1. This appeal is directed against a decree in a suit to enforce a mortgage-security alleged to have been executed, by the first defendant, Udho Prashad, in favour of the plaintiff on the 21st January 1904. The defendants are the mortgagor, the purchaser of the right, title and interest of the owner of the property and the owner herself, who appears to have executed a fictitious conveyance in favour of the mortgagor, the first defendant, on the 25th December 1901. The Courts below have found that the property did not belong to the mortgagor, that, as a matter of fact, it belonged to the third defendant and that the conveyance executed by her was fictitious and not intended to transfer any title. It appears that in execution of a decree held by the mortgagee Janki Prasad, the disputed property was sold on the 2nd December 1903 and was purchased by one Debiram. On the 14th December 1903, the first defendant who was the ostensible owner applied, under Section 311 of the Civil Procedure Code of 1882, for reversal of the sale. Notice of this application was served upon the decree-holder, the auction-purchaser and the judgment-debtor. The case was taken up for trial and, after some evidence had been adduced, the parties came to an arrangement under which the sale was set aside. The applicant Udho Prashad paid Rs. 800 to the decree-holder and Rs. 1,000 to the execution-purchaser. The payment is alleged to have been made on the 20th January 1904 and on the next day, Udho Prashad, executed a mortgage for Rs. 1,800, in favour of the present plaintiffs from whom the sum, said to have been paid to the decree-holder and the auction-purchaser, is alleged to have been borrowed. This is the mortgage which the plaintiffs now seek to enforce. The claim is resisted by the second defendant who, in execution of a decree for money against the third defendant, purchased the property on the 11th May 1907. On his behalf, the title of the plaintiffs has been challenged on the ground that the transaction was fictitious, that no money was, as a matter of fact, paid either to the mortgagee decree-holder or to the auction-purchaser, and it has further been suggested that the mortgage of 1896 was itself fictitious and that nothing was due thereupon. It has also been contended that the plaintiffs have no enforceable title as against the second defendant, first, because the plaintiffs when they accepted the mortgage from the first defendant knew that he had no legal title to the property assigned and that the beneficial owner was the third defendant; and secondly, that the second defendant as purchaser of the right, title and interest of the third defendant at an execution sale is not, like the judgment-debtor, bound by the rule of estoppel.
2. In so far as this last defence is concerned, we may state at once that there is no foundation for it. It was pointed out by this Court in the case of Debendra Nath Sen v. Mirza Abdul Samed 10 C.L.J. 150 at p. 164 : 1 Ind. Cas. 264 at p. 272 where the earlier authorities are reviewed, that a purchaser at an execution sale is bound by the same rule of estoppel as the judgment debtor whose right, title and interest he acquires. This view is in accord with the decision of the Judicial Committee in the case of Mahomed Mozuffer v. Kishori Mohun Roy 22 C. 909 : 22 I.A. 129. The same rule had been laid down by this Court in the case of Baneepershad v. Baboo Maun Singh 8 W.R. 67 and has been recognised in two recent cases, namely. Prayag Raj v. Sidhu Prasad Tewari 35 C. 877 and Radha Kant v. Ramananda 16 C.W.N. 475 : 13 Ind. Cas. 698 : 15 C.L.J. 369 : 39 C. 513. We must take it, therefore, that the position of the second defendant is precisely the same as that of the third defendant whose right, title and interest he has purchased at the execution sale.
3. The question in controversy between the parties thus is, whether Tetarbutty, the real owner, is in a position to resist the claim of the plaintiffs. Now if it be assumed that the consideration specified in the mortgage was, as a matter of fact, paid by the plaintiffs to the first defendant for reversal of the sale and was applied for that purpose, there can be no room for controversy that the third, defendant would be bound by the mortgage. As already stated, the application to set aside the sale was made by the ostensible owner the first defendant. Notice of this application was given to the then decree-holder, the auction-purchaser and the judgment debtor, the present third defendant. The judgment-debtor did not oppose the application nor question the right of the applicant to have the sale cancelled. It must be assumed, therefore, that even if the application was not in the first instance made with her knowledge Or assent, she subsequently approved of the course adopted by the ostensible owner. On the basis of that application, of which she had full notice, the sale was ultimately set aside. In other words, she accepted the benefit which was conferred on her; and her property which had been sold and irrevocably lost was restored to her. Under these circumstances, she would not be entitled to question the validity of the mortgage, if, as a matter of fact, the mortgage-money was advanced by the plaintiff to the mortgagor (her benamdar) and was applied by the latter for the restoration of her property. Upon, the question of fact, whether the plaintiffs had advanced the consideration recited in the deed and whether it was applied for reversal of the sale, the District Judge has, however, come to a finding which cannot be sustained. He assumes that the Subordinate Judge has found on the evidence that the first defendant really executed the bond and that the mortgagees paid Rs. 1,000 to the execution purchaser and the balance Rs. 800 to the decree-holder. But the Subordinate Judge, as appears from an examination of his judgment did not come to any such finding. On the other hand, the Subordinate Judge appears to have entertained grave doubts about the bona fides of the transaction. We observe that the District Judge has quoted extracts from the judgment of the Subordinate Judge which leave out important qualifying passages and do not represent what the Subordinate Judge actually stated. The District Judge was also in error when he said that the findings of the Subordinate Judge could not be questioned before him because no cross-appeal had been filed against those findings. But it was not necessary for the respondent to prefer any cross-objections against the findings in question, even if it be assumed that the findings were against them. They were entitled to support the decree of the Subordinate Judge on any ground which might appear on the face of the record; so that, even it the Sub-ordinate Judge had found upon this question against them, they would have been entitled to satisfy the District Judge that the findings were erroneous and contrary to the weight of evidence. We must take it, therefore, that the District Judge has not found whether the consideration mentioned in the mortgage-bond was paid by the plaintiffs to the first defendant and applied by him for the reversal of the sale. This, in fact, is the vital point in the case, and we regret to find that the District Judge should have dealt with this fundamental question in the case in such an unsatisfactory manner. On the other hand the District Judge has dealt with the question of subrogation, which was not raised in the Court of first instance, and, so far as we can gather from the materials placed before us, does not arise between the parties.
4. The result is that this appeal must be allowed, the decree of the District Judge set aside and the case remanded to him for the decision of the question specified in this judgment, namely, whether the plaintiffs advanced the consideration money mentioned in the mortgage-bond or any portion thereof to the first defendant and whether the sum if advanced, was paid by the first defendant to the decree-holder and the execution purchaser for reversal of the sale. If this question is found in favour of the plaintiffs, they will be entitled to a decree. If, on the other hand, it is found against them, the suit will stand dismissed. The costs of this appeal will abide the result.