1. This appeal arises out of a suit by an auction-purchaser of a holding, at a sale for arrears of rent to recover possession of the lands comprised in the holding, from the defendant who had subsequently purchased the same at a sale in execution of a decree upon a mortgage executed by the tenant.
2. It appears that the tenant had mortgaged the holding to the defendant, Bidhumukhi, in 1901. A suit was brought upon the mortgage in 1911 and was decreed by the Court of first instance on the 6th February 1912, and Bidhumukhi purchased the holding in execution of her mortgage-decree on the 19th November 1913.
3. In the meantime, the landlord obtained a decree for arrears of rent against the tenant, and in execution of that decree the holding was purchased by the decree-holder (the plaintiff) on 19th March 1912. He obtained formal delivery of possession on the 17th June 1912, and on the 31st August 1912, served notices under Section 167 of the Bengal Tenancy Act upon the defendants (other than Bidhumukhi) who held the lands as under-raiyats under her.
4. On the 2nd April 1913, an application was made by Bidhumukhi for setting aside the sale, which, however, was dismissed on the 15th December 1913. The present suit for possession was instituted on the 18th May 1914 originally against the other defendants, and Bidhumukhi was subsequently joined as a defendant. A notice was served upon her under Section 167 of the Bengal Tenancy Act on the 15th May 1915 after she had been joined as party to the suit.
5. The Court of first instance held that the incumbrance held by Bidhumukhi had not been annulled within one year from the date of plaintiff's knowledge of the incumbrance and accordingly dismissed the suit. On appeal the learned Subordinate Judge, relying upon the case of Gopi Nath v. Kashi Nath 1 Ind. Cas. 35 : 13 C.W.N. 412 : 9 C.L.J. 234, held that the plaintiffs' purchase would prevail over that of the defendant and that the question of notice upon her did not, therefore, arise and accordingly decreed the suit. The defendants have appealed to this Court.
6. Now, the plaintiff as the purchaser of the holding purchased it with power to annul all incumbrances. At the date of the sale, viz, on the 19th March 1912, the defendant Bidhumukhi had an incumbrance (a mortgage) on the holding. She had obtained a decree upon her mortgage on the 6th February 1912, but we do not think that the mortgage was extinguished by the decree passed upon it. It is true that in the case of Akhoy Kumar Soor v. Bejoy Chand Mohatap 29 C. 813 it was observed by Hill and Brett, JJ., that when a mortgagee of a tenure had enforced his lien and obtained a decree it would no longer remain an incumbrance on the tenure which could be avoided under the provisions of Section 167 of the Bengal Tenancy Act. It appears, however, that three contentions were raised in that case, viz., first, that the sale was not under the Bengal Tenancy Act; secondly, that the notice under Section 167 was not legal, and the application for service of notice having been made more than one year after the date of the sale or the date on which the purchaser had first notice of the incumbrance, was barred by limitation, and thirdly, that after the applicant had sued on his mortgage and had obtained a decree the mortgage lien had been extinguished and had become a judgment-debt which could not be annulled under the provisions of Section 167. The learned Judges observed that it was not necessary to go at length into the first and third contentions, as they considered that the appeal must succeed on the ground of limitation, the application under Section 167 of the Bangal Tenancy Act having been made more than one year after the date on which the purchaser had notice of the incumbrance. There is, however, the observation which runs as follows:
7. 'After, as in this case, the mortgagee had enforced his lien and obtained his decree, it seems difficult to hold that the decree would remain as an insumbrance on the tenure which could be avoided under the provisions of Section 167 of the Tenancy Act.' But if there was no incumbrance after a decree was obtained upon the mortgage, there was nothing to annul and no question of limitation of one year under Section 167 could arise, and yet the case was decided upon the question of limitation, The observation quoted above, therefore, was inconsistent with the decision as, has been pointed out in the case of Banbihari Kapur v. Khetra Pal Singh Roy 13 Ind. Cas. 785 : 38 C. 923 : 16 C.W.N. 259, The case of Ahhoy Kumar Soor v. Bejoy Chand Mohatap 29 C. 813 was referred to by Harington and Brett, JJ., in Gopi Nath v. Kashi Nath 1 Ind. Cas. 35 : 13 C.W.N. 412 : 9 C.L.J. 234, but the decision in the latter case turned upon the question of priorities which we will deal with later.
