JUDGMENT John Stanley, C.J.
1. The question before us was referred to a Full Bench on the ground of its importance, and is whether a sub-mortgagee of mortgagee rights is entitled to a decree for sale of those rights. I understand this to be whether, when a mortgagee has sub-mortgaged his interest in the property mortgaged to him to a sub-mortgagee, the sub-mortgagee is entitled to sell the interest in the property of his sub-mortgagor without impleading the mortgagor and foreclosing his equity of redemption; whether in fact the interest in the property mortgaged which has passed to the sub-mortgagee can be sold, leaving the equity of redemption outstanding in the mortgager.
2. Before I deal with this question it may be well to ascertain what is the nature of a mortgage and sub-mortgage as usually met with in these Provinces. "We rarely come across a mortgage in the English form, namely, a mortgage by way of conveyance of his land by the mortgagor to the mortgagee with a proviso that on repayment of the sum advanced by the mortgagee on a certain day, the mortgagee shall re-convey the estate. In a sub-mortgage of such a mortgage according to the English form, the security comprises the personal covenant of the sub-mortgagor to pay the sum advanced to him by his sub-mortgagee and also a transfer of the original mortgage debt and mortgaged property with the benefit of all powers and remedies contained in the original mortgage, to secure repayment of the mortgage debt. According to the practice in these Provinces a mortgagor does not in terms convey to the mortgagee the mortgaged property, but merely hypothecates the property as security for the money advanced to him. The transaction takes the form of an hypothecation or pledge merely of the property. So in the case of a sub-mortgage, the sub-mortgagor merely hypothecates his interest in the property mortgaged to him as security for the repayment of an advance made to him by the sub-mortgagee.
3. If the rule laid down by the majority of the Full Bench of this Court in the case of Mata Din Kasodhan v. Kazim Husain (1891) I.L.R., 18 All., 482 is accepted, it appears to me that the question before us must be answered in the negative, for it seems to follow as a logical consequence of that decision that the rights of a sub-mortgagee cannot be sold by the Court separately and apart from the interest in the land of the original mortgagor. Under ordinary circumstances, and notwithstanding the fact that this decision has not been accepted by the other High Courts, I should be disposed, on the well recognized and convenient rule stare decisis, to accept and follow it. But we are confronted by an earlier Full Bench decision which is wholly inconsistent with it: that is the case of Raghunath Prasad v. Jurawan Rai (1886) I.L.R., 8 All., 105. In view of this conflict of authority it becomes our duty to consider and determine which of these two authorities commends itself to us as correct.
4. In Mata Din Kasodhan's case, Edge, C.J., and Straight, Tyrrell and Knox, JJ., Mahmood, J., dissenting, held that the term 'property' as used in the Transfer of Property Act meant "the actual immovable property mortgaged, and not merely particular rights and interests in such property as distinguished and separated from the actual immovable property itself," and that consequently a subsequent mortgagee could not bring to sale under his mortgage-deed the property mortgaged to him without first redeeming prior mortgages. As I understand the decision, the majority of the Court held that a sale under the Act can only be of the land itself, including all rights and interests of as well prior as of puisne incumbrancers, and that all parties having any estate or interest in the land sought to be sold must be impleaded so that their estates and interests may be transferred to or may pass to a purchaser.
5. If full effect is given to this decision it seems to follow that a sub-mortgagee cannot have a sale under the Act of his interest in the property sub-mortgaged to him subject to the rights of the original mortgagor, that is to his equity of redemption. In the earlier case, which came before Petheram, C.J., and Straight, Oldfield, Brodhurst and Tyrrell, JJ., the appeal was from a decision of Oldfield, J., from whom Mahmood, J., had dissented, and arose out of a suit brought by a puisne mortgagee to enforce the payment of his debt by sale of the mortgaged property. Oldfield, J., bad held that the prior mortgage not having been extinguished afforded a defence against the claim, whilst Mahmood, J., was of opinion that "a puisne incumbrancer is not prevented by the mere fact of the existence of a prior mortgage from enforcing his security, so long as such enforcement does not clash with the rights scoured by the prior mortgage" (I.L.R., 7 All., 568). In his judgment Mahmood, J., observed: "It seems to me that, notwithstanding the mortgage, the mortgagor or the holder of the equity of redemption can alienate his rights by private sale, and it follows that he can do so by hypothecation. Such sale or hypothecation would, of course, be subject to the prior mortgage and could in no manner disturb the priority of lien possessed by the prior incumbrancer, or militate against his interests. So long as there can be no conflict between the rights created by the prior and the puisne incumbrances, it appears to me that property subject to two or more incumbrances can be sold in enforcement of any one of them, and the purchaser in such sale would acquire such right as the position of the incumbrance with reference to the rule of priority could convey" (page 574 of the Report). The Court unanimously upheld the view of Mahmood, J., and confirmed the decree of the Munsif, with a slight modification whereby it was provided that "the interest of the plaintiff as second mortgagee only" should be sold.
