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Kunjayamma Kartaiyayani Amma Vs. Kunchali Karthiyayani Madakkavil, Veedu and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKerala High Court
Decided On
Case NumberA.S. Nos. 690, 691 and 692 of 1963 and 23 of 1964 and S.A. No. 1170 of 1964
Judge
Reported inAIR1970Ker289
ActsTravancore-Cochin High Court Act, 1125 - Sections 23; Transfer of Property Act, 1882 - Sections 60 and 92; Travancore Limitation Act, (1100 ME) - Schedule - Article 136; Limitation Act, 1908 - Article 144
AppellantKunjayamma Kartaiyayani Amma
RespondentKunchali Karthiyayani Madakkavil, Veedu and ors.
Appellant Advocate T.S. Venkiteswara Iyer, Adv.
Respondent Advocate K.N. Narayanan Nair, Adv.
DispositionAppeals allowed
Cases ReferredIn Prithi Nath Singh v. Suraj Ahir
Excerpt:
- - 710 of 1121 which were instituted well within 12 years, whether the said period be calculated from the date of discharge of the mortgage debt or from the date on which defendants 1 to 4 obtained delivery of possession in execution of the decree in o. hence sections 92 and 95 of the said act are not applicable in terms to the present case, and the question has to be decided in accordance with principles of justice, equity and good conscience. it therefore becomes necessary to examine the true scope and content of the equitable doctrine of subrogation, the purpose and principle behind it and the conditions for its applicability in cases, like the present, not governed by a statute. 14. the law on the subject as laid down by the decisions of english and american courts has been.....balakrishna eradi, j.1. these appeals which raise common questions and were heard together by a division bench consisting of my learned brothers isaac and narayana pillai, jj. have come up before me on a reference by my lord the chief justice under section 23 of the travancore-cochn high court act, 1125 (act v of 1125) in view of the different opinions expressed in the separate judgments delivered by the two learned judges constituting the division bench. under the terms of section referred to above the scope of enquiry before me is limited to a consideration of those matters on which the learned judges have disagreed.2. a. s. 690 of 1963 arises out of o. s. 83 of 1120 of the munsiff's court, quilon and the appellant before this court is the plaintiff. a. s. 691 of 1963 arises out of o......
Judgment:

Balakrishna Eradi, J.

1. These appeals which raise common questions and were heard together by a Division Bench consisting of my learned brothers Isaac and Narayana Pillai, JJ. have come up before me on a reference by my Lord the Chief Justice under Section 23 of the Travancore-Cochn High Court Act, 1125 (Act V of 1125) in view of the different opinions expressed in the separate judgments delivered by the two learned Judges constituting the Division Bench. Under the terms of Section referred to above the scope of enquiry before me is limited to a consideration of those matters on which the learned Judges have disagreed.

2. A. S. 690 of 1963 arises out of O. S. 83 of 1120 of the Munsiff's Court, Quilon and the appellant before this Court is the plaintiff. A. S. 691 of 1963 arises out of O. S. 1096 of 1120 of the Munsiff's Court, Quilon and the second plaintiff is the appellant A. S. 692 of 1963 arises out of O. S. 710 of 1121 on the file of the Munsiff's Court, Quilon and the legal representative of the original plaintiff is the appellant. A. S. 23 of 1964 arises out of O. S. 79 of 1120 of the Munsiff's Court Quilon and here also the legal representative of the deceased plaintiff is the appellant. S. A. 1170 of 1964 arises out of O. S. 681 of 1957 on the file of the Munsiff's Court, Quilon and the plaintiffs are the appellants.

3. The common subject-matter of all these appeals is a plot of land 42 cents in extent situated in Quilon. Admittedly, this property belonged to one Kurumpa. She had two sons Kesavan and Narayanan and four daughters Kunchekki, Lakshmi, Parvathi and Nangeli. The parties belong to the Kammala community and are admittedly governed by Hindu Law as modified by custom. On the 6th Edavam, 1062 a mortgage was executed as per Ext. C by Kesavan, Narayanan, Kunchekki and Nangeli jointly along with Appili, daughter of Lakshmi who was by then dead, and Unichekki, daughter of Parvathi who was also deceased by that time. The mortgagee was one Muhammed Kunju and the amount borrowed was 1100 fs. The mortgage was for a term of 5 years and there was a stipulation for an annual payment of 40 fs. only by way of michavaram. On 20-9-1065 four udampadies were executed by Kesavarn as per Exts. B, D and E and Ext. P1 (marked in O. S. 681 of 1957 only) in favour of Kumchekki, Appili, Unichekki and Nangeli respectively, giving to each of them a 1/6th share in the equity of redemption of the property covered by Ext. C reciting that these documents were being executed in implementation of a partition arrangement which had been already entered into between the parties. The remaining 2/6th share in the equity of redemption was reserved for Kesavan and Narayanan.

4. In 1116 Kesavan's son Kunjn Pillai and his children instituted a suit O. S. 639 of 1116 on the file of the Munsiff's Court, Quilon for recovery of possession of the suit property from the possession Of the mortgagee contending that the mortgage debt had become discharged by set off against large arrears of michavaram due from the mortgagee, that in spite of demand having been made on the mortgagee to surrender possession of the property along with the balance amount which was due to the mortgagor by way of arrears of michavaram after effecting a set off of the mortgage amount the mortgagee had not surrendered possession of the property and that therefore the plaintiff should be given a decree for recovery of possession of the property with arrears of michavaram amounting to 846 fs. and future mesne profits from the date of suit.

That suit was decreed as per Ext. H. judgment dated 29-12-1118 upholding the claim of the plaintiffs that the entire mortgage amount had become wiped out by set off against the arrears of michavaram. The Court found that the contention of the plaintiffs that 846 fs. remained payable by the mortgagee by way of arrears of michavaram even after adjustment of the entire mortgage debt was true, but, nevertheless, held that under the law of limitation the plaintiffs could legally recover such arrears only for a period of six years immediately preceding the suit. Accordingly the plaintiffs were granted a decree for recovery of 240 fs. from the assets of the defendants by way of arrears of michavaram and in addition future mesne profits from the date of suit at the rate of Rs. 25 per year. Kunju Pillai had died during the pendency of the aforesaid suit. His widow and sons obtained delivery of possession of the property in execution of the above decree on 30-12-1119.

