R.M. Chinniah vs N.P.P.S. Nataraja Nadar Firm and Others

Gokulakrishnan, J.—The third Defendant is the Appellant before this Court. The Plaintiff, who is the first Respondent hereto, fifed the suit,

Original Suit No. 307 of 1969 in the Sub-Court, Madurai, praying for passing a preliminary mortgage decree for sale of the properties set out in

Schedules A, B and C and Schedule II to the plaint, directing the Defendants to pay a sum of Rs. 54,620.80 with subsequent interest and costs

within a time to be fixed by the Court and for proceeding against the compensation amount in respect of 15 cents in items II (i) and III in Schedule

C to the plaint.

The plaint allegations were as follows:--In or about 1964, accounts were looked into and it was found that Defendants 1 and 2 were liable to

pay a sum of Rs. 91,000 to the Plaintiff. Since the Plaintiff pressed for the payment of the said amount, Defendants 1 and 2 executed a registered

deed of mortgage on 1st June, 1964 in respect of the properties detailed in Schedules A, B and C to the plaint in favour of the Plaintiff for due re-

payment of Rs. 50,000 with interest at 3 per cent per annum. At the time of the mortgage, Defendants 1 and 2 assured the Plaintiff that there was

an earlier mortgage over the hypotheca, dated 4th October, 1962 only for a sum of. Rs. 33,000 in favour of one Vr. S.Rm. Ramasamy Chettiar.

Later on, it transpired that the said Ramasamy Chettiar filed a suit against Defendants 1 and 2 alleging that the mortgage was for Rs. 55,000 and

that Defendants 1 and 2 suffered a mortgage decree in Original Suit No. 212 of 1965, on the file of the Sub-Court, Madurai for the amount sued

for. The Plaintiff was ignorant of such a decree and he ignored the Same, On 6th October, 1966, the Plaintiff issued a registered lawyer''s notice

calling upon Defendants 1 and 2 to re-pay the said mortgage amount. To that Defendants 1 and 2 lent a reply through their lawyer on 27th

October, 1965 raising false and frivolous contentions.

It has been further averred in the plaint that Defendants 1 and 2 sold the property shown as C schedule (Item 1) to the Plaintiff with a direction

to pay a sum of Rs. 3,250 with Plaintiff''s consent. As directed, in the sale deed, dated 5th October, 1956, a sum of Rs. 3,250 has been

appropriated for interest for 26 months. Item 1 of the C schedule is, therefore no longer available for the Plaintiff. Item 2 of the C Schedule is 21

cents in extent. Fifteen cents out of this area has been acquired under the Land Acquisition Act and proceedings were pending at the time of the

suit in that connection some compensation has been awarded and Defendants 1 and 2 are reported to have asked for enhanced compensation.

The Plaintiff has to obtain the compensation amount from the Land Acquisition Officer. The remaining extent of 6 cents in item 2 of the C schedule

is alone available for being proceeded against by the Plaintiff and that has been described as C schedule item II (2) to the plaint.

With the above said allegation, the Plaintiff submitted that, he was obliged to file the suit for sale of Schedules A, B and C and Schedule II(2) to

the plaint and to proceed against the compensation money for 15 cents acquired in item II (I) and III of C schedule. He has valued the suit for

purposes of court-fee and jurisdiction at Rs. 54,620-80.

Defendants 1 and 2 remained ex-parte. The third Defendant filed a written statement. He denied the alleged borrowing by Defendants land 2

from the Plaintiff and also denied knowledge of the debt due to the Plaintiff by Defendants 1 and 2 in a sum of Rs. 91,000 on that account in 1964

itself. He also denied knowledge of the alleged mortgage deed dated 1st June, 1964 for Rs. 50,000 and pleaded that the Plaintiff must strictly

prove the truth, validity and binding nature of the mortgage deed and also as to whether the hypothecation bond is supported by consideration.