6. In his judgment in Mata Din Kasodhan's case, Edge, C.J., points out that in the earlier case the mortgage was usufructuary, and that "if it enured with all its benefits to the defendants, was one which the plaintiff when he brought his suit was not entitled to redeem" and he observes, at p. 447, as follows: "It does not appear whether the fact that the mortgage was an usufructuary mortgage with possession distinguished, in the opinion of the Full Bench, that case from one in which the prior incumbrance was a simple mortgage ripe for redemption." He then says: "Indeed it seems to me very doubtful whether the case was argued at all before the Full Bench, it having been assumed that the difference of opinion between Oldfield, J., and Mahmood, J., had arisen from some misapprehension as to the facts of the case." Mr. Justice Straight, who was a party to both appeals, nowhere in his judgment in Mata Din Kasodhan's case alludes to the earlier authority. It seems to me unlikely that the learned Chief Justice and Judges decided a question, as to which two of their colleagues were in conflict, without full knowledge of the facts and after careful consideration.
7. In the view which I take it is immaterial whether the prior incumbrance be an usufructuary or a simple mortgage. In either case a sale at the instance of a puisne mortgagee would be subject and without prejudice to the rights of the prior incumbrancer.
8. The question before us largely turns on the meaning of the term 'mortgaged property' as used in the Transfer of Property Act, Does the word 'property' as used in that Act mean the actual physical objects alone, or floes it embrace rights and interests existing in or derived out of the actual physical object? The word 'property' is nowhere defined in the Act. It is a word of very comprehensive meaning. Lord Langdale, M.R., described it as being "the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which a party can have"--(Jones v. Skinner (1835) 5 L.J., Ch., 90. In the General Clauses Acts, I of 1868 and X of 1897, 'immovable property' is defined as including 'benefits arising out of land' et cetera., It will be therefore necessary carefully to consider the Transfer of Property Act so as to discover whether its language justifies the restrictive interpretation placed upon the word 'property' by the learned Chief Justice in Mata Din Kasodhan's case.
9. Before I come to this it may be well to see what the practice in England is as regards the sale by the Courts of the interest of puisne and derivative incumbrancers. It will not be disputed that every person entitled to a mortgage, or charge upon property, may transfer the benefit of his security either absolutely or by way of sub-mortgage or sub-charge. In Taylor v. Russell (1892) A.C., 235 Lord Herschell says: "It is admitted that a mortgagee may create such estates as he pleases. He may convey by way of sub-mortgage to whom and in as many parcels as he pleases"--(see also observations of Jessel, M.R., in Re Sargent (1876) 17 Eq., 279. In Rose v. Page (1829)) 2 Simons, 471; 29 R.R. 142 it was hold that a second mortgagee may file a bill of foreclosure against the mortgagor and third mortgagee without making the first mortgagee a party. The objection in that case of the defendants that the first mortgagee was not a party was overruled.
10. Again in the case of Slade v. Rigg (1843) 3 H are, 35; 64 R.R., 204, in which it was held that the mortgagee of a reversionary interest in stock in the public funds, with a power of sale, may bring his bill for foreclosure, and is entitled to a decree in the common form for an account and in default of payment for foreclosure, Wigram, V.C., in his judgment observes as follows: "The only question then is whether the circumstance that the interest of the mortgagee, from the nature of the property, can only be equitable, excludes him from the right to the decree of foreclosure which he seeks. This question is answered by the cases which affirm the title of a second mortgagee to foreclose the mortgagor, although he does not redeem the first mortgagee, or take any steps to get in the legal estate. These cases decide, therefore, that the mortgagee of an equitable interest in the property is entitled to foreclose the equity of redemption, leaving the legal title in a third party. I am of opinion that the plaintiff in this case is entitled in like manner to a decree for foreclosure of the mortgaged property in the ordinary form." The authors of Daniell's Chancery Practice on this subject say: A second incumbrancer cannot redeem a prior incumbrance without bringing the mortgagor, as well as the prior incumbrancer, before the Court, but he may, if he please, foreclose the mortgagor and the third mortgagee without bringing the first mortgagee before the Court, because by so doing he merely puts himself in the place of the mortgagor and subsequent mortgagee and leaves the first mortgagee in the situation in which he stood before; and if in such case he makes the prior mortgagee a party, he must offer to redeem him" (Vol. I, 6th edition, p. 217). Likewise in Fisher on mortgages, we find at p. 816, paragraph 1693, 5th Edition, the following: "The second or other puisne incumbrancers may foreclose those subsequent, without joining those prior to themselves; for the latter can suffer no damage." Also in Coote on Mortgages we find this passage: "The mortgagor need not be a party in a foreclosure suit between the mortgagee and his derivative or sub-mortgagee."--(Coote, Vol. II, 7th Edition, p. 1028). So in the Treatise on Mortgage by Ashhurner, we find, at page 528, the following passage: "A mortgagee foreclosing must foreclose the ultimate equity of redemption; but a puisne mortgagee who brings an action to foreclose subsequent mortgagees and the mortgagor is not obliged at the same time to redeem prior mortgagees. Hence prior incumbrancers are not, but all subsequent incumbrancers are, necessary parties to a foreclosure action."
