Mere inactivity on his part would not be indicative of 'default', because there are occasions when execution petitions are 'struck off' by the executing Court without taking into account the opinion or the wishes of the decree-holder. The cases relied upon by the Appellants, viz., - Dhondba Misir v. Sheikh Qurban AIR 1947 All 313 (R); - Baba Punjaji v. Kisan Narayan MANU/MH/0072/1937 : AIR 1938 Bom 18 (S); - Vijaydas Hanumantdas v. Shekharappa Anantappa AIR 1941 Bom 395 (T) and - Nanu Mal v. Amar Nath AIR 1938 Lah 590 (U) were partly decided on their own facts and partly on a strict view of Rule 57 which, with all due respect we are not prepared to accept. In the present case a long time was not allowed to lapse between the 'striking off' of the first petition and the filing of another. The decree-holder came forward with a fresh application only three days later, and, on this point also, this case is distinguishable from the cases cited for the Appellants, in which the delay was considerable.
31. We are of opinion that what Puranik J. observed in relation to this order represents the true state of facts, and as their Lordships have said both in 32 Ind App 102 (PC) (B) and in MANU/PR/0003/1939 : AIR 1939 PC 80 (Q) each case must be decided on its own facts. Puranik J.'s conclusion was that the execution was struck off 'suo motu' by the Court without any default on the part of the decree-holder, and we, are, in respectful agreement with the learned Judge that the facts in this case disclose nothing more. We are satisfied that the attachment was not lifted cither in fact or by operation of law and that the second application for execution was merely a continuation of the earlier execution.1
AIR1953Nag200, [1952]ILR Nag684
IN THE HIGH COURT OF NAGPUR
Decided On: 08.10.1951
Appellants: Balwantrao Laxmanrao and Anr.
Vs.
Respondent: Dhondba Dasrath and Ors.
Vs.
Respondent: Dhondba Dasrath and Ors.
Hon'ble Judges/Coram:
Hidayatullah and R. Kaushalendra Rao, JJ.
Order XXI, rule 57 of the Civil Procedure Code must be read as a whole. Even after its introduction in the new Code it is necessary to find out whether there was a dismissal of the execution application due to the default of the decree-holder. If there is no dismissal due to the default of the decree-holder there is no final order under rule 57 which would automatically terminate the attachment. Even if the decree-holder apprehending that he had to file a fresh application, does so, the fresh application can be treated as merely a reminder to the Court that certain proceedings had been laid aside to be resumed on a future date.
(Case law discussed.)
Mere inactivity on the part of a decree-holder is not indicative of default because there are occasions when execution petitions are 'struck off' by the executing Court without taking into account the opinion or the wishes of the decree-holder.
A prior mortgagee if he is in possession can set up in defence his prior mortgage as a shield although in his suit he had not impleaded the subsequent mortgagee and even though a fresh suit to enforce it would be barred by time.
(Case law discussed.)
Where a prior mortgagee is in possession as an auction-purchaser in execution of his decree on his prior mortgage in a suit to which the puisne mortgagee was not made a party, the puisne mortgagee is entitled to redeem the prior mortgage by paying the amount of the final decree of the prior mortgagee less any profits made by the prior mortgagee while in possession.
A prior mortgagee desiring to redeem a puisne mortgage need not file a suit at all for that purpose. The accounting can be done in the suit of the puisne mortgagee.
1. This appeal is by the Plaintiffs who were mortgagees suing on a simple mortgage dated 9-6-1927. The mortgage was originally in favour of the first Appellant Balwantrao and one Kanhaiyalal Jain. Kanhaiyalal was adjudged insolvent in insolvency case No. 40 of 1936 of the Court of Third Sub-Judge First Class, Nagpur. His share in this mortgage was sold in an insolvency sale and was purchased by one Ramchandra on 2-8-1938. On 7-10-1938, Ramchandra assigned the right by a registered deed of Hiraman, who is the Plaintiff and Appellant No. 2 in this case.
2. The consideration of the mortgage was Rs. 6,000, of which Rs. 3,000 were furnished by Balwantrao and the remaining by Kanhaiyalal. The claim in the suit was Rs. 12,000, being double that of the principal. The Appellants in this case seek a preliminary decree for the amount or sale of the mortgaged security.
