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Mulla Veetil Seethi Kutti Vs. Korambath Paruthooli Achuthan Nair and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in9Ind.Cas.513
AppellantMulla Veetil Seethi Kutti
RespondentKorambath Paruthooli Achuthan Nair and anr.
Cases ReferredNagammal v. Venkatagiri Aiyar
Excerpt:
mortgage - prior and puisne mortgagees, relative rights of--right of puisne mortgagee not restricted to redeeming prior mortgage--right of puisne incumbrancer to bring property to sale--purchase by first mortgagee in execution of his decree--suit for possession or in the alternative for money--whether puisne mortgagee entitled to possession subject to redemption by second mortgagee. - - 'a posterior hypothecatee is generally not permitted to sell the hypotheca without the consent of the prior one, unless the prior one's claim will be satisfied by the sale' section 354. in ramu nathan v. ' lower down in the same page he says 'i think the court must rest satisfied with making that which would have been the ordinary form of decree before the statute and decreeing simply foreclosure and not.....1. the order of reference in this case states the following question for the decision of the full bench. 'whether a first mortgagee who has purchased the mortgaged property in execution of a decree on his mortgage and sues for possession, or in the alternative for the recovery of his money, is entitled to a decree for possession subject to redemption by a puisne mortgagee with possession who was not a party to the suit by the first mortgagee?'2. our answer is in the negative. there are conflicting decisions of this and the other indian high courts on the question which it is impossible to reconcile. the source of the difficulty seems to lie mainly in arriving at a definite conception of the rights of the second mortgagee. section 60 of the transfer of property act lays down the right of.....
Judgment:

1. The order of reference in this case states the following question for the decision of the Full Bench. 'Whether a first mortgagee who has purchased the mortgaged property in execution of a decree on his mortgage and sues for possession, or in the alternative for the recovery of his money, is entitled to a decree for possession subject to redemption by a puisne mortgagee with possession who was not a party to the suit by the first mortgagee?'

