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Laxmidas Ramji Vs. Lohana Bai Savita Tulsidas and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtGujarat High Court
Decided On
Case NumberFirst Appeal No. 669 of 1960
Judge
Reported inAIR1970Guj73; (1970)0GLR108
ActsTransfer of Property Act, 1882 - Sections 92; Code of Civil Procedure (CPC), 1908 - Order 23, Rule 1
AppellantLaxmidas Ramji
RespondentLohana Bai Savita Tulsidas and ors.
Appellant Advocate J.R. Nanavaty, Adv.
Respondent Advocate N.C. Shah, Adv.,; G.N. Desai and; M.D. Pandya, Advs.
Cases ReferredNarayana Tantri v. Nagappa
Excerpt:
(i) property - mortgage - section 92 of transfer of property act, 1882 and order 23 rule 1 of code of civil procedure, 1908 - whether trial court erred in holding that plaintiff-appellant not entitled to claim rights of first mortgagee-defendant in respect of suit property - plaintiff appellant is required to show that he was paying amount out of his own pocket and for protection of his own interest and not out of amount retained by him - property not redeemed by first defendant - first defendant had no right to claim subrogation - no protection of any pre-existing interest. (ii) withdrawal of suit - whether suit is barred by reason of withdrawal of suit by plaintiff - plaintiff had not sought for any permission giving him liberty to institute a fresh suit in respect of subject matter of.....shelat, j.1. two points arise to be considered in this appeal. the first is whether the trial court was in error in holding that the plaintiff-appellant was not entitled to claim the rights of the first mortgagee-defendant no. 1 respondent no. 1 in respect of the suit property having regard to the provisions contained in section 92 of the transfer of property act. the other point is whether the suit is barred by reason of the withdrawal of civil suit no. 15 of 1953 by the plaintiff having regard to the provisions contained in order 23, rule 1, or under the provisions contained in order 2, rule 2, clause (3) of the civil procedure code as urged by the learned advocate for the respondents in respect of other points on which findings have been recorded by the learned judge, it is conceded.....
Judgment:

Shelat, J.

1. Two points arise to be considered in this appeal. The first is whether the trial Court was in error in holding that the plaintiff-appellant was not entitled to claim the rights of the first mortgagee-defendant No. 1 respondent No. 1 in respect of the suit property having regard to the provisions contained in Section 92 of the Transfer of Property Act. The other point is whether the suit is barred by reason of the withdrawal of Civil Suit No. 15 of 1953 by the plaintiff having regard to the provisions contained in Order 23, Rule 1, or under the provisions contained in Order 2, Rule 2, clause (3) of the Civil Procedure Code as urged by the learned advocate for the respondents in respect of other points on which findings have been recorded by the learned Judge, it is conceded that they do not affect or bar the remedy sought for by the plaintiff in the suit and they do not, therefore, require to be considered.

