Ramnandan Prasad Singh v. Ram Das

1. This appeal arises out of an action on a mortgage. The appellant is defendant 4. The principal defendant was the occupancy tenant of a certain holding. The plaintiff is a mortgagee under a mortgage obtained by him from the principal defendant 1. It is necessary to state the history of the case in order to appreciate the points which have arisen.

2. In the first place I should like to say that I am indebted to the lucid arguments of Mr. Gandhari Prasad Singh and Mr. Khurshed Husnain which have been of material assistance to me, and although the matter is of considerable importance I propose to state my conclusions at once and not to reserve my decision for the reason that the points for consideration which have been advanced in the case are now fresh in my mind. The facts are these. In December 1914, defendant 4, the appellant, obtained two mortgages from defendant 1. To prevent a confusion I propose to call defendant 4 the appellant, the principal defendant that is defendant 1, I shall describe as the mortgagor and the respondent-plaintiff I shall describe as the plaintiff.

3. The appellant, as I have stated, obtained two mortgages in 1914. The mortgagor was, as I stated, the occupancy tenant of the holding, and on 29th July 1921, the landlord obtained a decree for rent against the mortgagor. On 20th May 1924, the landlord purchased the holding at the execution sale arising out of the action for rent. On 31st May 1922, the plaintiff having paid off the usufructuary mortgage of the appellant of 1914 obtained a usufructuary mortgage from the mortgagor. I have stated that the landlord had purchased the holding in execution of the rent decree on 20th May 1924. Then the plaintiff in his relation to the mortgage, which is the subject-matter of this suit, comes on to the scene and he advances money to the mortgagor tenant to enable him to pay off the rent decree obtained by the landlord. As security for the money advanced he obtained the mortgage which was sued upon in this action dated 31st August 1924. I should have stated, if I have not already done so although I have given some indication of the fact, that of the two mortgages of the appellant of December 1914 one was a usufructuary mortgage which was redeemed in circumstances to which I have already referred, and the other was a simple mortgage which still subsisted. On 31st May 1924 the appellant obtained a decree against the mortgagor on the simple mortgage of December 1914, and on 20th October 1925, the appellant purchased the property, which was the subject-matter of the mortgage, in execution of the decree. In those circumstances the plaintiff brought his action on his mortgage which he had obtained as security for the money which he had advanced to the mortgagor tenant in 1924, the action being commenced in the year 1928. I wish to repeat one fact to which I have already made more than one reference, namely, that the plaintiff obtained his mortgage as security for advancing the money to the mortgagor tenant to enable him to pay off the debt, and in those circumstances and in this action he claimed to be sub-rogated to the rights of the landlord. The learned Judge in the Court below has held that he was so entitled and has also held that he the plaintiff was entitled to a mortgage decree not only against his mortgagor, defendant 1, but also as against the appellant-defendant 4. In those circumstances the appellant as defendant 4 contends that there was no right to sub-rogation. It is admitted that had the plaintiff advanced the money to a mortgagor to pay off a mortgage debt and got a mortgage in security of that advance, then he would be entitled to be subrogated to the rights of the original mortgagee. But it is contended that the charge which was created by the decree for rent obtained by the landlord was a right to which the landlord alone was entitled and that in those circumstances there was no right of subrogation in the plaintiff. For that there is an alternative argument, that being that under the mortgage deed of the appellant, the appellant was liable to pay the rent of the holding. As the rent was not paid and as the rent decree resulted from the non-payment of the rent and as in effect the plaintiff has paid of the liability in respect of the rent, he, the plaintiff is entitled to be indemnified as against the defendant on general principles of law which is analogous to Sections 69 and 70 of the Contract Act. In my judgment, in the first place, S. 69 does not apply to this case and the question of indemnity is obviously a new point in the case and does not seem to me to arise in this appeal. But the other matter, the question of whether the plaintiff is entitled to be subrogated to the rights of the landlord is one of some considerable difficulty. The appellant relies first upon Section 65 of the Ben. Ten. Act. This section provides

“that the holding of a tenant shall be liable to sale in execution of a decree for the rent thereof and the rent shall be a first charge thereon.”

4. That has to be read with S. 148(h) which provides:

“Notwithstanding anything contained in Section 232 of the CPC, an application for the execution of a decree for arrears obtained by a landlord shall not be made by an assignee of the decree unless the landlord's interest has become and is vested in him.”

5. Now it is said that those sections together with the decision in A.H Forbes v. Maharaj Bahadur Singh (1), clearly show that the rights given under Section 65 of the Ben. Ten. Act, are peculiar to the landlord. The argument has taken a further step by a reference to the decision in Kesho Prasad Singh v. Mt. Paranjota Koer (2) which at any rate for the purposes of this Court finally decided, unless the decision is overruled by a Full Bench, that a rent decree is in no sense a mortgage decree. This decision is important, because from what I have said it can be seen that it is contended that the effect of the advance made by the plaintiff to the tenant in the subsequent mortgage to him places the plaintiff in the position as described in the case of Ram Narayan Sah v. Sahdeo Singh* (3) where the principle of subrogation was discussed and held to apply in the circumstances of that case. It will he seen therefore that the real matter which has to be determined in this case is whether the charge which the plaintiff landlord obtained is on the same footing as that of a mortgage. On the authority to which I referred a moment ago it seems to me that question must be answered in the negative.

