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  • IV of section 11 of the Code of Civil Procedure
  • Order XXI, rule, 100, of the Civil Procedure Code
  • SECTION 96 TRANSFER OF PROPERTY ACT
  • section 11 of the Code of Civil Procedure
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  • IV of section 11 of the Code of Civil Procedure
  • Order XXI, rule, 100, of the Civil Procedure Code
  • SECTION 96 TRANSFER OF PROPERTY ACT
  • section 11 of the Code of Civil Procedure
Smart Summary

Court Opinion Summary — Courtney Terrell, C.J.

Factual and Procedural Background

The appeal arises from a decision of the Subordinate Judge of Cuttack which allowed an appeal from the Munsif and dismissed the plaintiff's suit for a declaration of title to a disputed parcel of land.

Key factual chronology as set out in the opinion:

  • 21 July 1906: The predecessors-in-interest of defendants nos. 2, 3 and 4 sold a portion of the disputed land to the plaintiff.
  • 29 July 1906: The same predecessors mortgaged the land (and other properties) to defendant no. 1. As to part of the land mortgaged, the mortgagors had already transferred their interest to the plaintiff and thus had no title to mortgage that part.
  • Subsequently (date not specified): The predecessors sold a further portion of land (previously mortgaged) to the plaintiff; this portion was different from the portion sold on 21 July 1906.
  • 1915: Defendant no. 1 sued to enforce his mortgage security. In his plaint he listed the mortgaged properties and included plots corresponding to the 21 July 1906 sale. He made the mortgagors defendants and also impleaded the plaintiff, alleging that the plaintiff claimed an interest derived from a sale occurring after the date of the mortgage. The plaint did not refer to the earlier (21 July 1906) sale.
  • 1916: Defendant no. 1 obtained an ex parte decree in the mortgage suit.
  • 15 June 1925: The property was sold in execution and purchased by the mortgagee; he obtained delivery of possession from the Civil Court and dispossessed the plaintiff.
  • The plaintiff applied under Order XXI, Rule 100 of the Civil Procedure Code to regain possession; that remedy was refused on the basis that the plaintiff was himself a judgment-debtor.
  • The plaintiff then sued for a declaration that the ex parte mortgage decree did not bind the properties purchased by him in July 1906 (i.e., the prior sale).

Procedural history of the contested suit:

  • The Munsif granted a decree in favour of the plaintiff (i.e., declared the plaintiff's title).
  • On appeal the Subordinate Judge reversed the Munsif, holding that because the plaintiff had been made a party to the prior mortgage suit he was bound by that decision and that the issue between the plaintiff and defendant no. 1 was barred by res judicata.
  • The present appeal challenges that holding.

Legal Issues Presented

  1. Whether the plaintiff's claim to a prior title (the sale of 21 July 1906) is barred by res judicata because the plaintiff was made a party to an earlier mortgage suit in which an ex parte decree was obtained.
  2. Whether, under Section 11 of the Code of Civil Procedure and Explanation IV thereto, the prior sale "might and ought to have been made a ground of defence" in the earlier mortgage suit so as to render the present claim res judicata.

Arguments of the Parties

Plaintiff's Arguments

  • The plaintiff admitted that, insofar as he acquired a title subsequent to the mortgage to a portion of the mortgaged land, he was a necessary party to the mortgage suit.
  • However, the plaintiff contended that he was not bound in the mortgage suit to set up his paramount title which he had acquired in July 1906 (i.e., the prior sale) and that the earlier decree therefore should not bind the properties purchased by him before the mortgage.

