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Dorasami and ors. Vs. Venkataseshayyar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in(1902)ILR25Mad108
AppellantDorasami and ors.
RespondentVenkataseshayyar and ors.
Cases ReferredMata Din Kasodhan v. Kazim Huzain I.L.R.
Excerpt:
.....act - act iv of 1882. sections 85, 96, 97--mortgagee holding two mortgages over same property--suit for sale based on earlier mortgage alone--maintainability. - - 1,500, and the plaintiff was to enjoy the usufruct in lieu of interest; 4. we are clearly of opinion, that a mortgagee cannot be permitted to sue for enforcing only one of the mortgages in his favour and obtain an order for sale, subject to other mortgages of the same property in his own favour--especially when they are subsequent to the mortgage sued upon. this clearly shows that in the absence of the consent of the prior mortgagee, the sale under a decree obtained by a puisne mortgagee, will be one subject to the incumbrance in favour of the prior mortgagee. this is placed beyond all doubt by the provisions of section..........of the mortgaged property in such sale.5. under section 96 of the transfer of property act, a sale of property in execution of a mortgage decree may, with the consent of the prior mortgagee, be made free from that prior mortgage, and in that case the prior mortgagee has the same interest in the proceeds of the sale as he had in the property sold. this clearly shows that in the absence of the consent of the prior mortgagee, the sale under a decree obtained by a puisne mortgagee, will be one subject to the incumbrance in favour of the prior mortgagee. it is unnecessary to decide in this case, whether, when the prior mortgage is in his own favour, he can bring the property to sale subject to such prior mortgage. but a sale under a mortgage decree cannot be made subject to a puisne.....
Judgment:

1. The revised findings submitted by the District Judge, in accordance with the order of this Court, dated 13th March 1901, must be accepted, as they are not open to any legal objection; and the case has now to be decided with reference to the question of law raised in the eighth ground which has now been argued. That question is whether the plaintiff, who claims to have two mortgages on one and the same property, can maintain a suit, on the first mortgage alone, for sale of the mortgaged property, such sale being subject to the subsequent mortgage in his own favour.

2. The first mortgage, dated 20th December 1880, is a simple mortgage and the balance alleged to be due thereupon is Rs. 220. On the 22nd October 1886 the lands comprised in the simple mortgage, were mortgaged to the plaintiff, with possession, for the sum of Rs. 1,500, and the plaintiff was to enjoy the usufruct in lieu of interest; and there is a covenant in the mortgage bond for re-payment of Rs. 1,500 and redemption of the mortgaged properties, in August 1890.

3. In this suit, which was brought in 1898, the plaintiff does not allege that the amount of Rs. 1,500, which, under the usufructuary mortgage bond, became due in August 1890, has been paid to or recovered by him. He still continues to be in possession of the mortgaged property and if under the decree passed in his favour by the lower Appellate Court, the property is to be sold subject to his own usufructuary mortgage, the result will be that the plaintiff's right to redeem the usufructuary mortgage will be extinguished.

4. We are clearly of opinion, that a mortgagee cannot be permitted to sue for enforcing Only one of the mortgages in his favour and obtain an order for sale, subject to other mortgages of the same property in his own favour--especially when they are subsequent to the mortgage sued upon. If the other mortgages had been in favour of third parties, it would have been necessary for them to be made parties to the suit under Section 85 of the Transfer of Property Act; and when so made parties, their rights and interests would have been comprised and adjudicated upon, in the suit. It. therefore follows that when the other mortgages are in his own favour, the right arising therefrom should also be comprised in the suit and adjudicated upon; and he cannot be permitted to obtain an order for sale, in a suit brought on only one of his mortgaged, leaving the determination, of the existence or otherwise, of other mortgages and charges in his own favour, and of the extent and validity thereof, for future suits, between himself, the mortgagor and purchasers of the mortgaged property in such sale.

5. Under Section 96 of the Transfer of Property Act, a sale of property in execution of a mortgage decree may, with the consent of the prior mortgagee, be made free from that prior mortgage, and in that case the prior mortgagee has the same interest in the proceeds of the sale as he had in the property sold. This clearly shows that in the absence of the consent of the prior mortgagee, the sale under a decree obtained by a puisne mortgagee, will be one subject to the incumbrance in favour of the prior mortgagee. It is unnecessary to decide in this case, whether, when the prior mortgage is in his own favour, he can bring the property to sale subject to such prior mortgage. But a sale under a mortgage decree cannot be made subject to a puisne mortgage, whether the same be in favour of a third party or of the decree-holder himself. This is placed beyond all doubt by the provisions of Section 97 of the Transfer of Property Act as well as Section 295, Clause (c) 'thirdly', of the Code of Civil Procedure. The principle of the Transfer of Property Act is that any person instituting a suit for foreclosure, sale or redemption of mortgaged property should include in that suit the interests of all persons, in such property, of which he has notice,--whether such interest be prior or subsequent to his own, and if he obtains an order for sale, the sale will not be made subject to subsequent incumbrances, and the sale proceeds, after deducting therefrom the expenses incident to the sale, will be distributed between himself and the subsequent incumbrancers, according to their priorities. [Vide Transfer of Property Act, Section 97, 'fourthly' and 'lastly'; Civil Procedure Code, Section 295, Clause (c) ('secondly and thirdly')]

6. In the hands of the purchaser, however, the property will be subject to prior mortgages, unless the sale has been made free from the same with the consent of the prior mortgagees, in which case, they acquire the right of priority over the sale proceeds (Transfer of Property Act, Section 97-, 'secondly ').

