Judgement

Appeal from a judgment and decree of the High Court (May 13, 1913) varying a decree of the Court of the Subordinate Judge of Moradabad.

The appellant, in 1883, purchased immovable property which was subject to a simple mortgage made in 1880 in favour of one Lachman Das, and to further mortgage made in 1881 in favour of the first respondent, and took possession.

In 1895 Lachman Das obtained against the mortgagor and the appellant a decree absolute for sale under s. 83 of the Transfer of Property Act, 1884, upon his mortgage of 1880. The first respondent was not made a defendant to the suit although his mortgage of 1881 was duly registered. Later in 1892 Lachman Das died, without having executed the decree, and was succeeded by the appellant as heir. The appellant took no steps under the decree.

Law Rep. 45 Ind. App. 130 ( 1917- 1918)

Het Ram V. Shadi Lal 44

In 1910 the first respondent instituted the present suit against the mortgagors, the appellant, and other transferees of the property mortgaged (now joined as respondents), for a sale decree under his mortgage of 1880.

The trial judge made a decree for sale, but ordered that the sale should be subject to the prior mortgage right of the appellant under the mortgage of 1880.

Upon appeal to the High Court the decree was varied by omitting the direction in favour of the appellant. The learned judges (Richards C.J. and Lyle J.) said " We think that if Het Ram had acquired the mortgage of 1880 while he was still owner of the property subject only to the mortgage now sued upon, he could probably set up the equity of his prior mortgage of 1880. But it seems to us that Het Ram cannot be regarded as the owner of the mortgage of 1880. The (previous) suit was brought upon the foot of that mortgage and a decree obtained which has never been executed. We think that the mortgage merged in the decree, and that the acquiring of the decree by Het Ram cannot be said to have vested in him the mortgage upon which the decree was based. Neither is he in the position of a person who has purchased upon the foot of a sale in execution of the decree of 1880."

1918. Feb. 21, 22. Dunne, K.C., and T. B. W. Ramsay, for the appellant. The decree of the trial judge was right. The appellant succeeded to the rights of Lachman Das under the prior-mortgage. There was thereupon no merger of those rights, and the appellant was entitled in justice, equity, and good conscience to the benefit of that mortgage Gokuldoss v. Rambux Seochand (( 1884) L. R. 11 I. A. 126.); Dinobundhu v. Jogmaya (( 1901) L. R. 29 I. A. 9.); Mahomed Ibrahim v. Ambika . (( 1912) L.

R. 39 I. A. 68.) The decree of 1892 did not extinguish the prior mortgage right as against the first respondent, since the latter was not a party to the decree. Further, the appellant could not enforce the decree, since he was owner of the mortgaged property.

Dube, for the first respondent. Under s. 89 of the Transfer of Property Act the security contained in the prior mortgage ceased to exist upon the decree absolute being obtained Ram Singhji v. Chunni Lal . (( 1897) I. J. R. 19 A. 205.) The appellant has no rights against the first respondent upon the decree. First, because the first respondent was not made a defendant, as (under

s. 85) he should have been. The mortgage of 1880 being registered, Lachman Das had notice of it Mahomed Ibrahim v. Ambika . (L. R. 39 I. A. 68, 82.) Secondly, because under Sched. II., art. 179, of the Limitation Act, 1877, a period of three years was provided for enforcing the decree. Time began to run from the date of the decree absolute Mahabir Prasad v. Sital Singh (( 1897) I. L. R. 19 A. 520.); once it began to run there was no suspension owing to the fusion of the mortgagor and mortgagee interests Lala Soni Ram v. Kanhaiya Lal . (( 1913) L. R. 40 I. A. 74, 85.) The appellant could have taken steps upon the decree under s. 232 of the Code of Civil Procedure, 1882.

Dunne, K.C., in reply. The provisions as to limitation do not apply, since the appellant is not suing. Sect. 28 of the Limitation Act does not affect the equitable right which the appellant claims. The appellant could not enforce the decree against his own property; it would therefore be inequitable to hold that he is deprived of his rights under the prior mortgage.

March 15. The judgment of their Lordships was delivered by

VISCOUNT HALDANE. The material point in this appeal, which comes from the High Court of Judicature for the North-Western Provinces, Allahabad, lies in a short compass. The question in the suit was whether property in mortgage to the respondent Shadi Ram, as to which he had sought to obtain a decree for sale under Order xxxiv., r. 2, of the Code of Civil Procedure, 1908, should, when

Law Rep. 45 Ind. App. 130 ( 1917- 1918)

Het Ram V. Shadi Lal 45

sold, be treated as sold subject to an alleged prior right of the appellant under an earlier mortgage. This earlier mortgage was dated February 25, 1880; Shadi Rams mortgage was dated October 15, 1881.

The appellant had become the successor in title to the mortgagors, and it is assumed, for the purposes of this appeal, that he had also acquired such title as remained to the mortgagee under the earlier mortgage. In 1892 the prior mortgagee, whose name was Lachman Das, brought a suit on his mortgage and in 1895 obtained a decree for a sale under s. 89 of the Transfer of Property Act, 1882.

But the suit was brought only against the remaining mortgagor, and the second mortgagee was not made a party. This decree neither Lachman Das nor his successor in title took any steps to execute, and under art. 179 of the Second Schedule to the Indian Limitation Act, 1877, it ceased to be operative when three years had elapsed from the date of the decree becoming absolute. It had thus become wholly ineffective long before the present suit was commenced. The only other observation which it is necessary to make before considering the question of law that arises under the Transfer of Property Act, 1882, is that on the admissions of the parties it is to be taken that the second mortgage was duly registered, and that the first mortgagee must be taken to have had notice of it when he brought his suit and obtained a decree for sale in 1892.

The mortgage made to Lachman Das in 1880 was a simple mortgage within the meaning of s. 58 of the Transfer of Property Act, and under s. 67 the mortgagee had a right to obtain, as he actually did, an order for sale. The provisions of the Act, inasmuch as s. 09 does not apply to a simple mortgage, precluded him from any right to sell without such an order. Under s. 85 the first mortgagee was bound to make the second mortgagee a party to his suit for sale, and as he did not do so the second mortgagee was not bound by the order for sale, which could only have been operative subject to his title. Sect. 89 is important. Under this section, where an order for sale under s. 88 has been made, such as was made here in 1892, in favour of the first mortgagee, the mortgagor, or the second mortgagee, if he had been made a defendant, would have had the right to redeem if he had paid on the date fixed by the decree the amount due. If such payment is not made, a decree absolute may be made such as was made in 1895, for sale and for payment of the amount realized into Court. The section then provides that "the defendants right to redeem and the security shall both be extinguished." The construction which their Lordships put on the language so used is that on the making of the order absolute the security as well as the defendants right to redeem are both extinguished, and that for the right of the mortgagee under his security there is substituted the right to a sale conferred by the decree.

As their Lordships have already indicated, the second mortgagee, not having been made a party, was not affected by the decree made in the suit of 1892, and in addition the decree itself became inoperative under the Limitation Act as the result of nothing having been done under it. It follows that the title of the second mortgagee, Shadi Ram, the first respondent, has remained in existence as the only encumbrance prior to the title of the appellant as owner of the equity of redemption.

They concur in the opinion of the learned judges of the High Court that the decision of the Assistant Sessions Judge of Moradabad, who tried the case, was wrong.

They will humbly advise His Majesty that the appeal should be dismissed with costs.