Suraj Narain Chaudhary vs Maharajadhiraja Kumar Bisheshwar Singh and Others

Manohar Lall, J.—This is an appeal by defendant 1 against a decision of the learned Additional Subordinate Judge of Darbhanga dated 7th August 1935 by which he decreed the suit of the plaintiff, respondent 1, which was instituted for enforcing four mortgage bonds executed by the appellant on various dates in favour of respondent 2, the assignor of the plaintiff. The principal question for determination is the extent to which the first mortgage bond dated 14th August 1925 can be enforced. The facts necessary for determination of the controversy between the parties may be stated as follows.

On 14th August 1925 the appellant executed a mortgage bond (Ex. 5) for Rupees 30,000 in favour of Apurba Babu, defendant 2 in the action, stipulating to pay interest at 12 per cent, per annum, the due date of payment was 14th August 1926.

The properties mortgaged in this bond consisted among other properties of village Kasraur, tauzi No. 16. On 7th February 1927 the appellant executed another mortgage bond to secure a sum of Rs. 12,000 in favour of the same mortgagee by giving in hypothecation the same properties as were covered by the bond of 1925. On 25th August 1929 the appellant executed a third mortgage bond in favour of the same mortgagee to secure a sum of Rs. 10,000 and lastly on 15th September 1929, the appellant executed a fourth mortgage bond in favour of defendant 2 to secure an advance of Rs. 15,000 the properties mortgaged being the same in all these four bonds in suits the rate of interest being also the same.

In the year 1930 Mt. Sarosati Bahuria, defendant 3, was executing her money decree against the mortgagor; she assigned four annas in this decree to the plaintiff on 4th August 1930. On 12th September of the same year the plaintiff applied to be added as a co-decree-holder in the execution proceedings. In his petition, Ex. 3(E) at p. 111, he stated that he was the purchaser of the four annas share of the decree passed in favour of Mt. Sarosati Bahuria against Suraj Narain Choudhuri, judgment debtor, under the deed of assignment executed by Mt. Sarosati Bahuria on 4th August 1930, that the said decree was under execution in case No. 160 of 1930 and prayed that he should be brought on the record as one of the decree-holders.

The order sheet Ex. M at p. 99 shows that the Court after hearing the objection of the parties ordered on 12th January 1931, that the plaintiff should be added as a decree-holder in the execution proceedings. It should be stated, however, that before this when Sarosati Bahuria was the sole decree-holder she had applied to realise her decree by asking the Court to attach and sell village Kasraur tauzi No. 16, one of the mortgaged properties. On 18th July 1930, she had put in a petition that the property sought to be sold had an encumbrance of Rs. 45,000 upon which the Court ordered that a note to that effect should be made in the sale proclamation: see Ex. M at p. 99.

The petition of the lady is at p. 109 in which reference is made to the encumbrance of Rs. 45,000 under a mortgage bond. It is common ground, and indeed it is established on the evidence, that the mortgage bond referred to is first mortgage bond in suit, namely, of 14th August 1925. On 16th January 1931 the plaintiff and his co-decree-holder both informed the Court by means of a petition that in order to show the encumbrance on the judgment-debtor''s properties noted in the inventory of the properties sought to be sold a copy of the mortgage bond dated 14th August 1925, executed by Suraj Narain Chaudhuri (the appellant) in favour of Apurba Babu is being obtained today in the registration department which will be supplied within two days (Ex. F(3) at p. 113).

On the next day the two decree-holders filed another petition Ex. H (1) (at p. 114) in which they stated that the entire debt due on this mortgage was Rs. 56,038, that is Rs, 30,000 principal and Rs. 26,038 as interest, and they also filed a copy of the bond executed by the appellant in favour of Apurba Babu. The proceedings show that the Court had ordered the issue of sale proclamation fixing 2nd March 1931, for sale at 12 noon and the value of the property sought to be sold was fixed by the Court at Rs. 4,00,000: see Order No. 36 Ex. M at p. 100.

On 19th January 1931, the Court by Order No. 42 after hearing the parties directed that the sale of the property should take place first of four annas share and if the price fetohed did not cover the decretal amount which was about Rs. 15,000 then another four annas share was to be sold and finally the remaining eight annas would also be sold if the first two sales did not fetch the full decretal amount and directed that the sale proclamation was to make a mention of these specific directions. The sale proclamation which was actually issued is Ex. L at p. 116. It mentions that in the property which was sought to be sold, namely, village Kasraur, the share of the judgment-debtor was 15 annas and odd bearing tauzi No. 16, and also gave particulars as to the area and the sadarjama payable.

It also mentions the encumbrance as Rs. 56,038 under mortgage bond dated 14th August 1925, executed by Babu Suraj Narain Chaudhuri in favour of Apurba Babu and then notes the directions which the Court had given as to the order in which shares in this property would be put for sale. On 2nd March 1931 the two decree-holders applied for permission to offer bids in the auction sale to the extent of their decretal amount. The Court apparently allowed the prayer. The sale was actually held on 7th Maroh 1931--four annas share in village Kasraur, tauzi No. 16, was first sold to the decree-holders for Rs. 3800 and then another four annas share was sold for Rs. 3800 and lastly the remaining eight annas share was sold for Rs. 7600 with the result that the entire share of the judgment-debtor in village Kasraur was knocked down to the decree-holders for a sum of Rs. 15,200.

