- Bookmark
- Share
- CaseIQ
Sankana Kalana v. Virupakshapa Ganeshapa And
Factual and Procedural Background
The dispute arises from a decree obtained by Sankana against Ningana and subsequent proceedings before the District Court and this Court. The District Judge went behind the decree obtained by Sankana and held that, under Section 134 of the Contract Act, Sankana's omission to sue the principal (Mohidin) discharged the surety (Ningana). The respondent Virupakshapa contested that the decree obtained by Sankana was not binding on him, he having not been a party to that suit, and asserted a right to redeem. The High Court varied the District Judge's decree: it directed that on payment by Virupakshapa to Sankana of the amount of Sankana's decree against Ningana within three calendar months, Virupakshapa should have possession of the land; failing such payment he would be forever foreclosed. Each party was to bear their own costs.
Legal Issues Presented
- Whether Section 134 of the Contract Act operates to discharge a surety when the creditor omits to sue the principal, or whether Section 137 qualifies Section 134 (as held in Hajarimal v. Krishnaram).
- Whether a decree obtained by a prior mortgagee (Sankana) in proceedings to foreclose or sell binds a subsequent incumbrancer who was not a party, and whether such a subsequent incumbrancer may redeem.
- Whether a plaintiff may, on second appeal, make an entirely new case in the High Court different from the case made in the courts below.
Arguments of the Parties
Respondent (Virupakshapa)
- Contended that the decree obtained by Sankana was not binding on him because he was not a party to that suit.
- Relied on multiple authorities to assert that a subsequent incumbrancer has the right to redeem even if not made a party to a foreclosure or sale suit, and that notice of the incumbrance does not affect that right.
- Expressed willingness to accept the sum fixed in the decree obtained against Ningana and to redeem Sankana's mortgage on that footing.
Plaintiff (as represented in the High Court)
- The plaintiff's pleader in the High Court abandoned earlier allegations of collusion and fraud and did not press for ejectment; instead, accepted the District Court's finding that Sankana was a prior mortgagee and claimed only to redeem Sankana as a puisne mortgagee.
- This constituted making a different case in the High Court than in the courts below; the Court dealt with that new case on its merits.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hajarimal v. Krishnaram I.L.R. 5 Bom. 647 | Section 134 of the Contract Act is qualified by Section 137. | Relied on to conclude that the District Judge was wrong to hold that omission to sue the principal discharged the surety under Section 134. |
| Pandubhat v. Balaji Printed Judgments for 1878 p. 54 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Used as part of the body of decisions supporting the proposition that a subsequent incumbrancer may redeem despite not being a party to a prior foreclosure or sale suit. |
| Ganesh Sadashiv v. Balkrishna Gopal Printed Judgments for 1879 p. 28 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Referenced in support of the principle that notice does not affect the right of a subsequent incumbrancer to redeem. |
| Radhabai v. Shamrav Vinayak Printed Judgments for 1881 p. 219 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Referenced for the same general principle regarding redemption by subsequent incumbrancers. |
| Dayabhai Jaichand v. Maganlal Kalidas Printed Judgments for 1881 p. 232 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Referenced in support of the rule that a foreclosure plaintiff must make posterior incumbrancers parties to obtain a complete title. |
| Wasudev Balaji v. Narayan Krishna (See supra p. 131) | Cited among authorities on rights of subsequent incumbrancers to redeem. | Included in the list of authorities establishing the redemption right of subsequent incumbrancers. |
