Babu Ramjanam Singh and Others vs Babu Kunj Behari Singh

Adami, J.—The facts of the case are shortly stated, as follows:

Sometime prior to September 1�03 defendant No. 1 executed a simple mortgage of certain shares in five oat of the seventeen villages composing Mahal Gamhari in favour or Brij Mohan Singh, a nephew of the plaintiff.

On the 16th September 1903 defendant No. 1 executed an usufructuary mortgage of the same five villages in favour of the plaintiff in consideration of a payment of Rs. 837, and the plaintiff entered into possession as usufruatuary mortgagee, and his name was registered as such in the Collector''s register. Thereafter the shares of defendant No. 1 were put up to sale in execution of a money-decree obtained against him, and were bought by one Sadhu Singh, who in 1905 sold them to the plaintiff, who thus became proprietor of the shares in the whole mahal and was registered as such, but the entry of his usufructuary title in respect of the five villages still remains recorded.

In 1911 Brij Mohan Singh, the prior mortgagee, instituted a suit on the basis of his mortgage and joined the plaintiff with defendant No. 1 as defendants. He obtained a decree, in the execution of which the mortgaged properties were put up to sale and purchased by Ramdhani Tewari on the 8th of June 1913. The plaintiff made no attempt to redeem the prior mortgage. On the 6th February 1914 possession was delivered to Ramdhani Tewari, and the plaintiff was dispossessed. He then instituted the suit giving rise to this second appeal against his mortgagor, defendant No. 1, claiming re payment of the debt of Rs. 837 with interest.

The defendants contended that the plaintiff had by his own acts extinguished his rights under the mortgage and could not now claim a money decree; that by his failure to redeem the prior mortgage he had forfeited the security he held and that as soon as he made the purchase from Sadhu Singh his mortgage rights merged in his proprietary rights.

The learned Subordinate Judge found that the two mortgage bonds were genuine and for consideration and were executed for legal necessity, that what Sadhu Singh purchased and sold to the plaintiff in 1905 was merely the equity of redemption, that the plaintiff by the purchase had not merged his usufruatuary right in the proprietary right, as by the purchase be had not obtained absolute ownership, but only the equity of redemption, and in any case it was to his benefit to keep his usufruatnary right separate from his proprietary right. As there was a personal covenant in the mortgage-bond to pay the debt in the event of dispossession, he granted the plaintiff a decree.

On appeal to the District Judge it was contended that there was a merger at the time of the purchase in 1905, and that the suit for money was, therefore, barred, and also that there had in fast been no dispossession as Ramdhani was in reality the farzidar of the plaintiff. It was found that Ramdhani was not in fact the farzidar of the plaintiff and that the plaintiff had been dispossessed in 1914. The learned District Judge agreed on the other points with the Subordinate Judge and dismissed the appeal. In a cross-appeal as to interest from the date of suit to the date of the decree, the lower Court allowed interest for that period at the rate of 6 per cent. per annum.

The term of the zarpeshgi mentioned in the plaintiff''s bond is seven years ending in 1317 F.S. or 1910, and there is a condition in the bond "should the zarpeshgidar or his representatives be in any way dispossessed of the whole or a portion of, the zarpeshgi properties, then the said zarpeshgidar and his heirs and representatives shall be competent to bring the zarpeshgi properties into their possession by taking such steps, as they like, or to realise the said zarpeshgi debt with interest thereon at 11 per cent. per mensem from the date of their dispossession to that of realisation from the zarpeshgi properties or from my person and other properties or those of my heirs and representatives, by taking such steps as they think, proper."

It has been strenuously contended on behalf of the appellants-defendants, firstly that by his failure to redeem the prior, mortgage in the suit instituted in 1911, the plaintiff lost all rights against the mortgagor, not only the rights against the property mortgaged but also his rights against the, mortgager personally, that in fact his mortgage debt was altogether extinguished. Mr. S.M. Mullick even suggested that the knowledge that the subsequent mortgage existed would load intending purchasers at the auction-sale in execution of the prior mortgage decree to offer a proportionately smaller sum, and thus the mortgagor would be muloted for the subsequent mortgage debt and could not be asked to pay it again.

Secondly, it is urged that by his purchase in 1905 the plaintiff merged his usufrustuary rights into his proprietary rights and thus teased to be zarpeshgidar, so that, having lost the security of the property, any rights he had against the person of the judgment-debtor accrued in 1905 and the present suit for money must be barred by limitation.

