Jwala Prasad, J.:— (After stating the facts as set out above, proceeded as follows):
The first ground urged by Mr. Bhaduri, who appears for the appellant, relates to limitation which is covered by issue No. 1 framed in the lower Court. The learned Subordinate Judge says that the issue was not pressed before him and on the face of his finding that the suit was filed on the 28th June 1919 and that the due date of the two mortgage bonds was 9th July, 1907, no question of limitation could arise. Mr. Bhaduri does not agree that the suit was filed on the 28th June, 1919, and says that in fact it was filed on the 22nd July, 1919. That was the date on which the plaint was admitted and registered. Order No. 1 in the Order Sheet of the Court below clearly shows that although the plaint was registered on the 22nd July, 1919, if was filed much earlier on the 28th June, 1919, and that the delay in the registration of the plaint was due to the court-fee stamps having had to be replaced as those originally filed bore the endorsement of the Patna High Court. These facts being-pointed out; Mr. Bhaduri now concedes that the point taken by him was raised under a misapprehension.
He next contends that the mortgages in suit have been discharged. It is not disputed that Mr. Zakaria and Roqaitul Fatnia undertook to pay to the original holders thereof, Jadunandan and Baldeo, the dues under the two mortgages in suit, and in order to pay them, retained with them sufficient money out of the consideration of the sale deed (Exhibit A) of 22nd May, 1914. In fact, the deeds of assignment (Exhibits 2 and 2-a), dated 23rd July and 20th July, 1915, respectively on the strength of which the plaintiff has brought this action, recite this, but add that the vendees Mr. Zakaria Gauhar Ali and Roqaitul Fatma did not pay the mortgages in suit. On behalf of the defendant it is urged that the recital is false and in fact the original mortgagees Jadunandan and Baldeo were paid by Mr. Zakaria and Roqaitul Fatma, who in order to prejudice the defendant got the said deeds of assignment executed in the farzi name of the plaintiff, their relation.
[After considering the evidence on this point His Lordship continued as follows.]:
We have-carefully considered the evidence on the record. All that we can say is that the circumstances disclosed in the evidence referred to above and relied upon by the learned Vakil for the appellant raise some suspicion as to Mr. Zakaria and Roqaitul Fatma being the assignees of the mortgages in question and the plaintiff being their farzidar, but the evidence falls short of the conclusive proof of Khalil-ul-Rahman being a mere farzidar We agree with the learned Subordinate Judge in the view that he has taken of the transaction in question and the conclusion arrived at by him as regards this issue relating to the farzi character of the assignments in favour of the plaintiff. The connection of the appellant on this point is, therefore, overruled.
The next question raised relates to marshalling. The learned Subordinate Judge concedes that if defendant No. 14 had continued to be the mortgagee of the properties held by him under his mortgages he would have been entitled to compel the plaintiff to have his debts satisfied in the first instance, out of the properties not mortgaged to defendant No. 14. He, however, seems to think that the right, which the defendant No. 14 had ceased to exist upon his having purchased the properties in execution of his mortgage Decree in short, his view is that whereas the principle of marshalling applies to the case of a subsequent mortgagee it ceases to apply when he purchases the mortgaged property in execution of his mortgage Decree in support of this, he has cited the case of Magniram v. Mehdi Hossain Khan. The, facts of that case are not similar. On the 15th October, 1881, the defendant first party mortgaged four properties to defendant fourth party. On 12th January, 1888, the first two properties were purchased by defendant first party and on the 9th July, 1888, the remaining two properties were purchased by the plaintiff. On the 26th April, 1892, the defendant fourth party the mortgagee obtained a decree on his mortgage of the 15th October, 1881, and in execution of his decree he purchased two of the properties which had been purchased by the plaintiff in 1888. The plaintiff then commenced an action for contribution from defendant first party, the purchaser of the first two properties. His case in short was that all the four properties were liable to contribute rateably to the satisfaction of the mortgage debt and whereas the entire mortgage debt was satisfied out of the two properties purchased by him, the defendant who had purchased the remaining two properties ought to contribute to the defendant proportionate to the value of those properties. The question of marshalling did not, therefore, directly arise in that case, but an analogy drawn from it as an argument against the plaintiff's right of contribution was disposed of by their Lordships in the following words:—
“The rule of marshalling as laid down in the Transfer of Property Act, section 81, is no doubt limited to the case of mortgagees, and does not apply to the case of purchasers of mortgaged properties subject to prior incumbrances. Nor does the rule of marshalling in the case of purchasers as laid down in section 56 of the Act apply to a case between purchaser and purchase, section 56 being limited in its operation to the case in which the party claiming marshalling is a purchaser and the party against whom it is claimed is the original mortgagor. For the same reason the case of Lala Dilawar Sahai v. Dewan Bolakiram cited in the argument, in which a claim for marshalling was disallowed, may be distinguished-from the present case. Upon reason and principle it is difficult to say why, if marshalling is to be allowed as between two subsequent mortgagees, it should not be allowed as between subsequent purchasers. But though that is so, and though, as has been found by the Court below; the defendants 1st party bought without notice of the prior mortgage in favour of the defendants fourth party, as the plaintiff was a purchaser for value it would not be right to hold that the plaintiff is not entitled to claim contribution if the sale of his property results in the satisfaction of the mortgage debt completely………………. In our opinion then, if the sale of the plaintiff's property has resulted in the complete satisfaction of the mortgage debt, the plaintiff is entitled to contribution.”
