Rameshwar Rai and Others vs Harakh Lal Sahu and Others

Varma, J.—The plaintiffs are appellants in this case. They filed a suit for declaration that the four annas share in the rnukarrari interest in Phariatta Dih has not been affected by the mortgage decree which the defendants 1st party had obtained against the defendants 2nd party in mortgage Suit No. 22 of 1931. The mortgage bond was executed on 19th September 1919 by Chumu Lal Rai and Suba Lal Rai (defendants 2nd party) for Rupees 15,000. In order to understand the matter in dispute between the parties it is necessary to give the following genealogical table:

KEHAR RAI | ____________________________________________ | | | | Ghanshyam Ram Darsan Ranjit Rai Rai Rai Rai | | | __________________________ | | | | Chamu Lal Rai Suba Lal Rai | | ______________________________________ | | | Meghu Lal Rai Anand Rai Kirpal Rai

The plaintiffs are the descendants of Meghu Lal Rai and the defendants 2nd party are the members of the branch of the family of Ram Rai. It is not necessary to give the names of the descendants of Darsan Rai and Banjit Rai. In 1911, a suit for partition had been instituted by Ghanshyam Rai and others. One of the properties involved in it was 16 annas rnukarrari interest in mauza Phariatta Dih. The suit was disposed of by a compromise decree dated 5th February 1921 by which it was declared that each of the branches will have four" annas share in each and every joint property except one. That one is not the subject-matter of dispute in the present case. Therefore, it is clear that this mortgage deed was executed during the pendency of the partition suit. In the mortgage suit the plaint shows that Hargauri Rai, son of Meghu Lal Rai, and his sons were made parties. After giving the facts about the mortgage, the plaintiffs made the following statement in the plaint:

5....All the defendants 1st party are members of a joint family and they have all been benefited by the amount of loan aforesaid and have got the right to redeem the rehan. Hence all the defendants 1st party have been impleaded as party to the suit.

The plaintiffs have come to know on enquiry that after the execution of the bond in suit the defendants 1st party quite fraudulently and simply with a view to cause harm to the plaintiffs, have given away out of the mortgaged properties mentioned in the bond in suit, 4 annas share in village Phariata, original with dependencies appertaining to taluqa Kiajori pargana Chakai, tauzi No. 323 to their relations, the defendants second party by virtue of a compromise petition filed in suit No. 188 of 1911, Babu Deepohand Rai and others, plaintiffs versus Babu Chethru Lal Rai and others, defendants, of the Court of the Subordinate Judge of Bhagalpur. The plaintiffs are not bound thereby in law and are to get the said share also sold by auction in case of non-satisfaction of the amount of mortgage debt. But with a view to avoid future, contention they too are impleaded as party to the suit.

* * * * *

11. The plaintiffs in view of the above circumstances seek decree as follows:

(i) An account of the amount payable to the plaintiffs under the bond in suit may be prepared '' by the Court and in accordance with the aforesaid account the Court may be pleased to pass a mortgage decree for Rs. 33,634-15-9, the principal amount with interest or for the amount, which may be found due on account, besides costs in Court, interest pendente lite and future interest up to the date of realisation in favour of the plaintiffs by keeping alive the mortgage lien and with orders to get the mortgaged properties sold by auction.

(ii) The Court may be pleased to allow a reasonable time to the defendants for making payment of the decretal amount and this order may be incorporated in the decree that in case the defendants do not pay the entire decretal amount within the time allowed by the Court then the right of redemption of rehan may be extinguished and the decretal amount may be realised by putting the mortgaged properties to sale.

(iii) Such other reliefs as the circumstances of the case require, may be awarded to the plaintiffs.

The present plaintiffs who were the defendants in the mortgage suit did not put in appearance and they allege that they were not served with summonses or notices in the mortgage suit in question and that their four annas share cannot be sold in execution of the mortgage decree obtained by the defendants 1st party.

The Court below has found that the plaintiffs were the descendants of Ghanshyam Rai who had a four annas share in Phariatia Dih, that the share of the plaintiffs was only one-third in four annas and that they were in possession of the property, and therefore the suit was maintainable only with regard to one-third share out of four annas in the property in dispute ; but it held that as the '' present plaintiffs were parties to the mortgage suit their suit is barred by res judicata.

Mr. Section M. Mullick, appearing on behalf of the plaintiffs-appellants, urges that on looking at the plaint and the judgment in the mortgage suit, it is clear that the paramount title of the present plaintiffs was not effectively brought into controversy and was not decided in that suit. The judgment has been produced before us and, looking at it, it is clear that a mortgage decree was passed but there was no adjudication of the title of the present plaintiffs�indeed no issue was framed about the title of the present plaintiffs.