Defendants' Arguments

  • The defendants contended that because the plaintiff was made a party to the mortgage suit, and because the right to sell the mortgaged property was at issue, the plaintiff was obliged in that suit to set up any defence—specifically any prior title—that would defeat the defendant's right of sale.
  • Failing to rely on the prior title in the mortgage suit, the defendants argued, meant the plaintiff's present contention as to a prior title was forever barred by res judicata.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Radha Kishun v. Khurshed Hossain (Privy Council) Supports the proposition that transactions prior to the date of a mortgage are foreign to the purpose of a mortgage suit and, therefore, may not be treated as matters that necessarily "might and ought to have been made a ground of defence" in that suit. The court followed the reasoning of the Privy Council to hold that the mere inclusion in the mortgage plaint of specific plots and impleading the plaintiff did not amount to a specific attack on the prior sale; hence res judicata did not apply to the prior sale.
Lal Behari Singh v. Gur Prasad Singh Held that where a person impleaded as a puisne mortgagee files a written statement alleging he is a prior mortgagee but does not otherwise contest the suit and the judgment proceeds on the assumption he is a puisne mortgagee, he cannot subsequently allege he is a prior mortgagee. The court distinguished this principle: if a prior mortgagee did not submit his prior claim in the prior case and the plaintiff in that suit did not mention the prior mortgage, the prior interest was not submitted to the court and could not be treated as a matter that "might and ought to have been made a ground of defence."
Lachmi Narayan Marwari v. Chaudhuri Bhagwat Singh (Calcutta High Court) Authority stating that a puisne mortgagee may make a prior mortgagee a party to a suit, but the purpose for making a prior mortgagee party should be clearly stated; absence of a stated purpose suggests the prior mortgage will not be affected by the judgment. The court relied on this statement to reinforce that where no purpose or attack on the prior interest is pleaded, the prior mortgage should remain unaffected by the mortgage decree.
Srimanta Seal v. Bindubasini Dasi (Calcutta High Court) Held (in June 1922, without reference to the Privy Council decision) that a purchaser who obtained a subsequent paramount title could nevertheless be bound by a mortgage decree and sale in execution where he had been joined in the mortgage suit. The present court noted that the case differed on its facts (the plaintiff there sought to rely on a title derived subsequent to the mortgage) and observed that the Privy Council decision was not cited; the present court expressed doubt as to the correctness of Srimanta Seal and did not follow it.
Krishn Doyal Gir v. Syed Md. Amirul Hassan (Calcutta High Court, 1914) Held that where the prior mortgagee was made a party upon a general allegation that defendants had "some connection" with mortgaged properties and were added to give them a chance of redemption, the prior mortgagee ought to have relied upon his prior mortgage and was barred by res judicata. The present court distinguished the facts and criticized the reasoning as unsatisfactory; having regard to later authority (Privy Council decision), the court declined to follow this decision.

Court's Reasoning and Analysis

The court's analysis proceeded in structured steps, closely following the language of Section 11 of the Code of Civil Procedure and Explanation IV thereto:

  1. The court identified res judicata as governed by Section 11 CPC and noted Explanation IV that "Any matter which might and ought to have been made a ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit."
  2. It emphasized that to invoke Explanation IV against the plaintiff it would be necessary to show that the prior sale (July 1906) "might and ought to have been made a ground of defence" in the earlier mortgage suit.
  3. The court explained that, apart from Explanation IV, to sustain res judicata the defendant would have to demonstrate that the mortgage plaint distinctly referred to the plaintiff's prior title and sought to displace it in favour of the mortgagee. The court found no such distinct reference or specific attack in the mortgage plaint.
  4. The court held that the mere inclusion of specific plots in the mortgage plaint and the fact that the plaintiff was made a defendant in the prior suit did not raise the prior-sale issue sufficiently before the mortgage-court to trigger res judicata.
  5. The court relied on the reasoning of the Privy Council in Radha Kishun v. Khurshed Hossain to support the conclusion that transactions prior to the date of the mortgage are foreign to the purpose of a mortgage suit and that a party impleaded on account of a prior title may apply to be dismissed from the suit and remains free to raise that prior title later.
  6. The court examined and distinguished other decisions cited by the defendants:
    • Lal Behari Singh v. Gur Prasad Singh: the court treated it as authority for the proposition that a party who has affirmatively submitted and litigated under a contrary position may be bound; but the court contrasted that with the present facts where the prior title was not submitted for adjudication.
    • Srimanta Seal v. Bindubasini Dasi: the court observed differences in facts (the plaintiff there relied on a title derived after the mortgage) and that the Privy Council decision was not cited; the present court expressed doubt as to the correctness of that decision.
    • Krishn Doyal Gir v. Syed Md. Amirul Hassan: the court found the facts and the general nature of the challenge there to be different and the reasoning unsatisfactory in light of the Privy Council decision, and declined to follow it.
  7. The court offered a policy and doctrinal objection to the defendants' contention, describing it as "extremely technical." It noted that it is conceded a person impleaded as holding an interest prior to the mortgage is not bound to submit the priority of that interest to adjudication unless he elects to do so and the other party accepts the challenge. The court found no sound reason why the existence of separate subsequent interests should alter that position.
  8. The court further observed that accepting the defendants' argument would lead to the anomalous result of compelling disclosure and adjudication of prior interests even where an impleaded person has no subsequent interest, which would be contrary to the principle that a mortgage suit cannot, without consent, determine the validity of a prior interest.

