KALIDAA CHAUDHURY Vs. PRASANNA KUMAR DAS

JUDGEMENT

(1.) This is an appeal by the mortgagee defendants in a suit to enforce a mortgage security. On the 9th September 1902, the mortgagor defendant executed a mortgage in favour of the plaintiffs to secure a loan of Rs. 1,900, which was to cany interest at 33 per cent. per annum and was to be repaid on the 14th January 1903. On the 4th March 1904, a sum of Rs. 500 was paid by the mortgagor on account of interest. No further payment was made and on the 6th January 1915, the mortgagees instituted the present suit for recovery of their dues. The mortgagor was made the 1st defendant. Four other persons were also joined as defendants, on the allegation that they were puisne encumbrancers who had taken a mortgage on the 12th February 1804. The mortgagor defendant did not enter appearance. The mortgagee defendants contested the claim substantially on two grounds, namely, first, that the mortgage in favour of the plaintiffs was fictitious, and secondly, that they were entitled to priority in respect of a portion of the money secured by their mortgage. The Subordinate Judge has overruled both the contentions and decreed the suit. On the present appeal, the two grounds just mentioned have been reiterated. The first ground is, in our opinion, unsubstantial, because the evidence proves conclusively that the mortgage which is the foundation of the claim of the plaintiffs was a genuine transaction, as held by the Subordinate Judge. The second ground, however, requires careful consideration.

(2.) On the 10th June 1894, the mortgagor executed a mortgage in favour of Jaladhar Saha and Makhan Lal Saha to secure a loan of Rs. 7,500, which was to carry interest at 12 per cent. per annum and was repayable on the 16th August 1895. The mortgagees instituted a suit on the 15th August 1901 to enforce their security and obtained a decree on the 16 th September 1901. They took out execution on the 9th November 1903, and the 16th February 1904 was fixed for the sale of the mortgaged properties. During the pendency of the execution proceedings, on the 12th February 1904, the mortgagor borrowed from the present defendants a sum of Rs. 16,000 which was to carry interest at 9 per cent. per annum and was to be repaid on the 12th February 1906. This mortgage is the root of the title of the defendants. It recites the execution proceedings on the decree of the first mortgage then pending and states that the money had been borrowed to satisfy the dues of the prior encumbrancer. The records of the execution case show that a sum of Rs. 13,548-2 was paid to the decree-holders in satisfaction of their decree. The defendants contend that to the extent that their money was applied to satisfy the dues of the first encumbrancer, they are entitled to be subrogated to his rights and to claim priority over the mortgage of the plaintiffs. They have in support of their contention invoked the aid of the decisions in Gokaldas v. Puranmal 10 C. 1035 : 11 I.A. 126 : 4 Sar. P.C.J. 543; Dinobandhu Shaw Chowdhary v. Jogrnaya Daii 29 C. 154 : 29 I.A. 9 : 12 M.L.J. 73 (P.C.) : 4 Bom. L.R. 238 : 6 C.W.N. 209 : 8 Sar. P.C.J.217; Mahomed Ibrahim Hossein Khan v. Ambika Pershad Singh 14 Ind. Cas. 496 : 39 C. 527 : 39 I.A. 68 : (1912) M.W.N. 367 (P.C.) : 11 M.L.T. 265 : 9 A.L.J. 332 : 14 Bom. L.R. 280 : 16 C.W.N. 505 : 15 C.L.J 411 : 22 M.L.J. 468. Surjiram Marwari v. Barhamdeo Persad 2 C.L.J. 202 : Dhakeswar Prosad Singh v. Harihar Prosad Narain Singh 27 Ind. Cas. 780 : 21 C.L.J. 104; Bhawani Kumar v. Mathura Prasad Singh 16 Ind. Cas. 210 : 40 C. 89 : 16 C.W.N. 985 : 23 M.L.J. 311 : 12 M.L.T. 352 : (1912) M.W.N. 244 : 14 Bom. L.R. 1046 : 16 C.L.J. 606 : 39 I.A. 228 (P.C.). The plaintiffs have relied on the other hand upon the decision in Het Ram v. Shadi Ram 45 Ind. Cas. 798 : 45 I.A. 130 : 40 A. 407 : 5 P. L.W. 88 : 16 A.L.J. 607 : 35 M.L.J.I; 24 M.L.T. 92 : 28 C.L.J. 188 : (1918) M.W.N. 518 : 20 Bom. L.R. 798 : 22 C.W.N. 1033 : 9 L.W. 550 : 12 Bur. L. T.73 (P.C.) which was considered by a Full Bench of the Allahabad High Court in Chhaggan Lal v. Muhammad Mussain Khan 51 Ind. Cas. 133 : 17 A.L.J. 741 : 1 U.P.L.R. (H.C.) 1 : 41 A. 456. The decision of the Judicial Committee last mentioned may have the effect, as the appellants have contended, to unsettle what has hitherto been understood as settled law and may have affected judicial decisions which were not brought to the notice of the Judicial Committee, such as Bibijan Bibi