The judgment-debtor put in the usual application under Order 21, Rule 90, Civil P.C., asking for the setting aside of the sale on the ground of alleged irregularities in publishing and conducting the sale leading to the sale in favour of the decree-holders for a grossly inadequate price. The decree-holders auction-purchasers in their objections to this application of the judgment-debtor asserted amongst other things that the allegation of the petitioners that the properties sold by auction arc valued at Rs. 4,00,000 is wrong and false. The properties sold by auction have been sold, subject to the encumbrance, for proper price.

See para. 5 Ex. J (1), p. 125 and para. 5, Ex. J at p. 126--the first is the refutation petition by Mt. Sarosati Bahuria dated 2nd May 1931, and the second is the refutation petition by the plaintiff dated 5th June 1931.

The Court by its order dated 16th January 1932, (see Order No. 65 at p. 104), refused to set aside the sale holding that the processes of execution were duly served and that there was no irregularity. The only irregularity which was alleged for the first time in argument before him was that the sale which was originally fixed for 2nd March had been adjourned to 7th March without fixing the hour of sale. But the Court held that even if this may be assumed to be an irregularity there was nothing in the evidence from which it could be directly or indirectly inferred that the inadequacy of the price fetched--which could not be gainsaid--at the sale was due to this irregularity.

Against this decision there was an appeal to this Court (Miscellaneous Appeal No. 23 of 1932) but the judgment-debtor could not obtain any real relief. On 22nd January 1932 the Court issued a sale certificate in favour of Mt. Sarosati Kuer and the plaintiff certifying that these decree-holders have been declared purchasers for a consideration of Rs. 15,200 at a sale held by public auction on 7th March 1931, of 15 annas and odd share of village Kasraur, tauzi No. 16, having an area of 750.42 acres with a jama of Rs. 902-3-0 together with all zamindary rights appertaining to this tauzi.

It also mentions that the plaintiff was substituted as a decree-holder on 12th January 1931. It appears that about this time a receiver was appointed and had taken possession of this village Kasraur, tauzi No. 16. On 6th July 1932, defandant 2 assigned his rights in all the mortgage bonds in suit to the plaintiff for a sum of Rs. 90,000.

The plaintiff instituted the present suit on 9th August 1932, and stated in para 12 of the plaint'' that before getting the assignment under the sale deed dated 6th July 1932 from the mortgagee, the plaintiff along with Mt. Sarosati Bahuria purchased a portion of the mortgaged property, namely, village Kasraur, tauzi No. 16, given in Schedule 3 of the plaint, at an auction sale held on 7th March 1931, for Rs. 15,200 in which the plaintiff''s share was four annas (being the same share which he had purchased in the decree) and in which the Musammat has a share of 12 annas.

He also stated in this paragraph that the plaintiff and Mt. Sarosati Bahuria, defendant 3, entered into possession by obtaining a formal delivery of possession in November 1933, after the appeal of the judgment-debtor had been dismissed by the High Court against the order refusing to set aside the sale and that the plaintiff is in possession of only four annas, the share which he purchased. The plaintiff gave a deduction of Rs. 3040 from the amount due on the mortgage bond by spreading the proportionate amount of the dues on the four mortgages in suit on his four annas of village Kasraur. He prayed for the usual mortgage decree for Rupees 1,20,356-12-0 together with interest pendente lite till realization.

The defendant in his written statement put forward a number of defences, but the principal objection which was relied upon before us was that by reason of the purchase by the plaintiff of tauzi No. 16 for a very small consideration the entire debt due under the first mortgage bond had been wiped off. This written statement was filed on 9th January 1933, and on 1st May 1935 an additional written statement was filed .in which it was alleged then for the first time (see para. 1) that the plaintiff is the purchaser of the entire share of the mortgaged property, namely village Kasraur, tauzi No. 16, that Mt. Sarosati Bahuria is only his benamidar and that the plaintiff is in possession of the entire mortgaged property.

But the issues had already been struck on 16th March 1933 and after the filing of the additional written statement on 1st May 1935 the appellant did not ask the Court to frame an additional issue as to whether the plaintiff was the purchaser of the entire 16 annas of village Kasraur with the result that it must be assumed, as has been assumed in the Court below, that the two decree-holders were purchasers of their respective shares in village Kasraur. The learned Subordinate Judge found that the plaintiff purchased 4 annas share in touzi No. 16, village Kasraur.

Mr. Das at one stage of the argument suggested that upon a true construction, of the sale certificate), it must be held that the plaintiff and defendant 3 are only joint purchasers of village Kasraur without any specification of shares but later on contended that even if it be established that as between the co-purchasers the plaintiff has purchased only 4 annas share in village Kasraur his argument as to the effect of the sale remains unaffected (this contention will be considered later on). It must be assumed, therefore, as it was assumed before the learned Subordinate Judge, that the plaintiff is the purchaser of 4 annas of village Kasraur only. If it was necessary to decide this point on the evidence I would have come to the same conclusion. The appellant also questioned the deed of assignment in favour of the plaintiff and protested at the high rate of interest included in the bond.