According to the third Defendant, Defendants 1 and 2 borrowed a sum of Rs. 55,000 from one Vr. S.Rm. Ramasamy Chettiar on 4th October,

1962 for the purpose of their cinema business and they executed a promissory note therefore in his favour for the said amount agreeing to pay

interest thereon at 1 percent per annum. Defendants 1 and 2 also deposited their title deeds relating to the Plaintiff A and B Schedule properties as

collateral security therefore and, thereby created an equitable mortgage for the said debt. Subsequent to that also, Defendants 1 and 2 borrowed a

further sum of Rs. 22,000 from the said Ramasamy Chettiar on 29th August, 1963 on the foot of another promissory note agreeing to re-pay the

said amount together with interest thereon at 15 per cent per annum. Defendants 1 and 2 also agreed that the properties covered by the title deeds

already deposited by them with the said Ramasamy Chettiar relating to the plaint A and B schedule properties might be treated are collateral

security for the said debt also. They have thereby created a second equitable mortgage over the plaint A and B schedule properties for the said

debt also. Since they paid only a portion of the said debt, Ramasamy Chettiar filed a suit in Original Suit No. 212 of 1965 for the recovery of the

slid sum of Rs. 54,443.66 with subsequent interest thereon and also the costs of suit by enforcing the equitable mortgages over the plaint A and B

schedule properties. After obtaining a decree in the said suit for the said amount, Ramasamy Chettiar brought the plaint A and B schedule

properties to sale in court-auction through Execution Petition No. 146 of 1967 and the third Defendant purchased the said properties m the said

court-auction on 3rd February, 1968 for proper and valuable consideration.

It has been further averred in the written statement of the third Defendant that the Plaintiff, who appears to have been aware of all the said

proceedings, kept quiet without seeking to come on record as a party Defendant therein and has now laid this action in collusion with Defendants 1

and 2 and at their instance. Defendants 1 and 2 filed Execution Application No. 207 of 1968 to set aside the court-auction sale in favour of the

third Defendant on several false contentions and the said application was dismissed. Defendants 1 and 2 preferred an appeal against the said order

in the High Court. It was only at this juncture, the present suit was sought to be laid at the instance of Defendants 1 and 2 to harass and cause

annoyance to the third Defendant, who is a bona fide purchaser of the plaint A and B schedule properties for valuable consideration.

The third Defendant has further contended that the Plaintiff is only a subsequent mortgagee and the mortgages in favour of Ramasamy Chettiar

were clearly prior to the suit mortgage, The Plaintiff having obtained a mortgage only in respect of the equity of redemption in the plaint A and B

schedule properties, it is not open to him to ignore the mortgages in favour of Ramasamy Chettiar or the sale in favour of the third Defendant in

court-auction held in execution of the mortgage decree obtained by Ramasamy Chettiar The third Defendant, as a court-auction purchaser, in

execution proceedings pursuant to the decree obtained on the said prior mortgages, has acquired the rights of the prior mortgage decree-holder-

Ramasamy Chettiar and as such the Plaintiff is not entitled to bring the plaint A and B schedule properties to sale without first paying the prior

mortgage amounts due to the third Defendant.

Finally, the third Defendant inter alia alleged that ht is a bana file purchaser in execution of the prior mortgage decree and that the Plaintiff''s right,

if any, can prevail only subject to the rights of the third Defendant. With these averments, the third Defendant prayed for a suitable decree in the

light of the submissions made by him and also for suitable directions for the payment of the third Defendant''s costs.

On the above pleadings, the learned subordinate Judge of Madurai framed the following issue:

Whether the suit hypothecation bond is true, valid and binding on the third Defendant?

Whether the Plaintiff is not entitled to bring the A and B schedule properties to sale without first paying the prior mortgage amount due to the

third Defendant?

To what relief, if any is the Plaintiff entitled?

The learned Subordinate Judge held that exhibit A-1 is true and valid and binding on the third Defendant and that the auction-purchaser in

execution of the prior mortgage decree cannot claim payment of the amount due under the prior mortgage as a condition for a decree for sale in

favour of the puisne mortgage. The trial Court, after observing:

that Mulla Vittil Seethi Vs. Korambath Paruthooli Achuthan Nair and Others, 2 still holds the field and Sukhi v. Ghulam Safdar Khan (1921) 42

M.L.J. 15 (P.C.) cannot be taken to lay down the principle that the court-auction purchase in execution of the first mortgage decree is entitled to

compel payment of the mrotgage first before a decree for sale is passed. That the third Defendant can use the prior mortgage as a sheild cannot be

and is not disputed by the Plaintiff. It is only the nature and extent of that right that is called in question. Considering the fact that the court auction

purchaser as Well as the puisne mortgagee and the prior owners of the properties are before Court. I hold that there should be a finality to the

dispute. We need not pass a decree making it a condition precedent to pay off the third Defendant first before the properties are brought to sale.