Thirdly, it is argued that the defendant lost all his rights and interest in the mortgaged properties when the mahal was sold in execution of a money-decree to Sadhu Singh, and it is suggested that it was in 1905 or thereabouts that the plaintiff was dispossessed.

With regard to the first point, I think I may safely take as my guide the case of Worthington & Co. Ltd v. Abbott (1910) 1 Ch. D. 588 : 79 L.J. Ch. 252 : 101 L.T. 895 : 54 S.J. 83. There it was held that a puisne incumbrancer who voluntarily submits to a foreclosure order being made absolute without insisting upon his right to have a time allowed within which to redeem a prior incumbrancer, does not thereby preclude himself from suing on the covenant for payment in the mortgage-deed, and recovering his debt from the residuary legatees and devisees of the deceased mortgagor.

Mr, Justice Eve in delivering judgment conceded that it had been determined in a series of cases that "if the mortgagee, by voluntarily doing something which he is unauthorized to do, either by the express terms of the contract between him and the mortgagor or by implication arising from that express contract, puts it out of his power to re-convey the mortgaged premises to the mortgagors on payment, he cannot afterwards sue on the covenant." He then looked into the question whether the conduet of the mortgagees in that case fell within that principle. In that case the subsequent mortgagees in a suit brought by the prior mortgagees to foreclose their mortgage, being under the impression that the mortgagor was without means and unable to make any payment under the covenant in the mortgage, consented to stand debarred and foreclosed from all right, title and interest and quity of redemption of, in and to the mortgaged premises. The object was to save the delay that would otherwise be necessary for taking accounts and to save the subsequent mortgagees from the costs the taking of accounts would have entailed.

The learned Judge says: "it is conceded that if he (the subsequent mortgagee) incurs the costs and puts the prior incumbrancer to the expense of taking and verifying the accounts, although he never intends to redeem, he is still entitled to his remedy under the covenant, and I cannot see on principle why he should be placed in a worse position simply because he averts unnecessary delay and expense and says at once that he never intends to redeem and does not ask for an opportunity of doing that which he never intends to do * * * * * * the only effect of the conduct of which complaint is now made was that the puisne incumbrancers abandoned their right to redeem, and, I must assume, did so because they were satisfied that it was a right of which they had no intention of availing themselves, I do not myself see how in doing so they in any way prejudiced the mortgagor * * * * I do not thick there is anything in the, conduct of the mortgdgee * * * * * which disentitles him to sue on the covenant. I hold, therefore, that the right to sue on the covenant is subsisting."

In the present case I cannot see that the puisne mortgagee voluntarily did anything which he was unauthorised to do, either by the express terms of the contract between him and the mortgagor, or by implication arising from that express contract. He was not bound to redeem, and he did nothing which his contract did not allow him to do. The covenant was to the offset that if he ware dispossessed, the mortgagee might sue for re-payment of the debt. He was dispossessed and had a right to sue.

The next question is whether the plaintiff ceased to have any zarpeshgi right in 1905 when he purchased the property. His vendor had purchased only the right, title and interest of the mortgagor which was merely a right of redemption, and that was all that the plaintiff obtained by his purchase. The property was subject to the charge of the prior mortgage. Sadhu Singh never obtained possession and the plaintiff''s possession as zarpeshgidar was not disturbed. He continued to possess the lands in usufruct, and in any case was entitled to retain that usufruatuary right separate from the proprietary right, since it was for his benefit. In 19il when the prior mortgagee instituted his suit, the plaintiff was still in usufructuary possession. By his failure to redeem he, of Bourse, lost his security but as found above, had still a right against the mortgagor personally. It would, further, not be equitable that the plaintiff''s mere failure to redeem should absolve the defendant No. 1 from liability to pay a debt justly due.

With regard to limitation I have found that the plaintiff remained in possession as zarpeshgidar up to the date of suit, and he was still holding as such when dispossessed. His dispossession was in 1914, and, therefore, a suit brought in 1916 was not out of time. The dispossession gave him a right to sue for the debt under the terms of the bond.

I would dismiss the appeal with costs. There is a cross-objection to the effect that, as the rate of interest agreed to in the bond is 1 1/2 per cent. per mensem, that rate should have been allowed by the lower Court, and not the rate of 6 per cent. per annum for the period subsequent to the institution of the suit upto the date of the decree. The amount of interest to be granted for this period was at the discretion of the lower Court, and I see no reason to interfere. I would dismiss the cross-objection with costs.

Bucknill, J.

I agree.