8. It is well established that a mortgage lien is not extinguished on the passing of a decree upon it. The security is not extinguished till the sale takes place in execution of the mortgage-dearer and the sale-proceeds are distributed in satisfaction of the mortgage-debt. See Bibijan Bibi v. Sachi Bewah 31 C. 863 : 8 C.W.N. 684; Surjiram Marwari v. Barhamdeo Persad 2 C.L.J. 202 at p.214.; Jog Narain Singh v. Badri Das 13 Ind. Cas. 144 : 16 C.L.J. 156 at p. 159 and Basant Kumar v. Khulna Loan Company 28 Ind. Cas. 197 : 20 C.L.J. 1 at p.8 : 19 C.W.N. 1001.
9. The learned Pleader for the respondent, however, contends that the security became extinguished when the sale took place in execution of the mortgage decree and there was no longer any incumbrance which the plaintiff was required to annul. In the case of Banbihari Kapur v. Kheira Pal Singh Roy 13 Ind. Cas. 785 : 38 C. 923 : 16 C.W.N. 259, the learned Judges held that where a mortgagee of a tenure gets a decree and purchases the mortgaged tenure at a sale in execution of his mortgage-decree, and the tenure is subsequently sold again in execution of a rent-decree against the original tenant, it is open to the mortgagor to fall back on his mortgage as a shield against the purchaser under the rent sale when that sale is not free from incumbrances. The learned Judges relied upon the case of Bhawani Koer v. Mathura Prasad 7 C.L.J. 1 at p. 20.
10. In that case the mortgagee of certain shares in four out of seventy-one villages comprised in a revenue paying estate obtained a decree on his mortgage, and at the sale held in execution of the decree purchased the properties mortgaged on the 19th March 1900. On the 20th March 1900 an instalment of Government revenue on the seventy one villages fell into arrears, and a share of the whole estate, including the four villages purchased by the mortgagee, was notified for sale. The purchaser did act pay the revenue, and on the 23rd April obtained a certificate confirming the sale held on the 19th March. On the 6th June 1900, the villages were sold for arrears of revenue, and the purchaser at that sale sued the purchaser at the mortgage sale for possession of the share purchased by the latter. The learned Judges, Brett and Mookerjee, JJ., were of opinion that, although the purchase at the mortgage sale was confirmed before the revenue sale, yet as it was confirmed after default and without any knowledge on the part of the purchaser at the mortgage sale that default had been made, the latter was entitled to rely upon his mortgage and use it as a shield for his protection against the purchaser at the revenue sale. It was accordingly held that the purchaser at the revenue sale purchased the share subject to the incumbrance under Section 54 of Act XI of 1859. That decision, however, was set aside on appeal by the Judicial Committed: See Bhawani Kumar v. Mathura Prasad Singh 16 Ind. Cas. 210 : 40 C. 89: 16 C.W.N. 985 : 23 M.L.J.311 : 12 M.L.T. 352 : (1912) M.W.N. 244 : 14 Bom. L.R. 1046 : 16 C.L.J. 606 : 39 I.A. 228 (P.C.).Their Lordships held that the property mortgaged passed to the mortgagee on the 19th March 1900 when the sale took place, that he became the owner of the property and liable for the revenue which fell due after the date, and that he could not maintain as against himself or as against third parties unconnected with the mortgage transactions upon the property, the position that his mortgage still remained an incumbrance thereon.