How ever the properties can be sold free of encumbrance and the safe proceeds can be applied first in satisfaction of the claim of the third

Defendant and then of the Plaintiff. Of course we cannot order payment of the entire first mortgage amount. That can not be said to do violence to

the principles as laid down in Mulla Vittil Seethi Vs. Korambath Paruthooli Achuthan Nair and Others, .

passed a preliminary mortgage decree as prayed for with costs subject to the following condition:

A and B schedule properties shall be sold free of encumbrance and the sale proceeds shall first go in satisfaction of third Defendants amount and

the balance should go towards satisfaction of the plaint claim. Time for payment two months.

Aggrieved by the judgment and decree of the trial Court, the third Defendant has preferred the above appeal. According to Mr. Peter Francis

the learned Counsel appearing for the Appellant, a court-auction purchaser in execution of a first mortgage decree in respect of the property holds

a dual capacity i.e., one is representative of the mortgagor and the other as representative of the first mortgage, and that he is in law entitled to

exercise the option of either redeeming the puisne mortgage or using the first mortgage as a shield against the second mortgagee. The learned

Counsel would further contend that if the court-auction purchaser is entitled to use the prior mortgage as a shield, he is in law entitled to claim that

the second mortgage should redeem up, and that, in such a contingency, the second mortgagee is bound to pay the amount due to the first

mortgagee, and not merely the amount obtained in court-auction.

Mr. Sarvabhuman, the learned Counsel appearing for the first Respondent-Plaintiff, Used his argument on the Full Bench decision of our High

Court in Mulla Vittil Seethi Vs. Korambath Paruthooli Achuthan Nair and Others, while Mr. Peter Francis the learned Counsel appearing for the

Appellant contend that the Privy Council decision in Sukhi v. Ghulam Safdar Khan (1921) 42 M.L.J. 15 (P.C.) is in his favour and as such the

Privy Council decision must previal over the said Full Bench decision. A part from the above said two decisions, the learned Counsel appearing for

the parties cited various other decisions in support of their respective contentions. We will presently deal with these decisions.

The facts in Mulla Vittil Seethi v. Achuthan Nair (1921) 21 M.L.J. 213 (F.B.) are as follows :--The Plaintiffs were first mortgagees. The first

Defendant had a subsequent usufructuary mortgage. In a suit upon the first mortgage a decree for sale was passed. The first Defendant was not a

party to the same. In execution of the decree, the Plaintiffs became purchasers. The suit was for possession and in the alternative for the recovery

of the mortgage money. The Courts below passed a decree for possession in default of payment of the amount due under the first mortgage. The

first Defendant preferred the second appeal. When the second appeal came up before a Division Bench of this Court, the first Defendant Appellant

argued that as he was not a party to the Plaintiffs'' former suit his mortgage interest, which included his right to possession, could not be affected

and that the suit should be dismissed. The Plaintiff Respondent urged that the first Defendant was merely entitled to redeem the first mortgage as he

was given no opportunity to do so in the former suit. The Plaintiffs being simple mortgagees, were not entitled to sue for foreclosure. As the first

Defendant was not a party to the former suit his interest could not be affected by it. The mortgagors equity of redemption only amounted to the

interest that remained after deduction of the first Defendant''s mortgage right. The mortgagor had no right to possession after giving a usufructuary

mortgage to the first Defendant. The mortgagor''s interest that was sold did not include a right to possession. Hence the Plaintiffs could not

purchase such a right. Various decisions which subscribed to the views of either party were cited before the Division Bench. The Division Bench

after discussing these decisions and finding a conflict between them, stated as follows:

