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1929 Supreme(Mad) 200

IN THE HIGH COURT OF MADRAS
Pandalai
(Manchiraju) Venkayya
Versus
(Vadalamudy) Venkataramayya
Decided On : 1 May, 1929

The central legal point established in the judgment is the entitlement of subsequent mortgagees to marshal the securities of their own debtor and the limitations on requiring properties of any but their own debtor to be first sold.

Headnote:

marshalling - mortgage properties - T.P. Act, Section 81, Section 82, Section 56 - The court discussed the application of Sections 81, 82, and 56 of the T.P. Act in the context of marshalling rights between mortgagees and the order for the sale of mortgaged property. The court emphasized the entitlement of subsequent mortgagees to marshal the securities of their own debtor and the limitations on requiring properties of any but their own debtor to be first sold.

Fact of the Case:

The case involved a dispute over the order for the sale of mortgaged properties between defendant 4 and defendant 5, who were contesting respondents in a suit brought to enforce a mortgage.

Finding of the Court:

The court found that the direction appended by the lower court to the decree could not be sustained by Sections 81, 82, or 56 of the T.P. Act. It held that defendant 4 was entitled to marshal the securities of his own debtor, but defendant 5 could not be required to have properties of any but his own debtor first sold.

Issues: The issues included the genuineness of the plaintiff's mortgage, marshalling rights of defendants 4 and 6 to 9, and the relief the plaintiff was entitled to.

Ratio Decidendi: The court's decision was based on the interpretation of Sections 81, 82, and 56 of the T.P. Act, emphasizing the entitlement of subsequent mortgagees to marshal the securities of their own debtor and the limitations on requiring properties of any but their own debtor to be first sold.

Final Decision: The direction in the lower appellate court's decree was deleted and substituted with a new direction, specifying the order for the sale of the mortgaged properties. The appellant was awarded costs, and defendant 4 was directed to bear his own costs in both courts.

JUDGMENT

Pandalai, J.

1. The dispute in this case is only about a direction given in the decree of the lower Court that the properties sold to defendant 5 must be brought to sale first and those sold to defendant 4 should be sold, if necessary, afterwards. The appellant is defendant 5 and defendant 4 is the real contesting respondent. The suit was brought upon a mortgage Ex. A dated 15th December 1913 executed by defendants 1 and 2 and one Narayanaswami since deceased mortgaging the properties mentioned in the plaint schedule to the plaintiff. On 5th January 1914 defendant 2 alone, one of the mortgagors mortgaged his interest in item 2 of the properties in the former mortgage to defendant 4 who, it has been held, took the mortgage without notice of the former one. Defendant 4 brought a suit upon his mortgage and after decree bought the mortgaged properties himself by private sale on 26th June 1917. Defendant 5 purchased defendant 1s rights in the mortgaged properties by a sale deed Ex. 3, dated 22nd June 1921. In this suit which was brought by the plaintiff to enforce his mortgage of 15th December 1913, defendants 4 and 5 were the chief contesting defendants. Defendant 4s contention was that he had no notice of the suit mortgage at the time of his own mortgage of January 1914, that the plaintiff had been guilty of fraudulent conduct in not disclosing his mortgage and therefore was not entitled to the priority and that as defendant 2 executed the mortgage to the plaintiff only as surety on behalf of defendant 1, the plaintiff should be directed to recover his amount in the first instance from the share of defendant 1 and his brother, the deceased Narayanasami.

2. Defendant 5, contended that he was ready and willing to pay off the suit mortgage but did not do so because the mortgagee, plaintiffs father, had died and as regards the liability of the properties inter se, contended that they should be held proportionately liable. Three issues were framed:

(1) Whether the plaintiffs mortgage was genuine and supported by consideration?

(2) What marshalling rights, if any, defendants 4 and 6 to 9 were entitled to?

(3) To what relief the plaintiff was entitled?

3. On issue 1 the Munsif found that the plaintiffs mortgage was genuine and supported by consideration and on issues 2 and 3 that defendant 2 joined in the suit mortgage as surety for defendant 1 and that though it was clear that on a mortgage like that, the plaintiff could proceed against all or any of the mortgaged properties at his choice it was right as between the defendants themselves to append a direction that the plaintiff should in the first instance proceed against the properties sold by defendant 1 to defendant 5. Defendant 5 appealed and the only question before the Subordinate Judge was whether the direction appended by the District Munsif as to the order in which the property should be sold could be upheld. The learned Subordinate Judge held that the case was not governed by Sections 81 and 82, T.P. Act, because defendants 4 and 5 relied upon sales in their favour and did not claim as mortgagees. But the learned Judge held that the Court could even in circumstances not justified by those sections make an order under Order 34, Rule 4 regulating the order for the sale of the mortgaged property, and founding himself upon the fact that defendant 4 when he took his mortgage in January 1914 had no notice of the plaintiffs mortgage of December 1913 whereas defendant 5 when he took his sale deed in June 1921 had notice of the plaintiffs mortgage, made the same direction which the District Munsif had made. The present appeal is by defendant 5 against that direction.

4. A great many decisions have been cited during the argument to show that the direction appended by the lower Court to the decree cannot be sustained by Sections 81, 82 or 56, T.P. Act. It is unnecessary to refer to those decisions because the sections themselves are clear. Section 56 applies only as between a purchaser







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