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Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 48 of 155)
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310



YII]



MATA DIN KASODHAN V. KAZIM HUSAIN



13 All. 490



enforcement of a prior mortgage which, though falling due, he did not
choose to redeem to prevent sale under the prior mortgage.

But whilst this is so, it is one thing to say that if the right of redemp-
tion, whether under sections 74 and 75 or under section 91 of the Trans-
fer of Property Act, is not exercised in due time, the puisne mortgagee
may lose his security altogether : it is a totally different thing to say
that the redemption of prior mortgages is a condition precedent to
the enforcement by the puisne simple mortgagee of the right to bring the
mortgaged property to sale in enforcement of his security a right, which,
as I have already said, has been conferred upon him in express and un-
qualified terms by section 67 of the Transfer of Property Act.

I am therefore unable to regard anything either in sections 74 and
75 or in section 91 as enjoining any qualifications or restrictions upon the
right to sell which section 67 of the Transfer of Property Act declares in
favour of all simple mortgagees without any restriction as to whether they
are first, mesne or puisne mortgagees.

Where then is the authority in that statute or in any other for holding
that a puisne simple mortgagee's right to bring the property to sale is
subject to the condition that he should either wait for the lapse of the
term of the prior mortgages or that the redemption of such prior mortgages
is a condition precedent to the enforcement of his security ?

The section of the Transfer of Property Act upon which stress has
been laid is s. 85, which runs as follows :

"Subject to the provisions of the Code of Civil Procedure, s. 437, all
persons having an interest in the property comprised in a [490] 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."

Before stating the exact effect of that section, as I understand it,
upon the rights of a puisne simple mortgagee to bring the mortgaged
property to sale, or to redeem prior mortgages, I may premise that I
regard that section as enunciating no rule of substantive law but only
a rule of procedure for suits for foreclosure, sale and redemption institu-
ted under Chapter IV of the Transfer of Property Act. I make this
observation at the outset ; and before passing on to the consideration of
other points I am anxious to explain my views as to the effect of the
word "must" as it occurs in s. 85 in the clause saying that : "all persons
having an interest ia the property comprised in a mortgage must be
joined as parties to any suit under this chapter relating to such mortgage.'

Now, whatever may be the literal meaning of the word " must"
in the English tongue, I have no doubt that, whilst it may be under-
stood as more than merely directory and representing as strong an impera-
tive mandate as the words " shall," when used in statutes, it does not
convey the force in legal interpretation which is given to express prohibi-
tions as to the action of the parties to a litigation or of the Courts of
Justice. The word itself, however imperative, is affirmative in its effect and
meaning, and however imperative such affirmative meaning may be, the
statute law when interpreted draws a vast distinction between imperative
affirmative mandates and negative words of prohibition. Actions which fall
short of full compliance with affirmative rules whether merely directory or
imperative are no doubt reprehensible, but they amount to only defects of
procedure which can be remedied, whilst acts done in contravention of ex-
press legislative prohibition are ultra vires, illegal and without jurisdiction.
I have already indicated that no such words of prohibition are to be found

311



1891

JULY 25.

FULL
BENCH.

13 A. 132

(F.B.).



13 All. 491



INDIAN DECISIONS, NEW SERIES



[Yol.



1891 is s. 85 of the Transfer of Property Act, and I cannot therefore read that
JULY 25. section as if it began by saying ; " No suits shall be entertained unless all the

parties etc," The section, as it stands, seems to me to be nothing more than

FULL a corollary to the [491] principles contained in the various sections of the
BENCH. Code of Civil Procedure as to the array of parties to a Civil suit, and be-
yond this I am unable to carry the effect of the rule as indicated by the
13 A. 432 gec tion itself. That is to say, I cannot understand the rule as affecting
(F.B.). jjjjg substantive incidents of valid mortgages except in the sense of mere
procedure which must be clearly distinguished from substantive rights.
Nor can I take it as justifying the importation of any qualifications of
the right of sale which simple mortgagees, whether first, puisne, or
rnesne, possess under s. 67 of the Act, subject, of course, to the rule of
priority as enunciated in s. 48 of the Act.

