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Chinnu Pillai and ors. Vs. Venkatasamy Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in34Ind.Cas.507; (1916)30MLJ347
AppellantChinnu Pillai and ors.
RespondentVenkatasamy Chettiar and ors.
Cases Referred and Dirgopal Lal v. Bolake
Excerpt:
mortgage - property subject to several mortgages--suit for sale by prior mortgagee--puisne mortgagee not made party--decree and court sale--purchaser, rights and libilities of--puisne mortgagee, whether can sue for sale subject to prior encumbrance. - coutts trotter, j.1. in a recent case my brother spencer, j., and i had occasion to consider a question analogous to that which arises for determination here. all the decisions were cited before us, and having regard to their conflicting nature it is not surprising that we had very great difficulty in coining to a conclusion. no judgments were delivered, as the parties came to terms. but during the course of a careful and lengthy examination of cases, i came to the conclusion that venkatagiri aiyar v. sadagopa-chariar 10 ind. cas. 83 : 14 ind. cas. 449 : 22 m.l.j. 129 was in conflict with the full bench decision in mulla veetil seethi v. achutlian nair 9 ind. cas. 513 : 21 m.l.j. 213 : 9 m.l.t. 431 : (1911) 1 m.w.n. 165 and that if the former case was wrongly decided, then.....
Judgment:

Coutts Trotter, J.

1. In a recent case my brother Spencer, J., and I had occasion to consider a question analogous to that which arises for determination here. All the decisions were cited before us, and having regard to their conflicting nature it is not surprising that we had very great difficulty in coining to a conclusion. No judgments were delivered, as the parties came to terms. But during the course of a careful and lengthy examination of cases, I came to the conclusion that Venkatagiri Aiyar v. Sadagopa-chariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129 was in conflict with the Full Bench decision in Mulla Veetil Seethi v. Achutlian Nair 9 Ind. Cas. 513 : 21 M.L.J. 213 : 9 M.L.T. 431 : (1911) 1 M.W.N. 165 and that if the former case was wrongly decided, then Venkata-narasammah v. Ramiah 2 M.P 108 could not stand either. My brother in the judgment which he is about to read and which I have had the advantage of perusing has exhaustively reviewed the cases; and I assent entirely both to his conclusions and the reasoning by which they are reached. Speaking for myself, I think the matter is made plain when two fundamental principles, which I will endeavour to formulate in my own words, are grasped. The first is, that what passes to a mortgagee is a right to sell the mortgagor's interest as it stood at the date of his mortgage, subject only to this, that in his suit he must make all subsequent mortgagees parties if he wishes the sale to be free of their encumbrances. The other principle is, that of any number of mortgagees, the later can always redeem the earlier, but cannot be compelled to do so, and the earlier cannot redeem the later except by consent. Apply these principles to the present case and what is the result? The plaintiffs have a right to sell their mortgagor's interest as it stood at the date of their mortgage. At the date of their mortgage, it was subject to the two prior encumbrances; therefore, they can only sell subject to these encumbrances. The fact that there had been a previous sale by a prior encumbrancer does not affect their rights, as they were not made parties to that suit. In that suit the 2nd mortgagee could have sold the property as it stood at the date of his second mortgage, i.e., subject only to the 1st mortgage, but he did not comply with the condition that in order to effect this he must join subsequent encumbrancers. The result is, as I have said, that the 3rd mortgagee can sell the property subject to the prior mortgages. The prior encumbrancers cannot redeem the later; the later can, but need not, redeem the earlier. It follows that the decree made in this case was right and the appeal must be dismissed.

2. The necessary result of our decision is to dissent from Venkatagiri Aiyar v. Sadagopachariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129 and Venkatanarasammah v. Ramiah 2 M.P 108, and I have considerable difficulty in distinguishing Rangayya Chettiar v. Parthasarathi Naicker 20 M.P 120 from those cases. In my opinion all these ases are inconsistent with the principles embodied in the Full Bench judgment in Mulla Veetil Seethi v. Achuthan Nair 9 Ind. Cas. 513 : 21 M.L.J. 213 : 9 M.L.T. 431 : (1911) 1 M.W.N. 165 and as I am bound by the Full Bench judgment, to which I respectfully give my complete concurrence, I am unable to treat them as authorities binding upon me.