3. The mortgage security consists of a house situated in Peth Budhwari, Nagpur, and 16 annas' share in mouza Sindi Vihri in the Umred tahsil.
4. The mortgagors were members of a joint Hindu family and the mortgage bond was executed by Madhaorao Waoo for himself and his minor son Yado. It was also executed by Nilkanth, an adult son of Madhaorao, and. one Laxmikant Waoo. Laxmikant died before the suit, and Madhao, Nilkanth, Yado, and Vasant (the minor son of Laxmikant) were thus Defendants 1 to 4 in the case. Madhorao and Vasant have since died and are represented by their widows.
5. In the array of Defendants are included Dhondba (Defendant No. 5) and the Roman Catholic Mission (Defendant No. 6). These two are the contesting Defendants in the case and are concerned respectively with the house and the village.
6. A few facts have to be recounted to show how they come into the picture. The house in suit was sold in execution of a decree passed in a small cause Court case (civil suit No. 1368 of 1923) and was purchased by Nilkanth Vithal Potey, the decree-holder in that suit. This sale was confirmed in favour of Potey who on 4-5-1929 sold his interest to Dhondba (Defendant No. 5) by a registered deed.
7. Defendant No. 6, the Roman Catholic Mission, hereafter called the Mission, had a prior mortgage dated 22-4-1926 over the village. In civil suit No. 56 of 1927 of the Court of First Sub-Judge First Class, Nagpur, decided on 23-4-1929 the Mission obtained a decree for Rs. 11.051 including costs. On 9-3-1927 the village was sold for Rs. 7,500 and was purchased by the Mission. Admittedly, the puisne mortgagees, who are the Appellants in this appeal, were not made parties to the earlier suit.
8. Defendant No. 6, the Mission, pleaded in this case that as prior mortgagee it was entitled to keep the mortgage security alive and compel the subsequent mortgagee to redeem it. Its written statement on this point reads as follows:
Hence even assuming, though not admitting about the mortgage bond in this suit, it is submitted that this Defendant is a prior mortgagee and at the most the Plaintiffs in this case have got right of redemption. Hence the allegation in para. No. 6 of the plaint that this Defendant is entitled to redeem this mortgage is false and misleading.
The mission claimed that the suit be dismissed as against it.
9. The learned Additional District Judge rejected the contention of the 6th Defendant briefly in the following words:
Defendant 6 may redeem the Plaintiffs, if he likes. The claims of Defendants 5 and 6 as prior mortgagees remain unaffected by the suit, and cannot be considered here.
The Mission has now filed a cross-objection, to which we shall come later.
10. The 5th Defendant Dhondba contended inter alia that Nilkanth Potey's decree in civil suit No. 1368 of 1923 dated 30-12-1923 was put into execution, and in those proceedings the house was attached on 20-4-1927. A sale followed on 14-8-1928, and Potey bid with the permission of the Court. The sale was confirmed on 5-3-1929 and possession was granted on 24-3-1929. According to Dhondba, the mortgage in favour of the present Appellants was during the subsistence of the attachment of 20-4-1927 and was void in respect of all the claims enforceable under the attachment.
11. The Plaintiffs-Appellants confessed these facts about the attachment but avoided them on the following averments:
12. According to them the execution petition was presented on 1-3-1927, and the attachment was effected on 20-4-1927. The property was sold on 23-1-1928, but the auction-purchaser defaulted in making the payment of three-fourths of the price. As a result, the sale was set aside on 13-3-1928 and the case was dismissed, though the Court ordered that the attachment should subsist.
13. After the dismissal of this execution application, another execution application was filed on 16-3-1928, and the house was sold on 14-8-1928 and was purchased by Potey for Rs. 125. Objections under Order 21, Rule 90 of the Code of Civil Procedure followed. The execution was once dismissed on default of appearance by the decree-holder in 6-11-1928 but was restored on 22-1-1929, an the sale was confirmed on 5-3-1929.
