The Judgment of the Court was as follows:—
Mukherjea, J.:— This is an appeal on behalf of the Defendant and the suit was one commenced by the Plaintiff for recovery of khas possession of the land in suit on establishment of his title by purchase at a sale in execution of his mortgage decree. The facts lie within a short compass and are, for the most part, undisputed.
The land in suit which measures one bigha and odd is a part of a bigger parcel which admittedly belonged to one Hyder Mollah in tenancy right. Hyder Mollah mortgaged the entire plot to the Plaintiff in 1915. The Defendant claims to have a tenancy right in the land in suit under the predecessor of Hyder Mollah and then under Hyder Mollah himself long before the date of the mortgage. In July, 1917, the Defendant purchased from Hyder Mollah the equity of redemption in respect of the disputed plot which he already held as a tenant. In 1924, the Plaintiff mortgagee instituted a suit to enforce the mortgage bond and having recovered a decree., put that decree into execution and purchased the entire property in the year 1933. The present Defendant was made a party to the mortgage suit but he did not set up any tenancy right which he now claims in this suit. The Plaintiff after taking delivery of possession through the Court on June 11th, 1933, attempted to take actual possession and was resisted by the Defendant, which led to the institution of the present suit.
The defence in substance was that the Defendant had a tenancy right in the land in suit which was created long before the mortgage and was consequently unaffected by the mortgage decree and the sale.
The trial Court gave effect to this contention and though the Plaintiff was given a declaration of his title and was held entitled to recover rents from the Defendant, his claim for khas possession and mesne profits was dismissed. An appeal was taken against this decision by the Plaintiff to the lower Appellate Court and the Additional District Judge who heard the appeal reversed the decision of the trial Judge and decreed the Plaintiff's suit in its entirety. It was held by the Appellate Court that as the Defendant did not set up the tenancy right in the mortgage suit to which he was made a party, his defence was barred by the doctrine of constructive res judicata. It is against this decision that the present second appeal has been preferred.
It seems to me that the decision of the learned Additional District Judge on this point is not correct and the judgment in the mortgage suit could not bar the defence of the present Defendant under the rule of constructive res judicata.
As a general rule the ordinary scope of a mortgage suit is to cut off the equity of redemption and bar the rights of the mortgagor and those who derive their title from him. A stranger who sets up a title independent of the mortgage and paramount or adverse to it is not a proper party to the mortgage suit. Joggeswar Dutt v. Bhuban Mohan Mitra . Cases however arise where a person who is impleaded as a Defendant in a mortgage suit and is a necessary party to such a suit on the ground of his possessing an interest in the equity of redemption, claims to have an independent or paramount title to the subject-matter of the suit. The question is., whether in such cases the Defendant is bound to set up his paramount title as a defence in the mortgage suit itself. Almost all the re ported authorities so far as this Court is concerned have given a negative ans were to this question. Girija Kanta Chakravarti v. Mohim Chnndra Acharya , Asmatulla Pramanik v. Gamir Pramanik , Souabunnessd v. Abdul Hamid and Sm. Champa bati Dassi v. Mahomed Yakub Khan . Some of these authorities have gone to the length of saying that not only a Defendant is not bound to raise such question but he is not competent to do so and the Court should not allow him to raise such a question. In the case Sonabunnessa v. Abdul Hamid Mr. Justice Suhrawardy observed a follows:—
“If a Defendant in a mortgage suit has a title independent of and paramount or adverse to it, he is not bound to sat it up in the mortgage suit and the Court trying the mortgage suit is not justified in raising on issue of title as between him and the mortgagee.…”
This was quoted with approval by Mr. Justice Panckridge in the case of Sm. Champabati Dassee v. Mahomed Yakub Khan . Mr. Justice Pearson in the case of Asmatulla Pramanik v. Ganir Pramanik observed that the Court has a discretion, if not a duty in such cases to refuse to entertain the objection and thus enlarge the proper scope of a mortgage suit. As against these authorities there is a decision in the case of Srimanta Seal v. Bindu Bashini Dasi which undoubtedly takes a contrary view. There, the Defendant in a mortgage suit was not only a purchaser of the equity of redemption, but also claimed an independent, title as a settlement holder from the superior landlord. He however did not take up this defence in the mortgage suit and a decree for sale was made in his presence, in execution of which the property was purchased. It was held by Mookerjee and Chotzner, JJ., that he was bound to raise that defence in the