We shall assume that one mortgagee is not a party to the suit of the other. It follows that the interest of the mortgagee, who is not a party should

not be affected by the suit of the other, for there can be no representation of his interest in the suit by any other person claiming an interest in the

property. If t he second mortgagee has no right to possession, t he purchase by the first mortgagee by private or court sale must give him the right

to possession. If possession goes with the second mortgagee the sale under the decree of the first mortgagee must prima facie leave the possession

unaffected. The same result must follow in the case of the second mortgagee acquiring a light to possession under a prior sale in execution of a

decree on his mortgagee. It is, on the other hand, clear that the first mortgagee is entitled to sell and purchase all the interest of his mortgage as at

the date of the mortgage. This cannot, however, be done in the absence of the representatives of the subsequent interests carved cut by the

mortgagor after the first mortgage. The mortgagee must be entitled, if he had once failed to implead the subsequent incumbrancer, to enforce his

remedy of a sale of the subsequent encumbrance�s interest by a fresh suit. Should he be driven to such a suit on the fooling that the prior

proceeding can in no sence affect any of the rights of the subsequent mortgagor including the right to possession however acquired or is it open to

the Court in the first mortgagee''s suit for possession after his purchase, to give the second mortgagee his only right in a properly instituted suit by

the first mortgagee, namely, his right to redemption? We think it light to ask for an authoritative ruling of the Full Bench on the following question:

Whether a first mortgagee, who has purchased the mortgaged property in execution of a decree on his mortgage and sues for possession, or, in the

alternative, for the recovery of his money is entitle to a decree for possession subject to redemption by a puisne mortgagee with possession who

was not a party to the suit by the first mortgagee?

On such a reference, a Full Bench of this Court consisting of Sir Charles Arnold White R.T.C.J., and Krishnaswami Aiyar and Ayling JJ., after

fully discussing the various decisions in respect of the rights of a first mortgagee under different circumstances, laid down the following propositions:

A second mortgagee is entitled to the same rights as the first mortgagee with reference to hi.* security, having regard to the nature of his

mortgage.

The purchaser of the equity of redemption after the first mortgage and the second mortgagee both stand on the same footing with reference to

their respective rights against the first mortgagee when they have not been impleaded in the suit instituted by him on his mortgage.

These rights are unaffected by the suit of the first mortgagee to which they are not made parties and the decree passed therein and the sale made

in pursuance thereof and

The purchaser in such a suit, whether it is a first mortgage or a stranger, does not acquire the rights of the mortgagor as at the date of the first

mortgage, but only those that subsist in him at the date of the suit.

Laying down thus the propositions of law, the Full Bench stated:

It follows that the question referred must be answered as stated already against the Plaintiff.

Thus, the Full Bench has recognized the right of a usufructuary mortgagee by holding that the purchaser''s right to step into the shoes of the

mortgagor is limited to the mortgagor''s right on the date of the suit and not on the date of the first mortgage. In the Full Bench case, the first

Defendant was a usufructuary mortgagee while the Plaintiffs were purchasers of the hypothecs on the foot of a decree obtained by a simple first

mortgagee.

As far as the present case it concerned, the Plaintiff is a puisne mortgagee under Defendants 1 and 2. The first mortgagee Ramaswamy

Chettiar filed Original Suit No. 212 of 1965 to recover the amount due under the two equitable mortgages in his favour and obtained a decree in

his favour and brought the plaint A and B schedule properties to sale in Court-auction, and the third Defendant purchased the properties on 3rd

February, 1968 in the Court-auction. The third Defendant contended in this suit that he has acquired the rights of the prior mortgage decree holder

Ramaswamy Chettiar and as such the Plaintiff is not entitled to bring the A and B schedule properties to sale without first paying the prior mortgage

amount to due him. No doubt, the purchaser of the hypotheca in execution of the decree on the foot of the first mortgage can use the first mortgage

as a shield in his defence when the puisne mortgage files a suit for redemption of the mortgage in his favour. The decision rendered by the Full

Bench was in respect of the right of a puisne usufructuary mortgagee who had possession of the hypotheca when the purchaser in Court-auction in

execution of the simple first mortgage decree filed a suit for possession or in the alternative for recovery of the mortgage money. On such facts, the

