NEMASAO LAXMAN WANI Vs. MADHORAO GANESH DESHPANDE

JUDGEMENT

(1.) THIS appeal is by defendant 2. The suit was founded on a mortgage and the relief sought was payment of the amount due or foreclosure of the subject-matter of the mortgage. That subject-matter included a number of items. The only item now in question is a field No. 275. That field was purchased by the appellant at court auction. The sale was held in execution of a charge decree. The charge decree was dated 12th December 1927. The mortgage in suit is dated 28th April 1928. The appellant argues that by purchasing in execution of a charge decree he obtains the property and that the charge accordingly has priority over the subsequent mortgage. He accordingly applied to be discharged from the suit claiming paramount title. In our opinion, he should have been discharged, but not having been, and the whole question having been gone into quite unnecessarily in this mortgage suit it is nobody's desire now to discharge defendant 2 leaving him to relitigate this matter. We wish, however, to make it quite clear that where a person is joined in a mortgage suit and he does not dispute the mortgage but simply claims paramount title and asks to be discharged from the suit he should be discharged. This has the advantage of keeping the mortgage suit to its proper boundaries and not complicating it with an entirely different matter. The course pursued in this case results in what is in effect a counterclaim by defendant 2 being tried without payment of any court-fee and in the middle of another suit.

(2.) THE charge was created by the following words: (EX. 2-D. 1)--"The decretal amount shall be a charge on the property shown on the, reverse." It is not disputed that as a result of the sale the decretal amount was paid off. But it is said that a purchaser at court auction acquires the rights of judgment-debtor and decree-holder and that from the former he got title encumbered by the mortgage of 28th April 1928 (he purchased on 6th March 1933) and from the latter he obtained the charge which does not merge. Thus he ends with priority to the extent of the charge, i.e., to the extent of the decree or rather to the extent the decree was unsatisfied at the date of the auction sale. In support of that position Natchiappa Chettyar v. Ko Tha Zan A.I.R. 1928 Rang. 287, Baldeo Prasad v. Uman Shankar (10) 32 All. 1 and MatiUllah Khan v. Banwari Lal (10) 32 All. 138 were primarily relied upon. Baldeo Prasad v. Uman Shankar (10) 32 All. 1 turns on the well-established principle that (apart from Section 101, T.P. Act) there will be no merger unless the mortgagee-purchaser shows an intention to merge or unless merger is for his benefit. MatiUllah Khan v. Banwari Lal (10) 32 All. 138, so far as we can see, is a case of subrogation Natchiappa Chettyar v. Ko Tha Zan A.I.R. 1928 Rang. 287 is a very short judgment mainly concerned with distinguishing other cases including the leading Privy Council decision in Gokaldas Gopaldas v. Puranmal Premsukhdas (84) 10 Cal. 1035." If it decides that where A buys a property free from incumbrance its being a term that a mortgage of X shall be paid off and it is paid off nevertheless it is to be deemed that the mortgage continues for the benefit of the purchaser we prefer the view expressed by the Full Bench (a decision in any case binding on us) in Taibai v. Wasudeorao which decision arrived at the same conclusion as the Full Bench decision of the Allahabad High Court in Hira Singh v. Jai Singh which agrees with the Full Bench decision of the Madras High Court in Lakshmi Amma v. Sankara Narayana Menon A.I.R. 1936 Mad. 171. These cases are concerned with subrogation.

(3.) THERE is the further difficulty. A charge such as the present is over two fields to secure a decretal amount say Rs. X. Suppose one field is sold for the decretal amount. Would the charge still remain on the other field? There is some evidence (2 D. w. l) that the mortgagee knew, at the time of mortgage, of the charge decree. In Gokaldas Gopaldas v. Puranmal Premsukhdas ('84) 10 Cal. 1035 the facts were that A owned blackacre, mortgaged it first to B then to C. Next blackacre was sold in execution to X. X paid off B. He had bought, as usual in the case of court sales, without any guarantee as to title having purchased the right, title and interest merely. Thus while hoping for an unincumbered title he got a heavily incumbered one. He then paid off the first mortgage. The Privy Council held that he was not to be regarded as thereby causing merger and could accordingly claim the rights of the first mortgagee against the second mortgagee. It is to be noted that Toulmin v. Steers (1816) 3 Mer. 210 is not at all on all fours but its applicability to India was denied. It seems to us that Gokaldas Gopaldas v. Puranmal Premsukhdas ('84) 10 Cal. 1035, especially the observations at pp. 1045 and 1040, express what was later given legislative effect to by the Transfer of Property Act, viz., that if A buys blaekacre and then discovers incumbrances and takes a transfer of the prior incumbrance he does not thereby merge the incumbrance in his estate but will be regarded as keeping it alive on the principle that a man having a right to act in either of two ways shall be assumed to have acted according to his interest. According to Mali Reddi Ayyareddi v. Gopalakrishnayya A.I.R. 1924 P.C. 36 this does not apply if the person in question is not free to act in either of two ways, e.g., if he has covenanted to pay the later mortgage debt. Their Lordships there observe: There was an incumbrance upon a composite security, land and crops. It became necessary for the owner subject to the incumbrance, to pay sums of money to the incumbrancer to prevent his enforcing his charge from time to time. The incumbrancer could sell his charge or portions of his charge to any one, and there is nothing in law or good sense to eliminate the owner of the property from the list of possible purchasers. It is to the benefit of the owner that the proceedings should be deemed to be a purchase and not a redemption, and no reason appears why it should not be assumed that he intended to act in the way most beneficial to himself.