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Factual and Procedural Background

This matter arises from a mortgage suit instituted by the first mortgagees (referred to as the Roy Chaudhuris) against the mortgagor, Kali Podo Mukherji (the appellant), and a puisne (second) mortgagee, Abinash Chandra Datt. A final decree for sale in terms of Order 34, Rule 5, CPC, was passed on 31 May 1927 directing sale of the immovable properties and payment of proceeds (first to the plaintiffs, then to the second mortgagee out of any balance, and then to the mortgagor).

A public auction was held (recorded in the opinion as 22 May 1923). One Basanta Kumar Datt (brother of Abinash) was the successful bidder and deposited Rs. 15,000 as required by O.21, R.84. The balance of purchase money was not paid within the 15 days prescribed by O.21, R.85; on 5 June 1928 a petition for extension of time (bearing the mortgagor's consent as recorded by the Court) was filed and the Court, without resorting to R.86 (re-sale), extended time by ten days. The balance was then paid on 15 June 1928, the sale was confirmed and a sale certificate issued in Basanta's name.

When delivery of possession to the auction-purchaser was sought, Kali Podo Mukherji objected (27 April 1929). The Subordinate Judge dismissed that objection on 11 June 1929. Kali Podo Mukherji appealed that order by a Miscellaneous Appeal (No. 329 of 1929) and on 5 July 1929 instituted a separate title suit against Basanta (defendant 1), Abinash (defendant 2), and the Roy Chaudhuris (pro forma defendants). The mortgagor alleged the petition of 5 June 1928 was fraudulent, denied consenting to the extension, alleged Abinash was the real purchaser (Benami), and sought declarations (including preservation of his equity of redemption), injunction against possession, and related reliefs.

The Subordinate Judge dismissed the suit; the mortgagor (Kali Podo Mukherji) appealed by First Appeal No. 214 of 1930. The competency of the first appeal was not disputed; the competency of the miscellaneous appeal was discussed but the court treated competency as not decisive because the merits would be considered in any event. The appellate court ultimately considered both procedural objections and the merits of the claims (consent, benami/purchaser identity, effect of extension/confirmation of sale, and rights of puisne mortgagee purchasers).

Legal Issues Presented

  1. Whether the mortgagor's separate suit challenging delivery of possession and seeking declarations/injunction was barred by Section 47 of the Code of Civil Procedure or by Order 21 rules (in particular O.21, R.92(3)).
  2. Whether the mortgagor's objection to delivery of possession could be litigated in a separate suit or was a matter falling within Section 47 (i.e., an objection "arising between the parties to the suit").
  3. Whether the appellant (mortgagor) had given consent to the extension of time for payment of the balance, and the legal effect of such consent on the validity of the sale when the purchaser ultimately paid the balance after the extended period.
  4. Whether Basanta Kumar Datt was the real purchaser or merely a benamidar for his brother Abinash Chandra Datt (i.e., identity and effect of any benami relationship on entitlement to possession).
  5. What the legal effect of a sale held under Order 34, Rule 5 is on the mortgagor's equity of redemption — whether the sale extinguished the right of redemption or left it intact.
  6. What rights accrue to a puisne mortgagee who purchases at such a sale (particularly in the light of Section 74 of the Transfer of Property Act) and whether such a purchaser is entitled to delivery of possession.

Arguments of the Parties

Appellant's Arguments (Kali Podo Mukherji)

  • The petition of 5 June 1928 (seeking extension of time for payment) was fraudulent and the appellant did not consent to the extension.
  • Basanta was not the real purchaser; Abinash was the true purchaser and Basanta was a benamidar.
  • Because of the alleged fraud/irregularity in the sale process (extension of time outside the statutory period and absence of resale), the auction sale was illegal, inoperative and not binding; therefore the appellant retained the equity of redemption and was entitled to injunction and declarations.

Respondents' Arguments (Basanta Kumar Datt, Abinash, and Roy Chaudhuris)