v. Sachi Bewah 31 C. 863 : 8 C.W.N. 684, Shyam Lal v. Bashiruddin 28 A. 778 : 3 A.L.J. 630 : A.W.N. (1906) 230 Yellapaddi Mahalakshammal v. Sriman Madhva Siddhantha Oonahini Nidhi, Ltd. 11 Ind Cas. 865 : 35 M. 6 42 : 10 M.L.T. 169 21 M.L.J. 811 : (1912) M.W.N. 24; Chinnu Pillai v. Venkatasamy Ohettiar 34 Ind. Cas. 607 : 40 M. 77 : 30 M.L.J. 347 (1916) 1 M.W.N. 245 : 19 M.L.T. 217; Rahimunnissa Bibi v. Badri Das 9 Ind. Cas. 205 : 33 A. 348 : 8 A.L.J. 112. But the question of the effect of the decision in Het Ram v. Shadi Ram 45 Ind. Cas. 798 : 45 I.A. 130 : 40 A. 407 : 5 P. L.W. 88 : 16 A.L.J. 607 : 35 M.L.J.I; 24 M.L.T. 92 : 28 C.L.J. 188 : (1918) M.W.N. 518 : 20 Bom. L.R. 798 : 22 C.W.N. 1033 : 9 L.W. 550 : 12 Bur. L. T.73 (P.C.) upon the accepted view of law applicable to this class of oases, does not require consideration in view of events which we shall presently mention.

(3.) The defendants instituted a suit on the 17th January 1910 to enforce their mortgage of the 12th February 1904. In this suit, they joined the mortgagor alone as the defendant and did not implead the plaintiffs whose mortgage, as we have seen, was dated the 9th September 1902. The suit was decreed on the 30th January 1911. Execution was taken out on the 16th March 1911. The sale was held, the properties were purchased by the decree-holders, an application was made by the judgment-debtors for cancellation of the sale, and the sale was ultimately reversed on the 30th March 1914, On the 25th May 1914 the decree holders commenced the second execution proceedings. The sale was proclaimed in due course. But on the 17th August 1914, the mortgagor judgment-debtor preferred various objections. One of these objections was that the property described as the fifth lot in the sale proclamation (which is the substantial property covered by the mortgage in suit) was under mortgage, but it had not been mentioned. On the 19th August 1914, two of the decree-holders, through their Pleader, presented a petition and prayed that the property in question might be put up to auction upon declaration that it was subject to a mortgage for Rs. 1,900 held by Prasanna Kumar Das and others (the plaintiffs in this suit). The Subordinate Judge delivered judgment on the 22nd August and directed that the property mentioned be sold on declaration that it was subject to the mortgage mentioned. These facts we have gathered from an examination of the execution records, which we have called up at the request of both the parties. The sale was held on the same day. The bid offered by the decree-holders proved to be the highest and the property was purchased by them for Rs. 3,500. In the circumstances, the question arises whether it is now open to the decree-holders auction-purchasers (the mortgagees defendants in this suit) to contend that they have taken the property free of the mortgage of the plaintiffs either entirely or partially. We are of opinion that they are bound by the doctrine of estoppel and cannot take up a position inconsistent with what they adopted in the execution Court. 5. It was decided by the Judicial Committee in Bam Kirpal v. Rup Kuar 11 I.A. 37 : 6 A. 269 (P.C.) : 4 Sar. P.C.J. 489 and Beni Ram v. Nanhu Mal 11 I.A. 181 : 7 A. 102 : 4 Sar. P.C.J. 564 that a decision, in the course of execution proceedings, of a question which properly arises for consideration is final and binding between the parties. The position is not different when the order is made by the consent of the parties, for, as was observed in Laktmishanhar v. Vishnuram 24 B. 77 : 1 Bom. L.B. 534 and Bajlakshmi Dasee v. Katyayani Daisee 12 Ind. Cas. 464 : 38 C. 639 at p. 674 the consent order is just as binding on the parties to the proceeding as a decree after a contentious trial. In the case before us, two of the decree-holders agreed that the property should be sold subject to the mortgage of the 9th September 1902; the other decree-holder did not appear. The binding character of the order is not affected by the circumstances that as to some of the parties it was based on agreement, as to the others on adjudication by the Court. Reference may be made to the decisions in Kasturi v. Venkatachalapathi 15 M. 412; Jaganatha v. Gangi Reddi 15 M. 303; Erishnan v. Chadayan Kutti Haii 17 M. 17 and Giribala Delia v. Rani Mina Kumari 5 C.W.N. 497 to show that, in circumstances such as those of the present case, the decree holders purchasers would be bound by the doctrine of estoppel. It was their duty