KANHAIYA LAL Vs. CHHIDHU SINGH

JUDGEMENT

(1.) THIS appeal arises out of a suit brought by the plaintiff-appellant for sale upon two mortgages, executed by Hira Singh and Gambhir Singh on the 28 November 1890. On the 16 of December 1870, those persons had executed a mortgage in favour of Ganga Ram, the predecessor-in-title of the plaintiff and the property now sought to be sold was comprised in that mortgage. On the 21 Jane 1884, Ganga Ram obtained a decree for sale upon the mortgage of 16 December 1870. A sum of Rs. 489 remained due on account of the decree so obtained and accordingly on the 28 November 1890, Hira Singh and Gambhir Singh executed a zer-i-peshgi lease for Rs. 409, part of the said amount and they also executed a simple mortgage-deed for Rs. 95 which included Rs. 80 due upon the decree. These are the mortgages which the plaintiff seeks to enforce. Before the execution of these mortgages i.e., on 22 June, 1876, Gambhir Singh and Hira Singh mortgaged the same property to Panna Lal who is now represented by Basdeo and others, defendant?s third party. The only question which we have to determine is whether the plaintiff has priority over the intermediate mortgage executed in favour of Panna Lal for the amount of the decree of 1884 for which the mortgages of the 28 November 1890 were executed. The Courts below have held that Panna Lal's mortgage has priority over plaintiff's mortgages and have ordered a sale subject to the payment of that mortgage. The correctness of this decision is impugned in this appeal and it is urged on behalf of the appellant that as the mortgages of 20 November 1890 were effected in discharge of the decree obtained upon the earlier mortgage of 1870, the plaintiff can hold up that earlier mortgage as a shield against the intermediate mortgagee and is entitled to priority with regard to the amount of that mortgage. In our judgment this contention is well founded. There can be no doubt that if a prior mortgagee purchases the property comprised in his prior mortgage, he must be deemed in the absence of anything to the contrary to have kept the prior mortgage alive and is entitled to priority over an intermediate incumbrancer. It is equally clear, as held in Sham Lal V/s. Bashir-ud-din 28 A. 778, that where a mortgage debt, for the recovery of which a decree for sale has been obtained, is paid off by a third party who takes a subsequent mortgage, the prior mortgage enures to the benefit of the subsequent mortgagee, and he takes priority over an intermediate incumbrance. On principle we can see no distinction between the case of a third person taking a subsequent mortgage for discharge of a decree on a prior mortgage and the prior mortgagee himself obtaining a mortgage in lieu of the amount of his prior mortgage for which he has obtained a decree. In both cases it is to the interest of the holder of the subsequent mortgage to keep the prior mortgage alive and it must be presumed that his intention was to do so. In Alangaran Chetti V/s. Lakshman Chetti 20 M. 274, it was held that where a mortgagee subsequent to the execution of the mortgage deed takes another mortgage in renewal of the former deed, he has priority over in-cumbrances subsequent to the first deed. In Purnamal Chand V/s. Venkata Subburayabi 20 M. 486, it was held that when a subsequent mortgage was made to discharge a subsisting prior incumbrance, the fact that the said incumbrance had taken the form of a decree makes no difference on the question of priority. We agree with these rulings and we are of opinion that where a prior mortgagee obtains a decree upon his prior mortgage and in lieu of the amount of that decree he takes a subsequent mortgage of the same property from the mortgagor, the prior mortgage enures to his benefit and he can hold it up as a shield against a puisne mortgagee whose mortgage is of a date subsequent to that of the prior mortgage. We are, therefore, unable to agree with the view taken in the case of Nakta Ram V/s. Moti Ram A.W.N. (1906) 191, if it was intended by that ruling to hold that the mere fact of a decree having been obtained would deprive the prior mortgagee of the priority which he would otherwise have. In this case, the learned Judge of the lower appellate Court was of opinion that it could not have been the intention of the parties at the time of the execution of the mortgage-deeds of 1890 to keep alive the mortgage deed of 1870. We do not agree with him. If it was to the benefit of the prior mortgagee to keep alive the prior mortgage and it is manifest that it was undoubtedly for his benefit to do so, it would be presumed that he intended to keep the prior mortgage alive. The mere fact of his taking a zer-i- peshgi lease does not indicate a contrary intention. So far from his intention being not to keep alive the prior mortgage, it appears from the terms of the zer-i-peshgi lease that it was his intention to keep it alive. It was provided in that document that in the event of possession not being delivered over of the property to which the zer-i-peshgi lease relates, the lessee would be entitled to recover the amount secured by the lease by sale of the property which the decree of 1884 had directed to be sold. We are accordingly of opinion that the plaintiff lies priority over the mortgage in favour of Panna Lal in regard to the amount of the prior mortgage of 1870 which was included in the subsequent mortgage made in 1890. Panna Lal or his representative would be liable to the extent of the amount payable under the mortgage of 1870 for which the decree of 1884 was passed and for interest at the rate allowed by that decree and they can redeem the plaintiff's mortgage upon payment of that amount only. Both parties are agreed that a sum of Rs. 689-3 is the total amount payable under the prior mortgage for which the plaintiff has priority over the mortgage of 1876 executed in favour of Panna Lal. The decree of the Court below should, therefore, be varied to this extent that the legal representatives of Panna Lal would be entitled to redeem the plaintiff upon payment to him of Rs. 689-3 and interest thereon at 6 per cent per annum from the date of the suit till the date of payment. We accordingly modify the decrees of the Courts below and in lieu there of make a decree in the plaintiff's favour for recovery of the amount found to be due to him by the Courts below Upon his mortgages of the 28 November 1890 and we declare that out of the said amount he has priority over Panna Lal for Rs. 689-3 and for interest thereon at the rate of 6 per cent, per annum from the date of the suit till date of payment. We further declare that, upon the defendants third party, the representatives of Panna Lal, paying to the plaintiff aforesaid the sum of Rs. 689-3 together with interest thereon at 6 percent, per annum from the date of suit till the date of payment within three months from this date, the plaintiff will be entitled to pay on account of the mortgage in favour of Panna Lal dated the 22 June, 1876 the amount due upon that mortgage as well as the aforesaid sum of Rs. 689-3 with interest as aforesaid within a further period of three months and upon such payment he will be entitled, to bring to sale the mortgaged property for the amount so paid by him as well as the amount of his own mortgage unless the said amounts are paid by the defendants other than the representatives of Panna Lal within a further period of three months. If the amount of his mortgage is not paid within the period aforesaid, he may, if he so chooses, sell the mortgaged property for the amount of his mortgages of 1890 together with costs, subject to the mortgage in favour of Panna Lal for the amount due under that mortgage as well as the sum of Rs. 689- 3 aforesaid. Under the circumstances, we make no order as to the costs of this appeal.