Then their Lordships laid down the principle upon which the Contribution should be allowed. The fight in that cast was not between a prior and a subsequent mortgagee as to marshalling but was one of contribution between two private purchasers from the owner of different properties all of which were previously mortgaged to a third person, who obtained entire satisfaction of his mortgage by sale of the properties held by one of the purchasers, the properties held by the other purchaser having thus been altogether exonerated from the mortgage incumbrance. That case is not, therefore, an authority for the point for which the learned Subordinate Judge has used it that a mortgagee having purchased the mortgaged property in execution of his decree loses his right of marshalling. The learned Vakil for the respondent has cited the case of Kommineri Appaya v. Mangala Rangayya. The same, remark applies to this case as to the case of Magniram v. Mehdi Hossain Khan already dealt with. The right of marshalling was claimed not by the purchaser in execution of a subsequent mortgage decree but by a subsequent private purchaser who comes not under section 81 but under section 56 of the Transfer of Property Act. In that case their Lordships, while holding that the private purchaser was not entitled to have the property marshalled, pointed out:
“Under section 88 of the Transfer of Property Act, the Court may order that a portion sufficient to discharge the plaintiff's debt be sold, and if parcel No. 2 is sufficient and if the plaintiff cannot possibly be prejudiced by such sale, it may be open to the Court to direct in the decree itself its sale before the other property.”
Referring to section 56 of the Transfer of Property Act which entitles the buyer of one of the two properties mortgaged to another to have the charge satisfied out of the other property as against the seller only. Sir Rash Behari Ghose in his book on Mortgage seems to be of opinion that the object of the enactment is to secure that the rights of the creditor must not be diminished or unduly hampered, and he quotes the case of Webb v. Blessinton, in order to show that a purchaser of part of the mortgaged property may claim that the plaintiff shall not resort to the purchaser's part of the estate, unless the remainder of the lands and premises should prove insufficient.
Their Lordships of the Madras High Court in the case of Kommineri Appayya v. Mangala Rangayya, cited on behalf of the respondents and referred to above, observed that the right of the private purchaser arising under section 56 to marshall the property claimed by him was not referred to a Full Bench for decision nor was it argued; and as to the right of a private purchaser to marshall, their Lordships in the case of Magniram v. Mehdi Hossain Khan, referred to above, observed:
“Upon reason and principle it is difficult to say why, if marshalling is to be allowed between two subsequent mortgagees, it should not be allowed as between subsequent purchasers.”
The Courts have, however, in practice given effect to it, and the particular equities arising in a case are often adjusted by direction under Order XXXIV, rule 4, of the Civil Procedure Code corresponding to section 88 of the Transfer of Property Act given by the Court to sell the property in a particular order. We are not concerned in this case with the rights of private purchasers to marshall under section 56 of the Act, but with the rights of the purchaser in execution of a subsequent mortgage decree to marshall under section 81 of the Transfer of Property Act. Section 81 of the Transfer of Property Act runs as follows:
81. “If the owner of two properties mortgages them both to one person and then mortgages one of the properties to another person who has not notice of the former mortgage, the second mortgage is, in the absence of a contract to the contrary, entitled to have the debt of the first mortgagee satisfied out of the property not mortgaged to the second mortgagee so far as such property will extend, but not so as to prejudice the rights of the first mortgagee or of any other person having acquired for valuable consideration an interest in either property.”
Now, it is conceded that the right of marshalling was available to defendant No. 14 up to the moment he had not actually purchased the properties in execution of his mortgage Decree. That right to my mind continues to long as the properties mortgaged to defendant No. 14 are available to be sold in execution of a prior mortgage of the plaintiffs. The object of section 81 is to protect the subsequent mortgagee from the properties mortgaged to him being sold to satisfy the dues of a prior mortgagee who has the additional security of some other properties also. It will be dangerous, and in many cases will make the provision nugatory, if it were held that the moment the subsequent mortgagee purchases in execution of his mortgage, his rights of marshalling are extinguished. Now, a mortgagee is a transferee of property and the mortgagee acquires certain rights and incurs certain obligations in the property mortgaged from the time he takes his mortgage. One of those rights is the right of marshalling. The right acquired by him passes to the purchaser in execution of the mortgage decree whether he or a third person is the purchaser. The execution sale does not extinguish the rights or obligations already acquired or incurred by the mortgagee at the time when the mortgage was executed. His rights and obligations against the mortgagor are thus not extinguished. Hence the purchaser of the property in execution of his mortgage decree is entitled to enforce the rights of marshalling as against a prior mortgagee so long as that prior mortgage is not extinguished. None of the cases cited seem to conflict with this view. On the other hand, the case of Inder Dewan Prashad v. Mussammat Man Kuer seems to favour this view. In that case on the 21st June, 1886, the defendant No. 1 mortgaged to plaintiff two houses and some share in a mauza. On the 17th August, 1886, defendant No. 1 mortgaged to defendant No. 2 one of the houses only. On the 30th July, 1887, defendant No. 2 obtained a mortgage decree against defendant No. 1 passed upon his mortgage of 17th August, 1886. On the 15th April, 1891, he sold in execution of his decree dated the 30th July, 1887, and purchased the house mortgaged. On the 4th April, 1893, the plaintiff instituted a suit to enforce his mortgage of the 21st June, 1886, the first mortgage. It was held that defendant No. 12, the subsequent mortgagee, who had purchased the house in execution of his mortgage decree one of the properties mortgaged to the plaintiff in the first mortgage of 1886, was entitled to marshalling, in other words, he was entitled to compel the prior mortgagee to sell in the first instance the properties which were not mortgaged and purchased by defendant No. 2.