mortgage suit and not having done so the decree for sale was operative and binding against him. The propriety of this view has been questioned in subsequent cases, vide Asmatulla Pramanik v. Gamir Pramanik and Sm. Sonabunnessa v. Abdul Hamid . It may be pointed out that the view taken in this case is definitely against what was taken by Sir Ashutosh Mookerjee in an earlier decision which is to be found in the case of Girija Kanta Chakravarti v. Mohim Chandra Acharya . There also a Defendant who was a legal representative of one of the mortgagors and in that capacity was a necessary party to a mortgage suit, was a person interested in his own right adversely to the mortgagee. It was held by Mr. Justice Mookerjee that the Defendant was not bound to raise the question nor could the question be raised at all in the mortgage suit. Considerable stress was laid by Mr. Justice Mookerjee in the case above mentioned upon an earlier decision of this Court in the case of Hare Krishna Bhowmik v. Robert Watson & Co. , but that decision, in my opinion, does not really support the proposition which was enunciated by the learned Judge. In that case Messrs Watson & Co who were made Defendants in a mortgage suit as assignees of the equity of redemption expressly set up a paramount title on the ground that the mortgaged property which was an occupancy holding was not transferable and the mortgage was consequently not valid against them in the character of landlord. The Plaintiff did not object to the question being raised and after the Court had decided the point and decided it adversely to the Plaintiff the latter came up on appeal to this Court and contended, inter alia, that the frame of the suit was bad and the Court should not have allowed the question to be raised at all. This Court overruled this contention and held that it was open to the Defendants to raise this question inasmuch as they had a capacity quite separate from that of purchasers of the equity of redemption. It is to be noticed that Sir Asutosh Mookerjee, J., himself commented upon this decision in the case of Jogesswar Dutt v. Bhuban Mohan Mitra and pointed out that the facts and circumstances of the case were exceptional and if a Defendant in a mortgage suit set up by his answer a paramount title and without objection went to trial on that issue, neither party who had taken the chance of a favour able decision could, when defeated, ask a reversal of the decision on the ground that the issue was improperly tried. In other words, the question was not one of jurisdiction but rather of the frame of the litigation and the scope of the enquiry. If this is the correct proposition, the utmost that can be said is that a Defendant who has been properly joined as a party to a mortgage suit can, if he likes, raise a question of his independent title. The Court may, in its discretion, refuse to raise an issue on this point but if the question is investigated without objection by the parties, the decision cannot be challenged on the ground that the Court had no jurisdiction to decide it. The authorities however including the earlier decisions of Mr. Justice Mookerjee himself are clearly against the view that the Defendant in such cases has a duty to raise such an issue. In my opinion, the true principle which will govern cases of this description has been laid down by the Judicial Committee in the case of Radha Kissen v. Khurshed Hossein . In order to bring a case within the rule of res judicata, both the elements laid down in sec. 11, Explanation 4 of the Code of Civil Procedure must be established and it must be proved that the matter could have been and ought to have been raised in the previous suit. Whether it ought to have been raised by the Defendant depends entirely upon the circumstances of a particular case and the pleadings of the Plaintiff in the mortgage suit.
In this case, the second mortgagee had sued on the mortgage bond and had prayed for a sale of the mortgaged property. The first mortgagee was made a party to the suit but he did not appear. A decree was passed in his presence and in execution of that decree the mortgaged property was sold and purchased by the second mortgagee. The first mortgagee afterwards sued on his own bond and the contention raised by the second mortgagee was that as the first mortgagee did not make his mortgage a ground of defence in the previous suit he was barred from suing upon it. This contention though it was accepted by the Courts below was negatived by the Judicial Committee. Sir Lawrence Jenkins who delivered the judgment observed as follows:—
“Bakhtaur Mall's position therefore was that he was a prior mortgagee with a paramount claim out side the controversy of the suit unless his mortgage was impugned. Consequently to sustain the plea of res judicata it is incumbent on the Sahus in the circumstances of this case to chow that they cought in the former suit to displace Bakhtaur Mull's prior title and postpone it to their own. For this it would have been necessary for the Sahus as Plaintiffs in the former suit to allege a distinct case in their plaint in derogation of Bakhtaur Mull's priority.”