Holding and Implications

Core Ruling: The court held that the Subordinate Judge's judgment was wrong and should be reversed; the judgment of the Munsif was restored. The appeal was decreed.

Specific consequences for the parties (direct effect):

  • The decree of the Munsif (which had granted the plaintiff relief as to his claimed prior title) is restored.
  • The Subordinate Judge's reversal of the Munsif (which had dismissed the plaintiff's suit on res judicata grounds) is set aside.
  • Defendant no. 1, who contested the appeal, was ordered to pay the costs of the proceedings throughout.

The court's decision rests on application and interpretation of existing authorities (including the Privy Council decision in Radha Kishun v. Khurshed Hossain) and the statutory test in Section 11 CPC and Explanation IV. The opinion does not state that a new legal principle or precedent is being created; rather, it applies and distinguishes prior authorities to the facts before it.

Disposition: Appeal decreed; Munsif's judgment restored; defendant no. 1 to pay costs throughout.

    Koi Sahu v. Atul Krishna Ghosh

    Courtney Terrell, C.J:— This is an appeal from a decision of the Subordinate Judge of Cuttack allowing an appeal from a decision of the Munsif and dismissing the plaintiff's suit for a declaration of title to the disputed land. The facts are simple. On the 21st July, 1906, the predecessor-in-interest of defendants nos. 2, 3 and-4 sold the land in dispute to the plaintiff. On the 29th July the same predecessors mortgaged the same land together with other properties to defendant no. 1, that is to say as to part of the land mortgaged the mortgagors having parted with their interest to the plaintiff had no title. Subsequently to the mortgage the same predecessors sold a further portion of the land which they had previously mortgaged to defendant no. 1 to the plaintiff. The portion so sold was other than that already sold to the plaintiff on the 21st July, 1906. In the year 1915 defendant no. 1 sued to enforce his security. To his plaint he scheduled a list of the properties mortgaged and shewed it as including the plots of land the subject of the sale of the 21st July, 1906. He made the predecessors of defendants nos. 2, 3 and 4 defendants they being the mortgagors and he also impleaded the plaintiff as a defendant stating as against this defendant that he (the present plaintiff) claimed an interest by reason of the sale which took place after the date of the mortgage. No reference was made to the earlier sale of July 1906. The present defendant no. 1 obtained an ex parte decree in the mortgage suit in 1916. The property was put up to sale and was purchased by the mortgagee on the 15th June, 1925. He applied for and obtained delivery of possession from the Civil Court and dispossessed the present plaintiff. The present plaintiff applied to the Court under Order XXI, rule, 100, of the Civil Procedure Code to get possession but this remedy was refused the Court holding that the plaintiff was himself a judgment-debtor. He therefore now sues for a declaration that the ex parte mortgage decree is not binding on the properties purchased by him in 1906 prior to the mortgage taken by defendant no. 1.

    The Munsif granted a decree but the Subordinate Judge on appeal held that since the plaintiff had been made a party to the mortgage suit the plaintiff was bound by the decision in that suit and that the issue as between the plaintiff and the defendant no. 1 was barred as res judicata.

