Viswanatha Ayyar vs Chimmukutti Amma and Others

Reilly, J.—The predecessor of defendant 5 in this case, the janmi of the land! concerned, granted a kanam to defendants 1 and 2. They

granted a sub-mortgage of that kanam to defendants 3 and 4, who assigned their right to the plaintiff. After that, on the expiry of the term of the

kanam, defendant 5 sued for redemption without making the plaintiff or his assignors, defendants 3 and 4,. parties to the suit, obtained a

preliminary decree for redemption and settled with the kanamdars, defendants 1 and 2, by payment out of Court. The plaintiff has brought this suit

to enforce his sub-mortgage by sale of the kanam right, which had been mortgaged to his assignors. The District Munsif gave him a personal

decree against his mortgagors and a decree for the sale of their possessory right in the land concerned, whatever that might be The plaintiff

appealed to the Subordinate Judge claiming a decree for sale of the kanam; but his appeal was dismissed. He then appealed to this Court, and the

second appeal was dismissed by Spencer, J. The present appeal is against Spencer, J.''s decision.

I have mentioned that defendant 5 paid defendants 1 and 2 the amount fixed in his redemption decree. It has been suggested before us in the

course of the arguments by Mr. Ramakrishna Ayyar for the plaintiff that the evidence of that payment is unsatisfactory. But the payment was found

by the District Munsif to have been made; the Subordinate Judge''s judgment obviously proceeds on the ground that that finding is correct;

Spencer, J., accepted it as correct; and I do not see how we can allow that finding of fact to be questioned at this stage. The District Munsif found

that neither defendant 5 nor his predecessor ever had actual notice of the plaintiff''s submortgage and that finding is not now contested. It cannot be

disputed that on the authorities, if a mortgagor without notice of any submortgage pays off his mortgagee out of Court, the submortgagee cannot

after that redemption bring the right mortgaged to him to sale. For that we have Narayana Mudali v. Raghavammal [1903] 18 M.L.J. 462,

Chinnaswamy v. Venkataramakrishnayya [1917] 37 I.C. 778, Sahadev Ravji v. Shekh Papa Miya [1905] 29 Bom. 199 and Maunq Shan Hpyu

v. U Po Thaw AIR 1928 Rang. 30. Those were all cases in which the redemption proceeded out of Court. In this case, as I have mentioned,

defendant 5 brought his suit for redemption, and it was in the course of that suit that he made his payment. Mr. Ramakrishna Ayyar has contended

that that makes a vital difference in the matter. Under Rule 1, Order 34, Civil P.C, the plaintiff, a submortgagee, as a person interested in the

mortgage security, should have been made a party to defendant 5''s suit. Mr. Ramakrishna Ayyar contends that, as he was not made a party, the

payment in his absence did not discharge the mortgage to defendants 1 and 2, which is still available to the plaintiff. He has relied upon certain

expressions in the judgment of their Lordships of the Privy Council in Shuki v. Ghulam Safdar Khan AIR 1922 P.C. 11. Their Lordships there

quote with approval as a correct statement the following sentences from the judgment of the High Court in the case:

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 made a party to the

former suit.

Mr. Ramakrishna Ayyar would have us interpret that as meaning that WE must put the plaintiff in this case into the position in which he would

have been if he had been made a party to defendant 5''s redemption suit and that he must now get what he would have got in that suit. But I do not

think that their Lordships, in quoting these expressions, meant to lay down that, when one of the proper parties to a mortgage suit was not

impleaded, the suit should be treated as if it had never been or as if the decision between the parties to the suit as it stood could be wiped out or

that the hands of the clock should be put back or that necessarily the omitted party must get all that he would have got in that suit. It has been

decided that, if a proper party in a mortgage suit is omitted, then his rights are not affected by that suit in the sense that he can still pursue his own

remedy. That is so on general principles and is made clear in Mulla Vittil Seethi v. Achuthan Nair [1913] 9 I.C. 513 and Chinnu Pillai v.

Venkatasamy Chettiar [1917] 40 Mad. 77. In this case the plaintiff, as the submortgagee, had a right to sue for sale of the property mortgaged to

him. If he was not made a party to defendant 5''s suit, his right to bring his own suit was unaffected and could be pursued by him. But if he brought

such a suit what would he get? All he could get would be a decree for sale of the mortgage right which was mortgaged to him and, if necessary and

available, in due course a personal decree against his mortgagors. It happens that in consequence of the redemption of the land mortgaged it is of

no use to the plaintiff to bring that mortgage to sale. It is gone; and therefore all that remains to him is a personal decree against his mortgagors, to

which the District Munsif has added a decree for sale of their possessory right, if any.