14. According to the Plaintiffs, the attachment ceased by operation of law on 13-3-1928, the order of the execution Court keeping the attachment alive notwithstanding. Under the unamended 57th rule of Order 21, Code of Civil Procedure, an attachment ceases on the dismissal of an execution petition due to the default of the decree-holder. It was contended by the Plaintiffs that the order of 13-3-1928 was an order dismissing the execution petition and therefore the attachment came to an end. The mortgage which was taken by the Appellants, therefore, was unaffected by the subsequent sale of the property, which was not in furtherance of the earlier attachment, it being conceded that for the purpose of the second sale no fresh attachment had been effected.
15. This contention of the Plaintiffs was not accepted by the learned Additional District Judge, Nagpur, and the Plaintiffs have therefore brought this appeal. It may be mentioned that all questions of execution, attestation, consideration, legal necessity, or limitation, are no longer in dispute. The point for determination in this appeal therefore is whether the attachment automatically ceased after the execution case was struck off as infructuous on 13-3-1928, the order of the executing Court keeping the attachment subsisting notwithstanding'. The order to which reference is made may be quoted at this stage:
13-3-28: D.H. by agent Sk. Lai J.D. absent. Purchaser absent. 3/4 the appear not to have been paid. Sale set aside. Case struck off as wholly infructuous with costs on J.D. but with attachment pending.
16. A. large number of authorities was cited before us to aid the interpretation of this order. According to the Appellants, this order was tantamount to the dismissal of the execution petition. It was contended that the default of the decree-holder was implicit inasmuch as it was incumbent upon him to request the Court either in writing or at least orally tor a fresh sale. On behalf of Respondent No. 5 it is contended that the petition was not finally disposed of, but was merely 'struck off', that is to say, kept aside till such time as the decree-holder chose to set the Court in motion, and that the application for execution, which was filed three days latet, was merely a revivor of the earlier application which had been adjourned 'sine die'. It was argued that this order was not due to any default on the-part of the decree-holder but was an order passed 'suo motu' by the Court. In support of this contention, in addition to the authorities from other Courts was cited a ruling of this Court reported in - Govind Balkrishna v. Dhondba Dashrath AIR 1945 Nag 257 (A), in which Puranik J., when called upon to interpret this very order in another matter held that the attachment remained subsisting after 13-3-1928.
17. Order 21, Rule 57 (unamended), Code of Civil Procedure read as follows:
Where any property has been attached in execution of a decree but by reason of the decree-holder's default the Court is unable to proceed further with the application for execution, it shall either dismiss the application or for any sufficient reason adjourn the proceedings to a future date. Upon the dismissal of such application the attachment shall cease.
This rule is now having been introduced for the first time in 1908. Even prior to the enactment of this rule, Courts in India had deprecated the use of words 'struck off' etc. as amounting to an irregular older not contemplated under the Code. The rulings said that either an application should be dismissed or it should be kept pending and that there was no warrant for a via media between the two. Whether an application was taken to be finally-disposed of or merely kept suspended, that is to say, adjourned, was decided upon the facts of each case, and an important decision of the Privy Council on this topic is to be found in - Shaikh Kamar-ud-din Ahmad v. Jawahir Lal 32 Ind App 102 (PC) (B).
18. The amendment of this rule was effected in the hope that after this clear rule was put on the statute book vague orders like 'struck off' and 'consigned to the record room would not be passed and there would be no need to decide complicated questions about the continuance or otherwise of execution proceedings as in those cases where such orders were passed. Unfortunately, however, the executing Courts have not taken note of the underlying principle of the amendment and vague orders still continue to be passed with the result that interpretation of the orders according to the facts in each case is still necessary. It is to be hoped, however, that in future executing Courts in this State will take note and will clearly indicate in their orders whether the application is dismissed finally or merely adjourned. This question may not be of much importance now in connexion with Order 21, Rule 57, which has been suitably amended in this State, but is of considerable importance still in connexion with the finality of an execution order under Article 182, Limitation Act.
19. The cases that were cited at the Bar in support of either contention rested merely upon the individual facts to be found in them. No useful purpose would be served by examining the authorities. In some of them the default on the part of the decree-holder was explicit and the dismissal was therefore due to this. In such cases, whether the order was couched in straightforward language showing dismissal of the application or vaguely by saying 'struck off' etc., the net result was taken to be the dismissal of the application.
