Authored By : Edward Maynerd Des Champs Chamier, Jwala Prasad

Edward Maynerd Des Champs Chamier, Kt., C.J.

1. The facts of this case are as follows:--

In 1894 Ramjatan Ojha and Musammat Phul Koer mortgaged 18 bighas of land to Sheo Narain Ojha. The latter and others held mortgages on other property of Ramjatan Ojha on which they brought a suit. In execution of the decree in that suit they brought the mortgaged property to sale but the proceeds of the sale being not sufficient to satisfy the decree they obtained a further decree under section 90 of the Transfer of Property Act and in execution thereof in February 1906 brought to sale the 18 bighas above mentioned and purchased the property themselves for Rs. 500. Sheo Narain Ojha subsequently redeemed a mortgage held by one Parmeshur Ojha on the 18 bighas by paying to him a sum of Rs. 625.

2. In the present suit Ramjatan Ojha and others seek to redeem the mortgage of 1894. The Subordinate Judge made a decree for redemption on payment of the original mortgage money and interest and the sum of Rs. 500 paid for the property at the sale of 1906, but he declined to allow Sheo Narain Ojha the sum of Rs. 625 paid by him to Parmeshur Ojha. The defendants appealed and the plaintiffs filed cross-objections, with the result that the District Judge modified the decree of the Subordinate Judge by allowing the defendants the sum of Rs. 625 also.

3. The defendants have appealed to this Court, contending that the suit should be dismissed and the plaintiffs in their cross-objections contend that they should not be required to pay the sums of Rs. 500 and Rs. 625.

4. The purchase of the 18 bighas by the mortgagee of 1894 was contrary to section 99 of the Transfer of Property Act which was then in force, but it is now settled that a purchase contrary to that section or Order XXXIV, rule 14, which has replaced that section, is voidable only and not absolutely void. In a case to which neither of the provisions mentioned seems to have been applicable their Lordships of the Privy Council affirmed the rule to which those provisions give expression, but said that such a purchase was an irregularity only and not a cause of nullity for want of jurisdiction [see Khiarajmal v. Daim  32 C. 296 : 1 C.L.J. 584 : 32 I.A. 23 : 8 Bom. P.C.J. 734 : 9 C.W.N. 201 : 2 A.L.J. 71 : 7 Bom. L.R. 1 (P.C.)].

5. The defendants-appellants rely upon the case of Pancham Lal v. Kishun Pershad 6 Ind. Cas. 47 : 14 C.W.N. 579 : 12 C.L.J. 574, in which it was held in circumstances not unlike those of the present case that the purchase of the equity of redemption by the mortgagee constitutes him a trustee for the mortgagor and that he does not acquire an irredeemable title and that a mortgagor seeking to redeem after such a purchase by the mortgagee is not bound to have the sale set aside. It seems to me that the rule regarding the position of a mortgagee who purchases the equity of redemption was too widely stated in that case, but assuming that the mortgagee becomes a trustee for the mortgagor the trust is what is called a constructive trust, and the mortgagor cannot take advantage of section 10 of the Limitation Act. I am unable to agree with the learned Judges who decided the case of Pancham Lal v. Kishun Pershad 6 Ind. Cas. 47 : 14 C.W.N. 579 : 12 C.L.J. 574, that in circumstances like those of the present case the mortgagor is not bound to have the sale set aside within the time limited by law. The judgment of their Lordships of the Privy Council in Khiarajmal v. Daim  32 C. 296 : 1 C.L.J. 584 : 32 I.A. 23 : 8 Bom. P.C.J. 734 : 9 C.W.N. 201 : 2 A.L.J. 71 : 7 Bom. L.R. 1 (P.C.), shows that the sale now in question was at most irregular. The mortgagors' interest in the property was in fact sold and so long as that sale holds good, the plaintiffs cannot redeem the mortgage.

6. The plaintiffs in the present case failed to get the sale set aside within the time limited by law, I would overrule the cross-objections, allow the appeal and dismiss the suit with all costs in all three Courts.

7. The persons entitled to receive costs from the plaintiffs are the defendants who have appealed to this Court.

Jwala Prasad, J.

