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Veerammal Vs. Krishnan - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 794 of 1965
Judge
Reported inAIR1970Mad244
ActsTransfer of Property Act, 1882 - Sections 91
AppellantVeerammal
RespondentKrishnan
Appellant AdvocateV. Somasundaram and ;P. Devadass, Advs.
Respondent AdvocateV. Vedantachari and ;T. Rangaswami Iyengar, Advs.
DispositionAppeal dismissed
Cases ReferredChaube v. Bhagwati
Excerpt:
.....mortgagee entitled to redeem subsequent mortgage after obtaining title of property by court sale - prior mortgagee entitled to redeem subsequent mortgage even though subsequent mortgagee not made party to prior mortgagee's suit against mortgagor for redemption. - - somasundaram appearing for the appellant, third defendant, contended that all that the purchaser in a suit of the kind referred to above acquires is only the right of the mortgagee and he continues to be a mortgagee qua the puisne mortgagee, and that as such, such a purchaser is not entitled to redeem the puisne mortgagee under the well recognised principle 'redeem up and forclose down'.in support of this argument he cited nagu v. 5. the auction purchaser in execution of the prior mortgage decree occupies a dual capacity,..........appeal filed by the third defendant is whether a purchaser in execution of a decree obtained on a prior mortgage in a suit to which the subsequent mortgagee is not a party is entitled to redeem the subsequent mortgage. defendants 1 and 2, the owners of the suit property, had executed a simple mortgage over the suit property in favour of one pakkirisami pandithan and subsequently executed a usufructuary mortgage in favour of the third defendant, the appellant herein, under a document dated 7-6-1953. pakkirisami pandithar sued on his mortgage in o. s. 257 of 1957 on the file of the district munsif of trivellore, im-pleading defendants 1 and 2 alone and without impleading the 3rd defendant, the subsequent mortgagee, and obtained a decree and brought the hypotheca to sale. the plaintiff.....
Judgment:

Palaniswamy, J.

1. The point that arises for consideration in this appeal filed by the third defendant is whether a purchaser in execution of a decree obtained on a prior mortgage in a suit to which the subsequent mortgagee is not a party is entitled to redeem the subsequent mortgage. Defendants 1 and 2, the owners of the suit property, had executed a simple mortgage over the suit property in favour of one Pakkirisami Pandithan and subsequently executed a usufructuary mortgage in favour of the third defendant, the appellant herein, under a document dated 7-6-1953. Pakkirisami Pandithar sued on his mortgage in O. S. 257 of 1957 on the file of the District Munsif of Trivellore, im-pleading defendants 1 and 2 alone and without impleading the 3rd defendant, the subsequent mortgagee, and obtained a decree and brought the hypotheca to sale. The plaintiff purchased the suit property in Court auction and took possession in execution of the sale certificate. The third defendant applied for and obtained re-delivery on the strength of his usufructuary mortgage. Thereupon, the plaintiff instituted the suit for redemption of the usufructuary mortgage and recovery of possession. The third defendant contended that inasmuch as he was not mi-pleaded as a party in the suit instituted by the prior mortgagee, his rights as a puisne mortgagee were not affected and that as such the plaintiff was not entitled to redeem him. The trial Court accepted this defence and dismissed the suit. But in the appeal filed by the plaintiff, the lower appellate Court reversed the judgment of the trial Court and found that the plaintiff was entitled to redeem the usufructuary mortgage and accordingly granted the usual preliminary decree for redemption. It is against this decision that the. 3rd defendant has preferred this appeal.

2. Section 91 of the Transfer of Property Act enumerates the persons who may sue for redemption. Clause (a) of that section, which alone is relevant in this case, says that any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same, is entitled to redeem. The simple question in this case is whether the purchaser of the hypotheca in a suit brought on the prior mortgage without impleading the puisne mortgagee is a person having an interest in the property mortgaged or in or upon the right to redeem the same. In considering this question, it is necessary to know what exactly is -the right which such a Court auction purchaser purchases. That he gets all the rights of the prior mortgagee is undisputed. Inasmuch as the mortgagor is also a party to such a suit and inasmuch as the sale takes place in his presence, it should be taken that the right, title and interest which he had in the property including his right in the equity of redemption should also be taken to pass to the auction purchaser. When a second mortgage is created by the mortgagor, what is really mortgaged by the mortgagor to the second mortgagee is the equity of redemption. After such a second mortgage is executed, the equity of redemption vests both in the mortgagor and in the puisne mortgagee. That is the reason why under Order 34, Rule 1, Civil P. C., a puisne mortgagee is considered to be a necessary party to the suit filed on the prior mortgage, whereas In a suit bv a puisne mortgagee the prior mortgagee is not a necessary party. If the mortgagor and the puisne mortgagee are Impleaded in the suit filed on the prior mortgage, the whole of the equity of redemption is properly represented and the decree in such a suit would be binding upon the puisne mortgagee; but if the puisne mortgagee Is not impleaded as a party and if the decree ends in a sale his right as a puisne mortgagee to redeem the prior mortgage is not affected. Vide Murugappa v. Marudachalam, AIR 1948 Mad 412. Not only the puisne mortgagee has the right to redeem the prior mortgage but also has the right to sue for sale subject of course to the first mortgage--vide Debendra Narain v. Ramtaran, ILR(1903) Cal 599 . The puisne mortgagee may redeem the prior mortgage even though a suit to enforce the puisne mortgage is barred by limitation, because limitation for a suit for redemption is 30 years under Article 61 (a) of the Limitation Act, 1963, corresponding to 60 years under Article 148 of the Limitation Act, 1908, while limitation for a suit to enforce a mortgage is 12 years under Article 62 of the Limitation Act of 1963 corresponding to Article 132 of the Act of 1908,

