Periaswami Chettiar and Another vs S.A. Ramaswami Goundan

Wadsworth, J.—This petition arises out of an application u/s 19 of Madras Act IV of 1938 to scale down a mort gage decree.

The applicant (respondent here) was an assignee from the fourth defendant who was a third mortgagee. The petitioners before us represent the

plaintiffs who were the first mortgageae. The mortgagor was the first defendant. The plaintiffs got a decree in 1935 which they executed and

realised the full amount by the sale of the hypotheca. Plaintiffs also filed an appeal claiming an additional sum by way of interest and on 17th

March, 1938, the appellate Court gave a decree for this additional sum. The plaintiffs then applied for payment of the amount of this decree out of

the balance in Court deposit, and it was this application which gave rise to the application by the representative of the fourth defendant who had

been brought on record in execution to scale down the decree.

In revision a number of points have been taken. The first was whether the applicant by virtue of his mortgage can be said to have a saleable

interest in agricultural land which would qualify him for the benefits of the Act having regard to the definition in Section 3(ii). This point is covered

by our decision in Subburamier Vs. Venkatachalapathi Aiyar and Others, , in which we have held that a simple mortgagee has such a saleable

interest as to qualify him for the benefits of the Act.

The second point taken relates to the power of the trial Court u/s 19 to scale down a decree passed by the appellate Court. This question is

covered by the decision of a Bench of this Court in Rentala Ganga Raju Vs. Bikkina Bulli Ramayya and Others, , with which we are in respectful

agreement.

A more substantial question is whether a puisne mortgagee impleaded in a suit by the earlier mortgagee can be deemed to be a ''debtor'' entitled

to the benefits of the Act; that is to say, is he a person who is liable to pay the amount of the debt due to the first mortgagee. There is a decision of

Newsam, J., in S. Narayanachari Vs. T.V.A.K.T. Annamalai Chettiar, , to the effect that a puisne mortgagee is not a debtor of the first mortgagee

decree-holder, the reason being that he is a person in whose favour the privilege of redeeming the first mortgage debt has been recognised but not

one who is under an obligation to pay. This judgment, which is very short, makes no reference to the earlier case, Perianna Goundan Vs. Sellappa

Goundan and Others, , in which the Bench had to consider the position of the purchaser of the equity of redemption impleaded in a mortgage suit

and they held that the purchaser had such a liability as would fall within the definition of ''debt'' u/s 3(iii) of the Act and that certainly it was not the

intention of the Legislature to limit the relief tinder the Act to cases where a judgment-debtor was personally liable. An attempt has been made to

distinguish this decision on the ground that it emphasized the possessory interest which the purchaser had to protect by discharging the mortgage-

debt, whereas in the case of the puisne mortgagee, it is possible for the latter to await the result of the sale and collect his dues from the proceeds

thereof, if sufficient balance remains. We are unable to accept this distinction as valid. Under the mortgage decree, the debt is made payable by the

judgment-debtor who is a puisne mortgagee. It is true that he need not pay it, if he is prepared to risk the loss of his interest in the hypotheca or if

he is confident that the sale will produce sufficient to satisfy his mortgage as well as that of the first mortgagee. Surely the purchaser of the equity of

redemption impleaded in a mortgage suit is in a very similar position. He need hot pay the debt if he is prepared to risk the loss of his property, or

if he is confident that the sale will realise sufficient to pay him a fair compensation for the money he has spent in acquiring the equity of redemption.

In each case, there is in fact a liability to pay the debt of the first mortgagee. It is not a personal liability, but it is nonetheless a liability. The fact that

a puisne mortgagee is a person under a liability to pay the debt of the first mortgagee has been recognised in other decisions apart from those under

this Act - vide Askaram Sowkar v. Venkataswami Naidu (1920) 40 M.L.J. 218 : ILR 44 Mad. 544 and Thinnappa Chettiar v. Krishna Rao

(1939) 51 L.W. 453 . We have no doubt that the principle governing the decision in Perianna Goundan Vs. Sellappa Goundan and Others, , must

also govern the decision of the present case and we must hold that the puisne mortgagee against whom a decree has been passed in a suit by the

first mortgagee is a person liable to pay the debt of the plaintiff.

In the result therefore the petition is dismissed with costs of the contesting respondent.