But these two questions have been decided adversely to the appellant and have not been raised before us in appeal. The learned Subordinate Judge fixed the value of village Kasraur, tauzi No. 16, at Rupees 72,000, of tauzi No. 17 at Rs. 63,000 and of the remaining properties under the mortgage at Rs. 54,000. He came to the conclusion that the properties mortgaged must contribute towards the amount due under the bonds in suit as follows:

Plaintiff''s 4 annas share in touzi No. 16 2/21 Mt. Bahuria''s 12 annas share in touzi No. 16 6/21 Touzi No. 17.... 7/21 And the remaining properties.... 6/21 with the result that he decreed the suit for 19/21 of the amount claimed; that 2/7th of the claim would be payable by defendant 3 out of her 12 annas share in touzi No. 16 and the remaining, that is 13/21 of the amount claimed, by defendant 1 out of the properties in mortgage except village Kasraur, touzi No. 16.

He further ordered that in ease of non-payment the mortgaged properties except the four annas share of the plaintiff in village Kasraur, touzi No. 16 will be sold. In the appeal before us the principal question and indeed the sole question argued was that the amount due to the plaintiff should be reduced by wiping off the whole of the dues under the first mortgage bond of 1925 and that in any event under the provisions of the Bihar Money-Lenders Act 1939, if the plaintiff was entitled to claim the whole of the dues under the first mortgage bond he could not recover interest thereon more than the principal. The application of the Bihar Money-Lenders Act to this case has not been challenged by the respondent.

The provisions are clear and if the plaintiff is entitled to claim any sum under the first mortgage bond the amount will be limited to Rs. 60,000. In order to determine the important question seriously agitated before us, it is plain that the most important question of fact to be determined in the first instance is what is the value of the village Kasraur, tauzi No. 16, at the date of the auction sale. The learned Counsel for the appellant seriously contested the finding of the learned Subordinate Judge by which he had fixed the valuation at Rs. 72,000. (After examining certain evidence his Lordship concluded.) For these reasons I am unable to say that the learned Subordinate Judge was wrong when he fixed the valuation of village Kasraur at Rs. 72,000. The estimate is rather excessive but is in favour of the appellant. The other oral evidence in the case is unreliable and consists in the main of the evidence of the appellant himself; It may be observed that he had produced no village papers to show what the income from the zerait and bakast lands and other zemindary income of this village was.

He admitted he had no papers to show the income from pokhars. He sought to justify the non-production of the papers by asserting that all the jamakharch books were destroyed by the earthquake. It is difficult to accept the explanation. The witness sought to make out that his family purchased these mortgaged properties for Rs. 4,00,000. At p. 54 he says:

I had to spend four lacs including the value of 46 bighas and 22 bighas. I had to spend the money in cash. We paid one lac five thousand by borrowing and the rest was with my father. My father had about three lacs of rupees. I have no documentary evidence to show that we spent four lacs. The income of my father was Rs. 1500 to Rs. 2000 besides 500 to 600 bighas of land of khas cultivation....We paid Rs. 1,63,000 or Rs. 1,65,000 to Mr. Crowdy brother of Mr. Crowdy--the value of that land was settled at Rs. 87,000, Mr. Crowdy did not take any price for this. I have no papers to show that we paid Rs. 1,63,000 or so to the brother of Mr. Crowdy.

It seems to me that a mere perusal of the cross-examination of the appellant shows that he could not be relied upon. The statement which he has made as to the amount paid to the vendor is belied by the documentary evidence consisting of the sale deed from Mr. Crowdy. But it was argued that the respondent is bound by the valuation fixed in the sale proclamation which was inserted at the instance of defendant 3 at a time when she was the sole decree-holder and that the plaintiff when he became a co-decree-holder and joined in the execution proceedings not having taken any steps to challenge the valuation was bound ''by the same. The valuation in the sale proclamation as already stated was given at Rs. 4,00,000, but the record shows that the valuation was fixed on an admission made fey the advocate of the decree-holder who was not allowed to challenge the same at a late hour of the same day.

Order No. 22 dated 23rd August 1930 shows that Babu Gangadhar Missir objected to a petition for time being granted to the judgment-debtor to adduce evidence of valuation because he was willing to accept the valuation as given by him. The Court observes:

The matter ended then. In the last hour another pleader appeared for the decree-holder to say that the question of valuation be decided by the Court on evidence. The parties cannot be allowed to play fast and loose in Court. I accept the valuation as given by the judgment-debtor. This value is to be entered in the sale proclamation.

It is clear therefore that the Court did not decide the question of valuation on any evidence but fixed it in these circumstances. It may be that the pleader for the decree-holder whose decree amounted to only Us. 15,000 was not concerned with the valuation because the property admittedly is worth more than Rs. 15,000. Be that as it may, no estoppel of any kind can arise against the plaintiff on account of the mode in which the pleader of his vendor''s decree-holder agreed to have the valuation fixed for the purpose of this execution at the stage of Rule 66, Civil P.C. The parties have adduced evidence in the case and the valuation is to be determined on the materials such as they are on the record: see in this connexion AIR 1925 Pat 500 Mohit Narain Jha v. Thekan Jha.

