant, the appellant, is entitled to stand in the shoes of the decree-holder in O.S. No. 6 of 1890 (whom I shall call the prior mortgagee) so that he (the appellant) can Set up those rights as a shield against the plaintiff's claim to proceed against the sum of Rs. 3,000 which now represents item 2 of the mortgaged properties, the said item 2 having been mortgaged both in that prior mortgage and in the plaintiff's subsequent mortgage sued on.

3. So far as the ownership right in item 2 (the Karvetnagar forest) now represented by the Rs. 3000 is concerned, I think that as the suit O. S. No. 6 of 1890 was properly constituted without notice of the plaintiff's subsequent mortgage, Revanur Subramaniya Aiyar obtained by his purchase in execution of his decree in the said suit complete title to the ownership of that property. The pLalntfff, the subsequent mortgagee, not having been a party to the suit of 1890 is, however legally entitled to bring the present suit for sale on his mortgage notwithstanding that the property had been sold away in the former suit and even though his havitfg been not irnpleaded in the former suit was not due to any fault on the part of the prior mortgagee.

4. The further questions which arise for consideration on th e pleadings are (J) whether the court auction purchaser Revanur Subramaniya Aiyar, if he had continued to be ia possession of the forest as such purchaser and if he had been made a party to the plaintiff's present suit as being in such possession I of item 2 of the mortgaged properties could have claimed to elect to stand in the shoes of the prior mortgagee and td hold up either that prior mortgage or the rights declared by the decree passed on the footing of that mortgage, against the plaintiff,so as to compel the plaintiff to pay up the purchase-money so far as it went to discharge the prior mortgage decree before bringing item 2 to sale if item 2 had remained available for sale: (2) whether he would not have been legally entitled to set up' th-at right because the purchase-money paid for his purchase of item 2'in the court auction sale did not fully satisfy the decree in O. S. No. 6 of 1890: (3) whether even rf Revanur Subramania Aiyar might have had that right, the'25th defendant who represents the interests of Subbiah Chetti, a mortgageeunder Revanur Subramania Aiyar cannot claim to enforce the rights of Subramania Aiyar against the Rs. 3000 in dispute in order to satisfy the charge of Rs. 7000 and interest due under Subbiah Chetty's mortgage (and which has ripened into a decree for Rs. 18,000 and odd in 1915 passed in a suit to which all persons then interested were made parties): (4) whether the 25th defendant is not entitled to set up Revanur Subramania Aiyar's rights as a shield because the prior mortgagee would be barred if he brought a suit on his prior mortgage of 1886 on the date of the present suit in 1916: (5) whether Revanur Subramania Aiyar was merely a benamidar for the original mortgagor (the Rajah) and hence he would not have had the right to set up the rights of the prior mortgage decree holder as a shield against the plaintiffs subsequent mortgage and hence also the 25th defendant has no such right: and (6) whether the fact that the prior mortgagee's rights as mortgagee were merged in the decree passed thereon extinguished the mortgage security and hence, it could not be revived to serve as a shield against the plaintiff in favour of Revanur Subramania Iyer and of persons claiming in his right and whether no other right exists which could be availed of by the 25th defendant as an effectual shield against the plaintiff's claim to proceed against the 3000 Rs.

5. As usual in these cases involving conflicts between the rights of prior and subsequent mortgagees and between persons claiming to represent them partially or wholly and especially where the transactions have been numerous and several years old, the complexity and abstract nature of the legal rights and ideas involved make it difficult to hold clearly in the mind and arrive at a correct conclusion and the difficulty of expressing in clear and accurate language with all the necessary qualifications the reasons for arriving at a conclusion even after arriving at what one feels to be a correct conclusion, is also not inconsiderable. This appeal, 1 may state has been argued with consi-picuous ability and acumen by Mr. Sivaramakrishna Aiyar (who appeared for the appellant's vakil) on one side and Mr. Chandra-sekara Aiyar on the other side, and they naturally took full advantage of the general and broad expressions in favour of their respective contentions, found 'in the numerous cases quoted by them on the legal questions involved. Even learned Judges (if I may say so with respect) have been naturally unable to lay down the rules of law governing these questions in judgments pronounced by them in particular cases with all the necessary qualifications and limitations which would have to be applied to those rules if additional facts and circumstances of a special nature besides those appearing in the particular cases in which the decisions were given were involved therein. For instance in Muthammal v. Rasu Pillai I.L.R. (1916) Mad. 513 that very learned Judge Srinivasa Aiyangar, J. has formulated (with his usual lucidity, if I may respectfully say so) certain broad propositions relating to the law of mortgages at pages 515 to 517, as resting on principle, apart from authorities. He says: 'A mortgagee who sues for the sale, of the secured properties, if he succeeds, gets the title of the mortgagor as it stood on the date of his mortgage or transfers that title to the purchaser free from all interests or liens subsequently created by the mortgagor, provided he makes the owner of such interests or liens parties to the suit, but if he omits to make any of them parties, their rights or liabilities are not affected but the purchaser' (that is, the court auction purchaser) 'would acquire the rights in the mortgaged properties of all the persons who were parties, just as if he had obtained an assignment from all of them without however a merger of the interest or extinction of the lien so acquired. It is immaterial whether the purchaser is the mortgagee who sued, or another person, except that the latter would be subrogated to the rights of the mortgagee only to the extent to 'which the debt was paid out-of the price.' Then the learned Judge qualifies these broad statements by half a dozen sentences in which ' it is shown how some particular facts would affect this broad rule. It was of course unnecessary for the learned Judge, unless he was prepared to write an exhaustive treatise on that section of the law of mortgages, to refer to all possible special facts and circumstances and how each set of such facts would affect the rule so Laid down broadly. For instance, he had not to consider whether and how the rule would be affected if the purchaser purchased one only of the several properties advertised.for sale and if the purchase money did not satisfy the whole of the mortgage decree (which is the case we have to consider here.)

