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Sesha Ayyar and anr. Vs. Krishna Ayyangar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in(1901)ILR24Mad96
AppellantSesha Ayyar and anr.
RespondentKrishna Ayyangar and ors.
Cases ReferredKrishnasami Ayyar v. Janakiammal I.L.R.
Excerpt:
.....certainly cannot be in a better position than they would be if they had simply bought part of the mortgaged property subsequently sold under rangayya goundan's decree, had the opportunity, and they might, by paying off the debt and saving the property from sale, have 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.5. there are two questions raised by the appellants, the district judge has found that the plaintiffs waived their right to interest at she enhanced rate. we cannot 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.6. the other question relates to the point raised by the ninth issue......
Judgment:

1. The plaintiffs are the holders of a mortgage for Rs. 10,000 executed on the 24th 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 Goundan, It will be convenient to deal first with this latter claim, as to which it is argued, firstly, that in 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 Rangayya Goundan's mortgage, some of the property which is included in the latter mortgage of the plaintiffs was sold and to that extent the plaintiffs' security has been diminished. It was not competent to the plaintiffs, though they were parties to Rangayya Goundan's suit, to insist that he should prosecute his claim in the first instance; against the property other than that comprised in the plaintiffs' mortgage, because the plaintiffs had notice of Rangayya Goundan's mortgage and therefore could not call in aid the provision of section. 81 of the 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 Rangayya Goundan's mortgage only,, to make them contribute to Rangayya Goundan's claim, inasmuch as 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 parson 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 the remainder of that 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 Rangayya Goundan'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 Rangayya Goundan's mortgage? Ex hypothesi, Rangayya Goundan'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 bad 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 recognize 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 be in a better position than they would be if they had simply bought part of the mortgaged property subsequently sold under Rangayya Goundan's decree, had the opportunity, and they might, by paying off the debt and saving the property from sale, have 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.

3. 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 I.L.R. 11 Mad. 452. 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 seam to justify the notion that Section 82 of the Transfer of Property Act has a wider operation Ibu Husain v. Ramdi I.L.R. 12 All. 110; Baldeo Sahai v. Baij Nath I.L.R. 13 All. 371 But the point does not seem to have been argued. The cases of Chagandas v. Gansing I.L.R. 20 Bom. 615 and Jagat Narain v. Qutub Husain I.L.R. 2 All. 807 are illustrations of the ordinary claim for contribution. In the passage cited in argument from Robbins on 'mortgages,' volume 1, page 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 man 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, therefore, the suit as against the defendants interested in property X 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 Nos. 9, 10, 11 and 13 to 26, with coats payable to defendants Nos. 13 and 26.

4. It remains to consider the question raised by the ninth ground of appeal and also the objections taken on behalf of the first and second 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 on that mortgage, they could maintain this suit. It appears that, on the 24th April 1889, besides the mortgage already mentioned for Rs. 10,000, another mortgage for Rs. 500 was executed 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 fifth defendant. In the plaint it is stated 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 second and fifth 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 obligations,, the Courts are justified in saying that there is only one obligation. The case put by Sir V. Bhashyam Ayyangar, 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 a& giving rise be 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 suits 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.

5. There are two questions raised by the appellants, The District Judge has found that the plaintiffs waived their right to interest at She enhanced rate. We cannot 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.

6. The other question relates to the point raised by the ninth issue. The District Judge has deducted Rs. 4,695 from the amount of the plaintiff's claim, and in doing so he professes to follow She ruling in Hart v. Tara Prasanna Mukherji I.L.R. 11 Calc. 718, The sum deducted represents, according to the Judge, the profit which the plaintiffs have made by their purchase at the sale in execution of Rangayya Goundan's decree of a part of the property comprised in their own mortgage. The case of Hart v. Tara. Prasanna Mukherji I.L.R. 11 Calc. 718 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 decree-holder 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 I.L.R. 16 Calc. 132. 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-holder 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 sale. Shaw v. Bunny 34 L.J. Ch. 257 gives a complete answer on this point. There, Lord Justice Knight Bruce, affirming a decision of the Master 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 have made a difference, be 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 abatement of the law being clearly approved by the Judicial Committee in Raja Kishendatt Ram v. Rajah Mumtaz Ali Khan L.R. 6 IndAp 145 : I.L.R. 5 Calc. 198, we are bound to follow it, and therefore to disregard the case of Erusappa Mudaliar v. Commercial and Land Mortgage Bank, Limited I.L.R. 23 Mad. 377, which was cited, if that case conflicts with Shaw v. Bunny 34 L.J. Ch. 257. No difference can be suggested between the position of a second mortgagee buying as the defendant; bought in Shaw v. Bunny 34 L.J. Ch. 257 and the plaintiffs baying, as they aid, 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 at the date of the mortgage and the purchaser takes the property free from any claim by the second mortgage. 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).

7. This then being the state of things, it has to be asked how the plaintiff's claim on their mortgage is affected by their purchase of part of the property, When the facts are once understood it seems clear that the purchase has no effect at all, since presumably the whole value of the unencumbered 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 I.L.R. 12 All. 537; Chunna Lal v. Anandi Lal I.L.R. 19 All. 196; Nand Kishore v. Raja Hariraj Singh I.L.R. 20 All. 23; and a case decided in this Court was also cited. In Nand Kiskore v. Raja Hariraj Singh I.L.R. 20 All. 23, 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 the 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 rightneas of that assumption cannot be questioned; for it is clear that & person bidding at the sale under the decree on the second mortgage could only have expected to buy the property subject to the first mortgage and that in calculating the amount of his bid be would take into account the proportionate part on the mortgage money on the property. The mortgagee who cannot be supposed to have paid any higher price could cot 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 submit to a proportionate reduction of his claim. Chunna Lal v. Anandi Lal I.L.R. 19 All. 196 is another case in which the sale was made subject to an existing incumbrance see also Lakhmidas v. Jamnadas I.L.R. 22 Bom. 304 Pirjada Ahmadmiya v. Shah Kalidas Kanji I.L.R. 21 Bom. 544. It was otherwise in Ballam Das v. Amar Raj I.L.R. 12 All. 537, but that case is questioned by Banerji, J., in Nand Kishore v. Raja Hariraj Singh I.L.R. 20 All. 23 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.

8. No less distinguishable are those cases in which the mortgagee, having under his decree for sale bought part of the mortgaged property, proceeds to execute 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. Sheonath Doss v. Janki Prosad Singh I.L.R. 16 Calc. 132 and Gunga Pershad v. Jawahir Singh I.L.R. 19 Calc. 4. See Lakhmidas v. Jamnadas I.L.R. 22 Bom. 304. There are, again, the oases 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 oases also are radically different from the present, because it cannot be supposed that a mortgages 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 mortgaged debt. The case in Krishnasami Ayyar v. Janakiammal I.L.R. 18 Mad. 153 belongs to the class of oases 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 Rangayya Goundan'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.'

9. On the facts of the present case, it being granted that the plaintiffs, with regard to their purchase at the sale in execution of Rangayya Goundan's decree must be treated as strangers and that the whole property free from incumbrance and free from the plaintiffs' 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 no gain to them. It had the effect of diminishing the security, but it leaves the plaintiffs' claim as against the other property included in their own mortgage as it was before, wholly unsatisfied.

10. 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 Be. 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 first, second, ninth, tenth and eleventh defendants must pay the costs of plaintiffs calculated on the amount allowed by the decree.

11. The appeal is dismissed as against the sixteenth respondent with costs and also against fifth respondent with costs.

12. The memorandum of objections is dismissed with costs.


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