Having given the matter my most anxious consideration I am unable to hold that the decision of the learned Subordinate Judge that the value of village Kasraur cannot be taken at any figure higher than Rs. 72,000 is at all erroneous, and I agree with him that for the (purposes of the present suit the valuation of village Kasraur should be taken at Rs. 72,000.

I have already held that the plaintiff has purchased 4 annas share of tauzi No. 16 which must now be taken to be of the value of Rs. 18,000. What then is the effect of the assignment in favour of the plaintiff of the rights of the mortgagee in the mortgage bond dated 14th August 1925? Mr. Das for the appellant contends relying in the main on the decision of the Privy Council in (81) 7 Cal 648 Dooli Chand v. Ram Kishen Singh that the effect of the purchase was to wipe off the entire encumbrance of 14th August 1925.

He also argued relying upon the decision in (09) 31 All 583 Mt. Izzatunnissa Begam v. Kunwar Pertab Singh that the plaintiff was bound to indemnify defendant-1 to this extent by reason of his having purchased 4 annas share of village Kasraur, tauzi No. 16, in execution of a money decree in a sale held with a notification of this prior encumbrance. Sir Sultan Ahmad on the other hand, appearing for the respondents, contends that notwithstanding the purchase by the plaintiff his rights to contribution u/s 82, T.P. Act, are not abrogated and that all that the appellant can claim is to have a distribution of the mortgage debt due under the first bond on all the properties including the 4 annas of village Kasraur in the appropriate proportion as has been done by the learned Subordinate Judge; he also contended that the principle laid down by the Judicial Committee in (81) 7 Cal 648 Dooli Chand v. Ram Kishen Singh was confined to the peculiar facts of that case and has never been followed in the Indian decisions by which similar questions were decided.

In my opinion it is not possible for this Court to refuse to apply the principle laid down in (81) 7 Cal 648 Dooli Chand v. Ram Kishen Singh and (09) 31 All 583 Mt. Izzatunnissa Begam v. Kunwar Pertab Singh to the facts of this case but this will help the appellant only to the extent that the mortgage bond of 14th August 1925 will be considered to have been satisfied to the extent of the value of 4 annas of village Kasraur, viz., Rs. 18,000 less the price paid by the respondent for it. In (81) 7 Cal 648 Dooli Chand v. Ram Kishen Singh the facts shortly stated were that the mortgagor who was the owner of several villages and amongst others of two villages called Korina and Nandan had first mortgaged Korina in 1865 to the Bank and later on had mortgaged Korina and Nandan to Dooli Chand to secure Rs. 38,000.

The mortgagor there after mortgaged Nandan to the respondent for Rs. 5500. The Bank then instituted a suit on their mortgage of 1865 and obtained a decree for the sale of Korina. But Korina had been attached in execution by Chuttun Singh another decree-holder of the mort-gagor and purchased by the respondent subject to the mortgage of the Bank. Shortly after this sale, the respondent paid into Court the entire amount to satisfy the mortgage amount of the bank and got possession of village Korina. In the meantime the respondents had instituted a suit to enforce their mortgage and having obtained a decree they were proceeding in execution to sell Nandan when the appellant Doolichand intervened, gave notice of his mortgage of January 1870 and requested that it should be notified at the time of the sale and it was so notified.

It was found as a fact that the sale was made subject to that notification, and of course subject to the mortgage to the appellant, upon which he at that time claimed that a sum of Rupees 1,51,239 was due. Sir Montague Rule Smith in delivering the judgment of the Board observed:

It is plain what the effect of such a notification upon the sale must have been, and the biddings were only for the equity of redemption, which was of small value. The sale took place in August 1872, and the purchaser was one Dindyal, the appellant''s brother, the price being Rs. 11,710. A certificate of sale and possession were obtained on 11th September 1873. It has been found by both Courts that Dindyal purchased benami for the appellant. The appellant, therefore, having given notice of his mortgage, purchased the equity of redemption subject to his own debt, and thus became-both owner of the equity of redemption and mortgagee. In that state of things it became material to inquire what was the value of Nandan. It has been found by the Courts that its value, beyond the purchase, money, exceeded the amount due upon the appellant''s mortgage, and was sufficient to recover not only that amount but Rs. 18,800...Under these circumstances, it must be taken that the mortgage debt was satisfied by the purchase of Nandan and the value of that estate. The appellant, having thus obtained the full amount of his debt, could no longer avail himself of any other part of his security. The mortgage was only a security for the debt, and when it was satisfied there was an end of any right to resort to the further securities he held.

This case was sought to be distinguished by the learned Judges of the Madras High Court in the Pull Bench case in AIR 1920 Mad 375 Ponnambala Pillai v. Annamalai Chettiar but with great respect I am unable to agree with the .observations made by the learned Judges. It is not open to the Indian Courts to attempt to draw fine distinctions in the pronouncements of their Lordships of the Judicial; Committee. The observations of Sir Montague Smith which I have just quoted appear to me to be very clear and establish that; the mortgage debt of a mortgagee who purchases for a small value the equity of redemption in an estate with a notification and subject to his own debt is satisfied by the purchase of the village and the value of that village if the valuation to him exceeds the amount due on this mortgage.

