Sadhu Behera vs Dibakar Tarai and Others

Das, J.—As we are differing from the judgment of a Judge of this Court, it is but right and proper that I should give my reasons in support of the conclusion at which I have arrived.

It is, I think, well established that the proper scope of a mortgage suit is to cut off the equity of redemption and to bar the rights of the mortgagor and those claiming under him; and that a paramount title cannot be drawn in controversy in such a suit. The joinder of a paramount claimant is irregular as it only tends to confusion; but the rule so stated is a rule of convenience, not a rule of law, nor of jurisdiction. So upon this rule an important exception has been engrafted and it is this: 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. The exception follows from what I have already stated, namely, that the question is not one of jurisdiction but rather of the frame of the litigation and the scope of its enquiry.

Mr. S.N. Bose contends that there are two other rules established by the decisions of the Indian Courts of which we ought to take note. He contends in the first place that where a mortgagee institutes a suit upon a mortgage and cites a prior purchaser of a portion of the properties as a party defendant in the mortgage action, the suit itself shows that he is seeking to displace the title of the prior purchaser and postpone it to his own. When the suit is so framed so Mr. Bose argues it is incumbent on the prior purchaser to set up his title to defeat the claim of the mortgagee; and if he fails in so doing he cannot afterwards be allowed to claim on his prior title. In my view there is no substance in this contention. A question of this nature fell to be considered in Radha Kishun v. Khurshed Hossein AIR 1920 P.C. 81 The facts in that case were as follows: There was a mortgage-bond in favour of the Sahus dated 28th April 1894. In 1906 the Sahus instituted a suit to enforce the mortgage-bond. The plaintiff as the holder of a mortgage-bond dated 13th May 1892 was a party in that litigation. He did not, however, set up his mortgage-bond in that suit with the result that the Sahus obtained a decree in the absence of the defendants. Subsequently the plaintiff sued to enforce his mortgage of 13th May 1892 and it was contended on behalf of the Sahus that the plaintiff should have made his mortgage-deed of 13th May 1892 a ground of defence to the former suit and so he was barred from suing on it under Expln. 4, Section 11, Civil P.C. In dealing with" this argument it was pointed out by the Judicial Committee that the plaintiff''s position in the former suit was that he was a prior mortgagee with a paramount claim outside the controversy of the suit unless his mortgage was impugned and that consequently to sustain the plea of res judicata it was incumbent on the Sahus in the circum stances of the case to show that they sought in the former suit to displace the plaintiff''s prior title and postpone it to their own, and that for this it would have been necessary for the Sahus as plaintiffs in the former suit to allege a distinct case in their plaint in derogation of the present plaintiff''s priority.

In this case the plaintiff was undoubtedly a party to the former suit; but it is not suggested that plaintiffs in the former suit alleged a distinct case in their plaint in derogation of the present plaintiff''s priority.

This is not disputed by Mr. S.N. Bose; but he contends that although this may be so where the prior claimant is a mortgagee the rule-is different where the prior claimant is a purchaser and he argues that a reference to Section 96, T.P. Act, in the judgment of their Lordships of the Judicial Committee shows that their Lordships intended to confine their decision to a case where the prior claimant was a mortgagee. It is true that in the present case the plaintiff claims title under a prior purchase and not under a prior mortgage; but in my opinion the decision of their Lordships of the Judicial Committee cannot be distinguished on this ground. In fact there is another decision of the Judicial Committee which completely meets the point taken before us by Mr. S.N. Bose. I refer to the decision in Radha Kuwar v. Reoti Singh AIR 1916 P.C. 18. The facts were as follows: The plaintiffs sued to enforce a mortgage executed in their favour and they cited as a defendant a person who relied upon a conveyance executed in his favour by one Hukum Singh. The question in the litigation was whether Hukum Singh had any title to convey to the defendant. It will be noticed that the defendant did not claim under a prior mortgage, but he claimed under a conveyance; tad if he could make good his claim, then the plaintiffs would be unable to sell that portion of the property which was claimed by the defendent. Now Mr. S.N. Bose''s argument is that in these circumstances the prior purchaser becomes a necessary party and is bound to set up his prior title. In the case which I am considering the prior purchaser did set up his title, but what is of importance is that their Lordships of the Judicial Committee definitely stated that:

this joindar of these parties was irregular and that it could only tend to confusion.