Srinivasa Aiyangar, J.

3. This is an appeal by the 2nd defendant. There were three simple mortgages on certain premises. The plaintiffs' is the 3rd. The 2nd mortgagee sued for sale on his mortgage, obtained a decree and sold the properties; the 2nd defendant is the purchaser at the Court sale. After his purchase he has redeemed the 1st mortgage. To the suit of the 2nd mortgagee the plaintiffs were not made parties. The 2nd defendant's position is, therefore, that of an assignee of the first two mortgages and of the equity of redemption subject to the charge of the plaintiffs. The plaintiffs now sue for sale subject to the two prior mortgages and the question is, whether they are entitled to the relief. The 2nd defendant says that the plaintiffs cannot get a decree for sale subject to the two prior mortgages, but must first redeem them and then bring the properties to sale, unless the 2nd defendant redeems them as the ultimate owner of the equity of redemption; while the plaintiffs insist that they are not bound to redeem, as they are not affected by the previous decree, but are entitled to bring the properties to sale subject to the prior mortgages. The actual decree passed is one for sale free of all encumbrances, unless the 2nd defendant redeemed the plaintiffs. The learned Pleader for the appellants says that, if we decide that the plaintiffs are entitled to a decree for sale subject to the previous mortgages, he is content to leave the decree as it is. The learned Pleader for the appellants raised a further point in appeal which was not raised in the first Court, viz., that he is in a position to prove that the plaintiffs' mortgage was granted when the suit of the 2nd mortgagee was pending, and they were affected by Us pendens. As this point, if allowed, would necessitate a fresh plea and investigation on facts, we have declined to hear him on this point. The only question, therefore, for determination is, whether a puisne mortgagee who is not made a party to a suit for sale by a prior encumbrancer, is entitled to insist on a decree for sale subject to the previous mortgage. The rights and liabilities of a puisne encumbrancer not made a party to a suit for sale by the senior encumbrancer were elaborately discussed and all the cases were reviewed by a Full Bench of this Court and the conclusions arrived at were formulated in the shape of four propositions at the end of the judgment, Mulla Veetil Seeihi v. Achuthan Nair 9 Ind. Cas. 513 : 21 M.L.J. 213 : 9 M.L.T. 431 : (1911) 1 M.W.N. 165. If those propositions are correct the answer to the question in this case must be in the affirmative. The learned Pleader for the appellants, however, contends that these propositions are really obiter and, therefore, not binding on us; that they were so treated in Venkatagiri Aiyar v. Sadagopachariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129; that the present case is on all fours with Cangayam Venkataramana Iyer v. Henry James Colley Gompertz 31 M.P 425 : 3 M.L.T. 397 : 18 M.L.J. 298, which is referred to and not dissented from in the Full Bench case. I may say at once that I do not consider that the propositions of law deduced by the Full Bench from a review of the previous authorities are merely dicta; they are the principles on which the actual decision in the case depended and are binding on us. Further, as I think (if I may say so without presumption) that these propositions correctly lay down the law, I do not think it necessary to discuss the authorities cited therein. The decision in Rangayya Chettiar v. Parthasarathi Naicker 20 M.P 120, which is approved of in the Full Bench case and followed in Congayam Venkataramana Iyer v. Henrp James Calley Gompertz 31 M.P 425 : 3 M.L.T. 397 : 18 M.L.J. 298 on another point, is on all fours with the present case and is conclusive against the appellants.

4. The later case of Venkatagiri Aiyar v. Sadagopachariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129, however, appears to be in conflict with the Full Bench decision and I, therefore, propose to examine it, more especially as there are dicta in some of the cases cited therein which appear to me to be incorrect.

5. Under the Indian practice a mortgagee who sues to realise his security by sale of the mortgaged properties must make all persons, who have acquired an interest in the properties subsequent to his mortgage, parties to the suit, but a puisne encumbrancer need not make prior encumbrancers parties (Order XXXIV, Rule 1, of the Code of Civil Procedure). I do not pause to consider what will be the effect of a covenant not to alienate (pactum de non-aliendo) on the duty of a mortgagee to make subsequent alienees parties. Venkata v. Kannam 5 M.P 184, Shields v. Schiff 124 W.S. 357 . A mortgagee obviously cannot foreclose or sell without making the ultimate owner of the equity of redemption a party and a senior mortgagee cannot, therefore, foreclose and sell merely the interest of a junior encumbrancer in the mortgaged property. If he obtains a decree for sale in the absence of the ultimate owner of the equity of redemption, it had been doubted whether even the plaintiff mortgagee's right passed to the. purchaser (Ghose on Mortgages, page 620). It has, however, been held in America, where the usual decree is for sale, that a junior encumbrancer is not a necessary, though a proper, party to a mortgagee's suit for sale See Jones on Mortgages, Section 13. 4 and 13P5.) Under the Statute in India he is a necessary parly, though if he is not made- a party and a decree is obtained, the decree would not be void, but ineffective to affect the rights of the encumbrancer not joined; and the purchaser in an execution sale held under that decree would be in no better position than if he had obtained an assignment of the rights of the encumbrancers who were parties to the suit and a transfer from the owner of the equity of redemption. The puisne mortgagee, unless he disputes the senior mortgage or its priority, or desires to ascertain the amount due, or redeem or obtain a sale of the mortgaged property free of his encumbrance [which can only be done with his consent, Wickevden v. Raysan (1855) 6 De G.M. & G. 210 : 43 E.R. 1212 : 25 L.J.Ch. 162 : 4 W.R. 39 : 26 L.T. (o.s.) 192 : 106 R.R. 82, should not make a previous mortgagee a party. The puisne mortgagee has the right to bring to sale the property as it stood at the time of his mortgage and that right which is secured to him under Section 67 of the Transfer of Property Act cannot be taken away by a proceeding to which he was not a party. In Moulton v. Cornish 138 N. York 133 : 20 L.R. Annotated 370, decided by the New York Court of Appeals, it was said: 'The right to a judicial sale of the mortgaged property to pay the mortgage-debt is in this State one of the incidents of the mortgage contract; and if the mortgagor is in default, the mortgagee is entitled to the enjoyment of this right unimpaired. It can only be secured to him by a sale, in an action or proceeding to which he is a party; for in all such cases the sale is made for the benefit of all the parties interested, and the proceeds are distributed among them in the order of the priority of their respective liens. The 2nd mortgagee possessed the right to maintain an action upon it for the foreclosure of so much of the equity of redemption as remained in the mortgagor at the time when it was recorded, and for a satisfaction of the debt secured by it, by a sale of the mortgaged premises. This right is so important in these cases that the holder of the mortgage cannot be deprived of it without at the same time, impairing and depreciating the security created by the mortgage. Where it is a 2nd mortgage and the mortgagee is made a party to the foreclosure of a prior mortgage, full effect is given to this power of sale, by means of the sale directed in the action or proceeding which, as we have seen, is made for the benefit of all the parties served with process or notice'. Again speaking of the 1st mortgagee purchaser who sued to compel the puisne encumbrancer (who was not a party to the previous suit) to redeem or to be foreclosed, it was said: 'But she occupies no better position with respect to the defendant than if she had taken a deed from the mortgagor, and an assignment of the other encumbrances, and had gone into possession. As to the defendant, her mortgage is still unforeclosed, and the estate which the mortgagor had when he executed the defendant's mortgage is still subject to its lien. The plaintiff may at any time foreclose her mortgage, as against the defendant, notwithstanding the former defective foreclosure. It imposes no hardship to require her to pursue such course if she wishes to rid the title of the lien of the defendant's mortgage.' As the plaintiff in that suit had not made purchasers of other portion of the mortgaged estate parties to the suit, the Court, after holding that if the plaintiff desired she might be allowed to amend the plaint by making them parties, proceeded to observe: If the plaintiff obtains leave to amend by bringing in all the necessary parties, she may have a decree for a foreclosure of her mortgage as against the defendant, and a sale of the mortgaged premises. This is the extent of the relief to which she is entitled.' I have made this long extract, as I think it expresses precisely what I wish to say. The rights and liabilities of senior and junior simple mortgagees under the Transfer of Property Act are exactly the same as stated in the above opinion. In order to avoid misapprehension I should say that, except in a very few States in America, the theory of the mortgagee being the legal owner is discarded, and foreclosure as understood in English practice called strict foreclosure' is not the ordinary remedy, but the ordinary remedy of a mortgagee is sale which is sometimes called ordinary foreclosure' or ' foreclosure sale,' though in exceptional cases strict foreclosure is awarded. The mortgages referred to are what are known as English mortgages as defined by the Transfer of Property Act. I need hardly point out that in the case of simple mortgages under the Transfer of Property Act sale is the only remedy and the Courts have no jurisdiction to order strict foreclosure in any case.

