A V A AUDINATHA AYYENGAR Vs. SSBHARATHI

JUDGEMENT

(1.) The plaintiff-appellant has brought this suit upon a mortgage executed by defendants 1 and 2 and this appeal relates only to the properties mentioned in plaint Schedule 2 in which defendant 16, the only contesting respondent, is interested. These properties were mortgaged in 1911 for Rs. 15,000 and again in 1913 for Rs. 9,000. The plaintiff's mortgage which was executed in 1914 is the third mortgage on the properties. The first mortgagee brought a suit, O.S. No. 65 of 1916, and obtained a decree for sale. The mortgagee himself purchased the property in 1919 for Rs. 19,000 and odd and. resold it to a vakil, Mr Bharathi, defendant 5 in this suit, for Rs. 22,000. Defendant 1 then filed a suit, O.S. No. 38 of 1920, contending that the purchase by Mr. Bharathi was on his behalf. That suit was compromised on 10 March 1921 and it was de-creed that the plaint properties should be handed over to defendant 1 on payment of Rs. 29,000 before 13 July 1921. On 11 July defendant 1 entered into an agreement with defendant 16 to sell the properties to him for Rs. 33,000, the consideration being paid on 11 July in order that defendant 1 might pay Rs. 29,000 into Court on the 13th and obtain possession of the properties In his plaint the plaintiff alleged that the purchase by Mr, Bharathi was for the benefit of defendant 1, and as defendant 1 the original mortgagor was in possession of the mortgage property, that property was liable under the plaintiff's mortgage.

(2.) It is now well settled law that, when a mortgagor pays off a prior mortgage by purchase of the property for himself, he cannot be heard to plead the prior mortgage as a shield against the subsequent encumbrancer. This is decided in Otter V/s. Lord Vaux 69 E.R. 943, a decision which was confirmed on appeal in Otter V/s. Lord Vaux 43 KB. 1381. That principle has been accepted in this country in Bhaja Chowdhury V/s. Chuni Lal Marwari [1907] 5 C.L.J. 95, Ganga," Sahai V/s. Tulshi Ram [1903] 25 All. 371 and Raghunath Sahay Singh V/s. Lalji Singh [1896] 23 Cal 397. In Otter v- Lord Vaux (2), the mortgagor" purchased at a sale effected by the mortgagee in pursuance of a power of sale given under his mortgage; but the question whether, had there been intermediate purchasers of the property before it came into the hands of the mortgagor,, the same principle would prevail was left undecided. The further question has now been decided in this Court in Manappa Boy V/s. Krishnayya [1906] 29 Mad. 113, where the principle was applied to a purchase by the mortgagor, not direct from the mortgagee or in execution of the mortgagee s-decree, but after the property had passed through other hands. The liability of the mortgagor to discharge subsequent encumbrances out of the mortgage property is put on two grounds in Otter V/s. Lord Vaux: any purchase of his property from the mortgagee must be deemed to be payment in discharge of the mortgage debt thus freeing the property from the prior encumbrance for the benefit of the subsequent mortgagee and (2) the mortgagor is bound to fulfil his promise-to the subsequent mortgagee to repay him his loan on the security of the mortgage property and this is a promise which will be enforced when possible.

(3.) The decision in Manjappa Roy V/s. Krishnayya [1906] 29 Mad. 113, is based upon Section 43. T.P. Act. Mr. Varadachariar for the respondents, while not disputing the correctness of the decision, contends that Section 43, T.P. Act, is not applicable, but that the decision must be based on the obligation of the mortgagor to discharge his promise to the subsequent mortgagee. If the correctness of the decision be admitted, and with all respect I think that it should then in the present case it is not really material to hold that Section 43, T.P. Act, is applicable. The right to bring Section 44 into play is based on a misrepresentation by the person transferring immovable property. Such misrepresentation is alleged in the present case in that the mortgage deed to the plaintiff failed to recite the prior encumbrances but I do not think it necessary to discuss this question.