M.A.C. Arunachala Mudaliar and Another vs M.V. Jagannatha Mudaliar and Others

Chandrasekhara Aiyar, J.—There was a first mortgage by defendants 1 and 2 to defendants 3 and 4 on the 21st June, 1930. There was a

second mortgage on the 24th September, 1930, by them in favour of the plaintiffs. Finally, there was a sale deed in favour of defendants 3 and 4

for Rs. 11,275-14-9 of the mortgaged properties. The deeds are Ex D-1, P-1 and D-2 respectively. In a suit upon the second mortgage, Ex. P-1,

the lower Courts have held that defendants 3 and 4 are accountable for the profits on the mortgaged properties from the date of the sale in their

favour, viz., the 17th May, 1934. This decision is challenged in this second appeal preferred by defendants 3 and 4 who say that they occupied

two capacities, viz., a capacity as prior mortgagees under Ex. D-1 and a capacity as purchasers of the equity of redemption under Ex. D-2 and

that the two capacities should be kept distinct so far as the puisne mortgagees are concerned who have to redeem their mortgage Ex. D-1, by

payment of the principal and interest without any liability on their part to account for the rents and profits which they have enjoyed since the date of

their purchase under Ex. D-2. So far as our Court is concerned, this question is concluded by the authority of some Bench rulings and there is no

purpose served by reopening the question and urging on the strength of stray observations in earlier cases that if the mortgagee has been in

possession in his capacity as purchaser from the mortgagor, he is not under a liability to account. The decisions against the appellants are reported

in Natesa Chettiar v. Ramalinga Chettiar (1937) M.W.N. 700 and Ramachandra Rao v. Byragi (1937) M.W.N. 910. The former decision is by a

Bench consisting of Madhavan Nair and Stodart, JJ., and the latter is by Varadachariar, J. Observations in support of the same position are found

in Bappu alias M.P. Kader Batcha Sahib Vs. Dhurvas M. Venkatachalapathi Ayyar, Lakshmana Ayyar and Sons and Others, and Ramachandra

Naidu v. Pavalayammal (1934) 68 M.L.J. 717 both of them again Bench decisions. The only case that can be said to be in favour of the appellant

is the judgment of a single Judge, Ananthakrishna Aiyar, J., in Pichaikonar v. Narasimha Rama Iyer (1929) 58 M.L.J. 343.

A distinction was sought to be made out between a case where the property is purchased in Court aution under a defective decree in a suit in

which the puisne mortgagee is not impleaded as a party and who is therefore not bound and a case where the property is purchased under a

private sale from the mortgagors themselves. That there is no room for any such distinction is pointed out in Muthammal v. Raju Pillai I.L.R.(1917)

Mad 513

This is not a case where it could be said that the appellants paid any price for the equity of redemption. The amount for which the properties

were sold is the amount due under the first mortgage for principal and interest. The release of two items of the properties is of no consequence

because both the Courts have found on the evidence in the case that the inclusion of those items in the mortgage in favour of the appellants was due

to a mistake and that the sale deed did not comprise properties lesser in number than those covered by the mortgage. In Natesa Chettiar v.

Ramalinga Chettiar (1937) M.W.N. 700 which was no doubt a case on foot of a decree obtained on the first mortgage without impleading the

puisne mortgagee, it was held that the profits that the prior mortgagee-purchaser makes out of the land are deemed to be the property of the

mortgagor in his hands and liable to be credited in reduction of the prior mortgage and that the fact that the price paid by him is more than the

amount due on the mortgage sued on does not take away his liability to account. The rulings referred to by me are binding against me and the

second appeal must therefore be dismissed with costs. (No leave).