    The whole question raised upon this appeal has turned upon this point. The plaintiff admits that having acquire a title subsequent to the mortgage to a portion of the mortgaged land he was a necessary party to the mortgage suit but that he was not bound to set up his paramount title acquired in July 1906 prior to the date of the mortgage. The defendants, however, contend that having been made a party to the mortgage suit and it being an issue whether the property mortgaged could properly be put to sale it was incumbent upon the plaintiff in that suit to set up any defence upon which he could rely to defeat the defendant's right of sale that he had failed to rely upon that prior title and therefore that the contention that he has a prior title is for ever barred as res judicata.

    Now the nature of res judicata is defined by section 11 of the Code of Civil Procedure which states:—

    “No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.”

    Explanation IV is as follows:—

    “Any matter which might and ought to have been made a ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.”

    It is only by reason of this explanation that the defendants are able to raise their plea of res judicata. In a mortgage suit it is essential to implead parties such as subsequent mortgagees who have derived their, title subsequent to the mortgage sued on but it has long been held that transactions prior to the date of the mortgage are foreign to the purpose of a mortgage suit and that a party impleaded by reason of such a prior title may apply for dismissal from the suit; and in such circumstances he is not debarred from raising his prior title in subsequent proceedings. In order to apply Explanation IV of section 11 of the Code of Civil Procedure it would be necessary to hold that the prior sale of July 1906 “might and ought to have been made a ground of defence” to the mortgage suit by the present plaintiff. To sustain the plea of res judicata on the section apart from the explanation it is incumbent on the defendant no. 1 to show that there was a distinct reference by the defendant to the plaintiff's prior title and that it was sought in the mortgage suit to displace that title in favour of that of the mortgagee. It is quite clear that nothing of the sort was done in this case and the mere statement in the plaint of the claim to sell the specific plots, the subject of the prior sale, and the fact that the plaintiff in this suit was made a defendant in the prior suit are not enough to have raised such an issue before the Court which tried the mortgage suit. It is clear that for the defendants' plea of res judicata to succeed upon the section it would be necessary to shew that in the former case they had either specifically or otherwise attacked the validity of the sale. In coming to this conclusion I have followed the reasoning, as I understand it, of the Privy Council in the case of Radha Kishun v. Khurshed Hossain. In the case of Lal Behari Singh v. Gur Prasad Singh it was decided that where a person who is impleaded in a suit on a mortgage on the allegation that he is a puisne mortgagee files a written statement alleging that he is a prior mortgagee but does not otherwise contest the suit and the judgment in that suit proceeds on the assumption that he is a puisne mortgagee he is not entitled subsequently to allege in a suit on his own bond that he is a prior mortgagee. On the other hand it may be said that if a person who is in fact a prior mortgagee has not in the prior case submitted his claim as a prior mortgagee to the Court and the plaintiff in the mortgage suit has himself not mentioned the prior mortgage it cannot be maintained that the existence or validity of the prior interest has been submitted to the decision of the Court; nor having regard to the nature of a mortgage suit can it be said that it “might and ought to have been made a ground of defence or attack”. In the report of the judgment of Kulwant Sahay, J. in the last mentioned case at page 440 there is what I take to be a serious misprint. The learned Judge in commenting upon the case of Radha Kishun v. Khurshed Hossain is represented as having said. “The plaint of the prior suit was not produced and their Lordships held that in the absence of any proof as to the allegation upon which the prior mortgagee was made a party it must be assumed that he was made a party as a prior mortgagee and the case came within the terms of section 96 of the Transfer of Property Act”. I think it is quite clear that the words “it must be assumed” should read in view of the decision referred to “it must not be assumed” otherwise the observations of the learned Judge would be stultified. The learned Judge also quotes the decision of Sultan Ahmad, J. in Lachmi Narayan Marwari v. Chaudhuri Bhagwat Singh where that learned Judge says: “At the same time the puisne mortgagee may make a prior mortgagee a party to the suit. If he does so, the purpose of making a prior mortgagee party should be clearly stated, but, if no purpose is given in the plaint or provided for in the decree, the prior mortgage will not be affected by the judgment in any way.” As I have said in the present case there was no attempt on the part of defendant no. 1 when he was a plaintiff in the mortgage suit to make any reference to the plaintiff's prior interest or any attack upon its validity.