I read this decision as clearly laying down that the prior purchaser was not bound in law to set up his title in a mortgage action.

It was then contended by Mr. S.N. Bose that where a defendant has a twofold character, (1) as a subsequent in-cumbrancer and (2) as the holder of a paramount title, as he is a necessary party to the mortgage action as the subsequent encumbrancer, he is bound to set up his paramount title in the mortgage action, and, if he does not do so, he will not be allowed to set it up subsequently in a suit of his own. His argument finds support from the decision of the Calcutta High Court in Srimanta Seal Vs. Bindubasini Dasi and Others, , but I am unable to agree with the decision of the Calcutta High Court in that case. In deciding in favour of the view which is now advanced before us by S.N. Bose, Mukherji, J., professed to follow the decision of Banerji, J., in Hare Krishna v. Robert Watson and Co. 8 C.W.N. 365, According to Mukherji, J. what was actually decided in Hare Krishna v. Robert Watson and Co. 8 C.W.N. 365, was that where a subsequent incumbrancer is cited as a defendant in a mortgage action and that subsequent incumbrancer has also a paramount title, it is his duty to set up his paramount title in mortgage action. With great respect this was not the decision in Hare Krishna v. Robert Watson and Co. 8 C.W.N. 365. The facts in that case were as follows: Defendants 1 to 4 had mortgaged certain jotes to the plaintiffs. The plaintiffs sued to enforce the mortgage and cited defendant 5 as a party defendant on the allegation that he was the assignee of the equity of redemption. Defendant 5 did not offer to redeem; but he contested the suit on the ground that the mortgage was invalid against them because they happened also to be the landlords and the jotes in question were not transferable by the custom of the village. In other words, defendant 5 set up his paramount title. It is pointed out in the judgment of Maclean, C.J., that the plaintiffs in that suit might have asked to have defendant 5 dismissed from the suit on the ground that he did not ask to redeem but set up a paramount title. But as a matter of fact the plaintiffs did not adopt that course. They met defendant 5 on the issue as to the validity of mortgage and were defeated on that issue.

In these circumstances it was held that the plaintiffs could not turn round afterwards and contend that the issue was an irrelevant one and should not have been tried. I can find nothing in the judgment of Banerji, J., to support the contention that where a person is cited as a defendant on the allegation that he is a subsequent incumbrancer and that defendant happens to have also a prior title it is incumbent on him to set up his prior title in the mortgage action. In my view if the scope of a mortgage action is properly understood there is no difficulty in appreciating the fact that the interest of a person claiming under a prior title is not the subject matter of the suit. If this be recognized then it is impossible to take the view that because such a person happens also to be a subsequent incumbrancer it is incumbent on him to set up his prior title.