| Rupchand Dugdusa v. Davlatrav Vithalrav I.L.R. 6 Bom. 495 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Part of the array of cases relied on for the proposition that not being made a party does not defeat redemption rights. |
| Mansukh Pitambar v. Tarbhovan Parshotam Printed Judgments for 1882 p. 213 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Referenced in support of the same general principle. |
| Shivram v. Genu I.L.R. 6 Bom. 515 | Cited among authorities on rights of subsequent incumbrancers to redeem. | Included among cases showing a subsequent incumbrancer may redeem despite lack of notice or non-party status. |
| Joytara Dasi v. Mohamad Mobarak I.L.R. 8 Calc. 980 | Authority referred to regarding making a new case in a higher court on appeal. | Quoted in the context of whether a plaintiff should be allowed to make an entirely new case in the High Court on second appeal; noted but the Court proceeded to deal with the new case. |
| Khubchand v. Kalyandas I.L.R. 1 All 240 | Authority on effect of sale to a third party (without notice) defeating rights of a subsequent incumbrancer. | Cited to show that had the property passed to a third-party purchaser, the rights of Virupakshapa would have been defeated. |
| Ali Hasan v. Dhirja 4 Id. 518 | Authority on effect of sale to a third party defeating subsequent incumbrancer's rights. | Also cited to illustrate that a sale to a purchaser without notice could defeat redemption rights. |
Court's Reasoning and Analysis
The Court reasoned that the District Judge was incorrect to apply Section 134 of the Contract Act as discharging the surety, because Section 134 must be read with Section 137 (following Hajarimal v. Krishnaram). The Court accepted the established principle (supported by the cited authorities and treatises) that a plaintiff seeking a complete title in foreclosure or sale must make posterior incumbrancers parties, and that a subsequently omitted incumbrancer retains the right to redeem whether or not he had notice. The Court noted that the technical objection that the decree obtained by Sankana might not bind Virupakshapa (as he was not a party) was addressed by Virupakshapa's willingness to accept the sum fixed by that decree and redeem on its footing. One Judge observed that the simplest disposition would have been to reverse the District Court and restore the Subordinate Court decree; another Judge observed that although ordinarily a plaintiff should not be allowed to make an entirely new case on second appeal, precedent in the Bombay High Court had permitted it and the Court proceeded to decide the new case. The Court also held that the question of notice did not arise on the facts because Sankana was a prior mortgagee in possession; but it recognized that a sale to a third party without notice would defeat Virupakshapa's rights (citing Khubchand v. Kalyandas and Ali Hasan v. Dhirja).
Holding and Implications
DECREE VARIED.
Holding: The High Court varied the District Judge's decree and directed that upon payment by the plaintiff Virupakshapa to Sankana of the amount of Sankana's decree obtained against Ningana within three calendar months from the date of the order, Virupakshapa shall have possession of the land; in default of such payment within the specified time, Virupakshapa shall be for ever foreclosed. Costs: each party to bear his own costs throughout.
Implications: The decision implements the practical consequence that Virupakshapa may redeem by paying the decree amount within three months; the opinion applies established principles on the interplay of Sections 134 and 137 and on the right of subsequent incumbrancers to redeem. The opinion does not purport to establish a novel legal precedent beyond applying existing authorities.
1. Assuming that the District Judge was justified in going behind the decree obtained by Sankana against Ningana, it is clear that he was wrong in holding under Section 134 of the Contract Act that Sankana's omission to sue the principal Mohidin discharged the surety Ningana. Section 134 is qualified, as held in Hajarimal v. Krishnaram I.L.R. 5 Bom. 647 by Section 137, which obviously governs the present case.
