1. This is a defendant's appeal arising out of a suit for sale on the basis of a mortgage deed dated 2nd September 1919. The claim was mainly contested by the defendant-appellant who held a mortgage of 22nd April 1928, but claimed priority on account of the payment of two mortgage decrees which had been obtained before his mortgage on the basis of two earlier mortgages of 18th September 1909 and 20th July 1918. These mortgages were simple mortgages and the decrees were decrees for sale to which the present plaintiff as a, subsequent mortgagee had been impleaded. The mortgagor, in executing the third mortgage in favour of the defendant, had left Rs. 4,000 in the hands of the mortgagee for discharging one of the decrees and took Rs. 5,237 himself in order to pay off the other decrees, which he did. The defendant accordingly claimed that he should be given priority over the second mortgagee on account of the discharge-of the earlier mortgages of 1909 and 1918. The learned Subordinate Judge-has overruled this plea on four grounds.
(1) That there was no evidence that the previous mortgage debt was to be kept alive for the benefit of the subsequent mortgagee as against the mortgagor. This ground in our opinion is untenable. The defendant must be presumed to have intended to keep alive the security which was for his benefit.
(2) That there were some more mortgagors in the two mortgage decrees which were paid off. This circumstance-does not in our opinion affect the right-of the defendant to claim priority.
(3) That the mortgage debts of the previous decree-holders were extinguished by the mortgage decrees and the securities also were accordingly extinguished. This is doubtful in view of the amendment of the old Section 89 which has now been replaced by Order 34, Rule 5.
(4) That the money was not paid by the defendant under Section 74, T.P. Act, but was paid in performance of a covenant and therefore the defendant is not entitled to be subrogated to the rights of the prior mortgagees.
2. Two conflicting views have been expressed in cases of this Court. One view is that even though the old Section 74 corresponding to the new Section 92, T.P. Act, were not in terms applicable, on the principle underlying these section a third mortgagee who pays off a prior mortgage decree acquires a fresh charge on the date of the payment by him, which he can enforce by a separate suit within 12 years of the date of payment, and if made a defendant can claim priority as against the second mortgagee whose mortgage was prior to the payment by him but subsequent to the first mortgage. The other view is that if the sections do not in terms apply, the third mortgagee, who pays off the prior mortgage, merely acquires the rights and powers of the first mortgagee whom he had paid off and has no more extensive powers, and that accordingly he cannot claim priority at a time when the remedy of the prior mortgagee to enforce his claim has become barred by time. The rulings in support of the appellant are: Shib Lal v. Munni Lal 1922 19 ALJ 840, Mohammad Abbas Ali Khan v. Chotey Lal 1927 All 28 and Paras Ram v. Mewa Kunwar 1930 ALJ 890, while the case of Bansidhar v. Shiv Singh 1933 ALJ 1564 seems to be in support of the second view. As this case raises an important question of law which may arise frequently, we refer the following point to a larger Bench:
Where a property has been the subject of two simple mortgages and a suit has been brought for sale on the first mortgage and decreed against the second mortgagee also; and subsequently a third mortgage is taken and this mortgagee has paid the decretal amount but has not obtained possession of the property; when the second mortgagee brings a suit for sale and makes the third mortgagee a party, is the third mortgagee entitled to claim a right of subrogation for the amount which he paid in discharge of the decree in the earlier mortgage suit, even though the period of limitation for a fresh suit on the first mortgage would now be barred?
3. Let the case be laid before the Chief Justice for the constitution of a larger Bench. Let the plaintiff-respondent be informed of the date of the hearing before the Full Bench.
4. This is an appeal by defendant 5 arising out of a suit brought for sale on the basis of a mortgage deed dated 2nd September 1919, executed by defendants 1 to 3 in favour of the plaintiff's son. There were two earlier mortgages of 1909 and 1918 on the basis of which decrees for sale were obtained in 1922 and 1924. On 22nd April 1928, defendants 1 to 3 and others executed a mortgage deed in favour of defendant 5 of the same property along with others for Rs. 10,000. On the findings, Rs. 5,237 were borrowed and the decree of 1922 was paid off in January and February 1928; and Rupees 4,000 were left in the hands of the mortgagee for payment of the decree of 1924, which was paid off in January and June 1930 by defendant 5. The question in the present case is whether defendants having advanced money for the payment of these prior mortgage decrees is entitled to claim priority as against the plaintiff mortgagee, and has been formulated as follows:
Where a property has been the subject of two simple mortgages and a suit has been brought for sale on the first mortgage and decreed against the second mortgagee also; and subsequently a third mortgage is taken and this mortgagee has paid the decretal amount, but has not obtained possession of the property; when the second mortgagee brings a suit for sale and makes the third mortgagee a party, is the third mortgage entitled to claim a right of subrogation for the amount which he paid in discharge of the decree in the earlier mortgage suit even though the period of limitation for a fresh suit on the first mortgage would now be barred
5. It is convenient first to consider the position under the Transfer of Property Act as it stood at the time of the defendants' mortgage and at the time of the first two payments, and then to consider the effect of the amending Act of 1929. Under the old Act, quite apart from the rights allowed to mortgagors for contribution under Section 82 and Section 95, the only section which allowed a right of subrogation to a subsequent mortgagee was Section 74. Taking it literally, that section laid down a very narrow rule and was (1) confined to a subsequent mortgagee, (2) to payments to the next prior mortgagee, and (3) not to renewal of a mortgage. First, strictly speaking, it followed that there was no right given by that section to a purchaser of the property, as distinct from a subsequent mortgagee if he paid off a prior mortgage. But their Lordships of the Privy Council applied a much wider equity in several cases, and upheld rights of subrogation even for purchasers: Gokaldas Gopaldas v. Puranmil Pretnsukh (1884) 10 Cal 1035 and Malireddi Ayyareddi v. A. Gopalakrishnya 1924 PC 36 . In the last mentioned case their Lordships observed:
It is now settled law that where in India there are several mortgages on a property, the owner of the property subject to the mortgages may, if he pays off an earlier charge, treat himself as buying it and stand in the same position as his vendor, or to put it another way, he may keep the encumbrance alive for his benefit and thus come in before a later mortgagee.
6. Again a prior mortgagee who in execution of his own decree purchased property without impleading the subsequent mortgagee and got possession, could not on a strictly literal interpretation of the section be given a right of subrogation; but their Lordships applied the equitable rule that he would be entitled to use his mortgage as a shield. - In Sukhi v. Ghulam Safdar Khan 1922 43 All 469 their Lordships laid down that:
An owner of a property who is in the lights of a first mortgagee and of the original mortgagor as acquired at a sale under the first mortgage is entitled at the suit of a subsequent mortgagee who is not bound by the sale or the decree on which it proceeded to set up the first mortgage as a shield.
7. This case was, of course, followed by the majority of the Judges in the Full Bench case of Ram Sanehi Lal v. Janki Prasad 1931 ALJ 729.
