SESHAMA RAJU Vs. MOSUR SUBRAMANIA SASTRI

JUDGEMENT

(1.) The question that arises in this appeal is with regard to the priority of the representatives of two mortgagees to the village of Mylaravada. The earlier mortgage was one of the 6 March, 1891 in favour of one Seshama Raju for Rs. 7,500 and the property mortgaged consisted of the village of Mylaravada and another of the name of Veeranathur. The appellants are the representatives of that Seshama Raju. The other mortgage was one of the 9 June, 1894, in favour of Saravana Pillai and one Guruswami Ayya with whom we are not now concerned- -for the sum of Rs. 54,763-12-11; and the mortgaged property consisted of 129 villages, including the village of Mylaravada. On the earlier mortgage, O.S. No. 7 of 1903 was filed in the Court of the District Judge of North Arcot; and in that suit Saravana Pillai was impleaded as the 14 defendant. He had by then acquired the interest of Guruswami Ayya in the mortgage of 1894. Saravana Pillai filed a written statement in which he admitted the mortgage, but asked on equitable grounds that the village of Veeranathur should be sold first. A preliminary decree was passed on the 28 March, 1904, and the final decree--or order absolute as it was termed in those days--on the 6 February, 1907. That decree was executed; and on the 22nd December, 1916, the village of Mylaravada was sold to the 78th defendant, whose legal representatives the appellants are, for Rs. 35,768 of which Rs. 15,382-7-9, was paid to prior mortgagees and the remainder taken by the decree-holder in full discharge of his mortgage decree. The village of Veeranathur had not therefore to be sold. A suit on the later mortgage was filed and numbered as O.S. No. 33 of 1906 in the Court of the Subordinate Judge of North Arcot by the heirs of Saravana Pillai, which suit was afterwards numbered as O.S. No. 18 of 1911. The plaintiff gave a long list of mortgages; but he did not mention in his plaint the mortgage of the 6 March, 1891, which was the subject of O.S. No. 7 of 1903. The reason presumably was that by the time O.S. No. 33 of 1906 was filed the mortgage of the 6 March, 1891, was already embodied in the decree in O.S. No. 7 of 1903. Defendants 78 to 80, who are the appellants legal representatives, were however impleaded, because they also held prior mortgages with regard to four other villages of the 129 villages which were the subject of the mortgage of the 9 June, 1894. They were also impleaded as attaching decree-holders. These defendants filed a written statement asking that the property should be sold subject to their mortgage rights in various mortgages, but they made no mention of their mortgage of the 6 March, 1891, the reason presumably being that as they had already obtained a decree on that mortgage, to which Saravana Pillai was himself a party, that mortgage could no longer be disputed or be the subject of other litigation. A preliminary decree was passed in that suit on the 19 March, 1913. As the matter was taken in appeal, the final decree was not passed until the 1 December, 1920. The decree was to the effect that all 129 villages should be sold subject to the prior mortgages mentioned in the plaint, which did not, of course, include the mortgage of the 6 March, 1891; because that mortgage was not referred to in the pleadings of either the plaintiff or of the defendants 78 to 80. On the 21 February, 1902, Saravana Pillai had sub-mortgaged his rights under the later mortgage to Subbaraya Chetti whose assignee is the respondent in this appeal. He filed a suit which was numbered as 1 of 1926 on the file of the Sub- Judge of Ghittoor in which he impleaded only his mortgagors. He obtained a decree and is now, seeking to execute the decree in O.S. No. 33 of 1906 as one of the ways of enforcing his decree in O.S. No. 1 of 1926. As far as the execution of this decree is concerned, he is in precisely the same position as Saravana Pillai, who obtained the decree. What other rights he may have because the sub- mortgagee, Subbaraya Chetty, was not impleaded in O.S. No. 7 of 1903 we need not now consider.

