GURRAM RAMAOHANA RAO Vs. KODA KANAKACHARYULU

JUDGEMENT

(1.) This Letters Patent Appeal is directed against the judgment of our learned brother Ramchandra Raju, J., in Second Appeal No. 317/71. The plaint schedule house situated at Vijayawada originally belonged to one Majji Krishnamurthy It was mortgaged on 19-5-1950. It was subjected to a second mortgage on 22-5-1950 for a sum of Rs. 2,000.00 in favour of one V. Satyanarayana. The house owner fell in arrears of property tax due to Vijayawada Municipality for the years 1950-51 to 1953-54. The Vijayawada Municipality filed a suit O. S. No. 372/1954 on the file of the District Munsifs Court, Vijayawada for the recovery of the arrears of property tax amounting to Rs. 80-8-5. That suit was decreed on 17-9-54. The arrears of property tax constitutes a first charge on the house. In execution of the said decree, the house was brought to sale on 25-2-1963. At the Court sale, the plaintiff respondent herein became the highest bidder. This sale was held subject to the two mortgages referred to above. The sale was confirmed on 30-3-1963 and the plaintiff was put in possession on 18-4-1963 of the house sold to him at the court auction. While the suit O. S. NO. 372/54 filed by the Vijayawada Municipality was pending the second mortgagee of the suit house filed a suit O. S. No. 67/1954 on the file of the District Munsifs Court. Vijayawada to recover a sum of Rs. 2,800.00 and odd due under the said mortgage. A preliminary decree for the recovery of a sum of Rs. 3513-4-0 was passed in favour of the mortgagee on 30-8-1954. The final decree therein was made on 13-12-1954 for sale of the house. In execution of the said final decree, sale was held on 22-4-1957. The predecessor of the 1st defendant who is the appellant in this Letters Patent Appeal obtained a transfer of this decree in his favour on 19-8-1960. Before confirmation of sale the mortgagee transferred his rights to one Raghvaiah who died in the rights to one Raghavaiah who died in the year 1960. The sons of Raghavaiah succeeded to his rights in the suit house. The sale was ultimately confirmed on 5-8-1963 in E. P. No. 219/1962. The defendant filed an application for delivery of possession of the house. The plaintiff respondent herein, who is the auction purchaser in execution of the decree in O. S. NO. 372/54 on the file of the District Munsifs Court, Vijayawada filed by the Vijayawada Municipality, opposed the application and also filed a separate suit O. S. No. 383/1968 on the file of the IV Additional District Munsif, Vijayawada for redemption of the mortgages. The dispute now is thus between the auction purchaser in execution of the decree in the suit instituted by the Vijayawada Municipality O. S. No. 372/54 and the transferee decree holder auction purchaser in the suit O. S. No. 67/54 on the file of the District Munsifs Court, Vijayawada filed by the second mortgagee. The trial Court decreed the suit for redemption. On appeal the learned Subordinate Judge, Vijayawada confirmed the said decree and dismissed the appeal A. S. No. 146/68. Our learned brother Ramchandra Raju, J., also dismissed Second Appeal No. 317/71 directed against the concurrent judgments of both the courts below. However having regard to the substantial question of law involved in this appeal he granted leave to appeal.

(2.) The relevant facts which give rise to the questions of law in this Letters Patent Appeal are not in dispute. From the above narration of facts it is clear that the plaintiff respondent in the present suit is the purchaser of the suit house at a court auction held in execution of the decree in O. S. No. 372/54 on the file of the District Munsifs Court, Vijayawada in favour of Vijayawada Municipality for the recovery of property tax. The property tax constitutes a first charge on the house in favour of the Municipality. The sale itself was held on 25-2-1963. Though this suit was filed later than the suit O. S. No. 67/54 filed by the second mortgagee it was decreed on 17-9-54 earlier than the suit filed by the second mortgagee which was decreed on 13-12-54. While the sale in execution of the decree in O. S. No. 67/54 was held on 22-4-57 the sale in execution of the decree in O. S. No. 372/54 was held on 25-2-1963. But while the sale in execution of the decree in O. S. No. 67/54 was confirmed on 5-8-1963 the sale in execution of the decree in O. S. No. 372/54 was confirmed earlier on 30-3-1963. Even the possession of the suit house was delivered to the auction purchaser i.e. the plaintiff respondent herein on 18-4-1963 even before the sale (was confirmed) in favour of the auction purchaser in execution of the decree in O. S. No. 67/54.