5. The suits which have given rise to these appeals have been instituted by the legal heirs of the other five children of Kurumpa, namely Narayanan, Kunchekki, Lakshmi, Parvathi and Nangeli claiming to recover the l/6th share belonging to each of the five branches on the basis of the udampadies Exts. B, D, E and P1 executed by Kesavan. O. S. 79 of 1120 which has given rise to A. S. 23 of 1964 is the suit by Narayanan's son for recovery of his half share in the 2/6th part which had been jointly set apart for Kesavan and Narayanan after making the four dispositions as per Exts. B, D, E and Ext. P1. O. S. 83 of 1120, O. S. 1096 of 1120 and O. S. 710 of 1121 have been instituted by the respective representatives of the branches of Parvathi, Lakshmi and Kunchekki each claiming an 1/6th share on the strength of the udampadies Exts. E. D and B respectively. In all these suits the widow and children of Kunju Pillai (son of Kesavan) have been impleaded as defendants 1 to 4 and the relief of recovery of possession has been claimed against them. O. S. 681 of 1957 out of which S. A. 1170 of 1964 has arisen is a similar suit filed by the children of Nangeli claiming recovery of 1/6th share of the property from the same defendants.

6. O. S Nod. 79 of 1120, 83 of 1120, 1096 of 1120 and 710 of 1121 were tried jointly. The common contentions taken by the defendants were that the udampadies relied on by the plaintiffs had not taken effect and that the plaintiffs had not derived any valid right to the plaint property under the documents evidenceed by Exts. B, D and E, that in any event the defendants having redeemed the mortgage evidenced by Ext. C had been subrogated to the position of the mortgagee under that document and that the present suits which have been instituted beyond the period of 50 years after the expiry of the term fixed in Ext. C are barred by limitation. The trial court rejected these contentions of the defendants and decreed the suits as prayed for.

On appeal therefrom by the defendants, the Subordinate Judge set aside the decision of the trial court and allowed the appeals holding that the suits were barred under Article 136 of the Travancore Limitation Act, 1100. Second appeals were filed before this court by the plaintiffs in all the four suits challenging the correctness of the Subordinate Judge's decision. Velu Pillai, J. by judgment dated 28-8-1963 dismissed the second appeals upholding the view taken by the Subordinate Judge that the suits were barred by time under Article 136 of the Travancore Limitation Act. The learned Judge, however, granted the prayer of the appellants for leave to file appeals before a Division Bench. A. S. Nos. 690 to 692 of 1963 and A. S. No. 23 of 1964 have accordingly been preferred by the respective plaintiffs challenging the aforesaid decision of Velu Pillai, J.

7. When O. S. 681 of 1957 was instituted by the representatives of Nangeli the appeals filed by the defendants before the Subordinate Judge's Court challenging the decision of the Munsiff's Court in the earlier suits were pending. But by the time this suit was taken up for hearing, the Subordinate Judge had disposed of those appeals upholding the defendants' contention that the suits were barred under Article 136 of the Travancore Limitation Act. In the light of that decision, the Munsif dismissed this suit also on the ground that it was barred by limitation under Article 136 of the Limitation Act. It was further held that even if for any reasons there was no bar under Article 136 of the Limitation Act and the suit was to be regarded as one not for redemption but only for recovery of possession, the plaintiffs had still to be non-suited on the ground that the defendants had perfected their title to the plaint property by adverse possession under Article 144 of the Limitation Act inasmuch as the suit had been filed after the lapse of 12 years from the date of delivery of possession of the property in execution of the decree in O. S. 639 of 1116. This decision of the trial court was confirmed on appeal by the Subordinate Judge and hence the plaintiffs have preferred S. A. 1170 of 1864. In view of the common questions involved, this second appeal was heard by the Division Bench along with the four other appeals and, as already noticed, the two learned Judges have disagreed and delivered separate judgments.

8. Isaac, J. has taken the view that since the mortgage debt due under Ext. C had become discharged by its being set off against the arrears of michavaram, there was no subsisting mortgage to be redeemed when O. S. 639 of 1116 was instituted and that therefore the decree passed therein cannot be regarded as one for redemption but only as one for recovery of possession of the property from the erstwhile mortgagee. Accordingly, the learned Judge has held that the present defendants 1 to 4 who took delivery of possession of the property in execution of the decree in O. S. 639 of 1116 cannot be regarded as co-mortgagors who have redeemed the entire mortgage and that they are not therefore entitled to invoke the principle of subrogation in their favour. In this view, the learned Judge held that the present suits claiming recovery of the plaintiffs' shares in the suit property from defendants 1 to 4 are not governed by Article 136 of the Travancore Limitation Act since they cannot be regarded as suits for redemption filed against a redeeming co-mortgagor who has become subrogated to the position of the mortgagee.

Accordingly, the learned Judge has expressed the conclusion that the first four suits namely O. S. 79 of 1120, O. S. 83 of 1120, O. S. 1096 of 1120 and O. S. 710 of 1121 which were instituted well within 12 years, whether the said period be calculated from the date of discharge of the mortgage debt or from the date on which defendants 1 to 4 obtained delivery of possession in execution of the decree in O. S. 639 of 1116, are not barred by limitation and that the contrary view taken by Velu Pillai, J. is not correct. In regard to O. S. No. 681 of 1957 out of which S. A. 1170 of 1964 has arisen, the learned Judge held that the plaintiffs' claim for recovery of possession of their shares in the suit property is time-barred since this suit has been filed only after the expiry of 12 years even from the date of recovery of the property by defendants 1 to 4. But, with respect to the prayer of the plaintiffs in this suit for a permanent injunction restraining the defendants from interfering with the plaintiffs' possession of a house in the suit property, the learend Judge held that notwithstanding the circumstance that their suit for recovery of possession is time-barred, they would be entitled to a decree for injunction in respect of the house in case they are found to have been residing therein at the time of institution of the suit.

