This second appeal arises out, of a suit by appellant to redeem a mortgage executed by him in favour of the husband of the 1st defendant, who died leaving the 1st defendant, his widow, and defendants 2 and 31 his minor daughters. The 1st defendant in 1909 and after her husband's death sub-mortgaged the property and the 4th defendant claims to be entitled to the amount due on the sub-mortgage. The contention of defendants 1 to 3 is that that the sub-mortgage originally created by the 1st defendant was a nominal transaction. The District Munsif found that the sub-mortgage was a genuine transaction supported by consideration, but the Subordinate Judge on appeal reversed the decree on this point. In 1917, the appellant filed O. P. No. 33 of 1917 and deposited the amount in Court due on the mortgage. It is not disputed that the amount deposited was the amount legally payable on the mortgage. He seems to have stated that there was a sub-mortgage and that the 4th defendant claimed under it. Notice was issued to defendants 1 to 3 and to the 4th defendant. Owing to the contention raised by 1st defendant, that the sub-mortgage was nominal and that the 4th defendant was not entitled to any portion of the money deposited in Court, the money was not paid to anybody but remained in Court. It was, after the decree in the suit (O. S. No. 515 of 1917), ordered to be paid out, by the District Munsif, to the 4th defendant, who drew this sum.
The first question is whether the deposit made, under the provisions of Sect. 83 of the Transfer of Property Act, in O. P. No. 33 of 1917, was a proper one. Sect. 83 of the Act enacts that a mortgagor may, at any time, before a suit for redemption is barred, deposit, in a Court having jurisdiction, to the account of the mortgagee, the amount remaining due on the mortgage. There can be little doubt that the word mortgagee includes the legal representatives and assigns of the mortgagee. It is argued that a submortgagee is not an assign and that a deposit of the money, as payable both to the legal representatives and the sub-mortgagee, is not a proper deposit. We are unable to uphold this contention. Fisher in his Law of Mortgages observes:
“Mortgages are frequently transferred by way of sub-mortgage. In that case, the sub-mortgage is a compound mortgage consisting of a mortgage of a chose in action, viz., the original mortgage debt, and of the property which is security for the original mortgage debt.”
In cases of suits, where there is a sub-mortgage, the decree has to direct an account of what is due on the original mortgage and of what is due on the sub-mortgage and payment of what is due on the sub-mortgage not exceeding the sum due on the original mortgage and the residue, if any, to the original mortgagee. Form No. 9, Appendix D, to the Civil Procedure Code, refers to suits by a sub-mortgagee against the original mortgagor and mortgagee and shows that an account has to be taken on the above footing. Ghose in his work on the Law of Mortgages in India observes:
“Debts secured by mortgage are also frequently assigned by way of security. Such transactions are known as sub-mortgages and may be evidenced merely by a deposit of title-deeds. The sub-mortgagee, by virtue of the assignment is not only entitled to the usual remedies against his own mortgagor but also against the original mortgagor.”
It is clear that a claim by a sub-mortgagee against the original mortgagor cannot be met by a plea of want of privity, as the sub-mortgage is only an assignment of the original mortgagee's rights. Where the sub-mortgage is for an amount equal to, or in excess of, the original mortgage debt, it will operate as a complete assignment, and if for any lesser sum, as an assignment pro tanto.
We have not been referred to any case, where a deposit in Court, under Sect. 83 of the Transfer of Property Act, has been held to be bad, owing to the assignee of the mortgage being stated as the person entitled to the money. Where a person having notice of an assignment pays the money into Court and names only the original mortgagee, who has parted with his right, as the person entitled to receive the sum deposited, we do not see how he can, if the money is taken away, resist a suit by the assignee of the mortgage before such deposit: (see Narayana Mudali v. Raghavammal(1). A sub-mortgagee will be a necessary party to a suit for redemption and we think that a deposit will not be had merely, because the petition states the persons entitled on the original and sub-mortgages and the Court issues notices to them; the case will of course be different, if the mortgagor alleges claims of persons, not the legal representatives or assigns of the mortgagee, for the purpose of seeing that the money is not drawn out, or of supporting the case of persons with no title.
We do not think that Madhavi Amma v. Kunhi Pathumma(2) and Debendra Mohan Rai v. Sona Kunwar(3), referred to by the respondent apply to the case of sub-mortgages. They were cases where strangers having no right in the mortgage were mentioned as persons entitled to the money deposited.
The fact that the mortgagee and sub-mortgagee have disputes inter se, either as to the validity of the sub-mortgage, or the amount due thereunder, will not affect the mortgagor. Where the fact of a sub-mortgage is not disputed, it is no part of the business of the mortgagor to decide whether the sub-mortgage is real or nominal. In the case of legal representatives, it has been held in Nagathal v. Arumugam Pillai, that any dispute that may arise between the heirs, as to their shares, will not affect the mortgagor making the deposit and we can see no reason why a similar rule should not apply where disputes arise as to the right to the money between the mortgagee and the sub-mortgagee from him. A person executing a sub-mortgage and giving an apparent title should not cast on the mortgagor, a stranger, the duty of deciding who is entitled. To hold otherwise would in effect deprive the mortgagor of the rights given to him by Sect. 83, where a mortgagee disputes the effect of his own act in executing a document, which on the face of it creates rights in another to the mortgage money.
We are of opinion that a sub-mortgage is an assignment of the mortgage and that having regard to the remedies of the sub-mortgagee a deposit in Court does not contravene the provisions of Sect. 83 of the Transfer of Property Act, merely by reason of the fact that the mortgagor recited the sub-mortgage in his petition and the Court directs notice to issue and the money is, owing to disputes between the mortgagee and his sub-mortgagee, not paid out.
The next question is as to the liability of the defendants for mesne profits. The 2nd and 3rd defendants are minor daughters and they cannot be liable for mesne profits owing to any wrongful act of their mother. So far as 1st and 4th defendants are concerned, it is immaterial to the plaintiff, whether the 1st defendant continued in possession or parted with it to somebody else. 1st defendant died pending second appeal and her legal representatives are brought on record. If she created a sub-mortgage, it was her duty to get back possession and hand it over to the mortgagor. The 1st defendant is found by the Subordinate Judge to be in possession. So far as the rate of mesne profits is concerned there is no dispute. We think that defendants 2 and 3, as legal representatives of the 1st defendant and out of her assets and defendant 4 are jointly liable to pay the amount decreed for mesne profits.
As regards the amount deposited in Court in O. P. No. 33 of 1917, which had been drawn by 4th defendant, we think that on the findings of the Subordinate Judge, the 4th defendant is liable to pay the sum to the 1st defendant. As we hold that the deposit was valid, there is no reason why the plaintiff should pay the sum over again. There will be a decree in favour of the 1st defendant against the 4th defendant for recovery of the amount drawn by him.
The decree of the Subordinate Judge will be modified as decided above. As the appellant has succeeded in all the grounds urged, respondents 1 to 4 will pay his costs of the appeal and in the Courts below.
C. K.Appeal allowed: Decree modified.