Mr. Ghose who appears for the Respondent has attempted to distinguish this case on the ground that the Defendant had no double capacity in this case and as a prior mortgagee he was not a necessary party to the mortgage suit. In my opinion, that cannot make any difference in principle. A person may be a necessary party to a mortgage suit but if in another capacity he claims a title independent of the mortgage he is not in that capacity a proper party to the mortgage suit and his adverse title is as much outside the scope of the mortgage suit as if he was attempted to be impleaded as a party Defendant on the basis of that capacity alone. There are two cases upon which considerable reliance has been placed by Mr. Ghose—one of them is a pronouncement of the Judicial Committee in the case of Syed Mahomed Ibrahim Hossein v. Ambika Persad Singh and the other is a decision of this Court in the case of Kedar Nath Ojha v. Khiroda Dassya . In the first of these cases, the Plaintiff was an assignee of a simple mortgage, dated February 17th, 1888. This mortgage was subsequent to earlier mortgages of 1879-1880 but the money advanced on it was applied towards discharging an earlier debt secured by zarpeshgi lease of the year 1874. It appears that in a suit commenced on the mortgage deeds of 1879-1880 the Plaintiff's assignors were made parties but did not claim any priority in reaped of the mortgage debt of 1888 by reason of the fact that an earlier mortgage debt was satisfied with this money. In these circumstances, the claim of priority advanced by the Plaintiffs was held to be barred by res judicata. Here it is to be noticed that the Plaintiff's predecessors were impleaded as second mortgagees in the earlier mortgage suit and if they did claim any priority on equitable grounds in respect of the second mortgage itself, they were bound to set it up in that suit. The Plaintiff wanted in that suit to subordinate the rights of the second mortgagees to their own and they wanted a decree on that basis. In these circumstances, there was a distinct challenge to the rights of priority, if any, which the second mortgagee might claim and it was incumbent upon them to resist the Plaintiff's suit by setting up this defence specifically. In the other case which is reported in 37 C.W.N 671 [Kedar Nath Ojha v. Khiroda Dassya ] three out of four brothers had executed a mortgage in favour of the Plaintiffs. The fourth brother was dead and his rights devolved upon his mother, who was made a party to the mortgage suit not in that capacity but as a lessee in respect of a portion of the mortgaged property. The mother did not raise any defence that her rights as heir to her deceased son was not affected by the mortgage and a decree for sale was passed in her presence. It was held in a subsequent proceedings under Or. 21, r. 100 of the Code of Civil Procedure that the mother ought to have made this claim a ground of defence in the previous suit and the plea not having been taken it was barred by res judicata. It may be pointed out that in this case the mortgagee expressly asserted in the plaint that the property belonged to the three brothers only and impliedly therefore it was a denial of the rights of the fourth brother. This might impose upon the mother a duty to set up a title as an heir to her deceased son. Whether on the facts of this particular case the decision was right or not is another matter and it may be an arguable point whether the Court was justified in taking the plaint in this case to contain anything impugning the title of the deceased son whose rights had devolved upon the mother. But it is clear that the judgment proceeded upon the principle laid down by the Judicial Committee in the case of Radha Kissen v. Khurshed Hossein . Applying this principle to the facts and circumstances of this case it seems to me that there was nothing in the plaint of the mortgage suit which impugned the title of the present Defendant as a lessee in respect of the disputed property or contained any allegation in derogation of this title. It was therefore not incumbent upon the Defendant to set up his tenancy right in the mortgage suit and as such he is not precluded from raising this question in the present case. I hold therefore that the decision of the Court below on the question of res judicata is erroneous and cannot be supported.
