M N NAGENDRAN CHETTIAR Vs. LAKSHMI AMMAL

JUDGEMENT

(1.) The facts out of which this second appeal arises may be stated as follows. The respondent Lakshmi Animal obtained a deed of maintenance from her deceased husband's brothers in 1918, under which a house was charged with the payment of the maintenance to her. The owners of the house also executed a second mortgage of it in 1922. As the maintenance was not paid up to the year 1927, Lakshmi Animal filed a suit, O.S. No. 454 of 1927, without making the second mortgagee a party and obtained a decree. In execution of the decree she was appointed receiver on 27 January, 1930, for realisation of the profits of the house and appropriating the same towards her decree. She got possession of the house in April, 1930. The second mortgagee filed a suit on his mortgage, O.S. No. 12 of 1928, without making Lakshmi Animal a party and obtained a decree and got the property sold. It was purchased by Nagendram Chetty, the appellant before us, on 28 January, 1931. He sought to obtain possession of the property but was resisted by the respondent. The appellant applied to the District Munsif under Order 21, Rule 97, Civil Procedure Code, for the removal of the respondent's obstruction. The application was allowed by the District Munsif. There was an appeal to the District Judge of Trichinopoly. The District Judge allowed Lakshmi Ammal's appeal. Nagendram Chetty files this second appeal. When the case came on for disposal before Madhavan Nair, J., he referred the matter to a bench of two Judges. When the case accordingly came on before Jackson, J. and Mockett, J., it was thought that there was some conflict between Chinnu Pillai V/s. Venkatasamy Chettiar (1915) I.L.R. 40 Mad. 77 : 30 M.L.J. 347 and Chinnaswami Padayachi v. Darmalinga Padayachi (1932) 63 M.L. 394 and they referred the matter to a Full Bench. The case accordingly came on before us.

(2.) The first point to be noticed in the case is what the question now between the parties is, - who is entitled to possession until a regular suit is filed in which the two mortgage rights are brought face to face and can be worked out? The plaintiff- receiver in the first suit was the first mortgagee and is also entitled to possession by reason of the order of the Court appointing her a receiver for realisation of the mortgage amount. The purchaser in execution of the decree in the second suit stands in the shoes of the second mortgagee. By the general law a second mortgagee is entitled to redeem the first mortgagee. The first mortgagee before selling the property ought to afford an opportunity to the second mortgagee to redeem the first. Only after such an opportunity is given and not utilised can the first mortgagee sell the property free of both the mortgages for the realisation of the mortgage debt. Similarly the second mortgagee in suing on his mortgage might have impleaded the first mortgagee either offering to redeem the mortgage, or asking for the sale of the property subject to the mortgage, or praying for sale of the property free of both mortgages and a direction that the prior mortgagee's debt be first paid off and the amount due to himself should be paid out of the balance. Unfortunately the second mortgagee was not a party in the suit of the first mortgagee and the first mortgagee was not a party in the suit of the second mortgagee. Thus up to now there has been no suit in which the two mortgagees, or persons who stand in the position of the mortgagees, have been brought face to face so as to enable them to work out the rights under the mortgages according to the principles of law applicable to successive mortgages. Such a suit has yet to be filed. The question in this case is, - who, in the meanwhile, i.e., until such a suit settles the dispute between the parties finally, is entitled to possession? Prior to the decrees the mortgagors were the persons entitled to possession, the mortgagees being only simple mortgagees. By the order of appointment of Lakshmi Ammal as receiver she has got a right to possession from January, 1930 and the mortgagor's right to possession has passed to her. By the sale in execution of the second mortgage decree in January, 1931, the mortgagor's right to possession, if any, that remained in them passed to Nagendram Chettiar; but as already mentioned, the mortgagor's right to possession had already passed to Lakshmi Animal by the earlier order of January, 1930. Applying our mind only to the right to possession and not to the priority of the mortgages, it is thus seen that no right to possession passed to Nagendram Chetty because at the time of the sale the mortgagors had no right to possession, it having already passed to Lakshmi Animal. So far, I have stated the effect of the proceedings without reference to any of the authorities. The second mortgagee's right is not extinguished. His right is not affected by the first mortgagee's suit to which he was not a party. He still therefore has got a right to redeem the first mortgagee and realise by sale the amount of both the mortgages, or without redeeming he may obtain a decree for sale and a direction that after such amount as is due to the first mortgagee is paid the balance should be paid towards his own debt. These rights of his are not affected. Nor does any discussion about such rights arise in the present proceedings which are confined merely to the right to possession.

(3.) I will now examine the authorities. In Venkatanarasammah V/s. Ramiah (1879) I.L.R. 2 Mad. 108 there were two mortgages in 1864 and 1868. The suit on the first mortgage was in August, 1871. The exact date of the suit on the second mortgage does not appear. It was also in the year 1871. The first purchaser was in the suit on the first mortgage. The learned Judges held that he was the person entitled to possession. Kernan, J., observed that this would be so until the rights of the mortgagees are worked out in a later suit. Innes, J., expressed no opinion on this matter and seemed to doubt whether the second mortgage is still on foot and capable of being enforced. As will appear from later authorities this doubt of Innes, J., was not justified. The second mortgagee's right is not lost because he is not a party to the first mortgagee's suit. In Chinnu Pillai V/s. Venkatasamy Chettiar (1915) I.L.R. 40 Mad. 77 at 89 : 30 M.L.J. 347 Srinivasa Aiyangar, J., thus refers to Innes, J.'s observations: The other learned Judge, though he did not express any final opinion, thought that the second mortgagee's right was practically extinguished. Nobody now contends that the latter view is correct.