    The defendants have strongly relied upon the judgment of Mukharji, J. of the Calcutta High Court in Srimanta Seal v. Bindubasini Dasi. In that case, however, which was heard in June 1922 the decision of the Privy Council above referred to was not cited. The facts were as follows:—In July 1909 a family known as the Kundus executed a mortgage of their holding (which was not transferable) to defendants nos. 1 and 2. In December of the same year their right, title and interest was purchased by one Barmani at a sale in execution of a money decree and the purchaser obtained delivery of possession in January 1910. In February Barmani assigned the holding to the plaintiff. The defendants (mortgagees) sued to enforce their security joining the mortgagors and also the plaintiff and obtained a decree. The plaintiff commenced the suit under discussion for a declaration of title and for an injunction to restrain the execution of the decree alleging that the mortgage was inoperative because the holding was non-transferable and that the decree passed thereon was equally inoperative and he moreover set up a title which he did not claim as having come into existence prior to the mortgage but as constituted by a settlement from the superior landlord taken in September of 1910. The learned Judge held that although the plaintiff had been joined in the mortgage suit as the purchaser of the equity of redemption by reason of his assignment from Barmani in February 1910 that he could nevertheless have set up his subsequent paramount title derived from the landlords and that the decree obtained in the mortgage suit was operative against him and that he was bound by the result of the sale in execution which was passed in his presence. This decision was as I have said passed without reference to the reasoning of the Privy Council in Radha Kishun v. Khurshed Hossain above referred to and the facts moreover differ from those in the present case because the plaintiff sought to rely not upon a title derived prior to the mortgage but on a title derived subsequent to the mortgage and in any case I venture with the greatest hesitation and respect for the learned Judge to doubt whether that decision is well founded, for the question really was whether the plaintiff not only might but ought to have set up his paramount title.

    The defendants also relied upon a decision of the Calcutta High Court, in 1914 prior to the Privy Council decision of 1919. This was the case of Krishn Doyal Gir v. Syed Md. Amirul Hassan. Apart from the fact that this decision preceded the decision of the Privy Council I have to make the further comment that it was based upon facts which differ from those of the present case. The prior mortgagee had been made a party to the mortgage suit upon the general allegation by the plaintiff in the mortgage suit that he together with several other defendants in the mortgage suit had asserted “some connection with the properties mortgaged under the plaintiff's bond; therefore they have been added as defendants to give them a chance of redemption of the mortgage”. In that case it was held that on this challenge he ought to have relied upon his prior mortgage and that the matter was governed by the doctrine of res judicata. Having regard to the general nature of the challenge I do not think that this decision is an authority in favour of the defendants, moreover the reasoning of the decision is not, in my opinion, satisfactory and having regard to the decision of the Privy Council before referred to I am not disposed to follow it.

    Upon general grounds it seems to me that the contention of the defendants is of an extremely technical character. It is conceded on their behalf that a person impleaded as having an interest acquired prior to the mortgage is not bound to submit the priority of his mortgage to the arbitration of the Court unless he chooses to do so and his challenge is accepted by the other party. Yet if he has any other interest acquired subsequently to the mortgage he is according to their contention compelled to appear and submit any prior rights which he may have to adjudication of the Court. I cannot see why the existence of his subsequent rights should make any difference to his position as a prior mortgagee. Moreover, if the defendants' contention were right the mere fact that the owner of the prior interest was impleaded as having a subsequent interest even if he had in fact no such subsequent interest would compel him to disclose and submit to adjudication such subsequent interest. This is quite contrary to the principle that in a mortgage suit it is not competent to the Court without the consent of the person having the prior interest to enter into the validity and force of such prior interest.

    In my opinion the judgment of the Subordinate Judge was wrong and should be reversed and the judgment of the Munsif should be restored. The defendant no. 1 who has contested this case will pay the costs throughout.

    James, J.:— I agree.

    Appeal decreed.

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    Comments

    Koi Sahu v. Atul Krishna Ghosh
    (Apr 25, 1929)