But it has been contended that the effect of the section goes far
beyond my interpretation, that its provisions require that when a puisne
or mesne simple mortgagee seeks by suit to enforce hissecurity by bringing
the mortgaged property to sale, he is bound, as conditions precedent to
the enforcement of his security, firstly, to pay off the prior mortgages,
secondly, to wait for the expiry of the period when such prior mortgages
become redeemable, and thirdly, to require that all the subsisting mort-
gages, whether prior or puisne, should be liquidated and brought into-
account in Court as if the suit was one for administration of an estate
or the winding up of a company.

As I understand the argument, it amounts to this, that where a
mortgagor has, by several successive mortgages of the same property,
borrowed money at various times and on various conditions, including
various terms as to the periods when the mortgages would be redeemable,
it is not a matter of choice with any one of the puisne or mesne incum-
branoers, but a matter of legal mandate, that he should, in seeking to
enforce his own security against such rights as were mortgaged to him,
seek to free the property of all prior and subsequent incumbrances, and
bring to sale the full ownership of the property free of all incumbrances,
so as to give a clear title of full ownership to the purchaser who buys the
property in the auction sale which would thus take place. And, in support
of this view, certain observations to be found in Dr. Whitley Stokes' In-
troduction to the Transfer of Property Act (The Anglo-Indian Codes, Vol.
[492] I, p. 734) were referred to. I have read those observations with
all the respect due to an author of such eminence, and all the more so, as
it is a matter of the history of legislation in India that the Transfer of
Property Act practically owes its existence to the juristic labours of the
illustrious author when occupying the high position of Legal Member of
the Viceroy's Legislative Council. But those observations do not go the
length of the contention with which I am now dealing.

Under the law as it stood before the passing of the Transfer of Pro-
perty Act (IV of 1882) much doubt and uncertainty existed as to who were
the proper parties to a suit in which a prior, puisne, or mesne' mortgagee
sought to enforce his simple mortgage by bringing the property to sale.
The ordinary course adopted by such a simple mortgagee, at least in this
part of the country, was to sue only the mortgagor and to pray for enforce-
ment of his security against the mortgaged rights, ignoring the existence
of puisne incumbrancers and other persons interested in the property.
Such suits resulted in decrees, where the plaintiff's mortgage was proved,
in his favour resulting in sales, without giving those interested in saving
the property any opportunity of paying off the plaintiff's mortgage and

312



YII]



MATA DIN KASODHAN V. KAZIM HUSAIN



13 All. 494



securing their rights from sale. I dealt with this matter in delivering
my judgment in Sita Ram v. Amir Begam (1) where I said :

"The law, as it stood before the Transfer of Property Act, as to the
necessity in a suit by a first mortgagee of making a subsequent mortgagee
a party was explained by me in Ali Hasan v. Dhiraj (2) following the
ruling of Turner, J. f in Khub Ckand v. Kalian Das (3). It was there held
that it was not absolutely necessary to make puisne incumbrancers parties
to a suit by a first mortgagee, and that a sale in enforcement of the prior
mortgage would defeat the rights of the puisne incumbrancer, who is presum-
ed in jurisprudence to take with knowledge of the prior mortgage, or at least
cannot take more than his mortgagor had to give. The puisne inoumbran-
cer [493] could, of sourse, escape the decree by proving fraud or collusion,
or he might prevent the sale in enforcement of the prior incumbrance,
by redeeming ib. But if neither condition is satisfied, sale in enforcement
of the prior incumbrance would defeat the puisne incumbrance. Since
the passing of the Transfer of Property Act (IV of 1882) it seems, under
certain conditions, necessary, according to s. 85 of the Act to make
puisne incunobrancers parties, with the result that if they do not redeem,
their lien will be defeated in the absence of fraud, which might disturb
the rule of priority under conditions such as those contemplated by s. 78
of the Transfer of Property Act (IV of 1882)." This matter was more
fully considered by me in Bhoop Singh v. Goolab Rai (4) where I made
the following observations which have not been published in the official
reports and they are these :