The learned Judge, however, felt that there has not been a proper investigation by the courts below of the factual question as to whether the plaintiffs were actually in possession of the said house as on the date of the institution of the suit and hence considered that a remand of the suit is necessary for determining this question afresh. The learned Judge, has, therefore, expressed the conclusion that the decree passed by the courts below dismissing the suit in toto should be set aside and the matter remitted to the Subordinate Judge's Court for the limited purpose mentioned above.

9. Narayana Pillai, J., on the other hand, has taken the view that the mortgage Ex. C cannot be regarded as a 'self-redeeming mortgage' and that the mortgage debt did not therefore automatically get extinguished on non-payment of michavaram. According to the learned Judge, the mortgage became extinguished only by virtue of the decree for redemption in O. S. 639 of 1116 the debt having become wiped off only when the court allowed the set-off of the mortgage amount against the arrears of michavaram, and that hence the defendants should be regarded as co-mortgagors who have obtained possession of the property after redeeming the entire mortgage.

The learned Judge has further expressed the view that even though the defendants had not to pay anything to the mortgagee for effecting redemption, they were, nonetheless, entitled to invoke the doctrine of subrogation and to retain possession of the property as mortgagees until they were properly redeemed by the other co-mortgagors. Accordingly, he has held that Article 136 of the Travancore Limitation Act is applicable to the case and that since all the suits have been instituted only after the expiry of the period of 50 years prescribed by the said Article, the plaintiffs' rights to recover possession of their respective shares in the suit property had become barred and the suits had been rightly dismissed.

In regard to the prayer of the plaintiffs in O. S. 681 of 1957 for a permanent injunction restraining the defendants from interfering with their possession of the building on the suit property, the learned Judge has held that the plaintiffs would not be entitled to the relief of injunction unless they establish their title to the said building and in view of his having found that the right of the plaintiffs to recover possession of the property had become extinguished under Article 136 of the Travancore Limitation Act, the plaintiffs' claim for the relief of injunction was also negatived. In the result the learned Judge has expressed the conclusion that all the appeals should be dismissed.

10. Thus, the two learned Judges constituting the Division Bench have come to divergent conclusions on the following two questions.

1. Whether the four suits which have given rise to A. S. Nos. 690, 691 and 692 of 1963 and 23 of 1964 are barred by Article 136 of the Travancore Limitation Act?

2. Whether the plaintiffs in O. S. 681 of 1957 (out of which S. A. 1170 of 1964 has arisen are entitled to the relief of permanent injunction in respect of the building on the suit property notwithstanding the fact that their claim for recovery of possession or rest of the property has become barred by limitation?

Both the learned Judges have concurred in holding that the claim of the plaintiffs in O. S. No, 681 of 1957 to recover possession of the suit property is barred by limitation and that the said suit in so far as it seeks that relief has been rightly dismissed by the courts below. Counsel appearing for the appellants in S. A. 1170 of 1964 contended that the two learned Judges have disagreed even in regard to this matter since Isaac, J. has held the suit to be barred only by applying Article 144 of the Indian Limitation Act whereas Narayana Pillai, J. has treated the suit as one for redemption and held it to be barred under Article 136 of the Travancore Act.

11. Section 23 of the Travancore-Cochin High Court Act, 1125 under which these appeals have been referred for my opinion, is in the following terms:

'Where two Judges forming a Division Bench agree as to the decree, order or sentence to be passed, their decision shall be final. But if they disagree, they shall deliver separate judgments and thereupon the Chief Justice shall refer, for the opinion of another Judge, the matter or matters on which such disagreement exists, and the decree, order or sentence shall follow the opinion of the majority of the Judges hearing the case.'

Under this Section, that part of the subject-matter of the appeal respecting which the two learned Judges forming the Division Bench are in agreement 'as to the decree to be passed' is outside the scope of the reference and it is only in respect of those matters on which there has been a disagreement between them that the third Judge to whom the reference is made is called upon to state his opinion. Inasmuch as both the learned Judges have agreed as to the decree to be passed in the suit O. S. 681 of 1957 in so far as it relates to the plaintiffs prayer for the relief of recovery of possession of the property, I do not think it is open to the learned counsel for the appellants to re-agitate that question before me. When the Judges constituting the Division Bench have agreed as to the ultimate decree to be passed, their decision is declared by Section 23 to be final and hence any difference of opinion between them as to the reasons on which such conclusion should properly be based is of no consequence. I have not, therefore, permitted the learned counsel for the appellants in S. A. 1170 of 1964 to re-argue before me the contentions of his clients that their suit for recovery of possession of the suit property is not barred by limitation. The scope of the further discussion in this judgment will be limited to a consideration of the two questions mentioned supra on which the learned Judges have come to different conclusions.

12. The answer to the first question will depend on whether the suit O. S. 639 of 1116 can be regarded as a suit for redemption of a subsisting mortgage and, even if so, whether the principle of subrogation would apply in the circumstances of the case so as to entitle the defendants to retain possession of the property with all the rights of the mortgagee as against their co-mortgagors.

13. The Transfer of Properly Act had no statutory force in the erstwhile Travan-core State at the relevant time. Hence Sections 92 and 95 of the said Act are not applicable in terms to the present case, and the question has to be decided in accordance with principles of justice, equity and good conscience. It therefore becomes necessary to examine the true scope and content of the equitable doctrine of subrogation, the purpose and principle behind it and the conditions for its applicability in cases, like the present, not governed by a statute.

14. The law on the subject as laid down by the decisions of English and American Courts has been succinctly summarised by Sheldon in his well-known treatise on the Law of Subrogation and it is worthwhile extracting the following passage which deals with the aspects relevant to the present discussion.