6. In Hanumanthaiyan v. Meenakshi Naidu I.L.R. (1911) Mad. 183 to which my learned brother was a party, it was held by the Bench that a person advancing money privately to the mortgagor for the purpose of discharging the debt due under the first mortgage could not establish his claim to stand in the shoes of the first mortgagee so as to claim priority over the second mortgagee unless the first mortgage was. extinguished by his payment because, otherwise the result would be ' a number of persons would be entitled to rank as first incumbrancers with reference to different sums of money advanced by them and it would be impossible to work out the rights of the parties' and the Bench declined to follow Seetharama v. Venkatakrishna I.L.R. (1891) Mad. 94 . The learned Judges had not to consider the question whether if by the partial payment, one of the mortgaged properties became ;' wholly absolved from liability to the first mortgagee, the: person who made such payment could claim priority over the i second mortgagee so far as the charges fell over that particular property so released from the first mortgage (the release usually takes place by ur with the consent of the first mortgagee) nor did the learned Judges (because they were not called upon to) consider the question whether a court auction-purchaser stood on a higher footing than a person who purchased one of the mortgaged properties outside the Court. A court auction sale of one of the mortgaged properties which satisfies a portion of the decree amount prevents that particular property from being brought to sale again for the balance and the inconvenience mentioned in Hanumanthaiyan v. Meenakshi Naidu I.L.R. (1911) Mad. 183 namely, the contingency of a number of persons claiming to be entitled to rank as first incumbrancers would not arise in such a case. I also think (with great respect) that the inconvenience may not in practice be so very great after all. If several persons pay separate sums which discharge (taken together) the first mortgagee, they can get charges respectively in proportion to the amounts paid by them all in priority to the second mortgagee, out of the sale proceeds of the mortgaged properties when they are sold outright.

7. Then in Bismath Karumani v. Devi Doss (1911) 29 I.C. 511 decided by Napier, J. and myself, we held following Hanumanthaiyan v. Meenakshi Naidu I.L.R. (1911) Mad. 183 (which had not then been reported in the authorized series but to which we referred in our judgment from the unauthorised reports) that a person who advances money to partially discharge a prior mortgage cannot claim Subrogation where the prior mortgagee had not released his mortgage rights over the property so purchased. That judgment seems to imply that even though the prior mortgage had only been partially discharged by the purchase-money of one of the mortgaged properties sold, if the mortgagee had released his claim over that one property for the balance of, the, mortgage} amount still due to him, the court might be justified in recognizing in, the purchaser of that property the right to a prior charge over the second mortgagee to the extent of the purchase| money so far as that particular property so released was concerned and it was immaterial whether the sale was a private sale or a court, auction sale.

8. The principle of the Privy Council decision in Gokuldas Gopaldas v. Puranmal Premsukhadass I.L.R. (1885) Cal. 1035 (the well known case of Gokul Doss) should, in my opinion, be construed and applied as liberally as possible and it was so construed and applied by their Lordships in Dinobhandhu Shaw Chowdhry v. Jogaya Dasi I.L.R. (1901) Cal. 154. The general rule that where the prior mortgagee is not fully discharged by a payment made by a person interested, the latter cannot claim subrogation has therefore been subjected to various exceptions and, in my opinion, that rule should be strictly confined to cases which could not possibly be covered by any one of the numerous exceptions engrafted on the rule.

