Gross neglect, apart from fraud, can be a reason for postponement of a prior mortgagee under Section 78 of the Transfer of Property Act.

1. It is an admitted fact that the three principal title-deeds relating to the property in question in this suit, which should have been in the possession of the late second defendant as mortgagee under a deed of mortgage from Mrs. Annie Smith of the 5th December 1879, were in September 1883 in the possession of the mortgagor, who was thereby enabled to obtain a loan of Rs. 10,000 from the plaintiff company on executing to them a mortgage of the property in question dated 15th October 1883, and subsequently to obtain a further sum of Rs. 500 by way of further charge on the same property. The explanation which the second defendant gave of the title-deeds being out of his possession was that he was in possession of them in 1878, having obtained them on the occasion of taking a prior mortgage from Mrs. A. Smith, but gave them up to her in that year to enable her to obtain a new Collectors certificate in her name, that such new Collectors certificate was issued in May 1878 and handed to him, but he did not receive back the title-deeds from Mrs. Smith, and on asking her for them was told that they were retained by the Collector, with which answer he was satisfied and took no further steps to obtain the title-deeds. We understand from the judgment that the learned Judge who tried the case did not believe this explanation and we see no reason whatever to differ from him. It is possible that the first part of the story is true and that the title-deeds were given up by the second defendant to Mrs. Smith to enable her to get the new Collectors certificate, but we agree with the learned Judge that it is incredible that the second defendant, a sowcar of experience, who, on his own admission, had had a good deal to do with mortgages and who is well known in this Court as having been concerned in much litigation connected with mortgage transactions, could have believed that it was the practice for the Collector to retain possession of title-deeds handed to him on the occasion of a new certificate being applied for--not to retain them temporarily, but to keep them altogether--and that he should have believed this extraordinary statement merely on the word of Mrs. Smith and should never have made inquiries as to its truth at the Collectors office. This part "of the second defendants story rests only upon the evidence of himself and of his relative and agent Hunsraj, and we think the learned Judge was amply justified in rejecting it as incredible.

2. The case is therefore one of a first mortgagee, who allows the title-deeds, nearly 4 years after his mortgage, to be in the possession of the mortgagor and gives no reasonable explanation of their being so in her possession, and the question is whether he is on that account to be postponed to the second mortgagee, the plaintiff company. The law under which this question has to be decided is unquestionably Section 78 of the Transfer of Property Act, for the inducing the plaintiff company to advance money on the security of the property in question took place after the Act came into force. That the allowing the title-deeds to be in the hands or at the disposal of the mortgagee nearly 4 years after the date of his mortgage was gross neglect on the part of the second defendant in the ordinary meaning of the words can hardly be doubted. We think it would be so even if his explanation were believed and a fortiori when it is not believed. But it is argued that the words " gross neglect " in Section 78 of the Act must be understood in the limited sense in which they are used in the English decisions on the subject, viz., as meaning such gross neglect as is evidence of fraud or complicity in fraud. No doubt the tendency of the English decisions and especially since the case of the Northern Counties of England Fire Insurance Company v. Whipp L.R., 26 Ch. D., 482 where the previous cases were there classified and summarized, has been to refuse to postpone the owner of the prior legal estate to a subse