1. The facts are fully set out in the referring order. Gyan Singh, respondent, had executed three deeds of simple mortgage in favour of the plaintiff appellant on 8-11-1928, 13-12-1930 and 22-6-1931. The total amount borrowed under these three deeds was Rs. 1,600. In the year 1933 the plaintiff appellant filed a suit, No. 350 of 1933, on foot of the three mortgages and prayed for a decree for sale. The suit was decreed on 11-12-1933. The decree-holder found that there was a prior mortgage dated 17-2-1928, executed by the defendant respondent Gyan Singh in favour of Larhaiti Lal. This mortgage was for Rs. 1,400 with interest at 9 per cent, per annum. The amount was payable within eighteen months from the date of the mortgage.
2. As the property was not likely to fetch proper value if it was sold subject to the first mortgage, the plaintiff appellant decided to deposit the amount due to the first mortgagee, Larhaiti Lal, and he made a deposit of Rs. 2,825, the full amount due to the mortgagee, on 6-1-1934, under Section 83, Transfer of Property Act. Larhaiti Lal accepted the money and the first mortgage was thus redeemed.
3. The suit out of which this appeal has arisen was filed on 1-8-1942, in the Court of the Munsif of Kanauj being suit No. 266 of 1942, for the recovery of the sum of as. 2,325 with interest thereon by the enforcement of the charge. The defendant mortgagor Gyan Singh, raised several objections. It is, however, necessary to mention only three of them now.
4. The first objection was that Gyan Singh was an agriculturist and he was, therefore, entitled to claim the benefits of the U.P. Debt Redemption Act (XIII of 1940). Secondly he pleaded that for the purposes of calculation of interest the sum of Rs. 1,400, which was the amount borrowed, should be treated as the principal sum and not Rs. 2, 325, the amount paid by the plaintiff, Ishwar Dayal. Lastly he pleaded that the suit was barred by limitation.
5. The trial Court overruled all the objections of the defendant and decreed the suit for the full amount claimed, that is Rs. 3,200.
6. The defendant appealed, and the lower' appellate Court held that the defendant was entitled to the benefits of the Debt Redemption Act, that the principal sum borrowed was only Rs. 1,400 and that the plaintiff's suit was not barred by limitation. The lower appellate Court, therefore, reduced the amount and gave the plaintiff a decree for Rs. 2,360-12-0 only.
7. The defendant has submitted to the decree. The plaintiff has filed this second appeal, and on behalf of the plaintiff it is claimed that the lower appellate Court was not justified in applying the provisions of the U.P. Debt Redemption Act and in giving the plaintiff a decree for Rs. 2,360-12-0. The plaintiff appellant claims that he should be given a decree for the whole amount claimed by him, that is, for a sum of Rs. 839-4-0 more.
8. The first question that we have, therefore, to consider is whether the plaintiff is entitled to claim the whole amount of Rs. 3,200. In case we come to the conclusion that the plaintiff is entitled to claim the whole amount, we have to consider whether the claim was barred by time. Though in view of the fact that the defendant has not appealed we cannot interfere with the decree passed by the lower appellate Court, the defendant is entitled to resist the appeal for the excess amount of Rs. 839-4-0 claimed in this appeal on the ground that as the suit was barred by limitation the claim for this sum of Rs. 839-4-0 at least should be dismissed.
9. It is not denied that the defendant mortgagor is an agriculturist and it is further admitted that if the suit had been filed by the mortgagee, Larhaiti Lal, for the money due on the mortgage dated 17th February 1928, the mortgagor would have to pay the sum that has been decreed by the lower appellate Court. It is, however, urged that on 6th January 1934, Ishwar Dayal' paid off the first mortgage dated 17th February 1928, and the mortgage came to an end and, therefore, a statutory right was created in favour of Ishwar Dayal by reason of this payment to claim from the mortgagor the sum of Rs. 2325 that he had paid to the first mortgagee with interest at the rate provided for in the mortgage. This argument is advanced on the ground that the sum of Rs. 2325 paid by Ishwar Dayal to Larhaiti Lal on 6th January 1934, is not a 'loan' within the meaning of Section 2, Sub-section (9), U.P. Debt Redemption Act, and that the observations in the judgment of the learned Chief Justice in Munna Lal v. Chunni Lal : AIR1945All239 are that the effect of a payment by a person who is, entitled to redeem a mortgage under Section 91, T.P. Act, is that the prior mortgage is discharged and extinguished and a fresh charge is created in favour of the person making the payment from the date of redemption.
10. Section 92, T. P. Act (4 [IV] of 1882) as amended by Act 20 [xx] of 1929, is as follows:
Any of the persons referred ft in Section 91 (other that 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 ha redeems may have against the mortgagor or any other mortgagee....
