KOWTHA SOORYANARAYANA RAO Vs. SARUP CHAND RAJAJI

JUDGEMENT

(1.) THE facts of this case are somewhat complicated. On 24 -3 -1908, one Kidambi Narasimhacharyulu executed for himself and as guardian of his then minor sons who are defendants 2 and 3 in the present suit a deed of simple mortgage for Rs. 9500 in favour of one Chaturvedula Suryanarayana mostly for the discharge of antecedent debts which he had incurred. The mortgage was to be repaid in 12 annual instalments and it was provided that if default was committed in respect of the first, second and third instalments consecutively the entire amount of principal and interest should then become payable. A receiver appointed in O.S. No. 83 of 1915 on the file of the Subordinate Judge's Court, Bezwada gave three mortgages over the same properties in favour of defendant 1 in the present suit in the year 1918. In 1919 the equity of redemption of the Kidambis in those properties as also their interest in certain other properties were brought to sale in execution of a money decree against them in O.S. No. 69 of 1912 on the file of the District Court of Kistna and were purchased by Pyda China Bama. krishnayya, defendant 4 in the present suit and one Addanki Lakshmanacharyulu who subsequently conveyed his interest to Pyda. The mortgagors having defaulted in the payment of the first three instalments due ufider the mortgage of 1908 Chaturvedula Sooryanarayana filed O.S. No. 32 of 1921 on the file of the Subordinate Judge's Court, Bezwada, to recover the entire amount of principal and interest due under it, the defendants to that suit being the Kidambis and Pyda. Though the suit was filed on 23 -3 -1921, the present defendant 1 who had, as already stated, obtained three mortgages over the same properties in 1918 was for some unknown reason, not made a party to it. On 6 -2 -1922, Pyda executed a sale deed whereby he conveyed his equity of redemption in the hypotheca to Chaturvedula Sooryanarayana for a stated consideration of Rs. 36,000 which represented the amount claimed in O.S. No. 32 of 1921, costs and subsequent interest. The sale deed stated that the vendor roceived the sale amount by way of payment of the mortgage debt. It then recited that "both of us have filed razinama in the Court." The mortgages granted to the present defendant 1 by the receiver in O.S. No. 83 of 1915 were next referred to and it was distinctly provided that the vendee should retain the benefit of the first mortgage as against the subsequent mortgagee. On 8 -2 -1922, O.S. No. 32 of 1921 was dismissed. There is some obscurity as to what exactly happened at the time of its dismissal. Neither party in the present litigation is able to produce a certified copy either of the judgment or of the decree and the only material that is available is an extract from the suits register. It is stated therein that the suit was dismissed "as per adjustment reported in I.A. No. 113 of 1922."

