1. In the Calcutta and. Allahabad High Courts it appears to have been settled by judicial decisions that a benami mortgagee may maintain a suit upon a mortgage: vide Kirtibas Das v. Gopal; Jiu (1914) 19 C.L.J. 193, Sachita Nandu Mohapatro v. Baloram Gorain I.L.R. (1897) C. 644, and Parmeshwar Dat v. Anardan Dat I.L.R. (1915) All. 113. In this Court there is no reported case on the point so far as I am aware; but in Mandarayan v. Singaram Second Appeal No. 186 of 1903, the, same view was taken as in Calcutta and Allahabad and three more unreported cases were therein referred to as authorities that precluded arguments being raised to the contrary. In Kutha Perumal Rajali v. The Secretary of State for India I.L.R. (1907) Mad. 245, the decision in Chidambara Mandarayan y. Singaram Second Appeal No. 186 of 1903, was quoted with approval and its principle was explained as being that a benamidar's suit is equivalent to a suit by an agent of an undisclosed principal. If a mortgagor can successfully resist a suit brought by the beneficial owner of the bond on the ground that he is not the person named in the bond as mortgagee, it is difficult to see on what grounds he could also be successful against the ostensible owner of the legal estate when the real owner holds back. In case of dispute the remedy would be to join the person alleged to be the real owner as a party, so that he might be bound by the decision. If the benamidar can sue upon the bond there is no reason why he should not assign his right of suit to another for proper consideration. In this case, however, there is a further difficulty. Both the lower Courts have found that the transfer to the plaintiff by Rangaswamy Mudali, the benamidar, was not a bona fide transaction.
2. The Subordinate Judge gives as one of his reasons for this finding that the transfer was made on the very date upon which the second defendant sued to recover the consideration of the pro-note from the real mortgagee. If he meant that the transaction was one in fraud of creditors, it must be set aside in a suit framed for that purpose. So far as the parties to this suit are concerned it is sufficient that Rangaswamy Mudali says he transferred his title to the plaintiff and received consideration for the transfer. His act must be taken as operating to pass whatsoever title he had to sue the mortgagor and I have held above on the point of law that he had a title to sue as mortgagee though he was a benamidar.
3. I agree therefore that the lower Court's decree must be reversed and a decree passed for the plaintiff.
Seshagiri Ayyar, J.
4. Both the Courts below have found that the plaintiff's assignor was only a benamidar in respect of the mortgage sued on. We see no reason to differ from this conclusion. The further question whether a benamidar can sue in his own name on the mortgage is not free from difficulty.
5. There is only a thin line of demarcation between a benamidar and an agent or trustee. The element of confidence in the ostensible owner exists in all the three cases. In the case of an agent, the law gives a qualified right of suit to him. See Section 230 of the Contract Act. In the case of a trustee, the law recognizes him alone as entitled to deal with the outside world, because the legal estate vests in him; and until discharge he represents that estate: The case of a benamidar is slightly different. He is not the legal owner because although from the outset he is expected to screen the real owner from the public, he is to be only the alias of the latter, until he chooses to reveal himself as the person entitled. Such an attitude is insufficient to create a relationship of principal and agent either.
6. In this is view of his status, the question is whether he should be allowed to sue in his own name. The Judicial Committee of the Privy Council apparently held that he can sue to recover debts; Gopeekrist Gosain v. Gungupersaud Gosain (1854) 6 M.I.A. 53. In regard to negotiable instruments, it was held in Subha Narayana Vadhiyar v. Ramaswami Aiyar I.L.R. (1907) Mad. 88 that he alone was competent to maintain a suit. An extension of this principle was made in Sirasankaran Pillai v. Panchumi Kesiyar : (1898)8MLJ302 , where he was held entitled to sue for a debt due on a simple bond: A still further inroad upon the rights of the real owner was made in Sree Raja Datia Venkata Suryanarayana Jagapathiraju v. Goluguri Bapiraju I.L.R. (191 ) Mad. 143. In that case it was held that a benamidar can sue to set aside a sale. It may here be mentioned that an attempt to bar his right in all cases of suits relating to immovable property in general did not meet with approval in Madras. See observations in Kuthaperumal Rajali v. The Secretary of State for India I.L.R. (1907) Mad. 245. None the less it was held that he is not entitled to sue for rent: Kuppu Konan v. Thirugnana Sammandan Pillai I.L.R. (1908) Mad. 481. Suits in ejectment have been regarded as outside his rights; Kuthaperumal Rajali v. The Secretary of State for India I.L.R. (1907) Mad. 245.
7. As regards the other High Courts, in Allahabad the benamidar is allowed to sue on the mortgage: Parmeshwar Dat v. Anardan Dat I.L.R. (1915) All.. 118. A suit in ejectment is also allowed by that High Court: Nand Kishore Lal v. Ahamad Ata I.L.R. (1896) All. 69. In Calcutta, notwithstanding Munshi Basiruddin Ahmed v. Mahomed Jalish Patwari 12 C.W.N. 409, the later decisions concede his right to sue on a mortgage: Hara Gobinda Saha v. Purna Chendra Saha (1910) 11 C.L.J. 47 and Kirtibas Das v. Gopal Jiu (1914) 19 C.L.J 193 following Sachitananda Mohapatra v. Baloram Gorain I.L.R. (1897) Calc. 644. But he is not allowed to sue in ejectment: Mohendra Nath Mookerjee v. Khali Proshad Johuri I.L.R. (1903) Calc. 265. In Bombay also, the same view seems to prevail: see Ravji v. Mahadev I.L.R.(1898) 22 Bom. 672 .
8. Probably, it would be more logical to permit the enamidar to sue in all cases, leaving it to the real owner, to his remedies against him in a separate suit. The decisions which apply the rule of res judicata. against the real owners and even permit him to execute a decree obtained by the benamidar are not inconsistent with this view. It may be that suits in ejectment stand on a different footing from other suits. In such suits the legal right of the plaintiff and his right to eject are directly in question. It may be said that the defendant can plead jus tertii. These considerations may not be altogether absent in other suits. However that may be, it is not necessary at present to canvass the correctness of his position in regard to suits for ejectment.
9. I think that prima facie a suit on a mortgage is one to recover a debt, although such a debt is charged on immovable property: consequently, the dictum of the Privy Council in Gopeekrist Gosain v. Gungapersaud Gosain (1854) 6 M.I.A. 53 is applicable to such a suit. It was pointed out in Chidambara Mandarayan v. singaram Second Appeal No. 186 of 1908 that the practice in this Presidency is to permit the benamidar to sue on a mortgage; and that practice is in consonance with what obtains in the other High Courts. A further argument was addressed to us on the finding of the Subordinate Judge that the transfer to the plaintiff by the first benamidar Rengaswami was in fraud of the creditor, the second defendant. Even accepting this finding it is not open to the second defendant to resist the suit without first suing to set aside the transfer: Vide Palaniandi Chetty v. Appavu Chettiar (1917) 30 M.L.J. 565, Under these circumstances we must hold that the plaintiff must be allowed to sue in his own name. The decrees of the Courts below must be reversed and the usual mortgage decree should be passed for the amount sued for. Time for payment will be six months from this date. Each party will bear his own costs throughout.