7. If, however, a person having an interest in the mortgage property is not made a party to the suit, by reason of the party suing having no notice of such interest, the rights of such person will remain unaffected by the decree and the proceedings in execution thereof, and complicated questions frequently arise when such person sues subsequently, upon his mortgage.

8. But a party suing upon one of his mortgages, can have no excuse for his not including in the suit his rights under his other mortgages, for he must necessarily have notice of the same.

9. The very form of a decree for sale, (No. 128, schedule 4 to the Civil Procedure Code) in a suit by a mortgagee-- viz., that 'upon the defendant (mortgagor) paying into Court, what shall be certified to be due to the plaintiff, (mortgagee), for principal and interest...together with costs...within six months.... it is ordered that the plaintiff do re-convey the said mortgaged premises, free and clear from all incumbrances done by him...and do deliver up to the defendant...all documents in his custody or power relating thereto, &c.;,' clearly shows that the mortgagee is not to reserve to himself rights over the mortgaged property which he re-conveys to the mortgagor 'with all the documents in his custody or power relating' to the mortgaged premises. The said form is also in conformity with the substantive provisions enacted in Sections 86 and 88 of the Transfer of Property Act.

10. Section 61 of the Transfer of Property Act, which is the same as Section 17 of the 'Conveyancing and Law of Property Act, 1881' (44 & 45 Vict., cap. 41), no doubt abolishes the doctrine of 'consolidation of mortgages' over different properties, which doctrine was recognized by the Courts in India, before the Act was passed Vithal Mahadev v. Daud Muhammad Husen 6 Bom. H.C.R. 90. But that very section implies, as is shown by the illustration, that if the different mortgages are in favour of one and the same person, not in respect of different properties, but over the same property, the mortgagor cannot seek to redeem any one mortgage without redeeming the additional mortgages also. The same principle will be equally applicable to a mortgagee, having several mortgages over the same property, seeking to obtain an order for sale on one mortgage only.

11. In Sundar Singh v. Bholu I.L.R. 20 All. 822 which was heard by a Full Bench, the point actually decided was that Section 43 of the Code of Civil Procedure and Section 85 of the Transfer of Property Act, do not preclude a mortgagee (who had obtained a decree for sale of the mortgaged property in a suit brought by him, against the mortgagor only, on a mortgage bond executed in his favour in 1878), from instituting a second suit on a bond mortgaging the same property in 1882 in favour of a third party, who had assigned the mortgage to the plaintiff in 1883 before he instituted the former suit on the mortgage bond of 1878. In that case, no objection was taken by the mortgagor to the maintainability of the first suit, and in fact, no allusion whatever was made in that suit to the existence of the second mortgage; and a decree for sale was passed under Section 88 of the Transfer of Property Act. But the mortgagor resisted the second suit, pleading Section 43, Civil Procedure Code, and Section 85, Transfer of Property Act, as a bar to the same; but such plea though allowed by the Lower Courts was overruled by the High Court in second appeal. In the present case, objection is taken by the mortgagor to maintainability of the very first suit brought upon one of the mortgage bonds alone.

12. After disposing of the objections founded upon Section 43, Civil Procedure Code, and Section 85 of the Transfer of Property Act, the Full Bench of the Allahabad High Court, in the above case, observe as follows: 'There is nothing in the Civil Procedure Code or in the Transfer of Property Act, which prevents a holder of two independent mortgages over the same property, who is not restrained by any covenant, in either of them, from obtaining a decree for sale on each of them, in a separate suit .... It appears to us that their having obtained that decree can be no bar to their right to obtain a decree for sale on the mortgage of 1882. What benefits the two decrees will be to the plaintiffs it is difficult to see, except that the plaintiffs may execute one of these decrees by sale of the property, and, if there is a surplus arising from the sale, they may probably attach that surplus in execution of the other decree. One thing is quite clear, that the plaintiffs cannot sell the property twice over, and they cannot sell under the second decree subject to the first. That would be selling the equity of redemption, a right which is not acknowledged or recognized by the Transfer of Property Act and would be a mischief which has been struck at by Section 99 of that Act. This Court in Mata Din Kasodhan v. Kazim Huzain I.L.R. 13 All. 432 which has been followed in many other oases, has recognized that the intention of the Legislature was to put an end to the abuses which existed before Act IV of 1882 came into force, and that there can be no sale of the equity of redemption apart from the property itself at the instance of the mortgagee.'

13. Whether the actual decision in the above case be right or wrong, we are unable to concur in some of the observations above quoted and in the soundness of the general dictum, that 'there is nothing in the Civil Procedure Code, or in the Transfer of Property Act, which prevents a holder of two independent mortgages over the same property, who is not restrained by any covenant in either of them, from obtaining a decree for sale, on each of them in a separate suit.'

14. We may also add that the view which we take is in conformity with the principle underlying Section 99 of the Transfer of Property Act, that the holder of a decree for money should not be permitted to bring to sale the property of the judgment-debtor, reserving a mortgage right thereon in favour of himself (the decree-holder).

15. The second appeal is therefore allowed with costs and the decree appealed against is reversed and that of the Munsif restored and affirmed, but on the ground that the suit as now brought does not lie. As this objection to the maintainability of the suit was not taken by the appellant in either of the lower Courts each party will bear his own costs in both the lower Courts.


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