Mr. Section N. Bose, appearing on behalf of the defendants-respondents, has urged that when the present plaintiffs were made defendants in the previous mortgage suit they were bound by the decree therein. He has cited a number of cases before us.

The first case cited is Sri Gopal v. Pirthi Singh (02)1902 24 All. 429 which was decided in 1902. There it was held that an earlier mortgagee who in a redemption suit by a later mortgagee fails to set up one of his incumbrances as a charge to be redeemed is barred by Section 13, Civil P.C., from bringing a fresh suit to enforce the same. So also, when sued by a mortgagee, intermediate between two of his incumbrances, if he fails to insist on the right to redeem given him in his turn by his later mortgage, he cannot thereafter sue for that purpose. In Radha Kishun v. Khurshed Hossein AIR 1920 P.C. 81 which was decided in 1919 the head-note shows that the respondents were second mortgagees of certain villages under a mortgage of April 1894, and the appellant was the assignee of the original mortgagee of the same property under a mortgage of May 1892. The respondents brought a suit to enforce their mortgage to which they made the assignor of the appellant a party but did not attack or impugn the validity or priority of his mortgage, and he did not appear to defend it. In a suit by the appellant in 1907 to enforce his mortgage against the second mortgagees, they contended that the mortgage deed of 1892 might and ought to have been made a ground of defence in the former suit, and by the omission to do so the present suit was barred as res judicata. In this suit the appellant''s mortgage was admittedly valid. There it was held by their Lordships of the Judicial Committee that under these circumstances the case came within the terms of Section 96, T.P. Act, that the property could not be sold as therein provided with the consent of the prior mortgagee who had a paramount claim outside the controversy of the suit unless his mortgage was impugned; and, therefore, to sustain the plea of res judicata it was incumbent on the respondent to show that they sought in the former suit to displace the title of the prior mortgagee, and postpone it to their own, and that had not been done, and that the respondents, therefore, had failed to establish the conditions essential to their plea.

I shall now deal with the Calcutta decisions referred to by Mr. S.N. Bose. In Gopal Lal v. Benarasi Prasad (''04) 31 Cal. 428 which was decided in 1904 it was held that if a prior mortgagee is made a party to a suit brought by a subsequent mortgagee on a mortgage bond of certain property, but omits to enter appearance and set up his prior right and claim that he should be paid off or that the property should be sold subject to his mortgage, his mortgage lien must be deemed to be extinguished and that a suit subsequently brought by him or his heirs on his mortgage is barred by Expl. II of Section 13, Civil P.C. InJaggeswar Dutt v. Bhuban Mohan Mitra (''06) 33 Cal. 425 decided in 1906 it was held that in a suit to enforce a mortgage, persons claiming under a title adverse to that of both the mortgagor and the mortgagee are not proper parties. In that case it was observed that the ordinary rule is that a plaintiff mortgagee cannot be allowed so to frame his suit as to draw into controversy the title of a third party, who is in no way connected with the mortgage and who had not set up a title paramount to that of the mortgagor and mortgagee. But it was further observed that where in a mortgage suit a question of paramount title raised by a defendant is tried without objection, neither party can ask for a reversal on the ground that the issue was not properly triablein the action. In Kedar Nath Ojha Vs. Kshiroda Dassya, decided in 1933, in a suit to enforce a mortgage executed by three persons, their mother was made a party defendant as holding a lease under the mortgagors. A specific issue was raised at the instance of another defendant that the three mortgagors had another brother who had not joined in the mortgage and who had died leaving his mother as his heir. That issue was answered in the negative. The mother did not take any plea in defence that her right as the heir of her alleged fourth son could not be affected by the mortgage. There was a mortgage decree and the mortgaged properties were purchased by the decree-holder mortgagee. When the mortgagee purchaser went to take possession, the mother of the mortgagors made an application under Order 21, Rule 100, that her right to the one-fourth share of her alleged fourth son which she had inherited was not affected by the mortgage sale and, therefore, she could not be dispossessed of the same. In that case it was held that this matter ought to have been made a ground of attack in the suit itself and this plea not having been taken could not be raised subsequently. It may be noted that in this case there was a specific issue raised where it was held that it was not satisfactorily proved that Hriday left four sons on his death, and that the evidence given for the defence was contradictory on this point and no reliance could be placed on it.