11. The framers of the Transfer of Property Act had no doubt before them the provisions of the English Conveyancing and Law of Property Act, 1881, in which the powers of a mortgagee are defined. Section 19 of that Act enumerates the powers incident to the estate or interest of a mortgagee; and, amongst others a power when the mortgage money has become due to sell or to concur with any other person in selling the mortgaged property, or any part thereof, either subject to prior charges or not. What is meant in this section by 'the mortgaged property' is to be found in Section 21, which provides that a mortgagee exercising the power of sale conferred by this Act shall have power by deed to convey the property sold for such estate and interest therein as is the subject of the mortgage free from all estates, interests and rights to which the mortgage has priority but subject to all estates, interests and rights which have priority to the mortgage, et cetera. Under these provisions it is clear that in England a mortgagee can sell an interest in property as distinguished from the property itself. This section closely corresponds with Section 69 of the Transfer of Property Act, to which I shall presently refer. In In re Hodson and Howe's Contract (1887) L.R., 85 Ch. D., 668 it was held by North, J., and affirmed on appeal, that an equitable mortgagee by deed who sells in exercise of the power of sale conferred by the Conveyancing Act, 1881, cannot convey the legal estate vested in the mortgagor. North, J., observes in his judgment: "What is subject to the mortgage is the equitable estate and interest vested in the mortgagee. He can convey all he has; but he cannot convey the legal estate." The Lords Justices Cottton, Lindley, and Bowen affirmed this decision (35 Ch. D., 668). From these authorities I gather that in England it is not incumbent on a puisne mortgagee or sub-mortgagee, if he seeks to realize his security, to implead the prior incumbrancer or mortgagor respectively, but he may have a sale of his mortgagee rights. No doubt in the case of a derivative mortgage, that is, a sub-mortgage, it is usual be implead the original mortgagor and to foreclose the original mortgagor as well as the sub-mortgagor. The ordinary decree in such a case directs an account to be taken of what is due to the original mortgagee, and next what is due to the sub-mortgagee, and further directs that upon payment of the latter amount to the sub-mortgagee not exceeding the amount due to the original mortgagee and of the residue, if any, of what is due to the original mortgagee, both of (hem shall re-convey. In default of payment the original mortgagor is foreclosed and the sub-mortgage is ordered to re-convey the property to the original mortgagee on payment by the latter of what is due on foot of the sub-mortgage, and in default of payment the original mortgagee is foreclosed. The ordinary form of decree in England is to be found in Seton on Decrees, 5th Edition, p. 1730. This is undoubtedly a convenient form of decree, and I think that the practice of impleading the mortgagor as well as the sub-mortgagor may with advantage be followed. But the question before us is whether or not it is absolutely necessary that both these parties should be impleaded. According to the authors of Seton on Decrees the derivative mortgagee may foreclose the original mortgagee without making the original mortgagor a party (see Note, page 1733). The authors of Darnell's Chancery Practice also recognize the right of a sub-mortgagee to foreclose his mortgagor without making the original mortgagor a party (see 6th Edition, Vol. II, page 1357). Now the remedy by foreclosure or sale, I may observe, stands on the same footing-. Under Section 67 of the Transfer of Property Act the mortgagee, at any time after the mortgage money has become payable and before decree for redemption has been made, has a right to obtain from the Court an order for foreclosure or of sale.
12. I now turn to the sections of the Transfer of Property Act which seem to me to throw some light upon the question before us.
13. Section 58 defines a mortgage as "the transfer of an interest in specific immovable property for the purpose of securing the payment of money," et cetera. Not merely, therefore, may specific immovable property be transferred by way of mortgage, but an interest therein may also be the subject of mortgage. 'Mortgaged property' may be not merely 'actual immovable property' but 'an interest' in such property.
14. Section 60 provides that on redemption the mortgagee is either to re-transfer the 'mortgaged property' to the mortgagor, or to execute an acknowledgment in writing as therein specified. Now a mortgagee cannot re-convey a larger interest than he has got Therefore if the mortgage be a puisne mortgage, the mortgagee can only re-convey the property subject to the prior mortgage. He cannot re-convey the actual immovable property.
15. Next, Section 65 provides that in the absence of a contract to the contrary the mortgagor shall be deemed to contract with the mortgagee inter alia (a) "that the interest which the mortgagor professes to transfer to the mortgagee subsists and that the mortgagor has power to transfer the same;"(b) "where the mortgaged property is a lease for a term of years, that the rent payable under the lease, the conditions, et cetera, have been paid, performed," et cetera, and (c) "where the mortgage is a second or subsequent incumbrance on the property, that the mortgagor will pay the interest from time to time accruing due on each prior incumbrance," et cetera. This section recognizes the validity of a mortgage of an interest in land, including a lease-hold interest. A lessee is not owner of the land itself, but is merely entitled to a right to use and enjoy the land for a limited time, or in perpetuity. In England the interest of a lessee is a chattel interest; it is personal and not real estate at all. It is much the same in India; a lease-hold interest is not so much immovable property as a right to enjoy immovable property. It is an interest in immovable property. In the Transfer of Property Act a lease is defined 'as a transfer of a right to enjoy' immovable property (Section 105).
16. The use in Section 65 of the words 'the interest which the mortgagor professes to transfer' and 'where the mortgaged property is a lease,' seems to me to indicate that the powers conferred by the Act are not confined merely to the actual physical object but embrace any rights or interests subsisting therein which are the subject of a mortgage.
17. In Section 69, to which I have already referred, which treats of the power conferred by a mortgage deed to sell property without the intervention of the Court, provision is made for the application of the money arising from the sale. It declares that the money which is received by the mortgagee, arising from the sale, after discharge of prior incumbrances, if any, to which the sale is not made subject, or after payment into Court under Section 57 of a sum to meet any prior incumbrance, shall in the absence of a contract to the contrary be held," et cetera. This implies that a sale out of Court at all events can be made subject to prior incumbrances.
18. Section 86, which deals with foreclosure and sale, provides in the case of payment of the mortgage debt, for the "transfer of the property to the mortgagor free from all incumbrances created by the plaintiff or any person claiming under him, or when the plaintiff claims by derived title, by those under whom he claims." The words 'derived title' would apply to a sub-mortgage, which is a derivative mortgage, and seem to manifest that where a sub-mortgagee is plaintiff in a foreclosure suit the transfer to be made to the sub-mortgagor on payment is only of the interest which has been mortgaged, that is, the sub-mortgagee rights.
19. Section 96 is an important section. It is introduced by the heading--"Sale of property subject to prior mortgage"--and provides that "if any property, the sale of which is directed under Chapter IV, is subject to a prior mortgage, the Court may, with the consent of the prior mortgagee, order that the property be sold free from the same," et cetera. This section indirectly recognizes the right of a puisne mortgagee to sell the mortgaged property subject to prior incumbrances. The learned Chief Justice Sir John Edge says of this section that it "is not happily worded" and that he regards the words "subject to a prior mortgage" in Section 96 as mere words of description. I must confess that I do not clearly understand the meaning of this last observation. It appears to me that in the heading as well as in the body of the section itself the Legislature has with sufficient clearness intimated its meaning.
20. From the foregoing sections it seems to me apparent that where the words 'the mortgaged property' are used throughout chapter IV, they mean the interest in specific immovable property which the mortgagor professes to transfer, whatever that interest may be.
21. But reliance has been placed on the part of the respondents on Section 85. It provides that "subject to the provisions of the Code of Civil Procedure, Section 437, all persons having an interest in the property comprised in a mortgage must be joined as parties to any suit under this chapter relating to such mortgage; provided that the plaintiff has notice of such interest." It is contended that the section renders it imperative that all persons who have a prior interest in specific immovable property, a derivative or puisne mortgage of which is sought to be enforced, must be joined as parties to a suit for sale, and that the intention of the Legislature was that the actual physical object, that is the land itself, and that alone, can be the subject of a sale. I am unable to yield to this contention. Certainly in the case of a lease-hold interest, the right to enjoy the land, subject to the provisions of the lease, only can be sold, and generally such a construction of the Act appears to me to be wholly inconsistent with the whole tenor of chapter IV, as indicated by the sections to which I have already referred. If all persons having an interest in the land itself must be impleaded in a suit for sale by a mortgagee of a lease-hold interest, the lessor would be a necessary party; and if the absolute estate in the land, and not merely the lease-hold interest, must be sold, then either a sale cannot be had or a lessor is left at the mercy of his lessee and may have his estate taken from him at the instance of a mortgagee from his lessee. This surely cannot have been intended. And if it be not so, and only the leasehold interest can be sold at the suit of a mortgagee of that interest, then, as the lease merely gives a right to enjoy the property for a certain time or in perpetuity, the land itself cannot be sold at the instance of such mortgagee. It seems to me that the words 'property comprised in a mortgage,' as used in Section 85, were probably intended to denote no more than the estate or interest which is the subject of any particular mortgage, that is, if the mortgage be a mortgage of the absolute estate in the land, then the land itself, if it be a puisne mortgage, then the interest in the land of the mortgagor, that is, the equity of redemption. This would give the words the same meaning as the words the mortgaged property' as used in Section 25 of the English Conveyancing Act of 1881. In the case of a sub-mortgage, as distinguished from a puisne mortgage, it would, no doubt, be desirable that the mortgagor should be joined as a party to a suit for sale at the instance of a sub-mortgagee. But in this case it will be observed that the interest which is sub-mortgaged is the same interest as that which is the subject of the mortgage. In the case of a sub-mortgage according to the English practice, the mortgagor assigns the mortgage debt and conveys the land which is the subject of his mortgage to his sub-mortgagee and in a suit by the sub-mortgagee for foreclosure or sale, the mortgagor is usually impleaded, but, as I have already pointed out, this is not necessary. If this be not necessary in the case of a suit by a sub-mortgagee, it is difficult to see why a puisne mortgagee should not be permitted to enforce his security by a transfer of the interest which has been hypothecated in his favour, that is, by selling the land subject to prior incumbrances. Such a sale can in no way prejudice the rights of the prior mortgagees. Whether a first mortgagee is a person having an interest in the equity of redemption, which alone can be the subject of a subsequent mortgage within the meaning of Section 85, is 1 think open to question. He holds under a paramount title and cannot be prejudiced by a sale of the equity of redemption. But assuming that he is such a poison and that he should be joined as a party to a suit to enforce a second mortgage, it by no means follows that a sale cannot be ordered without redeeming him. I do not propose to refer to the earlier cases upon this subject with one exception. They are dealt with at length in the judgments in Mata Din Kasodhan's case.
22. The one exception is the case of Venkatachella Kandin v. Panjanadien (1881) I.L.R., 4 Mad., 213 which was decided before the Transfer of Property Act was passed. Turner, C.J., in the course of his judgment in that case thus stated the law upon this subject: "When a second mortgage is created in favour of a person who is not the holder of a first mortgage, the second mortgagee is entitled to pay off the first mortgage, or to sell the estate subject to the first charge. On the same ground of regard for the interests of all parties that dictates the preservation of the right created by the first charge, I an unable to see why the acquisition by the first mortgagee of the right remaining in the owner deprives the second mortgagee of his right to enforce his charge by a sale of the property subject to the rights of the first mortgagee. If the first mortgagee had not acquired the rights remaining in the owner, it is unquestionable that the second mortgagee would have been entitled to call 'for a sale of the property subject to the rights of the prior incumbrancer. His right should not be defeated by a transaction to which he is no party. If it had been considered an objection to the preservation of his right that the first mortgagee might subsequently hare applied to the Court to order a sale (and I do not think it is for the purchaser under the second mortgage might redeem the first mortgage and prevent a sale) then a sale should have been ordered of the property to discharge both mortgages, and the proceeds should have been applied to their satisfaction in order of priority; but I believe the course which would have best fulfilled the contracts and secured the rights of the parties would have been to allow a sale subject to the first incumbrance." I am not aware that disapproval of this enunciation of the law has ever been expressed except in Mata Din Kasodhan's case. I now come to several recent authorities which support the view which I entertain.
23. In the case of Kanti Ram v. Kutub-ud-din Mahomed (1894) I.L.R., 22 Calc., 33 it was held that 'immovable property,' as used in Section 58 of the Transfer of Property Act denotes not only the property itself, as distinguished from any equity of redemption which the mortgagor might possess in it, but includes the rights of the mortgagor at the time of a second mortgage and that a second mortgage, as well as a first mortgage, is a mortgage of specific immovable property under that section. It was also held that in a suit on a mortgage by a second mortgagee to which the prior mortgagee was a party, the plaintiff was entitled to an order for sale of the mortgaged property subject to the lien of the prior incumbrancer. Ghose and Gordon, JJ., adopted the view expressed by the Full Bench of this Court in the case of Raghunath Prasad v. Jurawan Rai. The same learned Judges followed this decision in Beni Madhub Mohapatra v. Sourendra Mohun Tagore (1896) I.L.R., 23 Calc., 795. In Debendra Narain Roy v. Ramtaran Banerjee (1903) I.L.R., 30 Calc., 590 a Full Bench of the Calcutta High Court consisting of Maclean, C.J., and Prinsep, Sale, Stevens and Geidt, JJ., unanimously held that a puisne mortgagee is entitled to have a sale of the property comprised in his mortgage subject to the rights of the first mortgagee even after the property had been sold in execution of a decree obtained by the first mortgagee in a suit to which the puisne mortgagee was not a party. In Jaggeswar Butt v. Bhuhan Mohan Mitra (1906) I.L.R., 33 Calc., 425 Rampini and Mookerjee, JJ., held that the term 'property comprised in a mortgage,' as used in Section 85 of the Transfer of Property Act, means not the physical object but the interest therein which the mortgagor is competent to transfer by way of mortgage at the date of the transaction.
24. In the Madras High Court the same view was taken in Muthu Vijia Ragunatha v. Venkatachallam Chetti (1890) I.L.R., 20 Mad., 35, Subrahmania Ayyar and Davies, JJ., hold that a sub-mortgagee is entitled to a decree for sale of the original mortgagor's interest in cases and in circumstances which would have entitled the original mortgagee on the date of the sub-mortgage to claim such relief. In that case the learned Judges expressed disapproval of the definition of the term 'property,' as used in the Transfer of Property Act, accepted by the majority of the Full Bench in the case of Mata Din Kasodhan v. Kazim Husain.
25. In the case of Raj Coomary Dassee v. Preo Madhub Nundy (1897) 1 C.W.N. 453, Jenkins, J. (now Chief Justice of the Bombay High Court), sitting on the original side of the Calcutta High Court, held that in a suit by a puisne mortgagee on his mortgage a prior mortgagee was not a necessary party, but is a proper party if the puisne mortgagee offer to redeem his mortgage.
26. I am not aware of any case in any of the High Courts other than this Court, in which the question which is now before us has been considered and been answered in the negative. I do not pause to consider the convenience or inconvenience likely to result whatever be the view which we adopt. This matter is fully discussed in the judgments in Mata Bin Kasodhan's case and appears to me to be rather a matter for the Legislature than for us, but I am not prepared to admit that the result upholding the view which I entertain would be to multiply or increase litigation. Upon the whole I feel constrained, by the language of the Transfer of Property Act, to hold that in a properly constituted suit a puisne mortgagee or sub-mortgagee may have a sale of the interest mortgaged or sub-mortgaged to them respectively, subject in the case of a puisne mortgage to the rights of a prior incumbrancer and subject in the case of a sub-mortgage to the rights of redemption of the original mortgagor.
27. For these reasons I would answer the question submitted to us in the affirmative.
George Knox, J.
28. The question referred is "whether a sub-mortgagee of mortgagee rights in immovable property can get a decree for Bale of the mortgaged property, i.e., of the mortgagee rights of his mortgagor in enforcement of his mortgage." I am now prepared to answer this question in the affirmative, and I do not know that I can add much that is of profit after the very exhaustive judgment of the Hon'ble the Chief Justice. But as one of the Judges who took part in the judgment of Mata Din Kasodhan v. Kazim Husain (1891) I.L.R., 13 All. 432 it is incumbent upon me to state briefly why the view which then commended itself to me no longer commends itself. I was then oppressed with the feeling that it was necessary and that the Legislature had intended in enacting Section 85 of the Act to "bring together into one suit," specially when that suit was for sale of the mortgaged property, all existing incumbrances on the physical property whole and undivided, and did not attach sufficient weight to the words 'comprised in a mortgage' which occur in Section 85 of the Act. Comparing with greater care than I then did the several sections in which the word 'property' occurs in the Act, especially Sections 58, 86, 87 and 88 and more especially Section 6 and the following sections in chapter II of the Act, I am now prepared to hold that the words the property comprised in a mortgage, used in Section 85, relate only to that or those interest or interests which has or have been the subject of mortgage in the particular suit, whatever the nature of those interests may be, whether proprietary rights or only a certain right or interest in the property known as the equity of redemption, and to forth. The language used in Section 96 of the Act seems to admit only of this interpretation and of no other.
29. Taking this view of the word 'property' as used in Chapter IV, I wish to express my full concurrence in the answer proposed by the learned the Chief Justice and in the reasons as stated by him.
Banerji, J.
30. The question referred to the Full Bench is "whether a sub-mortgagee of mortgagee rights in immovable property is entitled to a decree for the sale of the mortgagee rights of his mortgagor in enforcement of his mortgage." I should have had no difficulty in answering the question had it not been for the principle laid down by the majority of the Full Bench in the case of Mata Din Kasodhan v. Kazim Husain (1891) I.L.R., 13 All., 432 on the basis of which Ganga Prasad v. Chunni Lal (1895) I.L.R., 18 All., 115 and other subsequent cases were decided. The particular question before us did not arise and was not decided in the case of Mata Din Kasodhan v. Kazim Husain. Unless, therefore, we approve of the rule laid down in that case I see no reason why we should apply that ruling to any question which was not directly in issue and was not actually determined in that case. The point for determination in that case was whether a subsequent mortgagee could bring to sale the property mortgaged to him without redeeming the prior mortgage, and that is the question which was decided by the Full Bench. The ruling in that case therefore does not preclude us from considering and determining the question referred to us. We are of course bound to pay to the reasoning by which the decision in that case was arrived at the respect which pronouncements by eminent Judges deserve, although that reasoning has not, it may be observed, met with the approval of the High Courts of Calcutta and Madras.
31. The decision of the question before us depends, it seems to me, on the meaning to be placed on the words 'mortgaged property' in Section 67 of the Transfer of Property Act (No. IV of 1882). By that section in the absence of a contract to the contrary the mortgagee has at any time after the mortgage money has become payable to him, and before a decree has been made for the redemption of the mortgaged property, or the mortgage money has been paid or deposited 8 * * a right to obtain from the Court an order * * that the property be sold. So that every mortgagee who holds a simple mortgage is entitled to obtain a decree for the sale of the mortgaged property. In the case of a sub-mortgage the property mortgaged to the sub-mortgagee is not the land itself but the mortgage's interest which the sub-mortgagor holds in that land. It is this interest which is the mortgaged property. Unless, therefore, we can hold that nothing short of an actual physical object can form the subject of a mortgage, a sub-mortgagee would under the provisions of Section 67 be entitled to sue for and obtain a decree for the sale of the property mortgaged to him, namely, the mortgagee rights of the mortgagor, It was no doubt held by the majority of the Court in Mata Din v. Kazim Husain that "the term' property' as used in chapter IV of Act IV of 1882, means an actual physical object and does not include mere rights relating to physical objects." But with great deference I am unable to assent to that view. It is opposed to the definition of a mortgage as contained in Section 58. Under that section, "a mortgage is the transfer of an interest in specific immovable property," and is in fact a pledge of property for the repayment of a debt. As the learned Chief Justice has pointed out in his elaborate and exhaustive judgment, which I have had the advantage of perusing, the word 'property' has a comprehensive meaning and is "indicative and descriptive of every possible interest which a party can have" [Per Langdale M.. R., in Jones v. Skinner (1835) 5 L.J. Ch., 84, at p. 90], and there is no reason to assume that the word has been used in the Transfer of Property Act in a restricted sense. On the contrary, it is manifest from the provisions of Sections 65, 71, 74, 75 and 96 that it has not been so used, and that any interest in immovable property, and not the physical object itself only, can be mortgaged. Sections 65 and 71 show that the mortgaged property may be a lease for a term of years. From Sections 74 and 75 it appears that there may be a second or other subsequent mortgage, which in reality is not a mortgage of the physical object itself but of the interest in it which remained in the mortgagor after he had made a prior mortgage, that is, of his right of redeeming the prior mortgage. And Section 96 shows that property may be sold under the Act subject to a prior mortgage. The point has been so fully dealt with by the learned Chief Justice that, I deem it unnecessary to dwell on it further sale of the mortgaged property. In the case of a sub-mortgage English law and in this country. In England "where there is a sub-mortgage the security will comprise, first, the personal covenant of the sub-mortgagor; secondly, the transfer of the original mortgage debt and mortgaged property, subject to redemption; * * thirdly, a power of sale enabling the sub-mortgagee to dispose of the original mortgage debt and security"--(Robbins' Law of Mortgages, Vol. II, p. 880). In this country, except in the case of an English mortgage, a sale can only be effected through the intervention of a Court. So that, unless there is anything in the Transfer of Property Act to the contrary, a sub-mortgagee is entitled to ask for and obtain a sale of the original mortgage debt and security. I can find nothing in the Transfer of Property Act, which forbids a sub-mortgage. In the case of a sub-mortgage the property which is the subject of the mortgage is the interest of the sub-mortgagor as the original mortgagee. And as it is this interest which is the mortgaged property, the sub-mortgagee is entitled under Section 67 of the Act to an order for the sale of such interest. Any other view would place a sub-mortgagee in the same position as the holder of a simple money debt, and the pledge made in his favour would be no security at all. A consideration of the provisions of Sections 85, 86, 87, 88, and 89, does not in my judgment lead to a different result. Section 86, and the subsequent sections refer to the 'mortgaged property' which in the case of a sub-mortgage is the mortgagee interest of the sub-mortgagor. Section 85 only requires that all persons having an interest in the property comprised in the mortgage of whose interest the mortgagee has notice should be joined as parties to a suit upon the mortgage. The property comprised in a sub-mortgagee's mortgage being the mortgagee rights of his mortgagor, only those persons are necessary parties to the sub-mortgagee's suit who have an interest in those rights, Even the original mortgagor is not a necessary party to such a suit. It is only in cases in which he is liable to be foreclosed of his right of redemption and the derivative mortgagee seeks to foreclose him that he should be made a party. Similarly in the case of a puisne mortgage a prior mortgagee is not a necessary party, unless the puisne mortgagee seeks to redeem him in the exercise of his powers under Section 74 or Section 91 or desires that the property should be sold free from the prior mortgage with the prior mortgagee's consent under Section 96. This appears to be the rule not only in the Courts in England, but also in the Courts in America (sue Jones on Mortgages, Vol. II, para. 1589), and in any judgment the Transfer of Property Act does not lay down a different rule. It seems to mo that what Section 85 requires is that all persons should be joined as parties whoso rights may be affected by the decree in the suit. A prior mortgagee in the case of a suit for sale by a subsequent mortgagee or the original mortgagor in the case of a similar suit by a sub-mortgagee, cannot be prejudiced by the decree in the suit and is not therefore a necessary party, Section 85 was undoubtedly enacted with a view to prevent multiplicity of suits, but that object will not, as it seems to me, be defeated by holding that interests in immovable property which full short of the complete ownership of the property itself can be mortgaged and can be sold at the instance of the mortgagee. Such interests may be of considerable value, and I see no reason to assume that the Legislature in enacting the Transfer of Property Act intended that they cannot be regarded as property and cannot be the subject of a mortgage. If such interests can be mortgaged,--and there cannot be any doubt that they can be mortgaged,--those interests are mortgaged property within the meaning of Section 67, and are under that section liable to. sale. The question of the rights of a subsequent mortgagee, which was directly in issue in Mata Din Kasodhan v. Kazim Husain, is not before us in this case. We have only to consider the rights of a derivative mortgagee, and I am unable to hold that such a mortgagee has no right to bring to sale the interests mortgaged to him and is in no better position than an ordinary creditor who holds no security for the money advanced by him. I have therefore no hesitation in answering in the affirmative the question referred to us.
William Burkitt, J.
32. The question which has been referred for the consideration of the Full Court in this case is "whether a sub-mortgagee of mortgagee rights in immovable property is entitled to a decree for the sale of the mortgagee lights of his mortgagor in enforcement of the mortgage." That is the only question we have to consider. I do not desire to travel beyond it.
33. Having had an opportunity of perusing the judgment of the learned Chief Justice on the question referred to us, I fully concur in it and for the reasons by which it is supported. The rule laid down in Mata Din Kasodhan v. Kazim Husain (1891) I.L.R. 13 All., 432 cannot in my opinion be supported. I therefore answer the question in the affirmative.
34. I would add that as no question touching Section 85 of the Transfer of Property Act has been referred to us, I refrain from expressing any opinion as to the meaning or effect of that section.
Aikman, J.
35. Gaya Prasad and Musammat Jasoda Kunwar executed a mortgage-deed in favour of the predecessor in title of the plaintiffs respondents as security for money lent. By this deed certain immovable properties were mortgaged as security for the loans. As additional security the mortgagors further mortgaged their mortgagee right in six mortgages held by them.
36. The plaintiffs sue to recover their money by sale of the mortgaged property. Amongst the defences raised to the suit there was a plea that a mortgage of mortgagee rights is invalid according to law and that no decree can be passed for the sale of mortgagee rights. The lower Court gave the plaintiffs a decree for sale of the immovable property mortgaged to them, and also for sale of the mortgagee rights referred to above. Against that decree the defendant has appealed to this Court,
37. The fourth plea in the memorandum of appeal is that no decree could be legally passed for the sale of the mortgagee rights. The learned Counsel for the appellant in supporting this plea relied on a case of this Court--Ganga Prasad v. Chunni Lal (1805) I.L.R., 18 All., 313. That was a case in which a sub-mortgagee had got a decree for the sale, not of his mortgagor's rights, but for the sale of the property mortgaged to the plaintiff's mortgagor by the original mortgagor. The learned Judges who decided that case held that the sub-mortgagee was not entitled to such a decree, which was in fact a decree for the sale of the property which had not been mortgaged to him, although a different conclusion was arrived at in the case reported at page 35, I.L.R., 20 Mad. I entirely' concur in the view taken by this Court, and I agree in the opinion expressed in the case reported in I.L.R., 20 Bom., 549, that there is no privity between the sub-mortgagee and the original mortgagor. But the learned Judges who decided the case of Ganga, Prasad v. Chunni Lal went further than was necessary for the decision of the question before them, and stated broadly that the sole right which the plaintiff had as sub-mortgagee was to get a decree for money against his mortgagor. This dictum, which has been followed in subsequent cases, though sometimes with considerable hesitation, undoubtedly supports the plea taken in the memorandum of appeal, and if it is right, the decree of the Court below, so far as it directs the sale of the mortgagee rights must be set aside. In consequence of the doubts entertained by the Bench before whom the present appeal was argued as to the correctness of the proposition of law laid down in the case cited above, the question has been referred to the Full Bench as to whether a sub-mortgagee is or is not entitled in enforcement of his mortgage to a decree for the sale of the mortgagee rights of his mortgagor.
