Patna High Court
Khirodhar Singh And Ors. vs Gajadhar Lal Mahto And Ors. on 6 April, 1925
Equivalent citations: 91IND. CAS.221, AIR 1925 PATNA 484
JUDGMENT Ross, J.
1. This is an application in revision by the decree-holder against an order passed by the Subordinate Judge of Patna in execution proceedings.
2. The petitioner held a mortgage over two properties a gola and some kasht land. The opposite party is a subsequent purchaser of the gola. A decree was passed on the mortgage and the decree-holder applied for sale of both properties. The opposite party claimed that the gola should be sold only if the other property did not fetch a sum sufficient for the satisfaction of the decree. The learned Subordinate Judge was of opinion that such an order could be passed and he, therefore, ordered that all the mortgaged properties should be advertised for sale and that at first all except the gola should be put up for sale and, if such sale failed to fetch a sufficient sum, then the gola should also be sold.
3. The decree-holder contends that this order is without jurisdiction and that he is entitled to sell the mortgaged properties, in any order he chooses. As it is doubtful whether any question of jurisdiction arises, this application will be treated as an appeal inasmuch as it is a final order between the parties in a matter relating to the execution, satisfaction and discharge of the decree.
4. The learned Vakil for the opposite party relies on Sections 56 and 81 of the Transfer of Property Act and Order XXXIV, Rule 4 of the C.P.C. and upon the decisions in Rajkeshwar Prashad Narain Singh v. Mohammad Khalilul-Rahman 78 Ind. Cas. 796 : 3 Pat. 522 : 5 P.L.T. 223 : (1924) A.I.R. (Pat.) 459, Appaya v. Rangayya 31 M. 419 : 3 M.L.T. 287 : 18 M.L.J. 229 and Bhagwan Chandra Das v. Dharam Narain Das 84 Ind. Cas. 203 : 3 Pat. 962 : 2 Pat. L.R. 242 : (1924) A.I.R. (Pat.) 802 : (1925) Pat. 62 : 6 P.L.T. 392. and contends that the Court is entitled to say in what order the mortgaged properties should be sold having regard to the equities of the case.
5. It is not easy to reconcile all the decisions on the right of the subsequent purchaser to claim marshalling. See on the one hand Radhmal v. Rambarakh 7 A. 711 : A.W.N. (1885) 198 : 4 Ind. Dec. (N.S.) 774, Chunilal Vithaldas v. Fulchand 18 B. 160 : 9 Ind. Dec. (N.S.) 615 and Magniram v. Mehdi Hossein Khan 6 31 C. 95 : 8 C.W.N. 30. and on the other hand Bhikhari Das v. Dalip Singh 17 A. 434 : A.W.N. (1895) 83 : 8 Ind. Dec. (N.S.) 601 and Lala Dilawar Sahai v. Dewan Bolakiram 11 C. 258 : 5 Ind. Dec. (N.S.) 931.
6. The subject has been discussed in Jatadhari Singh v. Baldeo Lal 51 Ind. Cas. 444 : 4 P.L.J. 207, where in the leading judgment the cases are referred to and it is shown that the authorities in the Calcutta High Court are all unanimous in holding that the Executing Court ought not ordinarily to fetter the discretion of the decree-holder to put to sale whatever property he wishes first to sell. Order XXXIV, Rule 4 of the C.P.C. is referred to and it is pointed out that, while the Court making the decree has no doubt a right to declare what portion of the mortgaged property should be sold first, that discretion is not to be arbitrarily exercised and is subject to the general principle that the Court cannot prejudice the rights of the mortgagee if he has not himself done any act which, prejudices the rights of those having equities against the mortgagor. It is further observed that in the absence of a direction in the decree to the contrary it would seem that this discretion vests in the Execution Court also. Rajkeshwar Prasad Narain Singh v. Muhammad Khalil-ul-Rahman 78 Ind. Cas. 796 : 3 Pat. 522 : 5 P.L.T. 223 : (1924) A.I.R. (Pat.) 459 was a case between a prior and a puisne mortgagee and it was held that the puisne mortgagee was entitled to the benefit of Section 81 although he had purchased the property in execution of his mortgage-decree. But the learned Vakil relied on a passage in the judgment-at page 533 Page of 3 Pat.-[E.D.