11. There is nothing in this section which would, in any way, affect the liability of the mortgagor. As a matter of fact, the section provides that the person making the payment will have the same rights as the mortgagee whose mortgage he redeems. If we had, therefore, the provisions of the Transfer of Property Act alone to interpret, it would be impossible to argue that by reason of the payment made to a prior mortgagee by any of the persons other than the mortgagor who had the right to redeem under Section 91, the mortgagor's liability was, in any way, increased and he had to pay more than he would have had to pay to the mortgagee himself.
12. The Debt Redemption Act was passed to give relief to agriculturists debtors and it should, therefore, be interpreted, as far as possible, in their favour. As I understand the law of subrogation in this country, by payment of the prior mortgage by a puisne mortgagee certain statutory rights are created in favour of the person making the payment, but the mortgagor's lights are not affected and he cannot claim that so far as he is concerned the debt has been paid off. There is at best a legal substitution of one creditor by another. It may be that the creditor has an extended period of limitation about which I would not like to express any opinion unless it is necessary to do so.
13. There can be no doubt that the sum of Rs. 1400 borrowed by the mortgagor defendant Gyan Singh from the first mortgagee, Larhaiti Lal was a 'loan'. Larhaiti Lal may have been paid off by Ishwar Dayal, but so far as Gyan Singh was concerned the 'loan' remained outstanding and ii was recoverable from the agriculturist or from the property of the agriculturist, it may be not by Larhaiti Lal but by Ishwar Dayal, but I do not see why that should make any difference. If Larhaiti Lal had died and his legal heirs had brought a suit it would be impossible to argue that the debt of Rs. 1400 had ceased to be a 'loan'. Larhaiti Lal may not have died, but qua this mortgage his rights had come to an end [and] those rights had vested in Ishwar Dayal. Ishwar Dayal, to my mind, cannot claim any higher rights than Larhaiti Lal. As a matter of fact, Section 92, T.P. Act, itself provides that the person subrogated shall have the same rights as the mortgagee whom he had paid off. In that view of the matter, the principal sum borrowed would be only Rs. 1400 and it must be deemed to be a suit on a loan to which Rs. 9, U.P. Debt Redemption Act, was applicable. The plaintiff was, therefore, entitled to claim only the sum of Rs. 2360-12-0 the amount decreed by the lower appellate Court.
14. In the above view of the matter it is not necessary to express any opinion as regards the period of limitation. The question of limitation would not arise in view of the fact that even if we were to accept the contention of learned Counsel for the respondent that there was no fresh cause of action from which the period of limitation could be reckoned on 6th January 1934, when the plaintiff paid off the first prior mortgage, the suit would be within time. The mortgage was executed on 17th February 1928, the amount due under the mortgage was payable on 17th August 1929, and the limitation would, therefore, expire on 17th August 1941. The Temporary Postponement of Execution of Decrees Act, 1937 (10 [x] of 1937), however, came into force and remained in force up till 31st January 1940, when it was repealed by the U.P. Debt Redemption Act. This period of about three years has to be excluded in suits against agriculturists by reason of Rule 5 of the Act which provides that:
In computing the period of limitation prescribed by the Limitation Act, 1908, or any other law for the time being in force, for (a) the institution of a suit in a Civil Court against an agriculturist for money or for foreclosure or sale in enforcement of a mortgage, and (b) the execution of such decree as is referred to in Section 3, and not covered by Section 6, the period during which this Act shall remain in force, shall be excluded.