8. Secondly, the section expressly dealt with the payment of the amount due on the next prior mortgage. Prima facie a third mortgagee would acquire no right under this section if he paid off the first mortgage without paying off the second mortgage which was next prior to his. Had the section been taken in its narrowest sense, no question of priority would have arisen as against a previous mortgagee. A third mortgagee with whom money was left for payment to prior mortgagees would be entitled to pay off both the first and second mortgages or either of them, and would be entitled to recover his own amount, together with the sums so paid, from the property as against the mortgagor and all subsequent transferees. A third mortgagee would not, therefore, have been able to advance money unless the security was sufficient to pay off both the earlier mortgages. By merely paying off the earlier mortgage he could not step into the shoes of the first mortgagee so as to acquire rights higher than the second mortgagee. But such a narrow interpretation was considered to be against the rules of equity, justice and good conscience, and their Lordships of the Privy Council did not confine the principle of subrogation to the payment of the next prior mortgage only. In Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527 their Lordships held that the charge created by a zarpeshgi lease of 1874 was kept alive by Mt. Alfan, a mortgagee of 1888 who had advanced money to pay that off, even against holders of mortgages prior to 1888 and subsequent to 1874. This principle has been followed by this Court in numerous cases. The legislature has also adopted this view in the new Section 92 which is not limited to payment to the next prior mortgagee.
9. Thirdly, a renewal of an earlier mortgage has been held to be within the scope of the rule of subrogation. On a restricted view the section in terms contemplated the existence of two different mortgagees, one to whom money is due on a prior mortgage and the second who 'tenders such amount' to the prior mortgagee, and might have excluded the case of a person who renews his own mortgage. But their Lordships have repeatedly laid down that priority can be claimed by him, provided he intended to keep alive the security. In Dinobundhu Shaw v. Jogmay Dasi (1902) 29 Cal 154, where a mortgage had been executed in 1891 to pay off a mortgage of 1888, priority was allowed as against an attaching creditor who came in between. Their Lordships held that the question whether the charges were extinguished or kept alive for his benefit was simply a question of intention, and the intention may be found in the circumstances attending the transaction, or may be presumed from a consideration of the fact whether it is or is not for his benefit that the charge should be kept on foot.
10. On the authorities, therefore, it must be taken to be established that the principle of subrogation was of more general application and had to be applied when equities have to be adjusted between rival mortgagees in the order of their priority.
11. Now when a prior mortgage was paid off, there could be three possible legal positions: (1) The person paying off the mortgage may be deemed to be the assignee of the mortgage: (2) or in the case where a mortgage has merged into a decree the assignee of the decree, or: (3) a person who is neither an assignee of the mortgage nor of the decree, but one who has under Section 74 acquired the rights and the powers of the mortgagee so paid off. With regard to his position as the assignee of the mortgage or the decree, it was held in Bansidhar v, Gaya Prasad (1902) 24 All 179 that the rights and powers acquired by the person paying off the mortgage are to continue a pending suit and that he could not bring a fresh suit. And it was held in Madras and Bombay that the person paying off a mortgage decree was even entitled to execute the decree.
12. The authority of these cases was shaken, if not actually destroyed, by the pronouncement of their Lordships of the Privy Council in Gopy Narain Khanna v. Bansidar (1905) 27 All 325. In that case, which was governed by the old Act, although a puisne encumbrancer had been impleaded, the mortgage decree passed was in the form of the order given in Section 86 T.P. Act, which prima facie contemplated a suit between one mortgagee and the mortgagor only. The subsequent encumbrancer paid the amount of the decree and applied for a decree for absolute foreclosure, but his application was dismissed. He then instituted a suit for foreclosure within 12 years of the date of the mortgage which he paid off, and within 3 years of the date of his payment. Their Lordships held that the suit was not barred by Section 244, Civil P.C. and that in view of the language of the decree that had been passed, a separate suit was the appropriate remedy, as a new decree was required for the purpose of working out the rights of the parties. Their Lordships also suggested that the appropriate decree to pass in such a case would be to provide for the exercise by the puisne encumbrancers of their successive rights of redemption, or for working out the rights of the parties in the event of any puisne encumbrancer, in front of the mortgagor, redeeming the property. It is the duty of the Courts to see that proper decrees are framed. Particular attention should now be paid to forms Nos. 9 and 10 of Appendix D, Civil P.C.
13. The question that arises in the present case is, what is to happen if no proper decree has been passed, or if the subsequent mortgage comes into existence after the decree. There is plenty of authority in support of the view that even then the payment of the prior mortgage decree confers new rights on the subsequent mortgagee. In Shib Lal v. Munni Lal 1922 44 All 67 it was held by a Bench of this Court that by paying off a previous mortgage decree, a subsequent mortgagee acquires a fresh charge on the property and can institute a separate suit within 12 years of the date of payment to enforce such a charge. In Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527, already referred to, their Lordships disallowed a claim for recovery of the amount paid to discharge the prior zarpeshgi deed when it was brought more than 12 years after the zarpeshgi lease and also more than 12 years after its payment by borrowing on a new mortgage. As that suit had been brought more than even 12 years after the date of the payment with the fresh advance, the question as to which of these dates should be the starting point of limitation did not necessarily arise. The language used by their Lordships undoubtedly indicated that the claim was barred by Art 132 as it was brought more than 12 years after the date when the amount under the zarpeshgi deed became repayable, for their Lordships remarked:
But as the Rs. 12,000 were, under the zarpeshgi deed of 20th November 1874 repayable in Jeth 1294 Fasli (September 1887) and this suit was not brought until 22nd September 1900 the claim of the plaintiff to priority is barred by Article 132, Schedule 2, Lim. Act, 1877.
14. It would, therefore, seem that no fresh charge was created by the payment under Section 74 of the Old Transfer of Property Act. In Shib Lal's case it was not the mortgage itself which was paid off, but the amount due under the mortgage decree was paid off Therefore it may be said that Shib Lal's case has not by implication been completely overruled by this pronouncement. Mohammad Abbas Ali Khan v. Chotey Lal 1927 All 28 was a case where subsequent transferees had paid off prior mortgage decrees. So far as the plaintiff Chhote Lal was concerned there was a previous decision in his favour giving him priority which operated as res judicata. So far as Abbas Ali was concerned he was a defendant in possession. That case can therefore be distinguished.
15. In Aziz Ahmad Khan v. Chhote Lal 1928 50 All 569 the case of Shib Lal v. Munni Lal 1922 44 All 67 was doubted. In this case it was a mortgage decree which was discharged by a co-mortgagor. Although on the date when he paid off the decree a suit on the previous mortgage would have been altogether barred, the Bench distinctly held that where a right of contribution arose it could only arise from the date of payment. But the question of subrogation did not directly arise and the learned Judges themselves remarked at p. 575:
We need not express any opinion at present as to how far this case was rightly decided. It would probably be necessary to reconsider the law laid down there when a suitable occasion arises. The contention however before us is not whether a puisne mortgagee by paying a prior mortgagee gets 12 years time from the date of payment within which to enforce his newly-acquired right. The question before us is whether Chhote Lal having paid the decretal amount not as a puisne encumbrancer but as a purchaser...was entitled to exact contribution from the remaining nine properties and whether this claim for contribution is within time.