9. I shall now consider some of the numerous cases quoted before us. I need not say that if the observations in them are taken broadly, it is difficult to reconcile all the cases. In Gurdeo Singh v. Chandrikah Singh and Chandrikah Singh v. Rash Behary I.L.R. (1908) Cal. 193 . Mr. Justice Mookerjee considers this point at page 221 and he says: ' The rule therefore that. before one creditor can be subrogated to the rights of another, the demand of the latter must be entirely satisfied so that he shall be relieved from all further trouble, risk and expense, is based upon good sense and ought to be adopted as applicable to the case before us.' And then he quotes an old American authority of 1807 which was concerned with the rights of a surety who paid only a portion of the debt due to the creditor. He does not consider the question whether if the prior mortgagee creditor first released his rights over one of several properties mortgaged in consideration of, the payment of a portion of the debt by an interested third person, that person can claim subrogation to the extent of the money paid in respect of the charge on that property. In Saminatha Pillai v. Krishna Aiyar I.L.R. (1913) Mad. 548 Sankaran Nair and Oldfield, JJ. relied upon Rupabhai v. Audimulam I.L.R. (1887) Mad. 345 in support of their decision that even the person who partially discharges the prior encumbrance is entitled to claim priority to that extent and as a reason for the learned Judges not following Hanumanthayan v. Meenakshi Naidu I.L.R. (1911) Mad. 183 and Gurdeo Singh v Chandrikah Singh and Chandrikah Sir.gh v. Rash Behary Singh I.L.R(1903) . Cal. 193 Mr. Chandrasekara Aiyar argued acutely that the learned Judges had misunderstood the facts in Rupabhai v. Audimulam I.L.R. (1887) Mad. 345 and that those facts clearly shuwed that the prior mortgage debt as a mortgage debt was fully discharged by the person whose money went towards satisfying it, the mortgagee having accepted a new undertaking not involving a charge on the mortgaged properties in satisfaction of his claim for the balance of his mortgage debt. (See the facts stated at page 352 in Rupabhai v. Audimulam I.L.R. (1887) Mad. 345). It must be admitted that there is some force in Mr. Chandrasekara Aiyar's criticism of the judgment in Saminatha Pillai v. Krishna Aiyar I.L.R. (1913) Mad. 548. Then we come to Abdit Narain Misir v. Asharfi I.L.R. 38 All. 502 which decided that a purchaser of the equity of redemption is entitled to stand in the shoes of a prior incumbrancer ' where the purchaser, has with the consent of the incumbrancer partially discharged the liability.' The learned Chief Justice and Mr. Justice Muhammad Rafiq dissent from the broad observations in Gurdeo Singh v. Chandrikah Singh and Chandrikah Singh v. Rash Behary Singh I.L.R. (1903) Cal. 193 , follow Chetwynd v. Allen (1899) 1 Ch 353 and Baroness Wenlock v. River Deo Company (1887) L.R. 19 Q.B.D. 155 and say that unless a further liability was thrown on the puisne incumbrancer or on the property by the fact that the payment was only partial, subrogation ought to be allowed even in favour of the person who makes a partial payment to the extent of the amount,so paid in partial discharge. In Dulhin Sona Kuer v. Jamil Ahmed (1918) 48 I.C. 779 the Patna High Court followed Gurdeo Singh v. Chandrikah Singh and Chandrikah Singh v. Rash Behary Singh I.L.R. (1903) Cal. 193. In Abarthoranam Kutti v. Htikaparambilathan (1919) 11 L.W. 215 (decided in October 1919) Seshagiri Aiyar and Moore,'JJ. express a doubt whether the decision in Rupa Rat v. Audimoolam I.L.R. (1887) Mad. 345 is consistent with the decision in Hanumanthaiyan v. Meenakshi Naidu I.L.R. (1911) Mad. 183. In the particular case in Abarthoranam Kutti v. Htikaparambilathan (1919) 11 L.W. 215 the learned Judges allowed priority to the plaintiff to the extent of Rs. 180 as that sum alone was applied towards the payment of mortgages earlier than that of the 3rd defendant in that case. In Mulla Vittil Sethi v. Achuthan Nair : (1911)21MLJ213 a Full Bench case, the law as to priorities between mortgagees and the right of a purchaser in court auction in the suit of the first mortgagee in which the puisne mortgagee was not made a party, has been elaborately considered, and it was held among other dicta (see page 225), that the prior mortgagee's rights are not merged in the equity of redemption by a private or public sale made to him, as it must always be for his benefit to retain priority for his encumbrance and shjeld himself against puisne incum-brancers--see Section 101 of the Transfer of Property Act. The rule in Toulmien v. Steere (1817) 3 Mer. 230 has been, definitely abandoned in India since (Gokuldoss' case: Gokuldoss Gopal Doss v. Puranwal I.L.R. (1885) Cal. 1035 , and largely discountenanced in England.

10. In the result, I hold on the first of the six questions which I formulated in the beginning of this judgment that Revanur Subramania Aiyar who obtained possession of item 2 of the mortgaged properties as court auction purchaser in the 'sale held in execution of the decree on the prior mortgage would, if he were himself party to the present suit, be entitled to ; priority to the extent of the purchase money paid by him so far as ; rights of charge are claimed against item 2 which property became completely released from further obligation under' the decree on the prior mortgage.