  • The mortgagor had signified consent to the extension of time and therefore the irregularity (if any) was waived.
  • Basanta, and not Abinash, was the real purchaser; Abinash only advanced money and was subsequently repaid by Basanta.
  • Where the suit and sale were properly constituted and the purchaser paid the balance (even after extension by consent), the sale was valid and operative and the purchaser was entitled to possession; the puisne mortgagee (if he were the purchaser) would be subrogated to the prior mortgagee's rights and could obtain possession.
  • Section 47 and related procedural provisions precluded a separate suit when the objection relates to delivery of possession arising between parties to the decree/suit.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Kailas Chandra v. Gopal Chandra, A.I.R. 1926 Cal. 798 Full Bench decision on interpretation of Section 47 — concept of objections "arising between the parties to the suit". Used to frame the question whether the dispute between Abinash and the appellant fell within S.47; the court applied the principle to hold the objection to delivery of possession fell under S.47.
Mangaya v. Sriramalu, [1913] 19 I.C. 448 “Parties” mean parties opposed to each other; if their rights conflict the question falls within S.47. Supported the court's interpretation that a dispute between co-defendants may, if rights conflict, be within S.47.
Sarat Chandra v. Nahapiet, [1910] 37 Cal. 907 Limits on second (puisne) mortgagee's rights: right to redeem or to receive surplus only; cannot insist on sale or obtain personal decree if first mortgage satisfied. Used to explain the limited nature of a puisne mortgagee's rights in a mortgage sale context and to show procedural differences in mufassil practice.
Vidavyasa v. Madura Hindu Labha Nidhi Co., [1919] 42 Mad. 90 Supports the proposition that second mortgagee's rights are limited and procedural distinctions exist. Applied to reinforce the proposition that the second mortgagee is primarily a party to enable redemption or claim from surplus proceeds, not to obtain a personal decree for sale.
Mackintosh v. Watkins, [1905] 1 C.L.J. 31 Second mortgagee is made a party to allow opportunity to redeem and receive surplus proceeds; decree not necessarily in his personal favour. Relied upon to show second mortgagee's role in suit and to limit his ability to insist on sale or obtain personal decrees beyond surplus rights.
Gopi Narain Khanna v. Babu Bangsidhar, [1905] 27 All. 325 If a second mortgagee satisfies a decree and prevents foreclosure he acquires rights and powers of the first mortgagee under Section 74. Explained that upon paying off a prior decree a puisne mortgagee may be subrogated to the prior mortgagee's rights, but enforcement nuances differ when rights were not adjudicated in the suit.
Bavanna v. Balagorivi, [1899] 9 M.L.J. 177 Puisne mortgagee who pays off a decree can enforce his rights by execution and not by a fresh suit. Used to show the appropriate remedy for a puisne mortgagee who discharges a prior mortgage decree is execution/subrogation, not a separate suit covering what the decree already adjudicated.
Prosonna Kumar v. Kalidas, [1892] 19 Cal. 683 Judicial Committee endorsed a wide construction of S.244 (execution) and emphasis on disposing of execution objections cheaply and speedily. Adopted to support a wide construction of the phrase “arising between the parties to the suit” and to favour resolving execution-related objections within execution/procedural remedies.
Perianna v. Narudan Pillai, [1899] 22 Mad. 332 Language of S.74 indicates second mortgagee acquires no other right than that of the mortgagee whose debt he pays. Quoted to emphasize that S.74 limits the rights conferred on second mortgagee by payment to those of the mortgagee paid off.
Subramaniyam Nambudri v. Kammathi, A.I.R. 1923 Mad. 48 Authority to the effect that consent to irregularity in sale procedure can equate the transaction to a resale (i.e., waiver of procedural irregularity). Cited to support view that the mortgagor's consent to extension waived irregularity and that the resulting sale should be treated as valid (equivalent to resale) rather than a nullity.
Radha Kishan v. Hari Singh, A.I.R. 1927 Lah. 337 Similar to Subramaniyam — supports that consent can condone procedural deviations. Used as additional authoritative support for holding that waiver of irregularity by consent renders the sale operative and not void.
Jaibahadar Jha v. Matukdhari Jha, A.I.R. 1923 Pat. 525 Interpreting the procedural consequence of failure of purchaser and the consequence (resale) under O.21 R.87. Referred to when discussing what the Code prescribes on failure to comply with O.21 and the nature of resale; used to distinguish the present facts where consent altered the ordinary consequence.
Bhim Singh v. Sirwan Singh, [1889] 16 Cal. 33 Authority on whether failure to put in deposit makes a sale void or voidable. Cited among cases on the point but the court held these authorities did not assist the appellant on present facts.
Venkata v. Sama, [1891] 14 Mad. 227 Authority on consequences of purchaser's failure to deposit initial amount. Mentioned with similar effect — not decisive for the present case.
Sitaram v. Janki Ram, A.I.R. 1922 All. 200 Another case on purchaser's default and validity of sale. Referenced but held not directly applicable to the circumstances before the court.
Munshi Mahommad Ali v. Kibria Khatun, [1911] 9 I.C. 66 Authority that confirmation of sale without balance payment may amount to nullity (as argued by appellant). The court found this authority unhelpful to the appellant's case on the facts before it.
Jones on Mortgages (quoted, paras cited) Textual proposition: invalid foreclosure sale by reason of statutory non-compliance may operate as voluntary assignment; purchaser's title good against all except mortgagor and those claiming under him; purchaser subrogated to rights. Quoted and analyzed: Court read the passage as referring to fundamental antecedent irregularities and concluded that when the Court sale had taken place and the mortgagor consented to the deviation, the sale should not be treated as a nullity preventing possession.
Krishto Pada Roy v. Chaitanya Charan Mondal, A.I.R. 1923 Cal. 274 Cases dealing with purchaser's right to possession at sales held in suits imperfectly constituted. The court said many of these cases (and later decisions cited at the Bar) were not relevant to the present case because the present suit was properly constituted.
Kalu Sharip v. Abhoy Charan, A.I.R. 1921 Cal. 157 Authority concerning purchaser's rights; cited among related cases. Noted but held not directly relevant to the facts here.
Bhagaban v. Tarak, A.I.R. 1927 Cal. 259 Another decision cited on purchaser rights at sales. Mentioned but court held it lacked relevancy to this properly constituted suit and sale.
Bhodai Sheikh v. Baroda Kanta Dutt, A.I.R. 1928 Cal. 116 Case on purchaser's entitlement at sale. Cited among cases the court considered inapplicable to this fact situation.
Digambar Suthar v. Suajan, A.I.R. 1929 Cal. 233 Statement that two fundamentally different views may be taken on what a purchaser acquires at sale (equity of redemption or property discharged of mortgage lien). Quoted to frame the question of what passes to purchaser in a properly constituted sale; used to show that in such a sale the equity of redemption is cut off.
Het Ram v. Shadi Ram, A.I.R. 1918 P.C. 34 Judicial Committee commentary on S.89: on making order absolute the defendant's right to redeem and security are extinguished. Applied to support the proposition that in a properly constituted sale under O.34, the equity of redemption is extinguished and purchaser takes the property free of mortgage lien.
Matruml v. Durga Kumar, A.I.R. 1920 P.C. 79 Another decision referenced in relation to S.89 and the extinguishment of the right to redeem. Reinforced the analysis that sale under a decree operates to extinguish redemption rights where the procedure has been properly followed.
Muhammad Musa v. Edal Singh, A.I.R. 1922 Pat. 92 Patna High Court inclination that the right to redeem might remain for long after sale. Mentioned as an authority showing a different view; the court noted it but did not follow it in the present case.
Sukhi v. Ghulam Safdar, A.I.R. 1922 P.C. 11 Judicial Committee observed omission of S.89 concluding words in O.34 rules does not change prior law — purchaser acquires rights as at a sale under the Transfer of Property Act. Invoked to conclude that purchaser acquires both mortgagee's and mortgagor's rights after a sale under O.34 where the suit is properly constituted.
Barendra v. Martin & Co., A.I.R. 1921 Cal. 801 Holds that sale under O.34 conveys interest of mortgagor and mortgagee as at date of first mortgage. Relied upon to support the proposition that a sale under the decree cuts off the equity of redemption and passes full interest to purchaser.
Umar Ali v. Asmat Ali, A.I.R. 1931 Cal. 251 Discusses Section 74 rights as in effect subrogation; effect of puisne mortgagee paying off prior mortgage. Used to explain that a puisne mortgagee who pays off a prior mortgage steps into the prior mortgagee's shoes and acquires similar rights.
Syed Mahomed Ibrahim v. Ambika Prosad Singh, [1912] 39 Cal. 527 Authority referenced for the proposition about rights acquired under Section 74 upon payment of prior mortgage debt. Supported the court’s summary of S.74 consequences (acquisition of prior mortgagee's rights upon payment).
Aziz Ahmad v. Chhote Lal, A.I.R. 1928 All. 241 Explains that the Transfer of Property Act does not use the word “subrogation,” but the principle of substitution has been adopted by courts in equity. Quoted to clarify the equitable nature of subrogation and its application to a puisne mortgagee who discharges a prior mortgage.
Sankar Din v. Gokul Prosad, [1912] 34 All. 620 Authority that parties can make subsequent arrangements qualifying right to redeem. Cited to show that parties can, by subsequent agreement, affect the equity of redemption (consistent with accepted exceptions).
Zanhaya Lal v. Narhar, [1903] 27 Bom. 297 Authority for competency of parties to enter a subsequent contract for sale of mortgaged property to mortgagee. Used to show that sale to mortgagee by agreement can be valid and does not automatically offend the equity of redemption doctrine.
Reeve v. Lisle, [1902] A.C. 461 High authority supporting competency to enter into arrangements affecting right of redemption. Invoked to support the proposition that subsequent contracting between mortgagor and mortgagee can be effective to vary redemption rights.
Khairamal v. Daim, [1905] 32 Cal. 296 Judicial Committee rejected the extreme contention that a mortgagee cannot acquire the equity of redemption at a Court sale. Applied to reject the argument that a mortgagee (or subrogated purchaser) is entirely incompetent to acquire the equity of redemption by court sale.