20. In some other cases the decree-holder concurred in the order striking off the proceedings, and it was assumed that his concurrence meant that he was prepared to let that execution go and start a fresh one. In such cases also the execution petition was rightly held to have been finally disposed of unless the decree-holder had reserved either expressly or by implication the right to go on with the old application.
21. In yet some others in which the order of the Court was passed without any indication what the attitude of the decree-holder in the case was, it was held that the striking off of the execution was merely for statistical purposes and was not a final order so as to imply the final dismissal of the petition and the attachment was deemed to be subsisting.
22. In this connexion we might mention that a ruling of this Bench, - Kundanbai v. Satyanarayan AIR 1951 Nag 270 (C), was relied upon by the Appellants to support their argument that an order 'striking off' an execution petition is an order equivalent to its dismissal. The cited case is not an authority for the proposition. We were concerned in that case with two orders passed in execution; one, in which the execution was struck off and the attachment was ordered to continue, and the other, in which the attachment was withdrawn by the Court with the acquiescence of the decree-holder. It was not necessary for us to decide the appeal upon the first order because the case could be disposed of on the basis of the second order and that is in fact the way we dealt with the case. We did not enter into this question at all and contended ourselves with observing as follows:
It is not necessary to decide whether the words "struck off" denoted merely a suspension of the execution petition or its dismissal. In some cases it is held to be an order for statistical purposes only though in some others it is taken to denote a final dismissal particularly where costs are also awarded. We are not concerned with this since the view in this Court is that it amounts to a dismissal. See - Shankarlal v. MahadeoAIR 1940 Nag 301 (D).
23. Had it been necessary to examine the . first order in that case we would have been required to scrutinize closely the conflict of authorities to be found in India and, as it has emerged in the discussion at the Bar in the present apneal, even in this Court. The view propounded in MANU/NA/0027/1940: AIR 1940 Nag 301 (D) was not based upon an examination of the authorities of this Court but upon a ruling in - Chidambara Nadar v. Rama NadarMANU/TN/0212/1936 : AIR 1937 Mad 385 (FB) (E), which the learned Judge (Pollock J.) accepted. It is true that there is an earlier decision of Pollock J. in - Gulabchand Sheolal v. Dongarmal Harakchand AIR 1936 Nag 277 (F) and a still earlier decision of Macnair A.J.C. (later J. C.) in - Kundanmal v. Mt. Aziz Begam AIR 1929 Nag 82 (G) to the same effect. But the Madras High Court has taken the view that there could be no dismissal under Order 21, Rule 57 unless the decree-holder can be said to be in default: see - Subramanian v. Official Receiver, Ramnad AIR 1949 Mad 594 (H) and - Venkata Rao v. Surya Rao Bahadur Garu MANU/TN/0002/1950 : AIR 1950 Mad 2 (I). In - Sushila Bala Dasi v. Guest Keen Williams Ltd. ILR (1949) 1 Cal 177 (J) it was observed that Order 21, Rule 57 applies only when an application for execution is dismissed in default of the decree-holder. It has no application to the dismissal for any other reason. There are also authorities of other Courts to the same effect: see - Peoples Bank of Northern India v. Durga Dass Bhagwandas AIR 1938 Lah 728 (K) and - Vishnu Balkrishna v. Shankareppa Gurlingappa AIR 1942 Bom 227 (L).
24. In this Court Stone C.J. in - Madhao v. Madangopal S.A. No. 445 of 1939, D/- 11-3-1939 (Nag) (M) took a view contrary to that taken by Pollock J. inMANU/NA/0027/1940 : AIR 1940 Nag 301 (D) '(supra)'. There is also a decision of Bose J. (as he then was) in - Rukhmanibai v. RamsaroopMANU/NA/0036/1943 : AIR 1944 Nag 324 (N), wherein the learned Judge held that when the Court expressly keeps the attachment alive it cannot be said to have ceased unless the provisions of Order 21, Rule 57, Code of Civil Procedure apply, that is to say, when there has been a default of the decree-holder which compels the Court to dismiss the application. The case is particularly apposite.
