Baldeo Prasad v. Uman Shankar

Stanley, C.J and Burkitt, J.:— This appeal arises out of a suit for sale on a mortgage of the 11th of August 1902, executed by the defendant Debi Din to secure a sum of Rs. 1,400. There was a previous usufructuary mortgage of the year 1891 in existence at the date of this mortgage, by which a principal sum of Rs. 1,000 was secured in favour of the defendant Baldeo Prasad. On the 20th of October, 1902, the mortgagor Debi Din sold his equity of redemption to one Girdhari Lal for a sum of Rs. 1,800, of which amount Rs. 800 was paid in cash, and Rs. 1,000 was left in the hands of Girdhari Lal to satisfy the mortgage debt of Baldeo Prasad. Baldeo Prasad was a co-sharer in the village, and as such was entitled to pre-empt this sale, and he sued for pre-emption and obtained a pre-emption decree. Upon pre-emption he paid Rs. 800 to the vendor and retained Rs. 1,000, portion of the purchase money, in satisfaction of his own prior mortgage of 1891. The plaintiff in the present litigation is the holder of the second mortgage, and as such instituted the suit out of which this appeal has arisen on the 3rd of January 1905 to recover his debt by sale of the mortgaged property. The defendant Baldeo Prasad set up the case that he is entitled to hold up the mortgage of 1891 as a shield against the plaintiff's claim and that the plaintiff cannot have a sale without paying the amount of the earlier mortgage-debt. The court of first instance in a carefully written judgment decided in favour of the defendant Baldeo Prasad and held that he was entitled to rely on the prior incumbrance. On appeal, however, the learned District Judge has taken a different view of the rights of the parties and held that the puisne incumbrancer is entitled to a sale of the property discharged from the prior mortgage. We are at a loss to understand the reasoning by which he arrived at this conclusion. Section 101 of the Transfer of Property Act, which only embodies the law as it existed previously upon this subject, protects a purchaser, as the purchaser here, against the claims of puisne incumbrancers, where, holding a prior mortgage, he has purchased the mortgaged property. It provides that where the owner of a charge, or other incumbrance on immovable property, becomes absolutely entitled to that property, the charge or incumbrance shall be extinguished unless he declares by express words or necessary implication that it shall continue to subsist, or, as is the case before us, such continuance would be for his benefit. It was clearly for the benefit of Baldeo Prasad when he became the absolute owner of the property that his prior charge should be kept alive, and how the lower appellate court came to hold that the property which he purchased could be sold at the instance of a puisne incumbrancer without any regard to the earlier incumbrance we are at a loss to understand. We think that the decision arrived at by the learned Sub-ordinate Judge upon this question is entirely correct. We therefore allow the appeal, set aside the decree of the District Judge, and restore the decree of the court of first instance with Costs in all courts.

Appeal allowed.