" Such being the effect of the rulings of the other High Courts,
it is important to consider how this Court has dealt with the same
question in regard to suits brought to enforce the mortgage lien by sale of
the mortgaged property, such as the plaintiff's former suit of the 24th
April 1882, was, and to which only Bhajwant as the heir of Dalganjan
Singh (the executant of the mortgage of the 28th April 1870), and Jagraj
as the purchaser of the property under his own decree of the 14th August
1873, were impleaded. In the Full Bench case of Khub Ghand v. Kalian
Das (3), it was laid down by Turner, J., that when a suit is brought to
enforce the iien under the mortgage, though it is not absolutely necessary
for the plaintiff to make subsequent incumbrancers parties to the suit,
and though if subsequent iucumbrancers are not made parties to the suit,
they are not bound by the decree which the plaintiff may obtain, and may
at any time before sale come in and redeem, yet if they do not redeem, and
a sale takes place, their liens will be defeated, unless they can show
something more than the existence of their subsequent incumbrances,
some fraud or collusion which entitled them to defeat the first imcumbrance,
or to have it postponed to their own. The principle of the rule was followed
by me in Ali Hasan v. [494] Dhiraj (2) ; and again in a very recent case
Seeta Ram v. Wilaiti Begam (5) in respect of a sale which had already
taken place in execution of a decree enforcing hypothecation liens. Such
has undoubtedly been the course of decision in this Court, and is in
accord with the principle upon which the ruling of the Calcutta High
Court in Mathura Nath Pal v. Chunder Money Dabya (6) proceeded, and
is in special conformity with the dictum of West, J., in S. B. Shringar-
quri v. S. B. Pethe (7), where that eminent Judge observed that ' It was
not incumbent on the registered mortgagee, desiring to enforce his lien, to



1891

JULY 25.

FULL
BENCH.

13 A. 432

(F.B.).



(1) 8 A. 324 (at p, 339).

(4) 6 A.W.N. 1886, 269 at p. 271.

(7) 2 B. 663.



(2) 4 A. 518.

(5) 6 A.W.N. (1886) 101.



(3, 1 A. 240.
(6) 4 C. 817.



A VII-40



313



13 All. 495



INDIAN DECISIONS, NEW SERIES



[Vol.



1891

JULY 25.

FULL
BENCH.

13 A. 432

(P.B.),



search for subsequent incumbraneers or purchasers. It lay on them to
inform him of the assignment of the equity of redemption or of
the interests they had acquired. Eegistration of a subsequent sale
did not supply the place of such notice, as the mortgagee, though he
would properly look for prior inoumbrancers, could not be expected to keep
up a constant search for those subsequent to his own, and in the absence of
notice, would properly proceed against the person prima facie liable to him.
And if his proceeding was right, the title acquired under it was complete
so as to displace the defendant's title.' Both these cases were referred to,
and dissented from by the Madras High Court in Venkata Somayazulu v.
Kannam Dhora (1) to which I have already referred; and I confess that,
in view of this conflict of authority, I have, in considering this case,
bad much doubt as to whether I could still adhere to the dictum of
Turner, J., in Khub Chand v. Kalian Das (2) which I followed with the
concurrence of my brother Judges on more than one occasion, in the
cases which I have already mentioned. But I do not think it is necessary
for me to decide this question, because, whatever the rule of law may
have been before the passing of the Transfer of Property Act (IV of 1882),
the matter which has given rise to so much conflict of decision has now
been settled by the Legislature in s. 85 of that enactment, where it
is laid down that ' all persons having an interest in the property com-
prised in a mortgage, must [495] be joined as parties to any suit under
this chapter relating to such mortgage : provided that the plaintiff has
notice of such interest.' The Act must now be taken to have approved
of those rulings which require that all persons having an interest in
the mortgaged property, must be joined in a suit, such as the former
suit of Gulab Bai, instituted by him on the 24th April, 1882, and although
that suit was instituted before the Transfer of Property Act came into
force, I am prepared to follow the rulings which s. 85 of the Act has
approved, even though such a view may involve modification of the opinions
which I adopted in the two cases already mentioned."

