Nagammal and Others vs Venkatagiri Aiyar

The respondent, plaintiff in the suit, is the holder of a simple mortgage, dated the 4th June 1888. The appellants have become possessed of the

property comprised in this mortgage by purchase from the vendee who bought at the auction-sale in execution of the mortgage-decree made in O.

S. No. 236 of 1890. This latter mortgage was executed in 1887.

The price settled at the auction-sale in 1892, viz., Rs. 600, was not sufficient to pay off the amount due under the mortgage-decree. The

valuation of the property by the District Munsif made since certain improvements had been effected by the appellants leaves a margin beyond the

amount required to satisfy the mortgage-decree. The appellants claim that in the decision of any question between themselves and the respondent

credit should be given them for the amount spent on these improvements, and it is convenient to dispose of this question first, for if it were decided

in the appellant''s favour, the suit ought to be dismissed as it practically was by the District Munsif. Except upon the supposition that there is a

margin of value beyond the amount of the first incumbrance, it is plain that the second incumbrancer can so far as the mortgaged property is

concerned have no remedy. I am, however, of opinion that the Sub-judge was right in holding that the appellants are not entitled to credit for

money spent on improvements. As purchasers of the property the appellants cannot be in a better position than the mortgagor, and he clearly could

not have charged for improvements. As mortgagee in possession the appellants have not proved that the nature of the improvements was such as

to justify them in charging the cost against the mortgagor or those who derive their title from him. It must be taken, therefore, that the property as it

now stands would realise a sufficient sum to allow for payment in part of the respondent''s claim after the claim in the first mortgage is satisfied. In

other words, after both mortgagees are paid off, there will probably be nothing left for the appellant in whom the equity of redemption is vested.

In cases such as the present where a second incumbrancer has not been made party to a prior suit and is, therefore, not bound by the decree

passed therein, it appears to me that while the purchaser in execution of that decree must be treated as if he had bought privately the interests of

the mortgagor in the first mortgagee, a decree should be made in the form in which it would have been made if the second incumbrancer and the

purchaser had both been parties to the original suit. The position of the second incumbrancer should not be worse than it would have been if there

had been no previous suit. Therefore, it is open to them to question the account taken between the first mortgagee and the mortgagor and he is not

concluded as to the value of the property by the sale which has followed upon the decree. On the other hand, he is not to be in a better position,

and therefore, before he can enforce his mortgage right against the property, he must still pay off the amount secured by the first mortgage, whether

or not, that amount exceeds the purchase-money. That would clearly be so where the mortgagor himself is clearly the purchaser, and I think it

cannot be otherwise when the property is as here purchased by a stranger. The purchaser is supposed to take the interests in the property which

the mortgagor and the mortgagee together could convey, and therefore, although money may still remain due to the mortgagee, no interest in the

property is retained by him. (Dip Narain Singh v. Hira Singh I. L.R. 19 A. 532. Accordingly, the decree should be so framed as to give the

respondent the usual six months for paying the appellants the amount secured by the appellants'' mortgage together with interest at 6 per cent,

thereon from the date of the decree in the suit of 1890, and should direct that, on such payment being made the property should be sold and the

sum due to the respondents'' mortgage with interest and costs paid out of the proceeds, and the surplus, if any, paid to the appellants. In the other

event, i.e., on default of payment by the respondent his suit should stand dismissed with all costs.

Moore, J.

I concur