Krishna Ayyar and Others vs Muthukumarsawmiya Pillai and Others

Ramalingam Pillai, the deceased father of the plaintiff, a minor, obtained from the first defendant on the 21st June 1896, a bond for Rs. 5,000 on

the hypothecation of certain lauds, to which the first defendant and the two sons of his deceased brother, members of a joint family, were entitled,

the debt being recited to be one binding on all the members subsequent to the mortgage, the first defendant became by purchase from one of his

nephews entitled to a two-thirds share in the joint property instead of to one-half as originally. Of the other defendants, the second to the seventh

inclusive, are impleaded as persons entitled to the equity of redemption in some or other of the properties hypothecated to the plaintiff, they having

acquired such interest in Court sales held in execution of decrees against the first defendant, and the eighth and the ninth defendants are holders of

prior mortgages on the properties comprised in the plaintiff''s mortgage. In the present suit the plaintiff prayed for a decree against the first

defendant and only against his two thirds share of the mortgaged property, excluding the third share belonging to first nephew who had not parted

with his interest, it being stated in the plaint that the plaintiff apprehended there were difficulties in establishing that the debt was binding on that

nephew''s share.

The Subordinate Judge overruled the objection raised by the appellants (defendants Nos. 2 to 5) to the frame of the suit in so far at the

nephew''s third share was excluded, and granted a decree to the plaintiff as prayed for.

It was said on behalf of the appellants that Ramalingam Pillai being the maternal uncle of the nephew, the object of the exclusion of his share

from the suit was to throw the entire debt upon the share purchased by the appellants and save that of the nephew from liability to the debt to

which it was justly subject. The evidence which the nephew may produce against the condition that his one-third share is bound by the debt not

having been taken, no final conclusion on this point can be arrived at, and though the evidence on which the appellants rely tends to support their

contention that the nephew''s share also is bound yet the matter cannot be said to ha free from doubt. Consequently, it is not to be taken that the

next friend of the plaintiff in refraining from impleading the nephew and from litigating the matter with him was acting otherwise than in the interests

of the plaintiff.

The question is whether in the circumstances of the case it is open to the plaintiff to proceed against the two-thirds share which had vested in the

mortgagor and which has since passed to defendants Nos. 2 to 7 to the exclusion of the one-third share of the nephew.

The answer to the question must, we think, be in the affirmative. The only sections of the Transfer of Property Act that can be thought of as

having any sort of bearing on the present question are as pointed out by Sir V. Bhashyan Ayyangar, but four or five.

Now Section 56, as its very position, as part of chapter III shows, lays down a rule governing the rights and obligations as between the buyer

and the seller with reference to the instance provided for the section. Section 81 deals with marshalling of securities where the owner of two

properties mortgages them both to one person and then mortgages one of the properties to another person who has not notice of the former

mortgage, Section 82 provides that, where several properties, whether of one or of several owners, are mortgaged to secure one debt, such

properties are, in the absence of a contract to the contrary, liable to contribute ratably to the debt secured by the mortgage, according to the net

value of the properties at the time, this provision being inapplicable to a property liable u/s 81 to the claim of a second mortgagee. Section 95 gives

to one of several mortgagors who redeems the mortgaged property a charge on the share of each of the other co-mortgagors for his proportion of

the expenses, properly incurred in redeeming and obtaining possession. Section 60 of the Act confines the right of a person interested in but a

share of the mortgaged property to redeem his share only to cases where the mortgage has acquired in whole, or in part, the share of a mortgagor.

It is scarcely necessary to say that there is nothing in any of these sections suggesting the view that as between a mortgagee in the possession of the

plaintiff and holders of the equity of redemption such as the appellants are, the law compels the former to distribute his debt, upon the mortgaged

property rateably so as to entitle the latter to insist upon their interest not being proceeded with until after the nephew''s one-third share has been

proceeded against. Passing to the decided cases cited by Sir V. Bhashyam Ayyangar they more than support the conclusion in favour of the

plaintiff. In Timmappa v. Lakshmamma ILR Mad. 385 the mortgagee had obtained a decree for the sale of the mortgaged properties on account

of the mortgage debt. After the decree was passed the equity of redemption in one of the properties was purchased at a Court sale in execution of

a money decree against the mortgagor, Subsequent to this Court sale, the property, thus sold, was sold in execution of the mortgage decree and

purchased by the mortgagee himself. It was held that the purchaser under the money decree was not entitled to insist on the mortgagee recovering

what was due to him from the other mortgaged properties and that the purchaser at the money decree sale was bound, if he wished to redeem of

pay the whole mortgage debt. In the other case, the Court laid down that a mortgagee''s right to realise his debt by sale of any portion of the land

mortgaged to him cannot be curtailed by the fact that the portion of the land he elects to sell has been sold by the mortgagor subsequent to the date

of the mortgage. Lala Dilawar Sahai v. Deuan Bolaklram ILR 11 Col. 258 is to the same effect; and it was there held that where the owner of

certain property mortgages it to A and afterwards sells a portion of the mortgaged property to B, it is not incumbent on A. in suing to enforce his

mortgage to proceed first against that portion of the mortgaged property which has not been sold by the mortgagor. Roghu Nath Pershad v. Harlal

Sadhu ILR Cal. 380 proceeds on the same principle, and the contention of the purchasers of the equity of redemption from the mortgagors that the

debt should be apportioned upon the portions held by each of them, was disallowed, it being pointed out that the mortgagee was entitled to realise

the whole debt upon the whole property, the right to contribution being only as between the defendants Bhikari Das v. Duhp Singh ILR All. 434 is

a similar decision. Dr. Rash Behari Ghose apparently considers that Lala Dilwar Sahai v. Dewan Bolakiram ILR Cal. 258 and Rama Raju v.