2. The contention in respect of the first point made out by Mr. Nanavaty, the learned Advocate for the plaintiff-appellant, is that the plaintiff is one of the persons referred to in Section 91(a) of the Transfer of Property Act - he having pre-existing charge on the property and since he had paid off Rs. 21,500/- in all in full satisfaction of the claim of the defendant No. 1 under his first mortgagedeed Ex. 10 dated 12-2-1946 in respect of the suit property, he acquires the right to subrogate and gets all the rights of the first mortgagee-defendant No. 1 under Section 92, paragraph (1) of the Transfer of Property Act (hereinafter referred to as 'the Act'). According to him, the learned Judge has not taken into account his having a pre-existing charge on the suit property arising out of his claims under the deed Exs. 11 and 12 and that way his finding that his case was governed by paragraph (3) of Section 92 of the Act was erroneous. This right is said to have been acquired on 12-8-1952 when he paid off the balance of Rs. 8000/- due to defendant No.1. His alternative contention is that by reason of his having advanced the amount to defendant No. 3 under the deed Ex. 15 dated 12-5-1952 out of which amount he paid off the dues of defendant No. 1, and later on even his having passed on his equity of redemption in his favour under deed Ex. 16 dated 12-6-1952, and possession of the property delivered to him, it has to be assumed, though no specific recital is there in any of these deeds that the he agreed to his being entitled to claim benefits of the first mortgagee-defendant No. 1 on redeeming the property which he has done on 12-8-1962. He therefore subrogates to the claim under paragraph (3) of Section 92 of the Act and gets the right of defendant No. 1 against the property in possession of Defendant No. 2. In other words, either under the first paragraph, or third paragraph of Section 92 of the Act, he becomes entitled to be reimbursed by defendant No. 2 before he can validly become owner thereof by purchasing the same in Court auction. He takes subject to his claim which he is entitled to enforce against that property in his possession. On the other hand, it was urged by Mr. Desai, the learned advocate for defendant No. 2, that it is not enough that by merely having a pre-existing interest or charge on that property and his having paid up the dues of the first mortgagee in full that he is entitled to claim subrogation under paragraph (1) of Section 92 of the Act. He has further to show that not only he must have paid his own money for the protection of his right, but that the payment was not made under any covenant with the mortgagor so as to say that he paid up the amount out of the mortgagor's money. The test, according to him, was as to whose money he paid for redemption of the first mortgage. If it was mortgagor's money , in ano case he can claim the right to subrogate under paragraph (1)of Section 92 of the Transfer of Property Act. If it was out of mortgagor's money that he paid under the covenent in the deed Ex. 15, he cannot be said to have redeemed it , and in that event, a specific registered agreement giving such a person a right to subrogate in place of the first mortgagee must be shown to have been passed by the mortgagor-defendant No. 3 in the case. There is no such agreement alleged at any time before and none prove so as to claim that right under paragraph (3) of Section 92 of the Act.

3. In order to consider the rival contentions of the parties, it would be necessary to set out the relevant provisions contained in Sections 91 and 92 of the Act. Section 91 reads thus:-

'91. Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely:-

(a) any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same; xx xx xx xx xx'

Then comes Section 92 which was inserted by the Amending Act 20 of 1929. The equitable principle which prevailed before, came to be incorporated in Section 92 by the Amending Act 20 of 1929, at the same time repealing the old Section 74 of the Act. Section 92 reads thus:-

'92. 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.

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.

Nothing in this section shall be deemed to confer a right of subrogation on any person unless the mortgage in respect of which the right is claimed has been redeemed in full.'

On a plain perusal of these two provisions, one thing becomes clear that Section 91 recognises also persons other than the mortgagor having a right to redeem or institute a suit for redemption. The right to redeem a property by a mortgagor is specifically provided in Section 60 of the Act. The right of subrogation in Section 92, is however, given to other persons referred to in Section 91, and that excludes the mortgagor. That is very significant and a vital distinction in regard to a right of redemption when a claim by principle of subrogation is made, for such a right is denied and cannot be had to the mortgagor to set at naught his own deeds passed and defeat their claim of priority. In other words, it is clear that the first paragraph of Section 92 allows persons referred to in Section 91 and co-mortgagors to get that right of subrogation, and in no case to a mortgagor. The words, in brackets 'other than a mortgagor' therefore restrict such a right or benefit to such persons or co-mortgagors. The expression in that paragraph is that 'he redeems', and not as 'has been redeemed' in paragraph (3) of Section 92 of the Act. That emphasizes the fact that 'that person' must redeem and that person shall be such a person referred to in the section but he shall be other than a mortgagor. In paragraph (3) also redemption is required to be by a person other than a mortgagor and he may be any person having advanced money to the mortgagor and not necessarily a person falling under Section 91 of the Act and that way coming under Paragraph (1) of Section 92 of the Act. That is so provided as he gets the right by virtue of a clear agreement under a registered instrument by the mortgagor. Now it is easy to think that when a mortgagor is excluded from that section, any person on his account or on his behalf or who acts in terms of agreement with him would also be excluded. The intention of the Legislature could not be otherwise. If a mortgagor is excluded, all such persons getting right through him or acting on his account either as an agent or representative, or under any such covenant remain also excluded. Otherwise the mortgagor can creep in by such a method and defeat the rights of mortgagees created by him which in law he cannot be allowed to do unless the case is covered by the clear position arising out of Section 92.

