SENGAVA NAICK Vs. PERUMAL REDDIAR

JUDGEMENT

(1.) The point for decision in this second appeal lies within a narrow compass. The material facts are as follows: On 29 September 1910, one Aiyyappa Naick executed a registered deed of mortgage in favour of one Sundara Reddi for Rs. 150 payable on 29 September 1911. The said mortgage comprised two Bets of properties described in schedules 1 and 2 to the plaint. By virtue of an assignment dated 30 June 1916 from Sundara Reddi, the rights under the said mortgage became vested in the plaintiffs. The said Aiyappa Naick died subsequent to the date of the mortgage and his widow Lingammal executed a mortgage on 20 April 1920 to defendant 1 in and by which she mortgaged the properties in the said schedule 1 and also some other properties. Subsequent to this mortgage she conveyed the properties comprised in both the schedules to the plaintiffs by a sale deed dated 6 August 1921 in discharge of the mortgage debt and a cash payment of Rs. 76. Defendant 1 instituted a suit on his mortgage (O.S. No. 618 of 1921) in the Court of the Principal District Munsif of Srivilliputtur and in that suit the plaintiffs were impleaded as parties. There was a compromise decree in and by which defendant 1 agreed to a decree being passed subject to the prior mortgage in favour of the plaintiffs. Defendant 1 brought the properties to sale in execution of the said decree and the properties were purchased by defendant 4. This suit has been instituted by the plaintiffs to enforce the mortgage dated 29 September 1910, the rights under which vested in them as aforesaid and were recognized by Ex. D. The contention of defendant 4 was twofold: (i) the suit is not maintainable on the mortgage; and (ii) the plaintiff cannot sue to recover the mortgage amount without deducting therefrom the value of the properties of schedule 2 to which, by virtue of a sale in their favour, they became absolutely entitled. The District Munsif overruled both the contentions and held that the plaintiffs are not entitled to recover the entire mortgage debt but only a proportionate sum by virtue of their having retained schedule 2 properties. He found that the value of schedule 1 properties was Rs. 700 and that of schedule 2 properties Rs. 800. He therefore gave a decree for 7/l5 share of the amount claimed with interest. The learned Subordinate Judge took a different view. He held that the suit is not maintainable. He further held that the plaintiffs must give credit to the entire value of schedule 2 properties and if such credit was given, the plaintiffs will not be entitled to claim any portion of the mortgage amount. He therefore dismissed the suit. It is against this decision that the second appeal is preferred.

(2.) So far as the maintainability of the suit is concerned, in view of the recent decisions of this Court it cannot be contended that a suit does not lie: vide Polayya Dora V/s. Anantha Patro AIR 1936 Mad 61. The next question is, what is the amount which the plaintiff is entitled to recover. It is contended by Mr. Ramabhadra Iyer on behalf of the plaintiffs that they were entitled to recover the entire mortgage amount, whereas Mr. Srinivasa Iyer, on behalf of defendant 4, contends that they can only sue for such amount that will remain after deducting the value of schedule 2 properties. It seems to me that neither of the contentions is sound. At the outset I may make one matter plain. No question of marshalling arises in this case, as Under Section 81, T.P. Act, as it stood before the amendment, which governs this case, defendant 1 had notice of the mortgage in favour of the plaintiffs. The view of the lower Appellate Court was largely influenced by the fact that defendant 1 could have claimed the right of marshalling. The mortgagee is entitled to recover the entire mortgage debt from every item of the properties mortgaged to him. But an exception is made in the oases where the mortgage security is split up by the mortgagee himself and he himself acquires the share of one of the mortgagors or any item of the mortgage property himself. In Ponnambala Pillai v. Annamalai Chettiar AIR 1920 Mad 376 it was held, following the Full Bench decision in Bisheshwar Dial V/s. Ram Sarup (1900) 22 All 284, that: When a mortgagee buys at auction the equity of redemption in a part of the mortgaged property, such purchase has, in the absence of fraud, the effect of discharging and extinguishing that portion of the mortgage debt which was chargeable on the property purchased by him, that is to say, a portion of the debt which bears the same ratio to the whole amount of the debt as the value of the property purchased bears to the value of the whole of the property comprised in the mortgage.

(3.) This principle was also extended to a case where the mortgagee purchases the property in execution of a mortgage decree without impleading a person who is interested in the equity of redemption: vide Venkatasami V/s. Ramanathan (1910) 8 IC 153. The reason of the rule is discussed by Banerjee, J. at pp. 289 and 290 in Bisheshwar Dial V/s. Ram Sarup (1900) 22 All 284. Referring to Section 82, T.P. Act, 1882, the learned Judge says thus: The primary liability on each of several properties included in a mortgage being thus a proportionate share of the mortgage debt, every parson who purchases one of those properties incurs a liability to that extent. There can be no doubt that if persons other than the mortgagee purchase different parcels of the mortgaged property, their liability inter se is, as stated above, proportionate to the relative value of the property purchased by each of them, and it is immaterial what price was paid for it. If any such purchaser has to discharge the whole of the mortgage debt, he is entitled to claim contribution from the owners of the remainder of the mortgaged property, and this right subsists even if the price of the parcel purchased by him was grossly inadequate and the difference between that price and the actual market value of the property was in excess, not only of the amount of the proportionate liability of the property, but also of the whole amount of the mortgage debt....There appears to be no difference in this respect between the case of a purchase by a stranger and that of a purchase by the mortgagee.