(3.) The contention of the defendant applicant herein is that since the suit O. S. No. 372.54 was instituted later and the sale in execution of the decree therein also was held later while the suit O. S. No. 67/54 was instituted and pending all the proceedings in O. S. No. 372/54 and in E. P. No. 219/62 are hit by the doctrine of lis pendent and as such even though the sale was confirmed earlier in execution of the decree in O. S. No. 372/54, the plaintiff respondent auction purchaser does not have a right of redemption. It must yield to the decree in O. S. No. 67/54 and the auction purchaser in execution of the decree. The plaintiff respondent has no right to redeem in preference to the auction purchaser in execution of the decree in O. S. No. 67/54. In support of his contention reliance is placed by the appellants counsel on a Full Bench judgment of the Allahabad High Court in Ram Sanehi Lal v. Janki Prasad, (AIR 1931 All 466) (FB). The questions referred to the Full Bench therein were: 1. Whether the auction purchaser, in execution of a decree obtained on a prior mortgage without impleading the subsequent mortgagee acquires, at least, the rights of the mortgagor who was a party, including his rights to possession in cases where both the mortgages were simple? 2. Where sale in execution of a decree obtained on foot of a puisne mortgage takes place during the pendency of the suit on the prior mortgage. (a) Whether the sale in the subsequent mortgagees suit is affected by the rule of lis pendens so as to make the purchasers right subject to the result of the prior mortgagees suit; and (b) Whether, apart from the effect of the rule of lis pendens, the purchaser in the prior mortgagees suit is entitled to possession in preference to the purchaser in the puisne mortgagees suit in case both mortgages were simple, even though the sale in the second mortgagees suit took place before the sale in the prior mortgagees suit. The Bench of five Judges held: "Thus the equity of redemption of the mortgagor is in dispute in such a suit and the doctrine of lis pendens would undoubtedly attach to it. If in another proceeding, whether it be in execution of a simple money decree or in enforcement of a subsequent mortgage, the same proprietary interest of the mortgagor is simultaneously sought to be sold Sec. 52 would apply. Similarly if while a suit of a subsequent mortgagee for the enforcement of his mortgage against the mortgagor, without impleading the prior mortgage, is pending, any attempt on the part of the prior mortgagee to get that interest sold in his own decree would be equally governed by Sec. 52." Sulaiman, acting Chief Justice who rendered the leading opinion came to the following conclusions: "1 (A) If the purchaser in execution of the prior mortgagees decree is not in possession and is suing as plaintiff the purchaser in execution of the subsequent mortgagees decree. (a) he can enforce his remedy, if limitation on the prior mortgage has not yet run out, but (b) he cannot recover the mortgage money, if limitation has run out. (B) (a) if he was the earlier purchaser in point of time, he can redeem the second mortgage and recover possession, even though the prior mortgage is barred by time. (c) But if he was the later purchaser in point of time, then his suit even for redemption cannot be decreed. 2. If the purchaser in execution of the second mortgagees decree is suing the purchaser in execution of the prior mortgagees decree, who is the defendant in possession, then, (a) if the purchaser under the second mortgage was the earlier purchaser in point of time, he must redeem the prior mortgage, and the purchaser under the prior mortgage cannot compel the purchaser under the second mortgage to submit to redemption by him; (b) if the purchaser under the second mortgage was later in point of time, then he must first redeem the prior mortgage, but the purchaser under the prior mortgage will have the right to redeem the purchaser under the second mortgage next, and retain possession of the mortgagors property". With this view concurred Banerjee, J. Young J., and Pullan, J., while Mukerji, J., dissented. The Court thus answered the first question in the affirmative. "If either no suit by the subsequent mortgagee is pending or the purchase in execution of the prior mortgagees decree was earlier in point of time: If the mortgagee be the earlier purchaser, the rights of the mortgagor to obtain possession will ultimately vest in him: if this mortgage is not time barred, he must redeem the subsequent mortgage. The answer to (a) of the second question is in the affirmative. The answer to (b) of the second question is that if lis pendens does not apply and the second mortgagee is the earlier purchaser, the prior mortgagee will have the right to take possession as plaintiff if a suit on his mortgage be not time barred. If the second mortgagee redeems him, the second mortgagee will retain the property. If the prior mortgage has become barred by time, the prior mortgagee can not obtain possession". This view of the Allahabad High Court was consistently followed by that Court. Suffice to refer to the case in Hakim Mohd. V. Sahab Collector Bahadur, (AIR 1958 All 24) wherein it was observed: "Although Sec. 52, T. P. Act does not apply in terms to sales held in execution of a decree, the principle of lis pendens applies to such Court sales also ......" The Court further observed: "The lis in a mortgage suit begins from the date on which the suit is instituted and continues till the decree is satisfied". The Court also observed: "The auction purchaser must also be deemed to be a party to that suit". In Rattan Chand v. Prite Shah, (AIR 1962 Punj 402) discussing the position of the auction purchaser in execution of a prior mortgage as against subsequent mortgagees, the Court held: "The auction purchaser in execution of the decree based on the first mortgage occupies a dual capacity of a first mortgage occupies a dual capacity of a first mortgagee as well as the owner of the equity of redemption, and while in his first capacity he can use the first mortgage as a shield against the second mortgagee, in his second capacity he can redeem all subsequent mortgages". In coming to this conclusion, the Court relied upon Mt. Sukhi v. Ghulam Safdar Khan, (AIR 1922 PC 11) and Abdul Gaffor v. Sagun, (1949) ILR 27 Pat 526. A single Judge of the Bombay High Court in T. L. Desai v. Yogabai Paranjape. (AIR 1962 Bom 191) also took the same view as the Allahabad High Court and held: "Where a sale in execution of a decree obtained on foot of a puisne mortgage takes place during the pendency of the suit on the prior mortgage, it is affected by the rule of lis pendens so as to make the purchasers right subject to the result of the prior mortgage suit". We deem it unnecessary to multiply the decisions in this regard.