Arunagiri Mudaliar vs Kuppusami Pillai and Others

Spencer, J.—It is clear in my opinion that when the plaintiff purchased the cultivable lands by his sale-deed, Exhibit F, on 9th May 1901, he

took them subject to all the incidental liabilities which attached to them by reason of their having been previously mortgaged under the simple

mortgage (Exhibit A) of 3rd February 1900 along with the house and house site of defendants No. 1 and 2. In fact the sale-deed expressly stated

that the debt secured by the simple mortgage was to stand, thus bringing the case within the first exception to Section 101 of the Transfer of

Property Act. I am unable to read into these words an implied meaning that they referred to the simple mortgage standing not on the lands

described in the sale deed, but on other property not therein specified. If the parties intended to convey a different meaning by the words used by

them, then I can only say that they did not express their meaning properly. There are no words in the document stating expressly or by implication

that the sale was free of encumbrances. In other words, the plaintiff took whatever rights over the cultivable lands the mortgagors had to sell, viz.,

the equity of redemption, while the mortgagors retained all the rights they hitherto possessed in the house and house site. Again, when on 22nd

December 1908, the 5th defendant purchased from defendants Nos. 1 and 2 the house and house site, he succeeded to all the rights and benefits

which the mortgagors then possessed in that property. Among such rights was the right conferred by Section 82 of the Transfer of Property Act of

making the lands mortgaged along with the house and site contribute rateably to the debt secured by the simple mortgage of 3rd February 1900.

It is argued, first, that by providing in the sale-deed (Exhibit F) for the discharge of the principal of his own usufructuary mortgage of 1st

October 1896, the plaintiff impliedly cast all the burden to which the property was then subject on the house and site: and fseconrily, that the 5th

defendant''s undertaking to discharge plaintiff''s simple mortgage when he took a private conveyance of the house and site was equivalent to a

renunciation of his right to make the other lands bear any portion of the debt.

But the usufructuary mortgage does not really affect the question, as it had been cleared off before the 5th defendant purchased the house and

site and thus plaintiff''s liability to contribute out of the value of the lands purchased by him to the discharge of his own simple mortgage arose, not

by reason of his position as usufructuary mortgagee of the lands but by his purchase of the mortgagors'' equity of redemption.

Again, the 5th defendant''s agreement (Exhibit G) was an agreement with one of the mortgagors (1st defendant) and could not be taken as the

foundation of any rights in favour of any other owners of property burdened by the plaintiff''s simple mortgage, such for instance as the plaintiff.

Lastly, as regards the plea of res judicata, the admission of 5th defendant, who was plaintiff in Original Suit No. 236 of 1907, was an admission

of priority, not an admission that he surrendered his right to claim contribution at any future date, nor was the right to contribution directly and

substantially in issue in that suit. I hold that the view taken by the lower Courts was correct and that this second appeal must be dismissed with

costs.

Napier, J.--This is an appeal from a judgment of the District Judge of North Arcot in Appeal Suit No. 496 of 1912, from Original Suit No. 103

of 1912 on the file of the District Munsif of Tiruvannamalai. The Suit asked for a mortgage decree in respect of an amount of Rs. 460, alleged to

be due from the defendants on a simple mortgage deed, Exhibit A, executed by defendants Nos. 1 and 2 on 3rd February 1980. The properties

covered by this mortgage were certain lands which had already been mortgaged by the 1st defendant and another to the plaintiff by Exhibit E on

the 1st October 1896, together with a house and house site charged for the first time by Exhibit A. The plaintiff, by Exhibit F of the 9th May 1901,

purchased the lands covered by Exhibit E, and the present suit is to recover the whole amount due on the mortgage Exhibit A by the sale of the

house and house site charged therein. The District Munsif held that the plaintiff must abate a portion of his claim in the proportion which the value

of the properties purchased by him bears to the whole properties mortgaged, and gave a decree with respect to two-thirds of the claim only.

The District Judge, on appeal, holds that under the purchase-deed, Exhibit F, the mortgagors sold to the mortgage the equity of redemption and

that the document could not be construed as a sale of the mortgagors'' entire interest free of the mortgage charge. He, therefore, held that, just as a

stranger would be bound to contribute u/s 82, so the mortgagee in his capacity of owner of the equity of redemption of one of the properties must

contribute also, and, that on making allowance for what he was bound to contribute, the District Munsif was right in only allowing the sale for two-

thirds of the value of the mortgaged property.

The point argued before us on appeal is that Exhibit F is not a sale of the equity of redemption keeping the mortgage alive, but a sale of the

whole property free of the mortgage charge. Reliance is placed by the appellant on the case of Mir Esuff Ali Haji v. Panchanan Chatterjee 6 Ind.

