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T.V. Vedavyasa Aiyar v. The Madura Hindu Lab...
Structured Summary of the Provided Opinion
Factual and Procedural Background
The opinion concerns an appeal by the 12th defendant (the appellant). Defendants 1 and 2 had mortgaged certain properties to one Naga Iyer, who filed O.S.S. No. 61 of 1910 in the Court of the Principal District Munsif of Madura to recover the sum due on his mortgage. Puisne (subsequent) mortgagees were impleaded in that suit, including the present plaintiff Nidhi. A decree was drawn up in Form 7, Appendix D of the Code of Civil Procedure, declaring amounts due to the plaintiff and to a puisne mortgagee defendant, but ordering sale of the mortgaged properties only in the event that the defendant did not pay the amount found due to the plaintiff; the puisne mortgagees were given only a right to share in any surplus proceeds of sale.
One item of property was brought to sale in execution of that decree, but the plaintiff decree-holder was satisfied by payment under Order XXI, Rule 89 of the Code of Civil Procedure and the sale was set aside. The property was subsequently sold by private sale to the appellant. Because the appellant did not pay the amount found in O.S.S. No. 61 of 1910 to be due to the 1st respondent, a suit was brought for the recovery of that amount. In that suit several defences were raised; the chief objections were that (1) the plaintiff's remedy was by executing the decree in O.S.S. No. 61 of 1910 and not by a separate suit, and (2) the second suit was barred by res judicata. The Subordinate Judge overruled those objections and entered a decree which was confirmed by the District Judge. The present opinion is on the second appeal from those orders.
Legal Issues Presented
- Whether, where a decree under Form 7, Appendix D of the Code of Civil Procedure declares amounts due to puisne mortgagees but does not direct their redemption, a puisne mortgagee may maintain a separate suit to recover the amount or must seek execution of the prior decree.
- Whether a second suit by a puisne mortgagee is barred by res judicata by reason of the prior suit O.S.S. No. 61 of 1910 (which was within the pecuniary jurisdiction of the District Munsif).
- Whether the 1st respondent was entitled to execute the decree in O.S.S. No. 61 of 1910 and, relatedly, whether Section 47 of the Code of Civil Procedure applied in the circumstances.
Arguments of the Parties
Defences (as recorded in the opinion)
- The principal defences raised against the plaintiff's separate suit were that the plaintiff's remedy was by executing the decree in O.S.S. No. 61 of 1910 rather than by bringing a separate suit.
- It was also contended that the second suit was barred by the doctrine of res judicata because of the prior proceedings in O.S.S. No. 61 of 1910.
Appellant's Contentions (as recorded in the opinion)
- The appellant contended that when puisne encumbrancers are made parties defendant in a mortgage suit, there is a decree in favour of each of the mortgagees which can be executed by each mortgagee; in support of this broad contention reliance was placed on Govinda Taragan v. Veeran (1911 I.L.R. 36 M. 32) and an unreported decision in A.A.A.O. No. 87 of 1917.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sarat Chandra Boy Chowdhury v. Nahapiet (1910) I.L.R. 37 C. 907 | Declares that under a decree in Form 7, Appendix D, a second (puisne) mortgagee has no independent right of relief if the mortgagor satisfies the first mortgagee's claim; the second mortgagee is only for receiving surplus sale proceeds or redeeming. | The court cited this case to support the proposition that puisne mortgagees cannot take independent action once the first mortgagee's claim is satisfied; it reinforces that the decree does not confer an independent right to relief on subsequent mortgagees. |
| Mackintosh v. Watkins (1904) 1 C.L.J. 31 | Holds that in a suit by a first mortgagee impleading puisne mortgagees, the mortgagor cannot be called upon to redeem subsequent mortgagees and the subsequent mortgagees are not entitled to have the property sold for non-payment of sums due to them; impleading is to enable sale free from encumbrance, not to grant independent decrees against the mortgagor. | The court relied on this authority (including observations of Brett and Mookerjee, JJ.) to confirm that a decree framed under the relevant procedures does not permit puisne mortgagees to obtain sale for their own declared dues if the first mortgagee's claim is satisfied. |
