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Karan Singh vs Ishtiaq Husain And Anr.

High Court Of Judicature at Allahabad|26 October, 1920

JUDGMENT / ORDER

JUDGMENT
1. The suit which has given rise to this appeal was brought under the following circumstance:
2. One Arafat Hussein, who is now represented by the defendants respondents, mortgaged his Zemindari property under three mortgages. The first of these was executed in favour of Khurshed-Nissa and others in 1884. The other two which also related to the same property were esesuied in 1887 in favour of Sheo Prasad, who was represents) by Mohabbat Bahadur and others. Both sets of mortgagees brought suits upon their mortgages in 1910 and obtained decrees for sale, neither mortgagee was made a party to the suit of the other. Khurshed-un-Nisaa put her decree into execution and on the 20th of June 1912 she caused the mortgaged property to be sold by auction and the present plaintiff purchased it for Rs. 14,250. The amount of the mortgage held by Khnrshed un-Nissa was discharged in full out of the sale-proceeds, and there was a surplus of Rs. 9,000 and odd which remained in Court.
2. Mohabbat Bahadur and others applied for payment out of this sum of the amount of their decrees but, unfortunately, the Court on the objection of the defendants, refused to grant their application. We think that, in so doing, the Court acted erroneously. In our opinion, upon the Sale of the property, the security held by Mohabbat Bahadur and others was transferred to the surplus sale-proceeds "Which represented the mortgaged property. To this matter we will "refer later on, but we may repeat that, had it not been for the order of the Court refusing to pay over to Mohabbat Bahadur and others the amount of their decrees, and had not the mortgagor objected to subs, the present litigation would never have come into existence Upon the Court's refusing Jo pay to Mohabbat Bahadur and others the amount due upon their decrees the mortgagors themselves withdrew from Court the aforesaid renal of Rs. 9,000 and odd. Mohabbat Bahadur and others then applied far expanders of their decrees and for sale of the mortgaged property. Thereupon, the plaintiff brought a suit for a declaration that Mohabbat Bahadur and others were rot entitled to do so. This suit was dismissed, but the Court deciding it added to its decree a condition to the effect that if the property was sold in execution of the decrees held by the subsequent mortgagees, that is Mohabbat Bahadur and oilier?, the purchaser would not be entitled to obtain possession and to oust the plaintiff unless he redeemed the prior mortgage, in satisfaction of which the property had been sold and purchased by the plaintiff. Mohabbat Bahadur and others, the subsequent mortgagee, pursued their application ferulae of the mortgaged property and their decree ware transferred to the collector for execution. In order to prevent a sale of the property, the plaintiff paid the amount of their dares and thus protected tha property from sale and then instituted the preieni suit for recovery of the amount paid together with interest. The suit was resisted by the defend-ants on various grounds. The Court below has dismissed it mainly on the ground that the purofaase by the plaintiff was a purchase subject to the mortgage of Mohabbat Badadur and others, and that, therefore, the amount which the plaintiff paid as moderation only represented the value of the interest of the mortgagors and that the plaintiff was bound to discharge the mortgages of Mohabbat Bahadur and others, if he wished to protect the property trim a aneroid auction-sale. This, as we have said above, is the main ground upon which the learned Subordinate Julia has dismissed the suit. He has also held that Order II, Rule 2 of the Code of Civil Procedure is a bar to the maintainance of the present suit. We may at once observe that this Act ground of the learner Judge's decision b wholly untenable. The cause of action for the suit which the plaintiff previously brought was not the sure as that for the present suit. At the time when that suit was brought he had not managed the mortgages held by Mohabbat Bahadur aud cthera, and, therefore, he was not is a podium to claim in that suit the relief whish ha now seeks in the present suit.
3. As regards the other ground of the learned Judge's decision, we are unable to agree with his view. It cannot be said that the plaintiff purchased the properly subject to the subsequent mortgages held by Mohabbat Bahadur and others. The sale win in execution of a decree obtained upon the prior mortgage held by Khnrshed-no-Niasa and others. The only defeat in the plaintiff's title was, that it was still open to the second mortgagees, who had not son made parties to the first mortgages suit, to redeem the prior mortgage, but it cannot be said that the plaintiff did not acquire the property itself but only such rights as remained in the mortgagors, and subject to the sobriquet mortgages. In our opinion, the only right which the subsequent mortgagees heed was the right to redeem the prionmortgage and, if they did so, to sail the moiety property for the consolidated amounts of the prior mortgage and their own subsequent mortgages. Subject only to this right, the whole property must be deemed to have been purchased by the plaintiff. Furthermore, the proceed of the sale at which the plaintiff purchased were sufficient to discharge the prior mortgage, and a large surplus remained which was more than sufficient for the payment of the subsequent mortgages. After the sale of the proporty, the security which was held by the subsequent mortgagees was transferred to the surplus sale proceeds which represented the value of the property, and the subsequent mortgagees were entitled to be paid the amount of their mortgages from this surplus sale-proceeds. In the case of Barhamdec Prasad v. Tarachand 21 Ind. Cas. 961 : 41 C. 654 : 15 M.L.T. 62 : (1914) M.W.N. 38 : 12 A.L.J. 82 : 18 C.W.N. 345 : 19 C.L.J. 132 : 16 Bom. L.R. 89 : 26 M.L.J. 243 : 41 I.A. 45 (P.C.) their Lordships of the Privy council held that, when property is sold under a prior mortgage, the security of a subsequent mortgagee is transferred to the surplus sale-proceeds and it did not cease to be such security because the mortgagor had improperly withdrawn the money from Court. In the present case, upon there being a surplus, after the sale in satisfaction of the decree on the prior mortgage, the security of the subsequent mortgagees was transferred to the surplus sale-proceeds and they were entitled to be paid out of the amount of surplus. The mort gagors, in resisting their prayer for such payment and in withdrawing the money from Court, anted improperly and contrary to their rights. The plaintiff, having paid full value for the property which was the subject of the first mortgage, was not liable to redeem the subsequent mortgages. There were sufficient funds in Court to discharge those mortgages and it was only in consequence of the mortgagors appropriating those funds by withdrawing them from Court that the plaintiff was obliged to pay the amount of the subsequent mortgages in order to save the property from Bale in satisfaction of those mortgages. We think that, in justice and equity, the plaintiff is entitled to be reimbursed the money which he paid in discharge of the subsequent mortgages and for which the defendants were primarily liable. In this view, we think the decision of the Court below is erroneous. We accordingly allow the appeal, set aside the decree of the Court below, and decree the plaintiff's claim with costs in both Courts. The plaintiff will get future interest at 6 per cent. per annum from the date of the suit to the date of payment.
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Title

Karan Singh vs Ishtiaq Husain And Anr.

Court

High Court Of Judicature at Allahabad

JudgmentDate
26 October, 1920
Judges
  • P Banerji
  • G Prasad