Skip to content


Gaviya and anr. Vs. Lingiah - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 72 of 1951-52
Judge
Reported inAIR1957Kant65; AIR1957Mys65; ILR1957KAR1; (1957)35MysLJ110
ActsLimitation Act, 1908 - Schedule - Articles 97, 120 and 132; ;Transfer of Property Act, 1882 - Sections 74, 75, 91 and 92; Indian Contract Act, 1872 - Sections 69; Transfer of Property (Amendment) Act, 1929
AppellantGaviya and anr.
RespondentLingiah
Appellant AdvocateE.S. Venkataramaiya, Adv.
Respondent AdvocateV. Krishnamurthy, Adv.
Excerpt:
.....and that is one analogous to the doctrine of salvage .& the doctrine comes to this, that where a person buys property in good faith & for the purpose of clearing a mortgage on that property pays money to the vendor to be so applied then even if the vendor had no title, still as the mortgage was binding on the estate the vendee becomes an equitable assignee of the mortgage'.7. nasiruddin v. , could have been but the payment to the mortgagee was clearly made in good faith and i see no reason why in equity the reversioner should be allowed to claim the estate free of the encumbrances .onthe ordinary principle of subrogation i hold that the defendants are entitled to fall back on the mortgage which they have paid off to the extent it was binding on the estate. it seems repugnant to justice..........ilr 21 cal 142 (pc) (h) is a case in which a person who while in possession of an estate under a decree paid revenue and cesses but the decree was reversed in appeal and he was deprived of possession. the judicial committee expressed that possession of the person who made the payment was rightful and not wrongful at the time and that 'the claim is in the nature of salvage; and it is to be observed that the law relating to sales for arrears of government revenue recognises an equity to repayment in the case of a person who not being proprietor pays the government revenue in good faith to protect a claim which afterwards turns out to be unfounded.' on the same principle payments made by a purchaser on the strength of a title which was later found by the court to be ineffective were in.....
Judgment:

1. This appeal has been referred to a Division Bench as the learned Judge who heard it felt that the question of limitation involved for decision is of importance and has to be settled in the light of the conflicting rulings about it in 47 Mys HCR 337 (A) and Sundararaja-char v. Vartakavardhini Bank, Ltd., 52 Mys HCR 118 (B) and the view of the Full Bench sought for in It. A. No. 20 of 50-51 (Mys.) (C). These cases were concerned with the starting point of limitation for enforcing a claim of a co-mortgagor for reimbursement from other mortgagors or monies paid in excess of what is due by him to discharge a mortgage.

The observations in one of the cases lend support to the construction that the period of limitation is to be reckoned from the date of the mortgage and not from the date of payment but the Full Bench held otherwise.

2. The suit from which the present appeal arises is not that of a co-mortgagor but by a person who is a purchaser of the mortgaged property from one who had no right to the same and he seeks reimbursement of amounts paid by him in discharge of the mortgages. The properties admittedly belonged to Racha Boyee who by hypothecating these at first to defendant 4 and later to father of defendant 5 borrowed monies from them. After his death, two suits were filed Oil the foot of the respective mortgages against his daughter and the 3rd defendant alleged to be hisadopted son.

With the consent of the daughter the suits were decreed against her and defendant 3. Subsequently defendant 3 sold the mortgaged properties to plaintiff on 19-3-1943 and he Paid up the amounts due under the decrees. Possession, of the properties had to be given up by him to defendants 1 and 2 who are sons of the mortgagor's daughter on account of a decree obtained by them against defendant 3 that he is not the adopted son of Racha Boyi and that they alone are entitled to the properties.

The date of that decree is 26-2-1946, the Payments were made by plaintiff during 1943 and 1944 and the present suit was instituted on 21-9-1948 for recovery of these amounts from defendants 1 and 2 personally and also the mortgaged properties alleging the existence of a charge thereon in his favour with respect to the said amounts. Only defendants 1 and 2 contested the suit and their principal pleas are that plaintiff being a purchaser from a person without any title to the property has to be regarded as a volunteer not entitled to reimbursement and that the claim is barred by time.

The objections have been negatived in both Courts and a decree for realisation of the amounts by sale of the properties has been granted. The decree is challenged by defendants 1 and 2 in this appeal.

3. The finding that the suit is within time is based on the view that the case is governed by Article 97 of the Limitation Act which relates to a suit 'for money paid upon an existing consideration which afterwards fails.' Transfer of title to and possession of the properties being the consideration for the sale to plaintiff, deprivation of possession by virtue of the decision that the vendor had no right in the property has been regarded as constituting failure of consideration and the period of three years prescribed by the Article is computed from that date.

The Courts below have failed to notice that this is not a suit either for refund of purchase money or for relief from the vendor, who is the 3rd defendant. Defendants 1 and 2 were not parties to the sale and properties belonging to them are alleged to be liable for the amounts. Sri Krishnamurthy learned counsel for the respondent did not justify the application of this Article to the case and referred to Article 120 as the appropriate one relying on Kayarohana v. Subbaraya, ILR 33 Mad 250 : (AIR 1916 Mad 470) (D) and' Sundara Aiyar v. Ananthapadmanabha Aiyar, AIR 1923 Mad 64 (E), but these did not involve the determination of the availability or enforcement of a charge such as that alleged by plaintiff.

