MD KARIMUL RAHMAN KHAN Vs. SARASWATI SUGAR SYNDICATE

JUDGEMENT

(1.) Apart from the question whether the order sought to be assailed by the present appeal is an appealable order, we have come to the conclusion that there are no merits in this appeal and that the decision of the Court below must stand. 16 is well settled that so long as the mortgaged property remains in the hands of the mortgagor it is open to the mortgagee to realize the mortgage debt from the whole or any portion of the mortgaged property. The reason for this rule is that every item of mortgaged property is a security for the entire mortgage debt, and, as such, it is open to the mortgagee to realize the mortgage debt from any item of the mortgaged property. This rule is however subject to two exceptions. Firstly the rule is subject to the doctrine of marshalling provided for by Secs.56 and 81, T.P. Act, and secondly to the Court's power under Order 34, Rule 4, Civil P.C., to adjust the equities between the mortgagor and subsequent transferees from him by directing that the various items of mortgaged properties be sold in a certain order. The order in which the properties are to be sold may be regulated either by the decree for sale passed by the Court or in the course of execution proceedings of such a decree.

(2.) The provisions of Section 56 are analogous to the provisions of Section 81, T.P. Act, and the only difference between the two Secs.is that Sec 56 prescribes the rule as to marshalling by subsequent purchasers, whereas Section 81 provides for the marshalling of securities at the instance of a subsequent mortgagee. The rule of law enacted by these two Secs.is that if the owner of two or more properties mortgages them to one person and then sells or mortgages one or more of the properties to another person, the buyer or the subsequent mortgagee is, in the absence of a contract to the contrary, entitled to have the mortgage debt satisfied out of the property or properties not sold or mortgaged to him, so far as the same will extend, but not so as to prejudice the rights of the prior mortgagee or persons claiming under him or of any other person who has for consideration acquired an interest in any of the properties. It is evident [from the provisions of these Secs.that the rule as to marshalling can prevail only if its application to a particular case is not calculated to prejudice the rights of the prior mortgagee or of any other person who has acquired an interest in any item of the mortgaged property and that for consideration. The application of the rule as to marshalling has the effect of adjusting the equities between the mortgagor and subsequent transferees from him and can be enforced by a Court as against the prior mortgagee, provided his interests are not adversely affected by the application of the rule. Further, it is clear that marshalling jean be enforced only at the instance of a subsequent purchaser or a subsequent mortgagee of one of the items of the mortgaged property.

(3.) In the case before us the rule as to marshalling has no application for the simple reason that the subsequent purchaser in the present case, viz. the Saraswati Sugar Syndicate, Lahore, which is respondent 1 in the present appeal, has not invoked to its assistance the rule as to marshalling and this appeal is by the legal representatives of the mortgagor who unsuccessfully prayed in the Court below that the various items of the mortgaged properties should be sold in a particular order. The question that arises for consideration in the present appeal therefore is whether the second exception to the general rule mentioned at the inception of our judgment has any application to the facts of the present case. It has been laid down in a series of cases that, even if the doctrine of marshalling is not strictly applicable, the Court has, under Order 34, Rule 4, Civil P.C., the power to direct the order in which various items of mortgaged properties are to be sold, provided the order laid down by the Court does not in any way prejudice the rights of the mortgagee decree-holder.