Cas. 842 : 11 C.L.J. 639 15 C.W.N. 800 where the distinction between these two classes of transactions is pointed out, and the test laid down by

Mr. Justice Mookerjee is ""whether the mortgagee purchaser applied the purchase-money towards the satisfaction of the mortgage debt, and he

then expressed the view that it was not fair, if he had done that, to make him give credit, when proceeding against the other property, for a further

sum representing the difference between the mortgage value and the settled price. The appellant appears to have sought in the first Court to adduce

oral evidence as to the intention of the parties at the time of Exhibit F, obviously for the purpose of explaining the apportionment of the purchase-

money. But the District Munsif refused to admit it, holding that the language of Exhibit F was clear that the mortgage was kept alive. In his appeal

memorandum to the lower Appellate Court he pressed that this evidence should not have been shut out, and renews this plea here and desires to

show how the purchase-money of Rs. 950 was applied. Exhibit F purports to be a deed of absolute sale of the property with full right to alienate

by sale, gift, etc. Then come the words on which the difficulty arises: The amount dues under the hypothecation deed executed on 3rd February

1900 is excluded. This translation, as well as the translation by the lower Courts, is challenged by the appellants; and an alternative reading is given

to us by the Bench clerk, ""while the balance due under the hypothecation deed executed on 3rd February 1900 stands."" The appellant argues that

this means that the amount remains as a charge on the other property, i.e., the house and house site, and that it was put in to make that clear. The

respondent supports the view taken by the lower Court that it was intended to keep alive the liability on this property also.

In these circumstances I think it best to see what the nature of the original mortgage was. Exhibit A was a simple mortgage, that is to say, a

promise by the mortgagor to pay the mortgage-money with a right to proceed against the hypothecated properties for the purpose of recovering

the amount. Exhibit E, the prior mortgage, was a usufructuary mortgage. When the property was sold by Exhibit F the title to the property passed

to the mortgagee who already had the right to possession. What, then, became of the mortgagee''s rights under Exhibit A with reference to this

property? I am unable to see how Exhibit E can have failed to operate as a merger. His right under Exhibit A was to bring the property to sale.

When the property had passed into his hands as absolute owner, this right must, apart from any statutory possession, Necessarily disappear. It is

quite true that u/s 101 of the Transfer of Property Act it is in the power of the mortgagee to keep the charge alive, but I am unable to see any

express words or necessary implication in the language quoted above by which the mortgagee declares that it shall continue to subsist. The

alternative requirement is that the continuance would be for his benefit. It is most obvious that if there is another property liable for the mortgage

amount which is sufficient to discharge it, it cannot be for the benefit of the mortgagee to keep alive the charge on the property purchased so as to

render him liable to make a rateable reduction. I am inclined to think that the appellant''s reading of the clause is the correct one. Anyhow, I am

clear that it has not been made out that the view taken by the lower Court is correct.

I would refer to the view that I have expressed in Thuvoor Venkatasubba Reddy v. Bagiammal 29 Ind. Cas. 113 : 2 L.W. 469 : (1915)

M.W.N. 339 : 17 M.L.T. 411 that a mortgagee is entitled, subject to the provisions of Sections 56, 60 and 81, to proceed, for the whole amount

of his mortgage debt, against any portion of the mortgaged property, and I decline to introduce limitations to this right save as are to be found in the

language of the Act, or as arise by fraud of the mortgagee or in circumstances coming within the purview of Section 90 of the Trust Act, which

must be alleged and made out as an answer to the plaintiff mortgagee''s claim.

In my view it does not rest on the plaintiff to show that he paid the full value of the unencumbered property to the defendants No. 1 and 2, but

on the defendants to establish the contrary. The property was, as above stated, subject to a usufructuary mortgage in favour of the plaintiff on

which Rs. 500 was due and the purchase-money was Rs. 950. Defendants Nos. 1 and 2 did not set up any case of fraud or allege that the sum of

Rs. 950 was not the full value for the property. The 5th defendant is the real contesting defendant. He purchased the equity of redemption in the

house property covered by Exhibit A long after the sale under Exhibit F, his purchase being in 1908, while Exhibit F is in 1901. In his written

statement he claims the rateable reduction, but alleges no grounds in support of the claim. In my opinion this case is covered by the principles laid

down in Sesha Aiyangar v. Krishna Aiyangar 24 M.P 96 : 12 M.L.J. 283 and Mir Esuf Ali Haji v. Pachanan Chatterjee 6 Ind. Cas. 842 : 11

C.L.J. 639 : 15 C.W.N. 800 and the plaintiff mortgagee is entitled to enforce his claim for the whole amount of his mortgage against the property

covered by Exhibit A, and I would give a preliminary decree for sale for the whole amount found due on the mortgage; but as my learned brother,

takes a different view, the appeal will be dismissed with costs.