38. The learned Judges who decided the case of Ganga Prasad v. Chunni Lal do not go so far as to say that a sub-mortgage is invalid or illegal. But the effect of their dictum, if it is a correct proposition of law, is to render sub-mortgages abortive and utterly valueless as securities.
39. This is to my mind a very startling result. The right of a mortgagee to pledge or hypothecate his mortgagee rights was recognized by Roman Law. See Sandar's Justinian, 2nd edition, page 216.
40. A sub-mortgage, or, as it is sometimes called, derivative mortgage, is recognized as valid security in English Law. Coote in his well-known work on Mortgages says, at p. 837 of his 7th edition: "A mortgagee may assign the mortgage debt by way of absolute transfer or by way of sub-mortgage," and at p. 849 he says: "When there is a sub-mortgage, the security comprises a power of sale enabling the sub-mortgagee to dispose of the original mortgage debt and security." This view is fully supported by the cases cited.
41. Sub-mortgages are also recognized in America, see Section 139 of Jones on Mortgages, 5th edition, where it is said: "There may be a mortgage of a mortgage. One may mortgage an interest in real estate which he himself holds in mortgage."
42. I have not been able to discover any reported case of the Calcutta High Court in which the question of a sub-mortgage has been considered. But the validity of a sub mortgage and the right of a sub-mortgagee to enforce his security have been recognized by the High Courts of Bombay and Madras and by the Chief Court of the Punjab.
43. In Mata Din Kasodhan v. Kazim Husain (1891) I.L.R., 13 All., 432, Mahmood, J., says (at page 480): "I am wholly unaware of any authority in the Indian Law of Mortgages as it stood before the Transfer of Property Act (IV of 1882) or as it now stands since the enforcement of that enactment to justify the view that... a sub-mortgage is prohibited by law." I can find nothing in the Transfer of Property Act which would render a sub-mortgage invalid, or prevent its enforcement as a lawful contract.
44. For the above reasons I am of opinion, with all deference to the learned Judges who decided the case of Ganga Prasad v. Chunni Lal, that their dictum to the effect that the only right which a sub-mortgagee has is to get a decree for money is not a correct proposition of law.
45. But it is contended by the learned Counsel for the appellant that the dictum in Ganga Prasad v. Chunni Lal is a logical consequence of what was held by the majority of the Full Bench in the case of Mata Din Kasodhan, and the force of this contention must be admitted. I am very unwilling to disturb the authority of a case which, though it has been dissented from by the Calcutta and Madras High Courts, has been looked on as settled law in these Provinces since 1891, and which has undoubtedly had a salutary effect on the multiplication of suits on mortgages, which as Straight, J., observes in his judgment in that case," had become a perfect pest to the Courts which had to administer the law." But if the views expressed by the majority lead, as I think they do, to the startling conclusion that any one who lends money on the hypothecation of mortgagee rights gets no security whatever, it becomes necessary to consider whether those views are a correct exposition of the law. "With all deference to the learned Judges who expressed those views, I am forced to. hold that they are not.
46. It was held by the majority of the Full Bench that the word 'property,' as used in Chapter IV of the Transfer of Property Act, means an actual physical object, and does not include mere rights relating to physical objects; that the only thing which can be sold under a mortgage decree is specific immovable property, and that that cannot be sold subject to a prior mortgage. In my opinion this does not correctly express the intention of the Legislature, From Section 65(d) of the Act it is clear that the Legislature recognized the mortgage of a lease as a valid contract. But if it is a valid contract, how is it to be given effect to unless the sale of the lease-hold can be enforced under the mortgage?
47. In the Transfer of Property Act the Legislature has divided the Act into sets of sections with headings prefixed. These headings may be regarded as preambles to those sets of sections and may therefore be legitimately consulted for the purpose of ascertaining the meaning of the Statute--vide Maxwell on the Interpretation of Statutes, 4th edition, p. 75. One set of sections in chapter IV of the Act is headed "Sale of Property subject to prior mortgage." If it was the intention of the Legislature that property should not be sold subject to a prior mortgage, then, as observed by Edge, C.J., at p. 457 of the judgment in Mata Din Kasodhan's case, the following section is "not happily worded." If such was the intention of the Legislature they might have made their intention clear by framing this part of the Act (on the model of the well-known chapter on the Snakes of Iceland) as follows: "Sale of Property subject to prior mortgage. Section 96. No property shall be sold subject to a prior mortgage."
48. In my opinion a mortgage of mortgagee rights is a perfectly legal contract and a mortgagee of such rights is entitled under Section 67 of the Act to enforce the contract and to obtain an order for the sale of the property mortgaged to him, that is, to an order for the sale of the mortgagee rights.
49. I would therefore answer in the affirmative the question referred to the Full Bench.
Richards, J.
50. The question would, I think, be quite free from difficulty but for the ruling in Mata Din's case. It seems to me that we cannot hold the ruling in that case to be correct and answer this question in the affirmative. In the interval between the conclusion of the arguments and the delivery of judgment to-day, I have had the advantage of reading and considering the judgment just now delivered by the Chief Justice. I entirely concur with that judgment. I concur with the rest of the Court in saying that the question referred should be answered in the affirmative.
51. The order of the Court is that the question referred to us be answered in the affirmative.