If I apply this observation to the facts of the present case, it helps the appellant only to this extent that the mortgage debt will be taken to be satisfied to the extent of the value of the village purchased by the respondents less-the price paid by him for it. The respondent purchased only 4 annas of the village which has been found by me to be of the value of Rs. 18,000 but on paying Rs. 3800 for it. It follows that the mortgage of the respondent was satisfied but to the extent) of Rs. 14,200 only thus leaving him the right to enforce the unsatisfied portion of the mortgage debt against other parts of his security under this mortgage bond of August 1925 namely against the remaining 12 annas of village Kasraur, tauzi No. 16, and other properties. The case reported in (75) 24 WB 83, Byjonath Sahoy v. Doolhua. Biswanath points to the same direction.

In, that case the mortgagor had mortgaged three villages to the plaintiff who bad-become the purchaser at a sale in execution, of another decree of the rights of the mortgagor in one of the villages at a price wholly inadequate of its proper value and the Court found that at the sale in question the bids were made on the understanding that the properly Was burdened with the plaintiffs bond-debt. In these circumstances it was held that

the plaintiff has, by his own act, supplemented by the fact that he has in reality got back all money, precluded himself from following other portion of'' the property pledged to him, per Glover, J. at p. 85. Mitter J. agreeing-, observed:

The effect of this purchase by the plaintiff was therefore that through this execution sale in which he himself became the purchaser, he got himself repaid of the whole amount due to him then under the bond which is the foundation of the present action. It has been pressed upon us that, as the plaintiff only purchased one out of three properties hypothecated in the bond, the whole charge should, according to the ordinary rule of equity, be distributed over them all. We think that the plaintiff'' by his own conduct has precluded the Court in applying this ordinary rule, and under the pecnliar circumstances of this case it would be inequitable to adopt it.

In the present case plain equity requires that the plaintiff when he has obtained the satisfaction of his mortgage debt to the extent of the value to him of the village which he purchased he should not be allowed to enforce the mortgage bond to that extent. The plaintiff purchased the village on paying one-fourth of Rs. 15,200 that is to say Rs. 3800 and obtained in lieu thereof a property of the value of Rs. 18,000.

The result is that this mortgage bond is satisfied to the extent of Rs. 14,200 as stated already. Nor can Mr. Das derive any greater advantage than this from the case in (09) 31 All 583 Izzatunnissa Begam v. Kunwar Pertab Singh. In that case the mortgagor whose property had been sold at an auction sale subject to certain encumbrances which later on turned out to be invalid sued the purchaser for recovery of the amount due under the in-valid mortgages but the suit was dismissed on the ground that the purchaser was entitled to the benefit accruing to the property from its having been exonerated from mortgage liability and was not liable to account to the vendor for the amount thereof as unpaid purchase money or by reason of his being estopped from denying the validity of the mortgages. Lord Maonaughten in delivering the judgment of the Board observed:

On the sale of property subject to Incumbrances the vendor gets the price of his interest, whatever it may be, whether the price be settled by private bargain or determined by public competition, together with an indemnity against the incumbrances affecting the land. The contract of indemnity may be express or implied. If the purchaser covenants with the vendor to pay the incumbrances, it is still nothing more than a contract of indemnity. The purchaser takes the property subject to the burthen attached to it. If the incumbrances turn out to be invalid, the vendor has nothing to complain of. He has got what he bargained for. His indemnity is complete. He cannot pick up the burthen of which the land is relieved and seize it as his own property. The notion that after the completion of the purchase the purchaser is in some way a trustee for the vendor of the amount by which the existence, or supposed existence, of incumbrances has led to a diminution of the price, and liable, therefore, to account to the vendor for anything that remains of that amount after the incumbrances are satisfied or disposed of, is without foundation. After the purchase is completed, the vendor has no claim to participate in any benefit which the purchaser may derive from his purchase.

Relying upon these weighty observations Mr. Das argued that when the plaintiff purchased four annas share of village Kasraur he gave an indemnity to the appellant that he would be relieved from the entire burden of the mortgage debt due on the bond of August 1925. Similarly he argued that when defendant 3 purchased the twelve annas share in village Kasraur by the same sale she also gave an implied indemnity that she would relieve the mortgagor, whose property she had purchased, from the entire encumbrance of the bond of August 1925. He also referred to the case in AIR 1984 Mad 1 Rama Rayanimgar v. Raja of Kalahasti and to certain passages in the well-known book of Leek on Contract at page 50, etc., to show that the indemnity of co-sureties extends to the whole of the amount indemnified.

In my opinion this argument is of no assistance to the appellant. There is admittedly no express indemnity in the present case. But there is an implied indemnity and that implied indemnity, by the application of the principle laid down in (81) 7 Cal 648 Dooli Chand v. Ram Kishen Singh, can only extend to the actual value to him of the property which has been purchased by the auction-purchaser. I cannot construe the auction sale in the present case as imposing an implied liability upon the plaintiff-respondent to pay off the prior encumbrances of an amount in excess of the value to him of the share which was purchased. It should be noticed that in the present case the auction-purchaser was not the mortgagee at the date of the purchase in 1931. He became the assignee of the mortgagee at a later date. The question of the extent to which the mortgagor can call upon defendant 3 to indemnify him can only be decided in appropriate proceedings hereafter if the mortgagor is so advised and we have not been asked to decide that question in the present action.