Now we come to the decisions of the Allahabad High Court: Gajadhar Teli v. Bhagwanta (''12) 34 All. 599, decided in 1912, was a case in which certain puisne mortgagees brought a suit for sale on their mortgage in which, although ( they impleaded the prior mortgagees, they simply asked for the sale of the property mortgaged, neither claiming to have their mortgage redeemed nor asking for sale subject to the prior mortgage. The prior mortgagees on their part did not set up their rights under the prior mortgage. There it was held that Section 11, Civil P.C., was a bar to the prior mortgagees afterwards suing for sale on their mortgage. Bisheshar Dayal Vs. Mt. Jafri Begam and Another, , which was decided in 1936, was a case where in a previous mortgage suit the wife of the mortgagor, who was impleaded as one of the defendants in that suit, did not appear nor contested and after the decree was passed had not appealed. She subsequently brought a suit challenging the decree and raised the point that the Court which decreed the former suit had no jurisdiction. There it was held that the objection as to jurisdiction must be deemed to have been raised and decided in the previous suit, as, had she appeared and taken objection, the Court would have decided it, and that therefore applying the principle underlying Section 11, Civil P.C., and on grounds of equity, justice and expendiency, she was estopped from maintaining that the Court in the previous suit had no jurisdiction to decide the suit and, therefore, the subsequent suit was barred. Where the person who was impleaded as a defendant in the suit did not appear or take any objection to his being impleaded as such, it was held that the person had waived his objection thereto and, therefore, could not subsequently raise the plea that he was improperly impleaded. Their Lordships, however, observed that there was nothing in the CPC forbidding a mortgagee from impleading a person who claimed a paramount title to the mortgaged property. But it appears from the judgment that the suit was disposed of by the judgment of the learned Munsif in the following terms: "The plaintiff and the contesting defendant 3 have compromised against the other defendants; the claim is proved ex parte." So it appears that the question was decided in that case.

Reliance was also placed on the fact that the present appellants did not file any written statement, in the previous suit and that in spite of that they were bound by the decision in that suit. Reference has been made to the case in Shriram surajmal v. Shriram Jhunjhunwalla AIR 1936 Bom. 285 which was decided, in 1936. In that case his Lordship the Chief Justice of the Bombay High Court, referring to the case in J.B. Ross & Co. v. C.R. Scriven AIR 1917 Cal. 269 , said that Order 8, Rule 5 provides that every allegation in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted, except as against a person under disability.... If there is no pleading of the defendant, it is obvious that it can contain no denial or non-admission." The rule, it was observed, was similar to the rules of the Supreme Court in England Order 19, Rule 13. There is a proviso to Order 8, Rule 5, which is not to be found in the English rule, and that proviso enables the Court in its discretion to require any fact so admitted to be proved otherwise than by such admission. But the case reported in J.B. Ross & Co. v. C.R. Seriven AIR 1917 Cal. 269, was decided by a Special Bench consisting of the then Chief Justice, Woodroffe J. and Mookerjee J. There it was held that Order 8, Rule 5, did not apply to a case where the defendant had not put in a written statement. But in our High Court it has been held repeatedly that when there is a difference of opinion between the Calcutta High Court and any other High Court of India, the Calcutta decision should ordinarily be followed by this Court. Moreover, the principle has been accepted by a Division Bench of this High Court in Gobind Gorhi and Others Vs. Baldeo Ram and Others, where the purpose of Order 8, Rule 5 has been explained. The argument in that case was that the non-filing of a written statement should be held to amount to an admission, and the defendant should not be allowed to take any defence which would traverse the statements in the plaint. James J. delivering the judgment of the Court held that "the purpose of the rule is clearly that a defendant when he does make a written defence shall be compelled to make his defence specific. The rule does not apply to a case where the defendant has not put in a written statement, as was pointed out by Sir Lancelot Sanderson in J.B. Ross & Co. v. C.R. Seriven AIR 1917 Cal. 269 .

The following Patna decisions may now be referred. In Koi Sahu Vs. Atul Krishna Ghose and Others, decided in 1929, it was held that "Where, in a mortgage suit by a puisne mortgagee, a purchaser of the equity of redemption who also claimed to be the holder of a paramount interest, was impleaded as a defendant without his prior interest having been mentioned, where such person has not submitted his claim as holder of the paramount interest to the Court, the existence or validity of the prior interest will not be deemed to have been submitted to the decision of the Court, nor, having regard to the nature of a mortgage suit, can it be said that it "might and ought to have been made a ground of defence or attack" within the meaning of Expl. 4 of Section 11, Civil P.C., 1908, and therefore, the decision in the mortgage suit does not operate as res judicata in a subsequent suit brought on the basis of that prior interest.

In Sadhu Behera Vs. Dibakar Tarai and Others, , which was decided in 1929, it was held:

(1) As a general rule, a paramount title cannot be drawn in controversy in a mortgage action.

(2) But if a defendant in a mortgage suit sets up a paramount title and without objection goes to trial upon that issue neither party can afterwards say that the issue was irrelevant.