8. This appeal arises out of a suit by the plaintiffs for redemption of an usufructuary mortgage executed by plaintiff Ramjatan Ojha and Musammat Phool Kunwar in 1894 in favour of defendant Shive Narain Ojha. Musammat Phool Kunwar is dead and her daughter's son is defendant No. 10 in the suit. The property mortgaged in the bond of 1894 was 18 bighas of raiyati land belonging to the mortgagors. The mortgagee Shive Narain Ojha and his co-sharers had also held other mortgages on some other property of Ramjatan Ojha in respect of which they obtained a decree and sold the properties covered by those mortgages. The amount realised from the sale of the properties mortgaged being insufficient to satisfy the entire decree, the property covered by the mortgage of 1894 was sold for the balance of the amount due under the decree and was purchased by the mortgagees defendants at a sale held on the 8th of February 1906. The mortgagees defendants thus purchased the equity of redemption of the plaintiffs in the mortgaged property at an auction sale held in execution of their money decree, for a claim which did not arise out of the mortgage of 1894 sought to be redeemed by the plaintiffs.

9. The present suit was brought by the mortgagors in May 1914, that is, almost after six years from the purchase of the equity of redemption by the mortgagees. The defence set up by the mortgagees appellants was that there was no equity of redemption left in the plaintiffs and that it was extinguished by their purchase of the property at the auction sale in 1906. The Court below overruled the contention of the appellants and gave a decree in favour of the plaintiffs, allowing them to redeem the mortgage of 1894 on payment of the money due under that mortgage as well as the sum for which the property was purchased at the aforesaid auction sale and the money due on certain other prior mortgages on the property which were redeemed by the appellants after their purchase. The mortgagees before us in appeal have raised the same contention as was raised by them in the Courts below that there is no equity of redemption left in the plaintiffs by reason of the auction sale of 1906, at which the mortgagees purchased the property in dispute. This contention is based upon the ground that the auction sale has become absolute and cannot be set aside and unless the sale is set aside, the plaintiffs can have no claim to redeem the property.

10. The mortgagors respondents on the other hand contend that they have not lost their right of redemption notwithstanding the sale of the property and its confirmation, and that it is not necessary for them to have the sale set aside. It is not contended before us that the plaintiffs had no knowledge of the sale, or that the sale was fraudulent. There is no prayer in the plaint to have the sale set aside.

11. It is true that the sale in question was in contravention of section 99 of the Transfer of Property Act in force at the time of the sale, which provides that a mortgagee shall not be entitled to bring the mortgaged property to sale without instituting a suit under section 67 of the Transfer of Property Act in execution of a decree for the satisfaction of any claim, whether arising under the mortgage or not.

12. It may be taken as settled that a sale in contravention of section 99 is not without jurisdiction and is, therefore, not null and void but is only irregular and voidable. Following the principle laid down by their Lordships of the Privy Council in Khiarajmal v. Daim (1), it seems that all the High Courts in India have held that a sale in contravention of section 99 is only irregular, vide Ashutosh Sikdar v. Behari Lal Kirtania 35 C. 61 : 11 C.W.N. 1011 : 6 C.L.J. 320, Lal Bahadur Singh v. Abharan Singh 27 Ind. Cas. 795 : 37 A. 165 : 13 A.L.J. 138, Muthu v. Karuppan 30 M. 313 : 17 M.L.J. 163 : 2 M.L.T. 181, Sahadu Manaji v. Devlya Jaba Mahar 14 Ind. Cas. 780 : 14 Bom. L.R. 254 and Bhola Jha v. Kali Prasad 34 Ind. Cas. 288 : 1 P.L.J. 180.

13. Notwithstanding that the sale was only irregular, the lower Courts have held that the plaintiffs are entitled to redeem the property. The view taken by the Courts below is no doubt supported by the decision of a Division Bench of the Calcutta High Court in Pancham Lal v. Kishun Pershad  6 Ind. Cas. 47 : 14 C.W.N. 579 : 12 C.L.J. 574. All the other High Courts in India, however, appear to have taken a contrary view. The Full Bench of the Allahabad High Court in Lal Bahadur Singh v. Abharan Singh 27 Ind. Cas. 795 : 37 A. 165 : 13 A.L.J. 138, has held that where a sale in contravention of section 99 of the Transfer of Property Act is confirmed, the auction-purchaser, whether he be an outsider or the mortgagee bidding with the leave of the Court, obtains an indefeasible title, and the right of the mortgagor and those who represent him to redeem is absolutely extinguished.

14. The above decision has been recently followed by a Division Bench of the Madras High Court in Arjuna Reddi v. Venkatachala Asari  32 Ind. Cas. 611 : 32 M.L.J. 525 : 19 M.L.T. 121 : 5 L.W. 242 (January 1916). In the Madras case the mortgagee himself had purchased the equity of redemption in execution of his money decree as in the present case. Similar is the view of the Bombay High Court in Sahadu Manaji v. Devlya Jaba Mahar 14 Ind. Cas. 780 : 14 Bom. L.R. 254. It seems, therefore, that the decision of a Division Bench of the Calcutta High Court in Pancham Lal v. Kishun Pershad 6 Ind. Cas. 47 : 14 C.W.N. 579 : 12 C.L.J. 574, above referred to, relied upon by the mortgagors respondents is contrary to the decisions of all the other High Courts. Mr. Justice Woodroffe, who delivered the judgment of the Court in the above case, conceded that the sale in contravention of section 99 was irregular and not void, but the learned Judge held that the right of redemption of the mortgagor was not extinguished by the sale and that it was not necessary for him to obtain relief to have the sale set aside. His view is based upon what the learned Judge says is the established proposition of law that the purchase of the equity of redemption constitutes the mortgagee a trustee for the mortgagor. His view is no doubt supported by that of Macpherson, J., in Kamini Debt v. Ramlochan Sirkar  5 B.L.R. 450, referred to by Woodroffe, J., in his judgment. But their Lordships of the Privy Council in Mahabir Pershad Singh v. Macnaghten  16 C. 682 : 16 I.A. 107 : 13 Ind. Jur. 133 : 5 Sar. P.C.J. 345 : 8 Ind. Dec. (N.S.) 451, declined to accept the view of Macpherson, J. that the mortgagee purchasing the equity of redemption is a trustee for the mortgagor when the mortgagee purchases the property with the leave of the Court. Their Lordships held that "leave to bid puts an end to the disability of the mortgagee and puts him in the same position as any other independent purchaser." It does not appear that the attention of Woodroffe, J., was drawn to the above decision of the Privy Council. The view that the mortgagor can be allowed to redeem the property without having the sale set aside appears contrary to the decisions of their Lordships of the Privy Council in Malkarjun v. Narhari  25 B. 337 : 5 C.W.N. 10 : 2 Bom. L.R. 927 : 27 I.A. 2, 6 : 10 M.L.J. 368 : 7 Sar. P.C.J. 739 (P.C.). Their Lordships have distinctly held that a sale, howsoever irregular, roust be set aside within due time by the Courts as prescribed in section 311 of the Code of Civil Procedure, or by a suit within one year from the confirmation of the sale under Article 12, Schedule II, of the Limitation Act, before redemption can be allowed, and that a suit for redemption cannot be regarded as a suit to set aside the sale, though the irregularity may be sufficient by itself to entitle the plaintiff to vacate the sale by a proper proceeding under the Civil Procedure Code, or by a suit.

15. The aforesaid principle in my opinion should also apply to a sale held in contravention of section 99, Hence so long as the sale stands good and has not been avoided or set aside, it is impossible to conceive how the mortgagor can exercise his right of redemption. With great respect I must dissent from the decision of Woodroffe, J., in Pancham Lal v. Kishun Pershad  6 Ind. Cas. 47 : 14 C.W.N. 579 : 12 C.L.J. 574.

16. The plaintiffs' equity of redemption has been extinguished by the auction sale of 1906 and their remedy to have the sale set aside is barred by limitation. The plaintiffs' suit should, therefore, be dismissed. The appeal is allowed with costs.

17. The suit having been dismissed, the cross-objections of the plaintiffs that they are not liable to ray the purchase money and also the sum paid by their mortgagee to redeem the prior mortgage are disallowed.