} where it is said that apart from the question of marshalling it appears that the Court has undoubtedly the right to direct under Order XXXIV, Rule 4, that the properties mortgaged should be sold in a particular order. The judgment goes on to say that "ordinarily the right of selling the property in a particular order rests with the decree-holder; and, in the absence of any contract between the parties, the decree-holder may-proceed to sell the properties in whatever order he thinks best so as to facilitate the realization of his mortgage debt. But the Court can, in the circumstances of a case and in view of the equities arising in favour of the various parties, direct the order in which the properties should be sold" and, in fact in that case the Court did direct that the properties of the puisne mortgagee should be sold last. In Appaya v. Rangayya 31 M. 419 : 3 M.L.T. 287 : 18 M.L.J. 229, there were two properties, parcel No. 1 and parcel No. 2, that were mortgaged to the plaintiff; and the third defendant subsequently purchased parcel No. 1. It was held in that case that although the third defendant was not entitled to have the property marshalled and to insist that parcel No. 2 should be first sold before recourse was had to parcel. No. 1, yet under Section 88 of the Transfer of Property Act (Order XXXIV, Rule 4, C.P.C.) the Court might order that a portion sufficient to discharge the plaintiff's debt be sold; and, if parcel No. 2 was sufficient and the plaintiff could not possibly be prejudiced by such sale, it might be open to the Court to direct in the decree itself its sale before the other property.
7. In Bhagwan Chandra Das v. Dharam Naraia Das 84 Ind. Cas. 203 : 3 Pat. 962 : 2 Pat. L.R. 242 : (1924) A.I.R. (Pat.) 802 : (1925) Pat. 62 : 6 P.L.T. 392, the question was whether the decree-holders were entitled to have all the properties which were mortgaged to themselves sold in execution of their decree. In that case the Subordinate Judge had excluded from the sale properties which had been purchased subsequently to the mortgage. The Court in allowing the appeal decided that all the property must be advertised for sale and when they were actually brought into execution and became subject to sale it would then be for the Court to decide on just and equitable principles which property ought to be sold first.
8. The rule and its limitations are stated in Averall v. Wade (1835) LI : & G.T. Sugd. 262, where Lord St. Leonards while stating that where one creditor has a demand against two estates and another against one only, the latter is entitled to throw the former on the fund that, is not common to both, added: "This is a narrow doctrine and cannot generally be enforced against an encumbrancer who is a mortgagee. Whatever may be the equity of the creditor with only one security, the mortgagee of both estates has a right to compel the debtor to redeem or lie may foreclose." It is further, however, pointed out that whereas in a suit for foreclosure the first mortgagee has a right to foreclose and all that the second mortgagee can do is to redeem him, in the case where the mortgagee is not entitled to anything more than his money, that is, where the decree is for sale, the equity of the creditor with only one security may be easily worked out.
9. Section 55(1)(g) of the Transfer of Property Act provides that the seller is bound, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing; and, following this principle, Section 56 enacts that "where two properties are subject to a common charge, and one of the properties is, sold, the buyer is, as against the seller, in the absence of a contract to the contrary, entitled to have the charge satisfied out of the other property, so far as such property will extend." The matter is put thus by Sir Rashbehary Ghose in his Law of Mortgage, Fifth Edition at page 388: "The question, therefore, is not whether the purchaser takes subject to the mortgage as between himself and the mortgagee, but whether lie is bound to discharge the mortgage debt as between himself and the mortgagor. If he is not, he may undoubtedly insist upon marshalling. On the other hand, if the purchaser cannot claim exoneration, the whole burden of the mortgage debt should not, as between him and the mortgagor be thrown on the latter."
10. The question, therefore, turns oh the form of the contract between the vendor and the purchaser, namely, whether the property was sold subject to the encumbrance or not. It is stated in the petitioners affidavit that in their written statement the opposite party prayed that their purchased property should be ordered to be sold after the other properties, but the learned Subordinate Judge who decreed the suit ordered that no facility should be allowed to the opposite party; and the decree is silent on the subject. The presumption, therefore, is that what the opposite party paid for was the equity of redemption only and there is no equity in his favour There is, therefore, no ground for interfering with the rights of the mortgagee to sell the property in any order he pleases. I would allow this appeal with costs and set aside the order of the learned Subordinate Judge and disallow the objection of the judgment-debtor.
Mullick, J.
11. I agree.