Court's Reasoning and Analysis

The court proceeded methodically through threshold procedural issues and then the merits:

  1. On competency and procedural bar: The court considered whether the separate suit by the mortgagor was barred by Section 47 CPC and by O.21 R.92(3). It held that the declarations sought by the mortgagor were outside S.47 and therefore not barred. However, the mortgagor's objection to delivery of possession was a matter that fell within S.47 because the dispute as presented was one "arising between the parties to the suit" — a conclusion reached after reviewing authorities construing "parties" and S.47. The court therefore found the mortgagor was not competent to ventilate the objection to delivery of possession in a separate suit.
  2. On the facts of consent and benami: The Subordinate Judge's factual finding that the mortgagor had consented to the extension of time was not challenged on appeal and was supported by overwhelming material; with that finding abandoned, the core of appellant's claim was undermined. On the question whether Basanta was merely a benamidar for Abinash, the court examined evidence showing active participation by Abinash but also evidence that Basanta had repaid Abinash's advances. The court treated Basanta's admission in his petition (that he purchased for himself and his brother and prayed for a joint sale certificate) as unexplained and thus as good evidence; on balance the court proceeded on the footing that the brothers were joint purchasers rather than that Abinash alone was the purchaser.
  3. On procedural irregularity and its effect: The court analyzed the legal effect of receiving the balance of purchase money after the statutory 15 days when such payment was received after a ten-day extension granted by consent. Noting that Section 148 did not permit extension of the fixed period, the court nonetheless concluded the mortgagor's consent waived the procedural irregularity; the transaction should be viewed as equivalent to a resale (or at least as a Court sale with the deviation condoned by the consenting party). The court relied on comparable decisions (e.g., Subramaniyam Nambudri, Radha Kishan) for this proposition.
  4. On whether unpaid initial deposit/nullity authorities helped the appellant: Several authorities concerning purchaser defaults and whether a sale is void or voidable were cited by the parties. The court found these authorities did not assist the appellant in the factual matrix before it; the confirmed sale (after consented extension and payment) was not to be treated as a nullity for the purposes of withholding possession.
  5. On what passes at a properly constituted sale under O.34: The court reviewed competing views (citing Digambar Suthar and Judicial Committee decisions) and concluded that where the suit and sale are properly constituted, a sale under an order absolute under O.34 conveys the rights of both mortgagee and mortgagor as at the relevant date — in practical effect extinguishing the mortgagor's equity of redemption. The court referred to Judicial Committee authority (Het Ram and Sukhi) to show that omission of certain words in the Rules did not alter the substantive effect that sale extinguishes redemption rights in such circumstances.
  6. On the effect of purchase by a puisne mortgagee: The court considered Section 74 of the Transfer of Property Act (as it stood pre-amendment) and authorities explaining that a puisne mortgagee who pays off a prior mortgage is subrogated to the rights and powers of the mortgagee paid. The court observed that where a puisne mortgagee purchases at a properly constituted decree sale, he steps into the position of the prior mortgagee and can enforce those rights (and that such a purchaser is entitled to possession). The court rejected the contention that a mortgagee or puisne mortgagee is incompetent to acquire the equity of redemption at a Court sale.
  7. Synthesis and result on the merits: Given the uncontested finding of consent to extension, the absence of proof that Abinash alone was the purchaser, the legal effect of consent (waiver of the procedural irregularity), the principles on what passes at a proper decree sale, and the subrogation position of a purchasing puisne mortgagee, the court concluded the mortgagor could not successfully resist delivery of possession nor obtain the declarations/injunctive relief sought. The court therefore dismissed the appeals.