Mr. Ghose has attempted to support the decision of the lower Appellate Court on another ground. He argues that the tenancy right, if any, of the Defendant, became merged and extinct when the Defendant purchased the landlord's interest in the demised land in July, 1917. After his purchase he was holding the land in his rights as a landlord and these rights must have been extinguished by the mortgage sale. Under sec. 111(d) of the Transfer of Property Act, a merger takes place, when the tenant acquires the immediate reversion and the greater estate and the less coincide in the same person without any intermediate estate. The Court below decided the question of merger against the Plaintiff, on the ground that as there was a mortgage on the interest of the landlord at the time of Defendant's purchase, the entire reversion could not and did not, vest in the tenant. Mr. Ghosh argues that this reasoning is not Correct and even though there was a mortgage, the mortgagor still remained the landlord and there would be a merger when the two interests were united in the Defendant.
It is true that in a simple mortgage it is the mortgagor who is entitled to realise rents from the tenant and in all forms of mortgage the ownership in the property remains in the mortgagor until foreclosure or sale takes place. It may be argued however that under sec. 58 of the Transfer of Property Act there is a transfer of an interest in immovable property in favour of the mortgagee and it cannot be said that after the property is mortgaged the entire interest remains in the mortgagor. It is not necessary, I think to decide this matter finally, for in my opinion the material facts which would attract the operation of sec. 111 (d) of the Transfer of Property Act have not been established in this case. In the first place, we do not know whether the Defendant's lease was prior or subsequent to the Transfer of Property Act and even if it was a subsequent transaction whether the lease was one to which the provisions of the Transfer of Property Act are applicable. It is said that Haidarali Molla's interest has been recorded in the settlement records as that of a raiyat with regard to the entire area. It may be argued that the Defendant in such circumstances was an under-raiyat and the incidents of his tenancy would be governed by the Bengal Tenancy Act. If the general principle of merger apart from sec. 111(d) of the Transfer of Property Act is sought to be applied to the present case, other difficulties would arise. It would then be primarily a question of intention and we have no materials to decide that the Defendant intended to merge the two interests. A passage in the written statement of the Defendant in the mortgage suit, to which our attention was drawn by Mr. Ghose, does not, in my opinion, throw much light on this matter. A man is presumed to intend that which is for his benefit and judged by that test it would obviously be to the advantage of the Defendant to keep the two interests separate. His interest as a lessor is affected by the mortgage and if he allows his lessee's interest to be merged in the superior one he would be hit by, the mortgage decree and the sale, and; his rights would be extinguished. The existence of a mortgage on the superior right when the Defendant purchased it, even if it cannot be held to be an intermediate estate which would prevent merger, would in my opinion certainly constitute a criterion to defendent the intention of the lessee; and the Defendant could not have intended a coalescence of the two rights which was manifestly to his prejudice. The contention of Mr. Ghose must therefore fail.
Mr. Ghose's argument in the last resort is that at any rate, the lower Appellate Court has not come to any finding as to whether the tenancy set up by the Defendant existed in fact or not. This seems to be a substantial point, though the question of merger which seems to have been raised and argued in the lower Appellate Court presupposes the existence of a tenancy. The trial Court had come to an affirmative finding on this point in favour of the Defendant, but there were several grounds embodied in the memorandum of appeal to the lower Appellate Court from which, it appears, that the Plaintiff disputed the genuineness of the dhakhilas and denied the existence of the tenancy itself. The lower Appellate Court being of opinion that the Defendant was barred from raising this defence under the rule of constructive res judicata, did not record any finding on this point and it was not necessary for it to do so.
In the circumstances we think that while we set aside the decision of the lower Appellate Court on the questions of res judicata and merger, it is necessary that the appeal should go back to the lower Appellate Court in order that this question whether the tenancy existed in fact or not might be decided on the evidence in the record. If the lower Appellate Court, after remand, on a consideration of the entire evidence comes to be of the opinion that as a matter of fact there was a tenancy, whatever its nature might be, the Plaintiff's suit will be dismissed. If on the other hand it finds that there was no tenancy at all the Plaintiff would be entitled to a decree.
We make no order as to costs in this appeal.
Further costs will abide the result.
Roxburgh, J.—I agree.
The case raises for decision the following main questions:—
1. Is the defence barred because the Defendant failed to set up his title as lessee in the mortgage suit?
2. Is the case governed by the law of merger (a) under the Transfer of Property Act, (b) under the rule of justice, equity and good conscience?
3. Is the case one of accession to the mortgaged property and governed by the terms of sec. 70 of the Transfer of Property Act?