But Mr. Ramakrishna Ayyar has also contended that Sukhi v. Ghulam Safdar Khan AIR 1922 P.C. 11 is a direct decision that a simple

submortgagee left out of a mortgage suit to which his mortgagor is a party can in all cases afterwards enforce his mortgage by sale. I think it is

clearly a mistake to suppose that Sukhi v. Ghulam Safdar Khan AIR 1922 P.C. 11 was a case dealing with a submortgagee. In that case the first

mortgagee brought a suit for sale of his mortgage without impleading the second mortgagee, got a decree, brought the property to sale and bought

it himself. He died, bequeathing what he got by that purchase to his widow, and she gave it to secure certain annual payments to her for

maintenance. After that the second mortgagee brought a suit for foreclosure against the nephews omitting to make the widow a party. He got a

decree for foreclosure and paid the nephews about Rs. 3,000, claimed by them under the first mortgage, which they put forward as a shield against

the second mortgagee. The second mortgagee then got possession of the property. In the suit which came before the Privy Council the widow

sued for sale and she eventually got a decree for sale for the realization of the amount of Rs. 3,000, which had been paid by the second mortgagee

on the first mortgage on the ground that the nephews had derogated from the right mortgaged to her to that extent. But it was also provided that if

she wanted a decree to recover by sale any further amount on her mortgage, she must pay off the second mortgagee. On these facts, I think it is

quite clear that the widow was not, as Mr. Ramakrishna Ayyar suggested, a submortgagee.

What was mortgaged to her was what her husband, the first mortgagee, had got in his sale, i.e., the whole interest in the property to the extent of

the equity of redemption and his own mortgage but excluding the interest represented by the second mortgage. Their Lordships, while quoting from

the judgment of the High Court a statement which they say is correct, quote her description as a puisne mortgagee, as otherwise she would not

have been postponed to the second mortgagee. The case is therefore no authority for the proposition that a submortgagee left out of a redemption

suit against his mortgagor which ends in redemption can claim afterwards to bring either the property originally mortgaged to his mortgagor or what

was mortgaged to himself to sale. It is a fact as mentioned by Spencer, J., in his judgment that Madhavan Nair, J., in Second Appeal No. 668 of

1921 relied upon this judgment of the Privy Council in deciding in favour of a submortgagee in these circumstances. I think it is quite clear that

Madhavan Nair, J., realized that the case with which the Privy Council were dealing in Sukhi v. Ghulam Sardar Khan AIR 1922 P.C. 11 was a

puisne mortgagee''s case, not a submortgagee''s case as has been suggested. But he regarded it as applicable to a submortgagee''s case. With

respect I may perhaps point out that on a reference to the papers it appears that the case before Madhavan Nair, J., himself was not merely a

submortgagee''s case; it was a case of a puisne mortgagee also and therefore there is no doubt that the Allahabad case was applicable to it. But

that case in my opinion is no authority for giving a submortgagee a right which is claimed for him in this case In Muhammad Haji v. Moidin Kutti

AIR 1921 Mad. 374 a Bench of this Court decided that a sub-mortgagee left out of a redemption suit against his mortgagor after redemption had

been effected could not enforce his submortgage. And I think it is quite easy to see that on principle there is a distinction between the position of a

puisne mortgagee and a submortgagee in that respect. A puisne mortgagee obtains an interest in the property originally mortgaged and every puisne

mortgagee in his turn has a right to have his claim satisfied out of the property originally mortgaged until it is exhausted. A submortgagee has no

direct interest in the property originally mortgaged by his mortgagor''s mortgagor. He has only an interest in the mortgage right obtained by his

mortgagor a right which he knows is terminable and when that right has been legally terminated his security so far is gone. A mortgagor cannot be

allowed by redeeming some of his mortgagees to defect others but when a mortgagor wishes to exercise his legal right to redeem a mortgage

created by him, he cannot be obstructed or delayed by the existence of a submortgage of which he has never had knowledge or notice. We are

certainly not at liberty to allow new obstacles to be invented in the way of redemption.

So far I have been dealing with the case as if defendant 5 had no knowledge nor notice of the plaintiff''s submortgage. Mr. Ramakrishna Ayyar

has raised a contention that though defendant 5 had no actual knowledge of the submortgage, he had constructive notice of it. It is not suggested

that the plaintiff was in posssssion of the property or that he had the kanam-deed in his possession when defendant 5 came to pay off the

mortgage. Constructive notice is not suggested in either of these ways. But it is contended that, when defendant 5 brought his suit for redemption, it

was his duty Under Rule 1, Order 34, Civil P.C., to bring before the Court all the parties interested in the mortgage security; and in order to

perform that duty he ought to have searched the records of the Registration Department, and, if he had done so, he would have discovered the

plaintiff''s submortgage. It cannot be contended in a case like this that the registration of the sub-mortgage itself was notice. That is not the law as it

was at the time of defendant 5''s suit nor is it even the law as altered by the recent amendment of the Transfer of Property Act. And the cases I

have quoted Narayana Mudali v. Raghavammal [1903] 18 M.L.J. 462 and Chinnaswamy v. Venkataramakrishnayya [1917] 37 I.C. 778,

