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Sesha Aiyar and anr. Vs. Krishniengar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Reported in(1900)10MLJ383
AppellantSesha Aiyar and anr.
RespondentKrishniengar and ors.
Cases ReferredAiyar v. Jankiammal
Excerpt:
.....certainly cannot fee in a better position than they would be if they had simply bought part of the mortgaged property subsequently sold under rangia grounden's decree, had their opportunity, and they might by paying off the debt and saving the property from sale,havg acquired a right of contribution secured by a lien on the other property. whenever estates are subject to a common demand and that demand is satisfied by the person interested in one of them, he has the right to call upon the other owners to contribute, and, if the demand was on account of land revenue payable to government it has been held in this court that he has in addition a lien on the land of others forming part of the entire estate in respect of which revenue was payable seshagiri v. in our opinion section 82 does..........we have to deal with the admitted fact that under the decree, rightly or wrongly made in that suit, property was sold subject to the mortgage now sued on; and, unless it can be said that the suit is barred by section 43 of the code of civil procedure, we think we are bound to hold that the suit is maintainable in our opinion that section does not apply, and this objection must be overruled.there are two questions raised by the appellants.. the district judge has found that the plaintiffs waived their right to interest at the enhanced rate. we cannct agree with this finding. in our opinion the intention was to do no more than waive interest at the higher rate up to the date of the promissory note which was given.5. the other question relates to the point raised by the '9th issue. the.....
Judgment:

1. The plaintiffs are the holders of a mortgage for Rs. 10,000 executed on the 24.th April 1889.Besides seeking to enforce the ordinary remedies of mortgagees against their mortgagors and against the property comprised in the mortgage, they claim on the principle of contribution to charge any balance which may still remain due to them against certain other property which,. with the property comprised in their own mortgage, was included in a prior mortgage executed in favour of Rangayya Gounden. It will be convenient to deal first with this latter claim as to which it is argued firstly, that that point of law it cannot be maintained, and, secondly, that it cannot properly be joined in a Suit by the mortgagee on his own mortgage. The claim arises in this way:

2. In execution of the decree on Rangia Gounden's mortgage some of the property which is included in the later mortgage of the plaintiffs was sold, and to that extent the plaintiffs' security has been diminished. It was not compelent to the plaintiffs, though they were parties to Rangia Gounden's suit, to insist that he should prosecute his claim in the first instance against the property other than that comprised in the plaintiff's mortgage because the plaintiffs had notice of Rangia Gounden's mortgage and, therefore, could not call in aid the provision of Section 81 of Transfer of Property Act. Their case is that they being interested in property X comprised in both mortgages are entitled as against the defendants who have become possessed of property Y comprised in Rangia Gounden's mortgage only, to make them contribute to Rangia Gounden's claim, inasmuch a that claim has been paid off out of property X. It is not necessary to consider the effect of Section 56. The question is whether under Section 82 of the Act the plaintiffs have any legal claim against a third person in possession of property Y. The second paragraph of the section clearly has no bearing on the present case; for that paragraph merely deals with a case in which, the first mortgage having been paid off out of the only property comprised in it, it remains to be determined how the second mortgage debt is to be borne as between that remainder of the property and another property which is. also made security for the second debt. In such a case contribution works not in favour of the second mortgagee but in. favour of other persons interested in one or other of the two properties comprised in his mortgage. Nor do we think that the first paragraph of the section is applicable in the circumstances of the case. If the plaintiffs, instead of taking a mortgage on the 24th April 1889, had bought the property then mortgaged to them and had as purchasers, been included in Rangia Gounden's suit and had allowed that property to be sold under his decree, what possible right could they have had to claim compensation at the expense of persons interested in other property included in Rangia Gounden's mortgage? Exhypethesi Rangia Gounden's claim has been satisfied, and nothing has been done to keep his lien alive for the benefit of the plaintiffs. The first paragraph does not provide for the keeping alive of the lien after the mortgage debt has been paid, for it merely declares the manner in which the debt shall be borne by the several properties. It would come into effect when the administration of the estate of the mortgagor was under consideration and may be taken to recognise a lien possessed by the person, who being interested in one of the mortgaged properties, pays off the debt and so acquires a right of contribution; but we do not think that the section gives any further right. In the present case the plaintiffs, who certainly cannot fee in a better position than they would be if they had simply bought part of the mortgaged property subsequently sold under Rangia Grounden's decree, had their opportunity, and they might by paying off the debt and saving the property from sale,havg acquired a right of contribution secured by a lien on the other property. They would then have stood in a position analogous to that of one of several mortgagors who has redeemed the whole property and claims to take advantage of Section 95 of the Act. But the plaintiffs did nothing and, therefore, no right of contribution arose, and the other property stood free from any lien. The principle of contribution is not peculiar to the law of mortgage. Whenever estates are subject to a common demand and that demand is satisfied by the person interested in one of them, he has the right to call upon the other owners to contribute, and, if the demand was on account of land revenue payable to Government it has been held in this Court that he has in addition a lien on the land of others forming part of the entire estate in respect of which revenue was payable Seshagiri v. Pichu, l. It has never been suggested that, in such cases, any lien could come into existence unless there had been an antecedent payment and a consequent right of contribution. We are aware that in the Allahabad High Court there are cases which seem to justify the notion that Section 82 of the Transfer of Property Act has a wide operation Ibn Husain v. Bamdai (1899) 2 Q.B. 7. Baldeo Sahai v. Baij Nath, bb L.R. Ex. but the point does not seem to have been argued. The cases reported in I. L. R 20 B. 615 Chagandas v, Gansing and Jagat Narain v Qutub Husain, are, illustrations of the ordinary claim for contribution, In the passage cited in argument from Robbins on Mortgages (Vol. 1, p. 779) it is stated that one of the owners has paid off the debt, and there is a close resemblance between the language of that paragraph and the language of the section. In our opinion Section 82 does not justify the notion that a mats who has bought a property which at one time was, with other property, subject to a mortgage may, after the mortgage debt has passed into a decree and after the decree has been satisfied by the sale of that other property, be held responsible for part of the mortgage debt and, there-foro, the suit as against the defendant interested in property Y was rightly dismissed. If the claim were maintainable, we should also be prepared to hold that it ought... not to have been joined with the ordinary claim on the mortgage. Accordingly we dismiss the appeal as regards respondents 9, 10, 11 and 13 to 26, with costs payable to defendants 13 and 26.