16. In Ram Sarup v. Ram Rachhpal 1929 ALJ 750 a subsequent mortgagee who had advanced money towards the discharge of a first mortgage of 1904 was held entitled to priority over an intermediate mortgage who held a mortgage of 1910 and sued more than 12 years after the first mortgage. The question of limitation was not directly raised in that case and therefore strictly speaking not decided. It is just possible that a period might have been fixed for payment in the deed of 1904. The case turned on the sole question whether a partial payment conferred rights of subrogation. Jokhu Bhunja v. Sitla Baksh Singh 1930 ALJ 750 was a case of redemption, where the defendant mortgagee was in possession and his deed had itself provided that the mortgagor would not be entitled to redeem the earlier usufructuary mortgage without previous payment of the sum due under the second mortgage. There was a clear charge created on the property by the second mortgage and the defendant in possession was entitled to tack it on. The observation that no question of limitation can arise as against the defendant must be understood with reference to the facts of that case. In Paras Ram v. Mewa Kunwar 1930 ALJ 890, the plaintiffs, who were third mortgagees of the year 1909, had on 22nd July 1908 paid off a prior mortgage of 1898 (1908 is a misprint for 1898) and allowed a decree on the second mortgage of 1904 to be passed against them subject to the prior charge. When in 1926 they brought a suit on the basis of their mortgage, the claim was within time so far as their own mortgage was concerned, because there had been a period of five years fixed, but their claim for the enforcement of the charge on the prior mortgage was barred as it was brought more than 12 years after the mortgage and also more than 12 years after the payment by them. It was accordingly held that the claim was barred by time. No doubt the case of Shib Lal v, Munni Lal 1922 19 ALJ 840 was referred to as showing that if the plaintiffs could not sue on the basis of the mortgage of 1908, they could enforce the charge by virtue of their payment within 12 years.
17. But no occasion arose for deciding this point, as the claim was barred by time in either case. The Full Bench case of Ram Sanehi Lal v. Janki Prasad 1931 ALJ 729 was a case where a prior mortgagee had obtained the decree without impleading a subsequent mortgagee and had in execution of his own decree purchased the rights of the mortgagor and entered into possession. It was no doubt held by the majority that if the purchaser in execution of the prior mortgagee's decree is not in possession and is suing as plaintiff, the purchaser in execution of the subsequent mortgagee's decree (a) could enforce his decree, if limitation on the prior mortgage has not yet run out, but (b) he cannot recover the mortgage money if limitation has run out. What was held there was that if the purchaser remains in possession, he could use his prior charge as a shield, a weapon of defence, but cannot use it as a weapon of offence if limitation on the mortgage has expired and be has to bring a suit for possession. That was not a case where a mortgage decree had been obtained against the subsequent mortgagee also and it was such a mortgage decree against him that was paid off. Obviously if a defendant interested in the equity of redemption is left out from the mortgage suit, then no rights can be enforced as against him, if he is in possession after the period of limitation on the mortgage has already expired. The position of course is not identical if the mortgage has been sued upon, impleading the subsequent mortgagee, and a decree actually obtained as against him and also the mortgagor. It is this latter kind of case which has 'arisen in the appeal before us.
18. In the Full Bench case of 1932 A L J 827(17), there were mortgages of 1915 and 1916 and a third mortgage of July 1926 under which moneys were left for partial payment of both the mortgages as well as the other subsequent debts. In November 1926 the first mortgage was fully paid off but the second mortgage was not discharged. In a suit brought by the, second mortgagee the third mortgagees were impleaded as puisne mortgagees and set up their -claim of priority on account of the payment of the prior mortgage. The suit had been brought in. 1928 more than 12 years after the mortgage of 1915, but within three years of the payment. The Full Bench held that under the amended Section 92, which was retrospective, the defendants were subrogated to the position of the first mortgagee. Ultimately the property was ordered to be sold subject to the charge of the first mortgage. It is true that the question of limitation does not appear to have been directly raised, and the case of Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527 was not at all referred to, but it must have been before the Bench prominently. It is arguable that the decision might have proceeded either on the assumption that a suit on the mortgage of 1915 was not till then barred or that as the sale was to be merely subject to the mortgage -of 1915, it was unnecessary to decide the question of limitation. In that sense it may therefore be said that it 'was not necessarily decided that even if the mortgage had become barred by time the defendant was entitled to priority because he was a defendant. The sale having been ordered merely subject to the mortgage of 1915, the third mortgagee who had paid off that mortgage had necessarily to bring a separate suit to recover this amount in which the question of limitation would be finally decided. All the same the case favours the view put forward on behalf of the appellant,
19. In the case of Bansidhar v. Shiv Singh 1933 ALJ 1564, money had been left in the hands of a subsequent mortgagee for the payment of a previous mortgage decree of 1906 which was paid off in September 1921. More then 6 years after, on 10th September 1928, the plaintiff brought a suit to recover the amount so paid as against a later mortgagee, who had purchased village Nahil in execution of his own decree. As the plaintiff's mortgage of Nahil was altogether void as the mortgagors were not competent to hypothecate it, he. had to fall back on the payment of the previous mortgage. The Bench considered that the principle laid down in Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527, applied to the ease, and that Shib Lal v, Munni Lal 1922 19 ALJ 840, was of doubtful authority. They held that the claim was barred by time. It was however, pointed out that a right of reimbursement under Section 69, Contract Act for which there is a shorter period of limitation starting from the date of payment might have been enforced if brought within time of the payment of the decree. It was certainly held that no fresh charge was acquired so as to give to the plaintiff a fresh period of 12 years, but it was also not held that on payment of the mortgage decree, when 12 years had already expired the plaintiff acquired no rights whatsoever. The question whether a suit within six years of the payment would be maintainable did not arise for consideration, that case was decided under the provisions of the old Transfer of Property Act, and the effect of the Amending Act was not relied upon by counsel. Now if the payment of a mortgage decree was of no avail to the person who paid it off after the period of limitation on the mortgage has expired, then even on equitable grounds no subrogation might have been allowed to him and he might not have been entitled even to use the payment as a shield. But their Lordships of the Privy Council in Sukhi v. Ghulam Safdar Khan 1922 43 All 469, upheld his right to keep alive the charge and he was allowed to claim the amount even after the lapse of considerable time.
20. In that case the mortgages were of 1874 and 1875, and the mortgage decree and sale were of 1886. The second mortgagee of 1883 sued in 1910 and paid the amount in discharge of the mortgages of 1874 and 1875. On a suit brought in 1914 on the basis of the mortgage of 1902 the mortgagee of 1883 was allowed to set up his mortgage as a shield, and also his payment of the mortgages of 1874 and 1875. The latter's rights Were upheld on the ground that an owner of a property who is in the rights of the first mortgagee and of the original mortgagor has acquired at a sale under the first mortgage is entitled in the suit of a subsequent mortgagee who is not bound by the sale or the decree on which it proceeded, to set up the first mortgage as a shield. The same principle was followed by the Full Bench in Ram Sanehi Lal v. Janki Prasad 1931 ALJ 729. In that case there were mortgagees of 1911 and 1912 and both sued separately without impleading the other and obtained decrees and both purchased the property at auction. The prior mortgagee succeeded in obtaining possession through the revenue Court. The subsequent mortgagee brought his suit more than 12 years after his mortgage, but within three years of the purchase made by the prior mortgagee. His rights were upheld. These cases are undoubtedly authorities in support of the view that when a mortgage decree, as distinct from the deed of mortgage, was paid off, even though more than 12 years after the mortgage, when a suit on it would be barred by time, enforceable rights of priority were acquired by such payment. The very circumstance that their Lordships in Sukhi v. Ghulam Safdar Khan 1922 43 All 469, suggested that the decree should provide for the exercise by the puisne encumbrances of their successive rights of redemption, showed clearly that the payment of the decree, even after 12 years from the mortgage, would confer some rights, or else the Court would have had no jurisdiction to make such a provision in the decree.
