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1912 Supreme(Cal) 517

CALCUTTA HIGH COURT
Beachcroft, J., Ashutosh Mookerjee, J.
Dalip Narayan Singh & Anr. - Appellant
Versus
Chait Narayan Singh & Ors. - Respondent
Decided On : 03-09-1912

Headnote:

Mortgage - Priority - Transfer of Property Act, 1882, Sections 79, 80 - Res Judicata - A prior mortgagee is not entitled to priority over a subsequent mortgagee for advances made after the date of the subsequent mortgage, unless the prior mortgage expressly states the maximum amount secured and the subsequent mortgagee had notice of the prior mortgage.

Fact of the Case:

Two sets of mortgagees filed cross suits for enforcement of mortgage securities. The first mortgage was executed on October 12, 1900, and the second mortgage was executed on April 20, 1908. The second mortgagees claimed priority over the first mortgagees based on three earlier securities, including a security bond dated September 28, 1900. The first mortgagees argued that the second mortgagees were not entitled to priority and that they were personally liable for the mortgage debt.

Finding of the Court:

The court found that the second mortgagees were entitled to priority over the first mortgagees to the extent of the amount covered by a decree obtained in a rent suit on March 13, 1907. However, the court held that the second mortgagees were not entitled to priority for the entire amount secured by the security bond of September 28, 1900, as the first mortgagees had no notice of the prior security. The court also held that the first mortgagees were not personally liable for the mortgage debt.

Issues: The main issues in the case were: (1) whether the second mortgagees were entitled to priority over the first mortgagees based on the earlier securities, and (2) whether the first mortgagees were personally liable for the mortgage debt.

Ratio Decidendi: The court applied Sections 79 and 80 of the Transfer of Property Act, 1882, to determine the priority of the mortgages. The court held that a prior mortgagee is not entitled to priority over a subsequent mortgagee for advances made after the date of the subsequent mortgage, unless the prior mortgage expressly states the maximum amount secured and the subsequent mortgagee had notice of the prior mortgage. The court also applied the doctrine of res judicata to determine the effect of the decree in the rent suit.

Final Decision: The court allowed the appeals, discharged the decrees made by the Subordinate Judge, and remanded the cases to him for further proceedings.

JUDGMENT

1. These appeals are directed against two decrees in cross suits for the enforcement of mortgage securities. On the 20th April 1908, four persons, who maybe briefly described as the mortgagors, executed a mortgage security in favour of Dalip Narayan Singh and Balmiki Prasad for a sum of Rs. 15,539. The consideration for the mortgage comprised judgment-debts due from the mortgagors to the mortgagees, and also arrears of rent due in respect of leases granted by the mortgagees to the mortgagors. The mortgagees have joined as defendants not merely the mortgagors, but also junior incumbrancers. One of the defendant is Harak Narayan Singh, who claims under a mortgage-bond executed in his favour by the mortgagors on the 12th. October 1900. Prima facie, he is a prior incumbrancer, and, consequently, not a proper party to the mortgage suit, but the plaintiffs have joined him as a defendant as they claim priority against him. The suit was commenced on the 11th October 1909, and Harak Narayan died shortly afterwards, whereupon his infant sons were brought on the record. On the 11th April 1910, they filed their written statement wherein they repudiated the claim to priority set up by the plaintiffs. Meanwhile, on the 15th November 1909, they had instituted a suit to enforce their security of the 12th October 1900, and joined therein as defendants the mortgagees of the 20th April 1908, as puisne incumbrancers. The latter filed their written statement on the 19th April 1910, and claimed priority on the basis of three securities of the 14th June 1900, 28th September 1900 and 27th April 1903, which they contended had not only been not superseded but actually kept alive by the mortgage of the 20th April 1908. The substantial question in controversy in the two cross suits, consequently, was whether the mortgage of the 20th April 1903, is entitled to priority over the mortgage of the 12th October 1900, and if so to what extent. The Subordinate Judge has negatived the claim for priority and has not only given mortgage decrees to the two sets of mortgagees, but, has, in the suit by the mortgagees of the 12th October 1900, given them a personal decree against the mortgagees of the 20th April 1908. These mortgagees have now appealed to this Court, and on their behalf the decrees of the Subordinate Judge have been assailed OK two grounds, namely, first that the security of the 20th April 1903, is entitled to precedence over the security of the 12th October 1900, and, secondly, that a puisne mortgagee, as holder of a fragment of the equity of redemption, cannot be held personally responsible for the re-payment of the mortgage-debt which is primarily payable by the mortgagors.

2. To test the soundness of the first contention, reference must briefly be made to some of the earlier transactions between the parties. On the 28th September 1900, the mortgagors took a lease from the mortgagees of a half share of a property Balibigha, for a term of nine years, on an annual rental of Rs. 1,500. On the same date, the mortgagors executed a security bond to secure the due performance by them of their engagement to pay rent. These two documents were presented for registration on that very date and were actually registered on the 11th October 1900. The lessees made default in payment of rent. The consequence was that the landlords sued to recover arrears of rent, and joined as defendants several persons, among them Harak Narayan Singh, the mortgagee under the bond of the 12th October 1900, on the allegation that they had acquired an interest in the properties given by the lessees by way of security. The suit as framed was not merely a suit for rent but also a suit for enforcement of the security given by the lessees. A decree was made in favour of the landlords on the 13th March 1907. The decree declared the prior title of two of the defendants, but not of Harak Narayan Singh. On the 24th May 1907, the landlords obtained another decree for rent. Under these t

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