CHINA RAMAYYA Vs. RAMAMOHANA RAO

JUDGEMENT

(1.) The Judgment of the Court was delivered by Kumarayya, J- This Second Appeal is on reference before us>nd raises a point of limitation on which it is said the High Courts in India are divided in their views. For a proper appreciation of this point and the other points which incidentally arise for consideration, it is necessary to state essential facts of the case. Defendants 11 to 13 are brothers. Defendants 14 to 16 are sons of 11th defendant, and defendants 17 and 18 are sons of defendant No. 12 Defendants 11 and 12 for themselves and at guardian of their minor brother defendant No. 13 and also of their sons borrowed from the plaintiff-appellant a sum of Rs.1,500 on 6th August, 1934 executing a simple mortgage in relation to seven items of property including plaint schedule items 1, 2 and 3 with which we are concerned in this appeal. Item 1 property originally belonged to one Sina Subramanyam. It was purchased by the 12th defendant. The said defendent for himself and as guardian of his minor sons had earlier mortgaged item 1 and 3 and another property to one Vejju Mahalakshmi under Exhibit B-3 for a sum of Rs.900 on or about 13th January, 1934. Then on 10th June, 1934 the same defendants executed an agreement of sale for item 1 in favour of one Berika Krishna Rao for a sum of Rs. 700 under Exhibit B-5, This amount was stated to have been obtained for part payment of mortgage debt and it was paid to Mahalaksmi on or about 10th July, 1934. Shortly, after the suit mortgage, which as already stated, took place on 6th August 1934, the 12th defendant and his son sold item 1 pursuant to the agreement of sale to B. Krishna Rao on 19th November, 1936 under a sale deed (the original of Exhibit B-4) and put him in possession of the property. Krishna Rao remained in possession for sometime and sold the laid property to Venka- daru Sarvayya on 30th June, 1937 (Exhibit B-6) who in turn sold the same to Vejju Subbarao, father of defendants 1 to 5, for a sum of Rs 1, 000 on 7th May, 1943 under a registered sale deed Exhibit B-7 and put him in possession thereof. In family partition this item fell to the share of defendants 1, 2 and 4 to 6 and they are in possession of the property. During the period when Sarvayya was in possession, plaintiff brought an action for recovery of his mortgage amount on 5th April, 1940 but he did not implead him as a party to the suit even though he was fully aware of the fact that he wat in possession pf property at a purchaser of equity of redumption of item 1. In fact before he brought the suit he bad lodged a criminal complaint in 1939 against the mortgagors for cheating him. He had even examined Sarvayya in that case as a witness. At any rate, it is not at all disputed that he was not unaware of the alienations before he brought his action O. S. No. 170 of 1941). Even in relation to items 2 and 3, he had come to know long prior to the date of the suit and before the date of the criminal complaint, that the mortgagors had no tide even at the time of mortgage in relation thereto and the said items were in possession of defendants 7 to 10 He did not impiead the said defendants in the said action. Of course in an action on mortgage defendants 7 to 10 were not necessary parties under Order 34, rule 1, Civil Procedure Code.

(2.) The suit was decreed against the mortgagors and in execution thereof only four items of mortgaged property were brought to sale. The plain tiff became the auction-purchaser of items 1 to 3. He purchased item 1 for Rs. I 250 and items 2 and 3 for Rs 850. He applied for delivery of possession of item1 after the sale was confirmed. At that is, Vejju Subbarao, as transferee from Sarvayya was in possession of the said property. On his obstruction the auction-purchaser-plaintiff filed E A. 'iO of 1945 which was dismissed on the ground that the obstructor was not a party to the suit. Then he filed a suit O. S. No.252 of 1948 under Order 21, rule 103, Civil Procedure Code, to establish his right to the present possession of the property by getting the order set aside. That suit was dismissed. He went in appeal but with little success. His Second Appeal No. 258 os 1955 was also dismissed by the High Court on 29th January, 1958. Therein the learned Judge having held that the order refusing amendment of the plaint as prayed fer was justified, remarked thus :

(3.) The main contention raised in this appeal and which was also urged unsuccessfully ;a the Courts below is that, the plaintiff's suit filed within 12 years i'roiu the date of auction purchase is well within time in that it is not a suit to enforce the mortgage by sale of the property but one for recovery of possession oi ihe auctioned items of property giving an opportunity to the purca ser of equity of redemption to retain possession by paying the mortgage d ;bt. Such an JGUOU, r. u contended, is open to a mortgager- aucti-jn-purchaser witlim 12 years from the date of sale though as a mortgagee hi.i action for sate might have become time-barred. In such an action, it is urged, the time begins to run from the date of Court auction and not from the date when ibe mortgage amount fell due. in support of this contention reliance has been placed mainly on Sambtuiva Ayyar v. Subramania Pillai '. There it was held that the mortgagee-purchaser in execution of a mortgage deciec to which the purchaser of equity of redemption was not a, party has two causes of Action against such purchaser, one as a mortgagee and the other, as a purchaser in Court auction of the hypotheca. If he sues for sale as cnorgagee time wiii run from the date the amouat fell due under the mortgage. II he bn is a suit as a purchaser for possession time begins to run from the date of his purchase provided he had no knowledge of the sale of equity of redemption by the date of the previous suit. Other wife, the tine-shall run from the date of sale bfPthe mortgagor or perhaps the date the mortgage amount was due, whichever it later. That ease in fact was decided on the basis that the mortgagee had no knowledge of the purchase1 Both the Court* below have therefore held that the instant case is distinguishable en facti im that the piaini tiff hernia had full knowledge of the alienation even before he brought the suit ori mortgage and that the ratio dteidtndi in that CMC is there* fere of no application to the facti of the present case. We have to consider whether the Courts below^weie in error in holding s. The authority relied oa by the iearued Uouusel as may be noticed, dealt with a ease where the mortgagee sued in time on themorcgage for a mortgage decree against the ouly petson interested in the equity of redemption, so far as he was aware of. At the lime he laid his action he was ignorant of any third party's right in the property. He had no notice, actual or constructive of the purchase, by the third party, of the interest ot the mortgagor whether by private sale or Otherwise till he was resisted la getting possession in pursuance of his auction purchase which :ook place under the mortgage decree-. By that date, the time for bringing an action on the basis of mortgage against the said person had expired. Tne posit.ion in which the mortgagee suddenly found himself placed was most inequitable and this state was brought into being through no fault ot his own. The learned Judges considered, therefore, whether the equities of the parties could not be worked out without any detriment or prejudice to ther respective rights and without offence to any legal principles. Considering the relative rights of the parties and the interests of justice, they laid down the rule that the mortgagee-purchaser can enforce his right to possession as a parchaser within twelve years from the date of his purchase fter giving the purchaser of equity of redemption an opportunity to retain possession on payment, of mortgage debt. Where there is a mortgage, the right! in the property become split up Some remain with the mortgagor while the other become vested in mortgagee subject to the terms of the mortgage. The right which invariably remain! with the mortgagor is the equity of redemptieo. This r/ght is alienable and heritable. When the mortgagee eventually forecloses or buys in case of sale the bypotheca, the two rights coalesce and he becomes entitled to full rights of ownership. Bus this he gels only ia a properly framed suit. If any of the persons iiueiested in the mortgage ha* not been impleaded, as enjoined by Order 34, rule 1, Givii Procedure Code, the decree obtained though binding on the parties thereto cannot affect the right of the person not impleaded-