Subbarayudu ILR Mad. 387 and the cases following them go too far. We should be disposed not to rely on the authority of the said decisions

when the mortgagee refrains from proceeding against the portion of the mortgaged property which the mortgagor has not parted with, and when he

seeks to realise the entire debt from those portions only of the mortgaged property which have been conveyed by the mortgagor, subsequent to the

mortgage to a purchaser without any contract affecting the purchaser''s right to have the charge satisfied out of the portion retained by the

mortgagor, in other words where the mortgagor conveys not merely the equity of redemption but the property itself free from any liability to

contribute to the mortgage debt. That, in such a case, the purchaser may insist upon the mortgagee proceeding in the first instance against the

mortgaged property which is in the mortgagor''s hands would seem to be consonant alike with sound principle and the weight of authority (Ghose

on ''Mortgage,'' 3rd edition, p. 436). The present, of course, is altogether a different case : not only are the appellants not purchasers of the

property free from the mortgage, but the one-third not proceeded against does not belong to and is not in the hands of the mortgagor, but is the

property of a third party who is sought to be affected by a transaction entered into, so far at he is concerned, by another, purporting to act under

the power incident to the position of the mortgagor of a joint family under the Hindu Law. The doctrine of marshalling on the principle of which the

appellant''s contention virtually rests is not applicable to such a case. Even in the eases to which that doctrine in all its strictness is applicable Dr.

Ghose points out ""but there can be no doubt that, as a rule, marshalling cannot be enforced against the prior mortgagee where there is any doubt of

the sufficiency of the fund upon which the junior creditor has no claim or where the prior creditor is not willing to run the risk of obtaining

satisfaction out of that fund, or where that fund is of a dubious character or is one which may involve him in litigation to realise, Jones Section

1628"" (Ghose on ''Mortgage'' at p. 874).

Even if the facts of the present case were such as otherwise to admit of the application of the doctrine of marshalling, the existence of the dispute

as to the liability of the nephew''s share would take the case out of it. Flint v. Howard (1893) 2 Ch. D. 54 on which Mr. Krishnasami Aiyar laid

stress has no real bearing upon the present question. The decision was with reference to the special terms of the contract between the parties. In

Ram Dhun Dhur v. Mohesh Chunder Chowdhry ILR Cal. 406, no doubt, the mortgagee was compelled to resort in the first instance to properties

not parted with by the mortgagor. There, however, the question was in execution of a decree and it was quite competent to the Court to exercise

the control, which it did so as to bring the different items of property comprised in the decree to sale in a particular order with a view properly to

adjust the equities possessed by the parties who were before it and who were all the parties interested in the different items constituting the

security. It was urged by Mr. Krishnaswami Aiyar that the frame of the present suit was in contravention of the rule in Section 85 of the Transfer of

Property Act and that with reference to that section, the Subordinate Judge should have ordered the plaintiff''s nephew entitled to the third share

not comprised in the suit to be made a party, and allowed the appellants to raise the issue as to whether the mortgage was not binding upon that

one-third share also, and, in the event of the finding being in their favour, given directions in the decree which would have the effect of distributing

the mortgage debt proportionately. The literal construction of Section 85 pressed by Mr. Krishnaswami Aiyar cannot but lead to startling results.

Suppose, for instance, some part of the property comprised in a mortgage is made the subject of litigation between, on the one hand, a party

denying the mortgagor''s title thereto and on the other the mortgagor and the mortgagee and the mortgagor''s title is finally negatived, it would be

necessary to make such third person a party to the suit brought by the mortgagee against the mortgagor, if the words of Section 85 are to be taken

literally, inasmuch as the previous adjudication would not under the property adjudicated upon any the less ""property comprised in the mortgage,

Section 85, as has been pointed out more than once but reproduces a rule as to parties which had of course been even previous to the Transfer of

Property Act held applicable to mortgage suite, viz., that all persons interested in the actual subject of the suit should be before the Court in order

that as far as possible as between them complete justice might be done. That rule was never understood as authorizing the Court to complicate a

suit by a mortgagee by introducing into it controversy in which the mortgagee upon the frame of his plaint in itself unobjectionable, is really

uninterested. Now the consequence of allowing Mr. Krishnaswami Aiyar''s contention under consideration would, at least, be to oblige the plaintiff

to await the result of this controversy in all its stages between the appellants on the one hand and the nephew interested in the one-third on the

other for the realization of his debt from so much of the property as is unquestionably liable for it and against which alone he wishes to proceed and

as shown above is entitled to proceed. In these circumstances to make the recovery of the plaintiff''s debt to any extent dependent upon the

settlement of the dispute between the appellants and the nephew would be to give the mortgagee''s suit a turn to which he has a right to object.

It remains only to observe that, if the action of the mortgagee had had the effect of extinguishing the mortgage lien upon any portion of the

mortgaged property so as to relieve it from the liability to bear its proportion of the debt, he cannot recover more than what the property he

proceeds against would be rateably liable for. Such is not the case, for the omissions of the plaintiff to include the nephew''s share did not affect the

liability thereof to bear its proportion of the debt. In the event of the appellants being obliged to pay the whole debt and being able to show that the

nephew''s share was also liable, they would be entitled to contribution from him notwithstanding the non-inclusion of his third share in the present

suit Jagat Narain v. Qutub Husain I.L.R.2 All. 807 and Chayandas v. Gansing ILR 20 Bom. 615. And, so long as the equities in the matter of

contribution as between these parties are thus unaffected by the act of the plaintiff, the latter''s right to be paid the whole of his debt from whatever

portion of the mortgaged properties he wishes to comprise in his suit cannot be questioned.

The decision of the Subordinate Judge is therefore right and the appeal is dismissed with costs.