2. Our answer is in the negative. There are conflicting decisions of this and the other Indian High Courts on the question which it is impossible to reconcile. The source of the difficulty seems to lie mainly in arriving at a definite conception of the rights of the second mortgagee. Section 60 of the Transfer of Property Act lays down the right of the mortgagor to redeem the mortgage. Section 75 of the Act gives every second or other subsequent mortgagee the same rights as against the prior mortgagee as the mortgagor has against him as regards the redemption, foreclosure or sale of the mortgaged property. As the mortgagor is entitled to redeem the first mortgage, the second mortgagee is likewise entitled to redeem the first. As regards foreclosure and sale, they are the rights of the mortgagee and not of the mortgagor though when a decree for foreclosure or sale is made, any rights that the mortgagor may have in the carrying out of the foreclosure or sale, may also be claimed by the second or other subsequent mortgagee. But has the second mortgagee any other right than that of redemption? The section simply says that whatever rights he may have against the mortgagor he will have them against encumbrancers subsequent to himself in date. But what are the rights of the puisne mortgagee against his mortgagor over and above his right of redemption of the prior mortgage? Has he the right to bring to sale the equity of redemption of his mortgagor and has he the right of foreclosure? Discussing the rights of mortgagees Hunter says in his Roman Law, page 537: If the same thing has been hypothecated successively to several persons, only the first of them has the power of sale, unless a subsequent creditor has put himself in the place of the first.' That is to say, it is open to the second mortgagee to redeem the first mortgage and then ask for the sale of the mortgaged property standing in the shoes of the first mortgagee. But otherwise he has no independent right of sale of the equity of redemption of his mortgagor. Dr. Mackeldey in his hand-book of Roman Law says on the authority of the Code and the Digest: 'A posterior hypothecatee is generally not permitted to sell the hypotheca without the consent of the prior one, unless the prior one's claim will be satisfied by the sale' Section 354. In Ramu Nathan v. Subbaraya Mudali 7 M.H.C.R. 229 Holloway Officiating Chief Justice, and Kindersley, J., speaking of the second mortgagee say 'Dernburg justly observes that the subsequent mortgagee gets all to which he is entitled when he is allowed to redeem the prior mortgagee.' This statement of the view of the Continental Jurist is in accordance with the strict English notion of the equity of redemption. The property mortgaged passes absolutely at Common Law to the mortgagee. The legal effect of the forfeiture on breach of the condition could not be altered at Common Law but it was relieved against in equity. Thus, the mortgagor had an equity to redeem. Any transferee of that equity, as a second mortgagee, is entitled to the same equity. But the second mortgage of the mortgagor's equity to redeem with rights of sale and foreclosure must at first sight seem anomalous. But when the equity of the mortgagor is itself recognised as an estate see Lord Hardwick in Carborne v. Scarfe 2 W.L. and Tud. P. 9 there can be no difficulty in a mortgage of that estate attended with rights in the mortgagee, similar to those of the first mortgagee. A fortiori where both mortgagee and mortgagor have legal estates as in this country. But sale of the mortgaged property even at the instance of the first mortgagee was not ordered in England as a matter of course. See the judgment of Lord Cairns in Heath v. Crealock 10 Ch. A p. 32 : 44, L.J. Ch. 157 : 31 L.T. 650 : 23 W. 11. 95. He said 'it appears to me that under the recent Act of Parliament, 15 and 16 Victoria, Chapter 86, Section 48, it is within the discretion of the Court in a mortgage-suit, whether a foreclosure or sale shall be ordered. But a sale is not to be ordered as of course.' Lower down in the same page he says 'I think the Court must rest satisfied with making that which would have been the ordinary form of decree before the statute and decreeing simply foreclosure and not a sale.' A sale at the instance of the second mortgagee was a matter of more difficulty. In a suit by a second mortgagee of a moiety who applied for a sale (in his suit for foreclosure) the conduct of the sale was given to the first mortgagee of the entirety as more convenient and less expensive Hewitt v. Nanson 7 W.R. 5. The suit evidently in that case was not for sale subject to the first mortgage but free of all encumbrances. At the request of the second mortgagee in a suit by the first mortgagee an order was made for sale of the property first mortgaged or foreclosure in case sale should not be effected: See Saul v. Pattinson 55 L.J. Ch. 831 : 54 L.T. 670 : 34 W.R. 561. We have not been able to find any instance in England of a suit for sale by the second mortgagee of the mortgagor's equity of redemption merely; leaving the first mortgage unaffected. In Jones on Mortgages American authority is cited (section 1580) for the view that in case the prior mortgage is not due a puisne mortgagee may have a decree for the sale of the equity of redemption subject to the prior mortgage; but if it is due he may redeem and sell the whole estate. A junior mortgagee is entitled to bring in a bill to foreclose the equity of his mortgagor. The statement in Jones, Sections 1395 and 1431, that after foreclosure or sale by the first mortgagee the second mortgagee who had not been joined in the suit of the first has only the right to redeem is only explicable with reference to the English and American practice of not decreeing sale of the equity of redemption at the suit of the second mortgagee. But Section 25 of the Conveyancing and Law of Property Act, 1881, says 'any person entitled to redeem mortgaged property may have a judgment or order for sale instead of for redemption in an action brought by him either for redemption alone or for sale alone or for sale or redemption in the alternative.' This section distinctly recognizes the right of a second mortgagee to sue for sale but even this does not seem to warrant the sale of his mortgagor's mere right of redemption. The definition of a mortgage in the Transfer of Property Act includes the transfer of an interest in the equity of redemption to the second or other subsequent mortgagees and such second mortgagee is entitled to the same rights of sale of the interest mortgaged to him as the first mortgagee himself has under Section 67 or 68. Section 96 which speaks of a sale subject to a prior mortgage contemplates a suit for sale by the second mortgagee without his being confined to the mere right to redeem the first mortgage. Whatever doubts there may arise on this question under the Transfer of Property Act, Order XXXIV of the present Code of Civil Procedure sets the matter at rest by the explanation to Rule 1, which runs as follows: 'A puisne mortgagee may sue for foreclosure or for sale without making the prior mortgagee a party to the suit.' It was held by the Allahabad High Court before the enactment of the present Code by a Full Bench, in Mata Din Kasodhan v. Kazim Husain 13. A. 432 that a second mortgagee's only remedy was a suit for redemption and that he could not sue for sale. It was also held by the Bombay High Court in a series of cases that a sale under a decree on the first mortgage carried with it all' rights of the mortgagor as at the date of the mortgage even though the second mortgagee was no party to the suit (see Jones on Mortgages, Sections 1654 and 1656). These two principles are the foundation for many of the later judgments of those Courts as regards the rights of a puisne incumbrancer with reference to the prior mortgagee who had sold in execution of a decree the property of the mortgagor without having made the puisne incumbrancer a party to the suit. But so far as this Court is concerned, the uniform practice has been to recognize the right of the second mortgagee in case there was a personal covenant in his favour to sue for sale notwithstanding the contrary note sounded by the decision in Ramu Naikan v. Subbarnya Mudali 7 M.H.C.R. 229. In Vencatachella Kandian v. Panjanadien 4 M. 213; Gangadhara v. Sivarama 8 M. 246.; Rangayya Chettiar v. Parthasarathi Naicker 20 M. 120 and in numerous cases unreported, this Court has consistently recognised the right of the second mortgagee to sue for sale subject to the prior mortgage. The Full Bench of the Calcutta High Court has also taken the same view: See Debendra Narain Roy v. Ramtaran Banerjee 30 C. 599.