11. I find on the second question that Revanur Subramania Iyer would have been legally entitled to set up that right of prior charge even though the purchase money paid for his purchase of item 2 did not fully satisfy the decree in O.S. No. 6 of 1890.

12. On the third question, I hold that Revanur Subramania Iyer's rights can be availed of by the 25th defendant who is the assignee of the rights of Revanur Subramania Iyer's mortgagee (Subbiah Chetti) for the purpose of obtaining satisfaction of the mortgage debt and of the decree obtained on that mortgage, as it is an elementary principle of law that the mortgagee creditor can proceed against all his' mortgagor's rights over the mortgaged property as they stood on the date of his mortgage (and as against what represents the mortgaged property if it had'been sold away lawfully through the existence of a paramount; or prior right) so far as it is necessary to obtain satisfaction of his debt.

13. The 4th question is whether the 25th defendant is not entitled to set up Revanur Subramania Iyer's rights as a shield because the prior mortgagee would be barred if he brought a suit on his prior mortgage of 1886 on the date of the present suit in 1916. Mr. Chandrasekara Aiyar quoted some decisions in support of his contention on this point. He quoted Mahomed Ibrahim Hossain Khan v. Ambika Pershad Singh I.L.R. (1909) Cal. 527 to show that Article 132 of the Limitation Act enacting the 12 years' period of limitation applied to a suit upon a simple mortgage. Of course it is so. Then he relied on Sambhu Bin Hanmanta v. Natna Bin Narayan I.L.R. 35 Bom. 438 in which it was held that the defendants who had a simple mortgage lien on a property and afterwards got an unregistered sale deed which was useless to convey title could rely upon their possession as owners for a further period of twelve years (after the mortgage lien had ceased to exist on tne expiry of 12 years from the date of its enforce-ability) as giving them complete title as owners and that their possession during this further period should not be treated as traceable to their rights as lien-holders. This Court has held, following the Privy Council, that even before the first 12 years expired, the defendants could rely on Ih'eir possession under the unregistered sale deed as the beginning of the term of the 12 years' period for perfecting title by the adverse possession. I am unable to see that a mere obiter dictum in the Bombay case which was decided in favour of the defendants on the ground of title by adverse possession having vested in them, is of avail in support of Mr. Chandrasekara Iyer's client who is suing as plaintiff. Then Mr. Chandrasekara Iyer relied on some cases which held that a simple mortgagee cannot as plaintiff bring a second suit for sale after the expiry of 12 years from the due date against a person whom he had not imp'leaded in his first suit. These cases also are irrelevant as the 25th defendant relies on the prior mortgage not in order to obtain as plaintiff a second decree on the first mortgage for sale but as a shield against the plaintiff's claim, himself standing in the advantageous position of defendant. In fact it will be found in many cases where subrogation to the prior mortgagee's right was allowed in favour, of the defendants that a suit on 'such mortgage would have been barred either on the ground of limitation or on the ground that under Section 89 of the Transfer of Property Act, the security had been superseded by the rights given by the final decree passed in the prior mortgagee's suit. No cases were quoted by Mr. Chand-rasekara Aiyar in which the defendant's contention claiming priority was defeated on the ground that the second suit by him on the prior mortgage as plaintiff would be barred. Richards C.J. in Chagan Lal v. Muhammad Hussain Khan I.L.R. (1919) All. 456 points out that at page 466, there is a clear and well understood distinction between a plaintiff's suit to enforce his security and a defendant defending his position or possession in a suit brought against him by holding up a security. The cases in Ellis v. Ellis (1895) 1 Ch. D. 613 and Chhagan Lal v. Muhammad Hussain Khan (1919) L.R. 41 All. 456 were decided against the plaintiff on the ground that when a security is extinguished, the plaintiff cannot revive it so as to obtain a fresh decree upon it for sale. As Sir Henry Richards, C. J. neatly puts it. 'In my previous judgment I have pointed out the distinction between a plaintiff seeking to sell property simply by reason of his having discharged a prior incumbrance and a defendant defending his possession or position in a suit brought against him. The very metaphor of the shield indicates the distinction. A man does not attack with a shield ; he defends with it.' Here, the 25th defendant is merely seeking to defend his position, namely, the right to proceed against Revanur Subramaniya Aiyar's rights and interests in the forest which had been placed in Subramaniya Aiyar's possession against the plaintiff's attack, by setting up the prior mortgagee's right which was in a man'ner assigned to Revanur Subramania Aiyar on the principle enunciated by Srinivasa Aiyangar, J. in Muthammal v. Razu Pillai I.L.R. (1917) Mad. 513 I would therefore reject the plaintiff's contention on this 4th question.