Article 120 is residuary in terms meant to be invoked when the circumstances are such as not to attract the operation of any other Article and prescribes 6 years as the time within which the suit is to be filed. The difficulty for resorting to this Article is that enforcement of a charge is provided for by Article 132 and unless this is shown to be inapplicable to the case, the residuary provision cannot be resorted to. Article 120 affects, if at all, the claim against defendants 1 & 2 personally and the suit is well within time even if the period of limitation is regarded as 6 years under this Article.

Whether any of the Articles Which shorten the period of limitation to three years applies to the suit need not fee examined as the circumstances do not warrant in any event imposition of personal liability on the appellants for payment of the amounts. It is not suggested that defendants 1 and 2 ever asked the plaintiff to pay the decree-holders or that the payments were madeto their knowledge or with their consent. The decree was not executable against defendants 1 and 2 personally and only enabled the decree-holders to proceed against the properties.

The plaintiff cannot extend or increase the liability which was confined to the property to that of the individual or acquire higher rights than those of the mortgagee decree-holders by paying them off. For these reasons decree cannot be passed against defendants 1 and 2 personally for payment and the question of limitation regarding this does not arise.

4. As regards the portion of the decree for realisation of the amounts by sale of the properties the points for consideration are :

(i) Plaintiff's right to reimbursement ;

(ii) Creation of a charge on the properties for the amounts paid ;

(iii) the date from which limitation begins to run.

The first of these depends on plaintiff having acted bona fide and not as an officious volunteer or intermeddler. Apparently the transaction wag of the normal kind for fair consideration, part of which was paid to the vendor and the rest left with the plaintiff for satisfaction of the decree debts. In two suits the 3rd defendant was sued as an adopted son and as a legal representative of the mortgagor and it could hardly be imagined at the time that the adoption would be disputed by any one and pronounced by the Court to be not true.

Apart from clearing of the incumbrances and preventing the sale of the properties the payments were not intended to serve any purpose. Failure to pay would have amounted to default in acting up to the terms of the sale deed and compelled the decree-holders to bring the properties to sale and by allowing it the plaintiff would have lost not only the properties but also the amount already paid by him to the 3rd defendant towards the price. Delay in payment would have increased the debt by accumulation of interest.

The existence of the debts is proved by the decrees and the validity and binding nature of these on the estate are not in doubt. Collusion is not imputed to the parties and no special advantage was derived by the plaintiff from the payments. The payments must therefore be considered to have been made in good faith.

5. The properties are freed from liability by the payments but the person benefited by it is not the plaintiff who made the payments. He is deprived of the possession of properties by defendants 1 and 2 who are declared to be lawful owners thereof and they have the advantage of enjoying these free from the burden of any obligation. Plaintiff has done what defendants 1 and 2 had to do for avoiding loss of the properties to them and as such refusal or resistance on their part to the suit claim looks unreasonable.

Apart from technicality, defendants 1 and 3 can have no cause for complaint if the amounts admittedly due are to be paid to plaintiff instead of the decree-holders as it makes no difference in the sum payable and there is no possibility of the payment being questioned by any other. The tendency of persons to profit themselves at the expense of others, to deny reparation to those who have helped them to appropriate the fruits of the acts of others is not favoured in Courts and the doctrine of unjust enrichment is often invoked to promote the ends of justice.

Sri E. S. Venkataramaiah on behalf of appellants urged that this doctrine cannot be pressed into service to defeat or circumvent the provisions of the statute and cited the Full Bench decisions in Kiru Ram Das v. Mozaffer Hosain ILR 14 Cal 809 (F) and Chitormal v. Shiblal, ILR 14 All 273 (G). The question in both these cases was whether payment by one person of taxes due to Government by another with respect to a land can create a charge on the land for recovery thereof. It was held by a majority of 3 to 2 and 4 to 1 respectively that the first or paramount charge on the holding in favour of Government as regards arrears of revenue cannot be acquired by the payment and that the incidents of salvage lien are not to be extended to such cases.

The dissenting but minority opinion however in both cases was that it should be allowed on grounds of justice, equity and good conscience. Mahmud J. at page 314 in 14 All 273 (G) observed:

'Maritime salvage as understood in the English Law ig only a species of the genus and if England or other Maritime Countries restrict themselves to one or more species of salvage it does not follow that other countries which are not maritime like the territories over which this Court exercises jurisdiction should limit themselves to any species of salvage adopted by maritime countries to the exclusion of other species of salvage falling under the general genus of the equitable doctrine'.

6. Dakhina Mohan Roy v. Saroda Mohan, ILR 21 Cal 142 (PC) (H) is a case in which a person who while in possession of an estate under a decree paid revenue and cesses but the decree was reversed in appeal and he was deprived of possession. The Judicial Committee expressed that possession of the person who made the payment was rightful and not wrongful at the time and that 'the claim is in the nature of salvage; and it is to be observed that the law relating to sales for arrears of Government Revenue recognises an equity to repayment in the case of a person who not being proprietor pays the Government Revenue in good faith to protect a claim which afterwards turns out to be unfounded.'