3. The question then arises whether the right of the second mortgagee can in any way be affected by proceedings to which he was not a party. On general principles it seems impossible to understand how a person can be affected by proceedings to which he was not a party or in which he was not in some way represented. The Privy Council has definitely pronounced upon this point. In Brojanath Kondoo Chowdry v. Khelut Chunder Ghose 14 M.I.A. 144 : 8 B.L.R. 104 : 16 W.R. 33 where a foreclosure decree was first obtained by the first mortgagee without making the second mortgagee a party, Lord Justice James delivering the judgment of the Privy Council said 'it is difficult to see how a right of entry or cause of action against one man, in respect of his property, could be either lost or gained by proceedings against another man in respect of his property. He approved of the decision of the High Court on the point by saying 'it was, of course, held by the High. Court that he was in no wise affected by those proceedings.' In Umes Chander Sircar v. Zahur Fatima 18 C. 164 : 17 I.A. 201, the same tribunal observed with reference to the rights of a subsequent mortgagee, at page 179 as follows: 'It was indeed argued by Mr. Mayne that the sale in 1879 (at the suit of the prior mortgagee) had the effect of shutting out all puisne incumbrances. But their Lordships consider that the right view on this point has been taken in both the Courts below. Persons who have taken transfers of property subject to a mortgage cannot be bound by proceedings in a subsequent suit between the prior mortgagee and the mortgagor to which they are never made parties.' These observations are not confined to the mere preservation of the subsequent mortgagee's right to redeem the previous mortgage. If the rights of the puisne incumbrancer who was not made a party to the suit of the prior mortgagee are preserved in every respect, the right to sue for sale of the equity of redemption which existed previous to the suit by the first mortgagee must continue to remain after it. Again, in Gobind Lal Roy v. Ramjanam Misser, 21 Ck. 70 : 20 I.A. 165, Lord Macnaghten says at page 79: 'As regards the plaintiffs' title to sue, the learned Counsel for the appellant pointed out that the plaint, on the face of it, showed that the property on which the plaintiffs claimed to have a charge had been sold before the date of the Government sale, under a decree obtained by a prior mortgagee against the mortgagor and they insisted that such a sale has the effect of displacing puisne mortgagees and leaving them with nothing but a claim against the surplus proceeds, if any. That, however, in their Lordships' opinion, is not the necessary consequence of a sale under a decree obtained by a prior mortgagee against the mortgagor in a suit to which the puisne incumbrancers are not parties.' Their Lordships recognised the right of the puisne incumbrancer to proceed against the land, though it must be admitted that in that case the purchaser under the prior mortgage decree did not dispute it. In Maung Tha Hnyin v. Maung Mya Su 37 CK. 239 : 5 Ind. Cas.151 : 14 C.W.N. 214 : 11 C.L.J. 166 : 12 Bom. L.R. 234 : 20 M.L.J. 153, where the dispute was between two sub-mortgagees of a mortgage-interest and the plaintiff was in point of time the second sub-mortgagee (by deposit of title-deeds) the Privy Council observed that his rights, whatever they may have been, remained unaffected by the decree' in the suit of the first sub-mortgagee to which the second was not a party: see pages 248 and 250.