Such, then, was the law as to the array of parties in suits for
enforcement of simple mortgage securities and gave rise to multiplicity
of suits as to the rights claimed and enforced under one and the
same mortgage, and as to the title which the auction purchaser in sales
held in enforcement of sunh mortgage acquired as against other incum-
brancers and other persons interested in the property sold. The legis-
lature has removed this evil, and the law has now been placed
upon a sounder footing by s. 85 of the Transfer of Property Act as to
the array of parties in suits such as the present. The effect of that
law so far as the icnpleading of puisne incumbrancers is concerned is the
subject of a very recent ruling of my brother Straight in Namdar Ghaudhri
v. Karam Raji (3) where he, with the concurrence of my brother Tyrrell,
laid down the rule that " if a prior ineumbrancer having notice of a puisne
incumbiance, does not, when he puts his mortgage in suit, join the puisne
ineumbrancer as a party, that puisne ineumbrancer is in no way affected
or prejudiced by the decree in the rights which the Transfer of Property
Act gives him to redeem the prior incumbranoer. If he has been left out
of that litigation, the puisne ineumbrancer must be placed in the same
position he would have held had he been a party to that litigation."

In this view of the law I concur. But it does not go the length of
holding, that, where a suit has been improperly or defectively instituted in



(1) 5 M 184.



(2) 1 A. 240.
314



(3) 13 A. 315.



VII]



MATA DIN KASODHAN V. KAZIM HUSAIN



13 All 497



respect of the array of parties required by s. 85 [496] of the Transfer
of Property Act, such suit is to be defeated merely because of such defect,
or that when such a suit has actually gone to trial and resulted in a decree,
such decree is null and void as ultra vires. Much less does the ruling lay
down any rule which could be understood to necessitate that when a suit
is instituted by a mesne or puisne mortgagee for enforcement of his secu-
rity by sale, and the prior mortgagee or mortgagees or other persons interest-
ed in the property are left out of the array of parties, the suit must fail.

I may now say, before proceeding any further, that I concede that
2. 85 of the Transfer of Property Act requires, that to a suit by a mesne or
puisne incumbrancer, both the prior and subsequent mortgagees must be
made parties, so as to have an opportunity of contesting the genuineness,
validity or ext p ent of the plaintiff's rights under the particular mortgage
which he seeks to enforce, and also to assert and vindicate such rights as
they may have as between the plaintiff on the one hand, and themselves
on the other. The section would in such cases require the plaintiff to
implead as defendants (1) the mortgagor, (2) the prior mortgagees, (3) the
mortgagees puisne to his incumbrance, and (4) other persons interested in
the property which the plaintiff seeks to bring to sale by enforcement of
his security. The effect of an adjudication in a suit thus arrayed would
be that if the plaintiff succeeded in obtaining a decree for enforcement of
his security, such decree would define his rights and be binding upon all
parties defendants, and when a sale takes place in enforcement of the
decree such sale would convey to the auction purchaser a title unhampered
by any possibility of being subsequently qustioned by any one of the
parties to the litigation. This is obviously a great benefit conferred by the
section, but I do not think it aims at anything more.

It has been, however, argued that the section goes much further, for
there would be no object in requiring such an array of parties unless the
Legislature intended that when any mortgage is put in suit all other mort-
gages should be taken into account and liquidated so as to free the property
from all incumbraoces and render the sale [497] in enforcement of any
security free of all charges so as to pass a clear title of full unencumbered
ownership to the purchaser.

I will deal with this argument in two aspects. I will show in the
first place that the array of parties required by the section has substantial
benefits in preventing subsequent litigation, without subjecting the mesne
or puisne incumbrancer to the necessity of paying off prior mortgages or
bringing into account all incumbrances as a condition precedent to the
enforcement of his security. In the second place, I will show that our
rules of procedure contain no provision for determination of disputes as
to priority or otherwise which may arise inter se between several mortga-
gees who, under s. 85, must necessarily be impleaded on one and the same
side as parties defendants. For under the Code of Civil Procedure, no
two mortgagees seeking to enforce separate mortgages, could join as plaintiffs
in one and the same suit (s.'Sl), nor can any one be added as a plaintiff
against his will (s. 32) though he maybe added as a defendant so long as
any relief is claimed against him, " and judgment may be given against
such one or more of the defendants as may be found to be liable,
according to their respective liabilities, without any amendment."

Dealing, then, with the first aspect ; in a suit by a mesne mortgagee
for enforcement of his security, the parties being arrayed as abovementioned,
under s. 85 of the Transfer of Property Act, the mortgagor, who has to

315



1891

JULY 25.

FULL
BENCH.

13 A. 432

(F.B.).



13 All. 498



INDIAN DECISIONS, NEW SERIES



[Vol.



1891

JULY 25.

FULL
BENCH.