3. It remains to consider the question raised by the 9th ground of appeal and also the objections taken on behalf of the 1st and 2nd respondents. The objections actually argued resolve themselves into the question whether, in view of the fact that the plaintiffs had another mortgage of even date comprising the same property and had obtained a decree OR that mortgage, they could maintain this suit. It appears that, on the 24th Aprill 1889, besides the mortgage already' mentioned for Rs. 10,000, another mortgage for Rs. 500 was exeeuted in the plaintiffs' favour. It cannot be doubted that it was owing to the accident that the plaintiffs already had a stamped paper which sufficed for a Rs. 500 mortgage that the transaction was split up into two In 1891 a suit was brought on the Rs. 500 mortgage; decree was passed and under the decree some property was sold to the present 5th defendant, In the plaint it instated that this sale was made subject to the plaintiffs' mortgage for Rs. 10,000, and the averment, so far from being denied by the defendants, is admitted by the 2nd and 5th defendants It is argued however, on their behalf that Section 43 of the Code of Civil Procedure prohibits the institution of the second suit which is now brought. Regarding the case as one of a mere personal claim on the instrument of mortgage, we think it is clear that Section 43 does not apply. It may be true that the term ' cause of action is used in that section in a peculiar way, but we do not think that when parties, for whatever reason, choose to agree that there should be two instruments and two obligation the Courts are justified in saying that there is only one obligation.

4. The case put by Sir V. Bhashyam Aiyangar, of a man advancing Rs. 10,000 on a deposit of title deeds and then on another day advancing another such sum on the same security is, we think, distinguishable; for, in that case, there would not be the declared intention of the parties that the two loans should be treated as giving rise to distinct obligations. The case would be in no way different from that in which successive loans were made without any written instrument or security. It is then contended that the fact that the same security is given by both instruments made it obligatory on the plaintiffs to join in one suit the two claims and that it was not competent to them to ask in a suit on the Rs. 500 mortgage for a sale of the property subject to, the other mortgage. Whether the suit of 1891 on the Rs. 500 mortgage was a suit which, having regard to Sections 85 and 99 of the Transfer of Property Act, ought to have been maintained and whether in that suit the relief given was lawfully given, are questions which we need not consider. We have to deal with the admitted fact that under the decree, rightly or wrongly made in that suit, property was sold subject to the mortgage now sued on; and, unless it can be said that the suit is barred by Section 43 of the Code of Civil Procedure, we think we are bound to hold that the suit is maintainable In our opinion that section does not apply, and this objection must be overruled.There are two questions raised by the appellants.. The District Judge has found that the plaintiffs waived their right to interest at the enhanced rate. We cannct agree with this finding. In our opinion the intention was to do no more than waive interest at the higher rate up to the date of the promissory note which was given.