11. In that case, however, the mortgage sale took place and the mortgagee became owner of the property before the revenue sale took place. His incumbrance upon the property had, therefore, become 'extinct and lost in the mortgagee's overriding right when he became the complete owner of the lands.' In the present case the sole in execution of the mortgage decree did not take place until after the sale in execution of the rent-decree. The defendant, therefore, had not become the owner of the mortgaged property at the date of the sale held in execution of the rent-decree. But reliance is placed upon certain observations of their Lordships which run as follows:
Furthermore, if the properties, which were the subject of sale, were liable to attachment for sums due from the lands as revenue, and falling into arrear subsequent to the actual date of sale, namely, the 19th March 1900, it was not within the legal right of the mortgages on the one hand to claim as against the mortgagor that the ownership of the property had been transferred, and, at the same time, to claim against the Government, or in respect of third parties unconnected with either mortgagor or mortgagee, that the mortgagor had not transferred the rights of ownership to the mortgagee, but himself remained in the position of owner. For the mortgagee to be permitted to say to the mortgagor that the ownership had been transferred, and to say to an outsider, like the Collector of revenue, that the ownership had not been transferred, is a conclusion not supported by good sense and, in the opinion of their Lordships, they are not forced to it by any canon or rule of law,' and again: 'In their Lordships' opinion it is clearly unsafe to apply considerations as to the rights of prior and succeeding mortgagees to questions like the present. For, in the present case, no question arises as between a first and succeeding mortgagee, and no right or duty emerges with regard to the avoidance of an inequitable priority alleged to arise inferentially by acquisition of the estate.' Their Lordships, however, in the next sentence observed: 'On the 19th March 1900, the crucial date in question, there were no interests of any kind to enter into account or consideration so as to impede the full and complete transfer of ownership of the estate as such. In these circumstances, when the 29th March 1900 was reached, the property which fell then into arrear of revenue and became liable to subsequent sale was the property in fact and in law of no one but the purchaser, namely, the mortgagee.
12. The decision of the Judicial Committee was based upon the ground that the ownership of the property mortgaged had passed completely to the mortgagee before the arrears of revenue fell due and, consequently, before the sale which took place for those arrears; and the observations of their Lordships must be taken in connection with the facts of that case. In the present case, on the other hand, the mortgagee had a subsisting encumbrance at the date of the sale which was held in execution of the rent decree. The case of Bhawani Kumar v. Mathura Prasad Singh 16 Ind. Cas. 210 : 40 C. 89 : 16 C.W.N. 985 : 23 M.L.J. 311 : 12 M.L.T. 352 : (1912) M.W.N. 244 : 14 Bom. L.R. 1046 : 16 C.L.J. 606 : 39 I.A. 228 (P. C), therefore, is distinguishable from the present.
13. The lower Appellate Court relied upon the case of Gopi Nath v. Kashi Nath 1 Ind. Cas. 35 : 13 C.W.N. 412 : 9 C.L.J. 234. In that case, it appears that after a mortgagee had obtained a decree for sale on his mortgage, the landlord of the jote, the subject of the mortgage, brought a suit for rent and gold the jote in execution of a decree obtained therein. Later on, the property was sold in execution of the mortgage-decree and purchased by the mortgagee who took possession, In a suit for possession brought by the purchaser at the rent sale after service of notice on the mortgagee under Section 167 purporting to annul the mortgage, it was held by Harington and Brett, JJ., that the question was really one of priorities, and the purchaser at the rent sale had priority over the purchaser in execution of the mortgage decree. Harington, J., observed that by Section 65 of the Bengal Tenancy Act the arrears of rent are made a first charge on the holding, that the mortgagee of the holding when he sold the holding in execution of his mortgage decree was in the position of a second mortgagee, the property having been already sold in execution by the landlord, who was qua his decree for arrears of rent in a position vary similar to that of a first mortgagee. Brett, J., also was of opinion that the purchaser in execution of a rent-decree has priority over the purchaser in execution of a mortgage-decree. The decision was followed by Brett and Sharf-ud-din, JJ. in Taibatannessa Chowdhurani v. Pravabati Dasi 4 Ind. Cas. 750 : 10 C.L.J. 640.
