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(Manchiraju) Venkayya Vs. (Vadalamudy) Venkataramayya and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1930Mad178
Appellant(Manchiraju) Venkayya
Respondent(Vadalamudy) Venkataramayya and ors.
Cases Referred and Rajkeshwar Prasad Narain Singh v. Mahommad Khalilul Rahman
Excerpt:
- - 3. on issue 1 the munsif found that the plaintiff's mortgage was genuine and supported by consideration and on issues 2 and 3 that defendant 2 joined in the suit mortgage as surety for defendant 1 and that though it was clear that on a mortgage like that, the plaintiff could proceed against all or any of the mortgaged properties at his choice it was right as between the defendants themselves to append a direction that the plaintiff should in the first instance proceed against the properties sold by defendant 1 to defendant 5. defendant 5 appealed and the only question before the subordinate judge was whether the direction appended by the district munsif as to the order in which the property should be sold could be upheld......that to be so, i am unable to see how such an obligation could be transferred to the owner of the property sold by the principal debtor so as to involve that property in the liability to be first sold for the debt. even though the purchaser knew that the debt was one for which his vendor was primarily liable, we cannot have such a liability running with the land. it is purely personal; at any rate i have not heard of such a ground adopted as justifying a direction of the kind now given against defendant 5. then it was said that the defendant 5's purchase itself was fraudulent and it was suggested that if i found any difficulty on that point on the record, the case may be sent down for a finding on it.6. i am afraid i can find reason for neither. no one pleaded in the case that defendant.....
Judgment:

Pandalai, J.

1. The dispute in this case is only about a direction given in the decree of the lower Court that the properties sold to defendant 5 must be brought to sale first and those sold to defendant 4 should be sold, if necessary, afterwards. The appellant is defendant 5 and defendant 4 is the real contesting respondent. The suit was brought upon a mortgage Ex. A dated 15th December 1913 executed by defendants 1 and 2 and one Narayanaswami since deceased mortgaging the properties mentioned in the plaint schedule to the plaintiff. On 5th January 1914 defendant 2 alone, one of the mortgagors mortgaged his interest in item 2 of the properties in the former mortgage to defendant 4 who, it has been held, took the mortgage without notice of the former one. Defendant 4 brought a suit upon his mortgage and after decree bought the mortgaged properties himself by private sale on 26th June 1917. Defendant 5 purchased defendant 1's rights in the mortgaged properties by a sale deed Ex. 3, dated 22nd June 1921. In this suit which was brought by the plaintiff to enforce his mortgage of 15th December 1913, defendants 4 and 5 were the chief contesting defendants. Defendant 4's contention was that he had no notice of the suit mortgage at the time of his own mortgage of January 1914, that the plaintiff had been guilty of fraudulent conduct in not disclosing his mortgage and therefore was not entitled to the priority and that as defendant 2 executed the mortgage to the plaintiff only as surety on behalf of defendant 1, the plaintiff should be directed to recover his amount in the first instance from the share of defendant 1 and his brother, the deceased Narayanasami.

2. Defendant 5, contended that he was ready and willing to pay off the suit mortgage but did not do so because the mortgagee, plaintiff's father, had died and as regards the liability of the properties inter se, contended that they should be held proportionately liable. Three issues were framed:

(1) Whether the plaintiff's mortgage was genuine and supported by consideration?

(2) What marshalling rights, if any, defendants 4 and 6 to 9 were entitled to?

(3) To what relief the plaintiff was entitled?

3. On issue 1 the Munsif found that the plaintiff's mortgage was genuine and supported by consideration and on issues 2 and 3 that defendant 2 joined in the suit mortgage as surety for defendant 1 and that though it was clear that on a mortgage like that, the plaintiff could proceed against all or any of the mortgaged properties at his choice it was right as between the defendants themselves to append a direction that the plaintiff should in the first instance proceed against the properties sold by defendant 1 to defendant 5. Defendant 5 appealed and the only question before the Subordinate Judge was whether the direction appended by the District Munsif as to the order in which the property should be sold could be upheld. The learned Subordinate Judge held that the case was not governed by Sections 81 and 82, T.P. Act, because defendants 4 and 5 relied upon sales in their favour and did 'not claim as mortgagees. But the learned Judge held that the Court could even in circumstances not justified by those sections make an order under Order 34, Rule 4 regulating the order for the sale of the mortgaged property, and founding himself upon the fact that defendant 4 when he took his mortgage in January 1914 had no notice of the plaintiff's mortgage of December 1913 whereas defendant 5 when he took his sale deed in June 1921 had notice of the plaintiff's mortgage, made the same direction which the District Munsif had made. The present appeal is by defendant 5 against that direction.