25. We are further pressed by the view taken by Puranik J. in AIR 1945 Nag 257 (A) more so as the learned Judge was interpreting the very order which we have to interpret and there are several rulings which support the view that the use of the words 'struck off' do not necessarily result in the dismissal of the application: Chhattar Singh v. Kamal Singh MANU/UP/0220/1926 : AIR 1927 All 16 (FB) (O) and - Nand Kishore v. Kirtarath GirMANU/UP/0111/1944 : AIR 1944 All 217 (P).
26. In our opinion, even after Rule 57 has been introduced it is necessary to find out whether it could be said that there was a dismissal of the execution application due to the default of the decree-holder. If there is no dismissal 'due to the default of the decree-holder' there is not that final order under Rule 57 which would automatically terminate the attachment. The rule must be read as a whole. Even if the decree-holder apprehending that he had to file a fresh application does so the fresh application can be treated as merely a reminder to the Court that certain proceedings had been laid aside to be resumed on a future date.
27. In connexion with Article 182, Limitation Act, the Privy Council took precisely this view of an order passed by an executing Court. That order was not treated as a final order but merely as one adjourning the proceedings to a future date. In the - Oudh Commercial Bank Ltd. v. Bind Basni KuerMANU/PR/0003/1939 : AIR 1939 PC 80 (Q) their Lordships were dealing with an application made to the executing Court, which it was contended, was a fresh application as distinct from one to continue the previous proceedings. Their Lordships took into consideration a number of circumstances which were brought to their notice in support of the contention that the application was a fresh one. Their Lordships rejected those contentions and held at p. 84 as follows:
The question of the character of the application has to be decided upon the circumstances of each case and in the present case the bargain of the parties is a circumstance of great importance as is the fact that the Fyzabad Court acted by inadvertence contrary thereto. The substance of the matter must prevail over the form of the application which in their Lordships' opinion is not a fresh application as contemplated by Section 48.
28. This case has the support of an earlier pronouncement of the Judicial Committee in 27 All 334 (PC) (B).
29. Coming now to the facts in this case, the default in the payment of the three-fourths money was not due to any action of the decree-holder. The learned Counsel for the Appellants argued that it might have been a collusive action between the auction-purchaser and the decree-holder. We do not see that there is any material to support such a suggestion, which is just a mere surmise. We are satisfied that the order as it stands does not show that any duty was laid upon the decree-holder by the Court which he failed to fulfil.
30. Mere inactivity on his part would not be indicative of 'default', because there are occasions when execution petitions are 'struck off' by the executing Court without taking into account the opinion or the wishes of the decree-holder. The cases relied upon by the Appellants, viz., - Dhondba Misir v. Sheikh Qurban AIR 1947 All 313 (R); - Baba Punjaji v. Kisan Narayan MANU/MH/0072/1937 : AIR 1938 Bom 18 (S); - Vijaydas Hanumantdas v. Shekharappa Anantappa AIR 1941 Bom 395 (T) and - Nanu Mal v. Amar Nath AIR 1938 Lah 590 (U) were partly decided on their own facts and partly on a strict view of Rule 57 which, with all due respect we are not prepared to accept. In the present case a long time was not allowed to lapse between the 'striking off' of the first petition and the filing of another. The decree-holder came forward with a fresh application only three days later, and, on this point also, this case is distinguishable from the cases cited for the Appellants, in which the delay was considerable.
31. We are of opinion that what Puranik J. observed in relation to this order represents the true state of facts, and as their Lordships have said both in 32 Ind App 102 (PC) (B) and in MANU/PR/0003/1939 : AIR 1939 PC 80 (Q) each case must be decided on its own facts. Puranik J.'s conclusion was that the execution was struck off 'suo motu' by the Court without any default on the part of the decree-holder, and we, are, in respectful agreement with the learned Judge that the facts in this case disclose nothing more. We are satisfied that the attachment was not lifted cither in fact or by operation of law and that the second application for execution was merely a continuation of the earlier execution. In View of this the appeal must fail and is dismissed with costs.