4. The authority, therefore, of the Judicial Committee is clear for the position that whatever rights the second mortgagee as such may have at the date of his mortgage whether to possession (if his mortgage be one with possession and the previous mortgage without it) or to sale or foreclosure under Section 67, such rights remain altogether unaffected by the suit of the first mortgagee without the second being a party to it and the sale in execution of his decree. He has also the right to redeem the prior mortgage if it has not been extinguished by merger in the equity of redemption. Such merger is practically impossible where the prior mortgagee gets in the equity of redemption by private or public sale, for it must always be for his benefit to retain the priority of his incumbrance and shield himself against the puisne incumbrancer, see Section 101 of the Transfer of Property Act. The rule in Toulmin v. Steere 3 Her. 210 has been definitely abandoned in India since Gokuldoss' case Gokuldoss Gopal Doss v. Rambux Seochand 11 I.A. 126 : 10 CK. 1035 and largely discountenanced in England: Stevens v. Mid-hants Railway and Co. 8 Ch. 1064 : 42 L.J. Ch. 694 : 29 L.T. 318 : 21 W.R. 858; Thorne v. Cann (1895) A.C.11 : 64 L.J. Ch. 1 : 11 RK. 67 : 71 L.T. 852 and Liquidation Estates Purchase Company v. Willoughby (1896) 1 Ch. 726 : 65 L.J. Ch. 486 : 74 L.T. 228 : 14 W.R. 612. Merger on principle is impossible, for the case of the first mortgagee acquiring the equity of redemption when a second mortgage is still outstanding is not one of the rights and correlative obligation coalescing in the same person (see Lindley's Jurisprudence page 75) or of a smaller interest getting absorbed by a larger (see Lindley, Appendix LVII) or of two contiguous interests carved out of property combining to form a larger whole. But if merger there should be notwithstanding, according to the older English notion (see Coote on Mortgages Vol. II, page 1467), while it leaves nothing for the second mortgagee to redeem, it elevates the second mortgagee to the position of first mortgagee enlarging his security. It cannot in any sense cut down the rights of the second mortgagee as they stood at the date of the second mortgage. As we have pointed out already, the first mortgagee preserves his priority in spite of his purchase of the equity of redemption behind the back of the second mortgagee. The second mortgagee may, if he chooses, still redeem the first. But redemption is an equitable claim, or in India a legal right, which he may seek to enforce and not a liability which he may be compelled to discharge. If, therefore, the second mortgagee is not willing to redeem the first mortgage after the purchase of the equity of redemption of the mortgagor in Court or private sale by the first mortgagee, he cannot be deprived of his original right to institute proceedings for sale or foreclosure (whatever it was) under Section 67 as second mortgagee.

5. In examining the multitude of cases as regards the rights of first and second mortgagees after suit and sale by the one or the other or by each independently without impleading in the suit the representatives of all interests, carved out of the property, it is necessary to bear in mind certain misconceptions which have arisen in the course of the growth of the law of mortgages in this country, for otherwise we shall run the risk of misunderstanding and misapplying the cases. It was supposed at one time that a first mortgagee, selling in execution of a decree on his mortgage obtained in a suit to which the second mortgagee was not a party, succeeded in putting an end to the second mortgage altogether: See 8, B. Shringarpure v. S.B. Pethe 2 Bk. 662; Ali Hasan v. Dhirja 4 AL. 518; Sitaram v. Amir Begam 8 AK. 324 and Muthora Nath Pal v. Chundermoney Dabia 4 CK. 817. A modification of this view was adopted in later cases, namely, that the second mortgage should not be treated as extinguished at least when the first mortgagee had notice of the second mortgage and deliberately omitted to implead that mortgagee as a party defendant; See Muhammad Sami-ud-din v. Man Singh 9 AK. 125; Gajadhar v. Mulchand 10 AK. 520 and Namdau Chaudhri v. Karam, Raji 13 AK. 315. Whatever effect the non-inclusion of the second mortgagee as a party to the suit on the first mortgage might be deemed to have on the maintainability of that suit in case he had notice, it is difficult to see how the second mortgagee could in any wise be affected. And this is the position laid down by the Privy Council cases already referred to.

6. Some of the decisions of the Indian Courts are coloured by the misconception that a second or subsequent mortgagee has no right to sue for sale or foreclosure but can only claim to redeem the prior mortgage and after such redemption sue for sale or foreclosure according to his rights under Section 67 of the Act. We have also to remember the fact that in particular cases the decision has depended upon the circumstance, sometimes expressly noticed and sometimes not, that the prior or subsequent mortgage was a mortgage with possession and that the right to possession was attached to the mortgage, and did not accompany the purchase of the equity of redemption. Oftentimes, the form of the decree has had reference to the pleadings of the parties, the second mortgagee who was not a party to the first mortgagee's suit being content to redeem the first instead of insisting on his right to bring the equity of redemption to sale. Or, the first mortgagee who has brought the equity of redemption in proceedings to which the second mortgagee was not a party has waived his right to sue a second time upon his first mortgage impleading the second mortgagee and has been content to pay off the second mortgage as the purchaser of the equity of redemption.