Therefore defendant No. 14 in the present case is entitled to marshalling and to compel the plaintiff to sell in the first instance the properties other than the properties mortgaged to him and purchased by him in execution of his subsequent mortgage. Those properties are: (1) Present tauzi No. 10913, old 348 Maksudpur Agawan; (2) Present tauzi No. 11041, old 476 proprietary interest in mauza Ogawan Nisf. It is said that the defendant-appellant has failed to prove that these were the properties subsequently mortgaged to him and purchased by him in execution of that mortgage. Before the learned Subordinate Judge the point does not seem to have been seriously raised, as will appear from the following discussion in his judgment:
“The defendant's mortgage was subsequent and he has purchased the property in his own decree obtained on his mortgage. The plaintiff's mortgage is prior and therefore binding on the defendant.”
Witness No. 3 has also referred to these two villages, Maksudpur Ogawan and Ogawan Nisf, in his evidence as being the properties mortgaged to Edal Singh and purchased by him in execution of his mortgage Decree in the judgment, Exhibit 3, of the 22nd December, 1917, passed in the mortgage suit brought by Edal Singh, Muhammad Khalil as well as Jadunandan the original mortgagee, Mr. Zakaria, Gauhar Ali and Mussammat Roqaitul Fatma were all parties. In that case it was recited that the properties mortgaged to Edal Singh were Maksudpur Ogawan and Ogawan Nisf and the case was fought out on the assumption that Khalilur was the assignee of the mortgage in which these properties were hypothecated. Therefore the fact that these two properties were mortgaged to defendant No. 14 and that he purchased the properties in execution of his decree obtained on foot of his subsequent mortgage cannot now be seriously challenged.
It was then argued by the learned Vakil for the respondent that at the time when Edal Singh purchased the property in execution of his mortgage he was aware of the prior mortgage. To my mind that does not alter the position and the real question is as to whether he was aware of the prior mortgage at the time when he took his own mortgage and on that point the learned Subordinate Judge has held that the mortgage by Edal Singh was taken without notice. The subsequent proceedings to enforce his own mortgage were in due course of time and the fact that he came to know of the existence of the prior mortgage at the time he purchased the property, does not deprive him of the right of marshalling which he had acquired already. This point seems to have been also concluded by the authority of Inder Dewan Prashad v. Mussammat Man Kuer already referred to.
Apart from the question of marshalling it appears to me that the Court has undoubtedly the right to direct under Order XXXIV, rule 4, that the properties mortgaged should be sold in a particular order. The section says that in the event of the default of the defendant in paying the decretal amount the mortgaged property or a sufficient part thereof should be sold. Now, ordinarily the right of selling the property in a particular order rests with the decree-holder and in the absence of any contract between the parties the decree-holder may proceed to sell the properties in whatever order he thinks best so as to facilitate his realization of his mortgage debt. But the Court can, in the circumstances of a case and in view of the equities arising in favour of the various parties, direct the order in which the properties should be sold. Whereas the decree-holder has the right in the first instance to prescribe the order of the sale, the final order rests with the Court which has to adjust and determine the equities of the parties before it. This seems to be now the accepted view of the law. In the present case no order has been prescribed in the mortgage bond in which the properties should be sold and therefore in the circumstances of the case and in view of the complications created by the non-payment of the mortgage bonds by Mr. Zakaria and Roqaitul Fatma, the latter of whom is related to the plaintiff, and in view of the equities arising in the case, we think that defendant No. 14 is entitled to have the properties mentioned above, Maksudpur Ogawan and Ogawan Nisf, sold last of all the properties mentioned, in the mortgage bond. Accordingly we vary the decree made by the learned Subordinate Judge and order that the decree be modified by inserting therein an express direction that the properties be sold in the order indicated above.
In the circumstances of the case we think that defendant No. 14 is entitled to only half the costs incurred by him in this Court as well as in the Court below.
Kulwant Sahay, J.:— I agree.
Decree varied.