MUNNA LAL Vs. CHUNNI LAL

JUDGEMENT

(1.) This is an appeal by Muima Lal plaintiff under Section 10, Letters Patent, against the judgment of a learned Judge of this Court and arises out of a suit for sale on a mortgage, dated 13 February 1925, executed by Bharat Singh, defendant l, in favour of Dwarka Das, father of Munna Lal. The main contest in the suit was between the plaintiff and one of the defendants named Chunni Lal, who is a respondent to the present appeal. The Courts below held that the plaintiff had priority as against a mortgage held by Chunni Lal, but the learned Judge of this Court came to the contrary conclusion. The facts are not in controversy and are as follows: On 27 May 1912, Lal Singh, father of Bharat Singh, executed a deed of simple mortgage in favour of Dwarka Das, father of the plaintiff. This mortgage will hereafter be referred to as the mortgage of 1912. In the year 1920 there was some payment by the mortgagor in respect of part of principal or interest "as such" due on the mortgage of 1912, and the payment so made gave fresh start to the period of limitation for enforcement of the mortgage of 1912. Lal Singh died some time between the years 1920 and 1922 leaving three sons, Bharat Singh, Ran Singh and Ranjit Singh. It is common ground, that Lal Singh and his three sons constituted a joint Hindu family and, as such, on the death of Lal Singh, his three sons became owners, by right of survivorship, of the property mortgaged under the deed of 1912. On 22 April, 1922, Bharat Singh, as karta of the joint family consisting of himself and of his two brothers, executed a deed of simple mortgage in favour of Bansi Lal, father of Chunni Lal, defendant-respondent. This mortgage will hereafter be referred to as the mortgage of 1922. The properties mortgaged under the mortgage deeds of 1912 and 1922 were identical. In May 1924, Dwarka Das put the mortgage of 1912 into suit and obtained a preliminary decree for sale against Bharat Singh and his brothers in August 1924, Bansi Lal, the mortgagee under the mortgage of 1922, was no party to the suit or to the decree.

(2.) Some time between 1922 and 1925 there was separation between Bharat Singh and his brothers and each of the three brothers, on partition got one-third of the mortgaged property. On 13 February 1925, the mortgage deed in suit (hereinafter called the 1925 mortgage) was executed by Bharat Singh in favour of Dwarka Das. The amount secured by this mortgage was one-third of the amount due under the decree for sale obtained by Dwarka Das on the basis of the mortgage of 1912, and the property covered by the mortgage of 1912, which, on partition, was allotted to Bharat Singh. Two separate mortgage deeds with respect to two-thirds of the decretal amount were also executed by the two brothers of Bharat Singh in favour of Dwarka Das and thus the decree of 1924 was satisfied. We are, however, not concerned, in the present appeal, with the two mortgages executed by the two brothers of Bharat Singh. In the 1925 mortgage it was expressly recited that that mortgage was being executed in lieu of one-third of the amount due on the decree passed on the basis of the prior mortgage of 1912 and that the mortgagor had not redeemed, nor had the mortgagee released, the security under the mortgage of 1912, and that the prior security created by the mortgage of 1912 was kept intact for the benefit of the mortgagee.

(3.) The suit giving rise to the present appeal was filed by Munna Lal in 1937 and he maintained that, inasmuch as the amount secured by the 1925 mortgage went to satisfy the mortgage of 1912, he was entitled to priority with respect to the amount due on the 1925 mortgage as against Chunni Lal, the mortgagee under the deed of 1922. The position so taken by Munna Lal was controverted by Chunni Lal and, as stated at the inception of this judgment, the Courts below accepted the contention of the plaintiff, but the learned Judge of this Court held otherwise. Prior to the amendment introduced in the Transfer of Property Act by the Amending Act 20 of 1929, the doctrine of subrogation was imperfectly expressed in Section 74 of the Act. Section 74 ran as follows: Any second or other subsequent mortgagee may, at any time after the amount due on the next prior mortgage has become payable, tender such amount to the next prior mortgagee, and such mortgagee is bound to accept such tender and to give a receipt for such amount, and (subject to the provisions of the law for the time being in force regulating the registration of documents) the subsequent mortgagee shall, on obtaining such receipt, acquire, in respect of the property, all the rights and powers of the mortgagee, as such, to whom he has made such tender.