Sahadev Ravji v. Shekh Papa Miya [1905] 29 Bom. 199 and Maung Shan Hoya v. U Po Thaw AIR 1928 Rang. 30, would all have been wrong

if registration of the submortgage was itself notice. But the contention is that defendant 5, if he was to perform his duty to the Court, would have

been bound to search the records of the Registration Department in order to find out who were the parties interested in the mortgage security so as

to make the array of defendants in his suit complete. As Mr. Ramakrishna Ayyar has urged in Tilakdhari Lal v. Khedan Lal AIR 1921 P.C. 112

their Lordships of the Privy Council in discussing the duty of a plaintiff u/s 85, T.P. Act, before the present CPC came into force, to bring before

the Court in a mortgage suit all the parties interested in the property say:

In order to discharge that duty the plaintiff was bound to search the register, and his omission to do so would be presumed to have been a wilful

abstention from the search or gross negligence; and in either case he would be deemed to have had notice of the fact that he would have

discovered if the search had been made.

Those remarks appear to be equally applicable to the duty of a plaintiff in a mortgage suit Under Rule 1, Order 34 of the Code; and in that

sense I do not see how we can escape the result that defendant 5, when he brought his suit, must have had constructive notice of the plaintiff''s

submortgage. But what is the result of that? Defendant 5 did not perform the duty to the Court which should have been performed. He might have

been penalized in various ways for that. Anything that was done in the suit in the absence of the plaintiff would not prevent the plaintiff from

pursuing his own remedy as he might be advised. But can that affect the legal result of defendant 5''s redemption suit between the parties to it? The

suit was not altogether ineffective because the plaintiff was not made a party to it. We cannot wipe out that suit; we cannot pretend that it was

never heard and decided; we must respect its legal effect; and as between defendant 5 and his mortgagees, defendants 1 and 2, the legal effect of

what happened in that suit is that their kanam was redeemed and, so far as they are concerned, is gone for ever. The plaintiff had only a mortgage

right over that kanam, and, if the kanam is gone, then the whole foundation of his suit, so far as it is for sale, is gone too. In spite of the fact that in

accordance with a very long course of decisions payment out of Court in redemption by a mortgagor to his mortgagee with the knowledge that

there is a submortgagee who is not satisfied cannot affect the submortgagee''s right, as in this case the mortgage has been redeemed in accordance

with the decree of the Court, we cannot turn the clock back and pretend for the benefit of the plaintiff or anyone else that that has not happened.

That is in effect the way in which the question was dealt with in Muhammad Haji v. Moidin Kutti AIR 1921 Mad. 374, and with respect I think

that that is the way to look at it.

There was one other contention raised by Mr. Ramakrishna Ayyar on the ground that the payment in this case was admittedly made by

defendant 5 to defendants land 2 after the preliminary decree in the redemption suit but not into Court. The payment was made out of Court and

was reported to the Court. He contends that, after a preliminary mortgage-decree is made directing payment of an amount into Court such and

such results follow, but no payment out of Court has any valid effect. For that he relies upon Singa Raja v. Pethu Raja [1919] 42 Mad. 61. What

was decided in that case was that, if after a preliminary decree the mortgagor alleges that he has paid the amount due from him out of Court and

the mortgagee disputes it, the Court will not recognize a payment not made in accordance with the directions of the decree into Court. But that can

in no way affect the right of the mortgagor and the mortgagee to settle between themselves out of Court and report the matter to the Court. If they

are in agreement and bring the payment to the notice of the Court, it is surely absurd for the Court to take up the position that the preliminary

decree still stands and can be pursued, although the parties do not wish it to be done. Certainly that cannot be done at the instance of a third party

not impleaded in the suit.

I may add in conclusion that this case has been argued before us as one of a mortgage and a submortgage. The mortgage is a kanam, and a

kanam is not a mortgage only; it is also a lease. But throughout these proceedings in all the Courts the case appears to have been treated as one of

mortgage, and in that way I have dealt with it. If it were treated as a case, not of a submortgage of a mortgage right, but of a mortgage of a

leasehold right, still more if it were treated as a case of a mortgage of a kanam tenure under the new Malabar Tenancy Act, other considerations

might arise. But I do not think that we ought to go into those aspects of the matter on the present occasion in view of the way in which the case has

been treated in all the Courts.

In my opinion all the appellant''s contentions fail, and this appeal should be dismissed with costs.

Anantakrishna Ayyar, J.

I agree.