But the plaintiff having become the assignee of the mortgagee after his auction-purchase cannot be allowed in this action to enforce his newly acquired rights without indemnifying the mortgagor to the extent already indicated. It is right that I should deal with some cases that were relied on by Sir Sultan Ahmad in support of his argument that the principle in 8 IA 932 should not be applied to this case. The first case relied upon was the Pull Bench case in (1900) 22 All 284 Bisheshur Dial v. Ram Sarup where it was held that:

When a mortgagee buy at auction the equity of redemption in a part of the mortgaged property, such purchase has, in the absence of fraud, the effect of discharging and extinguishing that portion of the mortgage debt which was chargeable on the property purchased by him, that is to say, a portion of the debt which bears the same ratio to the whole amount of the debt as the value of the property purchased bears to the value of the whole of the property comprised in the mortgage.

The judgment of the Full Bench which was delivered by Banerji J., shows that the learned Judge relied entirely upon the provisions of Section 82, T.P. Act. He points out that there can be no doubt that if persons other than the mortgagee purchase different parcels of the mortgaged property, their liability, inter se, is proportionate to the relative value of the property purchased by each of them, and it is immaterial what price was paid for it and that if any such purchaser has to discharge the whole of the mortgage debt, he is entitled to claim contribution from the owners of the remainder of the mortgaged property, and this right subsists even if the price of the parcel purchased by him was grossly inadequate, and the difference between that (price and the actual market value of the property was In excess, not only of the amount of the proportionate liability of the property, but also of the whole amount of the mortgage debt.

The learned Judge then at p. 290 puts this question:

Does the case become different if the purchaser of a part of the mortgaged property be the mortgagee himself ? and gave this answer:

There appears to be no difference in this respect between the case of a purchase by a stranger and that of a purchase by the mortgagee. When the mortgagee buys at auction the equity of redemption in a part of the mortgaged property, all that the mortgagor or other person interested in the remainder of the mortgaged property can claim, is that he should not be placed in a worse position than that in which he would have been had the purchase been made by an outsider; that is to say that the property in his hands should not be rendered liable for a larger amount than the sum with which it would have been chargeable in the case of a purchase by a stranger. In the latter case, if the mortgagor or other owner were compelled to discharge the whole of the debt he would be entitled to contribution from the purchaser rateably to the value of the property purchased by him. In the case of a purchase by the mortgagee there appears to be no reason why the mortgagor or his representative should be allowed anything beyond a right to have his liability reduced to the same extent as in the Case of a purchase by an outsider, and this seems to be the only equity to which he is entitled.

The conclusion at which the Full Bench arrived as given by the learned Judge at p. 293 is:

As the mortgagee in this case purchased a moiety of the mortgaged property, the mortgage debt became extinct to the extent of a moiety only, and the plaintiffs were entitled to recover the other moiety by the sale of the remainder of the mortgaged property.

Although the facts of the case show that at the time of the auction sale an application had been made to notify the amount of the mortgage debt, this fact has not been noticed in the judgment of Banerji J. nor, it is to be observed, was the Case in 8 IA 932 brought to the notice of the learned Judges. Although this Case is directly in favour of the contention of Sir Sultan Ahmad, I am unable to treat this as a decision binding upon this Court in the face of a contrary decision of the Privy Council. It may also be observed that the learned Judge relied upon two decisions of the Privy Council, namely, (89) 16 Cal 682 Mahabir Pershad Singh v. Macnaghten and (70) 13 MIA 404 Nawab Azmat All Khan v. Jawahir Singh, but these decisions do not appear to be relevant.

In the former case all that was held was that the mortgagee who buys the mortgaged property at auction with the leave of the Court is not a trustee for the mortgagor, and is in the same position as any independent purchaser. The facts, of the case show that the mortgagees had put up to sale the mortgaged property in execution of a decree obtained by them and themselves purchased the property after obtaining leave to bid. In the second case it was admitted before their Lordships that the plaintiffs as purchasers of the equity of redemption in a portion of the mortgaged properties are entitled to redeem that portion on payment of some proportion of the mortgage debt and the only objections to the decrees made were (so far as relevant to the present controversy) as to the mode in which the rateable share of the debt payable in respect of Hosseinpore had been calculated, and secondly, as to the mode in which the gross amount of the mortgage debt to be apportioned had been ascertained: see the observations of Sir James Colvile, who delivered the judgment of the Board, at p. 408.

It may be observed, that in that case the mortgagee is not stated to have purchased the property as the result of a notification such as exists in the present case.

