JUDGMENT
Ramaswami, J.
1. The question at issue in this appeal is whether the judgment-debtor 11, who is appellant, can invoke the principle of marshalling and ask that properties 1, 2 and 5 which he had purchased in a court sale in execution of a money decree should be sold by the decree-holder in the last instance.
2. It appears that the mortgage decree was passed with respect to 9 items of properties. On 23-8-1952 the appellant prayed for an order from the Court that properties other than those purchased by him should be sold in execution of the decree. The application was summarily rejected. But on 27-8-1952 he made a second application asking for the same relief. The learned Subordinate Judge after hearing the parties held that Section 56, T. P. Act, had no application to a purchase at an auction sale.
3. On behalf of the appellant Mr. P.R. Das has challenged the correctness of this order. It was argued by the learned counsel that though Section 56, T. P. Act, does not in terms apply to the present case the principle of the section can be properly invoked by the appellant. It was argued by the learned counsel that Section 56 does not purport to codify the law in India on this point nor can it be held to be exhaustive of the equitable relief that could be granted by the Court in a case where there is a purchaser of the mortgaged property in a court sale. Section 56, T. P. Act, is as follows :
“If the owner of two or more properties mortgages them to one person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled to have the mortgage-debt satisfied out of the property or properties not sold to him, so far as the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming under him or of any other person who has for consideration acquired an interest in any of the properties”.
Upon a proper interpretation of the section it is manifest that it covers only the case of voluntary sale and that it cannot apply to a person who purchases the mortgaged properties in execution of a money decree. But the provisions of the section are not exhaustive. The preamble to the Transfer of Property Act states “whereas it is expedient to define and amend certain parts of the law relating to transfer of property by act of parties.” The Act does not, therefore, consolidate the law nor does it profess to be complete code dealing with transfer of property. It purports to do no more than to define and amend certain parts of the law relating to transfer of property. But there is nothing to indicate that the legislature intended to deal exhaustively with the subject matter of transfer of property. If an auction purchaser at a court sale, therefore, makes out a proper case, the Court may in its discretion apply the principle of marshalling on a consideration of the particular equities involved.
It was argued by Mr. P.R. Das that the appellant in the present case is entitled to invoke the principle of marshalling. The argument is based upon the decision ‘in — ‘Mt. Nowa Koowar v. Sheikh Abdool Ruheem’, 1864 WR 374 (Cal) (A) in which it was held by Jackson J. that if a third party had obtained a decree for money due from a mortgagor the sale would not release that estate from the mortgage but it would force upon the plaintiff to take measures in the first instance to recover amount due to him from the remaining estates included in his mortgage-deed, and that, if any balance remained after he had realised all he could from these two remaining estates, he could then return to the third estate to recover the balance. The doctrine so laid down in this case has been modified in subsequent authorities. For instance, in –‘Rodh Mal v. Ram Harakh’, 7 All 711 (B) the doctrine was applied only in case of a bona fide purchaser for value, without notice, of a portion of property the whole of which was subject to a prior mortgage.
The principle was laid down in similar terms in — ‘Khirodhar Singh v. Gajadhar Lal’, AIR 1925 Pat 484 (C) in which a certain portion of the property was purchased subsequent to the execution of the mortgage and in the executing Court the subsequent purchaser applied that the items purchased by him should be sold in execution of the mortgage decree only if the other items were insufficient. It was held by a Division Bench of this Court that the question turned on the form of the contract between the vendor and the purchaser, namely, whether the property was sold subject to the encumbrance or not. Upon the evidence adduced in the case it appeared that the sale was made subject to the mortgage and the Bench, therefore, held that there was no ground for interfering with the rights of the mortgagee to sell the property in any order be pleased. This opinion was cited with approval by the Calcutta High Court in — ‘Nobin Chandra v. Debendra Sen’, AIR 1927 Cal 522 (D),
The real position is that in a case of this description there are two conflicting principles, the first being the principle that the mortgagee is entitled to have his dues satisfied out of the mortgaged properties in any manner he
chooses and the other principle being that the
purchaser for value without notice of the
mortgaged property ought not to suffer any
detriment due to any mistake or lack of bona
fides on the part of the mortgagor. It is a
question of adjustment of equities upon the
particular facts of each case. It was conceded
by Mr. P.R. Das that the appellant would be
entitled to marshalling of securities only if he
makes out a case that he was a bona fide purchaser for value of the property without notice of the prior mortgage. But the difficulty
in the path of the appellant is that no such
case was made out in the application he had
filed before the learned Subordinate Judge. It
is not alleged by the appellant in his application before, the Subordinate Judge that he had
purchased not merely the equity of redemption but the entire property or that he was
not aware of the mortgage and had paid full
value of items 1, 2 and 5 included in the mort
gage decree. It was submitted by Mr. P.R. Das
that the matter should be remanded to the
learned Subordinate Judge for investigation of
the question whether the appellant was a bona
fide purchaser for value and whether he had
paid the purchase price not knowing that there
was a previous mortgage on the properties. In
the absence of any averment made by the appellant on this point it is not possible to hold that
there are any equities to which the appellant
is entitled in this case and upon the basis of
which he can ask the executing Court to apply the principle of marshalling in his favour.
4. In our opinion the learned Subordinate
Judge rightly dismissed the application filed
by the appellant and this appeal must be accordingly dismissed with costs.