14. The 5th question is whether Revanur Subramania Aiyar was merely a benamidar for the original mortgagor (the Rajah) and hence he would not have had the right to set up the rights of the prior mortgagee decree-holder as a shield against the plaintiff's subsequent mortgage and hence also, the 25th defendant has no such right. The Subordinate Judge refers to this point in his judgment in a single sentence as follows: - Whether the Rajah was the real purchaser and Revanur, Subramania Aiyar was only a benamidar or whether he is the real purchaser, it is immaterial to consider in this case.' As I did not consider it immaterial, the evidence on this point was discussed before us and my conclusion is that it has not been proved that Revanur Subramania Aiyar was the Rajah's benamidar. On the other hand, the release deed Ex. FF. clearly indicates that Revanur Subramania Aiyar was not-the Rajah's benamidar. Further, the plaintiff in my opinion is barred by Section 66(1) C.P.C. (whose language is much clearer and more precise than the language of the corresponding old Section 317) from contending that the court auction 'purchase by Revanur Subramania Aiyar was made on behalf of the Zamindar, as plaintiff seeks to 'maintain' this 'suit' 'against' the 25th defendant who is a 'person claiming title under' the purchase of the certified purchaser Revanur Subraraania Aiyar on the ground that the purchase was made on behalf of the Rajah ' through whom the plaintiff claims' his mortgage lien sued on.

15. The 6th and last contention remains to be dealt with and that is whether the fact that the prior mortgagees' rights as mort gagee were merged in the decree passed thereon extinguished the mortgage security and hence, it could not be revived to serve as a shield against the plaintiff in favour of Revanur Subramania Aiyar and of persons claiming in his right and whether no other right exists which could be availed of by the 25th defendant to serve as an effectual shield against plaintiff's claims to proceed against the Rs. 3,000. On this point, I shall briefly refer to a few of the authorities cited in He tram v. Shadi Ram I.L.R. (1918) All. 407 decided in March 1918. Their Lordships of the Privy Council say that Section 89 of the Transfer of Property Act as it extinguished the original security on the passing of a final decree for sale (even though that decree was passed in a suit which was brought only against the mortgagor without impleading the pusine mortgagee) the first mortgagee's rights under his original security ceased to exist and for those rights was substituted the right to a sale conferred by his decree and if that right had not been exercised and if the decree had been allowed by the first mortgagee's negligence to become barred the first mortgagee cannot set up any prior charge as available to him against the second mortgagee. I followed this Case Hetram v. Shadi Ram I.L.R. 40 All. 407 (as I was bound to do) sitting with Mr. Justice Burn in Laksh-manan Chetty and Anr. v. Muthayya Chetti and Ors. (1920) 40 M.L.J. 126. But in this latter case, the first mortgagee tried as plaintiff to obtain a second decree for sale based on his extinguished security which of course cannot be allowed in any case. Mr Chandrase-kara Aiyar relied upon Hetram v. Shadi Ram I.L.R. 40 All. 407 for his contention that even as a shield, neither the first mortgage nor the right to sell for the decree amount awarded in the suit thereon is available to the 25th defendant. No doubt in Hetram v. Shadi Ram I.L.R. 40 All. 407 the prior mortgagee was'the defendant (and not the plaintiff) and he claimed a prior charge but his defence was defeated on the ground that not only was his right under the first mortgage substituted by his rights as holder of the mortgage decree for sale which he had obtained and by its extinction under Section 89 of the Transfer of Property Act but that even the substituted rights under the decree has been extinguished by the decree not having been executed within the period of limitation and hence he had no rights at all to hold up as a shield. But in the present case the decree on the prior mortgage which decree was substituted for the security was. properly executed and possession of the mortgaged property followed the sale in execution and the position of the person in such possession is now occupied by the 25th defendant for purpose of satisfying his (25th defendant's) claim and it is