3. One of the questions that arose for consideration before the Full Bench in Mulla Veetil v. Achuthan Nair : (1911)21MLJ213 , was what exactly does the auction purchaser at an execution sale In a suit filed on the prior mortgage without impleading the subsequent mortgagee acquire. After an exhaustive review of the case law, the Full Bench held that the purchaser in such a suit, whether he is the first mortgagee himself or a stranger, does not acquire the rights of the mortgagor, as on the date of the first mortgage, but only those rights that subsist in him at the date of the suit (on the date of the suit instituted on the prior mortgage, the mortgagor had a part of the right to redeem the puisne mortgagee). The Privy Council has recognised the principle In Sukhi v. Ghulam Safdar Khan, AIR 1922 PC 11 , that the purchaser in execution of the decree obtained on the prior mortgage acquires the rights of the prior mortgagee and the equity of redemption of the mortgagor. In Abdul Gafoor v. Sagun Choudhary : AIR1952Pat321 , the same principle is reiterated.

4. Mr. Somasundaram appearing for the appellant, third defendant, contended that all that the purchaser in a suit of the kind referred to above acquires is only the right of the mortgagee and he continues to be a mortgagee qua the puisne mortgagee, and that as such, such a purchaser is not entitled to redeem the puisne mortgagee under the well recognised principle 'redeem up and forclose down'. In support of this argument he cited Nagu v. Gopal : AIR1953Bom405 . The headnote in that case, which is misleading, no doubt tends to support the above contention. But the facts of the case show that the puisne mortgagee sued on his mortgage first and purchased the property in Court auction in execution of his decree and thereafter the prior mortgagee instituted a suit on his mortgage without impleading the puisne mortgagee and bought the property in Court sale. The question arose who among them was entitled to redeem the order. It would be seen from the above facts that on the date of the sale in execution of the prior mortgage decree, the mortgagor had no subsisting title inasmuch as his right, title and interest had already been sold in execution of the decree obtained on the puisne mortgage. It is on account of that reason that the Court held that despite the auction sale in execution of the prior mortgage decree the prior mortgagee purchaser continued only to be a mortgagee and that the right of the puisne mortgagee to redeem the prior mortgage subsisted in spite of the sale held in execution of the prior mortgage decree.

5. The auction purchaser In execution of the prior mortgage decree occupies a dual capacity, that is, the capacity of the first mortgagee as well as the owner of the equity of redemption. In his first capacity he can use the first mortgage as a shield against the second mortgagee. In the second capacity he can redeem the subsequent mortgages. To acquire that right of redemption the consent of the subsequent mortgagee is not necessary. A mortgagor can assign his equity of redemption, and for such an assignment, the consent of the puisne mortgagee is not necessary. If such an assignment can be made by private negotiation, there is no good reason why such an assignment cannot take place by process of Court in execution of a money decree or any other decree. All that the law safeguards in favour of the puisne mortgagee is that his right as a puisne mortgagee shall not be affected (1) to redeem the prior mortgage and to sell the property for the amount due on both the mortgages or (2) to sell the property subject to the first mortgage. A Bench of this Court has laid down in Sarvothama Rao v. Raja Rao Sahib, 1921 Mad WN 603 : AIR 1921 Mad 648 that a prior mortgagee who is also the purchaser of the equity of redemption can redeem the puisne mortgagee even without his consent and that the purchaser, who is also the puisne mortgagee, is entitled to redeem the puisne mortgagee. See in this connection the decision of the Punjab High Court in Rattan Chand v. M/s. Prite Shah , and also the Full Bench decision of the Allahabad High Court in Ramsanehi Lal v. Janki Prasad : AIR1931All466 .

6. Mr. Somasundaram appearing for the appellant, referred to the Full Bench decision in : (1911)21MLJ213 , already referred to, in support of his contention that this being in substance a suit for possession, the plaintiff is not entitled to that relief. In that Full Bench case, the first mortgagee was the purchaser of the hypotheca in execution of the decree obtained on his mortgage without impleading the puisne usufructuary mortgagee. After obtaining the sale certificate the purchaser-mortgagee straightway sued for possession of the property or in the alternative for recovery of the money due to him under the prior mortgage. It was held that the suit was not maintainable. But the facts of the instant case are different, The plaintiff has not sued for possession only, but has prayed for redemption of the usufructuary mortgage and for recovery of possession. It is not correct to contend that the suit is in essence for possession. The primary relief is redemption of the usufructuary mortgage and once redemption is granted, possession automatically follows and therefore, the suit is in essence one for redemption.