'Subrogation is a doctrine primarily of equity jurisprudence..... .It is a substitution, ordinarily the substitution of another person in the place of a creditor, so that the person in whose favour it is exercised succeeds to the rights of the creditor in relation to the debt. It is broad enough to include every instance in which one party pays a debt for which another is primarily answerable, and which, in equity and good conscience, should have been discharged by the latter. ... It is a legal fiction, by force of which an obligation extinguished by a payment made by a third person is treated as still subsisting for the benefit of this third person, who is thus substituted to the rights, remedies, and securities of another.. Subrogation is an exercise of the equitable powers of the court, to relieve a meritorious creditor, who might otherwise be subjected to loss by his funds being applied to pay another's debt...... Subrogation to the rights of a creditor differs from an assignment of the debt, in that the latter assumes the continued existence of the debt, while the former follows only upon its payment. Before the right of subrogation accrues, the legal obligation resting upon the ultimate debtor must be discharged.... And the party for whose benefit the doctrine of subrogation is exercised can acquire no greater rights than those of the party for whom he Is substituted; if the latter had not a right of recovery, the former can acquire none'.

In Pomeroy's Equity Jurisprudence, Volume V, the principle of subrogation is explained at page 5183 in these terms:

'When an obligation is discharged by one not primarily liable for it, but who believes himself to be acting either in performance of a legal duty, or for the protection of a legal right, or at the request of the party ultimately bound, and even in certain other cases favoured by public policy, where none of the above circumstances may be present, the party thus discharging the obligation is entitled in equity to demand, for his reimbursement, and subject to any superior equities, the performance of the original obligation, and the application thereto of all securities and collateral rights held by the creditor. The same equity which seeks to prevent the unearned enrichment of one party at the expense of another, by actions for reimbursement, contribution, and exoneration, operates here, by creating a relation somewhat analogous to a constructive trust, in favour of the snbrogee, or party making the payment, in all legal rights held by the creditor, and the subrogee may proceed to enforce the trust. Whenever a party discharges an obligation in performance of a legal duty -- that is, an obligation for the performance of which he was legally bound -- but for which his liability was subsequent to that of another party, he is entitled to be subrogated to, and to have the benefit of, all rights of the creditor and all securities which may at any time have been put into the creditor's hands by a party whose liability is prior to his own, or which the creditor may have obtained from such party. The most conspicuous example of this class is the ordinary surety on an obligation for the payment of money, who has become such at the request of the principal debtor...... Other cases where the liability of a party making a payment is considered subsequent to that of some other party to the obligation, and in which, therefore, the former is entitled to subrogation, are cases of payment of more than his fair share by one or several joint debtors or co-sureties. In these cases, each party is considered, as against the others as primarily liable for his own proportionate share of the obligation, and as subsequently liable for the shares of the others. The subrogee is, in general, entitled to stand in the shoes of the creditor, and to enforce every right which the creditor himself could have enforced so far as necessary to secure reimbursement of contribution.'

In Jones on Mortgages, 7th Edition, Volume II at page 407 the learned author, while discussing the conditions for the applicability of the doctrine of subrogation, has stated the legal position as follows:--

'In general it may be said that to entitle one to invoke the equitable right of subrogation he must either occupy the position of a surety having paid the debt, or one having made the payment under an agreement with the debtor or creditor that he should receive and hold an assignment of the debt as security; or he must stand in such a relation to the mortgaged premises that his interest cannot otherwise be adequately protected ...... It only applies in favour of one who has bought the debt either expressly, or by paying it under circumstances which render the payment equivalent to a purchase.'

The principles stated in the passages extracted above are fully applicable in this country also and will govern the decision of cases, like the present one, not covered by the provisions of the Transfer of Property Act. This is placed beyond doubt by the decision of the Supreme Court in Ganeshi Lal v. Joti Pershad, AIR 1953 SC 1 where their Lordships had occasion to consider the scope of the equitable doctrine of subrogation in a case arising from the State of East Punjab where the Transfer of Property Act was (not--Ed.) in force at the relevant time. The following observations occurring in para 9 of the judgment may usefully be extracted:--

'If we remember that the doctrine of subrogation which means substitution of one person in place of another and giving him the rights of the latter is essentially an equitable doctrine in its, origin and application, and if we examine the reason behind it, the answer to the question which we have to decide in this appeal is not difficult. Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it, and it is well recognised that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of debtors. Such being the legal position as among the co-mortgagors, if one of them redeem a mortgage over the property which belongs jointly to himself and the rest, equity confers on him a right to reimburse himself for the amount spent in excess by him in the matter of redemption; he can call upon the co-mortgagors to contribute towards the excess which he has paid over his own share. This proposition is postulated in several authorities.

The position is therefore well established that the doctrine of subrogation is only a rule evolved by equity by which a surety paying a debt of the principal debtor, or a co-mortgagor who is compelled to pay more than his share of the common debt, is allowed to stand in the place of the original creditor and have the benefit of the securities which the creditor had, for the limited purpose of obtaining reimbursement from the persons whose liability he has discharged. It is undoubtedly of the essence of this doctrine that the benefit of the equity can be availed of only by one who has actually performed the obligations of another and has thereby become entitled to a right of reimbursement, for the protection of which right alone the security will be treated as kept alive for his benefit by a legal fiction. Hence, unless there has been a payment by a party in discharge of the obligation of another and consequently a right to reimbursement has accrued to him, there cannot be any scope at all for his invoking the equitable principle of subrogation.

14A. Tested in the light of the legal principles stated above, I have no hesitation to hold that in the present case defendants 1 to 4 are not entitled to claim the benefit of the principle of subrogation as against their erstwhile co-mortgagors, namely the plaintiffs. It is not contended that they had to pay any amount whatever to the mortgagee under Ext. C before recovering possession in execution of the decree in O. S. 639 of 1116. A reference to Ext. P-5 which is a copy of the plaint filed in that suit shows that the suit had been instituted by the present defen-dants on the specific allegation that not amount remained due under the mortgage and that, on the other hand, after setting off of the entire mortgage amount against the arrears of michavaram, a substantial amount was due to them from the mortgagee by way of such arrears. Ext. H is a copy of the judgment rendered in that suit and it is seen therefrom that the Court held that the entire mortgage amount had become wiped off by adjustment against arrears of michavaram and a decree was passed in favour of the plaintiffs in that suit for recovery of 240 fs. being michavaram for 6 years prior to suit, and also future mesne profits at the rate of Rs. 25/- a year from the date of institution of the suit. If the mortgage was treated as subsisting till the date of institution of the suit there would have been no question of the bar of limitation in the matter of taking accounts, nor would the mortgagee have been made liable for mesne profits from the date of suit.