only this position which he holds that is sought to be used as a shield. As I said before, it is impossible in these cases of' subrogation to use such precise and comprehensive language in giving reasons foi deciding a case depending upon particular facts and circumstances in a particular manner so as to form a sufficient guide for decision of all possible cases where the question of subrogation is involved. If Hetram v. Shadi Ram I.L.R. 40 All. 407 intended to decide that where the substituted rights under the decree had become again ripened or converted into possessory rights in the mortgaged property in a purchaser in court auction sale held in execution of the decree, such possessory rights and the right to utilize such possessory rights cannot also be used as a shield, their Lordships of the Privy Council must have also intended to overrule the numerous cases decided by themselves in which possessory and other rights substituted for the rights under the decree were held sufficient to enable a defendant to hold up the prior charge as a shield. The fact that no reference is made to such cases clearly shows that the decision in Heir am v. Shadi Ram I.L.R. (1918) All. 407 must be confined to cases where the substituted rights under the decree had also been destroyed without conversion into other rights by the negligence of the prior mortgagee decree holder. In fact that is made conclusive by the later Privy Council decision in Matru Lal v. Durga Kunwar I.L.R(1920) . All. 364. In this case, there was a prior mortgage, a decree on that prior mortgage in a suit to which the second mortgagee was not made a party, a sale in execution of that prior mortgage decree and a purchase by the first mortgagee decree holder. That decree was in 1884 and possession was given to the prior mortgagee decree-holder purchaser in 1890. The second mortgagee brought his suit long afterwards about 1910 and it was not contended that the first mortgagee could, not, because his mortgage had ripened into a decree, set up his security as a shield even though the had executed that decree and got into possession of the mortgaged land as purchaser. It was not that the decision in Hetram v. Shadi Ram I.L.R(1918) . All. 407 was ignored, for it was quoted both in the arguments and in the judgment. That decision was relied on only for the proposition that for the mortgagee's original security the right of sale conferred by the mortgage decree was substituted. Their Lordships on the other hand refer to the Privy Council decision in Umes Chander Sircar v. Zahur Fatima I.L.R(1891) . Cal. 164 wherein it was held that the prior mortgagee in possession as court auction purchaser was entitled to be paid the full amount of his prior charge calculated with high interest according to the termsof his mortgage bond itself before the second mortgagee cottld obtain a decree for sale and then they referto the case in Hetram v. Shadi Ram I.L.R.(1918) All. 407 itself. Then their Lordships point out that Umesh Chandra Sircar v. Zahur Fatima I.L.R(1920) . All. 364 was decided in respect of the rights of a first mortgagee decree holder purchaser who had obtained his decree before Section 89 of the Transfer of Property Act was enacted and that, it was decided in Hetram v. Shadi Ram I.L.R.(1918) All. 407 that Section 89 extinguished the right under the mortgage documents and substituted the rights under the decree passed thereon and the prior mortgagee decree-holder auction purchaser can only claim to hold up as a shield his right to be paid the amount mentioned in the decree passed in the suit brought on the prior mortgage and not the amount due as per the mortgage bond itself. Thus Hetram v. Shadi Ram I.L.R.(1918) All. 407 did not extinguish the right to hold up as a shield the claim for the amount mentioned in the decree on the prior mortgage provided that decree had not been negligently allowed to be barred as was the case in Hetram v. Shadi Ram I.L.R.(1918) All. 407. On the other hand if the decree rights had further ripened into the rights of a court auction purchaser by execution proceedings though such rights as court auction purchaser could not be. availed of against the puisne mortgagee's claim to bring the properties again to sale if the pusine mortgagee had not been made a party to the first suit, such rights could be made the basis of a defence of priority to the extent of the amount of the mortgage decree in the prior suit.