The next case relied upon was the case in (98) 22 Bom 304, Lakhmidas Kamdas v, Jamnddas Shankar Lal. In that Case three properties were mortgaged to the plaintiff for Rs. 90. In execution of a simple decree for money the equity of redemption in one of those properties, namely, a house, was sold by auction and purchased by the plain tiff mortgagee for a very small sum of Rs. 2-2-0. The mortgagee auction-purchaser sold this to one Francis for Rs. 100 and subsequently brought his suit to recover Us. 90, the whole of the mortgage amount by sale of the two remaining properties. Farran C.J. in reversing the decision of the trial Court, who bad dismissed the suit on the ground that the plaintiff had realised Rs. 100 by the sale of the property purchased by him and, therefore, nothing was due, held that:

The plaintiff, when he purchased the equity of redemption in the house, purchased it subject to its due proportion of the mortgage debt. That portion of the mortgage debt thus ceased to exist, and the plaintiff''s right as mortgagee to recover the money secured by his mortgage was reduced to that extent. What proportion of the mortgage debt was thus wiped out depends upon the proportion of the value of the house to the value of the rest of the mortgaged properties.

It will be observed again that in this case which was relied upon by the learned Judges in (1900) 22 All 284 Bisheshur Dial v. Ram Sarup the mortgagee did not purchase the property after the mort-gage encumbrances had been notified. The next case to which our attention was drawn was the case in (1911) 11 Cal LJ 639 Mir Eusuff Ali Haji v. Panchanan Chatterjee. It is pointed out at p. 844 that the Courts, if called upon to scrutinise the transaction, will look upon it with jealousy, and will set aside a purchase made by the mortgagee when, by the influence of his position or by constructive fraud, he has gained an unconscionable advantage and has purchased the property for such a low price as may be taken to be fairly indicative of fraud or undue influence. But, in the absence of fraud or undue influence or fiduciary relation, the mortgagee may purchase the equity of redemption of the mortgagor upon the same footing as any other person;

and a few lines later:

What then is the result of such purchase on the position of the mortgagee? It has been argued on behalf of the mortgagee that, if he takes a conveyance of a part of the mortgaged premises from the mortgagor, his position is not affected at all and he is entitled to proceed against the property still left in the hands of the mortgagor for the realisation of the balance of his debt. It has been strenuously argued, on the other hand, on behalf of the mortgagor, that the effect of a purchase by the mortgagee of a part of the mortgaged premises, is always to extinguish the mortgage pro tanto. In our opinion, both the contentions are too broadly expressed, and neither of them can be accepted as strictly correct and well founded on principle. The true principle is that the effect of the transaction must be judged by its nature. If the sale was intended to be one of the equity of redemption merely, the mortgagee acquired the property subject to his mortgage, and in such a contingency, it would be right to hold, that, while there is no extinguishment of his right to enforce the mortgage against the remainder, the mortgage is extinguished to the extent of the amount fairly chargeable upon the property purchased by him. If, on the other hand, the sale was of the property freed of the mortgage, and the intention of the parties was that the mortgagee should hold the portion transferred to him freed from the mortgage debt, and the purchase money should be applied in reduction of his dues, it would obviously be erroneous to maintain that the mortgagee was still bound to apportion the debt. In this latter contingency, unless the purchase might be successfully impeached on the ground of fraud or undue influence, it would manifestly be equally erroneous to ask the mortgagee to allow credit for a larger sum than what was deliberately settled as the price of the portion purchased by him. If this distinction is borne in mind, the judicial decisions, to which reference has been made by the parties in support of their respective cases, may be easily reconciled.

The learned Judges then proceeded to consider a number of cases including the Allahabad Full Bench case and the Bombay case referred to by me already. In my opinion the observations in Mir Eusuff Ali Haji v. Panchanan Chatterjee (1911) 11 Cal LJ 639 do not help the respondent and do not appear to lay down any rule of law contrary to what has been authoritatively laid down by their Lordships of the Judicial Committee in Mt.Izzatunnissa Begam v. Kunwar Perteb Singh 6 ALJ 817 I next consider the case in Gulzari Lal Vs. Ali Ahsan and Others, which was relied upon by both sides. The facts of the case though somewhat complicated have been succinctly stated at page 930 of the report, and may be briefly reproduced here. In November 1910 the mortgagor executed a mortgage for village Lalpur and Kuramai in favour of two persons Mauji Ram and Sita Ram. On 17th March 1911 he entered into an agreement for granting village Kuramai in zarpeshgi to Mt. Aziz Fatima, who obtained a decree for specific performance of this agreement in January 1912 with a declaration that the zarpeshgi was to take effect from 17th March 1911. On 22nd March 1911 the mortgagor executed two simple mortgages in favour of Gulzari Lal regarding village Kuramai and one house. We notice therefore that the mortgage in favour of Gulzari Lal was the third mortgage regarding village Kuramai and the first mortgage regarding the house.

On 19th August 1919 the mortgagor executed a usufructuary mortgage in favour of defendants. 2 and 3 regarding village Lalpur only which, it may be noticed, was subject to the only mortgage of November 1910. Gulzari Lal instituted a suit on the foot of his simple mortgages and obtained a preliminary and final decree in the presence of all the necessary parties, in execution whereof he purchased village Kuramai for a sum of Rs. 5000.

After he became the purchaser he paid off the sums due to the zarpesbgidar of 17th March 1911 and also paid off the two earlier mortgages of November 1910. In September 1928, Gulzari Lal instituted, a Suit for contribution against defendants 2 and 3 as usufructuary mortgagees of August 1919 regarding village Lalpur, the prior encumbrance whereof had been paid off by Gulzari Lal.