This is not, therefore, a case where defendants 1 to 4 have made any payment in discharge of the proportionate mortgage liability of the present plaintiffs and thereby acquired a right to reimbursement. The equitable principle of subrogation being intended only for protecting a right to reimbursement it cannot have any application to the present case. I am supported in this view by the observations or their Lordships of the Supreme Court in the decision already cited AIR 1953 SC 1 (supra), where it has been pointed out that to compel the co-debtors or co-mortgagors to pay more than their share of what was paid to the creditors or mortgagee would be to perpetrate an inequity or injustice and that such a result will not be countenanced by equity. Their Lordships have observed as follows at p. 4:

'If it is equitable that the redeeming co-mortgagor should be substituted in the mortgagee's place, it is equally equitable that the other co-mortgagors should not be called upon to pay more than he paid in discharge of the encumbrance.'

Further, as pointed out by Sheldon, the party for whose benefit the doctrine of subrogation is applied can acquire no greater rights than that of the party in whose place he is substituted and if the latter had not a right of recovery the former can acquire none. In the present case, as on the date of institution of O. S. 639 of 1116 no amount whatever was due to the mortgagee and he had no right to hold the property by way of security. In these circumstances the defendants cannot claim to have acquired a right to retain possession of the property as security by virtue of any principle of substitution. I therefore hold that, irrespective of the question as to whether or not the suit O. S. 639 of 1116 can be regarded as an action for redemption of a subsisting mortgage, defendants 1 to 4 cannot claim the benefit of the equitable principle of subrogation and had derived no right to retain possession of the property as mortgagees.

15. In view of my having come to the conclusion that defendants 1 to 4 are not entitled to claim the benefit of the doctrine of subrogation, it is really unnecessary for me to consider the further question as to whether the suit O. S. 639 of 1116 can be regarded as an action for redemption and whether defendants 1 to 4 are co-mortgagors who have come into possession of the property on redeeming the entire mortgage. However, since this question was argued before me at considerable length by the learned counsel appearing on both sides I shall proceed to state my opinion on this point as well. According to the appellants the mortgage debt under Ext. C had become automatically wiped off by adjustment against the arrears of michavaram and therefore there was no subsisting mortgage at all to be redeemed as on the date of institution of O. S. 639 of 1116. On the other hand, it is contended on behalf of the defendants that the set off was effected only as per the decree passed in that suit and hence the mortgage became extinguished only on the passing of the said decree.

16. As pointed by the Federal Court in Thota China Subba Rao v. Mattapalli Raju, AIR 1950 FC 1 at p. 6:

'The right of redemption is an incident of a subsisting mortgage and it subsists so long as the mortgage itself subsists'.

If a mortgage has been discharged by payment or in any other manner recognised by law the right of the mortgagee to hold the property as security for the debt ceases to exist and the mortgagor becomes entitled to recover possession of the property from him without any necessity to 'redeem'. Since the present case is not governed by the provisions of the Transfer of Property Act it has to be decided only on the general principles of law relating to mortgage. It is worthwhile in this connection to extract the following passage from 'The Law of Mortgages of Real and Personal Property' by Francies Hilliard, Volume I, page 480:--.

'From the intimate connection between the debt secured by the mortgage and the mortgage itself, which has been already explained, it of course results as a general proposition, that whatever extinguishes the former, puts an end to the latter also...... A mortgage is but a security for the payment of the debt, and when that is paid or extinguished, it can never be resuscitated. By payment, the whole mortgage is extinct; as much so as if released or paid and cancelled of record. It ceases to operate either at law or in equity, and the whole title revests in the mortgagor. To call it a mortgage would be an abuse of the word. It is no more than a blank.'

Such being the legal position, I shall proceed to examine whether the debt secured by Ext. C was subsisting on the date of institution of O. S. 639 of 1116 or whether it had become extinguished at any time prior thereto. It is contended on behalf of the respondents that the mere circumstance that the mortgagee had kept the michavaram in arrears ever since the commencement of the transaction and that the accumulated arrears of michavaram due by the mortgagee far exceeded the amount due under the mortgage, will not have the effect of extinguishing the mortgage as there cannot be said to have been any 'payment' of the debt by the mortgagor.

17. Under the terms of Ext. C the mortgagee was put in possession of the property with the stipulation that from out or the rents and profits he was to pay annually to the mortgagor 40 fs. by way of michavaram and appropriate only the balance towards the interest on the mortgage amount. When the stipulated michavaram remained unpaid, the mortgagee must be taken to have had in his hands at the end of each year an equivalent amount which really represents the surplus profits realised from the property. Interest due under the mortgage having been already realised by him by appropriation of the balance profits, the mortgagee was bound in law to apply the portion of the profits represented by the unpaid michavaram in reduction of the principal amount of the mortgage debt. As stated in Jones on Mortgages, 7th Edition, Volume II, at page 733 'A mortgagee in possession whether in person, by trustee, receiver, or by a tenant, is in equity accountable for the rents and profits of the estate, and is bound to apply them in reduction of the mortgage debt. After paying the interest of the debt any balance of receipts is applicable to reduce the principal'. To the same effect are the following observations at page 835 in Coote's Treatise on the Law of Mortgages, 9th Edition, Volume II:--

'A mortgagee, as soon as he is paid off, became before 1926 a mere trustee, holding the legal estate for the benefit of the mortgagor or the next puisne incumbrancer of whose charge he has notice, who may require the reconveyance of the estate accordingly. After 1925, however, mortgagee, having no longer the legal estate in fee simple, but only a term of years in the land will have no legal estate or interest in the land after payment off because under Section 116 of the Law of Property Act, 1925, the term will automatically cease. A mortgagee, who had entered into possession, must therefore, so soon as the rents and profits received by him have fully satisfied the moneys due under his mortgage, including principal, interest, and costs, deliver up the property to the person entitled to possession of it.'