(3) Where a plaintiff in a mortgage action alleges a distinct case in his plaint in derogation of the priority which may be claimed by the defendant and seeks in his suit to displace that prior title and postpone it to his own, it is incumbent upon the defendant to establish his priority; and if he fails to do so, he will not be allowed to raise that question in a subsequent suit of his own.

(4) There is no rule of law that a defendant being a subsequent incumbrancer or the purchaser of the equity of redemption is bound to set up as a defence that he has also a paramount title. If in such a suit he does not invite the Court to decide the question of his priority, he will not be precluded from raising 9 the question of his priority in a suit of his own.

In coming to these conclusions reliance was placed upon Radha Kishun v. Khurshed Hossein (''20) 7 AIR 1920 P.C. 81 and several other cases. In reply to an argument advanced in that Sadhu Behera Vs. Dibakar Tarai and Others, , that a distinction should be drawn between a prior mortgagee and a prior purchaser, reference was made to the decision in Radha Kunwar v. Reoti Singh AIR 1916 P.C. 18 , where the plaintiffs had made parties to the suit not merely the people who claimed under the mortgagors but also certain people who had set up adverse claims to the mortgaged property, among whom the appellant was one. Under those conditions the Lord Chancellor observed: "Their Lordships think that this joinder of these parties was irregular and that it could only tend to confusion." Referring to this decision in Sadhu Behera Vs. Dibakar Tarai and Others, D as j, observed that he read the decision as clearly laying down that the prior purchaser was not bound in law to set up his title in a mortgage action.

The result of all the decisions seems to be that in a mortgage suit paramount title cannot ordinarily be drawn into controversy without the consent of the parties. But if there is any allegation in the plaint, derogatory to the title of the prior mortgagee, and if the prior mortgagee consents to have that title decided then he will be bound by the decision in that suit. But, if the paramount title is in conflict with the title of the mortgagor as well as the mortgagee, that is a matter which should not ordinarily be decided in a mortgage suit. In the present case although the present plaintiffs were a party to the previous suit their interest was adverse to that of both the mortgagor and the mortgagee and they should not have been made a party to that suit. Moreover, upon the facts mentioned in the plaint in the previous suit and the relief sought, it does not appear that any relief was sought against the plaintiffs. The judgment does not show that any issue was raised on this point nor does it contain any decision on this point. Under these circumstances I would hesitate to extend the theory of constructive res judicata against the plaintiffs.

In this view of the case, I would allow the appeal, modify the decree of the Court below and hold that the plaintiffs were not bound by the previous mortgage decree to the extent of their share which amounts to one-third of four annas share. The appellants are entitled to proportionate costs.

Manohar Lall, J.

I agree. It is now well settled that as a general rule paramount title cannot be drawn into controversy in a mortgage action, but the parties may without objection or on agreement come to trial upon that issue. Such a procedure leads to confusion and is irregular but does not affect the jurisdiction of the Court to pass a decree upon the issues which have thus been allowed to be raised in that suit. Some of the decisions which deal with this question appear to be contradictory, but if this principle is kept in view the decisions are quite easy to understand. In each case the Court must examine the previous decision and find out whether in the previous suit the question of paramount title has been raised and has been decided. It must also be remembered that the question of priority of mortgages is a necessary issue in mortgage actions. For instance, where a subsequent encumbrancer claims priority on the doctrine of suborgation he must raise that issue; on the other hand, where a person impleaded sets up a title adverse to the mortgagor, that question is obviously beyond the scope of the mortgage action, and unless that question is distinctly raised in the issue and decided, the decision in the suit cannot operate as res judicata. It must also be observed that the decision in a suit irregularly constituted is still a decision of a Court with jurisdiction and if the Court has pronounced its decision and passed a decree against the party in the suit he must have the decree set aside by regular proceedings by way of appeal or otherwise.

Applying these principles to the present case all that I find is that the plaintiff in the former I suit made an allegation in the plaint that the partition decree founded upon the compromise between the cosharers was fraudulent. This allegation was never sought to be established and remained nothing more than an allegation, that is to say, the plaintiff in the former suit did not raise this question as an issue in the suit and having given no evidence on the point (the onus being on the plaintiff) the Court never decided this question, the judgment is entirely silent upon this point. The defendant in that suit did not appear and therefore he did not agree to have this question of his paramount title tried by that Court, nor did that Court profess to try it. These facts distinguish the case so strongly relied upon by the learned advocate for the appellants namely Bisheshar Dayal Vs. Mt. Jafri Begam and Another, . In that case the quotation given in the report from the judgment in the mortgage suit shows that the Court while accepting the compromise petition on behalf of some of the defendants did decide the question although ex parte otherwise I would have felt great hesitation in accepting the correctness of that decision.