GARUDAPPA PERIA THIRUVADI AYYANGAR Vs. POOKUTTI JANAKI

JUDGEMENT

(1.) My learned brother has set out the facts of the case in his judgment which he is about to deliver and they need not, therefore, be repeated. I agree with him that the second appeal fails but for reasons somewhat different from his.

(2.) It seems to me clear that if a person buys property over which he has a mortgage himself and the mortgage in consequence becomes discharged by merger or by the terms of the sale- deed, he can never the less, use that mortgage as a shield against any puisne incumbrancer who attempts to enforce his claim against the property, unless his intention to extinguish the mortgage is clear otherwise. That is the principle of Section 101 of the Transfer of Property Act. The buyer cannot be credited with the intention of altogether extinguishing his mortgage for all purposes when it is found to be to his benefit to keep it alive, merely because in the deed of purchase a part of the purchase-money is treated as going in discharge of his mortgage. Whether the purchase is statedly of the whole property lor a price made up of the price of the equity of redemption and of the mortgage amount or whether it is, statedly, of the equity of redemption, only, the transaction is substantially the same; and as it is for his benefit to keep the first mortgage alive we cannot necessarily assume the existence of an intention on his part to extinguish it, even in the former case. See the decision in Chidambara Nadan V/s. Musuvathi Muni Nagendrayyan 58 Ind. Cas. 813 : 39 M.L.J. 445 : (1920) M.W.N. 534 : 12 L.W. 393 : 28 M.L.T. 300. The puisne mortgagee loses nothing by the first mortgage being used as a shield as he bargained only for a right subject to the first mortgage and there is no reason why his right should he enlarged because the prior mortgagee purchases the property. In the present case, therefore, I should have been prepared to hold that defendants Nos. 2 and 3 had not lost their right to plead their first mortgage under Exhibit I as against the plaintiff but for the covenant in their deed of purchase, Exhibit III, whereby they expressly undertook to pay off the whole of the plaintiff's mortgage amount. That, I think, makes the difference in this case.

(3.) Having covenanted to pay the plaintiff's mortgage amount themselves it is not open to them to deny their liability. It was contended that plaintiff cannot take advantage of the covenant in Exhibit III as she was no party to it and reference was made to Jamna Das V/s. Ram Autar Pande 13 Ind. Cas. 304 : 34 A. 63 : 16 C.W.N. 97 : 11 M.L.T. 6 : 9 A.L.J. 37 : (1912) M.W.N. 32 : 15 C.L.J. 68 : 14 Bom. L.R.I. : 21 M.W.J. 1158 : 39 I.A. 7 (P.C.), a decision of the Privy Council. This might be so; but the first defendant with whom the covenant was made and who is entitled to enforce it, is a party to this suit and has asked the Court to enforce it by making defendants Nos.2 and 3 pay the plaintiff's mortgage amount themselves by sale of Item No. 1 free of incumbrances. I do not see why that claim should not he enforced in this suit. Defendants Nos. 2 and 3 have no answer to that claim, It was argued that first defendant should be left to sue for damages for breach of covenant if he suffers any injury by reason of defendants Nos. 2 and 3 not paying off the plaintiff's mortgage. He will, no doubt, have a right to sue for damages but that is not a reason why in this suit itself when the parties are all before us their rights should not he adjusted. There is no necessity to drive the first defendant to a separate suit for damages. I would, therefore, in enforcement of the covenant between the first defendant and defendants Nos. 2 and 3, direct that Item No. 1 be sold free of any claims by the latter under their mortgage; and for that reason I would support the decree of the lower Appellate Court.