5. The other question relates to the point raised by the '9th issue. The District Judge has deducted Rs. 4,695 from the amount of the plaintiffs' claim, and in doing so he professes to follow the ruling in Hart v. Tara Prasanna Mukherji (1894) Nos.514 of 1899. The sum deducted represents according to the Judge, the profit which the plaintiffs have made by their purchase at the sale in execution of Rangia Gounden's decree of a part of the property comprised in their own mortgage. The case in I.L.R. 11 . so far resembles the present that in both cases there is found a mortgagee buying at one execution sale part of the mortgaged 'property. In other respects the cases are totally different. Here it is not the decreeholder who has bought, and the question does not arise between rival creditors of the mortgagor but between the mortgagee and his mortgagor (see Sheonath Doss v. Janki Prosad Singh ). Moreover, the judgment in the case, in so far as it favours the notion that a mortgagee decree-holder, who buys, having first obtained leave to bid, is in the position of a trustee cannot be supported for it has been distinctly decided by the Judicial Committee that leave obtained removes the disability under which, in the absence of leave, a decree holdr labours, In the present case the plaintiffs not being decree-holders at the time of the purchase, it is argued that in their character of second mortgagees they stood in a, fiduciary position towards their.mortgagors and therefore cannot be treated as independent strangers buying at an auction sals. Shaw v. Bunny (1899) 2 Q.B. 7 gives a complete answer on this point. There, Lord Justice Knight Bruce, affirming a decision of the Mnster of the Rolls, held that the defendant who had bought a house sold by a first mortgagee in exercise of his power of sale had, though himself a second mortgagee of the same house acquired an irredeemable and absolute title such as a stranger buying under the circumstances would have taken. It might haye made a difference, he added, if the defendant ' had availed himself of his position as a mortgagee to procure some facility or advantage relating to the purchase or connected with it'. This statement of the law being clearly approved by the Judicial Committee in Raja Kishendatt Ram v. Raja Mumtaz Ali Khan, L.R. Ex. we are bound 'to follow it and, therefore, to disregard the unreported case of this Court (A. A. 0. No.85 of 1899) which was cited, if that case conflicts with Shaw v. Bunny (1899) 2 Q.B. 7. No difference can be suggested between the position of a second mortgagee buying as the defendant bought in Shaw v. Bunny (1899) 2 Q.B. 7 and the plaintiff buying, as they did, at the sale in execution of the decree in which they were parties and which was obtained at the suit of the first mortgagee. In either case the title conveyed is that which the mortgagor and mortgagee could have legally conveyed (1894) Nos. 514 of 1899 at the date of the mortgage and the purchaser takes the property free from any claim by the second mortgagee. We must, therefore, hold that the plaintiffs took an absolute title. such as strangers might have taken. They were under no sort of disability and there is nothing to show that they took any advantage of their position (see Section 90, Indian Trusts Act)