| Kissory Mohan Roy v. Rally Churn Ghose (1899) I.L.R. 22 C. 100 | Was distinguished by Pugh, J. on the ground that it related to a decree passed on the Original Side of the High Court (a different practice). | The court noted the distinction and did not treat the case as directly applicable to the present facts under the procedure governing mofussil courts. |
| Sururjigur Begum v. Baredakant Mitter (1910) 11 C.L.J. 563; I.L.R. 37 Cal. 526 | Expresses the view that if the amount due to the first mortgagee is paid, there can be no sale of the mortgaged properties and puisne encumbrancers obtain no relief in the suit. | The court cited this authority to support the conclusion that payment of the first mortgagee's claim prevents sale and defeats independent relief for puisne encumbrancers. |
| Govinda Taragan v. Veeran (1911) I.L.R. 36 M. 32 | Related to a redemption suit and held that paragraph 2 of Section 93 of the Transfer of Property Act did not take away the right from the plaintiff mortgagor to apply for a sale; the decree in that case was for redemption. | The court explained that this case does not support the appellant's broad proposition concerning puisne mortgagees generally, because it arose in a different procedural context (a redemption suit) and did not raise the puisne-encumbrancer issue now before the court. |
| Appeal against Appellate Order No. 87 of 1917 (unreported) | Held that a sub-mortgagee (an assignee of an original mortgagee) was entitled to apply for execution to work out his rights by sale, where the sale would be for the amount directed in the decree to be paid by the original mortgagor to his mortgagee. | The court observed that this unreported decision does not support treating puisne mortgagees as decree-holders entitled to bring property to sale in default of payment of sums declared due to them when no direction for their redemption or sale for their dues appears in the decree. |
| Platt v. Mendell (1884) L.R. 27 Ch. D. 246 | English practice regarding decrees and procedures in mortgage contexts (referenced). | The court mentioned the English practice but expressly stated it was unnecessary to decide whether Indian courts could, by reference to the Transfer of Property Act, pass decrees directing redemption of puisne mortgagees and sales at their instance; the case was not applied to decide the present point. |
| Debendra Nath Sen v. Mirza Abdul Samed Seraji (1909) 10 C.L.J. 150 | Holds that a suit by a puisne mortgagee who was a party to a prior suit can be barred by that prior suit only if the puisne mortgagee is in a position to have his claim satisfied from the surplus sale proceeds realised in execution of the prior decree. | The court relied on this authority to conclude that O.S.S. No. 61 of 1910 (on the file of the District Munsif's Court) could not render the present suit res judicata because the present suit was beyond the pecuniary limit of the District Munsif and because the puisne mortgagee would only be barred if he could have his claim satisfied from a surplus of the prior execution. |
Court's Reasoning and Analysis
The court affirmed the decision of the lower courts and explained its reasoning in a sequential manner:
- The court began by observing that although the present plaintiff Nidhi was a party to O.S.S. No. 61 of 1910 as a puisne encumbrancer and the amounts due to him were ascertained, the decree drawn up under Form 7, Appendix D did not direct the redemption of subsequent mortgagees. Instead, the decree expressly authorised sale only if the amount due to the first mortgagee was not paid in the time limited. The puisne encumbrancers were granted only a contingent right to redeem the first mortgage and to share in any surplus on sale.
- The court relied on prior authorities (notably Sarat Chandra Boy Chowdhury v. Nahapiet and Mackintosh v. Watkins) to support the legal principle that a puisne mortgagee, under a decree of the form here, does not obtain an independent right to enforcement if the first mortgagee's claim is satisfied. Pugh, J., and Brett and Mookerjee, JJ., were cited for views that the presence of puisne mortgagees in such a suit is to enable a sale free from their encumbrance or to permit them to share in a surplus, not to permit them to convert the decree into an independent effective decree for their own separate claims when the first mortgagee's claim has been met.