16. Whether I have expressed my reasons fully and clearly or not, I am satisfied in my own mind as to the conclusion I ought to arrive at on the facts of this case, namely, that the 25th defendant is entitled to claim priority of resort to Rs. 3000 (representing the Karvetnagar forest and now in deposit in court) in satisfaction of his rights to recover the money due to him to the extent to which it satisfied the decree amount in the suit of the prior mortgagee, over the plaintiff's claim to resort to that same sum for the amount of his puisne mortgage.

17. In the result, I would allow the appeal and modify the decree of the lower court by substituting in the 4th paragraph of the decree for the words ' that the plaintiffs are entitled in priority to receive the amount of Rs. 3000 which is in deposit in the District Court ' the words ' that the 25th defendant is entitled in priority to the plaintiff to receive the amount of Rs. 3000 which is in deposit in the District Court'. Under the circumstances, I will make no order as to costs in this appeal.

Spencer, J.

18. The Rajah of Karvetnagar executed four mortgage deeds between the years, 1881 and 1890. The first mortgage of 1881 was in favour of the plaintiffs' father for Rs. 11,000, the items mortgaged being Karvetnagar village and Amur. This mortgage is not concerned in the present suit as it has been satisfied. The second mortgage in 1885 was also in favour of the plaintiff's father for Rs. 25,000, the same two items being mortgaged and the forest of, Karvetnagar as well. This also has been satisfied by a sale in 1918 in execution of the decree in O.S. No. 45 of 1898 and an amount of Rs. 3,000 of the sale proceeds remains in court deposit. The third mortgage in 1886 was in favour of Mr. Bowden for Rs. 40,000 and he transferred his rights to the Commercial Bank. The Karvetnagar forest and 9 other villages were mortgaged and a suit, O.S. No. 6 of 1890, to which the Rajah alone was a party, being brought to enforce the mortgage, a decree for Rs. 57,000 was passed. The fourth mortgage is that concerned in the present suit. It was in favour of the plaintiffs for Rs. 11.000, the Karvetnager forest and other items being mortgaged. In execution of the mortgage decree upon the third mortgage in favour of Mr. Bowden, the Karvetnagar forest alone was sold on the 20th July 1893 and Revanur Subramaniya Iyer purchased it for Rs. 25,000 subject to the second mortgage but not subject to the plaintiff's fourth mortgage as he had no notice of that, the suit having been filed on 4th March 1890 and the plaintiffs' mortgage deed not having been registered till May 1890 although executed on the 23rd February 1890. Revanur Subramaniya Iyer having become the owner of the forest, mortgaged it in favour of Grandhi Subbiah Chetti from whom he had borrowed Rs. 7000 towards the purchase-money. Grandhi Subbiah Chetti assigned his mortgage rights to the appellant for Rs. 17,000 and the latter brought a suit in 1914 and got a decree for Rs. 21,724. Revanur Subramaniya Iyer in 1902 released his right of redemption for the sum of Rs. 15,000 and odd in favour of the Rajah under Exhibit FF leaving the latter to redeem his mortgagee for Rs. 8800 but as the mortgage was not redeemed it culminated in the decree just referred to. The subject of this appeal is Rs. 3000 which remain in court deposit out of the purchase money paid on the second mortgage at the sale in 1918. The Subordinate Judge has held that the plaintiffs have a right to receive this sum and that the appellant's (that is 25th defendant's) right must be subordinated to his, because the plaintiff's were not made parties to O. S. No 6 of 1890 under which the appellant derives his title.

19. In this appeal the appellant's first contention is that Kevanur Subramania Aiyar's purchase was free of the fourth mortgage as that mortgage was a transfer pendente lite. His second contention is that Revanur Subramaniya Aiyar's purchase was subrogated to the rights of the Commercial Bank, that is, the plaintiff in O.S. No. 6 of 1890 (the suit on the third mortgage) to which Mr. Bowden transferred his right as third mortgagee, and that the 3rd mortgagee is to be preferred to the fourth mortgagee under Section 48 of the Transfer of Property Act.

20. On the question of lispendeus Mr. Sivaramakrishna Aiyar for the appellant has referred' us to Tilakdhari Singh v. Gour Narain (1920) 5 Pat. L.J. 715 and Papi Reddi v. Narasa Reddi I.L.R. (1892) Mad. 464. The learned Judges of the Patna High Court held that where an instrument purporting to transfer title to property requires to be registered, the title does not pass till registration has been effected. For the respondents it is contended that this decision is wrong as it is opposed to the provisions of Section 47 of the Registration Act (XVI of 1908) which declares that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration. The cases quoted in that decision viz., Papi Reddi v. Narasa Reddi I.L.R.(1892) Mad. 464 and Sheo Narain Singh v. Darbari Mahton (1897) 2 Cal. W.N. 207 can be distinguished. Papi Reddi v. Narsi Reddi I.L.R(1892) . Mad. 464 was a case of an oral contract for sale of land exceeding Rs. 100 in value for which a registered sale deed was required. In Sheo Narain Singh v. Darbari Mahtotn (1897) 2 Cal. W.N. 207 it was recognized that even registration may not pass title if there was no animus transferendi. On the other hand in Veerakutti Coundan v. Ramaswami Asari (1916) 32 I.C. 431 it was held that a mortgage deed takes effect from the date of its execution and not from the date of its registratioiii In Bapuji v. Icharam 2 P.J. (Bom. H.C.) 361 there is a decision that Us pendens will not apply to the case of registration of mortgage documents during the pendency of a suit.

21. It is also argued that this is not a true case of lis pendens. The plaintiff's right to obtain a mortgage from the Rajah could be exercised without interfering with the rights of Mr. Bowden, the holder of the third mortgage, to obtain a decree and sell the mortgaged property. There is force in these arguments and in my opinion, the first contention of the appellant fails.

22. The respondents' answer to the second contention is that Subramaniya Aiyar had no right to be subrogated by virtue of his purchase and that he could not transfer such a right to Grandhi Subbiah as he only partially discharged the mortgage decree on 10 items. It has been held that even partial discharge of a mortgage will give the person who releases a prior encumbrance a right of subrogation to the extent of which the money advanced by him discharged that encumbrance. See Saminatha Pillai v. Krishna Iyer I.L.R.(1913) Mad. 548, Udit Narain v. Asharfi Lal I.L.R. (1916) All. 502 Muthammal v. Razu Pillai I.L.R(1917) . Mad. 513 . And in Chhajan Lal v. Muhammad Hussain Khan I.L.R. (1919) All. 456 it was held that a purchaser at an auction sale in execution of a decree upon a prior mortgage, when a puisne incumbrancer has not been made a party to the suit, can hold up the prior mortgage as a shield against the puisne incumbrancer.