6. This then being the state of things, it has to be asked how the plaintiffs' claim on their mortgage is affected by their purchase of part of the property. When the facts are once under stood it seems clear that the purchase has no effect at all, since presumably the whole value of the unincumbered property was paid by the plaintiffs. There are, however, cases which seem to support the general proposition that a mortgagee who purchases part of the mortgaged property must submit to some reduction of his claim. In several Allahabad cases language. has been used which may be held to justify that proposition {Ballam Das v. Amar Raj 1, Chunna Lal v. Anandi Lal (1899) 2 Q.B. 7 Nand Lal v. Bansi, L.R. Ex. and a case decided in this Court was also cited. In Nand Kishore v. Raja Hariraj Singh there had been two mortgages to the same person and there were two decrees; a part of the mortgaged property included in the first mortgage was sold in execution of another decree, a decree for money, and bought by the mortgagee, and another part of the property included in both mortgages was sold under the decree on th,e second mortgage and bought by the mortgagee. The question was whether the decree on the first mortgage was absolutely discharged by these purchases, and the question was answered in the, negative. It was' assumed that to some extent the decree must have been satisfied by the purchases and regard being had to the special facts the Tightness of that assumption cannot be questioned; for it-is clear that a person bidding at the sale under the decree on the second mortgage could ony have expected to buy the property subject to the first mortgage, and that in calculating the amount of his bid he would take into account the proportionate part of the mortgage money on the property. The mortgagee who cannot be supposed to have paid any higher price could not be allowed to: gain the difference between the value of the property unincumbered and the value of it subject to the proportionate part of the debt, and therefore would rightly be made to subject to a proportionate reduction of his claim. Chunna Lal v. Ananeti Lal (1899) 2 Q.B. 7 is another case in which the sale was made subject to an existing incumbrance (see also Lakhmidas v. Jamnadas Pajada 5, Ahmad Miya v. Sha Kalidas Kanji (1894) Nos. 513 of 1899 It was otherwise in Ballam Das v. Amar Ruj (1899) 2 Q.B. 7 but that case is questioned by Banerji, J., in Nand Kishore v. Raja Hari Raj Singh L.R. Ex. and is not easy to understand. The cases in which the property has been sold and bought subject to the mortgage which it is sought to enforce are clearly distinguishable from the present case in which the purchasers, though they happened to be mortgagees, must be taken to have paid the full value of the unincumbered property.

7. No less distinguishable are those cases in which the mortgagee having under his decree for sale bought part of the mortgaged property, proceeds to axecute his decree against other property or against the mortgagor personally, it is plain that in such a case the mortgagee must give credit for the amount of his bid, it being assumed that he had leave to bid and to set off the amount of his decree against the purchase-money. We refer by way of illustration to I.L.R. 16 C. 132 and Gunga Pershad v. Jawahir Sing 4. See Lakhmidas v. Jamnadas 5. There are again the cases in which', in consequence of a purchase made by the mortgagee from one of the mortgagors', the question arises as between the mortgagee and the other mortgagors. Those cases also are radically different from the present because it cannot be supposed that a mortgagee buying under such circumstances has dealt with the mortgagor as if he were the holder of unincumbered property. On the contrary, it must be taken that, in ''calculating the price paid by the mortgagee, allowance has been made to him for a proportionate part of the mortgage debt. The case of krishnaswami Aiyar v. Jankiammal 6 belongs to the class of cases in which a decree holder, having bought at the sale in execution of his own decree', proceeds to further execution of the decree against the judgment-debtor It is thus distinguishable from the present because, here, it will be remembered, it was at the sale in execution of Rahgia Gounden's decree that the plaintiffs bought. For some reason which is not clear the court held that the decree-holder ought to give credit, not for the mere amount of his bid but for that sum plus ' the amount undertaken to be paid to the mortgagee.'

8. On the facts of the present case, it being granted that the plaintiffs, with regard to their purchase at the sal in execution of Rangia Gounden's decree, must be treated as strangers and that whole property free from incumbrance and free from the plaintiff's right of redemption was put up for sale and bought, we can see no ground for holding that their claim under their mortgage is in any way impaired. The sale to the plaintiffs was not effected at their instance and brought on gain to them. It had the effect of diminishing the security, but it leaves the plaintiffs' claim as against the other property in cluded in their own mortgage as it was before wholly unsatisfied.

9. The decree must be amended by substituting for the amount decreed the full amount of the claim minus the sum of Rs. 1,500-13-4 admitted to have been received by the plaintiffs and with regard to interest, by giving interest at the enhanced rate from the date of the promissory note up to the date fixed for payment. The decree must also be amended by fixing the 28th February 1901 as the day for payment. In the result, there will be a decree for Rs. 18,156-9-10 with interest at 15 per cent. On the principal Rs. 8,500 up to 28th February 1901, or till payment, if sooner. The 1st, 2nd, 9th, 10th and llth defendants must pay the costs of plaintiffs calculated on the amount allowed by the decree.

10. The appeal is dismissed as against the 16th respondent with costs and also against 5th respondent with costs.

11. The memorandum of objections is dismissed with costs.


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