1. This is an appeal by the plaintiff in a suit claiming declaration of title and possession of certain properties against the judgment of the Subordinate Judge in favour of the defendant.
2. The property in question was sold on September 17th 1901 in execution of a decree for arrears of rent and was bought by the appellant, the rent suit having been commenced in June 1900.
3. Previous to the bringing of the rent suit, a suit had been brought against the tenant on a mortgage and on May 14th, 1900 a mortgage decree had been made.
4. The property was brought to sale under this decree in 1904, and was purchased by the mortgagee (respondent in the present appeal) who obtained possession in August 1904.
5. The appellant served, a notice on the respondent under Section 167 of the Bengal Tenancy Act, annulling the encumbrance,--but the respondent contends that the encumbrance having been merged in a decree of the Court in the mortgage suit the appellant has no power to annul it under Section 167 and relies on a decision in Akhoy Kumar v. Bijoy Chand 29 C. 813.
6. For the appellant it is contended that his rights could not be affected by the mortgage granted by the tenant, that the rent was a first charge on the property, that he could annul any lien which the tenant purported to create in priority to the rent, and that as he was no party to, and had no notice of the mortgage suit he was not bound by the decree, and has not lost his right to annul the lien under Section 167.
7. For the respondent it is contended that the sale at which he purchased was held subject to the mortgage decree in the suit of 1900 and that the mortgage not having been annulled before the decree was made it was too late for the appellant to seek to annul it under Section 167.
8. The question really resolves itself into one of priorities, and I think it is clear that the landlord's charge on the land for rent is prior to the charge created by the tenant in favour of the mortgagee.
9. By Section 65 of the Bengal Tenancy Act the arrears of rent are made a first charge on the holding. Had the mortgagee therefore proceeded to execute his mortgage decree of May 1900 before September 1901 he could have only sold subject to the charge created by law in favour of the landlord for the arrears of rent. He did not do this but waited till 1904 when he sold under his mortgage decree. In my opinion he was then 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 very similar to that of a first mortgagee.
10. By Section 73 of the Transfer of Property Act when property is sold for arrears of rent subject to a mortgage the mortgagee is entitled to enforce his mortgage against the surplus purchase money, if any, and that is the position of the respondent in the present case.
11. The mortgagee cannot by postponing the execution of his decree acquire greater lights than he would have had if he had executed it prior to the sale for arrears of rent. If he had acted promptly he might have sold subject to the arrears of rent. If he had executed his decree before the property was sold in execution of the rent decree, he might on paying off the rent decree have purchased the mortgaged property free of encumbrances.
12. He failed to take either of these courses.
13. I think, therefore, that the purchaser at the sale in execution of the rent decree took the property free of encumbrances, and is entitled to possession.
14. The result is that the appeal must be allowed with costs.
15. I agree with, my learned brother that the purchaser in execution of a rent decree has priority over the purchaser in execution of a mortgage decree. I, therefore, agree that the appeal should be decreed.