32. This brings us to the cross-objection. The cross-objection has been filed by the prior mortgagee whose pleadings we have quoted above. The lower Court in dealing with the case of the prior mortgagee stated that its mortgage security would not be affected and proceeded to observe that the prior mortgagee, can, if it so chooses, redeem the mortgage of the puisne mortgagees. A chance was, therefore, afforded to the prior mortgagee to redeem the mortgage of the Appellants failing which sale of the property was ordered.
33. This decision in effect postpones the prior mortgagee to the puisne mortgagees because no direction has been included that the sale under the puisne mortgagees' decree was to be subject to the prior charge of the Mission.
34. The position is now clear in view of Section 101, Transfer of Property Act. That Section reads as follows:
Any mortgagee of, or person having a charge upon, immovable property, or any transferee from such mortgagee or charge-holder, may purchase or otherwise acquire the rights in the property of the mortgagor or owner, as the case may be, without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee of, or person having a subsequent charge upon, the same property; and no such subsequent mortgagee or charge-holder shall be entitled' to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto.
35. The decision of their Lordships of the Privy Council in - Mt. Sukhi v. Ghulam Safdar Khan AIR 1922 PC 11 (V) shows that a prior mortgagee, who has won a decree in his mortgage suit, can use it as a shield against a puisne mortgagee whom he had failed to join as a party to his own suit. The learned Counsel for the Appellants did not controvert this position.
The learned Counsel for the Appellants, however, contended that unless the suit on the prior mortgage is within limitation the prior mortgagee cannot avail himself of the decree obtained in his suit as a shield against the puisne mortgagee whom he had not impleaded in the suit. But this contention cannot be accepted. The question was considered by a Full Bench of the Allahabad High Court in - Ram Sanehi Lal v. Janki Prasad MANU/UP/0056/1931 : AIR 1931 All 466 (FB) (W). Sulaiman A.C.J. regarded Sukhi's case as a clear authority for the proposition that a prior mortgagee if he is in possession can set up in defence a prior mortgage as a shield although in his suit he had not impleaded the subsequent mortgagee and even though, a fresh suit to enforce it would be barred by time. Sarda Prasad v. Kanhai Lal MANU/UP/0257/1933 : AIR 1933 All 412 (X) is an instance of the application of the proposition deduced by Sulaiman A.C.J. from Mt. Sukhi's case (V). Further support can be found for the same proposition in - Venkataramana v. RangiahMANU/TN/0058/1921 : AIR 1922 Mad 249 (Y); - Karuppan Chettiar v. Venkata Perumal AIR 1929 Mad 465 (Z) and - Sengamuthu v. ThayarammalMANU/TN/0289/1939 : AIR 1940 Mad 646 (Z1).
36. There are several alternative orders which can be passed by the Court in such a case. The Court can order that the property shall be sold free of both the encumbrances and the prior mortgagee paid first. It may allow either the prior mortgagee to redeem the puisne mortgagees or vice versa. As a last alternative the Court may order the sale of the property subject to the mortgage charge of the prior mortgagee. There is no possibility of compelling the first mortgagee to redeem the property & in default to sell it free from the encumbrance of the prior charge, which has been done in the present case.
37. The cross-objector, the Mission, has put in an application for amendment of its pleadings. It is not necessary to consider that application or the reply which has been put in on behalf of the Appellants. The first mortgagee is using its mortgage as a shield. The law allows it to do so. In the present case, the puisne mortgagees have expressed their willingness to redeem the first mortgage, Shri Bobde, however, argues that this is subject to two conditions, viz., that the Mission should file a regular suit to enforce the mortgage against the present Appellants and secondly the Mission must show that its mortgage is still within the period of limitation prescribed by law. He relies upon - Radhakisan v. Hazarilal MANU/NA/0065/1944 : AIR 1944 Nag 163 (Z2).