I should like to say one word on Sri Gopal v. Pirthi Singh [1902] 24 All. 429, on which Mr. S.N. Bose, strongly relied. The facts of that case were as follows: The proprietor of a certain estate had executed three mortgages in favour of Phul Chand between 1868 and 1870. Thereafter he executed five different mortgages one in favour of Ishur Das on 21st July 1871, a second in favour of Murli Singh and Sarnam Singh on 30th August 1872, a third in favour of Ishur Das on 7th February 1874, a fourth in favour of Ishur Das on 16th July 1871 and the last in favour of Bhagwan Das on 18th August 1876. It appears that out of the money raised'' on the last mentioned mortgage Phul Chand was paid off. Now this mortgage ultimately vested in Mt. Janki the wife of one Bachai Lal who was the son of Phul Chand. Mt. Janki claimed that her bond took precedence over all the bonds. In 1883 the heirs of Ishur Das commenced an action on the bond of 21st July-1871 against the mortgagors only and in due course they obtained a decree for payment and if necessary for sale. In the same year Murli and Sarnam commenced an action on the bond of 30th August 1872 in which action also the mortgagors were the only defendants and they also obtained a like decree for payment and if necessary for sale. In 1888 the heirs of Ishur Das commenced an action against the mortgagors only under the charge of 16th July 1874 and they obtained a decree for payment and sale in default. It will be noticed that up to now no steps were taken to enforce this bond of 7th February 1874. In 1888 a suit was instituted to enforce the charge of 18th August 1876; and in this suit not only the mortgagors but also the holders of the prior incumbrances were made parties. The plaintiff in that suit sought to establish the charges of 18th August 1876 as having priority over the earlier mortgages above referred'' to upon the ground that the money thereby secured had been borrowed to pay, and had been applied in paying the mortgages in favour of Phul Chand.

Now on the facts as stated it is clear that the plaintiff in that action alleged a distinct case in his plaint in derogation of the priority of the prior incumbrancers and distinctly sought to displace the prior title of those incumbrancers arid postpone them to his own. It is clear then that it was incumbent on the prior inoumbrancers to establish their priority in that suit; and that if they failed to do so they could not afterwards be heard to claim priority. This is clear from what was subsequently decided by the Judicial Committee in Radha Kishun v. Khurshed Hossein AIR 1920 P.C. 81.

Now it appears that the prior incumbrancers actually contested the position taken up by the plaintiff in that action; but it so happened that the charge of 16th July 1874 was not set up. The claim to priority broke down, the plaintiff in that action having failed to satisfy the Court that the earlier charges had been kept on foot, or that the money had been so applied. The decree gave the plaintiff judgment for payment against the mortgagors and declared that in default of payment the plaintiff would be entitled to sell the mortgaged property after fully paying and satisfying the amount of the prior debts detailed at the foot of the judgment, namely the bond in favour of Murli and Sarnam dated 30th August 1872; and the bond in favour of Ishur Das dated 21st July 1871. The bond of 16th July 1874 was; not mentioned at the foot of the judgment, so that it followed that the plaintiff in that litigation was entitled to sell the mortgaged properties free from the claim of 16th July 1874. The question before their Lordships arose in a suit which was instituted to enforce the bond of 16th July 1874. The question was whether that bond was entitled to priority to that of 18th August 1876.

It was held by the Judicial Committee that it was distinctly alleged in the former suit that the bond of 18th August 1876 was entitled to precedence over the bond of 16th July 1874. It was therefore the duty of the holder of the bond of 16th July 1874 to meet the case of the plaintiff in that action and to satisfy the Court that there was no foundation for the claim of the plaintiff in that litigation. Either the bond of 16th July 1874 was actually set up in that litigation or it was not. If it was set up and the case was wrongly decided then, there was no remedy as the only remedy was to appeal from the wrong judgment. But if it was not set up it should have been set up since the suit on the bond of 18th August 1876 distinctly raised the question of priority. Now this is the whole of the judgment of the Judicial Committee; and the principle laid down in that case was identical with that which was adopted by their Lordships of the Judicial Committee in the subsequent; case of Radha Kishun v. Khurshed Hossein A.I.R 1920 P.C. 81, It does not support the argument of Mr. S.N. Bose in this case. I have considered all the decisions which have been cited before us and my conclusions are these:

(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 try 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 the question of his priority in a suit of his own.

I agree therefore that this appeal should be allowed and the judgment and the decree of the learned District Judge restored. I agree also that the appellants should get their costs throughout.

Rowland, J.