The defence to the action was that when Gulzari Lal purchased Kuramai he purchased it subject to the entire incumbrance of the bond of November 1910 with the result that Lalpur became free from incumbrance altogether. The learned Subordinate Judge found that the value of Kuramai, which was purchased by Gulzari Lal in execution of his decree, was over Rs. 17,000 and as the plaintiff has purchased it for only Rs. 5000 he was not entitled to contribution. In the appeal before the High Court of Allahabad, two questions arose for consideration. The first was whether the plaintiff''s purchase of village Kuramai was subject to the entire charge created by the deed of November 1910, which has been subsequently paid off by him, and secondly, whether assuming the plaintiff purchased Kuramai subject to the entire charge, he is or is not entitled to contribution from those interested in village Lalpur.

In proceeding to consider the question of fact which would decide this question the learned Judges observed that sale proclamation was not produced in the ease but considering the entire evidence in the case they had no doubt that the plaintiff purchased village Kuramai far below its market value and observed that:

This circumstance by itself may have no effect on the right of the plaintiff to obtain contribution, but it has evidential value in considering the question whether he purchased the village subject to the entire incumbrance or only to a proportionate charge.

They further observed:

We think the circumstances of this case indicate that the arrangement contemplated was that the entire charge be laid on this village which was of much greater value than the decretal amount for which it was to be sold. The fact however remains, as appears from the documents to which referenoe has been made, that the village Kuramai was sold to the plaintiff-appellant on the distinct understanding that the whole of the mortgage money payable under the deed of 18th November 1910 would be paid by him. In arriving at this finding we have been greatly influenced by the proceeding recorded on the date of sale and the terms in which the auctioned property is described in the sale certificate.

The learned Judges further pointed out that there was no doubt that if a sale deed executed by the mortgagor couched in the terms employed in drawing up the sale certificate had been executed, the plaintiff could not have successfully contended that he did not assume the liability to pay the entire incumbrance created by the mortgage, of 18th November 1910 and that the position could not be materially different where the sale certificate contained the same terms and where it was dear that the bids had been invited on those terms.

The sale certificate, it may be stated, in the case before the learned Judges gave the description of, the property sold as village Kuramai subject to the entire prior encumbrance. For these reasons the learned Judges held that the plaintiff purchased the village Kuramai subject to the entire incumbrance in favour of the earlier mortgagees, Mauji Ram and Sita Ram, with the result that village Lalpur became free from incumbrance as between the auction-purchaser and the judgment-debtor.

Sir Sultan Ahmad relied strongly upon this case in support of his contention that it is the sale certificate which should deoide what the executing Court had sold and argued that as the sale certificate in the present case did not make any mention that the sale of village Kuramai, tauzi No. 16, was subject to the entire incumbrance.

It should be held that the plaintiff in the present case purchased the village subject to the so called incidence which attaches to a sale of property which is subject to a mortgage so that the rights of the plaintiff to contribution u/s 82 cannot be defeated, Mr. P.R. Das on the other hand argued that a sale certificate which is directed to be issued by the Courts under Order 21, Rule 94, Civil P.C., is nothing more than a ministerial act and that the proceedings which lead up to the sale, and in particular the sale proclamation, must, always be looked at to determine what the Court did actually put up for sale and what was purchased. In my opinion the true view is that the fact whether the purchase by the plaintiff is subject to the entire charge is a question of fact in each case as was truly observed at p. 930 of the case just dealt with.

If the question of fact is decided in favour of the plaintiff that neither the Court intended to sell nor the auction-purchaser intended to purchase village Kasraur subject to the entire encumbrance of the earlier mortgage, the plaintiff is entitled to the benefit of the provisions of Section 82, T.P. Act. It seems to me therefore that this case is of no assistance to either side.

The result then of the examination of the cases relied upon by Sir Sultan Ahmad is that I am confirmed in the view which I have already expressed that this case is expressly governed by the rule laid down by their Lordships of the Judicial Committee in Dooli Chand v. Ram Kishen Singh (81) 7 Cal 648

The account of the amounts due from defendants 1 and 3 on the first mortgage bond dated 14th August 1925, will have to be re-cast in the light of my decision in this way that the first mort-gage bond will be treated to have been satisfied to the extent of Rs. 14,200 on 9th August 1932 and with the further condition that the amount due on this bond on account of principal and interest shall not exceed Rs. 45,800. The figures as worked out in the decree at pp. 82 and 83 as to the amount due from defendant 1 on account of the second, third and fourth mortgage bonds are admittedly correct. Similarly the account of the first mortgage bond due from defendant 3, Mt. Sarosati Bahuria, will have to be recast on the same lines, but the amount due from her on account of the second, third and the fourth mortgage bonds as worked out at pp. 85 and 86 of the decree will not be interfered with.

The office will draw up a mortgage decree to carry out these directions. The result is that the appeal is allowed in part; the appellant is entitled to costs in proportion to his success in this appeal. He will pay to the plaintiff-respondent costs in proportion to the extent to which the appeal has failed.

Harries, C.J.

I agree.