In Ashworth v. Lord, (1887) 36 Ch D 545, it was contended on behalf of the mortgagor that the mortgagees who were in possession of the mortgaged property and realising the rents and profits had been overpaid and that they should be charged with liability to account for rents and profits with interest by applying the principle of annual rests for the period subsequent to the date on which the mortgage debt was paid up in full by appropriation of rents and profits. North J. upheld this contention and stated thus at p. 551:

'But, after they have been paid in full, they are, as was pointed out by the Master of the Rolls in Wilson v. Metcalfe, (1826) 1 Russ. 530, persons who are, in receiving the rents after their debt has been fully paid, availing themselves of another man's money for their own use and benefit, and they ought to be charged with interest. In that case annual rests were directed to be made from the time at which the mortgage debt was fully paid and that is what I have always understood to be the practice in the few cases in which the point has arisen. It seems to me that annual rests are in the present case a matter of course.'

18. A similar question arose in an early case before the Allahabad High Court reported in Jaijit Rai, by His Guardian Parbati Kuar v. Gobind Tiwari, (1884) ILR 6 All 303. There, by the terms of a usufructuary mortgage it was provided that the annual profits of the mortgaged property should be taken to be Rs. 65-10-6 out or which the mortgagee was to appropriate Rs. 42.6.6 as interest on the mortgage money and to pay Rs. 23.3.0 as the amount of jama payable as revenue to the Government on land. The mortgage was executed in 1864. The plaintiff obtained an assignment of the equity of redemption in 1869 and instituted the suit for recovery of possession of the mortgaged property alleging that the mortgage amount ad become completely discharged because the mortgagee had not paid any revenue since 1869 and the plaintiff had been compelled to pay it. According to the plaintiff, by adjustment against the mortgage debt of that portion of the rents and profits of the mortgaged property as represented by the amounts reserved annually for payment of revenue, but not utilised for that purpose, the entire mortgage money had been paid and amounts were due to the plaintiff from the mortgagee by way of such profits.

In his defence to the action the mortgagee contended, inter alia, that the terms of the mortgage did not entitle the plaintiff to set off the annual sum of Rs. 23.3,0 against the mortgage debt and that the plaintiff's claim that the mortgage debt had become discharged and that he was entitled to recover surplus profits from the mortgagee, was therefore untenable. Mahmood, J. who delivered the judgment on behalf of the Division Bench rejected this plea of the mortgagee. Upholding the plaintiff's contention that the mortgage debt became discharged by set off against the amounts reserved for payment of revenue and that the mortgagee was, therefore, liable for profits calculated with annual rents, His Lordship stated thus at p. 308:--

'By a long course of decisions it has been settled in India that even a special agreement to the effect that the mortgagee shall remain in possession until payment of the debt is made in one sum, does not prevent the mortgage from being at an end whenever the mortgagee has realised both principal and interest from the usufruct........This rule, though it probably originated in the exercise (express--Ed.) provisions of the old regulations, is so consonant with equity that it deserves recognition by the Courts, even irrespective of statutory provisions'.

19. The above decision was followed by a Division Bench of the Madras High Court consisting of Venkatasubba Rao and Reilly, JJ. in Seshayya v. Lakshminarasimha Rao, AIR 1930 Mad 160. In that case, the mortgagee who was put in possession of the mortgaged property, the profits wherefrom were estimated to be Rs. 240, was required annually to pay Rs. 100 towards revenue and village expenses, appropriate Rs. 80 towards the mortgage debt and pay over the balance of Rs. 60 to the mortgagor. The mortgage amount was Rs. 2,200 and it was provided in the mortgage document that the debt was to be discharged in 55 years by the above process of appropriation, the interest for that period being stipulated to be an amount equal to the principal, namely Rs. 2,200. The mortgagee was to surrender possession of the property only thereafter. It was further provided that if the mortgagee failed to pay the amount of Rs. 60 he would be bound to relinquish a part of the holding in proportion to that sum. The mortgage was of the year 1865. From 1882 onwards the annual payment of Rs. 60 was never made to the mortgagor.

The question arose whether the mortgagee who thus retained in his hands the sum of Rs. 60 payable every year during the period subsequent to 1881 was bound to apply that sum annually in reduction of the mortgage debt. If that was done the mortgage debt would have become discharged long prior to 1920 in which year alone the stipulated term of 55 years was to expire. The Division Bench upheld the claim of the mortgagor that it was the bounden duty of the mortgagee to apply the amount of Rs. 60 retained with him annually in reduction of the mortgage debt and that therefore the debt became wiped out long before 1920.

Venkatasubba Rao, J.observed thus at p. 163 :--

'A portion (Rs. 60) was by agreement of parties excluded from the usufruct for a specific purpose. If the purpose failed or the term was not carried out, what was the result? The part excluded reverted without any further act or agreement and became again profits. The mortgagee would then be liable to apply it in reduction of the debt. Section 76 (h) enacts that the mortgagee shall apply the usufruct first in reduction of the interest, then of the principal. This, he is bound to do under the law; so that, a part of the profits initially excluded was not applied as directed, it became usufruct as a matter of course, and without a special contract to that effect.

The proper way then of viewing the question is: has the part excluded, in the events that have happened, regained, its character of rents and profits? If so the mortgagee has no option but to appropriate it to the mortgage debt. (1884) 6 All 303, is a very instructive case on the point and gives effect to the principle as I have stated it. ..... I am, therefore, of the opinion that the plaintiffs contention must prevail, namely, that the sum of Rs. 60 should be debited against the mortgage debt and the account taken accordingly. It is obvious that in that event, the debt became wiped out long before 1920, that is, before the expiry of the period fixed.'

