Jugdeo Singh v. Habibulla

Mookerjee, J.:— The subject-matter of the litigation, out of which the present appeal arises, is a five dams share of Mehal Bhadeji, Pergunnah Mohair, which bears Touzi No. 3033 on the revenue rolls of the Collector of Gaya. The disputed property was originally owned by Defendants 2 to 5, but the Plaintiff-Appellant as well as first Defendant-Respondent claim to have the acquired title to it by different transaction and the substantial question in controversy between the parties is as to the manner in which their rights are to be adjusted. The Plaintiff alleges that on the 31st May 1886 one Baij Nath Singh, now represented by Defendants 2 to 5, executed a mortgage in his favour for a consideration of Rs. 1,000. The security comprised six properties and included 11 annas, 10 dams share of Mehal Bhadeji. The loan was repayable on the 23rd June 1884. Default was made in payment and in 1893 the mortgagee sued to enforce the security. He joined as parties Defendants various persons, who had meanwhile acquired an interest in different fragments of the equity of redemption, but by some misapprehension, the nature of which is not material for our present purposes, the first Defendant, who had acquired an interest in the disputed property, was left out of the litigation. On the 28th February 1895, a decree was made on the mortgage by consent of the parties to that suit. The result was that the mortgagee obtained a decree for the balance due on the security, but as he released some of the properties from his claim the decree directed a sale only of the property now in dispute and of certain other properties with which we are not now concerned. In execution of this decree, the properties were sold and purchased by the decree-holder himself on the 26th September 1896. This is the foundation of the title of the Plaintiff. Meanwhile, in the course of proceedings under the Public Demands Recovery Act, a sale was held by the Collector on the 11th of August 1894, and the first Defendant purchased the share of Mehal Bhadeji, now in dispute, for a sum of Rs. 300. His purchase was confirmed on the 14th March 1895. A dispute then arose between the Plaintiff, who had purchased at the mortgage sale, and the first Defendant who had purchased at the certificate sale, as to their respective right to have their names registered under the Land Registration Act. There was a protracted litigation in the Revenue Courts, the ultimate result of which was that the first Defendant was defeated and the name of the Plaintiff was registered as proprietor in the books of the. Collector on the 12th of February 1897. On the 14th September 1897, the purchaser at the certificate sale commenced an action for recovery of possession and mesne-profits, substantially on the ground that, as he was not a party to the mortgage suit, his right of redemption and consequent possession of the property was not in any manner affected by that litigation. The Court of first instance made a decree in favour of the purchaser at the certificate sale on the 13th July 1898, which declared that the Plaintiff was entitled to have his name registered with respect to the disputed property, to recover possession thereof and to obain mesne-profits from the date of dispossession up to the date of delivery of possession. Upon appeal by the purchaser at the mortgage sale, the District Judge reversed this decision on the 24th September 1898, and dismissed the suit. On appeal to this Court, however, Habibulla Khan v. Jugdeo Singh(1), the decree of the District Judge was set aside and that of the Court of first instance restored. The ultimate result of the litigation, therefore, was that the purchaser at the certificate sale became entitled to possession and to mesne-profits which had accrued due during the period of dispossession. It is conceded that the first Defendant has executed this decree and is now in possession. It appears to have been argued before this Court, on behalf of the present Plaintiff, who was then Respondent, that the purchaser at the certificate sale was not entitled to an unconditional decree for possession and that he was at best entitled to recover possession after he had redeemed the purchaser at the mortgage sale. This Court, however, held that, in the suit as framed, this objection could not be entertained, and an observation was thrown out that the purchaser at the mortgage