Holding and Implications

Holding: The court's final decision was that the mortgagor-appellant was not entitled to resist delivery of possession and was not entitled to the declarations or injunctions sought; accordingly the appeals were dismissed. The court ordered:

  • Appeals dismissed.
  • First appeal dismissed with costs; miscellaneous appeal dismissed with no costs.
  • Records to be sent down to the Court below as early as possible.

Implications for the parties and legal effect:

  • The confirmed sale (after consented extension and payment of the balance) was treated as operative; the purchaser (Basanta, and to the extent relevant Abinash as joint purchaser or subrogated puisne mortgagee) was entitled to possession.
  • Where a suit and sale are properly constituted under Order 34, Rule 5, the sale extinguishes the mortgagor's equity of redemption and passes the mortgaged interest to the purchaser as held by the authorities relied upon in the opinion.
  • Objections to delivery of possession that arise between parties to the original mortgage suit fall within Section 47 CPC and are not maintainable in a separate collateral suit; such matters should normally be raised in the execution/possession proceedings or by the procedural remedies available in the original suit.

    Kalipada Mukerji v. Basanta Kumar Dutta

    Mukerji, J.:— The facts which have lad up to these two appeals are the following: In a suit for sale instituted by certain parsons as the first mortgagees, who for the sake of brevity may be called the Rai Chaudhuris holding a mortgage from the appellant Kali Podo Mukherji in which they had impleaded as defendants the said appellant as the mortgagor as well as one Abinash ??? Dutt as the puisne mortgagee a final decree for sale was passed in accordance with the provisions of O. 34, R. 5 of the CPC. on 31st May 1927. The decree was in these words:

    “It is ordered that the immovable properties mentioned in the said decree and specified at the foot thereof or so much thereof as may be necessary be sold by Public auction and that the money which may be realized by such sale (after defraying there out the expenses of sale) be paid into Court to the credit of this suit and that the sum of Rs. 34,301-5-6 payable under the said preliminary decree together with Re. 1-12-3 the costs of the application for final decree and further interest from 29th May 1927 up to the date of payment at the rate of 6 per cent per annum specified in the said decree be paid to the plaintiffs and that the claim of the second mortgagee (defendant 2) will be realized from the balance of the sale proceeds if any after satisfaction of the dues of the plaintiff (first mortgage) and that the balance if any be paid to the defendant 1 (the mortgagor.)”

    2. The sale was held on 22nd May 1923. One Basanta Kumur Datt, brother of Abinash Chandra Datt, purchased the properties for Rs. 58,500 and deposited Rs. 15,000 as required by O. 21, R. 84 of the CPC. The balance of the purchase money as required by O. 21, R. 85 was not paid within 15 days, i.e, 5th June 1928 but on 5th June 1928 a petition was filed by the purchaser for extension of time for the payment and as it bore the consent of the mortgagor judgment-debtor Kali Podo Mukherji, no action under R. 86 was taken by the Court and no resale was ordered but the purchaser was allowed extension of time by ten days. Within that time on 15th June 1928, the balance of the purchase money Rs. 43,500 was deposited. Eventually the sale was confirmed, sale certificate being issued in the name of Basanta Kumar Dutt. When possession was about to be taken by the auction-purchaser, objection was preferred by Kali Podo Mukherji on 27th April 1929. This objection to delivery of possession was dismissed by the Subordinate Judge on 11th June 1929. From this order Kali Podo Mukherji preferred Miscellaneous Appeal No. 329 of 1929 on 21st June 1929. On 5th July 1929, Kali Podo Mukherji instituted a title suit against Basanta as defendant 1, Abinash as defendant 2, and the Roy Chaudhuris as pro forma defendants 3 to 5. He challenged the petition of 5th June 1928 as fraudulent and denied that he had consented to the extension of time that Basanta had obtained. He alleged that the real purchaser was Abinash. He put down his cause of action in the plaint in these words:

    “The cause of action for the suit arose * * * on 22nd May 1928, i.e, the date of auction sale and subsequently on 20th April 1929 when the matter contained in the fraudulent petition dated 5th June 1928 filed by defendants 1 and 2 was known to the plaintiffs.”

    3. The substance of the reliefs asked for in the suit were; first: a declaration that the plaintiff has the right of equity of redemption in the properties in suit and that the said right was not affected by the auction sale and also a declaration that the defendants are trustees in the said properties; second a declaration that the auction-sale was illegal, inoperative and not binding on the properties in suit; third, an injunction restraining the defendants from taking possession under the said auction purchase and other incidental or consequential reliefs not necessary to be specifically mentioned.

    4. The defence was an assertion that Kali Podo Mukherji had signified his consent to the extension of time that the sale was valid, operative and binding and that Basanta himself and not Abinash was the real purchaser Abinash having advanced some money to his brother Basanta and having subsequently been paid off by the latter. It was denied that any of the legal position alleged on behalf of the plaintiff had arisen. It was claimed that Basanta was entitled to possession under his purchase.

    5. The Subordinate Judge has dismissed the suit and from his decree First Appeal No. 214 of 1930 has been preferred by Kali Podo Mukherji.

    6. There can be no question as regards the competency of the first appeal but the competency of the Miscellaneous appeal may be disputed unless the order from which it has been taken may be regarded as one falling within S. 47 of the Coda. The question however is of purely academic interest, because, unless both the appeals are incompetent, which is not the case here, the merits of the case will necessarily have to be gone into. The question whether the order of 11th June 1929 is one falling within S. 47 of the Coda arises in another connexion, namely, whether the suit in so far as it covers the same field as the objection to delivery of possession, was maintainable and we shall presently express our opinion on it in that connexion.

    7. Before the Subordinate Judge it was contended that the suit was barred by reason of S. 47 of the Code, as well as of the provisions of O. 21, R. 92, sub-R. (3). He held that O. 21, R. 92, sub-R. (3), would afford no bar as there was no application under O. 21, R. 90, but that the suit was barred because of S. 47. It may be stated in passing that the interpretation which the Subordinate Judge has given to sub-R. (3), O. 21, R. 92, is erroneous because the sub-Rule bars a suit for setting aside an order by which a sale is sat aside under sub-R. (2) or an order confirming a sale under sub-R. (1) irrespective of the question whether an application for setting the sale aside has been made or not. But sub-R. (3) has no operation here because what has been prayed for in the suit is not the setting aside of the order confirming the sale, but certain declarations, the nature of which has already been set out and also an injunction as regards the taking of possession both of which are matters with which the sub-rule has no concern. The real question is whether S. 47 stands in the plaintiff's way. As regards the declarations, they are clearly outside the purview of S. 47 and a prayer therefor is not barred by that section. The real question to be considered is as regards the appellant's objection to delivery of possession and his prayer for an injunction restraining such delivery. Here again, the question has to be considered upon the case which the appellant seeks to present and not upon what his opponents may say or have succeeded in establishing against it.

    8. The appellant's case is that Basanta is but a benamidar for Abinash and that Abinash is the real auction-purchaser. His objection to delivery of possession will, on the principle of the Full Bench decision of this Court in the case of Kailas Chandra v. Gopal Chandra . A.I.R 1926 Cal. 798, fall within S. 47 of the Code, if the dispute between Abinash and the appellant was a question “arising between the parties to the suit” within the meaning of that section. It has been urged on appellants behalf that the words “parties to the suit” in S. 47, sub-S. (1), mean parties arrayed in opposition to each other, and that the appellant and Abinash having been both defendants in the suit, they do not satisfy the requirements of these words. On behalf of the respondents it has been contended that Abinash, by reason of the fact that he was a puisne mortgagee in whose favour an order for payment in case of the sale fetching a surplus had been made in the decree, was in the position of a decree-holder; the decree being read as a combination of two decrees, one in favour of the Roy Chaudhuris and the other in favour of Abinash. Now, it has been held that “parties” mean parties who are opposed to each other in the suit, though not necessarily as plaintiff and defendant, and that the nature of the suit and the contentions between the parties ought to be considered and that if their rights conflict the question is one within the meaning of S. 47: Mangaya v. Sriramalu . [1913] 19 I.C 448.. As regards a mortgage suit for sale, the rights of the second mortgagee are very limited: he has the right to redeem the prior mortgage or to receive his mortgage money out of the surplus sale proceeds after satisfaction of the prior mortgage treating the suit as one for his benefit; but he cannot ask for a sale of the property if the prior mortgagee's claim is satisfied before the sale, nor can he ask for sale of soma other property included in his own mortgage and for either of these purposes he must bring a separate suit for sale on his own mortgage. Sarat Chandra v. Nahapiet . [1910] 37 Cal. 907 and Vidavyasa v. Madura Hindu Labha Nidhi Co. . [1919] 42 Mad. 90. From these decisions it would appear that whatever may be the English practice and the practice on the Original side of this Court, the procedure in the mufassil is different and, as held in affect in the case of Mackintosh v. Watkins . [1905] 1 C.L.J 31., the second mortgagee is merely made a party to the suit in order that he might have an opportunity of redeeming if he wished and in order that he might have his mortgage money, or part of it, out of the surplus sale proceeds after satisfaction of the first mortgage, but that the decree is not really a decree in his favour, and that he could not insist upon a sale nor get a personal decree in his favour if the first mortgage was satisfied before or by means of the sale.

    9. Notwithstanding this limited right which he had it is rather difficult to hold that Abinash was a party not opposed, for certain purposes, to the mortgagor against whom he was entitled to and was, in fact, given some relief. In the case of Gopi Narain Khanna v. Babu Bangsidhar . [1905] 27 All. 325, the Judicial Committee held that a second mortgagee who is a party to a suit by the first mortgagee for foreclosure, and who satisfies the decree made therein and thus prevents foreclosure, acquires under Section 74 of the Transfer of Property Act, all the rights and powers of the first mortgagee; but he is not entitled to work out under Section 244 of the CPC, his rights, as owner of the first mortgage and as second mortgagee, as against other en-cumbrancers who are parties to the suit, and that as soon as the money due under the foreclosure decree has been paid it is discharged and satisfied, and there is nothing to be done in the execution department. There of course it was a question of enforcing rights which had not been adjudicated upon in the suit itself, and were not covered by the decree. On the other hand, as regards rights enforceable under the decree itself, it has been held that a puisne mortgagee who pays off a decree on a prior mortgage can enforce his rights only by process of execution and not by suit: Bavanna v. Balagorivi . [1899] 9 M.L.J 177.. In our opinion therefore the question that was decided by the Subordinate Judge on the appellant's objection as to delivery of possession was a question falling within the purview of Section 47 of the CPC. Such an interpretation of the expression “arising between the parties to the suit” would be more in oonsonance with the wide construction which their Lordships of the Judicial Committee approved of in the case of Prosonna Kumar v. Kalidas . [1892] 19 Cal. 683;

    “It is of the at most importance that all objections to execution should be disposed of as cheaply and speedily as possible. Their Lordships are glad to find that the Courts in India have not placed any narrow construction on the language of S. 244.”

    10. We are therefore of opinion that the appellant was not competent to ventilate this objection in a separate suit. This however does not relieve us of the necessity of considering the merits of the objection for though we may ignore it so far as the first appeal is concerned, we have to examine it in the miscellaneous appeal.

    11. To deal with the questions that have arisen on the merits, two questions of fact which are involved in the case may with convenience be disposed of first. The first is: did the appellant give his consent to the extension of time which Basanta applied for by his petition of 5th June 1927 and obtained? The finding of the Subordinate Judge on this question is in the affirmative. The appellant no longer challenges this finding, and rightly enough because the materials in support of it are overwhelming. We cannot however overlook the fact that with the abandonment of this allegation the corner-stone of the appellant's case is removed. The other question is, whether Abinash and not Basanta was the real auction-purchaser? The Subordinate Judge was of opinion:

    “that there is no satisfactory evidence to show that defendant 1 is the benamidar of defendant 2, that if the application supported by affidavit, which defendant 1 filed be taken as disclosing the true state of things, defendant 2 does not become the benamidar of defendant 1, but only a co-purchaser with him.”

    12. He ultimately recorded his finding thus:

    “I am moreover satisfied from the evidence adduced that defendant 2 merely helped his brother, defendant 1, with some money for the purchase of the property but did not himself become one of the auction-purchasers.”

    13. We have carefully examined the evidence. There is evidance to show that Abinash took a far more active part in the matter of the purchase and for its confirmation than Bisanta, and on the other hand there is evidence that Basanta has paid off the amount which Abinash had advanced to him for the purchase. What the real position is, it is very difficult to say: it is clear however that the admission of Basanta in his petition supported by an affidavit, that he had made the purchase for himself and his brother Abinash, has not been explained, and so must be taken as good evidence for the purposes of the present case. In this petition Basanta went the length of praying, adversely to his own interest, that the sale certificate should issue in their joint names. In these circumstances, while it must be conceded that it has not been established that Abinash alone was the real purchaser and Basanta his benamidar, it is reasonable to proceed on Basanta's admission that both the brothers were joint purchasers. That is the footing on which the questions arising in the case will have to be decided.

    14. The first question now is what was the effect of the sale when, by consent, the balance of the purchase money was received on a date to which the period provided for by O. 21, R. 85, was extended, and when the procedure prescribed in default of such payment was not followed and no resale was held as required by O. 21, Rr. 86 and 87. It is true that S. 148 of the Code would not authorize the Court to enlarge the period because the period is fixed by the statute and is not fixed or granted by the Court. But the effect of the consent, in our opinion, is to waive the irregularity in the procedure, and the proper view in our judgment to take of the transaction is to hold that the old sale was equivalent to a resile. To the same effect is the decision of the Madras High Court; in the case of Subramaniyam Nambudri v. Kammathi . A.I.R 1923 Mad. 48 and of the Punjab High Court in the case of Radha Kishan v. Hari Singh . A.I.R 1927 Lah. 337. Such a sale, in our view, is not a nullity nor held without jurisdiction, and has not the effect of a private sale but is to be regarded as a Court sale with the deviation from the normal procedure condoned by the consenting party and as bringing on all the statutory consequences which will follow on a sale regularly held by the Court in strict accordance with the provisions of the Statute.

    15. The effect of failure on the part of the auction-purchaser to put in the initial deposit under O. 21, R. 84, that is to say, whether it makes a sale void or voidable on which point Bhim Singh v. Sirwan Singh . [1889] 16 Cal. 33., Venkata v. Sama . [1891] 14 Mad. 227., Sitaram v. Janki Ram . A.I.R 1922 All. 200 and other cases have been cited does not fall for consideration in the present case. Nor is the case of Munshi Mahommad Ali v. Kibria Khatun . [1911] 9 I.C 66., in which it has been held that if the sale is confirmed though the balance of the purchase money has not been put in it amounts to a nullity of assistance to the appellant. A passage from Jones on Mortgages, Edn. 6, para. 1678, has also been cited. It runs thus:

    “When a foreclosure sale is invalid by reason that in making it the requirements of the Statute have not been followed the purchaser is subrogated to the rights of the mortgagee. When the proper parties to the suit are omitted, and therefore are not bound by it, or there is other irregularity in the proceedings, the sale operates as a voluntary assignment of the mortgagee of his interest to the purchaser. This is true of sales and powers of sale, as well as under decrees of Court…. The purchaser's title under an invalid sale is good against all except the mortgagor and those claiming Under them.”

    16. The passage in question as far as we can gather must have reference to fundamental irregularities, ejusdem generis, with the irregularity as to omission of necessary parties which is specifically mentioned and such as are antecedent to the sale. But then it has been argued that here also it should be held that the sale was not complete and that the irregularity in the shape of extension of time for deposit of the balance of the purchase money should be regarded as irregularity in proceedings antecedent to the sale. To this it may be said in answer that the sale had in the language of the Code, already taken place and what had to take place on failure of the purchaser to comply with O. 21, R. 86, in the language of the Code, was a resale: vide O. 21, R. 87: see also Jaibahadar Jha v. Matukdhari Jha* . A.I.R 1923 Pat. 525. As another answer on the question whether delivery of possession may be resisted, it may be pointed out that in Jones on Mortgage (Edn. 7, para. 1678) the following addition has been made:

    “If the mortgagee purchases at an ineffectual sale and enters into possession he simply becomes a mortgagee in possession; and if he sails the land to another and there are successive sales the conveyances operate as assignments of the mortgage to the successive parties in the several deeds. Anyone who takes possession under a valid mortgage is entitled to the rights of the mortgagee in possession. A title acquired by a purchaser through void foreclosure proceedings under a valid mortgage cannot be assailed by the mortgagor or any person claiming under him, unless the amount of the decree and interest is tendered.”

    17. An invalid sale is equivalent to an assignment, but no authority has been shown to us which has ever held that when that takes place as a result of proceedings taken in Court the purchaser is not entitled to obtain possession.

    18. The next question that has been argued is, what passed at the sale, seeing that it was a sale held in pursuance of O. 34 of the CPC, and not under the Transfer of Property Act. In other words, it has been contended on behalf of the appellant that notwithstanding the sale, the right of redemption still remained in him. Now let us examine this question, treating the purchaser as a stranger. The suit, it must be remembered, was one properly constituted in which all persons having interest in the property comprised in the mortgage were parties. Cases discussed at the Bar, which deal with the right of a purchaser to possession at a sale held in a suit imperfectly constituted cases which are noticed in Krishto Pada Roy v. Chaitanya Charan Mondal . A.I.R 1923 Cal. 274, to many of which our attention has been drawn and later decisions e.g, Kalu Sharip v. Abhoy Charan . A.I.R 1921 Cal. 157, Bhagaban v. Tarak . A.I.R 1927 Cal. 259 and Bhodai Sheikh v. Baroda Kanta Dutt . A.I.R 1928 Cal. 116 have no relevancy in the present case. As regards the rights of a purchaser at a sale under such a decree made under the provision of the Transfer of Property Act in a suit properly constituted, as pointed out in the case of Digambar Suthar v. Suajan . A.I.R 1929 Cal. 233:

    “Two views fundamentally different may be taken: he may be regarded as having acquired the equity of redemption as it stood at the date of the mortgage together with the lien of the mortgage; or he may be looked upon as having acquired the property as it was at the date of the sale, that is to say, that property discharged of the mortgage lien.”

    19. Whichever view betaken we do not think it has ever been disputed that in a case in which there was no defect in the constitution of the suit and to which the Transfer of Property Act applied, the sale would entirely cut off the equity of redemption, and that the whole property including the interest of the mortgagees and of the mortgagor would pass to the purchaser. The Judicial Committee, in the case of Het Ram v. Shadi Ram . A.I.R 1918 P.C 34, observed as follows:

    “Under S. 85 the first mortgagee was bound to make the second mortgagee a party to his suit for sale, and as he did not do so the second mortgagee was not bound by the order for sale which could only have been operative subject to his title. S. 89 is important. Under this section where an order for sale under S. 88 has been made such as was made here in 1892 in favour of the first-mortgagee, the mortgagor or the second mortgagee, if he had been a defendant, would have bad the right to redeem if he had paid on the data fixed by the decree the amount due. If such payment is not made, a decree absolute may be made as was made in 1895, for sale and for payment of the amount realized into Court. The section then provides that defendant's right to redeem and the security shall both be extinguished. The construction which their Lordships put on the language so used is that on the making of the order absolute the security as well as the defendant's right to redeem are both extinguished, and that for the right of the mortgagee under his security there is substituted the right to a sale conferred by the decree.”

    20. See also Matruml v. Durga Kumar . A.I.R 1920 P.C 79.

    21. The recent amendment of the rules under O. 34 need not be considered because the decree and the sale in the present case took place before those amendments. The question arises whether by reason of the omission of the concluding words of Section 89 of the Transfer of Property Act, “and thereupon the defendant's right to redeem and the security shall both be extinguished,” from the provisions of O. 34, R. 5 when it was enacted under the Code of Civil Procedure, 1908, the right to redeem remained in the mortgagor even after the sale. On behalf of the appellant it has been contended that it so did. As regards cases under O. 34 it has been held, though without specifically dealing with the effect of the omission of these words, that a sale under the decree obtained by the first mortgagee conveys the interest of the mortgagor and mortgagee as they ware at the data of the first mortgage: Barendra v. Martin & Co. . A.I.R 1921 Cal. 801. Our attention has been drawn to a case, Muhammad Musa v. Edal Singh . A.I.R 1922 Pat. 92 in which Das, J. of the Patna High Court was inclined to hold that the right remained in the mortgagor after the sale and for long afterwards. In the case of Sukhi v. Ghulam Safdar . A.I.R 1922 P.C 11 their Lordships of the Judicial Committee observed thus:

    “In these rules the words above quoted are omitted in the rule which corresponds to S. 89…. Now the words being gone their Lordships feel no difficulty in holding that the law remains as it certainly was before the Transfer of Property Act, 1882, namely, that an owner of a property who is in the rights of a first mortgagee and of the original mortgagor as acquired at a sale under the first mortgage is entitled at the suit of a subsequent mortgagee, who is not bound by the sale or the decree on which it proceeded, to set up the first mortgage as a shield.”

    22. From these observations it seems to us clear that in a sale held under an order absolute under O. 34, R. 5, the purchaser acquires the right of the mortgagee and also of the mortgagor, that is to say, the latter's right of redemption. It is true that under O. 21, R. 89 the mortgagor judgment-debtor is entitled to stop the sale by payment of the amount due and costs, and further he can, if the property is sold, have the sale set aside on making the deposit as proved by O. 21, R. 89, or by making payment at any time before the confirmation of the sale under O. 34, R. 5, sub-R. (1), though O. 21, R. 83, sub-R. (3), disentitle him to a postponement of the sale for raising the decretal amount. But these are rights which the Code of Civil Procedure gives a mortgagor judgment-debtor and are not to be confused with the right of redemption, which is an equity in favour of the mortgagor. The statutory enactment contained in Section 60 of the Transfer of Property Act, which must be taken as defining the right of the mortgagor to redeem, so far as this country is concerned, expressly says:

    “Provided that the right conferred by this section has not been extinguished by act of the parties or by order of a Court.”