7. Bearing the foregoing considerations in mind, let us proceed to examine the decided cases. The following Allahabad cases were relied on in the course of the argument on one side, or the other: Namdar Chaudhri v. Karam Raji 13 AK. 315; Hargu Lal Singh v. Gobind Rai 19 AT 541; Madan Lal v. Bhagwan Das 21 AK. 235; Baldeo Singh v. Jaggu Ram 23 Ak. 1 and Ram Prasad v. Bhikari Das 26 AK. 464. With the exception of the first, the remaining cases will be found to have no bearing on the question under consideration, and the judgment in that case vitiated by the erroneous view that a subsequent mortgagee has only the limited right to redeem the first mortgage as laid down in the Full Bench case in Mata Din Kasodhan v. Kazim Husain 13. AK. 432. The first mortgagee who purchased in execution of his decree on the mortgage sued the second mortgagee in possession under his mortgage in ejectment and the Court gave him a decree subject to redemption within a fixed time by the second mortgagee. It was erroneously assumed that the second mortgagee was only entitled to redeem. The purchaser and first mortgagee did not sue for foreclosure, assuming he had the right to it. He did not as purchaser seek to redeem the second mortgage. The second mortgagee entitled to possession under his mortgage had the right to continue in possession until redeemed by the purchaser and could not be ejected by the first mortgagee or compelled to redeem him. But the decision was the logical result of the view taken by the Full Bench in Mata Din Kasodhan v. Kazim Husain 13. AP. 432. The Full Bench cases in Hargu Lal Singh v. Gobind Rai 19 AL 541 and Madan Lal v. Bhagwan Das 21 AK. 235 simply lay down the rule that when there is a mortgage and sale of the equity of redemption by the mortgagor or in execution of a money-decree against him, the mortgagee who in a subsequent suit on his mortgage to which the first purchaser is not a party purchases the mortgaged property cannot affect the rights of the first purchaser. He cannot, on the basis of his purchase, eject the first purchaser. But if he sues to enforce his mortgage again against the first purchaser by foreclosure Baldeo Singh v. Jaggu Ram 23 AP. 1 or sale Ram Prasad v. Bkihari Das 26 AK. 464 he is at liberty to do so. Some of the observations in the last two cases may perhaps be open to exception but the decisions themselves are in accordance with true principle. Goverdhanadas v. Veerasami Chetti 26 MK. 537 which seems to be a correct decision on the facts of that case, is quoted with approval as warranting the position that the second mortgagee with possession has only the right to redeem.

8. Passing on to Bombay, we find that although it is not in terms anywhere stated that a second mortgagee is only entitled to sue for redemption but not for foreclosure or sale, it is repeatedly affirmed that the first mortgagee is entitled to sell the property as it stood at the date of his mortgage free from all subsequent encumbrances even if the Subsequent mortgagee was not made a party to his suit on the first mortgage. All that is reserved to the subsequent mortgagee in such a case, according to the Bombay High Court, is a mere liberty to redeem subject to which the purchaser under the decree on the first mortgage has full rights in the property purchased. The decisions in Mohan Manor v. Togu Uka 10 BK. 224 and Desai Lallubhai v. Mundas Kuberdas 20 BK. 390 and the other Bombay cases there cited, clearly express the above view. In both the cases above cited possession was given to the purchaser under the decree on the first mortgage setting aside the right of the second mortgagee to possession under his mortgage and reserving to him a mere liberty to redeem within a time fixed. Hassanbhai v. Umaji 28 BK. 153 does not touch the question of the rights of the second mortgagee. It merely decides that the first mortgagee who has foreclosed without making the second mortgagee a party to the proceeding may redeem him by virtue of the equity of, redemption acquired under the foreclosure. The decision in Radhabai v. Shamrao Vinayak 8 BK. 168, however, cannot be reconciled with the current of authority in Bombay as pointed out by Aston, J. in Hassanbhai v. Umaji, 28 BK. 153 and by Jacob, J. at page 175. Though it seems to stand alone so far as that Court is concerned, the decision appears to be sound in principle. A stranger who purchased in execution of a decree on the first, mortgage sued in ejectment the second mortgagee with possession who had not been a party to the prior suit but the Court gave him only a decree for redemption of the second mortgage on the footing that he was entitled to possession until redeemed. This case, therefore, is an authority which supports the view indicated in our answer to the reference.