Full Bench gave a decision to the effect that the purchaser in a suit, whether it is the first mortgagee or a stranger, does net acquire the rights of the

mortgagor as at the date of the first mortgage, but only those that subsist in him at the date of the suit. Hence the right of the Plaintiff in the Full

Bench case was recognized subject to the right of possession of the usufructuary puisne mortgagee. Thus, the question, whether the purchaser of

the hypotheca in the court-auction in execution of the decree of the first mortgagee is entitled to claim only the amount for which he purchased the

property in the court-sale and not the amount due on the first mortgage, has not been considered by the Full Bench in that perspective.

Mr. Peter Francis referred to Sukhi v. Ghulum Safdar Khan (1921) 42 M.L.J. 15 (P.C.) and stated that the said decision of the Privy Council

supports his view. This Privy Council decision is subsequent to the Full Bench decision rendered in Mulla Vittil Seethi Vs. Korambath Paruthooli

Achuthan Nair and Others, The facts of the Privy Council case are as follows:--One Nand Ram and others, the owners of the property is question

and of other properties, executed two simple mortgages in favour of one Kirpa Ram on 3rd January, 1874 and 10th June, 1875. Kirpa Ram was

no more and his wife was the Plaintiff. Subsequent to the above two mortgages Nand Ram and others, executed another mortgage of the property

in question by way of conditional sale in favour of the first Respondent Ghulam Safdar Khan and another. This mortgage was, dated 15th January,

1883. In 1886, Kirpa Ram the mortgage raised an auction for payment and sale, but he omitted to implead the holders of the mortgage of 1883,

and obtained a decree for sale. The property was sold and Kirpa Ram himself purchased it at the judicial sale. Kirpa Ram died leaving a Will,

dated 1895 in favour of his widow, the Plaintiff. She obtained probate in 1898 and the (sic) made a gift of the properties lo which she had

succeeded, including the property in question, to Jag Ram and Net Ram, her nephews. They at the same time covenanted to pay Rs. 1,200 a year

for maintenance, and in security of this obligation they hypothecated the properties, including the property in question, by way of mortgage. 7he

mortgage was, dated 14th October, 1902 and w; s duly registered, in if 10, the mortgages in the mortgage of 1883 brought a suit on their

mortgage against Jag Ram and Net Ram, but emitted to implead the Plaintiff. Jag Ram and Net Rim put for ward the mortgages of 1874 and 1875

as a sheild and accordingly the Respondents had to pay into the Court the sum of Rs. 2,954. Having so done, and Jag Ram and Net Ram not

choosing to redeem, the Respondent, were adjudged owners of the property. This was finally stilled in 1913. In 1914, Plaintiff raised the present

suit in respect of her mortgage, the sums due under the agreement lo pay Maintenance amounting to ever Rs. 1,00,000. It was not defended by

Jag Ram and Net Ram but appearance was made for the Respondents who held the property by virtue of the decree they had obtained in 1913,

upon their mortgage of 1883. The Subordinate Judge decreed the suit, but on condition that the Plaintiff repaid to the Respondent the am of Rs.

2,954 which they had paid to the first mortgagees. On appeal, the High Court altered this by adding the condition that the Plaintiff should also pay

the sum of Rs. 8,649-13-7, being the sum'' found due to the Respondents in the suit of the mortgage of 1883, in respect of which they were given

the foreclosure decree of the property. Against the decision of the High Court, the matter was taken up to the Privy Council by the Plaintiff. The

Privy Council, in their judgment, observed:

An owner of a property who isinthe rights of a first mortgagee and of the original mortgagor as acquired, at a sale under the first mortgage is

entitled at the suit for a subsequent mortgagee, who is not bound by the sale or the decree on which it proceeded to set up the first mortgage as a

shield. From this it follows that the omission by the Respondent Ghulam Safdar Khan to make the Plaintiff a party to the suit instituted by him to

execute his mortgage of 1883 does not prevent him from setting up that mortgage in cases where he would have been so entitled before the Act of

1882 and the present dispute is within the benefit of this ruling.