(2.) THE present defendant 1 filed O.S. No. 3 of 1930 in the Court of the Subordinate Judge of Masulipatam on foot of his three mortgages of 1918 impleading amongst others Pyda, the Kidambis and Chaturvedula Venkata Subra -maniam the son of Sooryanarayana who had died in 1929. Chaturvedula Venkata Subra -manyam was defendant 6. By the time, O.S. No. 3 of 1930 came on for hearing Pyda's sale . was held to be one brought about in furtherance of a scheme to defraud the creditors of the Kidambis in a contest which arose between Pyda and an unsecured creditor of the Kidambis. In the judgment in O.S. No. 3 of 1930, Ex. P -7, it is mentioned that it was stated on behalf of the plaintiff therein, i.e., the present defendant 1 that Pyda's sale had been set aside since the institution of the suit. Defendant 6 would appear to have put forward the sale in his father's favour by Pyda on 6 -2 -1922, but in view evidently of the fact that Pyda's sale was itself declared to be invalid, no attempt was made on behalf of defendant 6 to prove the sale he was relying on. The priority of defendant 6's mortgage having been conceded by the plaintiff's pleader, the decree passed in O.S. No. 3 of 1930 provided that the hypothecated properties should be sold "subject to the prior mortgage of defendant 6 dated 24 -3 -1908." The sale proclamation in O.S. No. 3 of 1930 also stated that the hypotheca was; being sold subject to the mortgage of 1908; but a remark was added that it was executed fraudulently and without consideration." The plain -tiff -decree -holder in O.S. No. 3 of 1930 himself purchased the hypotheca in court auction and the sale certificate issued in his favour again mentioned that the sale was subject to the mortgage of 24 -3 -1908. He applied for possession under Order 21, Rule 95, Civil P.C., notwithstanding that the property was in the possession of tenants and delivery is said to have been given to him on 13 -5 -1935. It is not suggested that the tenants were turned out of possession but in view of the later proceedings, it is unnecessary to consider the validity or effect of this' delivery which is said to have been given to him. Mean -while, Chaturvedula Venkatasubramanyam was adjudicated insolvent in I.P. No. 24 of 1934 and the Official Receiver in whom the insolvent's estate was vested and who was not made a party to the application of the auction purchaser (present defendant 1) in O.S. No. 3 of 1930 under Order 21, Rule 95 succeeded in obtaining possession of the lands in Fasli 1344 (1934 -35). This led to certain petitions filed by the present defendant 1 in I.P. No. 24 of 1934 whereby he prayed that the property purchased by him should be excluded from the schedule of assets of the insolvent and that the Official Receiver should be directed not to sell the property or deal with it in any way. These proceedings culminated in the judgment of the High Court in C.M.A. Nos. 30 and 530 of 1938 wherein it was held that the Official Receiver could sell the right of the insolvent in the mortgage of 1908, but that he could not resist the application for delivery made by the present defendant 1. Defendant 1 accordingly obtained possession of the properties in Fasli 1345 (1935 36). The Official Receiver sold the insolvent's right in that mortgage to the present plaintiff on 8 -1 -1942. The shares of the insolvent's two sons were also sold by them to the plaintiff on 21 -9 -1942. In the present suit which was filed on 3 -3 -1943 on foot of the mortgage bond dated 24 -3 -1908 the plaintiff prays for a mortgage decree for Rs. 12,000 to which amount he restricted his claim notwithstanding that according to him an amount of nearly Rs. 80,000 would be due under the terms of the mortgage. Defendants 2 and 3 are the Kidambis and defendant 4 is Pyda. The contesting defendant is the first. The lower Court decreed the suit as prayed for and in this appeal which has been filed by defendant 1, two points are pressed on his behalf.

(3.) IT is then argued for the respondent relying on the decisions in Ramasubba Aiyar v. Arunaehalam Chettiar , A.I.R. 1946 Mad. 423 and Batey Krishna v. that the decree in O.S. No. 3 of 1930 which directed the hypotheca to be sold subject to the mortgage of 1903 and which is dated 1st day of September 1931 is the starting point of limitation. This argument again we are unable to accept. The former of the two decisions quoted was concerned with a judgment and decree of the High Court which, while giving 'possession of certain properties to one party expressly declared in favour of the other party who was being dispossessed a charge for the amount which he had paid for the discharge of certain mortgages on those properties. In the latter case, the facts of which are fully set out in Ramasubba Aiyar v. Arunaehalam Chettiar , A.I.R. 1946 Mad. 423 the prior claim of a person who discharged two mortgages of 1909 and 1915 was recognised in a suit for foreclosure brought by a subsequent mortgagee and a charge was declared in the former's favour and presumably incorporated in the foreclosure decree. We see much difference between those cases and the present one. There is here no declaration of a right which came into existence on 1 -9 -1931. The decree is in the usual form of a mortgage decree passed in a suit by a puisne mortgagee against the prior mortgagee and the mortgagor and it does no more than recognise the fact of a prior mortgage created in 1908. We are altogether unable to construe it as creating a new right in favour of the plaintiff's predeces -sors -in -title or as affording a fresh cause of action.