(2.) As Seshama Raju had already obtained a decree in O.S. No. 7 of 1903 on his mortgage of the 6 March, 1891, and nothing was said about that mortgage in O.S. No. 33 of 1906 or in the decree, it is difficult to see how, as contended by the respondent, the prior rights of Seshama Raju established in the earlier suit can have become lost by the fact that the decree in O.S. No. 33 of 1906 by which the hypotheca was directed to be sold subject to certain prior mortgages, did not refer to the mortgage of 1891; but the lower Court has held that because defendants 78 to 80 did not put forward their decree or their mortgage as a defence in O.S. No. 33 of 1906 they are now precluded by the principle of res judicata from placing any reliance on the decree in their favour in O.S. No. 7 of 1903. The learned Judge has based his decision primarily on two Privy Council decisions, namely, Mohamed Ibrahim Hosain Khan V/s. Ambika Pershad Singh (1942) 22 M.L.J. 468 : L.R. 39 I.A. 68 : I.L.R. 39 Cal. 527 (P.C.) and Sri Gopal V/s. Pirthi Singh 2. In the former case, a subsequent mortgagee had a right by subrogation to priority to another mortgage; but when he was impleaded in the suit filed by the prior mortgagee he failed to put forward his right by subrogation to priority. It was held that as he did not do so he could not in a subsequent suit claim any priority. In the latter case, a fifth mortgagee claimed priority to all the four prior mortgages which were the subject of the suit by reason of having paid off a mortgage that was earlier than any of the four prior mortgages. One of the mortgagees, who held three of the four prior mortgages, put forward in his written statement his prior rights with regard to two of the three mortgages, But failed to say anything about the third. The Courts held, as a finding of fact, that the fifth mortgagee had not proved that he had discharged any mortgage debt prior to the four mortgages which were the subject of the suit. Their Lordships nevertheless held that as the holder of the three prior mortgages had only set up two of the three prior mortgages as being prior to the fifth mortgage, they were barred by the principle of res judicata from claiming in a subsequent litigation priority for the third mortgage, with regard to which they had said nothing in the earlier suit. It is seen that in one of these cases the principle of res judicata was applied where a subsequent mortgagee, impleaded as such, failed to put forward claims which would have given his mortgage priority to the mortgage of the plaintiff, and in the other where a prior mortgagee, whose priority had been impugned, failed to assert his priority with regard to one of his mortgages. In the present case, the priority of the mortgage of 1891 was never in question. In O.S. No. 7 of 1903 it was admitted by Saravana Pillai, and in the subsequent suit, O.S. No. 33 of 1906, no reference was made to the mortgage by either of the parties; and the priority of the earlier mortgage was therefore not impugned in any way. This difference distinguishes Mohamed Ibrahim Husain Khan V/s. Ambika Per shad Singh (1912) 22 M.L.J. 468 : L.R. 39 I.A. 68 : I.L.R. 39 Gal. 527 (P.C.) and Sri Gopal V/s. Pirthi Singh (1902) L.R. 29 I.A. 118 : I.L.R. 24 All. 429 (P.C.) from the present case. The learned Advocate for the respondent has argued with regard to Sri Gopal V/s. Pirthi Singh (1902) L.R. 29 I.A. 118 : I.L.R. 24 All. 429 (P.C.) that as it was found that the fifth mortgagee had not proved that he had paid off the earlier mortgage, the parties were left precisely in the same position as they are in the present case, in which a decree was passed subject to certain prior mortgages with no mention of the prior mortgage which was the subject of the subsequent litigation. Their Lordships put the matter in this way: The materiality of the mortgage here referred to is evident. If Mussammat Janki's (fifth mortgagee s) claim had succeeded to its full extent she would have established her priority over all the four bonds in question. As it was, she only established her claim subject to the specified securities of Sri Gopal and Murli (holders of the second mortgage) and Sarnam Singh (holder of the other three prior mortgages), which did not include the bond now sued on. The appellant would have been entitled to plead and prove this bond as a bar to any decree being made for sale except subject to that bond. Had he done so, it would have been included in the details of liens at the end of the decree and the right of Mussammat Janki would have been expressly subordinated to that charge also.

(3.) A case almost identical with that now under consideration in this appeal was dealt by a decision of the Privy Council in Radhakishun V/s. Khurshed Hosain (1919) 38 M.L.J. 424 : L.R. 47 I.A. 11 : I.L.R. 47 Cal. 662 (P.O.). In that case, the third mortgagee, who was also the first mortgagee, referred in a suit filed on the third mortgage to his own earlier first mortgage but said nothing of the second mortgage. The second mortgagee was impleaded as a party though for what precise purpose was not clear. The second mortgagee remained ex parte and did not set up his claim on his second mortgage. The result was that a decree was passed to sell the property subject to the first mortgage. It was nevertheless held that the second mortgagee was not barred from contending in a subsequent litigation that his mortgage had priority to the third mortgage. Their Lordships held that unless a prior mortgage is expressly impugried it is not a subject of the suit and that it is therefore unnecessary for the prior mortgagee to say anything about his rights. They said: Bakhtaur Mull's (second mortgagee s) position therefore was that he was a prior mortgagee with a paramount claim outside the controversy of the suit unless his mortgage was impugned. Consequently, to sustain the plea of res judicata it is incumbent on the Sahus (representatives of the first and third mortgagees) in the circumstances of this case to show that they sought in the former suit to displace Bakhtaur Mull's prior title and postpone it to their own. For this it would have been necessary for the Sahus as plaintiffs in the former suit to allege a distinct case in their plaint in derogation of Bakhtaur Mull's priority. As it was found that they had not done so, it was held that Bakhtaur Mull had a right to assert his priority in the later suit. In our opinion, the appellants are in a stronger position than Bakhtaur Mull was in Radha Kishun V/s. Khurshed Hosain (1019) 38 M.L.J. 424 : L.R. 47 I.A. 11 : I.L.R. 47 Cal. 662 (P.C.) for the reason why no mention was made of the earlier mortgage by the plaintiffs in the later suit was clearly that a decree had been passed which was binding on the principal parties to the suit and could not therefore be a subject for contention in the later suit. Many other cases have been cited by the learned advocate for the respondent; but none seen by us has sought to modify the simple proposition" apparently, laid down in Radha Kishun V/s. Khurshed Hosain (1019) 38 M.L.J. 424 : L.R. 47 I.A. 11 : I.L.R. 47 Cal. 662 (P.C.) namely, that a prior mortgagee, is not bound to assert his priority unless his right is impugned. On the other hand, if a subsequent mortgagee has priority by reason of a right to subrogation, he is obliged to put forward that right. If, in addition to having a subsequent mortgage, a defendant has a prior independent mortgage, he is not bound to say anything about the prior mortgage.