But then there is the question of the position due to the original mortgagees of Rs. 2,924/- and unfortunately this seems not to have been very

carefully considered in the judgment below. The Subordinate Judge held that the Defendants wore entitled to set up this as a sheild, because the

defend ants had paid this sum to the original first mortgagee as a condition of getting the properly; and that as the Plaintiff''s tile flowed from the first

mortgagees, she could have no higher right than the first mortgagees, and must be bound by anything done by them. The High Court seemed to

think that the same arguments that applied to the mortgage of 1883 also applied to the earlier mortgagees.

The situation, however, must be looked at more closely than this. The general principle is stated rightly by the High Court. It is this. The Plaintiff is a

puisne mortgagee seeking to enforce her mortgage, the prior mortgagee in his suit, having failed to make her a party. It is the duty of the Court to

give the Plaintiff the opportunity of occupying the position which she would have occupied if she had been a party to the former suit. Now the

original mortgagee having brought the estate at the sale in the suit was she owner of both the mortgage and the equity of redemption merged in one

by the decree of the Court. He was succeeded by his widow and she male the gift to Jag Ram and Net Ram. When they in turn mortgaged to the

widow, the present Plaintiff they mortgaged both the original mortgage and the equity of redemption merged as aforesaid. When in the suit of the

present Defendants on the mortgage of 1883, Jag Ram and Net Ram, as to speak, revived the original mortgage as a sheild, they revived

something which in a question with the widow they had mortgaged. Whether the decision of the Court that the sum in the prior mortgages should

be made a condition of the decree in the suit was right or wrong for, if Net Ram''s case had been decided it would have been wrong, the sale

having taken place in 1886, is immaterial, for the present Defendants acquiesced in and paid under the judgment.

If the widow had been made a party to the suit, as she ought to have been she would have been entitled in right of her mortgage to have been put

in possession of the amount which was being put forward as a sheild by Jag Ram and Net Ram against the Plaintiffs and the present Respondents.

She was not made a party, and the result was that owing to the laches of the present Defendants Jag Ram and Net Ram were allowed to carry off

in money the part of the estate represented by the value of the first mortgage which they had really impledged by their mortgage to the widow. It

follows that to carry out the general principle expressed above, the widow must not be deprived of the rights which had. she been called she could

have made good.

The result must be that unless the Respondents pay the Plaintiff Rs. 2,925- with interest thereon at 6 percent from December 3rd, 1914, the

Plaintiff must get her decree for sale of so much of the estate as will realize that sum. If however, the Respondents pay that sum or the said sum is

realized by sale of part of the estate, then the Plaintiff can only have decree and sale of the rest of the estate on condition that she pay to the

Respondents Rs. 8,649-13-7, being the sum in the decree of 1883 as brought out by the High Court, The Respondent will have a right to recover

from Net Ram and Jag Ram the sum wrongly carried off by them in fraud of their own mortgage to the present Plaintiff, but the right cannot be

given effect in this suit.

From the above excerpt from the decision of the Privy Council it is clear that the Privy Council gave relief to the puisne mortgagee only after

his paying the decree amount of the action of the Respondent Ghulam Safar Khan in respect of the mortgage dated 15th January, 1883. But the

Privy Council directed the Respondent to pay the sum of Rs. 2,954 to the Plaintiff on the ground that Net Ram and Jag Ram had wrongly carried

away that amount in fraud of their own mortgage to the Plaintiff and that the Respondent had not made the Plaintiff as a party to the suit filed by

him in 1910. Thus, it cannot be said that decision in tie Privy Council case supports the view put forth by Mr. Peter Francis directly. The facts and

circumstance as, referred to above in the Privy Council case, are completely different and as such he contention of the third Defendant that he

should be paid the whole of the first mortgage amount instead of the actual amount for which he purchased the hypotheca in Court-auction, basing

the Same on the above Privy Council decision, in our view, cannot be sustained.