as execution creditors to specifiy the judgment debtor s interest in the property so far as they had been able to ascertain the same (Order XXI, Rule 13). The sale proclamation was to specify, as fairly and accurately as possible, any encumbrance to which the property was liable (Order XXI, Rule 66). The judgment-debtor took exception that the prior encumbrance had not been mentioned. The Court thereupon directed that the property be sold subject to the mortgage now in suit. The decree holders, if they claimed priority, should have set forth their objection at the time. But they did not claim priority for any portion of their dues. On the other hand, two of them expressly agreed to have the sale held subject to the mortgage of the plaintiffs which was prior in point of time, while the other acquiesced in order. On no conceivable principle of justice, equity and good conscience can they be now permitted to take up a position inconsistent with what they deliberately adopted at the time. They themselves and their mortgagor were all bound by the order made by the execution Court, and the fact that they purchased the interest of the mortgagor in execution proceedings undoubtedly does not operate to weaken its binding character; for it is well settled that the mortgage who has purchased at the sale in execution of his decree on the mortgage is bound by an estoppel that would have bound his mortgagor. Kishory Mohun Roy v. Mahomed Muzoffar Hossein 18 C. 188; Mahomed Mozuffer Hossein v. Kishori Mohun Roy 22 I.A. 129 : 2 C. 909 : 5 M : L.J. 101 : 6 Sar. P.C.J. 683. In this view the mortgage defendants are not entitled to set up a question of priority as against the plaintiffs; for the circumstances disclosed attract the operation of the well-established doctrine, recognised in a long series of decisions, that the decree-holder himself who is bound to notify before the sale all encumbrances on the property about to be sold cannot subsequently set up an encumbrance in his own favour not set up in the execution proceedings Prosonna Kumar Mukherjee v. Srikant Raut 16 Ind. Cas. 365 : 40 C. 173 : 17 C.W.N. 137 : 16 C.L.J. 202. 6. We may add that if we had not affirmed the finding of the Subordinate Judge as to the reality of the mortgage which the plaintiffs seek to enforce, the question would have arisen whether the defendants were not bound by the doctrine of estoppel upon that question also. If a person purchases an estate subject to a mortgage, whether under a voluntary conveyance or under a sale in invitum, or undertakes to discharge it, he cannot be heard to deny the validity of the mortgage subject to which he made his purchase. Where, however, the purchaser merely buys an estate which is under mortgage but does not take it subject to the encumbrance or undertake to discharge it, he is not precluded from impeaching the validity of the mortgage. The distinction between the two classes of eases depends upon the question, whether the property has been sold subject to the mortgage or whether mere notice of the alleged mortgage has been given in the proclamation of sale. The former contingency is provided for by Order XXI, Rule 62, the latter is contemplated by Order XXI, Rule 66. The distinction is well-illustrated by the cases of Inayat Singh v. lzzat-un-Nissa Begam 27 A. 97; A.W.N. (1904) 174, 1 A.L.J. 435; Rama-chandra v. Haji Kassim 16 M. 207; Shantappa v. Chedambaraya v. Subrao Ramchandra 18 B. 175; Shib Kunwar Singh v. Sheo Prasad Singh 28 A. 418 : 3 A.L.J. 200 : A.W.N. (1906 ) 68; Ganesh v. Curshottam 1 Ind.Cas. 106 : 33 B. 311 : 11 Bom. L.R. 26 : 5 M.L.T. 228 and Jairoj Mai v. Radha Kishan 20 Ind. Cas. 182 : 35 A. 257 : 11 A.L.J. 357. The language used in the petition of the decree-holders and the order of the execution Court may well lend support to the contention that the decree-holders agreed to have the property sold as subject to a genuine mortgage. They do not suggest that the purchaser should buy the property, merely with notice of a mortgage claim, subject to such risks as the notice might involve, with liberty to contest the mortgage and to redeem it only if it was established to be a really subsisting mortgage. This point of view, however, does net require further elaboration, as in concurrence with the Subordinate Judge we have overruled the contention that the mortgage of the plaintiffs was ficititous. 7. The result is that the decree of the Subordinats Judge is affirmed and this appeal dismissed with costs.