23. On the other hand in this Court in Besinath Karumani v. Devi, Doss (1915) 29 I.C. 511 to which my learned brother was a party, it was held that the purchaser of a mortgaged property could not claim the right by subrogation to priority against a puisne incumbrancer when he has paid only a portion of the mortgage debt and a similar view was taken in Hanuman-thaiyan v. Meenakshi Naidu I.L.R. (1910) Mad. 183 to which I was a party. We held that it was necessary that the first mortgage should be entirely discharged before a claim to priority as to the second mortgage could be sustained and Gurdeo Singh v. Chandrika Singh & Chandrika Singh v. Rash Behary Singh I.L.R. (1907) Cal. 193 is an authority for refusing the right of subrogation in aid of a mere volunteer who pays a debt for his own benefit only, being under no legal obligation to make the payment.

24. I feel considerable doubt in recognizing any right of subrogation existing in the purchaser Revanur Subramaniya Aiyar under the third mortgage decree. I think, that he purchased the Karvetnagar forest subject to the seqond mortgage but not subject to the fourth mortgage, of which no notice had been received at the date of the institution of the third mortgagee's suit. As his purchase must be regarded as being a bona fide one made without notice of the fourth mortgage, I consider that he has a right to be preferred to the 4th mortgagee by reason of Section 48 of the Transfer of Property Act ; and Grandhi Subbiah Chetti by virtue of his loan Rs. 7,000 and mortgage became subrogated to that extent to the title of Kevanur Subramania Aiyar ; and the appellant has succeeded to Grandh Subbiah Chetti's rights by virtue of the assignment in his favour ; and by his subsequent mortgage decree he obtained all that remained of the right, title and interest of Revanur Subramania Ayyar to the Karvetnagar forest after he released the equity of redemption to the Estate Collector on behalf of the Rajah for Rs. 15,000 and odd under Ex-FF.

25. Although the 4th mortgagee is not bound by the decree in the 3rd mortgagee's suit (O.S. No. 6 of 1890) to which he was not a party (Vide 21 M.L.J. 213 and I.L. Rule 40 AIL 40?) yet Revanur Subramania Ayyar having purchased in'court auction both the rights'of the 3rd mortgagee whose decree for Rs. 57,00 0 was not satisfied by the sale of item 2 for 25,000 as well as those of the Rajah mortgagor, can hold up the prior mortgage as a shield against the puisne iucumbrancer (Vide 41 All. 456) and thus can claim an advantage over the 4th mortgagee by the natural priority of the 3rd mortgage over the 4th mortgage.

26. Two or three other contentions raised hy the respondent's pleader in his endeavour to defeat the appellant's claim remain to be disposed of. First he argues that his mortgage is earlier in point of time-being of date 23rd February 1890 as' against the plaintiff's assignor's mortgage of the 24th January 1894 and he relies on Section 48 of the Transfer of Property Act: but that section only applies to the, order of mortgages created by the same person at different times. Grandhi Subbiah Chetti's mortgage of which the appellant got an assignment was created not by the Rajah but by Subramania Aiyar the purchaser of the forest. The next point is that the appellant's claim is barred by limitation as the charge created in favour of Grandhi Subbiah Chetty who lent Rs. 7,000 to Subramania Aiyar in 1894 was not sued upon within 12 years. I think that no question of limitation arises in the present claim. In O.S. No. 61 of 1914 the question of limitation was raised and it was then held that the suit was in time as far as the claim for a decree for sale was concerned, but that the personal remedy was barred. As the necessary parties were impleaded in that suit, the respondents are not entitled to raise the question a second time in this suit. Lastly there is the question whether Revanur Subramania Aiyar the auction purchaser at the sale in execution of the 3rd mortgage decree and the appellant, his successor in title, are not estopped from contending that they have acquired priority over the plaintiff's mortgage. In Kalidas Chaudhuri v. Prasannakumar Das I.L.R.(1920) Cal. 446 it was held that decree-holders are bount to specify in the sale proclamation any incumbrance to which the property was liable, that a mortgagee who purchases at a sale in execution of his decree on the mortgage is bound by an estoppel that would have bound his mortgagor, and that a decree-holder purchaser cannot set up in his own favour an encumbrance not specified in the execution proceedings. But the auction purchaser in the present case was not also a decree holder. Moreover the 3rd mortgagee did not cause the 4th mortgagees to change their position by his failure to implead them in his suit. Nor has the appellant taken up a position inconsistent with that of the 3rd mortgagee decree-holder or that of the auction purchaser, Revanur Subramania Iyer. In my opinion, no question of estoppel arises in the present suit like that which arose in Kalidas Chaudhuri v. Prasannakumar I.L.R. (1920) Cal. 446 .

27. I am therefore of opinion that the appeal should be allowed and the lower court's decree should be amended in the manner directed in my learned brother's judgment.


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