The subject matter of this litigation is a small plot bearing No. 207 with an area of about 1/20th of an acre in Cuttack town. This plot originally formed part of the holding of Kapil Samal. The plaintiff bases his title to it on a sale of this plot in 1897 to Sadanand from whom the plaintiff purchased this plot in 1922. In the meantime Kapil had in 1903 mortgaged his entire holding including this plot to Bhagwan Tarai. The area of the entire holding was 75''76 acre. In 1904 Sadanand took from the son of Kapil a mortgage of another portion of the holding measuring 1460 acre. In 1911 the successors of Bhagwan sued on his mortgage bond impleading Sadanand as a puisne mortgagee in respect of his mortgage of 1904. Sadanand filed a written statement in that suit asserting that he had purchased plot 207 in 1897. Sadanand did not further contest the mortgage suit which was decreed in 1912, the holding was put to sale on 20th September 1912 and bought by the mortgagees who took possession in 1918. The present suit was decreed by the Munsif whose decision was upheld by the District Judge. An appeal to this Court was heard by a single Judge, who has dismissed the suit on the ground that it is barred by the'' principle of res judioata, and the only point for decision in this appeal is whether the principle of res judicata bars-the suit.

Section 11, Civil P.C. provides:

No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former'' suit between the same-parties, or between parties under whom they or any of them claim, litigating under the-same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.

The language of the section manifestly does not apply to the present case, for in the mortgage suit no issue was framed or decided as to Sadanand''s title, but Expln. 4 is relied on which runs thus:

Any matter which ''might and ought to hava been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.

The point shortly is whether Sadanand in the former suit was bound to contest the suit on the basis of his prior purchase. For the appellant it is contended that he was not bound to do so. The suit was on a mortgage and his prior purchase gave him not an interest in the equity of redemption but a paramount title.

The general rule is that:

a paramount title cannot be drawn into-controversy in an action for foreclosure. An adverse Claimant is a stranger to the security as well as to the estate in mortgage, who cannot be prejudiced in any way by a suit for foreclosure, which only seeks to out oft the interest of the mortgagor and rights subsequently created by him. Whenever, therefore, a paramount title is set up in an action for foreclosure, the part who sets it up is dismissed from the action. (Ghose''s Law of Mortgage in India Vol. 1, p. 616.)

The rule is recognized in Nilakant Banerji v. Suresh Chandra Mullick [1885] 12 Cal. 414, where a mortgage suit had been brought and a previous purchaser of a portion of the property had been impleaded; that purchaser claimed an adverse interest and urged that he had been added as a defendant without due cause. He was dismissed from the action and given his costs on the ground that the Court would not adjudicate on a question as paramount title. The question of his paramount title became the subject of a subsequent litigation. In Radha Kuwar v. Reoti Singh AIR 1916 P.C 18, it is stated in the judgment of their Lordships of the Privy Council:

The facts of this case are these: In 1884 a mortgage was executed of certain property for a sum of Rs. 2,000, with interest at 12 par cent. On 20th November 1909, the persons who were entitled to the benefit of that mortgage took proceedings in order to have it enforced. They claimed that the amount due upon the mortgage was Rs. 38,494, and they asked for an order for payment of that sum against the defendant and a sale of the property. They made, as parties to that 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. Their Lordships think that this joinder of these parties was irregular, and that it could only tend to confusion.

There can be no doubt that the general rule is that in a mortgage suit a question of paramount title is not proper, question for investigation. A party having a paramount title is not bound, if impleaded, to contest the mortgage suit on the basis of that title. In Radha Kishun v. Rhurshed Hussein AIR 1920 P.C. 81, the plaintiff was a mortgagee who holding a prior mortgage had not contested a mortgage suit brought by a puisne mortgagee. It was contended that his subsequent suit on his own mortgage was barred by the principle of res judicata. Their Lordships rejected this contention, observing:

To sustain the plea of rea judioata it is incumbent on the Sahus in the circumstances of this case to show that they sought in the former suit to displace Bakhtaur Mull''s prior title and postpone it to their own. For this it would have bean necessary for the Sahus as plaintiffs in the former suit to allege a distinct case in their plaint in derogation of Bakhtaur Mull''s priority. But from the records of this suit it does not appear that anything of the kind was done.