Reilly, J. in his concurring judgment has stated as follows at page 165: --

'But on what principle could a mortgagee in possession be heard to say that he had in his hands money belonging to the mortgagor, which he had received in his capacity as mortgagee out of the income of the mortgaged property in his possession but that he refused to adjust that against the mortgage debt and that he would hold it until the mortgagor sues him for it in some proceedings unconnected with the mortgages. I do not think it is necessary in this connexion to drag in the idea that in those circumstances the mortgagee would be trustee for the mortgagor in respect of the mortgagor's money which he kept in his hands, though no doubt he would be so. It is enough, I think, to remember that the essence of a mortgage transaction is that the mortgage is security for the mortgage debt. When the mortgagee has obtained payment of his debt, the security is done with; there is no purpose left in it. Let us suppose that we reach a stage where the mortgage debt except Rs. 480 has been paid off by the application of Rs. 80 a year out of the income and at the same time by his failure to pay the Rs. 60 a year to the mortgagor the mortgagee has Rs. 480 out of the income from the mortgaged property in his hands. It appears to me almost absurd to suggest that in such circumstances the mortgagee could say:

The mortgage debt still remains to the extent of Rs. 480. I have got the mortgagor's money to that amount in my hands; bit I intend to keep that entirely separate. It has been suggested that the mortgagee could do that because he could have got the Rs. 60 a year in his hands not in accordance with the terms of the contract between the parties but in violation of the terms. Surely, we cannot allow a party to plead his own wrong in that way. In my opinion it is clear on principle that, when the mortgagee has paid himself the mortgage debt out of the mortgaged property in his possession, he cannot maintain that the mortgage is still in force. That principle is recognised in Section 62-A, T. P. Act and it was enforced in (1884) ILR 6 All 303 ...... The decision in (1884) ILR 6 All 303, has never been overruled, nor has dissent ever been expressed from it.

Now does the fact that in this case a term of 55 years is mentioned make any difference in the application of this principle? We are not concerned in this case with any question of redemption, because in this transaction the mortgagor could never redeem by paying the balance of the mortgage debt to the mortgagee; his right was only to recover possession when the mortgage debt was satisfied. For myself I doubt whether in these documents, Exts. A and B any term of years in the strict sense was really intended. I doubt whether the meaning is more than that the Rs. 4,400 was to be paid off out of the income of the property at the rate of Rs. 80 a year and so would be cleared of in 55 years ending with Siddarti. But, even if the mention of the term of 55 years ending with Siddarti means more than that, how does it really affect the mortgagee's position in the circumstances that have arisen? If the amount of the mortgagor's money which the mortgagee retained in his hands has to be adjusted against the mortgage debt then at a time long before the expiry of the 55 years the mortgage debt must have been satisfied. From that time, until the end of the 55 years in what capacity would the mortgagee claim to remain in possession? Obviously not as a mortgagee to whom any part of the mortgage debt was still due. I think the result of that is, that, if this transaction is a mortgage and nothing else, the Rs. 60 must clearly be adjusted as it fell due against the mortgage debt until it was discharged and that the plaintiff must be held to have been entitled to recover possession from the date on which the debt was so discharged.'

In the light of the principles enunciated in the above decisions with which I am in respectful agreement, I have no hesitation to hold that the mortgage debt under Ext. C had become completely wiped off by 6-10-1090 by adjustment against arrears of michavaram.

20. Counsel appearing on behalf of the respondents relied very strongly on a decision of the Bombay High Court reported in Ragha-vendracharya Appacharya Katti v. Vaman Shriniwas Deshpande, AIR 1943 Bom 191; the facts of that case may be briefly stated. In 1931 one of the co-mortgagors in respect of a usufructuary mortgage brought a suit for redemption of the mortgage claiming the benefit of the Dekkhan Agriculturists' Relief Act. On an application of the provisions of the said Act it was found that the entire mortgage amount had become wiped off and that nothing remained due to the mortgagee. Accordingly a decree was passed directing the mortgagee to deliver possession of the property free from the mortgage and the decree-holder accordingly obtained possession. Subsequently, the assignees from two of the other co-mortgagors instituted a suit in April 1937 to recover their half share in the property and it is from that suit that the second appeal arose before the High Court. One of the questions to be decided was whether the co-mortgagor who had earlier sued and obtained possession in execution of the decree could claim the right of subrogation. The Division Bench which decided the case rejected the contention of the plaintiffs that the defendant could not be regarded as a co-mortgagor who had redeemed the mortgage and observed as follows at page 192:--

'It has been argued on behalf of the plaintiffs that no question of subrogation arises because in fact in the circumstances of this case there has been no redemption. The basis of that argument is that when accounts were taken under the Dekkhan Agriculturists' Relief Act it was found that the mortgagee had recovered not only the principal money but also a fair rate of interest on it out of the income, and therefore by reason of the provisions of the Act the plaintiffs were not liable to pay anything. Mr. Belvadi referred us to the terms of Section 60 T. P. Act, which provides, that at any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage money to get a reconveyance. He argues that redemption implies payment of the mortgage debt, and if there is no mortgage debt to pay, there is no redemption. In our view this is not a correct statement of the position. No doubt the mortgagor cannot redeem without paying or tendering whatever amount may be due. But that does not mean that there is no such thing as redemption if in the circumstances it turns out that there is nothing to pay. It was only as the result of the application of the Dekkhan Agriculturists' Relief Act that nothing was found due. According to the terms of the mortgage itself, the mortgagee was entitled to remain in possession in lieu of the interest only, and however long he remained in possession he was entitled to receive the principal amount. Defendant 3, the plaintiff in the suit, was enabled to get those favourable terms because he established that he was an agriculturist. It does not follow that the other co-mortgagors would have been able to get redemption on the same terms. Apart from that, however, the suit brought by defendant 3 was undoubtedly a suit for redemption and the decree, the terms of which have already been given, was nothing less than or different from a decree for redemption.'

These observations do, no doubt, support the contention advanced before me on behalf of the respondents. But, as I will presently show, this decision cannot now be regarded as laying down correct law. In Ram Prasad v. Bishambhar Singh, AIR 1946 All 400, a similar question arose for consideration before a Division Bench of the Allahabad High Court, though in slightly different circumstances. There, the suit was instituted by the representatives of the mortgagor for recovery of possession of the mortgaged property on the strength of the provisions contained in Section 2 (9) of the U. P. Debt Redemption Act and the question arose whether the suit was barred under Article 148 of the Limitation Act which Article would apply, if the suit were to be regarded as one for redemption. The contention of the plaintiff was that the mortgage debt had become completely wiped off By virtue of the provisions of the U. P. Debt Redemption Act and hence there was no necessity for redeeming the mortgage and that the suit should not, therefore, be regarded as one for redemption falling within the scope of Article 148 of the Limitation Act. This contention was upheld by the Division Bench consisting of Braund and Yorke, JJ.