- The court analysed the appellant's reliance on Govinda Taragan v. Veeran and the unreported A.A.A.O. No. 87 of 1917 and found these authorities distinguishable or limited. Govinda Taragan arose in a redemption suit and did not consider the rights of puisne encumbrancers in the same way; the unreported case concerned a sub-mortgagee (an assignee) enforcing a decree to work out rights that the original mortgagee could have enforced, which the court considered different in principle from permitting third-party puisne mortgagees to be treated as decree-holders entitled to bring the property to sale in default of payment of sums declared due to them.
- The court reiterated the settled consequence from the cited authorities: if the amount due to the first mortgagee is paid, the property is not liable to be sold under the decree and the puisne encumbrancers obtain no relief under that decree. Thus the decree cannot be read as directing the mortgagor to redeem each puisne mortgagee within the time limited for redeeming the first mortgagee, nor as entitling each puisne mortgagee on default to bring the property to sale for non-payment of the sums declared due to each of them.
- Applying those principles to the facts, the court concluded that the 1st respondent was not entitled to execute the decree in O.S.S. No. 61 of 1910; accordingly, Section 47 of the Code of Civil Procedure had no application in these circumstances (the court states this explicitly).
- On the point of res judicata, the court noted that the present suit was beyond the pecuniary limit of the jurisdiction of the District Munsif and that O.S.S. No. 61 of 1910 (on the file of the District Munsif's Court) therefore could not render the present suit res judicata. The court further relied on Debendra Nath Sen v. Mirza Abdul Samed Seraji to state the principle that a puisne mortgagee who was a party to an earlier suit is only barred if he was in a position to have his claim satisfied from surplus sale proceeds realised in execution of the earlier decree.
Holding and Implications
Holding: The court dismissed the second appeal. The opinion concludes: "The second appeal fails and is dismissed with costs."
Implications (direct effects stated in the opinion):
- The decision of the lower courts (the Subordinate Judge and the District Judge) was affirmed.
- The court held that the 1st respondent was not entitled to execute the decree in O.S.S. No. 61 of 1910; therefore Section 47 of the Code of Civil Procedure did not apply in the present circumstances (as explicitly stated in the opinion).
- The opinion indicates that the rights of puisne mortgagees, under decrees drawn up in the form here, are contingent upon a sale arising from non-payment of the sum found due to the first mortgagee and are essentially limited to sharing in any surplus; the decree does not operate as an independent executory decree for each puisne mortgagee in the event the first mortgagee's claim is satisfied.
- No broader precedent or change of law is announced beyond the court's application of the authorities discussed; the opinion confines itself to affirming the lower courts' conclusion on the facts and law presented.
Judgment notes: Phillips, J. delivered the opinion. Another judge recorded agreement: "I agree." The second appeal was dismissed with costs.
1. The 12th defendant is the appellant. Defendants 1 and 2 mortgaged certain items of property to one Naga Iyer who filed O.S.S. No. 61 of 1910 on the file of the Court of the Principal District Munsif of Madura to recover the sum due on his mortgage. He impleaded the puisne mortgagees, one of whom was the present plaintiff Nidhi. A decree was passed in Form 7, Appendix D of the Code of Civil Procedure. The amounts due to the plaintiff in the suit and the puisne mortgagee defendant were declared but the sale of the mortgaged properties was ordered only in case the defendant did not pay the amount found due to the plaintiff and' the only right given to the puisne mortgagees was to share in the surplus if any arising out of the sale. One of the items of property was brought, to sale in execution of the decree but the. plaintiff decree-holder was satisfied as the amount due was paid under Order XXI, Rule 89 of the Code of Civil Procedure and the sale set aside. The property was sold by private sale to the appellant. As he did not pay the amount found in O.S.S. No. 61 of 1910 to be due to the 1st respondent herein he sued for the recovery of the amount due to him as his mortgagor. Various defences were raised the chief of which were (1) that the remedy of the plaintiff was by executing the decree in O.S.S. No. 61 of 1910 and not by separate suit and (2) that the second suit was barred the matter being res judicata. The Subordinate Judge overruled the objections raised and passed a decree which was confirmed by the District Judge.