7. It is next contended for the appellant-third defendant that the plaintiff should sue for the amount due under the first mortgage and also to pray that in default of payment of the amount due under the first mortgage it be declared that the third defendant is absolutely debarred of his right to redeem the prior mortgage and he be directed to surrender possession of the property. It was contended that if such a suit is filed, the third defendant will have an opportunity to redeem the prior mortgage and that Inasmuch as such an opportunity is not given, the right of the 3rd defendant should not be prejudiced. I do not accept this argument. No authority is cited in support of the argument that the only kind of suit which the purchaser in execution of the prior mortgage decree can file is a suit of the kind referred to above and no other suit. In Goverdhana Doss v. Veerasami Chetti, ILR (1903) Mad 537, the plaintiffs were the prior mortgagee auction purchasers in a suit filed on the prior mortgage without impleading the puisne usufructuary mortgagee, as in the instant case. They sued for recovery of the money by sale of the property and prayed that in default of such payment, the usufructuary mortgagee be declared to be barred of his right to redeem the prior mortgage. The trial Court directed the usufructuary mortgagee to redeem the mortgage within the time specified and further declared that if he failed to do so, he was debarred of his right to redeem the prior mortgage. In Appeal, Sir Arnold White C. J. and Moore, J. held that the reliefs granted were proper. It is not the principle laid down in that decision that the only form of suit in a case of this kind is the one in that suit.

8. Lastly, Mr. Somasundaram, appearing for the appellant, cited Shanmugam v. Sivan Pillai : AIR1967Mad418 and strongly relied upon it as supporting his contention that the suit is not maintainable. In that case, the facts are a bit complicated. The question considered was whether the auction purchaser in execution of the decree obtained by the first mortgagee without impleading the puisne mortgagee though the sale was held earlier is entitled to redeem the auction purchaser In a sale held in execution of the decree obtained on the puisne mortgage though held subseauently. The learned Judge, Kailasam, J., examined the Question as to what right was acquired by the auction purchaser in execution of the first mortgage decree. At page 236 (of Mad LJ) = (At p. 420 of AIR) it is observed:--

'When a prior mortgagee suing to enforce his mortgage does not make the puisne mortgagee a party to the suit and brings the property to sale, the auction purchaser acquires the rights both of the mortgagee and mortgagor and as assignee of the mortgagor he may sue to redeem the puisne mortgagee. Under Section 91 the puisne mortgagee as an assignee of the equity of redemption has a statutory right to redeem an earlier mortgage.'

At page 237 (of Mad LJ) = (At page 421 of AIR) it is observed:--

'By not making the puisne mortgagee a party, the right to which the puisne mortgagee was entitled, cannot be taken away or the right of the purchaser without notice be enhanced. Taking all the circumstances into consideration I am of the view that the right of the puisne mortgagee to redeem a prior mortgagee cannot be prejudiced by a court sale at the instance of the prior mortgagee without impleading the puisne mortgagee. Though in law the purchaser in the prior mortgagee's sale as an assignee of the mortgagor is entitled to redeem his right to redemption in law or in equity cannot prevail over the puisne mortgagee's right to redeem.'

In the result, the learned Judge held that the purchaser in the sale held in execution of the first mortgage decree was not entitled to redeem the auction-purchaser in the sale held in execution of the puisne mortgage.

9. Mr. Rangaswami Aiyangar, appearing for the plaintiff-respondent, contended that the above view is not correct having regard to the decision of the Bench in 1921 Mad WN 603 : AIR 1921 Mad 648, in which the principle is laid down that the auction purchaser in execution of the prior mortgage decree is entitled to redeem the puisne mortgagee even though the latter had not been impleaded as a party in the suit filed on the first mortgage. He also referred to the observations of the learned author Mullah on the Transfer of Property Act, 5th Edn. at pages 606 and 607, where the learned author has pointed out that in a case where the right of the puisne mortgagee to redeem the prior mortgagee and the right of the prior mortgagee as the assignee of the equity of redemption, as in the instant case, to redeem the puisne mortgagee come in conflict, the right of the prior mortgagee purchaser to redeem the puisne mortgagee takes priority. This view is supported by the decisions in Hasanbai v. Umajl, ILR(1904) 28 Bom 153; Parasram Singh v. Pandhohi, ILR All 462 : AIR 1922 All 135 and Ram-baran Chaube v. Bhagwati : AIR1925All804 . In my view, it is unnecessary to express any opinion on this question in this case as there is no question of conflict of interest between two auction purchasers, one having taken a sale in execution of the first mortgage decree and the other in execution of the subsequent mortgage decree as in the case reported in : AIR1967Mad418 . I have already pointed out that in the Instant case the appellant is only a usufructuary mortgagee and without any more right.

10. I am of the view that the lower appellate Court was right in holding that the plaintiff is entitled to redeem the usufructuary mortgage and recover possession. In the result, the appeal fails and is dismissed. There will be no order as to costs in this appeal. Leave granted.


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