(1.) This is a reference by the District Judge of Poona under Section 54 of the Dekkhan Agriculturists Relief Act. The principal question referred to us, put in the simplest language, is whether a mortgagee having two mortgages of different dates upon the same property may sue upon the mortgage of later date first, and having had the property sold without reference to the prior mortgage can thereafter bring a separate suit on the prior mortgage. We think that he cannot do so. In our opinion, the question is not to be answered under Order II, Rule 2. The causes of action certainly are distinct. It could hardly be seriously contended, we think, that in such circumstances if the mortgagee allowed the prior mortgage to be time-barred, he could not sue upon the puisne mortgage, or again, that by doing so, he could revive the prior mortgage which had become time-barred. Thus, it is clear, that the causes of action are not the same. The answer then will have to be sought by reference, we think, to the general principles of the law of mortgage and res judicata. The rule is that where there are several mortgages upon the same property, any mortgagee suing upon his mortgage must make all the other mortgagees, as well as the mortgagor, parties to the suit. To this rule there are exceptions. Until the alteration of Section 85 by Order XXXIV, Rule 1, the Courts appear to have put a very strict interpretation upon the words of old Section 85 of the Transfer of Property Act. But there can be no doubt that under the general law of mortgage as administered in England a puisne mortgagee might sue his mortgagor, if he chose to do so, for foreclosure and sale, without making a prior mortgagee a party to the suit, and the result of such a suit between a puisne mortgagee and his mortgagor would be to have the property sold, as it is said, subject to the prior mortgage. Accurately stated, in all cases of that kind what is really sold is not the property at all but the right to redeem the prior mortgage upon it.
(2.) Similarly, when a puisne mortgagee sues the mortgagor and joins a prior mortgagee, the effect of the suit between the puisne mortgagee and the mortgagor is exactly the same as though the prior mortgagee had not been a party to it, assuming (1) that the mortgagee has insisted upon his rights; (2) that neither the puisne mortgagee nor the mortgagor has redeemed him in the suit. Then the result would be that the property would be sold subject to that prior mortgage as between the puisne mortgagee and the mortgagor. In other words, again, what would be sold would not be the property but the right to redeem the prior mortgagee. It is equally clear, we think, that in a suit so framed if the prior mortgagee did not choose to assert his rights, although a party to the suit, the result would be that the property would be sold free of that mortgage, and that the prior mortgagee would be disentitled to assert any rights he might otherwise have had under his prior mortgage against a purchaser at any such sale. That rule depends upon the principle of res judicata. This is very clearly apparent from the dicta of their Lordships of the Privy Council in Sri Gopal v. Pirthi Singh (1902) 4 Bom. L.R. 827; I.L.R. 24 All. 429.
(3.) In our opinion, precisely the same result is worked out where the puisne mortgagee suing on his puisne mortgage is himself a prior mortgagee. By no stretch of fictional forms or fictional ideas can it be said, we think, that, in such circumstances he is not a party to the suit. He is just as much a party as though he had been impleaded by a puisne mortgagee other than himself. So that where a mortgagee holds two mortgages of different dates upon the same property, and sues upon the later mortgage, he must be deemed to be a party to the suit in a position to assert any rights he might have under his prior mortgage. There might be no objection in such circumstances to his reserving those rights, as though he and the prior mortgagee were different persons, and so have the property put to sale subject to the prior mortgage. But if he makes no mention of his rights as prior mortgagee, then he is in the same position, we conceive, as a prior mortgagee would be, if being duly impleaded, he did not attempt to assert his rights. In such cases the decision in Sri Gopal v. Pirthi Singh is conclusive, establishing that such a prior mortgagee would be precluded from bringing another suit upon his prior mortgage against the purchaser at the sale; that is to say, the matter would be res judicata against the prior mortgagee.