2. I am of opinion that the decision of the lower courts is right. No. doubt the present plaintiff Nidhi was a party to O.S.S. No. 61 of 1910 as a puisne encumbrancer and the amount due to it was ascertained. The decree however did not direct redemption of the subsequent mortgagees and expressly authorised sale only in case the amount due to the first mortgagee was not paid within the time limited. The only right given to the puisne encumbrancers was the right to redeem the first mortgage and on sale to share in the surplus sale proceeds in order of priority.
3. In Sarat Chandra Boy Chowdhury v. Nahapiet (1910) I.L.R. 37 C. 907. the effect of a decree drawn up under Form 7, Appendix D of the Code was considered and Pugh, J. was of opinion that there was no right conferred in the mortgagee to get any relief at all if the mortgagor satisfied the first mortgagees claim. He observed
" In my view, therefore, under the Code, second mortgagee is there simply for the purpose as indicated by Brett and Mookerjee, JJ. in Mackintosh v. Watkins ( 1904) 1 Cal. L J. 31 of receiving any surplus sale proceeds or of redeeming, and that he cannot take any independent action and treat the decree as in other respects in his favour."Referring to Kissory Mohan Roy v. Rally Churn Ghose ( 1899) I.L.R. 22 C. 100. the learned Judge distinguished the case on the ground that it related to a decree passed as in the Original Side of the High Court and in Mackintosh v. Watkins ( 1904) 1 C.L.J. 31 at 35 Brett, J. took the view that the practice and procedure followed on the Original Side was not to govern decrees passed by Courts in the mofussil which are governed by the Civil Procedure Code and the Transfer of Property Act.
4.In Mackintosh v. Watkins (1904) 1 C.L.J. 31 at 35 it was held by Brett and Mookerjee, JJ. that in a suit by a first mortgagee impleading the mortgagor and the puisne mortgagees the mortgagor cannot becalmed upon to redeem the subsequent mortgagee defendants and that they are not entitled to have the property sold for non-payment of the sutras due to them. Brett, J. observed that the object of impleading the puisne mortgagee was to enable the property to be sold free from his encumbrance and " not to enable him to practically obtain a decree against the principal defendant without bringing a suit properly framed for the purpose". The learned Judge was also of opinion that such a procedure would be opposed to the provisions of Chapter III of the Court Fees Act. Mookerjee, J. was of opinion that Sections 86 to 89 of Transfer of Property Act " do not provide that the mortgagor may be called upon by the decrements to pay to a puisne encumbrancer who has been joined as a party defendant, what may be found due to him on his mortgage; the mortgagor, therefore, cannot incur the liability to have his property sold by reason of non-payment of the dues of the subsequent encumbrancer." He held that if the mortgagor defendant pays to the plaintiff mortgagee what may have been found due to him the property was not liable to be sold under the decree in the suit at the instance of the second mortgagee. In Sururjigur Begum v. Baredakant Mitter (1910) 11 C.L.J. 563 at 576 : I.L.R. 37 Cal. 526. the same learned Judge was of opinion that if the amount due to the first mortgagee was paid there can be no sale of the mortgaged properties and the puisne encumbrancers would obtain no relief in the suit.
