YERLAGADDA MAHALAKSHMI Vs. MIDDE SOMARAJU

JUDGEMENT

(1.) The appellant sued to recover money due under a mortgage deed for Rs. 3,000 executed in his favour by defendants 1 to 3 and their father on 13 March, 1917. The seventh defendant was the principal contesting defendant. His defence was in the main founded upon certain events that happened in 1918 and 1920.

(2.) In August, 1918, a third party who had a money claim against the mortgagors attached some of the mortgaged items, before judgment, pending his money suit against them. On 2nd October, 1918, the mortgagors purported to sell the mortgaged items to the plaintiff under the original of Ex. I partly for the mortgage amount and partly for a further consideration of Rs. 441. When the money decree- holder attempted to bring the properties to sale on the basis of the attachment already made, the plaintiff filed a claim petition (Ex. G) on 29 September, 1920. In this petition she claimed one of two reliefs: she set up her sale and asked that the property should be released from attachment, in the alternative, she asked that even if the sale should be held to be invalid as against the attaching decree- holder, the execution sale should be directed to be held subject to the mortgage in her favour. It appears from the endorsement on Ex. G that the decree-holder himself had referred in his sale proclamation to the mortgage in the plaintiff's favour but suggested that it was supported by consideration only to the extent of Rs. 2,500. When the matter carne on for final disposal the executing Court held that the sale having been effected subsequent to the attachment was invalid as against the decree-holder and it directed the sale to be held subject to the mortgage "referred to by the decree-holder." The property was accordingly sold subject to the mortgage and purchased by the decree-holder himself, who in turn conveyed it to the seventh defendant as the result of a decree for specific performance of an agreement entered into between them. The result of the execution sale was that the plaintiff was deprived of possession of items 1, 2 and 4 to 6 of the plaint schedule and retained possession only of items 3 and 7. The plaintiff accordingly filed this suit for the recovery of the amount due under the mortgage, contending that as the sale had failed, he was entitled to fall back upon the mortgage. The seventh defendant contended that the sale must be deemed to have extinguished the mortgage and that the subsequent events could not revive the plaintiff's claim under the mortgage. The learned Subordinate Judge gave effect to this contention and dismissed the suit. The seventh defendant raised other contentions which formed the subject-matter of the other issues raised in the case. One of them was a plea of partial discharge which forms the subject- matter of the fourth issue. Another was a claim that the plaintiff should give credit as against the mortgage amount and the interest due thereon for the profits realised by him during the time that he had been in possession of the properties sold to him. Finally there was a question of the amount which the plaintiff was entitled to recover in view of the fact that he still retains as vendee two items of the hypotheca.

(3.) So far as the lower Court dismissed the plaintiff's suit, we are unable to concur in its decision. The decision is mainly based on the judgment of this Court in Daso Polai V/s. Narayana Patro . We shall presently show that that case is distinguishable on its facts; but we think it right to add that we are, with all respect, unable to concur in some of the observations in that case, in the present case, the order Ex. G-1 was clearly an order under Order 21, Rule 62, Civil Procedure Code. As we have already stated, the plaintiff put forward alternative claims in his claim petition - one on foot of the sale in his favour and the other on foot of the mortgage. The Court rejected the claim based on the sale but upheld the claim based on the mortgage. Neither party took steps to impeach that order and it became conclusive between the claimant and the decree-holder in the money suit. The Court accordingly purported to sell only the equity of redemption and the decree-holder (who became the auction purchaser) having purchased only the equity of redemption could convey only that interest to the present seventh defendant. In respect of these facts the position in Daso Polai V/s. Narayana Patro was very different. The claim petition there was dismissed as preferred too late and as no suit was brought by the claimant under Order 21, Rule 63, Civil Procedure Code, that order became final. It was in those circumstances impossible to imply any adjudication that the claim founded on the mortgage was well founded. The learned Judges had therefore to hold that the reference to the mortgage in the sale proceedings amounted to nothing more than a notice to intending purchasers under Rule 66 of Order 21, Civil Procedure Code. It is on that footing that they held that the Court auction purchaser was not precluded from contesting the existence or validity of the mortgage. On the facts of the present case as we have set out above neither the decree-holder in the money suit nor the Court auction purchaser nor the seventh defendant as the purchaser from him could go behind the order in the claim proceedings which upheld the mortgage claim. We may also point out that in Daso Polai V/s. Narayana Patro , the learned Judges laid stress on the fact that even in the claim petition the claim based on the mortgage was never put forward and that the claimant insisted that the mortgage had been discharged by the sale deed in his favour. The conclusion reached in that case that the mortgage had been extinguished has largely been based upon this ground. That ground also will not avail the seventh defendant in this case because as already stated the claim was put forward both on the mortgage and on the sale. The portion of the judgment with which we are unable to agree is the interpretation which the learned Judges have placed on Section 101 of the Transfer of Property Act. With all respect we think that in a case like the present it must be presumed that it is to the advantage of the mortgagee to keep his interest as mortgagee and his interest as purchaser of the equity of redemption distinct because of the intervening attachment against which his sale cannot be effective.