13 A. 432
(F.B.).



defend his rights of ownership in the property, will have the chance of
contesting whether the security which -the plaintiff seeks to enforce is
genuine and valid, whether the amount claimed thereon is correct or has
been reduced by subsequent payments. Similarly, the incumbrancers
puisne to the plaintiff could raise any pleas, to the same affect (for such
right is given to them by s. 75 of the Transfer of Property Act) and they
would further in common with the mortgagor (under s. 88 read with s. 86)
be allowed an opportunity of redeeming the plaintiff's mortgage to prevent
the property from being brought to sale in enforcement of the plaintiff's
security thus obviating the avils of a fresh litigation as pointed out by my
brother Straight in Namdar [498] Chaudhri v. Karam Raji (I). Now, this is
obviously a great improvement upon the law as it stood before s. 85 of the
Transfer of Property Act, and it will be readily observed that neither the
terms of that section nor the exigencies of the advantage thus'derived there-
from require that puisne incumbranoers to whom the right and opportunity
of redemption is thus given should bring their mortgages into account, before
the mesne incumbrancer, who is prior to them, can enforce his security. I
can imagine and know many cases in which such puisne incumbrancers are
either debarred by the terms of their mortgages from seeking recovery of the
money due thereon, or are unwilling to forego the security which they al-
ready possess and which they wish to keep, preferring to pay off the prior
mortgage to closing the benefit of their investment, and I am unable to
understand anything in the section which would force them to do so at
the will of the prior incumbrancer, or that of mortgagees puisne to them.
The advantages of impleading prior mortgagees, as required by the
section, are equally great. In a suit by a puisne mortgagee it may be that
he denies the validity or genuineness of the prior mortgage, or by ignoring
its existence assumes that such a mortgage has already been paid off and
is no longer subsisting. It may also be that whilst admitting the prior
mortgage, he contests the amount remaining due thereupon as a charge
upon the mortgage property which would take precedence of the plaintiff's
security by reason of the rule of priority as enunciated in s. 48 of the
Transfer of Property Act. And, indeed it may also be, as I have known
in numerous cases, that the mesne or puisne incumbrancer contepds that
although his security is puisne in point of time to that of the prior
mortgage, yet the security possessed by such prior mortgagee must be post-
poned to the plaintiff's security, because the latter advanced money in
consequence of the fraud and collusion of the prior mortgagee. By saying
this, I mean that in mortgage suits by mesne or puisne incumbrancers
in India it is not an uncommon plea, based, as it is, upon the doctrine
explained in s. 78 of the Transfer of Property Act, which lays down that
" where, through the fraud, misrepresentation [499] or gross neglect
of a prior mortgagee another person has been induced to advance
money on the security of the mortgaged property, the prior mortgagee
shall be postponed to the subsequent mortgagee." On the other hand,
there are cases in which a pripr mortgagee, after the property haa
been mortgaged to a second mortgagee, makes further advances upon
the same property and pleads that he made such advances by reason of
the fraud and misrepresentation of the pusne incumbrancer in collusion
with the mortgagor, and upon that ground claims priority, not only in res-
pect of sums advanced upon the prior mortgage but also in respect of such
advances as were made upon the mortgage subsequent in point of time to

(1) 13 A. 315,
316



YII]



MATA DIN KASOD5AN V. KAZIM HUSAIN



13 All. 501



the security which the plaintiff, the puisne or mesae mortgagee, seeks to
enforce. Further, there are' cases of which this very case affords an illus-
tration, viz,, cases, in which the prior incumbrancer dealing direct with
the mortgagor and behind the back of the mesne and puisne incumbrancers,
purchases such rights of ownership as were left to the mortgagor after the
execution of the various mortgages.

The preclusion of points such as these being raised by the prior
mortgagee in any litigation which might ensue after the mesne or puisne
incumbrancer has already obtained his decree, and that decree has resulted
in a sale at which a third party has purchased is one of the important
objects which s. 85 of the Transfer of Property Act aims at by requiring
that tho prior mortgagee should also be impleaded in such a cause. His
being so impleaded would also give him an opportunity of expressing his
consent in suits by puisne incumbrancers to the effect that the sale in
enforcement of the puisne incumbrance may take place free from his
prior incumbrarice under conditions provided by s. 96 of the Transfer of



Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 48 of 155)