In my opinion the answers to all the above questions are in the negative.
The first question turns on the explanations to sec. 11 of the Code and on the law governing the question whether a claim to paramount title either (i) can be pleaded and decided in a suit for foreclosure or redemption of a mortgage, or (ii) must be so pleaded or as to (iii) the effect when it has been so pleaded or decided.
These matters have been considered in two types of cases (1) directly in mortgage suits and (2) in subsequent suits where the question of res judicata has arisen. It is now well settled that a question as to paramount title can be decided in a mortgage suit and that the decision will be res judicata in a subsequent suit if the proper conditions are satisfied. It is also clear that it is not essential that a question of paramount title must be raised by either side in a mortgage suit.
The case of Srimanta Seal v. Bindv, Bashini Dassi has been relied on by the learned District Judge and in argument before us for the view that the question of paramount title must be raised in the former suit and the learned Judge appears to consider that the case of Kedar Nath Ojha v. Khiroda Dassya , also followed this view. The case of Srimanta Seal v. Bindu Bashini Dasi was considered by Pearson, J., in Asmatulla Premanik v. Gamir Pramanik and it has been pointed out that the case which purports to be based on the decision in Hare Krishna v. Robert Watson & Co. is itself apparently at variance with the views expressed by the same learned Judge in Girija Kanla v. Mahim Chandra . It may be added that the same learned Judge discussed the same case [Hare Krishna v. Robert Watson & Co. in Juggeswar Dutt v. Bhban Mohan Mitrx [as was pointed, out by Suhrawardy, J., in Sonabunnessa v. Abdul Hamid ] and that he concluded that while the question as to whether a claim to paramount title could be decided in a mortgage suit was not merely one of convenience, it was tint one of jurisdiction. I do not consider therefore that we are pressed by the decision in Srimanta Seal v. Bindu Bashini Dasi . As regards the case of Kedar Nath Ojha v. Khiroda, Dassya , it would appear that it was there held that the former decision was res judicata on two grounds, first that the issue had been raised between other Defendants and had been decided and secondly on the ground that the circumstances were similar to those contemplated in Radha Kissen v. Khurshed Hussein as affording a foundation for the plea of res judicata, namely that in fact “it was distinctly alleged in the plaint that the mortgagors were the only persons who were specific owners in respect of the mortgaged property.”
For reasons which will appear hereafter, in my opinion, there is no question here that the Defendant ought to have raised his claim as lessee in the mortgage suit; the only question is whether the mortgagee had distinctly alleged in his plaint a case in derogation of the title of the Defendant as lessee, i.e, whether this case is to be governed by the principle in Radha Kissen v. Khurshed Hossein . We have been taken through the plaint and I am of opinion that this is not so. The Defendant was a proper party to the mortgage suit as purchaser of the equity of redemption and there is nothing in the plaint to suggest that his title if any as tenant was challenged. He might have raised the question of such title and the Court might or might not have decided it, but in fact it was not raised, nor was it necessary for the Defendant to raise it in the circumstances.
The case of Syed Mahamad Ibrahim Khan v. Ambika Persad Singh has been relied on as showing that this is a case where the Defendant “ought” to have raised his claim of title as a lessee. The circumstances in that case were that a puisne mortgagee of 1888 who had been made a party as such in suits by prior mortgagees had also a claim to priority on the ground that an earlier zarpeshgi deed of 1874 had been paid off out of the proceeds of the puisne mortgage of 1888. In the suits on the prior mortgages, the puisne mortgagee had not set up his claim to priority on the basis of this redemption of the zarpeshgi and it was held that he could not raise it in the later suit then under consideration. The circumstances appear to be quite distinguishable from the facts of the present case; the claim to priority arose directly out of the circumstances of the transaction of the puisne mortgage; it may be said in fact that mortgage was in form a puisne mortgage but in substance partook of the nature of a prior mortgage. When the mortgagee was made a party as puisne mortgagee his claim to priority was directly challenged, if he had any and it was for him to raise it. As it was stated in Kameswar Pershad v. Rajkumari Ruttun Koer (11):
“where matters are on dissimilar that their union might lead to confusion, the construction of the word ‘ought’ would become important; in this case the matters were the same. It was only an alter, native way of seeking to impose a liability upon Ran Bahadoor.”