In my opinion the principle of that decision applies to the case with which we are dealing; when the defendants brought their mortgage suit Sadanand filed a written statement alleging his prior purchase but it does not appear that the plaintiffs of that suit did anything to indicate that they did not admit the truth of the purchase alleged by him. The ground on which it is sought to-distinguish these cases and take the present litigation out of the operation of the principle is that Sadanand had a dual title, being not only the holder of a paramount title but also having a subordinate interest in the equity of redemption in virtue of his subsequent mortgage. There are several cases in-which a party impleaded as a person interested in the equity of redemption has-been held to be debarred in a subsequent suit from setting up the paramount title-which he had failed to set up in a previous suit. But those cases do not appear to lay down anywhere the principle that every party having both a paramount and a subordinate title must put his paramount title into controversy. I will examine the facts of the decision. In the case of Sri Gopal v. Pirthi Singh [1902] 24 All. 429, the facts were that a certain property was subject to five successive mortgages. Of these the 1st, 3rd and 4th were held by the same party, the 2nd and the 5th by different mortgages.

The first mortgage was sued on-and a decree obtained; the second mortgage was sued on, a decree obtained, and a portion of the mortgaged property was sold; the fourth-mortgage was sued on, a decree obtained-and a part of the mortgaged property sold. In each case the subsequent mortgagees were not impleaded. A suit was then brought by the holder of the fifth mortgage who claimed priority over all the previous mortgagees by virtue of the principle of subrogation and impleaded; the prior mortgagees. The plaintiffs in that suit failed to establish priority and obtained a decree declaring her right to-sell the mortgaged property after satisfying the debts of the prior mortgagees as specified in the judgment. The holder of the first, third and fourth mortgages-got his first and fourth mortgages entered in this decree but not his third mortgage; in fact, he remained silent as to its existence. Subsequently when he sued on his third mortgage it was held that his suit was barred by the principle of res judicata. The circumstances of that case were peculiar and involved considerations of the nature of those which arise in a suit for redemption. It was certainly not laid down as a general (Principle that every person having a paramount title as well as a subordinate title must prove the former. The case was in fact one in which the Court had undertaken an enquiry into the paramount title of the holder of the first, third and fourth mortgages. The plaintiff having directly and distinctly claimed that there were no debts prior to the debts of the plaintiff''s it was for the Court to decide and the Court decides what previous debts had priority over the debt which was the subject matter of the suit. In Muhammad Ibrahim Khan v. Ambica Prasad Singh [1912] 39 Cal. 527, the plaintiff had brought a suit in 1900 on the basis of a mortgage bond dated 17th February 1888 secured on properties which had been the subject of prior mortgages dated 1879, 1880 and 1888, respectively. The plaintiff claimed to have priority over those mortgages by virtue of the principle of subrogation on the ground that by the mortgage of 1888 a prior hypothecation dated 1874 had been satisfied and the lien kept alive. The three intermediate mortgages had already been the subject of three mortgage suits on which decrees had been obtained; in two of those suits the holders of the plaintiff''s mortgage had been in pleaded as puisne mortgagees. The High Court observed:

They were made parties as puisne mortgagees who had the right to redeem. The plaintiff asked for sale of the mortgaged properties free from the liens of all the puisne mortgages. The Court in the cases of Brijnath Singh and others directed that the property mortgaged to Dwarkanath Ray should not be sold unless the money payable to him was deposited in Court as it was found that he was a prior mortgagee. Yakub and his sisters did not set up their title as prior mortgagees on the basis of zarpeshgi of 1874 the ground of relief in the present action. If they had the title now set up by the assignees, their omission to raise it in the previous suits is u/s 13, Expln. 11, Civil P.C., a bar to the plaintiffs now relying on their prior mortgage, even if they could get the benefit of a prior mortgage.