15. The suit would, therefore, have been within time up to 1944 and could not be barred by limitation.
16. For the reasons given above, I would dismiss this appeal with costs.
Raghubar Dayal, J
17. I agree with the order proposed to be passed by my Lord the Chief Justice.
18. The facts are given in his judgment and the main point urged on behalf of the appellant is that his suit was not based on a loan as it was not a suit on the basis of the mortgage executed by Gyan Singh in favour of Larhaiti Lal on 17th February 1958 for Rs. 1400, but was to enforce the rights given to the appellant under Section 92, T. P. Act, on account of his having redeemed the property which had been mortgaged to Larhaiti Lal under the mortgage in his favour. I do not agree with this contention. The rights which the appellant, a puisne mortgagee, acquired under Section 92, T.P. Act, on redeeming the property are the same rights as the mortgagee whose mortgage he redeems might have against I the mortgagor or any other mortgagee, so far as regards redemption, foreclosure or sale of such property. Whatever those rights may be, it cannot be disputed that they are such rights as the mortgagee whose mortgage is redeemed possessed. It would follow, therefore, that the rights which the appellant acquired under Section 92, T.P. Act, are the rights which arose under the mortgage-deed executed by Gyan Singh in favour of Larhaiti Lal. This suit must, therefore, be a suit to enforce the rights which arose under that mortgage deed. The rights of a simple mortgagee include a right to realise the mortgage money by sale of the mortgaged property within the period of limitation allowed by law. The mortgagee's original rights could be subject to such laws of the land as would apply to him. It is by virtue of the mortgagee's rights which the appellant acquired that he can base his claim to recover the money he paid by sale of the property. Section 92, T.P. Act, does not say that the person who redeems any mortgage will get a right to recover the money paid by him and will have a charge over the property which had been mortgaged for the recovery of his money. It cannot, therefore, be said that this suit by Ishwar Dayal appellant is a suit to enforce a new right which is conferred by Section 92, T.P. Act, and which is to recover the money paid by him to the mortgagee whose mortgage is redeemed and to have a charge over the property which had been mortgaged for the recovery of his money. I have, therefore, no hesitation in holding that this is a suit on the basis of a loan which was originally advanced by Larhaiti Lal to Gyan Singh, the mortgagor, and that, therefore, this is a suit to which the Debt Redemption Act of 1940 applies.
19. In view of the above opinion the decree of the Court below is correct, it being based on the original principal sum and interest calculated at the rate allowed under the Debt Redemption Act and not on the contractual rate.
20. The question whether the suit was within limitation or not does not now arise as the defendant mortgagor has submitted to the decree passed against him.
21. I would, therefore, dismiss the appeal with costs.
Bind Basni Prasad, J.
22. I have had the advantage of going through the judgments of his Lordship the Chief Justice and my brother Dayal J. I agree with the conclusions reached by them and desire to add a few words.
23. The first point for consideration is whether the sum recoverable by the plaintiff-appel-lant from Gyan Singh is or is not a 'loan' as defined by Sub-section (2) of Section 2, U.P. Debt Redemption Act, 1940. If it is a 'loan' Gyan Singh is entitled to all the benefits of the Act including the reduction of interest and the non-saleability of the property under Section 17 of the Act, otherwise not. It is undisputed that the advance made by Larhaiti Lal to Gyan Singh was a 'loan', and if the present suit had been brought by him on the foot of the mortgage of 17th February 1928, Gyan Singh would have been entitled to the benefits of that Act. Has Gyan Singh been deprived of the benefits of the Act because the plaintiff-appellant redeemed that mortgage on 6th January 1934, by virtue of the rights vested in him under Section 91, T.P. Act, and because instead of Larhaiti Lal the present appellant is now the plaintiff? Did the transaction cease to be one in respect of 'loan' on this material date of 6th January 1934? Was there any fresh contract on this date? I would answer all these questions in the negative. It is plain enough that there was no fresh contract between the parties when the appellant redeemed the mortgage in 1934. He did so by virtue of the statutory provisions contained in Section 91, T.P. Act, and not by reason of any consent on the part of Gyan Singh. When there is no consent from Gyan Singh there can be no fresh contract. The appellant acquired the rights to recover the amount because he was subrogated to the position of the original mortgagee, Larhaiti Lal, under Section 92, T.P. Act. According to that section he has the same rights, inter alia regarding sale as Larhaiti Lal possessed, that is to say he can ask for the recovery of his money by sale of property only for so much amount as for which Larhaiti Lal could have asked for and not for any larger sum. If the supervening legislation deprived Larhaiti Lal of a portion of interest and of his right to put the property to sale, the appellant too cannot put it to sale. Eights and liabilities go together. If by the subrogation the appellant acquired the rights of Larhaiti Lal he became subject to corresponding liabilities arising out of supervening legislation as in respect of which Larhaiti Lal would have been subject if he had brought the present suit for sale on the basis of the mortgage of 17th February 1928. Gyan Singh is entitled to claim from the appellants the same rights which he could have claimed from Larhaiti Lal. The transaction continues to be one of 'loan'. The same rights and liabilities exist between the appellant and Gyan Singh as between Larhaiti Lal and Gyan Singh.
24. As regards the point of limitation, it is not necessary to express any opinion upon the Full Bench cases in Alam Ali v. Beni Charan 23 : AIR1936All33 and Munna Lal v. Chunni Lal 32 : AIR1945All239 to which we have been referred. It was held in those cases that a puisne mortgagee who redetms a prior mortgage had a period of twelve years for a suit for the recovery of the money paid by him from the date of the accrual of the cause of action to him.
25. As pointed out by his Lordship the Chief Justice the present suit is within time by virtue of the provisions of Section 5, Temporary Postponement of Execution of Decrees Act, 1937 (10 [x] of 1937.)
26. The appeal be dismissed with costs.