IN THE HIGH COURT OF ALLAHABAD
SUNIL AMBWANI
CHANDULAL KESHWANI - Appellant
Versus
BALWANT singh - Respondents
S. A. 2335 Of 1977
Decided On : 10/05/2005
encumbrance - Mortgage Decree - Section 94 of the Transfer of Property Act, 1882, Section 92 of the Transfer of Property Act, Section 70 of the Transfer of Property Act, Section 81 of the Transfer of Property Act, Section 91 of the Transfer of Property Act - The court discussed the rights of mesne mortgagee, subrogation, marshalling of securities, and satisfaction of prior debts by the subsequent mortgagee. It held that the auction purchaser of the mortgaged property stepped into the shoes of the mortgagor and where the subsequent mortgagee is not a party to his suit for foreclosure, such a puisne mortgage-inferior in rank, acquires a right of redemption, and can sue for his interest in the mortgaged property. In a decree of redemption of mortgaged property, the right of the auction purchaser is subject to the rights of the puisne mortgagee.
Fact of the Case:
The plaintiffs filed a suit for recovery of mortgage money against the defendants, who contested the suit by claiming that the mortgage was fictitious and without consideration. The Trial Court found that the mortgage was genuine and that the plaintiffs were entitled to recover the amount claimed from the auction purchasers, but not against the original mortgagor. The Appellate Court confirmed the findings and dismissed the appeal.
Finding of the Court:
The court found that the mortgage was genuine and that the plaintiffs were entitled to recover the amount claimed from the auction purchasers, but not against the original mortgagor. The court also held that the suit for personal decree against the original mortgagor was barred by time.
Issues: The issues included the genuineness of the mortgage, the rights of the plaintiffs against the auction purchasers, and the limitation for the suit for personal decree against the original mortgagor.
Ratio Decidendi: The court held that the auction purchaser of the mortgaged property stepped into the shoes of the mortgagor and that the rights of the subsequent mortgagee are not affected by the sale, as long as there is no other prohibition in law. The court also discussed the rights of mesne mortgagee, subrogation, marshalling of securities, and satisfaction of prior debts by the subsequent mortgagee.
Final Decision: The Second Appeal was dismissed with no order as to costs.
( 1 ) HEARD Sri K. N. Saxena for appellants. No one appears for the respondents.
( 2 ) THE Original Suit No. 8 of 1974; balwant Singh and others s. Chandulal and 7 others for recovery of Rs. 8,160/- against the defendants 1 to 7 and interest pendente lite and future, on the principal mortgage money of Rs. 4,000/- at the rate of 6% per annum was decreed on 4. 5. 1976. The Civil appeal No. 101 of 1976 against the Judgment and Decree was dismissed by the District Judge, Jhansi on 30. 6. 1977. The Second Appeal, was admitted on 13. 1. 1978. The court issued notice on ground Nos. 1 to 3 as substantial questions of law. "1. Whether an auction purchaser in a mortgage decree purchases the property free of encumbrance when no encumbrance is shown in sale proclamation or not?2. Whether the plaintiffs decree holders who did not object to get their encumbrances shown in the sale proclamation are estopped from endorsing their mortgage for recovery of their mortgage money when they were aware of the sale and the suit?3. Whether plaintiff who pursued their remedy for getting excess amount paid to them and did not object for showing their encumbrances in the sale proclamation are estopped from enforcing their claim against auction purchaser?"
( 3 ) THE plaintiffs Balwant Singh and others filed a suit with the allegations that the defendant No. 8 Sri H. K. Franklin borrowed rs. 4,000/- from the plaintiff on 15. 10. 1962, and executed a simple mortgage in respect of his two houses namely house Nos. 396 B and 397. Premganj, Sipribazar, Jhansi. The defendant No. 8 agreed to pay the interest on the mortgaged money. The period of payment of mortgage money was three years. The defendant No. 8 paid Rs. 1300/- towards interest for the periods 15. 10. 1962 to 30. 6. 1965. He did not pay interest thereafter. The defendant No. 8 had previously mortgaged the property along with one more house No. 398 situate in same Mohalla to one Sri Ganga Vishnu who filed suit No. 80 of 1965 against the defendant No. 8 and obtained a decree for mortgage money from the court of Additional Civil Judge, Jhansi. In execution of this decree all the three mortgaged houses were sold. House No. 396- B was purchased by Sidh Kumar Rehaney, the husband of defendant No. 1, and the father of defendants 1 to 7; and House No. 397 was purchased by defendant No. 1. The house No. 398 (which was not mortgaged to the plaintiff) was purchased by Chhadamai lal. The plaintiff had the charge on the disputed house no. 396 B and 397, by way of subsequent mortgage deed. The defendant no. 1 subsequently sold the house Nos. 397 to defendant No. 2, and defendant Nos. 3 to 7, who being the heirs of Sidh Kumar rehaney were impleaded as parties to the suit. The house was purchased subject to the said charge, hence they are liable to pay mortgaged money to the plaintiffs. The plaintiff No. 2 had taken his share of the mortgaged money from plaintiff No. 1, and that the plaintiff No. 1 alone is entitled to recover the mortgaged money. The interest on mortgage money of Rs. 4,000/- for the period 1. 7. 1965 to 31. 3. 1974 @ Rs. 40/- per month comes to Rs. 4160. 00, and thus the plaintiff No. 1 is entitled to recovery of Rs. 8160/- from the defendants failing which the houses are liable to be sold.
( 4 ) DEFENDANTS 1 to 7 contested the suit. They stated in the written statement that the disputed house was never mortgaged by defendant No. 8 to the plaintiff. It is wrong to say that the defendant No 8 executed a simple mortgage in favour of plaintiff for a consideration of Rs. 4,000/ -. The mortgage in question is a fictitious and sham deed without any consideration. At the time oi auction of the house in execution of the decree in case No. 80 of 1965, no encumbrance or charge was proclaimed. The defendant no. 1, or S. K. Rehaney had no notice of the plaintiffs mortgage. The plaintiffs had full knowledge of the auction in the execution proceedings of the decree in case No. 80 of 1965, and that no objection was
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