This decision so far as it referred to those of the intermediate mortgagees who had impleaded the plaintiffs in their suits was affirmed by the Judicial Committee who without discussing the matter at length observed that the High Court rightly dismissed the suit so far as it related to the properties the subject of those mortgages. The High Court had treated it as settled by the principle of Sri Gopal v. Pirthi Singh [1902] 24 All. 429, and it seems to me that indeed the decision goes no further than the former case. Both were instances in which the Court had definitely taken up an inquiry as to the priority inter se of successive mortgagees; when that is done one as such mortgagees will not be allowed subsequently to set up another priority which he did not assert in the former suit.

Now let us see whether from the recorded decisions any principle can be deduced to assist us in determining a case presenting in its facts a general similarity together with some points of difference. Elements common to both litigations were the existence of claim of two distinct titles arid certain conduct of the litigant, disqualifying him in the subsequent suit. It cannot be that the mere existence of two titles in the litigant can support his disqualification; the crucial point must be something in his conduct. If there is noticeable any peculiar point in the conduct of the defeated litigant such as deserved to be visited with disqualification, we may be not far out in supposing that that point is relevant to the decision.

Now in each of, the oases examined there is an element of concealment; the party who subsequently claimed a paramount title had at the time of the previous mortgage suit remained silent as to its existence. The effect of this might well be to permit the mortgagees to believe that the property was free of prior incumbrances and cause them to act on such belief in purchasing the property.

Now concealment of facts is the very matter which if certain consequences follow brings on the disqualification known as estoppel. Section 115, Evidence Act enacts that:

when one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.

If we find the same element of concealment present in the conduct of the defeated litigants in other cases of the kind, the inference that this element is material to the decision gains strength. In Srimanta Seal Vs. Bindubasini Dasi and Others, , a mortgagee had sued on his mortgage dated 7th July 1909, secured on a raiyati occupancy holding and had obtained a decree in presence of Sri-manta who was the purchaser of the holding at a sale dated 15th December 1900 in execution of a money decree. In the mortgage suit Srimanta had not disclosed that he had any other title than that of a purchaser of the equity of redemption but he subsequently sued alleging that he had acquired a title independent of the mortgage under a settlement from the superior landlord taken on 1st September 1910. It was held by the lower Gdurts that the settlement by the landlord was invalid, the holding not having been abandoned. In the High Court the decision was upheld on a different ground, namely, that the plaintiff was barred by the principle of res judicata as he had not set up his paramount title in the mortgage suit. Just as in Sri Gopal v. Pirthi Singh [1902] 24 All. 429, and, Muhammad Ibrahim Hossein Khan v. Ambica Prasad Singh [1912] 39 Cal. 527, so too in this case there was omission to disclose a title subsequently set up, which omission might have influenced the mortgagee to buy the property at a higher price than he would have done had the threat to his title been known to him. The same element of concealment of an alternative title was present in Bhaja Chowdhury v. Ghuni Lal Marwari [1906] 5 Cri.L.J. 95, and I have found no case similarly decided in which this element was absent. If, as I think, this concealment of prior title which is common to all these cases, is an element contributing to each decision, we can regard the results as embodying a principle satisfactory to conscience and not difficult to apply. In the appeal we are trying, the facts differ from all the cases of this class in the absence of this element of concealment, in the absence of omission to disclose the title subsequently asserted. We should not therefore follow those decisions.

In the judgment under appeal it is said

The present case is stronger than that case, Srimanta Seal Vs. Bindubasini Dasi and Others, , because Sadanand did actually plead his prior purchase although he did not appear at the trial to make it good.

With great respect to the learned Judge, I do not think that the judgment can be supported. The fact that Sadanand pleaded his paramount title is a point in his favour and not against him; he was bound to disclose his title, but he was not bound to prove it in the mortgage suit unless and until it was challenged. Following the decision in Radha Kisun v. Khurshed Hossein AIR 1920 P.C. 81, I would allow the appeal, set aside the judgment of the learned Judge of this Court and restore the judgment and decree of the-District Judge. The appellant will get his costs.