9. The following decisions of the Calcutta High Court, namely, Har Pershad Lal v. Dalmardan Singh 32 CP. 891 : 9 C.W.N. 728 : 1 C.L.J. 371; Ganga Das Bhattar v. Jogendra Nath Mitra 5 C.L.J. 315 : 11 C.W.N. 403; Jugdeo Singh v. Habibullah Khan 6 C.L.J. 612 : 12 C.W.N. 107 were referred to by Mr. Ramachandra Aiyar. They support his contention that the first mortgagee who has bought the property in a suit upon the mortgage to which the second mortgagee was not a party is entitled to possession as against him though he (the second mortgagee) had previously obtained possession by a sale under his mortgage and that the second mortgagee is merely entitled to redeem the prior mortgage. It is not easy to reconcile these cases with the principle of the Full Bench decision in Debendra Narain Roy v. Ramtaran Banerjee 30 CL. 599 which held the right of sale of the second mortgagee to be unaffected by proceedings to which he was not a party. It seems to be fairly deducible from that case that if the second mortgagee had bought in execution of his decree the equity of redemption prior to the sale in execution of the decree on the first mortgage his rights must be equally saved and cannot be cut down to a mere right of redemption. The principle of the Privy Council decisions to which reference has already been made is also opposed to these Calcutta rulings. The dissenting judgment of Rampini, J., in Har Pershad Lal v. Dalmardan Singh 32 CK. 891 : 9 C.W.N. 728 : 1 C.L.J. 371, refusing possession to the first mortgagee who purchased in execution against the second mortgagee who had previously bought the property under a decree on the second mortgage is in accord with what appears to be the true principle as to the rights of second mortgagees. It is not easy to understand how the purchasers of the mortgagor's equity of redemption under a private sale were held liable to be deprived of possession by the first mortgagee-purchaser who did not implead those purchasers in his suit. See Mookerjee, J. in Ganga Das Bhattar v. Jogendra Nath Mitra 5 C.L.J. 315 : 11 C.W.N. 403. Such a view would even be opposed to the rulings in Hargulal Singh v. Gobind. Rai 19 AL 541 and Madan Lal v. Bhagwan Das 21 A. 235.

10. We pass on now to the Madras cases. In Venkatanarasammah v. Ramiah 2 MK. 108 it was held that the first mortgagee who was the first purchaser in execution was entitled to possession against the defendant who bought later under his second mortgage. Both mortgages were simple and the Court held that the second mortgagee bought nothing after the sale of the equity in the first mortgagee's suit. (Sea Kernan, J. at page 112). The Court further held that the right of the second mortgagee was not affected though effect could not be given to it in that suit having regard to its particular frame. This is entirely in accordance with two decisions of the Calcutta High Court in Nanack Chand v. Teluckdye Koer 5 CK. 265 : 4 C.L.R. 358 and Dirgopal Lal v. Bolakee 5 CK. 269 where the mortgagee who became first entitled to possession was adjudged it against the other. Akatti Moidin Kutty v. Chirayil Ambu 26 Ml. 486 was a similar decision where the second mortgagee who was the first purchaser was maintained in possession against the later purchaser under the first mortgage. So also was the case of Kutti Chettiar v. Subramania Chettiar 32 Ml. 485 : 4 Ind. Cas. 1077 Section 19 M.L.J. 728. In Vencatachella Kandian v. Panjanadien 4 MK. 213 there was no sale under the first mortgage and the second mortgage was one with possession. The second mortgagee was held entitled to hold possession against a purchaser of the mortgagor's equity of redemption under a money-decree. The case has no bearing on the particular question now under consideration though the remarks of Turner, C.J., on the rights of a second mortgagee to sue for sale are instructive. In Venkata v. Kannam 5 Mk. 184 the second mortgage was with possession. The purchaser under the decree on the first mortgage which was simple sued to eject the second mortgagee. It was held that the suit was liable to be dismissed, but as the second mortgagee who was respondent in the appeal did not object to the direction of the lower Court to redeem the prior mortgage or be for ever foreclosed that was not disturbed: (See page 188). In Rangasamy Naiken v. Komarammal 26 MK. 484 the same decision was pronounced on similar facts. The decision in Sivaraman Chetty v. Kuppumutha Chetty 13 M.L.J. 72 has no bearing on the present controversy. There the second mortgagee who bought nothing under his subsequent decree and sale against the mortgagor after the first mortgagee had bought in execution of his decree was held entitled to redeem the first mortgage which was treated as still in law subsisting. That was the plaintiff's prayer and it was granted. There are a few more cases which, however, require a more minute examination. Perumal v. Kaveri 16 MP. 121 rests on the view which we cannot accept that a sale under the first mortgage causes a merger of the mortgage in the equity of redemption so that the second mortgagee becomes disentitled to sue for redemption of a mortgage which no longer subsists. This case is against the whole trend of authority in India which repudiates the doctrine of merger, at all events since Gokuldoss's case Gokuldoss Gopaldoss v. Rambux Seochand 11 I.A. 126 : 10 CK. 1035. The second mortgagee was usufructuary. The suit brought by him for redemption was dismissed but it was held that he was entitled to remain in possession till he was redeemed. This case is no authority for the respondent's position that the second mortgagee loses his right to possession by the sale under the first mortgagee's decree and has only the privilege of redemption. The learned Judges made no reference to the second mortgagee's right of sale as there was apparently no covenant to pay. The actual decision in Krishnan v. Chadayan Kutti 17 MP. 17 is not in conflict with the true principles as to the right of a second mortgagee. Both the mortgages were usufructuary. The first mortgagee was entitled to possession but the mortgagor gave possession to the second. The first mortgagee having sued, and obtained a decree for sale and sold the equity of redemption was clearly entitled to possession when he sued the second mortgagee in ejectment apart from the question dealt with in the case as to the effect of the order rejecting his claim under Section 278. It is, however, observed at page 20 that all that he (defendant) can ask as puisne mortgagee is that he shall be allowed an opportunity of redeeming and the decisions in Radha Pershad Misser v. Monohur Das 6 CP. 317; Naru v. Galabsing 4 BK. 83 and Radhabai v. Shamrao Vinayak 8 BK. 168 are cited in support of the observation. None of those cases negatives the right of a second mortgagee to sue for sale whether before or after the first mortgagee's decree and sale. It may be the second mortgagee had no right of sale under the terms of his mortgage and as a usufructuary mortgagee he could only seek redemption, the right to possession having gone with the first mortgagee. This decision also does not support the respondent. Bangayya Chettiar v. Parthasarathi Naickar 20 MP. 120 has been already referred to as recognising the right of a second mortgagee to sue for sale contrary to the doctrine in Mata Din Kasodhan v. Kazim Hussain 13. AK. 432. Muhammad Usan Rowthan v. Abdulla 24 MP. 171 turned on the construction of the decree in the suit of the second mortgagee which was expressed to be subject to the rights of purchase under the first mortgagee's decree. Moreover, the first mortgagee being the first purchaser in possession could not be turned out in execution of his decree by the second mortgagee who had merely bought subject to the rights of the first purchaser. The second mortgagee had not obtained a decree for sale of the equity of redemption that is the interest of his mortgagor which had passed to the purchaser under the first mortgagee's decree. Shephard, J., quotes with approval Venkata Narasammah v. Ramiah 2 MP. 108; Nanack Chand v. Teluckdye Koer 5 CP. 265 : 4 C.L.R. 358 and Venkata v. Kannam 5 MJ. 184. Having once sued for sale, making the mortgagor and the purchaser under the first mortgagee's decree parties, the second mortgagee could not sue them a second time for sale. The observation, therefore, that the right of redemption and no other was all that remained to the second mortgagee in the circumstances of the case was perfectly right. No general proposition was laid down that a second mortgagee had a mere right to redeem and after redemption to sell, nor that after the first mortgagee's suit and sale without making the second mortgagee a party the right of redemption was all that could remain in him. Rangayya Chettiar v. Parthasarthi Naickar 20 MP. 120 is not dissented from though the language employed in that case is stated to be open to exception. Mallikarjunadu Setti v. Lingamurti Pantulu 26 MP. 332 decides that a second mortgagee who is not made a party to the first mortgagee's suit for sale cannot apply under Section 310A, Civil Procedure Code, to set aside the sale. It is authority for the position that no interest of his (in which must be included his right to bring the equity of redemption to sale) passes by the sale under the decree of the first mortgagee. Mr. Ramachandra Aiyar relied very strongly on two decisions of this Court, Goverdhana Doss v. Veerasami Chetti 26 MP. 537 and Venkataramana Iyer v. Gompertz 31 MP. 425 : 3 M.L.T. 397 : 18 M.L.J. 298. As regards the first, if the facts are carefully examined there is nothing in the decision which can be invoked in support of the respondent though certain observations are not reconcilable with the principle that the second mortgagee who was not a party to the first mortgagee's suit; remained unaffected in every respect. Mohan Manor v. Tegu Uka 10 BK. 224 and Desai Lallubhai Jethabhai v. Mundas Kuberdas 20 BK. 390 which we have already pointed out as not in accordance with the true principles as to the rights of second mortgagees are cited in this case with approval and the remarks of Shephard. J., in Muhammad Usan Rowthan v. Abdulla 24 MP. 171 are treated as laying down a general rule with reference to the rights of second mortgagees without reference to the particular facts of that case. The facts, however, in Goverdhana Doss v. Veerasami Chetti 26 MK. 537 fully justified the decision in that case. Both the mortgages were usufructuary. The first mortgagee sued first for sale apparently upon a covenant to pay and purchased in execution of his decree behind the back of the second. He now sued the second mortgagee for the amount of his decree and in default for foreclosure. The second mortgagee had apparently no right of sale under his mortgage. The first mortgagee had the right to possession and it could not, therefore, pass to the second. The only remedy left to the second mortgagee was redemption and this was recognised as unaffected by the prior proceedings. Any observations tending towards a limitation of the second mortgagee's rights in all cases to the mere privilege of redemption must be regarded as unsupported by principle or the general trend, of authority in this Court. The decision in Venkataramana Iyer v. Gompertz 31 MK. 425 : 3 M.L.T. 397 : 18 M.L.J. 298 does not appear to us to help the respondent. Indeed it expressly follows the decision in Rangayya Chettiar v. Parthasarathi Naickar 20 MP. 120. The suit itself was by the second mortgagee and a person who had acquired the rights of the first mortgagee and the mortgagor's equity of redemption behind the back of the second was the defendant in the suit. The plaintiff asked for a decree for sale subject to the first mortgage or in the alternative for redemption of the first mortgage. The decision did not negative the right of sale subject to the first mortgage but in view to the alternative prayer to redeem and the right of the purchaser of the mortgagor's equity of redemption it was thought that the better form of decree was to give the plaintiff redemption and a sale of the mortgaged property after redemption of the prior mortgage on failure of the defendant to redeem the plaintiff in his turn. There can be no doubt that this form of decree effectually disposes- of the claim of all parties interested in the mortgaged property. If, instead, a mere decree for sale of the equity of redemption on failure of the purchaser of it to redeem the plaintiff had been made, it would have left the rights of the same defendant qua first mortgagee undetermined. It is certainly a wise rule as far as possible and consistently with the frame of the suit to adjust the rights of all parties interested in the mortgaged property. One more case deserves to be noticed and that is the decision in Nagammal v. Venkatagiri Aiyar 8 M.L.J. 298. There the second mortgagee's suit for sale after the first mortgagee's sale under his decree was dismissed as against the purchaser on failure to redeem the prior mortgage. It seems to us that in case the purchaser of the equity of redemption was not willing to redeem the plaintiff he was entitled to a decree for sale subject to the prior mortgage. There was no reason why that prayer should have been refused when the first mortgagee was not suing the second for foreclosure or sale.

11. On a full review of the decided cases the following propositions appear to be established:

1. A second mortgagee is entitled to the same rights as the first mortgagee with reference to his security having regard to the nature of his mortgage.

2. The purchaser of the equity of redemption after the first mortgage and the second mortgagee both stand on the same footing with reference to their respective rights against the first mortgagee when they have not been impleaded in the suit instituted by him on his mortgage.

3. Those rights are unaffected by the suit of the first mortgagee to which they are not made parties and the decree passed therein and the sale made in pursuance thereof.

4. The purchaser in such a suit, whether it is a first mortgagee or a stranger, does not acquire the rights of the mortgagor as at the date of the first mortgage but only those that subsist in him at the date of the suit.

12. It follows that the question referred must be answered as stated already against the plaintiffs.


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