38. In the cited case there was a prior mortgage which was renewed after a mesne mortgage had been taken. The prior mortgagee seeking to enforce his subsequent renewal wanted to rely upon his first mortgage as a shield. It was held that the prior mortgagee could not rely upon his prior encumbrance unless he could show that the encumbrance was enforceable at law regard being had to the law of limitation of suits. That case has nothing to do with the proposition we have before us. No prior mortgagee can by any acknowledgement or renewal, after a mesne encumbrancer has come into the picture, affect the mesne encumbrancer unless he can show that his prior encumbrance on which he seeks to rely is enforceable and is within the period of limitation prescribed by law. In the present case, the prior mortgagee had already filed his suit and won a decree and all that he wants to use the mortgage for is to protect his own interest in, the property which he has purchased as a result of his decree. This case is entirely distinguishable from the cited case and indeed falls entirely within the four corners of their Lordships' decision to which we have referred above.
39. As regards the filing of the plaint, it is obvious that when a prior mortgagee relies upon his prior mortgage he used it for the purposes of defence and not for attack. In such a case, be prior mortgagee is not required to, file a plaint at all because the accounting can be done ha the suit of the puisne mortgagee.
40. All this is really not of much consequence because the puisne mortgagees have expressed their desire to redeem the prior mortgage. All that they want is that there should be proper accounting and the sum for which redemption can be had, determined. They, however, state that the price of redemption should be the decretal sum less any profits made by the prior mortgagee while in possession.
41. The earliest leading case on the subject is - Umes Chunder v. Zahur Fatima 18 Cal 164 (PC) (Z3). That case dealt with a mortgage before the Transfer of Property Act was passed. In this case their Lordships gave the Plaintiff in the suit the right to redeem the purchaser in execution of a mortgage decree in which the Plaintiff had not been made a party although he had an interest in the equity of redemption. Lord Hobhouse observed as follows:
The Plaintiff getting the security of a decree has his interest reduced in the generality of cases. But the Plaintiff in this case comes to take away from Zahur the benefit of the decree. It would be unjust if he could, use the decree to cut down her interest, while ha deprives her of the whole advantage of it. His case is, that as to him Zahur is still but a mortgagee, and if so, she should be allowed such benefit as her mortgage gives her. If Zahur had not got a decree, & the Plaintiff had come to redeem her mortgage, he must have paid whatever interest her contract entitled her to, and the Court would have had no jurisdiction to cut it down; and that is the position in which the parties are placed by the decree in this suit.
42. After the enactment of the Transfer of Property Act, its 89th Section provided that after the due date has passed 'the Defendant's right to redeem and the security shall both be extinguished'. As a result of these words, their Lordships of the Privy Council in - Matru Mal v. Durga Kunwar AIR 1920 PC 79 (Z4) held that the mortgage security disappears and all that remains is the decree. Matru Lal's case (Z4), however, is no longer good law because Order 34, Code of Civil Procedure, which replaces Section 89 of the Transfer of Property Act, does not in its 5th rule provide for the disappearance of the mortgage security. The result of this amendment is to restore the decision of the Privy, Council in - Umes Chunder v. Zahur Fatima (Z3) '(supra)', and that is, therefore, the ruling to rely upon in this connexion.
43. The correct principle of accounting therefore would be not to take the decree as representing the amount due to the first mortgagee nor even to take the profits as equivalent to interest during the period post-decree.
44. While interest would run in accordance with the mortgage bond subject to any disallowance by law, the mortgagee in possession would be accountable for his possession and the profits received by him. The accounts which have to be taken are those which are usually taken in an ordinary redemption suit when the mortgagee is in possession On the one hand the mortgage debt would carry interest as laid down in Order 34, Rule 11 of the Code of Civil Procedure, subject to any special disallowance by law or by the Court. The mortgagee in possession would be required to account for his management and for all the profits he made thereby: see in this connexion - Gulam Khaja Mahamad v. Pandharinath AIR 1948 Bom 379 (Z5). The cross-objection is therefore allowed with costs on the Appellants.
45. The decree of the lower Court will be varied. The lower Court shall take an account of the mortgage debt together with interest as allowed by law and costs. The Court shall also take accounts of the prior mortgagee's possession and, the profits made by it. If there is any balance found due to the prior mortgagee, the Court shall determine the sum and fix the usual time for redemption by the puisne mortgagees failing which the suit of the puisne mortgagees shall be dismissed. If the prior mortgage has been discharged by the profits, a preliminary decree for sale shall be passed in favour of the puisne mortgagees.
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