4. A great many decisions have been cited during the argument to show that the direction appended by the lower Court to the decree cannot be sustained by Sections 81, 82 or 56, T.P. Act. It is unnecessary to refer to those decisions because the sections themselves are clear. Section 56 applies only as between a purchaser of one of several properties previously mortgaged and the vendor. This is not that case. Section 81 applies as between mortgagees of the same debtor, the first of whom has got several securities and the second of whom has but some of those securities and advanced loan without notice of the earlier encumbrance. In such a case the later mortgagee is entitled to marshal the securities and to require that the earlier mortgagee shall first proceed against those securities which have not been encumbered in favour of the latter. This is not that case either, except to the extent which I will presently mention. It is this. From the facts stated defendants 1 and 2, who are shown to have been divided from each other prior to the mortgage sued upon, together mortgaged their properties, in which, of course, they must have had their several interests. One of them viz., defendant 2 subsequently mortgaged his interest in one of those items to defendant 4. Stopping there for a moment, it is clear that defendant 4 has no right to marshal the securities against the plaintiff in so far as the plaintiff is a mortgagee from defendant but he is entitled to marshal the securities of his own debtor viz., defendant 2 if in the mortgage to the plaintiff there are other properties than those which were mortgaged to defendant 4. At an early stage of the argument, I suggested that the direction contained in the decree might be right to that extent. The appellant's advocate acceded to it and I think rightly. The respondent's advocate was not content with it; but so far at any rate as concerns defendant 2's property contained in the suit mortgage, if there be any other than those which were mortgaged to defendant 4, it is clear that defendant 4 to the extent to which he was a mortgagee was entitled to marshal them as against the plaintiff. To the extent of defendant 2's own property, the only complication on this topic is that defendant 4 is not the mortgagee himself but has become the purchaser. But there are decisions of which it is only necessary to cite Ramaswami Chetty v. Madura Mill Co. Ltd. [1916] 1 M.W.N. 265, and Rajkeshwar Prasad Narain Singh v. Mahommad Khalilul Rahman : AIR1924Pat459 , to show that even where the mortgages have culminated in sales, the Court may on a consideration of equity extend to the purchaser the right to have the securities which are properly marshallable, first sold in execution. To the extent to which the direction in the decree only covers the properties of defendant 2, I do not think that the appeal deserves to succeed.

5. But defendant 5 is the purchaser from defendant 1 of his interest in the mortgaged property and the main question in this appeal has been whether the direction in the decree can be upheld as against defendant 5 and the properties of which he is the owner. On this point the learned advocate for the respondents has not been able to show me any instance in which a subsequent mortgagee has been allowed to require properties of any but his own debtor to be first sold either by way of marshalling under Section 81 or by way of the exercise of discretionary power to control execution sales under Order 34, Rule 4. The other cases cited before me have been cases of either a second mortgagee or a purchaser, subsequent to a second mortgage, of some property from a man who had first mortgaged those and other properties to a third party and either by way of marshalling under Section 81 or by way of regulating sales under Order 34, Rule 4, the Court has intervened to order that such other properties of the same debtor should be first proceeded against, whether such direction is contained in the decree itself or whether it should be made during execution. The respondent's learned advocate has asked me to say that there are special equities in this case which justify such an order as has been made against defendant 5 though he does not claim from the same debtor as defendant 4. It was urged that defendant 2 joined in the mortgage deed to the plaintiff only as surety for his co-mortgagor, defendant 1 and that a surety would be entitled to ask the principal debtor to pay off the debt in the first instance. The learned Judge has not even referred to the fact that defendant 2 was only a surety. Assuming that to be so, I am unable to see how such an obligation could be transferred to the owner of the property sold by the principal debtor so as to involve that property in the liability to be first sold for the debt. Even though the purchaser knew that the debt was one for which his vendor was primarily liable, we cannot have such a liability running with the land. It is purely personal; at any rate I have not heard of such a ground adopted as justifying a direction of the kind now given against defendant 5. Then it was said that the defendant 5's purchase itself was fraudulent and it was suggested that if I found any difficulty on that point on the record, the case may be sent down for a finding on it.

6. I am afraid I can find reason for neither. No one pleaded in the case that defendant 5's purchase was fraudulent. There was no issue upon it. No doubt the Munsif in trying to support his direction tries to distinguish between the recitals in Ex. 3, the sale deed to defendant 5 of 1921 and the mortgage deed to the plaintiff Ex. A of 1913 and says that the recitals in Ex. 3 appear to be fraudulent. All that need be said is that there was no issue and no contention on that point and the fact that certain discrepancies exist between recitals in two documents executed between different parties at a distance of eight years cannot ordinarily be said to be evidence of any fraud. The learned Judge has made no reference whatever to these observations in his judgment or in any way based it upon the character of the sale deed Ex. 3. It appears to me that the District Munsif not knowing on what grounds to support his conclusion was casting about for one and pitched upon a vague, and futile allegation of fraud which is supposed to cover all manner of legal insufficiency. There is no ground whatever to send the case back upon a point which never arose and on which the appellate Judge has made no observations whatever.

7. The result is that the direction in Clause 4 of the lower appellate Court's decree will be deleted and the following substituted

and that defendant 2's interests if any in the property comprised in the mortgage Ex. A other than the property sold to defendant 4 under Ex. 2, will be proceeded against in the first instance and then if necessary the properties sold to defendant 4 under Ex. 2. This direction to have effect only as between the plaintiff-decree-holder on the one hand and defendants 2 and 4 on the other.

8. The appellant who has substantially succeeded must have his costs here and in the lower appellate Court from defendant 4 who must bear his own in both the Courts.

9. This case having been ordered to be posted for being spoken to this day the Court made the following order:

* * *

10. The order as to costs will stand.


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