The proposition that the court-auction purchaser of the first mortgagees right can use the first mortgage as a shield in his defence when the

puisne mortgagee who was not made a party in the first mortgagee''s suit institutes proceedings for redemption cannot be denied. But to what

extent the shield can be used both in equity and according to law is the question that has to be decided. The Privy Council decision arose out of a

suit filed by a mortise to recover over a lakh of rupees from persons who became the owners of the suit property by virtue of a suit en a mortgage

which was interior in point of time to the mortgage of the Plaintiff. The Privy council recognized the right of the puisne mortgagee who was not

made a party in the prior mortgagee''s suit and granted her a decree provided she paid the Respondents the sum of Rs. 8,649.13.7 which was the

amount of the decree obtained by the Respondents in respect of he mortgage deed dated 15th January 1883 in their favour. As already noticed,

the Privy Council also directed the Respondents to pay the pontiff Rs. 2,925. Thus, apart from the facts and circumstances of the Privy Council

case being different the amount the Plaintiff was directed, to pay the Respondents was equivalent to the amount of decree they had obtained in

respect of their mortgage of the year 1883. Therefore, the decision of the Privy Council cannot be taken as authority for the proposition now put

forth by the Appellant herein.

The various other decision cited by the respective Counsel on either side deal with the right of the sub-mortgagee, the right of the party

purchaser the right of the mortgage purchaser, the right of two different mortgages purchasing of portions of the property mortgaged and the right

of priority for possession of the purchased mortgaged property. In all the decided case one, finds general expressions used by the learned Judges

in discussing the rights of parties with reference to mortgage suits, which are likely to lead to, confusions, if some stray sentences from such

judgments be sought to be taken as laying down the law irrespective of the other sentence in such, judgments, the facts of the case and the actual

decision in the suit. One will have to see what the actual decision was, and what exact contentions were in fact put forward by the contesting

parties; also who had possession and how the same was acquired and when, and the nature of the proceedings in which possession was taken. If

these and other relevant circumstance are ascertained and kept in view, it seems to us that almost all the decision that were quoted to us could be

reconciled. We are far from saying that there are not observations in some of the judgments which, taken by themselves would not be too wide;

further, there are some observations which are quite obitor, with reference to points not necessary for the actual decision in such cases. But the

various decisions themselves seem to be generally reconsiliable to one another and in accordance with sound legal principles, and, in our view, the

law of mortgage relating to the point now under consideration, should be taken to be well settled so for as our Courts arc concerned. In this

connection we may usefully refer to the Full Bench decision in Nagendran Chettiar v. Lakshmi Ammal ILR (1933) Mad. 846 (F.B.) his Full Bench

decision the rights of two auction purchasers were discussed and it was decided that the auction purchaser prior in point of time is entitled to be in

possession on the facts and circumstances of that particular case Only in this Full Bench decision of our High Court it has been observed, that the

decision rendered in various judgments regarding the rights of parties in mortgage suits should be read in relation to the context of the particular

case or otherwise will lead to confusion.

We may also usefully refer to the decision in Pingali Venkataramana Reddi by his authorised agent Brahmanda Narasimha Rau Vs. Kotigari

M. Rangiah Chetti and Others, . In that case, a prior mortgagee sued on his mortgage and obtained a decree for sale without being aware and,

therefore, without impleading the puisne mortgagee as a party to the suit. In execution of the decree, an item of the mortgage property was sold

and with the purchase money, a portion of the decree amount was paid off. The purchaser at the execution sale in his turn mortgaged that item to

the Defendant to secure money already borrowed by him for the purpose of depositing the purchase money at the Court sale. The Defendant

obtained a decree on his own mortgage, executed it and purchased the rights of his own mortgage in the item mortgaged to him. Subsequently in a

suit by the pisune mortgage to enforce his mortgage, the Defendant pleaded that he was entitled to a prior charge on the item sold in execution of

the decree on the first mortgage, to the extent to which that decree was satisfied. On these facts, the Full Bench held that the purchaser at the

execution sale having realized the item purchased by him from all liability under the decree on the prior mortgage was entitled to a prior charge on

that items in respect of the moneys paid by him towards the decree on the prior mortgage that notwithstanding the fact that the prior mortgagee had

a decree on his mortgage and sold the property in execution thereof, it was open to the purchaser to hold his right to the prior charge as a shield

against the puisne mortgagee in the suit by the latter to enforce; his mortgage ; that the right of the Defendant to hold the prior charge as a sheild

was not effected by limitation ; that the purchaser had not a general right of sub-rogation by reason of the fact that he had paid off a portion of the

decree on the prior mortgage and that the Defendant being a mortgagee from the purchaser was entitled to avail himself of all the rights which his

own mortgager had in that particular item of the mortgaged property which was freed from all liability by the purchaser including the right of priority

as aforesaid. There is a specific observation is that judgment:

It is immaterial whether the purchaser is the mortgagee, who sued, or another person, except that the latter would be sub-rogated to the rights of

the mortgagee only to the extent to which the debt was paid out of the price.

It has been further observed in that judgment that:

A court auction sale of one of the mortgaged properties which satisfied a portion of the decree amount prevents that particular property from being

brought to salt again for the balance and the inconvenience mentioned in Hanumanthaiyan v. Meenakshi Naidu ILR (1911) Mad. 183 namely, the

contingency of a number of persons claiming to be entitled to rank as first incumbrancers would not arise in such a case. I also think (with great

respect) that the inconvenience may not in practice be so very great after all. If several persons pay separate sums which discharge (taken

together) the first mortgagee, they can get charges respectively in proportion to the amount paid by them all in priority to the second mortgage out

of the sale proceeds of the mortgaged properties when they are sold out right.

In that judgment the Bench has refereed to a decision of one of the learned Judges of that Bench suing along with Napier J. reported in

Bismath Karumani v. Devi Dass (1915) 29 I.C. 511 which is to the effect that a person, who advances money to partially discharge a prior

mortgage cannot claim sub-rogation where the prior mortgagee had not released his mortgage rights over the property so purchased and observed

that judgment seemed to imply that even though the prior mortgage had only been partially discharged by the purchase-money of one of the

mortgaged properties sold, if the mortgagee had released his claim over that one property for the balance of the mortgage amount still cue to him,

the Court might be justified in recognizing the purchase r of that properly the right to a prior charge over the second mortgagee to the extent of the

purchase money so far as that particular property so released was concerned and it was immaterial whether the safe was a private sale or a court

auction sale.

Applying the principles laid down in the various decisions and also he decision rendered in Pingali Venkataramana Reddi by his authorised

agent Brahmanda Narasimha Rau Vs. Kotigari M. Rangiah Chetti and Others, it is clear that a third party auction purchaser can use the first

mortgage as a shield when a puisne mortgage brings a suit to enforce his mortgage only to the extent of the money for which he purchased the

propriety. The auction-purchaser no doubt gets into the shoes of the mortgagor and the first mortgagee and the liability incurred by the auction-

purchaser, who is a third party in this case, is only that amount he paid for such purchase at the court-auction. The right of the first mortgage by

virtue of the purchase by the third party auction-purchaser is superimposed by the right of the purchaser, and the auction-purchaser in equity is

only entitled to get that amount which, he paid at the auction for the purchase of the property.

The argument of Mr. Peter Francis, the learned Counsel appearing for the Appellant, that he can get the whole of the first mortgage amount,

inasmuch he has stepped into the shoes of the first mortgagee and the mortgagor, in our view, is not sound either in law or in equity. The decisions,

we have refereed to above including that in Pingali Venkataramana Reddi by his authorised agent Brahmanda Narasimha Rau Vs. Kotigari M.

Rangiah Chetti and Others, in our view do not support the contentions advanced by Mr. Peter Francis. The Appellant contends that the second

mortgagee is bound to pay the entire amount due on the first mortgage and not merely the amounts he had paid for the purchase of the property in

Court-auction, and that the Appellant can use the first mortgage as a shield against any claim put forth by the puisne mortgagee. The trial Court has

clearly found that the third Defendant can use the prior mortgage as a shield, but he can get only that amount he had paid for the purchase of he

properly at the auction, and not the entire first mortgage amount. We are in complete agreement with the said finding recorded by the learned

Subordinate Judge of Madurai and as such we confirm the judgment and decree of the trial Court.

In these circumstances, the appeal is dismissed with costs.