6. There is another important point to be mentioned at this stage. The landlord purchased in execution of his decree as, I have stated on 20th May 1924, but it is clear that sale was not confirmed. I am inclined therefore to the view which is advanced by the learned advocate on behalf of the appellant that in any event by reason of that fact alone it cannot be said that the plaintiff is placed in the shoes of the landlord decree-holder. The argument took another turn in this way. It was contended by Mr. Khurshed Husnain that as a result of the purchase by the appellant in execution of his mortgage decree on 20th October 1925 the mortgage became merged in the decree, and consequently the appellant was merely in the position of an owner of the property and as such the plaintiff was entitled to a mortgage decree not only against his mortgagor but against the appellant also and as the mortgage in other words had disappeared. Another branch of the same argument was that by the purchase by the landlord in execution of the rent decree the incumbrance of the appellant had been wiped out. Mr. Khurshed Husnain in this connexion relies upon the provisions of the Bengal Tenancy Act and contends that the purchase in execution of a rent decree is a purchase free of incumbrances.

7. For the respondent on this point the case of Sital Chandra v. Parbati Charan (4) is relied on. The decision in that case was that a sale in execution of a rent decree did not ipso facto cancel an incumbrance and that the landlord is bound to annul the incumbrance under S. 167 as in the case of any other third party purchaser. This case however was explained in this Court in the decision in Sourendra Mohan Singh v. Kunjbihari Lal (5). The reasoning in that case was this: that prima facie the occupancy holding was non-transferable and that therefore so far as the landlord of a non-transferable holding is concerned, any incumbrance without his consent might be said not to exist, and it was suggested by Jwala Prasad, J., who delivered the judgment of the Court as, I understand it, that the case to which I was referring, Sital Chandra v. Parbati Charan , could be explained only on the assumption that the holding was, transferable. But so far as the point which Mr. Khurshed Husnain raises, namely, that by reason of the execution of the rent decree the incumbrance of the appellant ceased to exist, his argument, it seems to me, cannot be supported. It is unnecessary in connexion) with this point, perhaps, to rely upon, the decisions to which I have just referred as it is not necessary to decide; the point. In my judgment, the most that need be said is that the incumbrance as between the tenant on the one hand and the landlord on the other is a matter which the landlord can ignore. That at any rate cannot be doubted and it cannot be said that the transaction creating the incumbrance is void, otherwise the necessity for the provisions contained in the Bengal Tenancy Act allowing third party purchasers to avoid incumbrances would not exist. If that he the true position we have then to ascertain what is the position as between the plaintiff and the appellant in this case, who admittedly was a prior incumbrancer. It is only by holding that the plaintiff is placed in the position of the landlord, who obtained a rent decree, that it could be said that the plaintiff was a prior incumbrancer. If that position cannot be maintained, it is clear that he must be held to be a puisne mortgagee.

8. For the reasons which I have advanced, it seems to me to be concluded that the plaintiff is in no better position than a person who has obtained a mortgage at a time when the prior incumbrance was already in existence and therefore in the position of a puisne mortgagee. Now I come to the other point which Mr. Khurshed Husnain advances to meet the position which I hold was the position on the facts and law in this case. The point which he advances is, as I have already stated, that by the purchase by the appellant in execution of his mortgage decree, the mortgage merged in the decree and no longer stands in the way of the plaintiff. The first case to which I would refer is the case of Ram Narayan Sah v. Sahdeo Singh* . It is contended here by the learned advocate on behalf of the appellant that the mortgage upon which he sued and in execution of which he purchased the morgaged property, being prior in date to that of the plaintiff, he was entitled to use it as a shield against the plaintiff. The case to which I have just made reference held that a person, 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 of the decree on which it proceeded, to set up the first mortgage as a shield. I refer to that case, because there was a discussion there of the leading cases on this question and which were decided by the Judicial Committee of the Privy Council, the one being the case of Het Ram v. Shadi Ram (6) and the other being the case of Mt. Suki v. Ghulam Safdar Khan (7). In the latter case there was some discussion of the opinion expressed by the Judicial Committee in the former case and the question was finally decided in the words to which I have referred and read and which formed part of the judgment in Ram Narayan Sah v. Sahdeo Singh* .

9. It seems to me for these reasons that the learned Judge in the Court below was wrong in holding that the plaintiff is subrogated to the rights of the landlord. Reliance was not placed upon Section 92 of the Transfer of Property Act. To sum up my conclusions in this matter, it seems to me that the true position is that the charge which was obtained by the landlord by his rent decree was a charge, to use my former expression, peculiar to himself. That charge could not be passed on in the manner which is suggested in this case, and that at any rate, so far as the other parties are concerned, the incumbrances which were created by the tenant in a non-transferable holding — and I assume this to be one—are not incumbrances which are void but which may be treated as void only as between the tenant and the landlord. A sufficient indication that they are not void as between tenants and third parties will be found in the somewhat elaborate provisions of the Bengal Tenancy Act giving a right to certain persons purchasing in rent sales to annul those incumbrances. Another matter which seems to be equally clear is that by the purchase by the appellant in execution of his mortgage decree, the mortgage was not for all purposes merged in the decree, that is to say he was entitled to use the mortgage as a shield against the plaintiff.

10. There is one further observation which I wish to make and it is this. The learned Judge in the Court below has relied upon the case of Mohammad Musa v. B. Edal Singh (8), but there is a considerable difference in that case. First, there is the distinction which I have already drawn from the observations which I have made, namely, first that Mohammad Musa's case was a case of a mortgage and not a case of a rent, decree, and secondly the person who in that case, namely, defendant 17, who was in a similar position to that of the appellant in this case, had been a party to the mortgage action, and, as held by the learned Judges in that case, had a right of which he had not availed himself. In the circumstances of the case it seems to me that the judgment of the learned District Judge was wrong and must be modified to the extent that the plaintiff is not entitled to a mortgage decree against defendant 4. The appeal therefore will be allowed with costs. There will be leave to appeal.

R.K

11. Appeal allowed.