The question there was whether in the mortgage suit a claim against “Run Bahadur” personally should have been made. That was a case where it was held that a particular ground of attack “ought” to have been made. In Syed Mahomed Ibrahim Hossein v. Ambika Persad Singh the question was to a ground of defence, but similar principles appear to be involved. It is clear that the circumstances in the present case are quite distinguishable from those in the cases cited, the title as lessee here is entirely separate from the title as purchaser of the equity of redemption.
I am therefore of opinion that this is not an instance where the Defendant ought to have raised his claim to title as lessee whether regarded as one being governed by the principle of Syed Mahomed Ibrahim Hossein v. Ambika Per shad Singh or as governed by that of Radha Kissen v. Khurshed Hossein and that therefore his defence is not barred under sec. 11 of the Code of Civil Procedure as being res judicata.
As to the second question, namely merger, it appears to me that this is not a case of merger at all. No case of merger under sec. 111 of the Transfer of Property Act where there was a mortgage in respect of the lessor's interest has been cited to us and it seems doubtful if merger as such can take place in such circumstances. Such cases are, I think, to be disposed of as cases of accession under sec. 70 of the Act and not as cases of merger. It is to be noted that the case of Raja Kishendatt Ram v. Raja Mumtaz Ali Khan (12) which was decided in 1879 and is cited sometimes in connection with questions of merger, is evidently the foundation for secs. 63, 64, 70 of the Transfer of Property Act, 1882, relating to accessions and acquisitions by a mortgagee in possession or by a mortgagor as the case may be. The case was discussed from the point of view of general equitable principles and these are similar in cases of “merger” when so governed. It is not therefore necessary to decide whether the present is a case governed by the Transfer of Property Act or is one relating to “merger” in the Mofussil to be governed by the case of Dulhim Lachhanbati Kumri v. Bodhnath Tewori (13).
As I have indicated, in my opinion the case is to be treated as one under sec. 70 as an accession to the mortgaged property, if at all; this is the third question raised in this suit. In Raja Kishendatt Ram v. Raja Mumtaz Ali Khan , reference was made to Doe v. Pott (14) in which it was held that
“if the lord of a manor mortgage it in fee and afterwards, pending the security, purchase and take surrenders to himself in fee of copyholds held of the manor they shall enure to the mortgagee's benefit and the lord cannot lessen the security by alienating them.”
Thus acquisition of a lease by a lessor was considered as an accession to the mortgaged property and sec. 70 of the Transfer of Property Act is the Indian statutory provision embodying the rule as to accession. The case of Raja Kishendatt Ram v. Raja Mumtaz Ali Khan , related to acquisition by a mortgagee in possession which is dealt with in sec. 63 of the Transfer of Property Act, (and also in sec. 90 of the Trusts Act, 1882), but some of the matters there discussed would be equally important in the case of acquisition by a mortgagor. In the present case great reliance has been placed on the case of Surja Narain Mandal v. Nunda Lal Sinha (15) by Mr. Ghose supporting the case of the Respondent. This case has been discussed at some length in the case of Hirendra Nath Dutta v. Hari Mohan Ghose (16), the latter being a case on apportionment in Land Acquisition proceedings, the former being a case of mortgage. In the view which I take, it is not necessary to discuss the case of Surja Narain Mondal v. Nanda Lal Sinha at length. It is sufficient to say that the learned Judges in the case of Hirendra Nath Dutt v. Hari Mohan Ghose , found good reason to differ from the former case on the subject of merger pointing out that it had not fully appreciated the points in Raja Kisendatt Ram v. Raja Mumtaz Ali Khan . If the present had been a case of acquisition by a mortgagor it would have been necessary to consider this matter in more detail to decide how far the question of intention was to be considered in cases of acquisition of a sub-tenure by the lessor; but it seems to me that this case is to be finally disposed of on the ground that the only provision under which it could be brought being sec. 70 and as that section does not provide for the case where the lessee acquires the equity of redemption, this is not a case of accession to the mortgaged property at all.
I agree that the case should be remanded for the determination by the lower Appellate Court of the question of fact whether the tenancy of the Defendant exists.
C.C