5. It is contended for the appellant that in a mortgage suit when puisne encumbrancers are made parties defendants there is a decree in favour of each of the mortgagees which can be executed by him and reliance has been placed on Govinda Taragan v. Veeran (1911) I.L.R. 36 M. 32. and the unreported decision in A. A.A.O. No. 87 of 1917. I do not think these decisions support the broad propositions contended for. The former case related to a suit for redemption of a mortgage and it was held that paragraph 2 of Section 93 of Transfer of Property Act did not take away the right from the plaintiff mortgagor to apply for a sals. The learned Judge after discussing the right of the mortgagor and mortgagee and " where a decree is imperative there is no reason why the decree should not be regarded as passed for the benefit of all the parties to the suit. They thought there was no reason for holding that any of the parties to the suit who would be benefited by the sale cannot apply for the enforcement of the decree. It should be observed that the suit was between mortgagor and mortgagee and no question arose as to the rights of puisne encumbrancers. The decree was for redemption and the only question was whether it was open to the plaintiff in a redemption suit to apply for sale under Sections 92 and 93 of the Transfer of Property Act. In the present case there is nothing in the decree directing the mortgagor to pay off the subsequent mortgagees. The decree no doubt declared the amount due to them but this was only with the view of enabling them to share in the surplus should the property be sold owing to non-payment of the sum due to the plaintiff who was the first mortgagee. The right of the subsequent mortgagees under the decrees drawn up according to Form 7 Appendix D of the Code of Civil Procedure is contingent on the property being brought to sale for non-payment of the sum found due to the plaintiff mortgagee and the decree cannot be read as a decree directing the mortgagor to redeem each of the puisne encumbrancers within the time limited for redeeming the first mortgagee and to entitle the puisne encumbrancer on default to bring the property to sale for non-payment not of the sum decreed due to the first mortgagee but to each of them. The utmost that can be said is that if the first mortgagee for some reason or other does not apply for sale in spite of the fact that be has not been paid the mortgagees can apply for sale in order to work out the rights to share in the surplus if any. This is quite different from their applying to sell the property to discharge the amount declared due to each of them. If the mortgagor pays off the amount for which alone a sale in default of payment was directed it is difficult to see how under the express terms of the decree each puisne encumbrancer can come forward and ask for sale. No time is fixed in the decree for redeeming them. There is no direction in the decree directing the mortgagee to pay them any amount and the right to share which is dependent on there being a sale an(sic) surplus after paying off the plaintiff mortgagee cannot be enforced if for any reason the sale cannot take place at the instance of the plaintiff. Reference has been made to the English practice as set out in Platt v. Mendell (1884) L.R. 27 Ch. D. 246. and Daniell's Chancery Practice but it is unnecessary to consider whether having regard to the provisions of the Transfer of Property Act Courts in India can pass a decree directing plaintiff to redeem each of the puisne mortgagees and direct a sale at the instance of each of them in case of his failure to do so. No such decree has been passed in the present case In Appeal against Appellate Order. No. 87 of 1917 the sub-mortgagee applied to enforce the decree in favour of his mortgagor who was the mortgagee from the owner of the property. All that was held was that he was entitled to apply for execution and to work out his rights by the sale of the property. The sale was to be for the amount directed in the decree to be paid by the original mortgagor to the mortgagee who in turn sub-mortgaged the property to the defendant. There is nothing in the judgment which suggests that puisne mortgagees should be treated as decree-holders entitled to bring property to sale in default of payment of the sum declared to be due to them though the decree contains no direction that they should be redeemed or that property should be sold in default of payment of the sums declared to be due to the puisne mortgagees. The sub-mortgagee is an assignee of the original mortgagee and his being allowed to work out his rights by doing what his mortgagor could have done would not confer similar rights on third parties claiming on their own right.
6. As the 1st respondent was not entitled to execute the decree in O.S.S. No. 61 of 1910, Section 47 of the Code of Civil Pocedure has no application.
7. As regards the question of res judicata the present suit is beyond the pecuniary limit of the jurisdiction of the District Munsif. O.S.S. No. 61 of 1910 which was on the file of the District Munsif's Court cannot render the present suit res judicata. Moreover as pointed out in Debendra Nath Sen v. Mirza Abdul Samed Seraji (1909) 10 C.L.J. 150. a suit by a puisne mortgagee who is a party to a prior suit by another mortgagee can only be barred if the puisne mortgagee is in a position to have his claim satisfied from the surplus sale proceeds realised in execution of the decree on the prior suit.
8. The second appeal fails and is dismissed with costs.
Phillips, J.
9. I agree.
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