21. M. Kotappa v P. Raghavayya 1927 50 Mad 626 is the solitary case cited before us in which a mortgage-decree had been paid off by a subsequent usufructuary mortgagee, and he was not allowed to claim the amount even in a suit for redemption brought against him by the mortgagor. The usufructuary mortgagee had actually preserved the property of the mortgagor by preventing its auction sale. It does not appear to have been argued before the learned Judges that the usufructuary mortgagee ' was entitled under Section 72, T.P. Act, to spend money for the preservation of the mortgaged property from sale. With great respect, I am unable to agree with that decision because it seems to have been altogether overlooked that quite independently of Section 74 the usufructuary mortgagee was entitled to recover the amount paid by him for the discharge of the prior mortgage decree at least from the mortgagor: see Abdul Qayyum v. Sadruddin Ahmad Khan (1905)27 All 403.
22. No doubt in that case the learned Judges instead of applying Section 72 thought-S. 74 was applicable although as between the mortgagor and the usufructuary mortgagee there could be no question of any priority at all Wallace, J., had expressed a somewhat' contrary opinion in Parvati Ammal v. Venkatarama Iyer 1925 47 MLJ 316, which he-modified The learned Judges considered that the case was governed by the ratio decidendi in Gopy Narain Khanna v. Bansidar (1905) 27 All 325 and Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527, both of which were obviously distinguishable. Some reliance was also placed on the case of Sibanand Misra v. Jagmohan Lal 1922 68 IC 707, although that was not a case of a payment of a mortgage decree at all.
23. There can be no doubt that a subsequent mortgagee paying off the prior mortgage acquired all the rights and powers of the mortgagee under Section 74. Under that section the rights and powers become vested in him. There is no assignment of the mortgage or the mortgage decree to him, but it is vesting of the rights and powers of the mortgagee by operation of law. It is noteworthy that the legislature had used two words 'Rights' and 'Powers' which were distinct in meaning ''Rights' of course meant substantive rights to recover his money, a right of priority over subsequent incumbrancers and transferees rights in presenti, if the mortgage-is not extinguished, or in the case of a mortgage decree, if the decree has not become barred by time. 'Power' obviously meant the power to enforce these rights by adopting the proper procedure recognised by law. The powers then possessed by the prior mortgagee are, in the case of a mere mortgagee, to file a suit for sale within the period of limitation by enforcing the charge, and in the case of a holder of a mortgage decree to file an application for execution of the decree and realise his decretal money.
24. If a puisne mortgagee paid off a prior mortgage before any suit had been brought on the mortgage, the right of the mortgagee which he could acquire was obviously the right under the mortgage to enforce the charge and claim priority, and the power he acquired was to bring a suit on the basis of it within 12 years of the mortgage under Article 132, Lim. Act. But where the mortgage had already been sued upon and had merged in a mortgage decree, which might happen well after the expiry of 12 years from the original mortgage, the payment of the mortgage decree, if it conferred nothing upon the puisne mortgagee but a right to bring a suit on the basis of the previous mortgage, would give him no right or power at all. It would give him not only much less than what the mortgagee had at the time of payment but indeed absolutely nothing. On the date of payment the prior mortgagee was entitled to execute his decree, enforce the charge and recover the amount in execution, and claim priority over all subsequent incumbrances: but the puisne mortgagee who paid off the mortgage decree would find himself in the helpless position of not being able to execute the decree as he was not an, assignee of the decreie and not being able to bring a fresh suit on the mortgage deed as that would be barred by time. He would thus acquire no powers and rights which the prior mortgagee possessed, and his payment of the mortgage decree would be a simple discharge of the prior debt without giving him any rights or powers to recover the amount so paid, as against the second mortgagee, whose mortgage also was subject to the decretal charge.
25. In a suit for sale brought on a prior mortgage within time, a decree for sale might have been obtained after the expiry of the ordinary 12 years, not only against the mortgagor, but also against two successive mortgagees, without unfortunately there being in it any express terms providing for the rights of subrogation. Under the old Section 74, if the mortgagor himself paid the mortgage decree, it might have been said that he acquired no rights of priority at all because it was his duty to pay all the mortgages. But how could the third mortgagee pay off the decretal amount, if he would not be entitled to recover it as against the second mortgagee? By paying it off, he would benefit the second mortgagee, without the right of recovering it by a separate suit,, unless the property was sufficient to discharge all the debts. To hold this would be tantamount to holding that although the preliminary decree directed that the defendants should pay the amount within the period fixed, neither of them could really pay it, except at his-peril. Under Section 95 a co-mortgagor redeeming a prior mortgage was entitled to a charge on the share of his co-mortgagors, and it was held in many cases that the right to enforce this charge accrued on the date of payment and even though at the time of the suit the limitation on the mortgage might have expired. See Umar Ali v. Asmat Ali 1981 58 Cal 1167. The last, mentioned case was decided under the. old Section 95 and the charge was enforced; the dictum as to the possible effect of the new Section 92 was professedly not any final opinion.
26. It would be difficult to hold that although a mortgagor paying off the amount of the joint decree against himself and his co-mortgagor even though 12 years of the mortgage had expired, would be entitled to enforce' his charge against his co-mortgagor by a separate suit for which under Section 95 his right to sue would accrue on the date of payment, a subsequent mortgagee paying off a prior mortgage decree in similar circumstances had under Section 74 lesser rights; and if the limitation on the old mortgage had already expired, he acquired no right in reality. I am inclined to think that Section 74 was intended to confer higher rights on the subsequent mortgagee than Section 95 did on a co-mortgagor, as probably in the latter case, the charge could not be enforced against a transferee without notice, while it could in the former case. It seems to me that where a subsequent-mortgagee redeemed a prior mortgage he under Section 74 acquired only the rights and powers of the mortgagee and was-entitled to bring a suit on the basis of the mortgage within 12 years of the mortgage.
27. He acquires no fresh charge. But where a suit had already been brought on the original mortgage and had ripened into a mortgage decree, the mortgage merged into the decree and the powers and rights of the mortgagee decree-holder were those under the decree which was alive at the time and which gave him a priority over subsequent encumbrances and entitled him to recover his amount by sale of the property without any bar of limitation. The payment of such a decree conferred on the subsequent encumbrancer all the rights and powers of the mortgagee decree-holder as then subsisting though the procedure to be followed by him had to be different. No doubt under the ruling of their Lordships of the Privy Council in Gopy Narain Khanna v. Bansidar (1905) 27 All 325 he was not entitled, at any rate not bound., to execute the decree, if the decree was not properly framed. But it would be 'too. much to say that if on the date when he paid off the decree 12 years had already expired from the date of the original mortgage, he acquired no enforceable right whatsoever. To hold this would be to grant him the statutory rights and powers of the mortgagee decree-holder on account of his payment, and at the same time to deny him those rights on the ground of limitation. I think that this was not the position contemplated by the Legislature, nor would it be in accordance with the rule or justice, equity and good conscience. The position is now made much clearer by the amendments to the old Transfer of Property Act. In view of the fact that the saving clause, Section 63, Act 20 of 1929, did not refer to Sections 39, 47 and 48 of the Amending Act, under which the old Sections 74 and 95 were replaced by new sections, the Full Bench, in Tola Ram v. Ram Lal 1932 ALJ 627. held that the new Section 92 had a retrospective effect. The legislature has made it retrospective in order to obviate the difficulty created by the language of the old section. There is a marked contrast between the provisions of the old Act and the new Act. In the first place; Section 74, Act 4 of 1882. did not in terms apply to the payment of a mortgaged decree, for it said: 'And such mortgagee is bound, to accept such tender and to give a receipt for such amount' and that 'The subsequent mortgagee shall, on obtaining such receipt acquire' etc. These words were appropriate to a redemption of the mortgage out of Court by payment of the money direct to the mortgagee who was to grant a receipt, and the rights and powers of the prior mortgagee were acquired 'on obtaining such a receipt,' The new Section 92 merely says 'On redeeming property subject to the mortgage,' and can refer both to the payment of a mortgage out of Court and the payment of a mortgage decree.
28. In the second place, Section 74 did not refer to payment by a co-mortgagor, who acquired a charge under Section 95. As regards the co-mortgagor it was therefore clear that he acquired a fresh charge by virtue of his payment on the date of redemption. In the amended Act no fresh charge is given to a co-mortgagor under Section 95, but he is allowed to enforce his right of subrogation under the new Section 92 against his co-mortgagors. It is also clear that a co-mortgagor is on the same footing as a subsequent mortgagee and acquires the same rights by redeeming a prior mortgage. In the third place, the new Section 92 confers on a subsequent mortgagee and co-mortgagor the rights of the prior mortgagee whom they redeem, as against 'any other mortgagee.' The section is not confined to the payment to the next prior mortgagee, nor are the rights acquired under it exercisable only against subsequent mortgagees. Now it can hardly be considered that the charge which the co-mortgagor acquired under the old Section 95 by payment of a mortgage debt has been extinguished by the new provisions, and that if a co-mortgagor pays off a mortgage decree after twelve years have expired from the date of the mortgage, he has no right whatsoever against the co-mortgagor. The acquisition of 'the same rights' as the prior mortgagee must mean the same rights which that mortgagee possessed at the time of the payment, and the rights which he possessed at that time included a subsisting right to enforce the charge. This was a substantive right, while the remedy to enforce it by execution of the decree and not by suit was a matter of procedure only.
29. Section 82, both old and new, merely fixes the rateable liability of the several properties mortgaged, and could create a charge only if the debt were 'paid out of' a few items of the property. In such an event, the co-mortgagor can enforce his charge under Section 100. But these sections would apply only when the debt has been realised by sale of the properties. If Section 92 cannot help a co-mortgagor then it would follow that when there is a mortgage decree for sale of several properties belonging to different mortgagors or their representatives and 12 years from the time of the mortgage have expired, there would be hardly any option but to let the property be sold, for if any co-mortgagor wishes to save his share from the sale by depositing the decretal amount in Court, he must do so at his peril for he may not be able to recover the rateable share from the properties of the other co-mortgagors. If the mortgagor allows his property to be sold he would acquire a charge, but if he saves his property from sale by paying the amount and cost he would not. Such a position, in my opinion, could never have been intended by the legislature. The right of subrogation which a co-mortgagor can enforce under the new Section 95 is the right which he acquires under the new Section 92, and it must mean the statutory right of foreclosure or sale. It follows that a subsequent mortgagee paying off a mortgage decree is in the same position and acquires similar rights not only against the mortgagor but also against 'any other mortgagee'. Unless it be held that a fresh charge is created by virtue of this stautory provision, the rights conferred by the section may in most cases be nugatory and unenforceable. It seems to me that the right of subrogation conferred by the new Section 92 is in no way narrower, but really wider, in scope than that conferred by the old Section 74, specially as more emphatic words are now used.
30. This view is in consonance with the view expressed in the Full Bench case of Tola Ram v. Ram Lal 1932 ALJ 627. The right of reimbursement under Section 69, Contract Act, might with advantage have been enforced within three years against the co-mortgagor, personally, but the aid of that section could hardly have been invoked by a subsequent mortgagee against another who was prior to him, as the latter was no more bound by law to pay the amount than the former.
31. Now the rights of the parties are governed by the provisions of Section 92, as amended, and the necessary inference from it is that the payment of the mortgage decree conferred upon- the person, who paid it off. a statutory right under that section, which right was not identical with the rights of an assignee of the mortgage itself but was an acquisition of a fresh charge enforceable within the period of limitation applicable to such a suit. Article 132 would apply when the charge is sought to be enforced, and limitation would run from the date when the decretal amount was. paid and the statutory right acquired. Under Order 34, Rule 12, Civil P.C., a person, who' is subrogated to the position of a prior mortgagee can, when consenting, recover the amount due to him out of the sale proceeds, provided his rights have not become extinguished by lapse of time. I am therefore of the opinion that the defendant by paying off the amount due on the mortgage decree in 1928 and 1930 acquired the rights of the mortgagee decree-holder to recover his money by enforcement of a fresh charge within twelve years of the redemption.
32. I concur.
Ganga Nath, J.
33. The following point has been referred to the Full Bench for a decision:
Where a property has been the subject of two simple mortgages and a suit has been brought for sale on the first mortgage and decreed against the second mortgagee also; and subsequently a third mortgage is taken and this mortgagee, has paid the decretal amount but has not obtained possession of the property; when the second mortgagee brings a suit for sale and makes the third mortgagee a party, is the third mortgagee entitled to claim a right to subrogation for the amount which he paid in discharge of the decree in the earlier mortgage suit, even though the period of limitation for a fresh suit on the first mortgage would now be barred
34. The facts out of which this point has arisen have been given in the referring order and are as follows: The plaintiff-respondent brought a suit on the basis of a mortgage-deed, dated 2nd September 1919, against his mortgagor and the defendant-appellant, who is a subsequent mortgagee. The defendant-appellant holds a mortgage of 22nd April 1928. This mortgage deed was executed for Rs. 10,000. Out of it Rs. 4,400 were left with the defendant for payment of the amount, due under the hypothecation decree passed by the Court of the Second Subordinate Judge of Moradabad on 7th January 1925, in Suit No. 129 of 1924, Sahu Salek Chand v. Mubarak Husain and others, Rs. 5,237 were taken by the executants for payment to Sahu Salek Chand on account of another decree No. 99 of 1922. These decrees had been obtained on the basis of two earlier mortgages of 18th September 1909 and 20th July 1918. These mortgages were simple mortgages and the decrees were decrees for sale to which the present plaintiff as a subsequent mortgagee had been impleaded. The defendant contended that he should be given priority over the second mortgagee on account of the discharge of the earlier mortgages of 1909 and 1918. In order to determine the point referred to the Full Bench it is necessary to ascertain the nature and extent of the right of the third mortgagee. Before the Amending Act 20 of 1929, Section 74, T P. Act, laid down:
Any second or other subsequent mortgagee may, at any time after the amount due on the next prior mortgage has become payable, tender such amount to the next prior mortgagee, and such mortgagee is bound to accept such tender and to give a receipt for such amount; and (subject to the provisions of the law for the time being in force regulating the registration of documents) the subsequent mortgagee shall, on obtaining such receipt, acquire, in respect of the property, all the rights and powers of the mortgagee, as such, to whom he has made such tender.
35. Under the Amending Act this section, as well as Section 95, T.P. Act, were replaced by Section 92 which lays down:
Any of the persons referred to in Section 91 (other than the mortgagor) and any co-mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee. The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems.
36. So far as the subsequent mortgagee's rights are concerned there is no difference between the provisions of Section 74 and Section 92. There has been some change so far as the redeeming co-mortgagor's rights are concerned. Section 95 T.P. Act before the amendment was:
Where one of several mortgagors redeems the mortgaged property and obtains possession thereof, he has a charge on the share of each of the other co-mortgagors in the property for his proportion of the expenses properly incurred in so redeeming and obtaining possession.
37. Under this section the co-mortgagor had not the right of subrogation which has now been conferred on him under Section 92, T.P. Act. A co-mortgagor and a subsequent mortgagee who redeem a prior mortgage have now been put in the same position and have been given the same right of subrogation. The defendant was the third mortgagee. He made some payments out of the mortgage-money before the amendments in January and February 1928 and some thereafter in January and June 1930. As the provisions of both the old Section 74 and the present Section 92, T.P. Act, are substantially the same so far as his rights are concerned, his rights are not affected whether they are considered under the old section or the present section. Though the word 'subrogation' was not used in the old Section 74, yet he had the same rights as are now conferred under the term 'subrogation' on him in Section 92. The right conferred on the mortgagee has now been defined as subrogation. The defendant did not acquire any right to enforce the security independently of the rights of the mortgagee whom he paid off He acquired the same right as the mortgagee, whose mortgage he redeemed, had against the mortgagor or any other subsequent mortgagee, as regards redemption, foreclosure or sale of the redeemed property.
38. He has been substituted for the mortgagee whom he has paid off. The distinctive feature of the subrogation is that the incumbrance that is paid off is not extinguished but is treated as kept alive and assigned to the person making the payment. The words in Section 74: 'All the rights and powers of the mortgagee, as such, to whom he has made such tender' and in Section 92 'the same rights as the mortgagee whose mortgage he redeems may have' point to the same conclusion So this is clear that be had no independent right of his own to enforce the mortgage security and what he acquired was the right of the mortgagee whom he had paid off, and his remedy is to enforce, the same security as the redeemed mortgagee had. It being so the only Article of the Limitation Act which applies to this case is Article 132. Under it the period of limitation is 12 years from the time-when the money sued for becomes due. In this case the money sued for is the money which is charged on the mortgaged property. The defendant would therefore have the same period of limitation for enforcing payment of the money charged upon the mortgaged property as the original mortgagee had. The case directly in point is Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527. There, in the first place, there was a zar-i-peshgi lease of 1874 in favour of Girwar. Singh for Rs. 12,000 under which possession was delivered. This was followed by mortgages of 1879, 1880 and January 1888. Lastly there was a mortgage of 17th February 1888 in favour of Mt. Alfan, which was for the express purpose of paying off the zar-i-peshgi debt which Mt. Alfan discharged (p. 550). The representatives of Mt. Alfan brought a suit in 1900 to enforce not only the mortgage of 17th February 1888 but also to recover the sum of Rs. 12,000 due on the zar i-peshgi lease on the ground that they had paid that amount, and thereby acquired priority as against the intermediate mortgagees of 1879, 1880 and January 1888. There were pleas of res judicata and limitation and also a plea that the charge created by the zar-i-peshgi lease had not been kept alive. On p 555 their Lordships came to the conclusion that the charge created by the zar-i-peshgi lease was kept alive for the benefit of Mt. Alfan. On p. 558 their Lordships held that as Mt. Alfan had not been made a defendant in a previous suit brought by an intermediate mortgagee, although she was a necessary party, her rights were not affected by the decree and there was no bar of res judicata. Having recorded these findings their Lordships went on to observe at p. 558:
But as the Rs. 12,000 were under the zar-i-peshgi deed of 20th November 1874, repayable in Jeth 1294 Fasli (September 1887), and this suit was not brought until 22nd September 1900, the claim of the plaintiffs to priority is barred by Article 132, Schedule 2. Lim. Act, 1877.
39. Mt. Alfan's representatives were therefore not allowed to claim priority on account of their having paid off the amount due under the zar-i-peshgi lease although that lease was prior in point of time to the mortgages of the contesting defendants, and the ground on which the claim was disallowed was that the period of limitation prescribed for the enforcement of the charge under the zar-i-peshgi had expired. The mere fact that Mt. Alfan paid off the lease in July 1888 did not entitle her representatives to recover the amount. This was a case in which prior the mortgage was paid off before a decree was obtained on it. In 1921 Cal 166 it was held that a co-mortgagor seeking contribution must bring his case within the period within which a mortgagee could have brought a suit to enforce his mortgage. This case had been decided under the old Section 95. In Umar Ali v. Asmat Ali 1981 58 Cal 1167, the Full Bench consisting of five learned Judges, while deciding that the decision in Raj Kumari v. Mukund Lal 1921 Cal 166, was wrong under the old Act, held that in effect it was now the statute law. Under the old Act a co-mortgagor had a different right under Section 95 from the one a mortgagee had under Section 72. In the new Act Section 95 finds no place and both of them have been placed in the same position and consequently the same rule of limitation would now apply to both.
40. It would make no difference whether the payment by the puisne mortgagee is made after the obtaining of a decree by the first mortgagee or before. It is the redemption of the mortgaged property which confers a right of subrogation under Section 92; and the mortgaged property can be redeemed even after a decree has been passed till the sale which might take place under the decree is confirmed or a final decree for foreclosure is passed. The mortgage charge on the property is not extinguished by the passing of the decree but the charge attaches itself to the decree which the decree enforces after it is passed. If the puisne mortgagee gets his right to enforce the security by virtue of the old Section 74 or the new Section 92, T.P. Act, which are substantially the same, then he is bound to enforce his right within the period of limitation allowed to the first mortgagee.
41. The decision in Gopy Narain Khanna v. Bansidar (1905) 32 IA 123 settles the point as to what are the rights of the redeeming mortgagee and to what relief he is entitled, The fact that it was decided under the old Section 74 would not make any difference as there is no difference in the old Section 74 and the new Section 92. There, on 20th July 1889, Chaudhri Fateh Chand executed a mortgage by conditional sale in favour of the respondents Bansidhar and Kunjbehari Lal for Rs. 7,101. The mortgaged property consisted of two villages, Patara and Bhaipura. On 22nd October 1889 the same mortgagor executed a second mortgage by conditional sale in favour of Anant Ram, and the respondent for Rs. 10,000 and interest. This mortgage comprised Patara and eight other villages not including Bhatpura. On 1st October 1891 Anant Ram sold his moiety of this mortgage to Gaya Prasad. On 17th September 1893, a suit (No. 123 of 1893) was brought for foreclosure of first mortgage by the respondent and Kunjbehari Lal, the first mortgagees, on Patara, against Chaudhary Raj Kunwar, son and heir of Chaudhri Fateh Chand (then deceased), Gaya Prasad, and a third mortgagee on the same property. Bhatpura was disposed of under a prior hypothecation, and was excluded from the suit - by order. On 27th September 1893 another suit (No. 122 of 1893) was brought for foreclosure of the second mortgage by the respondent and Gaya Prasad against Chaudhri Raj Kunwar and the third mortgagee. On 22nd December 1894 decrees were passed in both the suits in the same form.
42. On 7th May 1898 a decree absolute. for foreclosure was passed in the suit of the second mortgagees (No. 122 of 1893). The time for redemption on the decree in the suit on the first mortgage (No. 123 of 1893) was from time to time enlarged but the money was not paid by the mortgagor. On 3rd January 1896, when the enlarged, time was about to expire, Gaya Prasad paid into Court, the sum of Rs. 15,093, and that sum was taken out by the plaintiffs, the first mortgagees, in discharge of their mortgage. On 3rd August 1897 Gaya Prasad made an application to the Court that a decree for absolute foreclosure of the mortgaged property might be prepared in his favour. The application was dismissed by the Subordinate Judge who held that Gaya Prasad had become the representative of the prior mortgagee under Section 74, T.P. Act, and was entitled to bring a suit for foreclosure, but that he had not acquired the status of a decree-holder. Gaya Prasad then, on 3rd February 1898, filed a suit against Bansidhar, Kunj Behari Lal, the widow and heir of Ghaudhuri Raj Kunwar (then deceased), and the representative of the third mortgagee. The plaintiff prayed for three reliefs: (1) for obtaining a decree absolute without a condition of redemption of mortgage; (2) in the event of the first prayer not being granted, for a. decree under Section 86, T.P. Act, fixing a, specified period, and in the event of noncompliance therewith for a decree absolute; (3) in case the aforesaid two prayers were not granted, then for a decree for Rs. 7,546-8-0 to be passed against, the person and property of Babu Bansidhar, defendant 1. The question as to what relief the plaintiff was entitled and the fact that a decree on the first mortgage had been passed were prominently before their Lordships of the Privy Council. Their Lordships observed on p. 132:
The plaint contains a statement of all the. material circumstances, but the prayer of it is inartificially framed. In the opinion of their Lordships, however, it was sufficient, with the aid of the prayer for further relief, to enable the Court to give the plaintiff the appropriate relief: if he was otherwise entitled to it.
43. So the relief granted by their Lord ships in the case was the appropriate relief to which the plaintiff was entitled in the case where the first mortgage was. paid off by a puisne mortgagee after a decree on the first mortgage had been passed. The relief granted by their Lordships was (see p. 134):
That it should be declared that it appearing that in the events which have happened the appellants, as representatives of Babu Gaya Prasad, the late plaintiff, and the respondent. Babu Bansidhar, defendant 1, as between themselves, have become the owners in equal shares of the village Patara, with the hamlets (naglas) appertaining thereto, in the plaint mentioned, subject to a charge thereon vested in the appellants for Rs. 15,093, being the sum paid into Court by Babu Gaya Prasad on 3rd January 1896 in suit No. 123 of 1893, together with subsequent interest from the last mentioned date on the principal money comprised in that sum, the appellants are entitled to a decree in this suit; that upon the respondent Babu Bansidhar, on. or before a day to be fixed by the Court, paying, to the appellants, or into Court, the sum of Rs. 7,546-8-0, being one moiety of Rs. 15,093, together with future interest at the rate of 8 annas per cent per mensem on Rs. 3,550-8-0, being one moiety of the principal sum of Rupee 7,101 in the plaint mentioned from 3rd January 1896, to the date fixed for such payment, together with the costs. , the appellants shall accept the sum so paid in satisfaction of their said charge on the said property mentioned in the plaint so far as affects the respondent or his share in the said property; but if payment be-not made on or before the said day to be fixed by the Court the respondent shall be absolutely debarred of all right to redeem his said share of: the said property.
44. Their Lordships also observed on p. 133:
Foreclosure is by the decree directed only in the event of the sum named not being paid into Court on or before the prescribed date. And their Lordships think that on payment by Gaya Prasad of the sum into Court before the expiry of the enlarged time, and acceptance of that sum by the plaintiffs, the decree was spent and became discharged and satisfied. There was, therefore, nothing left to be done in the execution department. It is true that Gaya Prasad, having made that payment (as he had the right to do), acquired under Section 74, T.P. Act, all the rights and powers of the mortgagees as such. But this would not have the effect , of reviving or giving vitality to a decree which by the terms of it had become discharged.
45. Their Lordships thus by passing a decree for foreclosure held that the second mortgagee who had paid off the first mortgagee the amount due to him after a decree on the first mortgage, was entitled to establish by a suit his right to enforce the charge under the first mortgage even though it had by that time become merged in a decree. In Parvati Ammal v. Venkatarama Iyer 1925 Mad 80 there was the question of the right of a puisne mortgagee who had paid up an execution sale amount for which the property had been brought to sale on a prior mortgagee's decree. Justice Wallace held 'that the plaintiff (the punisne mortgagee) was subrogated to the decree charge held by the prior mortgagee, i.e. the right to hold the property to sale to discharge the decree debt. Subsequently in the light of the Privy Council ruling in Gopy Narain Khanna v. Bansidar (1905) 27 All 325, referred to above, he had to modify his view in M. Kotappa v P. Raghavayya 192750 Mad 626. He observed at p. 630:
But on further consideration I must admit that the technical difficulties in the way of this view are harder to surmount than those in the way of the view that the charge which the puisne mortgagee is entitled to enforce is the original mortgage charge in its form of a mortgage charge which must be enforced in that form although it has become merged in a decree. This, I think, is the logical result of the decision of the Privy Council in Gopy Narain Khanna v. Bansidar (1905) 27 All 325, which becomes clear when the case is closely studied.
46. In M. Kotappa v P. Raghavayya 1927 50 Mad 626, referred to above, it was held by Wallace and Madhavan Nayar, JJ., that when a puisne mortgagee pays off a decree on a prior hypothecation, he is subrogated to the right of the prior hypothecatee. He is not entitled to enforce the decree as such but can only enforce his charge arising by subrogation. The period within which he should enforce it is 12 years from the date on which a suit on the hypothecation should have been brought and not 12 years from the date of payment.
47. The other case also in point in which payment was made after the decree is Bansidhar v. Shiv Singh 1933 ALJ 1564. There under a mortgage in favour of the plaintiff' money was left with him for payment of a previous mortgage decree of 1906-and he paid the amount due under the previous mortgage decree. In the suit brought by the plaintiff he claimed to recover the amount paid by him as against the defendant, a subsequent mortgagee, who purchased the property in execution of his mortgage decree. It was held that limitation on the previous mortgage of 1906 having run out the plaintiff could hot recover the amount paid by him to discharge the previous mortgage. The plaintiff might have enforced his personal right of reimbursement, under Section 69, Contract Act,. for which there is a shorter period of limitation though it would start from the date of payment; but he could not, claim that the payment made by him created a fresh charge in his favour which gave him a fresh start of limitation as against everybody concerned.
48. The learned Counsel for the appellant has referred to a number of cases in most., of which it was decided that a subsequent mortgagee who redeemed a prior mortgagee acquires a priority over the, intermediate mortgagees. This point is not disputed. It was also urged by the learned Counsel that in some of these cases very old mortgages had been paid off by subsequent mortgagees in respect of which the subsequent mortgagees, who paid them off, were given a right of priority. In those cases no question of limitation arose nor was it considered. If the claim of the subrogee had been-time barred, the question must have been raised and considered; but there is nothing to show that the claim had be come time-barred. Since the point of limitation did not arise and was not considered in these cases, they cannot be regarded as any authority on this point. The only case in point cited by the learned Counsel for the appellant is Shib Lal v, Munni Lal 1922 19 ALJ 840. There it was held:
Where a prior mortgagee sues upon his mortgage, impleading the puisne mortgagee, and obtains a decree for sale, and the puisne mortgagee, pays off and discharges the decree he thereby acquires, on the principle of Section 95 and Section 74,. T.P. Act, a charge upon the property, which he can sue to enforce within 12 years of the date on which he made the payment. He is also entitled, under the provisions of Section 69, Contract Act, to be reimbursed the money by the mortgagors and can sue to recover it from the mortgagors personally within three years of the date of his payment, under Article 61, Lim, Act. He is not an assignee of the prior mortgagee, although his rights may be akin to those of an assignee, and hence the limitation of time within which a suit by the prior mortgagee had to be brought does not apply to him, nor is his suit to enforce the charge acquired by him a suit to enforce the prior mortgage.
49. It was observed on p. 841:
As there was a charge on the mortgagors' property in favour of the first mortgagee, and the second mortgagee, the present plaintiff discharged that charge, he acquired a charge on the property. On the principle of Section 95, T.P. Act, which has been held not to be exhaustive, a co-mortgagor who discharges a mortgage is entitled to a charge on the property of the other mortgagor. On the same principle a second mortgagee who discharges a prior mortgage acquires a charge on the property which he relieves of liability for that mortgage. This is also manifest from the provisions of Section 74.
50. The difference between the provisions of Section 95 and Section 74, T P. Act, seems to have been overlooked. There was a marked contrast between the language of Section 95 which dealt with a co mortgagor and that of Section 74 which dealt with a puisne mortgagee. Section 95 conferred a charge. The definition of the charge, given in Section 100, T.P. Act, shows that the charge is not the same as a mortgage. Section 100 says:
Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property.
51. The right given to a co-mortgagor was therefore not the same as that given be a puisne mortgagee, because a puisne mortgagee could stand upon the original mortgage and enforce all the rights of the prior mortgagee against his mortgagor and subsequent mortgagees, while a co-mortgagor could not. There is a difference between a charge and a mortgage. A charge cannot be enforced against a transferee for' consideration without notice while there is no such restriction in the case of a mortgage. Under a charge a property may always be liable for sale; while in the case of a mortgage it is not so when the mortgage is usufructuary or by conditional sale. In Mahomed Ibrahim Hossain Khan v, Ambika Pershad Singh (1912) 39 Cal 527 their Lordships of the Privy Council held that in a case of a puisne mortgagee who had redeemed the first mortgage his right to stand upon the prior security was not a new right which accrued to him upon his redemption of that security but was one to which Article 132, Lim. Act of 1877, had to be applied counting the period of 12 years from the due date of the original security. Before the amendments the rights of the co-mortgagor, who paid off the entire mortgage debt were not analogous to those of a puisne mortgagee, paying off the prior mortgage, probably on the principle that one of the co-debtors paying off the entire debt is only entitled to contribution from the other debtors. A co-mortgagor was given a right of contribution which he could enforce by a charge on the share of his co-debtors. A puisne mortgagee was placed on a higher footing and was given a right of substitution for the mortgages he paid off, and therefore he was given all the rights and powers of the mortgagee as such in respect of the property comprised in the earlier mortgage which he paid off.
52. This case, Shib Lal v. Munni Lal 1922 19 ALJ 840, is not free from objections and has been dissented from by the Madras High Court in M. Kotappa v P. Raghavayya 1927 50 Mad 626, referred to above, Sibanand Misra v. Jagmohan Lal 1922 1 Pat 780, and by this Court in Bansidhar v. Shiv Singh 1933 ALJ 1564 referred to above. The next case cited in favour of the appellant is Mohammad Abbas Ali Khan v. Chotey Lal 1927 All 28. There the only point considered was the interpretation of Section 89. It was held that a subsequent transferee who pays off the prior mortgagees, who have obtained decrees for sale on their mortgages, is entitled to priority to the extent of the amounts paid as against any intermediate mortgagees. As regards the right of priority, as already stated, there is no question. The third case cited which is in favour of the appellant is Paras Ram v. Mewa Kunwar 1930 ALJ 890. There the following observations were made:
Accordingly the only remedy that was left open to the present plaintiffs who had paid off the prior mortgage of 1903 was, if not to sue on the basis of the mortgage of 1908 of which strictly speaking they were not assignees, to recover the amount by enforcing a charge on the property within 12 years of the date of their payment.
53. For these observations Shib Lal v, Munni Lal 1922 19 ALJ 840, which has been discussed above was taken as an authority. A question incidentally arises as to what would be the effect on the rights of the mortgagors and subsequent mortgagees if a suit is brought by a prior mortgagee for the sale of the property at the close of the period of 12 years and the period expires during the pendency of the suit. In the natural course of things when subsequent mortgages are made, the presumption is that the mortgaged property affords sufficient security for all the mortgages that are made. If it were not So, no subsequent mortgagee would advance any money on the security of a property on which prior mortgages exist. There can be no doubt that a subsequent mortgagee would not care to redeem a prior mortgage, if the 12 years' period for the recovery of the money on the prior mortgage has expired, because it would not be to his advantage to do so. But as the property should be sufficient for all the incumbrances on it, if the property were sold under the first mortgage, there should be no loss to the subsequent mortgagees. So long as the right of a mortgagor or a puisne mortgagee to enforce the security of the prior mortgagee by virtue of subrogation under the present Section 92 or the old Section 74, T.P. Act, is based only upon the right of the prior mortgagee to enforce his security, he has to act within the same period as is allowed under the law to the prior mortgagee. He acquires a right to sue only when he pays off the prior mortgage, but thereby he does not acquire a new cause of action beyond what the prior mortgagee had. Within the 12 years given to him he has to make up his mind as to whether he would redeem the prior mortgage to be subrogated to 'the prior mortgagee's right or not. In Gopy Narain Khanna v. Bansidar (1905) 27 All 325 32 IA 123, their Lordships observed that although the form of decree for foreclosure prescribed by Section 86, T.P. Act, 1882, contemplates a suit between one mortgagee and the mortgagor only, it should in practice be adopted to the particular circumstances of each case, and provide in the case of puisne incumbrancers for the exercise of successive rights of redemption and for working out the rights of parties in the event of redemption by any one of them. So if the prior mortgagee brings a suit when the 12 years' period is about to expire, the puisne mortgagee should take care to get the decree properly drafted in the light of these observations for which forms Nos. 9 and 10 have been provided in Appendix D.
54. The mortgagee's interest is only to recover his money from the property which he would get if the security is sufficient. Ordinarily it is in the interest of the mortgagor to save the property if the encumbrances on it do not exceed its value. The preliminary decree is primarily for the benefit of the mortgagor. If he is inclined and thinks in his interest to save the property from sale and pays off the encumbrance, he would have a right of reimbursement from his co-mortgagors under Section 69, Contract Act, for which he would have three years from the date of payment if the period for enforcing the security has expired. The right to reimbursement should not be confused with the right to enforce a security by virtue of subrogation. These rights stand on different grounds. The person, who claims the right to reimbursement, enforces it in his own right, and not in the right of another. We are not concerned with this right here. The right to enforce a security by virtue of subrogation is a right which equity concedes to a person and it is a right to demand the performance of the original obligation and the application thereto of all securities held by the creditor. It is a claim which is enforced in the right of the original creditor, and only because the person claiming it becomes clothed with the rights and powers of the original creditor. The subrogee is an assignee in equity and he cannot stand on a better footing than an assignee at law. If a creditor assigns his security for valuable consideration to a person who thereupon sues upon the security, it cannot be urged that though the right to enforce the security in the hands of the creditor may be barred by limitation, the assignee may proceed to enforce it if he brings his suit within 12 years from the date of assignment. The right to enforce the security in his own name arises on the date of assignment, but the limitation which has already commenced to run will not cease to operate just because the' creditor has assigned the security to another. A subrogee, whose position is that of an equitable assignee, cannot be better. He can enforce the security in the right of the creditor and therefore subject to the law of limitation that would affect the creditor.
55. My answer therefore is in the negative.