    23. In any case, there is no foundation for the view that under the sale in the present case, treating the auction-purchaser Basanta as a stranger, the right of redemption remained in the appellant after the sale, or in any event after the confirmation thereof.

    24. The next question is: What should be the position when the purchaser is not a stranger but a puisne mortgagee? The right of a puisne mortgagee to pay off a prior mortgagee is dealt with by Section 74 of the Transfer of Property Act, as it stood before the recant amendments. Where a puisne mortgagee pays off the prior mortgagee, he upon redemption of the prior mortgage, acquired under S. 74:

    “all the rights and powers of the mortgagee as such to whom he has made such tender: see also Syed Mahomed Ibrahim v. Ambika Prosad Singh . [1912] 39 Cal. 527.

    25. As pointed out in the Full Bench decision of this Court in the case of Umar Ali v. Asmat Ali . A.I.R 1931 Cal. 251 this right which S. 74 confers is “in effect the right of subrogation,” but that prior to the recent amendment, the Transfer of Property Act did not employ the word subrogation. It has also been observed in the case of Aziz Ahmad v. Chhote Lal . A.I.R 1928 All. 241:

    “It will be important to note that the word “subrogation” is not to be found within the four corners of the Transfer of Property Act. The word “subrogation” means “substitution.” The rule of substitution has been adopted and applied by Courts of equity on the principle: “He who seeks equity must do equity.” If a certain party is owning property and his property is relieved from a certain liability it is the duty of the owner to see that the party who relieves is not allowed to suffer, this is the principle of subrogation, and also the doctrine of subrogation has been applied for the benefit of a party making the payment in suitable cases and cannot be applied to the disadvantage of that party.”

    26. Assuming that even after the sale in pursuance of the decree the security was in force, and assuming that Abinash and Basanta were joint purchasers, as we have held for the purpose of this case they were, or even assuming that Abinash alone was the purchaser, they or he would be subrogated to the position of the prior mortgagees and would be competent to stand in the shoes of the latter, and to enforce, if so minded, the rights which the latter possessed in respect of the security. That does not mean that the right of redemption on the part of the mortgagor judgment-debtor still remained in him or that even after the sale which has been confirmed he would be competent to enforce it as against the purchaser or purchasers at the sale and even assuming that the mortgagor judgment-debtor still possesses that right, it is inconceivable how he can contend that the purchaser or purchasers at the sale should not get delivery of possession. Shephard, J., in Perianna v. Narudan Pillai . [1899] 22 Mad. 332 at p. 336, observed that the language of S. 74 makes it clear that the second mortgagee is, by the tender of the mortgage money to acquire no other right than that possessed by the mortgagee.

    27. But, where, as here, the second mortgagee purchases at a sale held in pursuance of a decree passed in a mortgage suit properly constituted, there is no reason to suppose that his rights are to be regulated by S. 74 or are confined to that section only. As regards the competency of a mortgagee to purchase the equity of redemption at a private sale it is, generally speaking, correct to say that once a mortgage transaction is entered into, it is not within the competency of the parties to clog the equity of redemption, that any stipulation which fetters the equity of redemption is invalid as opposed to Section 60 of the Transfer of Property Act, and that any agreement in restraint of the right of redemption which is oppressive or unreasonable as giving the mortgagee an advantage not belonging to the contract of mortgage is not enforceable. At the same time there is authority for the proposition that there is nothing in law to prevent the parties to a mortgage from coming to a subsequent arrangement qualifying the right to redeem: see Sankar Din v. Gokul Prosad . [1912] 34 All. 620, and that it is competent to the mortgagee and the mortgagor to enter into a contract subsequent to the mortgage for the sale of the mortgaged property to the mortgagee; Zanhaya Lal v. Narhar . [1903] 27 Bom. 297. For this last mentioned proposition there is also very high authority: Reeve v. Lisle . [1902] A.C 461. So far as the competency of a mortgagee to purchase at a Court sale is concerned it would be sufficient to say that the extreme contention that he is incompetent to make a purchase at all was overruled by the Judicial Committee in the case of Khairamal v. Daim . [1905] 32 Cal. 296, in these words:

    “But the Judge has made a decree for redemption of the whole estate on the ground, that the mortgagees could not acquire the equity of redemption directly or indirectly at a Court sale except by a suit brought on the mortgage, on account taken and time specially allowed for redemption. Their Lordships cannot concur in this view which is based upon a misapplication of a sound principle of equity. Their Lordships throw no doubt on the principle, which has been acted on in many cases in India, that a mortgagee cannot, by obtaining a money decree or the mortgage debt, and taking the equity of redemption in execution, relieve himself of his obligation as mortgagee or deprive the mortgagor of his right to redeem on accounts taken and with no other safeguards usual in a suit on the mortgage.”

    28. In the present case it cannot be disputed that the suit was properly framed to out off the equity of redemption.

    29. The result is that in our opinion the appellant was in no conceivable view, competent to resist the delivery of possession to the respondent Basanta Kumar Datt which the latter was about to take, and that the appellant is not entitled to any of the reliefs he asked for in the suit. The appeals are dismissed, the first appeal with costs and the miscellaneous appeal with no costs.

    30. Let the records be sent down to the Court below as early as possible.

    Guha, J.:— I agree.

    V.B/R.K

    31. Appeal dismissed.

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    Kalipada Mukerji v. Basanta Kumar Dutta
    (Apr 1, 1931)