On the same principle payments made by a purchaser on the strength of a title which was later found by the Court to be ineffective were in Ammani Ammai v. Ramaswami Naidu 51 Ind Cas 67 : (AIR 1919 Mad 105) (I) ordered to be made good. At page 62 (of Ind Cas): (at p. 109 of AIR) Napier J. observes:

'There is however another doctrine which may affect some payments and that is one analogous to the doctrine of salvage .....& the doctrine comes to this, that where a person buys property in good faith & for the purpose of clearing a mortgage on that property pays money to the vendor to be so applied then even if the vendor had no title, still as the mortgage was binding on the estate the vendee becomes an equitable assignee of the mortgage'.

7. Nasiruddin v. Ahmad Husain AIR 1926 PC 109 (J) is also a case in which the sale was held to be invalid but the purchaser who had discharged mortgages on the property was considered to be entitled to stand in the shoes of the mortgagees whom he paid off.

8. In Palamalai Mudaliyar v. South Indian Export Co. Ltd., ILR 33 Mad 334 (K) sale of a property was set. aside as being fraudulent under Section 53 of the Transfer of Property Act but the amounts paid by the transferee for satisfaction of a mortgage decree binding on the property were held to be a charge, in Narayana Kutti Goundan v. Pechiammal ILR 36 Mad 426 (L) for discharge. of a decree against a widow the daughters raised a loan by mortgaging the property, and the creditor sued for recovery of the amount. At page 437 Sundara Iyer J. stated :--

'I am of opinion that the daughters had sufficient Interest in the land to entitle them to discharge Muthu Gowdftn's debt when the property was brought to sale and that by doing so they obtained a charge over the land which they were entitled to assign or charge in favour of plaintiff. I must therefore hold that plaintiff obtained a valid charge for the amount paid by him to discharge Muthu Gowdan's mortgage'.

Spencer J. briefly remarked that plaintiff was equitably entitled to a charge.

9. Ghosh in his Law of Mortgages, Volume I page 373 states:

'A purchaser when the purchase money has been applied by the vendor in discharging in cumbrances on the estate sold to him. can also avail himself of the doctrine of subrogation if the sale is for any reason afterwards set aside'.

10. In Veetil Kelu v. Chekkara Cheppan : AIR1937Mad451 the mortgage debt was paid by a person who had not acquired the right of the mortgagor. Nevertheless it was held that he was entitled to subrogation of the mortgagee's rights.

11. Mt. Nathibai Ramratan v Wailaji Punjaji AIR 1937 Nag 330 (N) is a case in which an alienee from a limited owner discharged certain debts but the alienation as a sale was held to be ineffective owing to defect in the registration of the document. Pollock J. allowed the claim for amounts paid towards debts binding on the estate saying at page 333:

'It has been contended that ,. .. .. .. thedoctrine of subrogation should not be applied in the present case because there was a fraud on the registering officer. It is not clear what the motive in deceiving the registering officer., could have been but the payment to the mortgagee was clearly made in good faith and I see no reason why in equity the reversioner should be allowed to claim the estate free of the encumbrances ....... Onthe ordinary principle of subrogation I hold that the defendants are entitled to fall back on the mortgage which they have paid off to the extent it was binding on the estate.'

12. Under Section 91(a) of the Transfer of Property Act, any person who has any interest in or charge upon the property mortgaged may redeem the mortgaged property. By the succeeding section the person redeeming acquires the rights of the mortgagee against the mortgagor and is 'subrogated to the rights of the mortgagee whose mortgage he redeems'. Sections 91 and 92 are Inserted by the amending Act 20 of 1929 and 'subrogation' though not expressly mentioned in the Act prior to the amendment was provided for in the repealed Sections 74 and 75 and the right to redeem was available to the person 'having interest' in the mortgaged property even before the amendment.

The criterion of 'having interest' is that there should be a reasonable basis for a person to honestly act upon in a manner which cannot be regarded as improper or wanton and not that the interest should bo such as cannot be successfully challenged by any one. As stated in Mt. Munni Bibi v. Trilokinath : AIR1932All332 , interest in making payment does not mean such an interest as will stand the test of a judicial trial and all that is necessary is that the person making the payment should honestly and really believe the payment to be necessary in hig own interest.

It seems repugnant to Justice and equity that those who get or want to retain the advantage resulting from payments made by others should be immune from the obligation of making good the same and that bona fide alienees who clear off encumbrances binding nature of which is not open to doubt, should be denied reimbursement because of the alienation being attacked later on and being found to be defective or ineffective. It has been held in the cases referred to that relief cannot be denied on this ground.

In the present case as the existence of the encumbrances and necessity for the discharge are undisputed and good faith for the payments by plaintiff is established, the plaintiff is entitled to recover the amounts as a charge on the Properties' which are relieved from liability for the decretal debts. The suit was filed within twelve years from the dates of payments and as such there is no bar of limitation.

13. The decrees of the Courts below are confirmed and the appeal is dismissed with costs.

14. Appeal dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //