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Seth Chunni Lal Vs. Lakshmi Chand and ors. - Court Judgment

LegalCrystal Citation
Subject Property
CourtAllahabad
Decided On
Reported inAIR1940All237
AppellantSeth Chunni Lal
RespondentLakshmi Chand and ors.
Excerpt:
- - all the defendants were given six months' time from the date of the decree to redeem the plaintiffs' mortgage and in case of their failure to do so the plaintiff was given three months' time from the expiry of the six months aforesaid to pay off the amount of rs. the facts may be somewhat different but the principle is clearly applicable. the defendants are given six months time from today to redeem the plaintiff's mortgage and in case of their failure to do so bharat singh's one-third share in the property in dispute shall be sold. the defendants are given six months time from today to redeem the plaintiff's mortgage and in case of their failure to do so bharat singh's one-third share in the property in dispute shall be sold......mortgage dated 28th april 1922. the defendants to the suit were bharat singh, ranjit singh and ram singh, defendants 1 to 3, who might loosely be described as the original mortgagors, and lachhmi chand, hargu lal and rameshwar das, defendants 4 to 6, who were impleaded as subsequent mortgagees under a mortgage of 19th january 1929. the mortgage was executed by bharat singh in his own right and as the guardian of ranjit singh and ram singh. the defence of ranjit singh and ram singh was that they were separate from bharat singh defendant 1 and the latter had no right to execute the mortgage on their behalf and the mortgaged property so far as their share was concerned was unaffected. defendants 4 to 6 pleaded-and it is only with this plea that i am concerned-that they had priority to the.....
Judgment:

Bajpai, J.

1. This is an appeal by Seth Chunni Lal who was the plaintiff in the Court below and who had brought a suit for the recovery of a sum of Rs. 2800 on the basis of a mortgage dated 28th April 1922. The defendants to the suit were Bharat Singh, Ranjit Singh and Ram Singh, defendants 1 to 3, who might loosely be described as the original mortgagors, and Lachhmi Chand, Hargu Lal and Rameshwar Das, defendants 4 to 6, who were impleaded as subsequent mortgagees under a mortgage of 19th January 1929. The mortgage was executed by Bharat Singh in his own right and as the guardian of Ranjit Singh and Ram Singh. The defence of Ranjit Singh and Ram Singh was that they were separate from Bharat Singh defendant 1 and the latter had no right to execute the mortgage on their behalf and the mortgaged property so far as their share was concerned was unaffected. Defendants 4 to 6 pleaded-and it is only with this plea that I am concerned-that they had priority to the extent of Rs. 3230 because under the mortgage of 1929 the above sum was credited towards an earlier mortgage in their favour of 28th January 1921, a mortgage earlier than the mortgage in suit of the plaintiff.

2. The trial Court held in favour of defendants 2 and 3 and said that defendant 1, Bharat Singh, was not entitled to execute a mortgage on behalf of defendants 2 and 3 and that the property of defendants 2 and 3 was unaffected by the mortgage. It also held in favour of defendants 4 to 6 and declared that they were entitled to priority with respect to the sum of Rs. 3230. On these findings the learned Munsif decreed the plaintiff's suit for Rs. 2800 but exempted defendants 2 and 3 and their share of the property. All the defendants were given six months' time from the date of the decree to redeem the plaintiffs' mortgage and in case of their failure to do so the plaintiff was given three months' time from the expiry of the six months aforesaid to pay off the amount of Rs. 3230 for the prior mortgage of defendants 4 to 6 and in case of such payment being made within the period above mentioned the plaintiff was to be entitled to realize the amount due on the mortgage in suit as also the sum of Rs. 3230 plus the costs of the suit by sale of Bharat Singh's 1/3rd share in the property in dispute. There was an appeal by the plaintiff, and the lower Appellate Court confirmed the decree of the trial Court.

3. In second appeal before us it is contended that defendants 4 to 6 are not entitled to any priority. For the rest no grievance is made so far as the decrees of the Courts below are concerned. The submission on behalf of the plaintiff is that defendants 4 to 6 are mortgagees under the mortgage of 19th January 1929 and to that extent their mortgage is subsequent to the plaintiff's mortgage of 28th April 1922. The mortgage of 19th January 1929 was executed for a sum of Rs. 5500 and out of this, Rs. 3230 was credited towards a mortgage of 28th January 1921 in favour of defendants 4 to 6 and a sum of Rs. 1200 was left for payment to the present plaintiff upon his mortgage of 28th April 1922. It is contended on behalf of the plaintiff-appellant that the mortgagees of 1929 are not entitled to subrogation so far as the sum of Rs. 3230 is concerned and reliance is placed on Section 92, T.P. Act (Act 4 of 1882 as amended by Act 20 of 1929). Section 92 provides amongst other things:

A person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such persons shall be so subrogated.

4. This provision of law means that before a subsequent mortgagee can claim to be subrogated to the rights of a prior mortgagee to whom money has been paid under the terms of the subsequent mortgage there must be a registered instrument agreeing to such subrogation. This was the view taken by a Full Bench of this Court in Hira Singh v. Jai Singh (1987) 24 AIR All 588, to which I was a party. It was held in that case that

where a person himself redeems a mortgage, that is to say, pays the mortgage money out of his pocket and not merely discharges a contractual liability to make the payment he is entitled to the rights of subrogation under Para. 1 if he is one of the persons enumerated in Section 91. But where the person does not himself redeem the mortgage, that is to say, does not himself pay the money out of his own pocket in excess of his contractual liability but advances money to a mortgagor and the money is utilized for payment of a prior mortgage, whether the money is actually paid through the hands of the mortgagor or is paid through the hands of the mortgagee, the latter acquires the right of subrogation only if the mortgagor has by a registered instrument agreed that he shall be so subrogated. In this view when a person with whom money has been left for payment to a prior mortgagee pays it off, he is really not himself redeeming the mortgage but redeeming it as the agent of the mortgagor and has in substance advanced money to the mortgagor with which the mortgage has been redeemed. He cannot get the rights of subrogation unless there is a written and registered agreement to that effect.

5. Applying the above principle to the facts of the present case it is clear that the subsequent mortgagees of 1929, namely defendants 4 to 6, cannot be subrogated to their rights under the prior mortgage of 28th April 1922, because there is no written and registered agreement to that effect, and the view taken by the Courts below is not sound. It was contended on behalf of the respondents defendants 4 to 6 that the facts of the Full Bench case just now mentioned were slightly different from the facts of the present case and in any event Section 101, T.P. Act, was not discussed by the Full Bench. The facts may be somewhat different but the principle is clearly applicable. Section 101, T.P. Act, says:

Any mortgagee of, or person having a charge upon, immovable property, or any transferee from such mortgagee or charge holder, may purchase or otherwise acquire the rights in the property of the mortgagor or owner, as the case may be, without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee of, or person having a subsequent charge upon, the same property; and no such subsequent mortgagee or charge holder shall be entitled to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto.

6. The argument is that defendants 4 to 6 were mortgagees under the mortgage of 20th January 1921 and they in 1929 acquired the rights in the property of the mortgagor or owner by the mortgage of 19th January 1929 and therefore they did not cause the earlier mortgage of 1921 to be merged as between themselves and the plaintiff who was the subsequent mortgagee under the mortgage of 28th April 1922. This argument assumes that when defendants 4 to 6 took the mortgage of 1929 they acquired the rights in the property of the mortgagor or owner. In my view it is clear that in 1929 defendants 4 to 6 obtained only a mortgage and did not acquire the rights in the property of the mortgagor or owner. Section 101, T.P. Act, has therefore no application to the facts of the present case.

7. It was then argued that Section 92, T.P. Act, had no retrospective effect inasmuch as all the transactions with which one has to deal in the present case took place before the Amending Act of 1929 and therefore the condition laid down in Section 92 that subrogation could be had only under Clause 3 of the Act by means of a registered instrument did not apply. The simple reply to this is that the point was considered in the Full Bench case in Hira Singh v. Jai Singh (1987) 24 AIR All 588, to which reference has already been made, and it was held there that effect ought to be given to the language of the Act as it stands and those Sections of the Transfer of Property Act which are not dealt with in the Sections enumerated in Section 63, Amending Act, have retrospective effect at least where no action was pending on 1st April 1930. Section 92 is not one of the Sections enumerated in Section 63 of the Amending Act and the present action was not pending on 1st April 1930 but was instituted on 8th May 1934. The position therefore is that Section 92, T.P. Act, applies to the present action and the plaintiff is justified in saying that by reason of that provision defendants 4 to 6 have no priority so far as his mortgage of 28th April 1922 is concerned. For the reasons given above I would allow this appeal with costs against defendants 4 to 6 in all Courts and modifying the decrees of the Courts below substitute the following decree;

8. The plaintiff's suit for the amount claimed is decreed with costs future and pendente lite interest at the contractual rate till 26th July 1935 and then at Rs. 6 per cent. per annum. The decree is ex parte against defendant 1. Defendants 2 and 3 are exempted. The defendants are given six months time from today to redeem the plaintiff's mortgage and in case of their failure to do so Bharat Singh's one-third share in the property in dispute shall be sold. A preliminary decree for sale will now be drawn up under Order 34, Rule 4, Civil P.C., on the lines indicated above. The plaintiff is entitled to his costs against defendants 1, 4, 5 and 6 in all Courts.

Iqbal Ahmad, J.

9. In view of the Full Bench decision referred to by my learned brother which is binding on me, I agree in the order proposed. But for the Full Bench decision, I would not have assented to the proposition that all the Sections of the Transfer of Property Act that are not enumerated in Section 63, Amending Act (20 of 1929) have retrospective effect and in particular I would have held that para. 3 of Section 92, T.P. Act, has no retrospective effect. I note that on the question whether the amended Section 92 has retrospective effect there is great divergence of judicial opinion and speaking generally the Madras, Rangoon, Patna and Nagpur High Courts have held that the Section is not retrospective, while this Court and the Calcutta and Bombay High Courts and the Oudh Chief Court have taken the view that that Section is retrospective in effect except in proceedings pending on 1st April 1930, on which the Amending Act came into force.

10. The appeal is allowed and in modification of the decrees passed by the Courts below the following decree is substituted. The plaintiff's suit for the amount claimed is decreed with costs future and pendente lite interest at the contractual rate till 26th July 1935 and then at Rs. 6 per cent. per annum. The decree is ex parte against defendant 1. Defendants 2 and 3 are exempted. The defendants are given six months time from today to redeem the plaintiff's mortgage and in case of their failure to do so Bharat Singh's one-third share in the property in dispute shall be sold. A preliminary decree for sale will now be drawn up under Order 34, Rule 4, Civil P.C., on the lines indicated above. The plaintiff is entitled to his costs against defendants 1, 4 to 6 in all Courts.


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