6. Applying the above principles, the puisne mortgagees in this case, who have made the present owner of the equity of redemption, viz., the 2nd defendant a party, are entitled to a decree for the sale of the security as it. stood at the date of their mortgage, i. e,, the properties subject to the 1st and 2nd mortgages. The fact that the 2nd defendant happens also to be the assignee of the 1st and 2nd mortgagees cannot in any way affect or prejudice the plaintiffs,

7. It is, however, contended that if the senior mortgagee is in fact made a party, though the plaintiff does not seek any relief in respect of the prior mortgages, the plaintiff must redeem; on what principle this argument is based I am unable to see. It will be observed that the plaintiffs have no choice in' the matter of making the 2nd defendant a party and why any action of third parties behind their back should prejudice their rights it is impossible to understand. The case of Cangayam Venkataramana Iyer v. Henry James Colley Gompertz 31 M.P 425 : 3 M.L.T. 397 : 18 M.L.J. 298 is, as pointed out in the Full Bench case, no authority for that position. In that case the plaintiff asked in the alternative for redemption of the previous mortgages and sale. That of course he was entitled to ask, though he was not bound to. The decision proceeded on the basis that as the plaintiff had asked for the relief, though in the alternative, the Court for finally adjusting the rights of all parties can make a decree in that form. If the decision goes further, and was intended to decide that the defendant who happens to be also a prior mortgagee can compel the plaintiff to redeem in the sense that unless he so redeems his suit must be dismissed, I am unable to agree. Even if the defendant had instituted an action to compel the puisne mortgagee to redeem (and no such action can be instituted, as I have said above, without making the owner of the ultimate equity of redemption a party), the only relief which the senior mortgagee can have in default of redemption is sale of the property free of all liens and payment of his mortgages in priority, then payment of the mortgage of the junior encumbrancer and the payment of the balance, if any, to himself as the owner of the equity of redemption. In no case can a prior simple mortgagee extinguish the right of the puisne mortgagee by foreclosure. Sufficient attention has not always been paid to this important fact, when it is said that the junior mortgagee is bound to redeem, or his only right is to redeem or that the senior mortgagee can compel redemption.

8. In the Full Bench case the actual decision was that a senior simple mortgagee who had purchased in execution of a decree for sale against the mortgagor, had no right to recover possession of the property from a puisne usufructuary mortgagee who was not a party to the previous suit. The senior mortgagee had the right to compel the junior mortgagee to redeem, but if he did not, his mortgage cannot be extinguished so as to enble the 1st mortgagee purchaser to obtain possession as if the 2nd mortgage had been satisfied: he might be entitled to sell the property, in which case both his and the 2nd mortgage will have to be paid out of the sale-proceeds. So also in the present case if the 2nd defendant had instituted a suit against the plaintiffs (and he would, I think, be entitled to do so though he had already sued the mortgagor) he could have obtained a decree for sale of the property free of all encumbrances and all the mortgages would be paid out of the sale-proceeds in the order of priority. He certainly cannot have a larger right as a defendant. If he wants to keep the property as purchaser he can only do so by redeeming the plaintiffs.

9. In Venltatagiri Aiyar v. Sadagopachariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129 the 1st mortgagee first sued without making the 2nd mortgagee a party, as he ought to have done, and obtained a decree for sale. The 2nd mortgagee next brought his action for sale and obtained a decree for sale subject to the 1st mortgage. The 1st mortgagee was a party to this suit, but he need not have been made a party.' The mortgagor was a party to both the suits. Both the decrees were executed and the mortgaged properties were purchased by different persons. The question was, which purchaser was entitled to possession as owner. It is to be observed that at the time of the institution of the second suit the 1st mortgagee had not brought the properties to sale, and the mortgagor was still the owner. The 2nd mortgagee's suit was, therefore, properly constituted to entitle him to sell the property subject to the lien of the 1st mortgagee. The 1st mortgagee's suit was improperly constituted and a purchaser in execution of that decree cannot, I think, have a better or larger right than if he was a private assignee of the equity of redemption from the mortgagor during the pendency of a suit for sale against his vendor. I. should, therefore, hold that the purchaser at the sale in execution of the 2nd mortgagee's decree was entitled to the possession of the property as the owner of the ultimate equity of redemption. The purchaser under the 1st decree, who is practically in the position of an assignee of the rights of the 1st mortgagee, may be entitled to bring a suit for sale against the purchaser in the 2nd mortgagee's sale, but the latter would be entitled to the balance of the sale-proceeds after satisfying the 1st mortgage, which shows that the purchaser at the 1st mortgagee's sale does not really acquire the ultimate equity of redemption. This, I think, is perfectly right on principle. Take a case in which the 1st mortgagee obtains a decree for sale without making the 2nd mortgagee a' party and brings the property to sale, which is purchased either by himself or a stranger. If after this the 2nd mortgagee brings his suit for sale, he must make the previous purchaser party; but can obtain a decree for sale, and the purchaser at that sale would be entitled to possession from the previous purchaser. If that would be the result if the purchase had been made before the second suit was instituted, the same result must follow if the purchase was made during the pendency of the second suit. The principle lis pendens would apply. No doubt the purchaser at the first sale, if he buys after the institution of- the 2nd mortgagee's suit, may be entitled to redeem standing in the shoes of the mortgagor, or he may join as a party in the 2nd suit and apply for a sale of the property free of encumbrances or if there be a sale subject to his own first mortgage may claim to be paid the balance of the sale-proceeds after satisfying the plaintiff's 2nd mortgage. His previous purchase by itself does not entitle him to have or to keep possession of the mortgage premises as against the purchaser in the second sale. If the second sale was subject to the 1st mortgage, he can no doubt bring a fresh action for sale against the 2nd purchaser, The doctrine of Us pendens cannot of course affect titles or rights acquired prior to the institution of a suit, nor rights acquired from or through persons not parties to a suit. The difficulty arises from the fact of the mortgagor, as the owner of the ultimate equity of redemption, being a party to two different suits for sale, instituted by the 1st and 2nd mortgagees respectively without making the other a party. But a moment's consideration will show that the right of the 1st mortgagee to sell the equity of redemption is a right to sell it as it stood at the date of his mortgage, which he can enforce only in a proceeding to which the 2nd mortgagee is a party; otherwise the sale at the best can convey to the purchaser only the equity of redemption subject to the 2nd mortgage. The 2nd mortgagee is left free to enforce his security. As the first mortgagee is not a party to the 2nd mortgagee's suit, the right of the purchaser in his sale to sue as a first mortgagee may not be affected, but his right to hold as a purchaser of the equity of redemption would.

10. In the case of Venkatagiri Aiyar v. Sadagopachariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129 and similar observations occur in several other cases) it is said that ' as both of them (i. e., the 1st and 2nd mortgagees) are entitled to bring to sale (the equity of redemption), the first sale puts an end to the mortgagor's interest and conveys it to the purchaser. If, therefore, the 1st mortgagee sells the property, before the puisne mortgagee, then there is nothing for the latter to sell'; but this ignores the fact that the first purchaser purchases it subject to the right of the 2nd mortgagee to sell. The judgment is also vitiated, if I may respectfully say so, by the erroneous assumption that the puisne mortgagee has only a right to redeem in the sense that unless he so redeems, his mortgage-interest becomes extinct. In other words, a simple mortgagee who does not conform to the provisions of the law, by not making a puisne mortgagee a party, becomes entitled to a right of strict foreclosure, a wholly unreasonable result. It is said that 'each mortgagee might go on ad infinitum without making the other a party.' If the view which I have set forth is correct, in the case where the 1st mortgagee had omiited to make the 2nd mortgagee a party and proceeded to sale, the purchaser, whether himself or another, can bring a fresh suit for sale making the 2nd mortgagee a party; or he can as a defendant, when the 2nd mortgagee instituted a suit for sale, insist on a sale of the property free of his mortgage, or if he had not proceeded to sale before the 2nd mortgagee's sale, he can, though not made a party, get the necessary relief by applying for sale free of encumbrances in the mortgagee's suit. If finally a sale takes place in the 2nd mortgagee's suit the 1st mortgagee can again sue or if he sells under his decree, the purchaser can. There cannot be more than three suits at the most and if the 1st mortgagee's action had been properly constituted there cannot be more than one suit. They cannot go on ad infinitum. The principle should be that the purchaser in the properly constituted suit is entitled to the ownership of the properties and if these two suits by the 1st and 2nd mortgagees respectively are both properly constituted, the purchaser in the 1st mortgagee's suit is so entitled.

11. I shall now briefly refer to the cases cited in Venhatagiri Aiyar v. Sadagopachariar 10 Ind. Cas. 83 : 14 Ind. Cas. 449 : 22 M.L.J. 129

12. The first is Venhatanarasammah v. Rainiah 2 M.P 108, which is similar to the principal case. One learned Judge was of the opinion that the 2nd mortgagee's right still subsisted and that the first purchaser took the property subject to the second mortgage which, it was said, can be enforced in a separate suit. The other learned Judge, though he did not express any final opinion, thought that the second mortgagee's right was practically extinguished. Nobody now contends that the latter view is correct. Taking the former, viz., that the 2nd mortgagee can assert his right in a separate suit, there is no indication in the judgment that such right is only a right to redeem, in default of exercise of which the mortgage becomes extinguished. Therefore it comes to this: though the 2nd mortgagee is entitled to bring a fresh suit against the purchaser in the 1st sale to sell the property for the satisfaction of the 2nd mortgage-debt subject to which the first purchaser took (that I think necessarily follows from the Full Bench decision), yet the whole of the proceedings taken by the 2nd mortgagee to realise his security, which proceedings were regularly and properly constituted, in which he obtained the decree which he was entitled to get, viz., the sale of the premises subject to the 1st mortgage, becomes wholly infructuous not owing to any fault of his, but because a purchaser comes into existence pendente lite, whose purchase is in execution of a decree in a suit improperly constituted. I say it with all humility, but I am not able to see either the logic or the justice of it. It may be said that the 2nd mortgagee may apply to be made a party in the 1st mortgagee's suit, so also the 1st mortgagee can make himself a party in the 2nd mortgagee's suit. Further, the 2nd mortgagee may not know of the existence of a suit by the 1st mortgagee, as there is no system of registration of Us pendens here. So far as the 1st mortgagee is concerned, there is generally no excuse for his not making a puisne mortgagee a party, for in a large majority of cases a search of the register of immovea'ole properties would show the existence of all incumbrances, and in the few cases in which mortgages for less than Rs. 100 may be made by delivery of possession, such possession would be sufficient to give notice to the 1st mortgagee. Why then should the 2nd mortgagee or the purchaser in his sale be driven to another suit, when the 1st mortgagee who had omitted to make the 2nd mortgagee a party can and ought to sue again? I am, of course, dealing with the case of two simple mortgages. If the 1st mortgage was an English mortgage and if without negligence the 1st mortgagee obtains a decree for sale without making the 2nd mortgagee a party and there is a sale, the purchaser may in some exceptional cases obtain an order for foreclosure against the 2nd mortgagee in default of redemption, though even in such cases the proper order ordinarily should be sale. [Moulton v. Garnish 138 N. York 133 : 20 L.R. Annotated 370 Though this decision [Venhataiiara-sanimah v. Ramiah 2 M.P 108 had not been dissented from in the Full Bench case, it is really inconsistent with the principles laid down therein and ought not to be followed.

13. The next case is Krishan v. Chadayan Kutti Haji 17 M.P 17. There the 2nd mortgagee set up his rights in certain claim proceedings and there was an adverse order against him. He did not challenge it by a regular suit within the time limited and was, therefore, disentitled to claim his rights as 2nd mortgagee thereafter. The case is also otherwise distinguishable.

14. Rangayya Chettiar v. Parthasarathi Naicher 20 M. 120 is, as I have already said, on all fours with the present case. There, as in this, at the time when the suit of the 2nd mortgagee was instituted, had been a sale in execution of the 1st mortgagee's decree, and the purchaser who became the owner of the ultimate equity of redemption was made a party and a sale of the property subject to the 1st mortgage was directed.

15. Muhammad Usan Rowthan v. Abdulla 24 M.P 171 seems to be ad idem with the case in Rangayya Chettiar v. Parthasarathi Naicker 20 M.P 120 but a contrary conclusion was arrived at. One of the learned Judges who was a party to both the decisions was able to distinguish the previous case; I- confess I do not understand the differences, though as suggested in the Full Bench case the decision in Rangayya Chettiar v. Parthasarathi Naicher 20 M.P 120 probably rested on the interpretation of the decree in the 2nd mortgagee's suit.

16. Akatti Moidin Kutty v. Chirayil Ambu 26 M.P 486 purports to follow the decision in Venhatanarasammah v. Ramiah 2 M. 108 and does not require any detailed consideration; but the actual decision seems to be quite right as the purchaser in the 2nd mortgagee's sale was held to be the owner.

17. The decision in Kutti Chettiar v. Subramania Chettiar 32 M. 485 gives effect to the principle I have formulated, though the decision appears to have been based merely on the priority of sales.

18. The decisions in this Court purport to follow the decisions in Nanack Chand v. Teluckdue Koer 5 C.P 265 : 4 C.L.R. 358 and Dirgopal Lal v. Bolake 5 C. 269. At that time the practice in mortgage suits was not settled, and decrees were executed as if they were mere decrees for money by attachment and sale. The statement in the judgments that the purchaser was holding as a trustee for the mortgagor subject to redemption shows that the previous decrees, in execution of which the sales took place, were mere money decrees, and not decrees for sale in suits, by a mortgagee to enforce his right to realise the security. To a suit on the covenant to pay, none but the mortgagor need be made a party, and if a sale of the equity of redemption is permitted in execution of such a decree it is obvious that the 1st purchaser would be entitled to possession. These decisions are not authorities for the position that in a mortgage sale the 1st purchaser is always entitled to possession.

19. Taking then two simple mortgagees, their rights and liabilities will be as follows:

1. If the 2nd mortgagee sues first, he can, without making the 1st mortgagee a party, sell the property subject to the 1st mortgage; the purchaser will become the owner of the equity of redemption instead of the mortgagor, but subject only to the 1st mortgage as the 2nd mortgage is extinguished, by the sale'. The 1st mortgagee can sue to recover his mortgage-money by sale without making the 2nd mortgagee or the mortgagor a party but only the purchaser. If he wants a personal decree against the mortgagor, he can also be joined in the same suit.

2. If the 2nd mortgagee sues first, he can join the 1st mortgagee and redeem him and sell the property and realise the amount due on both the mortgages.

3. If the 2nd mortgagee sues first, he can join the 1st mortgagee, and with his consent ask for a sale of the property free of all encumbrances. The sale-proceeds will be distributed according to priority.

4. If the 2nd mortgagee sues first without making the 1st mortgagee a party, the 1st mortgagee may in execution of the 1st decree require the property to be sold free' of his mortgage and if the amount due to him is admitted, the Court can order a sale free of all encumbrances.

5. If the 2nd mortgagee sues first without making the 1st mortgagee a party the 1st mortgagee can, while the 1st suit is pending, sue for sale making the 2nd mortgagee and the mortgagor a party, in which case there can be no sale in the first suit and if there had been a sale pending the 1st mortgagee's suit, the purchaser will be affected by Us pendens. He can redeem the 1st mortgagee, in which case there will be no sale in the 1st mortgagee's suit or if there is a sale, can claim the balance of the sale-proceeds after payment to the 1st mortgagee, as both the 2nd mortgagee and the mortgagor must be presumed to have obtained the value of their interests in the property out of the sale-proceeds in the first sale. In this case, the purchaser under the second sale gets the property and is entitled to possession against the 1st purchaser.

6. If the 1st mortgagee sues first, making the 2nd mortgagee a party as he ought, there cannot be a trial of a further action.

7. If the 1st mortgagee sues first without making the 2nd mortgagee a party, the 2nd mortgagee is not affected and can bring his own action for sale making the mortgagor a party, if there had been no sale in the 1st motrgagee's suit or if there had been a sale, making the purchaser a party in his capacity of the ultimate owner of the equity of redemption; and the purchaser in the 2nd mortgagee's execution sale gets a good title to the property. He is not affected by any Us pendens, while any purchaser in the 1st mortgagee's sale would be.

20. I, therefore, think the appeal fails and must be dismissed with costs.


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