2. It is contended, however, on behalf of the respondent Virupakshapa that the decree obtained by Sankana was not binding on him, he not having been a party to the suit, and that, on the authority of the numerous decisions of this Court--see the cases of Pandubhat v. Balaji Printed Judgments for 1878 p. 54; Ganesh Sadashiv v. Balkrishna Gopal Printed Judgments for 1879 p. 28; Radhabai v. Shamrav Vinayak Printed Judgments for 1881 p. 219; Dayabhai Jaichand v. Maganlal Kalidas Printed Judgments for 1881 p. 232; Wasudev Balaji v. Narayan Krishna See supra p. 131; Rupchand Dugdusa v. Davlatrav Vithalrav I.L.R. 6 Bom. 495; Mansukh Pitambar v. Tarbhovan Parshotam Printed Judgment's for 1882 p. 213; and Shivram v. Genu I.L.R. 6 Bom. 515--he should be allowed even in this suit to redeem the defendant. In most of these cases, it is urged on the other side, there was actual or constructive notice of the existence of other incumbrances: apparently this was so, but it is clear upon the authorities that the question of notice cannot possibly affect the right of a subsequent incumbrancer to redeem. It is well established See Spence's Equity Jurisprudence, Vol. 2, Section 5, and Fisher on Mortgages, Sections 1439, 1440 and 1441 that, in order to obtain a complete title, the first or any subsequent mortgagee or incumbrancer who files a bill for foreclosure or sale must make all persons who have incumbrances at the time of the institution of the suit, posterior in point of time to his mortgage, parties to his suit, and that if such plaintiff should foreclose the mortgagor and such incumbrancers as he has made parties, yet he will be liable to be redeemed by any incumbrancer who might have been, but was not, made a party to his suit, whether he had any notice of that incumbrance or not. It might be a question whether the judgment so obtained by the plaintiff without having received notice of the subsequent incumbrance would bind such incumbrancer as to the accounts; but we are saved the necessity of considering this point in the present case, as we understand Mr. Ghanasham, on behalf of his client Virupakshapa, to express his willingness to accept the sum fixed in the decree obtained against Ningana and to be ready to redeem Sangana's mortgage on the footing of that decree. It is true that the plaintiff has in this suit sought an entirely different remedy; but this was probably rather the fault of his adviser than of himself, and it seems unnecessary to put him to the expense and trouble of another suit. We, accordingly, vary the decree of the District Judge and direct that on payment to Sankana of the amount of his decree obtained against Ningana, within three calendar months from this date the plaintiff Virupakshapa do have possession of the land in dispute, and that in default of such payment within the time specified, he be for ever foreclosed. As to costs we think the proper order to make is, that each party do boar his own costs throughout.
Decree varied.
Pinhey, J.
3. Reading Section 134 of Act IX of 1872 with Section 137 of that Act, and referring to the decision at Indian Law Reports, 5 Bombay, 647, it is impossible to uphold the decree of the District Court, and the simplest way of disposing of this second appeal would have been to reverse the decree of the District Court and to restore that of the Subordinate Court.
4. But the pleader of the plaintiff Virupakshapa in this Court seeing that the decree of the District Court could not be sustained, has now made an entirely different case for his client to that made in the Courts below, and my brother Kemball considers that we should deal with and dispose of this new case on its merits. Concurring, as I do, fully in the observations made by Field, J., in Joytara Dasi v. Mohamad Mobarak I.L.R. 8 Calc. 980 I do not myself think that a plaintiff should be allowed to make an entirely new case in the High Court on second appeal. The thing has, however, been allowed so often in the Bombay High Court that I do not consider it either necessary or advisable to formally differ from my brother Judge on this point in the present case.
5. What plaintiff now says is, I no longer charge the two defendants with collusion and fraud, and I no longer sue to eject them or either of them; but I accept the District Court's finding that defendant No. 2, Sankana, is a prior mortgagee of the property; and, as the District Court has found me to be a puisne mortgagee, I claim to redeem Sankana. This, of course, he would have been entitled to do if he had framed his suit with that professed object, and I, therefore, agree to the decree proposed by my brother Kemball.
6. The question of notice does not arise, as Sankana is a prior mortgagee in possession; but it would have been important if Sankana had, without notice of any puisne mortgage, brought the property to sale, and the property had passed into the possession of a third party as purchaser. If this had been done, the rights of Virupakshapa would have been defeated--Khubchand v. Kalyandas I.L.R. 1 All 240 and Ali Hasan v. Dhirja 4 Id. 518.
Alert