Marshalling and vesting in State in mortgage execution: sale could proceed first, but unconfirmed sale failed after vesting.

Marshalling under Sections 56 and 81 of the Transfer of Property Act did not help the subsequent purchasers, because the decree contained no mandatory order of sale and no superior equity required the mortgagee to proceed first against other mortgaged properties; the objection therefore failed. By contrast, where a mortgaged estate vested in the State under the Bihar Land Reforms Act before confirmation of an auction sale, the sale was not yet absolute under Order 21 Rule 92 CPC and the execution remained pending. Sections 4(d) and 4(e) then barred continuation of the proceeding and confirmation of the sale, so the court lacked jurisdiction to proceed further. The appeal was allowed.

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Issues: (i) Whether the judgment-debtors could insist that the mortgage decree be executed first against other mortgaged properties before proceeding against the property purchased by them. (ii) Whether vesting of the mortgaged proprietary interest in the State under the Bihar Land Reforms Act, 1950, after the auction sale but before confirmation, rendered the execution proceeding incompetent and barred confirmation of the sale.

Issue (i): Whether the judgment-debtors could insist that the mortgage decree be executed first against other mortgaged properties before proceeding against the property purchased by them.

Analysis: The right of marshalling under Sections 56 and 81 of the Transfer of Property Act protects a subsequent purchaser or mortgagee only to the extent that it does not prejudice the prior mortgagee or persons claiming under him. The decree was silent as to any mandatory order of sale, and the executing court's power to regulate the order of sale was limited to exceptional cases where equity required it. Here, most of the mortgaged properties had already been released on payment of a major part of the decree debt, and the remaining balance was sought to be realised from the property later purchased by the appellants. In those circumstances, no enforceable equity entitled the appellants to prevent sale of that property first.

Conclusion: The objection based on marshalling failed and was against the appellants.

Issue (ii): Whether vesting of the mortgaged proprietary interest in the State under the Bihar Land Reforms Act, 1950, after the auction sale but before confirmation, rendered the execution proceeding incompetent and barred confirmation of the sale.

Analysis: A court sale is not complete until it is confirmed under Order 21 Rule 92 of the Code of Civil Procedure, and until then the purchaser acquires no indefeasible title. Section 65 of the Code operates only when the sale has become absolute, and confirmation is an integral part of that process. Since confirmation had been stayed and had not taken place when the estate vested in the State, the execution proceeding remained pending. In that situation, Section 4(d) of the Bihar Land Reforms Act, 1950 required pending proceedings for recovery of such secured money to be dropped, and Section 4(e) barred attachment or sale of the vested estate. The court therefore lacked jurisdiction to proceed further or to confirm the sale.

Conclusion: The vesting barred further execution and confirmation of the sale, and the appellants succeeded on this ground.

Final Conclusion: The appeal was allowed, and the execution proceeding was held not maintainable after vesting of the property in the State, with no order as to costs.

Ratio Decidendi: Where a judicial sale of mortgaged property has not yet been confirmed, vesting of that property in the State during the pendency of execution divests the court of jurisdiction to continue the proceeding or confirm the sale; and the statutory right of marshalling cannot be used to defeat the mortgagee's entitlement where no superior equity exists in favour of the subsequent purchaser.

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