sale might bring another suit for the sale of the property in the presence of the purchaser at the certificate sale. On the 21st of May 1903, the present Plaintiff, who had purchased at the mortgage sale and who had been defeated in the previous litigation, commenced this action for recovery of Rs. 2,210 by sale of the 5 dams share of Mehal Bhadeji which was covered by the mortgage of 31st May 1886 and had been subsequently purchased by the first Defendant at the certificate sale on the 11th of August 1894. The Plaintiff founded his claim upon the ground that the effect of the previous litigation had been to deprive him of the disputed property, (the price of which, fetched at the mortgage sale, had been applied in partial satisfaction of the mortgage decree) and that, as the first Defendant was not bound, in any manner, by the previous litigation on the mortgage, the Plaintiff was entitled to recover from him by sale of the mortgaged property the sum of Rs. 2,210 which he had paid at the mortgage sale as the price of the disputed property. The claim was resisted, on various grounds, amongst which it is sufficient to mention two, namely, first, that the suit as framed was not maintainable, and, secondly, that it was barred by limitation. The Courts below have dismissed the suit on the ground that it is barred by limitation inasmuch as it has been brought more than 12 years after the date on which the mortgage money fell due. An attempt was made, on behalf of the Plaintiff, to take the case out of the Statute of Limitation by reason of some alleged acknowledgment of the debt made by the representatives of the original mortgagor on the 28th February 1895, when the consent decree on the mortgage was made. The learned Judge, however, has held that the acknowledgment relied upon was not sufficient, and if it were necessary for us to consider this point, a question of some nicety might have arisen. But in the view we take of the rights of the parties, it is not necessary to discuss this matter. In our opinion, the suit has been erroneously framed and, if leave be granted to the Plaintiff to amend his plaint, as we think ought to be done, no question of limitation arises and the rights of the parties may be adjusted without any difficulty.

From the circumstances we have set out, it is reasonably clear that what has happened is that the mortgagee in execution of a decree obtained against the owners of the equity of redemption, except one, has brought the mortgaged property to sale and purchased it. The result of this has been that the right of redemption of the first Defendant, who was omitted from the mortgage suit, has not been, in any manner, affected by the decree made in that litigation, Mallikarjunadu v. Lingamurti(2). The position of the person, who has been thus excluded, is that he has now to reckon with the purchaser at the mortgage sale in whom by virtue of the sale under the decree, the interest of the prior mortgagee and that of the holders of the equity of redemption, who were parties to the suit, have become vested as it stood at the date of the sale; but the decree, which has been obtained behind his back, obviously does not affect his rights, as he is not before the Court and had no opportunity to be heard. [Mc Veigh v. United States(3). Hughes on Procedure, Vol. I, p. 169]. His right in the property, which gives him the right to redeem, remains as it was before the decree was passed. Ram Narain v. Bandi(4), Gangadas v. Jogendra Nath(5), Rungasami v. Felli Badi(6), Hassanbhai v. Umaji(7), Brij Kishore v. Madho(8). The proper procedure, therefore, for the purchaser at the mortgage sale to follow is to sue for recovery of possession subject to the right of the person excluded to redeem him. It is not necessary for our present purposes to consider, whether it is open to a mortgagee, who has omitted to implead a necessary party, to maintain another suit to enforce his security against the party excluded; that he may do so under certain exceptional circumstances appears to have been affirmed by the Allahabad High Court in Dharam Singh v. Angan Lal(9) and Lachman Das v. Ballu(10); but even if it be assumed that it is open to a mortgagee to enforce his security by a fresh suit for sale against an excluded party, which, however, we must not be taken to affirm, it is well-settled that it is not obligatory upon him to do so and that his appropriate remedy is by a suit for possession subject to an exercise of the right of redemption by the party excluded. In support of this proposition reference may be made to the cases of Banwari Jha v. Ramji Thakur(11), Ram Narain Sahoo v. Bandi Prosad, Harprosad v. Dalmardan Singh(12), and Gangadas v. Jogendra Nath. Under the circumstances of the present case we think the Plaintiff is not entitled to recover from the first Defendant by sale of that portion of the mortgaged property, which is in his possession, a sum of Rs. 2,210, which, the Plaintiff alleges, he paid at the auction-sale held in execution of the mortgage decree for the purchase of the disputed property. No intelligible reason has been suggested why the Plaintiff should recover the specific sum for which he purchased the property at the mortgage sale, that sum may be greater or less than the portion of the mortgage debt which is fairly chargeable upon the property in the hands of the first Defendant. Besides, the Plaintiff has already enforced his security, and it may very well be contended that when he brought an action upon his mortgage and obtained a decree, the effect thereof was to exhaust the original cause of action and to transform the mortgage debt into a judgment debt. No doubt, the first Defendant is not bound by that decree as he was no party to that litigation; but it is not easy to perceive how, if the mortgage contract is one and indivisible, the cause of action as against the owner of one fragment of the equity of redemption may rightly be regarded as distinct and separate from the cause of action against the owners of other fragment of the equity of redemption. Hemendra Kumar Mullik v. Rajendra Lal Munshi(13), King v. Hoar(14), Kendal v. Hamilton(15), Ex. Jewings(16). We must, therefore, hold that the proper remedy of the Plaintiff was to bring an action for declaration of his title as purchaser at the mortgage sale and for recovery of possession, subject to the exercise of the right of redemption of the first Defendant. It was argued, however, by the learned vakil for the Respondent that as the result of the previous litigation between the purchaser at the certificate sale as Plaintiff on the one hand, and the purchaser and the mortgage sale as Defendant on the other, the Plaintiff is precluded from recovering possession. In our opinion, there is no force in this contention. It appears from the judgment of this Court on the last occasion that the present Plaintiff, who was then Respondent, did suggest that the first Defendant, who was then Plaintiff, should not be allowed to recover possession unconditionally, that he should be put on terms and that he should be compelled to redeem the mortgagee purchaser before he was restored to possession of the property. The first Defendant then successfully resisted this suggestion on the ground that, as he was not a party to the mortgage suit and as his right of redemption had not been extinguished, he was entitled to recover and retain possession and that the mortgagee purchaser must enforce his rights by a separate suit properly framed for the purpose. This Court allowed the objection to prevail and it is not open to the Respondents now to suggest that the Plaintiff is not entitled to recover possession subject to the exercise of the right of redemption by the Defendant, and that the rights of the parties ought to have been adjusted in the previous litigation. It was, further, suggested by the learned vakil for the Respondents that leave ought not to be granted to the Plaintiff to amend his plaint at this stage of the litigation, and in support of this contention, reliance was placed upon the observations of this Court in the case of Surjiram Marwari v. Berhamdeo Pershad(17). In that case, however, there were very special circumstances, which disentitled the Plaintiff to any indulgence from the Court. In the case before us, if the suit has not been properly framed, the fact must be attributed, in some measure, to the dictum in the judgment of this Court in the previous litigation where it was said that the Plaintiff might enforce his rights by a suit on his mortgage against the purchaser at the certificate sale. Leave is, therefore, granted to the Plaintiff-Appellant to amend his plaint and to convert the suit into one for recovery of possession of the disputed share, subject to the exercise of the right of redemption of the first Defendant.

The question next arises as to the mode in which the rights of the parties are to of adjusted. The Plaintiff mortgagee has purchased some of the mortgaged properties and the security therefore has been split up under the last paragraph of sec. 60 of the Transfer of Property Act. The Defendant is, therefore, entitled to redeem his own share in the disputed property upon payment of a proportionate part of the amount due on the mortgage. [Gangadas v. Jogendra Nath]. The same result follows from the circumstance that the mortgagee has released some of the properties from his claim, the effect of which is to split up the security, and allow partial redemption [Hakim Lal v. Ram Lal(18)]. To find out the proportionate amount payable by the Defendant, the value of the properties comprised in the mortgage security at the date of the execution thereof must be first determined, as also the value of the 5 dams share of Mehal Bhadeji now in dispute. The principle amount of Rs. 1,000 must then be distributed over all the properties comprised in the mortgage and the amount fairly chargeable to the share of Bhadeji now is dispute, proportionate to its value, will have to be calculated. The amount so fixed is the principal, which, the first Defendant may legitimately be called upon to pay. Interest on this amount will run at the rate specified in the mortgage contract from the 31st May 1886 to the 28th August 1895, i.e, the date which was fixed for re-payment in the decree made in the mortgage suit. This direction is based on the ground that the previous decree is not binding upon the first Defendant, for three reasons; first, because he was no party thereto; secondly, because that decree was obtained by consent, and, thirdly, because in that decree various properties were released from the claim on the mortgage and a heavier liability imposed upon the others than what could legitimately be done. As pointed out by this Court in the case of Gangadas v. Jogendra Nath, when a party who has been excluded from a mortgage suit, and has thus not been afforded an opportunity to redeem, subsequently seeks to exercise his right of redemption, he is entitled to do so upon the same terms as if he had been made a party to the original suit; the party who has been improperly excluded from a mortgage suit, is entitled to claim that he should not be placed in a worse position than what he would have occupied if he had been made a party to the original suit; if he had been so made a party, he would have been entitled to redeem upon payment of the sum ascertain by the decree together with interest upon such sum at the Court rate between the date of the decree and date of actual realization; in other words, his liability to pay interest at the contract rate would have terminated on the date of the decree, when the liability would have passed from the domain of contract into the domain of judgment; from that date his liability would have been determined by the decree and interest would have run at the Court rate allowed by the decree. This principle is equally applicable whether the decree in the mortgage suit was upon contest or by consent indeed, in the latter event, the reason for the application of the principle is paramount. This view is clearly supported by the decision of their Lordships of the Judicial Committee in Kedar Lal Marwari v. Bishen Prasad(19). [See also Gurdeo Singh v. Chandrika Singh(20)]. The amount determined as payable on the 28th August 1895, will, therefore, carry interest at 6 per cent, from the date up to the date fixed for re-payment in the decree to be made by the District Judge in the present litigation. It was suggested, and we think Very properly, by the learned vakil for the Respondent, that against the sum so found due to the Plaintiff must be set off the profits, if any, which may have been realized by the Plaintiff by his possession of the disputed share after the successful termination of the proceedings before the Collector in his favour. We observe, however, from the proceedings in the previous litigation between the parties, that the decree of this Court restored the decree of the Court of first instance which entitled the first Defendant, who was then Plaintiff, to recover mesne-profits from the present Plaintiff, who was then Defendant, in respect of the property, between the dates of dispossession and recovery of possession. We have not been informed whether these mesne-profit have been actually recovered by the Respondent; if they have been, the Respondent is clearly not entitled to ask for any set-off of the profits which may have been received by the Plaintiff during his possession; on the other hand, if these mesne-profits have not been assessed and realized, the Defendant would legitimately be entitled to the set-off which he has claimed. When the amount due to the Plaintiff from the first Defendant has been determined by the District Judge on the principles indicated above, he will make a decree, which will entitle the Defendant to pay the amount to the Plaintiff within six months from the date of the decree; if the Defendant makes the payment, the suit will stand dismissed; if the Defendant fails to make the payment, the Plaintiff will be entitled to be placed in possession of the property in execution of the decree and whatever interest the first Defendant has now in the property will stand extinguished.

The result, therefore, is that this appeal must be allowed, the decree of the District Judge discharged, and the case remitted to him for disposal in the manner indicated in this judgment. The District Judge will be at liberty to take additional evidence for the satisfactory determination of the questions to be tried and he may do so himself, or he may direct the Subordinate Judge to act under sec. 568 of the Code of Civil Procedure. The final decree, however, is to be made by the District Judge himself. As regards the costs of this litigation, the Plaintiff-Appellant must pay to the first Defendant the costs in all the Courts incurred up to this stage. The costs of the proceedings alter the remand will be in the discretion of the District Judge.

S.C.S

Case remanded.