HUKUM SINGH Vs. LALLUNJEE

JUDGEMENT

(1.) This appeal arises out of the following circumstances. It appears that Mata Prasad and Devi Prasad, defendants Nos. 1 and 2, executed a simple mortgage of certain property in favour of one Sanwalia, defendant No. 4, and his brother on the 29th of June 1896. In the year 1907 the mortgagors made a simple mortgage in favour of Lallunji, the plaintiff respondent. Sanwalia, defendant No. 4, brought a suit for sale on his mortgage on the 1st of December 1908 and obtained a decree for sale under the provisions of Section 88 of the Transfer of Property Act, No. IV of 1882, on the 23rd of December 1908. Later on he applied for and obtained an absolute decree for sale. The date of this decree does not appear from the Board, but the decree must have been passed under the provisions of the present Code of Civil Procedure, whish had come into force on the 1st of January 1909. To this suit and the subsequent proceedings Sanwalia, defendant No. 4, had omitted to impaled Lallunji, the second mortgagee. When be proceeded to sell the property, the present suit was instituted by the second mortgagee for sale of the property on his mortgage, and a declaration was also sought to the effect that the property was not liable to sale in execution of the decree obtained by the prior mortgagee defendant and also prayed for a permanent injunction restraining him from executing the decree. In the alternative the plaintiff asked for such relief as the Court might think he was entitled to. The suit was defended by the prior mortgagee alone, who pleaded inter alia that unless the amount due to him was paid, the cLalm could not be maintained. The Munsif came to the conclusion that the prior mortgagee having failed to impaled the plaintiff in his suit for sale, that decree was not binding on the plaintiff and a fresh suit on the prior mortgage being now barred by time, the plaintiff was entitled to the decree cLalmed. This judgment has been affirmed on appeal by the learned Judge of the lower Appellate Court on the strength of the case of Janki Prasad v. Kishen Dat 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310, The defendant first mortgagee tomes here in second appeal, and his contention is that the plaintiff is not entitled to sell the property without redeeming his prior mortgage. This appeal same up before a learned Judge of this Court who, having regard io the importance of the question raised in this appeal and the doubt expressed in some eases about the correctness of the view expressed in the case of Janki Prasad aforesaid 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310, referred the matter to a larger Bench. The question raised in the case, put shortly, domes to this, what is the effect of the failure of a prior mortgagee to impaled a subsequent encumbrance in his suit for sale? Does it result in the total destruction of his rights as a mortgagee so far as the poise encumbrance is concerned, or does this omission simply amount to this that the rights of the poise inoutnbranoer to challenge the validity and binding effect of the prior charge remain unaffected because he has had no opportunity to contest it, and, therefore, the only right which the second mortgagee has is to have the question tried out? In our opinion there is no warrant for holding that the mere omission would result in the total extinction of the rights of the prior mortgagee. That this is so would appear from case in which it has been held that a person who has purchased mortgaged property at a sale in execution of a decree on a prior mortgage to which the second mortgagee was no party, is entitled to set up the prior mortgage as a shield in a suit for sale brought by the second mortgagee and the second mortgagee has in those oases been held to have a right to sell the property in satisfaction of his mortgage, only on the condition that he pays up the prior mortgage. See chulam Safdar Khan v. Sukhi 38 Ind. Cas. 573 : 15 A.L.J. 190 and compare Gokaldas Gopaldas v. Purina Premsuhhdas 10 C. 1035 (P.C.) : 11 I.A. 126 : 8 Ind. Jur. 396 : 4 Sar. P.C.J. 543 : 5 Ind. Dec. (N.S.) 692, Bahimunnissa v. Bairi Das 9 Ind. Cas. 205 : 33 A. 368 : 8 A.L.J. 112 We have now to see whether the mere fact that the prior mortgagee has not yet sold the mortgaged property, makes any difference in his rights. We are not aware of any principle on which a distinction can be made between the rights of a decree holder prior mortgagee and a prior mortgagee who has purchased the property in execution of his own decree on the mortgage.

(2.) The learned Judges who decided the case in Janki Prasad v. Kishen Dat 16 A. 478 (F.B.) : A.W.N. (1894) 151 : 8 Ind. Dec. (N.S.) 310 seem to have overlooked totally this aspect of the question. Jones in his well-known work on the Law of Mortgages says: "When a party in interest other than the owner of the equity of redemption is not made a party to the bill, the foreclosure is not generally for this wholly void. It is effectual as against those persons interested in the equity who are made parties. The sale vests the estate in the purchaser, subject to redemption by the person interested in it who was not made a party to the proceedings. His only remedy, however, is to redeem. He cannot maintain ejectment against the purchaser. He cannot have the sale set aside by intervening by petition in the foreclosure suit. His only right is the right of redemption" (Jones, paragraph 1395). To put it in other words, omission to join keeps infact the rights of persons not joined."

(3.) There can be no doubt whatever that the cLalm put forward by the plaintiff- respondent is not one which upon merely equitable grounds is entitled to consideration. We consider that there is nothing to prevent the defendant from compelling the plaintiff-respondent to redeem him before the property can be sold to satisfy the plaintiff s mortgage. In this, case all the parties interested the mortgaged property are before the court and we think that the equities between them should be worked out and the plaintiff given an opportunity to redeem the mortgage of the defendant No. 4 before he can sell the property to satisfy his own mortgage, as was done in the case of Babu Lal v. Jalakia 37 Ind. Cas. 243 : 14 A.L.J. 1146 at P. 1154. The reasoning applied by this Court in the case of Bam. Prasad v. Bhihari Das 26 A. 464 at P. 467 : A.W.N. (1904) 108 might well be applied to the present case. In that case the mortgaged property had been sold in execution of a simple money decree and the purchasers were put in possession. Subsequently to this the mortgagees brought a suit for sale on their mortgage without imp leading the auction purchaser. They obtained a decree for sale, the property was sold and purchased by a third person. That third person brought a suit for possession of the property against the purchasers in execution of the simple money decree and prayed that the latter might be allowed to redeem him and if he failed to do so, his right of redemption be foreclosed and possession handed over to the plaintiff. He failed in the lower Court and tame up in appeal to this Court, The learned Judges observed in the course of their judgment: In the present case the suit is one, as we have said, for foreclosure of the mortgaged property, and it is the duty of the Court to work out the equities between the parties and to give the respondents the opportunity which ought to have been afford-ed them, when the decree for sale was passed in Nath Mal s Suit, of redeeming his mortgage, The respondents are entitled to redeem, but they are not entitled to anything further by reason of the fact that the plaintiff in that suit omitted to impaled them as defendants. The omission to impaled them can neither improve their position nor the reverse. The plaintiff-appellant, who purchased the property at a Court sale in a suit in which the mortgagee Nath Mai was the plaintiff and the mortgagor was the defendant, purchased the property, that is, whatever rights the mortgagor and mortgagee then possessed, subject to the infirmity that the present respondents had not been imp leaded, and consequently he must suffer by reason of the neglect of the plaintiff to impaled the respondents. He did not get a clear title to the property, but he got all the title which Nath Mal and the mortgagor could give, and that was a title subject to the equity which the respondents had of redeeming Nath Mal s mortgage and preserving the property for themselves. That right will still be secured to him.