JUDGMENT
1. This appeal arises put of a suit to recover the money due on the basis of a hypothecation bond dated 10th November 1918.
2. The suit was not contested by the mortgagors but defendant 9, Bhagwan Das, was impleaded as a subsequent mortgagee of a portion of the mortgaged property, namely, the property which is situated in mahal "Yellow Bhagwan Dai" of mauza Fatehpur Asl.
3. Bhagwan Das pleaded that he had priority in respect of his mortgages and it was found as a fact that he held two usufructuary mortgages of a date earlier than the date of the mortgage in suit. He contended that the plaintiff should not be allowed to bring the property to sale without paying him the mortgage money due on his prior mortgages.
4. The trial Court granted to the plaintiff a decree for sale on condition that the plaintiff should pay Rs. 1,500 to the prior mortgagee Bhagwan Das, and ordered that in case of failure by the plaintiff to make such payment then the suit shall stand dismissed with costs.
5. The decree was upheld on appeal by the learned Additional Subordinate Judge of Moradabad. It has been contended before us in second appeal by the plaintiff that the decree of the trial Court which has been upheld by the lower appellate Court is defective in that it compels the puisne mortgagee to redeem the prior mortgagee as a condition of bringing the property to sale. The contention is that the proper decree to pass would be to decree the sale of the property in suit subject to the prior mortgages.
6. On this point we think that the contention of the learned advocate for the appellant is well founded. The lower appellate Court relied upon a ruling in Manohar Lal v. Ram Babu [1912] 34 All. 323. That was a case in which the defendants were the auction purchasers of properties sold in execution of a decree obtained upon a prior mortgage and the plaintiff was seeking to bring the property to sale on the basis of his subsequent mortgage. It was held in that case that the plaintiff had no absolute right to bring the property to sale in satisfaction of his mortgage subject to the prior mortgage and that in the circumstances he ought to redeem the prior mortgage before bringing the property to sale.
7. In our opinion this ruling can be distinguished from the present case on the facts In the case now, before us the prior mortgagee has not brought a suit upon his mortgage and the interests of mortgagor and prior mortgagee are still separate. In the case upon which the ruling was passed the auction-purchaser had acquired the rights both of the mortgagor and of the prior mortgagee. The ruling proceeds upon its special facts which are quite different from the facts of the case now under consideration.
8. On the other hand, we have been referred to the ruling in Kanti Ram v. Kutubuddin Mahomed [1896] 22 Cal. 33. That was a suit by a second mortgagee to which the prior mortgagee was a party and the plaintiff prayed that the amount due to him might to realized by sale of the mortgaged property. The Courts below dismissed the suit holding that the plaintiff was not entitled to sell the mortgaged property without redeeming the prior mortgage. It was held that this view was erroneous and that the plaintiff was entitled to a decree for sale of the mortgaged property subject to the lien of the prior encumbrancer. The facts of that ease are on all fours with the facts of the case before us. Although the ruling is an old one it has not been shown to us that it has ever been dissented from and in our opinion it is still good law.
9. Under Order 34, Rule 1 it is expressly provided, in the explanation, that a puisne mortgagee may sue for sale without making the prior mortgagee a party to the suit. That implies that on a decree for sale by a puisne mortgagee the decree would ordinarily be for sale of the property subject to the prior mortgage. The interests of the prior mortgagee cannot be affected by a decree given upon such terms. If the prior mortgagee is impleaded by mistake (as happened in the present case because the plaintiff was under the impression that Bhagwan Das was a puisne mortgagee and not a prior mortgagee) we do not think that the mere fact that the prior mortgagee is a party to the suit will affect the nature of the decree which should be passed. In our opinion the learned advocate for the appellant is correct in contending that the proper decree would be for sale of the property subject to the prior mortgages.
10. Order 34, Rule 12 shows that, if the prior mortgagee consents, then the property can be sold free from incumbrances on condition that the prior mortgagee will have the same interest in the sale proceeds as he had in the property sold. A decree on those terms would not seem to be proper in the present case because the prior mortgagee has not expressly consented to the sale of the property free from incumbrances.
11. The proper decree therefore will be for sale of the property subject to the prior mortgage. As the prior mortgagee is a usufructuary mortgagee it is clear that the auction purchaser will not be able to get possession of the property without redeeming: the prior mortgages. The interests of the prior mortgagee therefore will in no way be effected.
12. It has also been argued that even if the views taken by the Courts below were correct there was no justification for dismissing the suit for sale completely if the plaintiff failed to pay up the mortgage money due to Bhagwan Das. He held a mortgage in, respect of only part of the property mortgaged in the plaintiff's mortgage-deed. At the most, therefore, the Court should have dismissed the suit for sale in respect of the property covered by Bhagwan Das's mortgage bonds.
13. In our opinion this argument also is valid, but in view of our decision on the first contention it does not affect the result.
14. The respondent Bhagwan Das mortgagee is dead and in his place his son has been substituted. Mr. Vishwa Mitra, was appointed as advocate on behalf of Bhagwan Das but has not been appointed on behalf of the son who is therefore unrepresented in this appeal.
15. We allow the appeal and decree the plaintiff's suit for sale of the mortgaged property subject to the prior mortgages held by Bhagwan Das or his representative. The plaintiff-appellant will get his costs in this Court and in the Court below from Bhagwan Das, defendant 9, or his representative. The order as to costs of the trial Court will hold good. Let a decree be prepared accordingly under Order 34, Rule 4. The period for payment will be six months from today's date.