Braund, J. who delivered the judgment held thus at pp. 402 and 403:--

'Now, the question is whether this suit--being a suit to recover possession of the mortgaged property after (according to the law as it stood at the date the suit was begun) it had been paid off -- is a suit 'against a mortgagee to redeem' or 'to recover possession of immovable property mortgaged'. The learned Civil Judge of Patehpur has dismissed the matter a trifle summarily by saying that 'in the present case right to recover possession accrued on the passing of Act 13 (XIII) of 1940 and as such the suit is within limitation. Before going further with this question, we think it right to refer shortly to those two sections of the Transfer of Property Act which are the statutory sources of the right to redeem or to recover possession at the instance of a mortgagor in this country. Section 60 says (paraphrasing it) that at any time after the principal money has become due the mortgagor may require the mortgagee to reconvey 'on payment or tender at a proper time and place of the mortgage money, and it is that right that the section expressly describes as the 'right to redeem'. Now, it is quite obvious that that section can only refer to a case in which a mortgagor under a subsisting mortgage approaches the Court to establish his right to redeem and to have that redemption carried out by the process of the various declarations and orders of the Court by which it effects redemption. In other words. Section 60 contemplates a case in which the mortgage is still subsisting and the mortgagor goes to the Court to obtain the Return of his property on repayment of what is still due. Section 62, on the other hand, is in marked contrast to Section 60. Section 62 says that in the case of a usufructuary mortgage the mortgagor has a right to 'recover possession' of the property when (in a case in which the mortgagee is authorised to pay himself the mortgage money out of the rents and profits of the property) the principal money is paid off. As we see it, that it is not a case of redemption at all. At the moment when the rents and profits of the mortgaged property stifficed to discharge the principal secured by the mortgage, the mortgage came to an end and the correlative right arose in the mortgagor 'to recover possession of the property'. The framers or the Transfer of Property Act have clearly recognised the distinction between the procedure which follows a mortgagor's desire to redeem a subsisting mortgage and the procedure which follows the arising of a usufructuary mortgagor's right to get his property back after the principal has been paid off.'

In Prithi Nath Singh v. Suraj Ahir, AIR 1963 SC 1041, their Lordships of the Supreme Court have expressly approved the above statement of the law contained in the judgment of Braund, J. In view of this pronouncement of the Supreme Court, the contrary view expressed in AIR 1943 Bom 191, can no longer be accepted as correct. It must then follow that the suit O. S. 639 of 1116 cannot be rcgarded as one for redemption since there was no subsisting mortgage on the date of its institution.

21. In the light of the discussion in the preceding paragraphs I hold that the defendants cannot be regarded as co-mortgagors who have obtained possession of the property on redemption of the whole mortgage and that in any event they have no right to claim the benefit of the equitable doctrine of subrogation since they have not paid any portion of the liability of the plaintiffs and had therefore no right to obtain any reimbursement from them. I, therefore, agree with the view taken by Isaac, J. that Article 136 of the Travancore Limitation Act has no application and that the suits which have given rise to A. S. Nos. 690, 691 and 692 of 1963 and 23 of 1964 are not barred by time.

22. It now only remains For me to consider the subsidiary question raised in S. A. No. 1170 of 1964 relating to the plaintiffs' claim for the relief of permanent injunction in respect of the building on the property. If the plaintiffs succeed in establishing that they were actually in possession of the building as on the date of the institution of the suit, they are, in my view, entitled to the relief of injunction notwithstanding the circumstance that their suit for recovery of possession of the remaining portion of the suit property is barred under Article 144 of the Limitation Act. The question as to whether or not the plaintiffs were actually in possession of the building as claimed by them has not been properly investigated by the lower Courts. I am, therefore, in agreement with Isaac, J. that it is necessary in the interests of justice to have the suit remanded to the lower court for the limited purpose of investigating this question and that the decree passed by the courts below dismissing the suit in toto should, therefore, be set aside. The second question is also answered accordingly.

23. In the result, I hold that the first Jour suits, namely O. S. No. 79 of 1120, O. S. No. 83 of 1120, O. S. No. 1096 of 1120 and O. S. No. 710 of 1121 are not barred by limitation and that the appeals A. S. Nos. 690 to 692 of 1963 and A. S. No. 23 of 1964 should be allowed and the cases should be remitted to the Subordinate Judge for fresh disposal in the light of the directions contained in the judgment of Isaac, J. I also hold that the decree dismissing in toto O. S. 681 of 1957 has to be set aside and that the case should be remanded to the Subordinate Judge for the limited purpose of considering only the plaintiff's claim for the relief of permanent injunction in respect of the building on the suit property in the light of the observations and directions contained in this judgment and in the judgment of Isaac, J.

M. U. ISAAC AND P. NARATANA PILLAI, JJ. (11-8-69)

24. In accordance with the opinion of the majority, we hold that O. S. 79, 83 and 1096 of 1120 and O. S. No. 710 of 1121 are not time-barred, and that the plaintiffs in these suits are entitled to get from 30-12-1119 M. E. mesne profits of the properties, which they seek to recover, subject to their claim to the ownership of the said properties is being upheld. We also hold that O. S. No. 681 of 1957 is time-barred in respect of the relief claimed for recovery of the plaint schedule property; but the plaintiffs will be entitled to an injunction restraining the defendants therein from interfering with the plaintiffs' possession of the house, in case they are found to be residing therein at the time of institution of the suit. Accordingly all the appeals are allowed, and the cases are remitted to the Subordinate Judge, who will take up all the appeals and dispose of them in the light of the opinion of the majority and the findings and observations contained therein.

25. The appellants in A. S. Nos. 690. 691 and 692 of 1963 and 23 of 1964 will get their costs from the respondents. The costs of the appeals in the Subordinate Judge's Court hereafter and the costs in the trial court will abide the result of the said appeals, and the Subordinate Judge will pass necessary orders in that respect. The parties in S. A. No. 1170 of 1964 will suffer their respective costs hitherto in all the courts. The Subordinate Judge will pass necessary orders regarding the costs of appeal incurred by the parties hereafter.


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