14. No doubt, Section 65 of the Bangal Tenancy Act lays down that 'rent shall be a first charge.' But the analogy does not go further than that. In the first place, in ordinary mortgage transactions, a prior mortgagee must make the puisne mortgages parties to a suit on the mortgage in order that the sale held in execution of the decree might be binding upon them, but a mortgagee on a holding or tenure is not made a party to a suit for rent by the landlord, and he is not bound to do so, although the rent is a first charge; and the mortgagee cannot bring a suit for redemption or otherwise exercise his right of redemption after the rent sale, on the ground that he was not a party to the rent decree and was not bound by the sale. In the next place, the learned Judges in the two cases cited above do not appear to have considered the provision of Chapter XIV of the Bangal Tenancy Act in determining the rights of a purchaser at a sale for arrears of rent and those of a mortgagee, respectively. Section 159 provides that where a tenure or holding is sold in execution of a decree for arrears due in respect thereof the purchaser shall take subject to the interests defined in the Chapter as 'protected interest', but with power to annul the interests defined in that Chapter as 'incumbrances' provided (among other things) that the power to annul shall be exerciseable only in the manner directed by the Chapter. Section 161 lays down that, for the purposes of Chapter XIV, the term 'incumbrances', used with reference to a tenancy, means (among other things) any lien created by the tenant on his tenure or holding, and Section 167 prescribes that a purchaser desirous of annulling an incumbrance must present an application to the Collector within one year from the date of the sale or the date on which he first has notice of the incumbrance for service of notice on the incumbrancer. So that, notwithstanding that Section 65 provides that 'rent shall be a first charge' on a tenure or holding, the purchaser must take steps a laid down in Section 167 for annulling the mortgage. If he does not do so within the time specified in Section 167, the mortgage remains an incumbrance even though the purchaser at the rent sale may be in the position of a first mortgagee.
15. It is clear, therefore, that if there is a mortgage on the holding which is not annulled by the purchaser within the time limited by Section 167, the tenure or holding continues to be liable for such mortgage and the analogy of first and subsequent incumbrances will not avail the purchaser at the rent sale.
16. As stated above, the incambrance held by Bidhumukhi (the mortgagee) subsisted at the date of the rent sale. The plaintiff as the purchaser at the rent sale took the property subject to that incumbrance. The fact that the mortgagee enforced her mortgage after the date of the rent sale could not affect the incumbrance subject to which the plaintiff purchased at the rent sale. The question whether the incumbrance was extinguished or was subsisting has to be considered, we think, with reference to the date of the rent sale. The plaintiff was, therefore, bound to annul that incumbrance within the time limited by Section 167 of the Bengal Tenancy Act, and, not having done so, the incumbrance still subsists. We do not think, however, that the mortgagee (Bidhumukhi) can claim the right of ownership of the property (by virtue of her purchase) as against the plaintiff. The position of the plaintiff was that of a purchaser of the equity of redemption and he was no party to the mortgage-decree or the sale in execution of which the mortgaged property was purchased by Bidhumukhi. It is open, therefore, to the plaintiff to redeem the mortgage and we think that he may be allowed that relief in the present case. We accordingly direct that, upon the plaintiff's paying off Bidhumukhi, the amount for which the mortgaged property was sold, within two months of the arrival of this order in the Court below the plaintiff will get possession of the property. The defendant will not be entitled to get any interest on the decretal amount and the plaintiffs will not be entitled to get any wasilat. The defendants other than Bidhumukhi claim title under her, and if the plaintiff gets possession against Bidhumukhi he will get possession against the other defendants also. If the said amount is not paid within the period specified above, the decree of the lower Appellate Court will be set aside and the plaintiffs' suit dismissed. The parties to bear their own costs in all the Courts. This order will govern the other Appeal No. 1027 of 1917.