4. Now, the claim of the plaintiff-appellant in the first instance is that he falls under paragraph (1) of Section 92 of the Act by reason of his being one of those persons referred to in Section 91(a) and since he has redeemed in full the first mortgage in respect of the suit property by paying off the dues of defendant No. 1, he becomes entitled to the same right as defendant No. 1 had in respect of that property. According to Mr. Nagavati, all that he is required to show is that he had a pre-existing interest or charge on the property and that way falls under Section 91(a) of the Act, and secondly that he has paid off the dues of the first mortgagee-defendant No. 1 and has thus redeemed the same in full, and not as to how and whose money was paid. On the other hand Mr. Desai for the respondent No. 2 urged that he must further show that he redeemed it not only for his own benefit or protection of his interest, but that the money paid by him for redemption was not that of the mortgagor. In other words, according to him, the payment for the purpose of redeeming the property must be purely on his account and that it cannot be on account of the mortgagor or by way of paying off the amount under a covenant entered into between them from the mortgagor's money in his hands.

5. Before we turn to the authorities cited at the Bar, it may be stated that for the purpose of showing that he had pre-existing interest or charge, reliance was placed by Mr. Nanavaty on his claim arising under the two mortgagee- deeds Exs. 11 and 12 in the case. Both the deeds are of the same date as of 29-7-'48. The properties specifically mortgaged therein are other than the suit property. The claim is on the basis of a certain recital in both the deeds whereby the defendant No 3 had created a general charge over his properties in Junagadh, other than those given in mortgage thereunder for the amounts remaining due under those deeds. In the suit filed by the defendant No. 2 for recovering his mortgage dues under his mortgage, this plaintiff had put up his claim arising under Exs. 11 and 12 dated 29-7-1948, and as would appear from the judgment Ex. 13 dated 13-12-1951 recorded in that suit No. 152 of 1949 a charge in respect of Rs. 7000/- arising only under the deed Ex. 12 was recognized. Since that charge was prior to that of defendant No. 2 the amount was required to be paid before he can realise his amount by sale of the suit property. So far as the claim of Rs. 9000/- under the other deed Ex. 11 is concerned, it appears clear from that judgment that it was negatived by the Court. Obviously therefore, it would not be open to the plaintiff to re-agitate any such claim of Rs. 9000/- against defendant No. 2, who along with defendant No. 3, were parties to that suit. It can, therefore, be taken that before the plaintiff can be said to have redeemed the suit property he had a ore-existing interest or charge in that property by reason of the judgment and decree passed in Civil Suit No. 152 of 1949 for a sum of Rs. 7000/- and interest thereon. Thus, on that basis, he has to be taken as a person falling under Section 91(a) of the Act, and that way fulfilling the first condition contemplated in the first paragraph of Section 92 of the Act.

6. The other conditions required to be fulfilled relates to his having redeemed that property which was subject to the mortgage of defendant No. 1 and that redemption must have been in full. Now it appears that in the first instance the defendant No. 1 did resist the claim of the plaintiff in that regard by saying that he was not paid in full and that the property was not redeemed by him with the result that he had no right to claim any subrogation under paragraph (1) of Section 92 of the Act. The case of the plaintiff was that he had paid in full and that way he can be said to have redeemed the property in full. It is now no longer in dispute that Rs. 13,500/- were paid by him to defendant No. 1 on 9-6-1950 and Rs. 8000/- on 11-8-1952. During the course of the hearing of the suit, however, the defendant No. 1 gave up that challenge by saying that he has been paid in full and that no other amount has been due from him under his mortgage. In those circumstances, as found by the trial Court, he can be taken to have paid up the amount due to defendant No. 1 in full on 11-8-1952. It is the payment in full of the mortgagee's dues that matters and when that is made, he can be said to have redeemed his mortgage. An attempt was made by Mr. Desai to urge that the plaintiff has not redeemed the property in full inasmuch as it is not shown that the other property called 'Jayendra Theatre' comprised in the mortgagee deed Ex. 10 is redeemed by paying off the dues of the defendant No. 1 in that regard. That right is one and indivisible and he cannot therefore claim to have satisfied that condition required under Section 92 of the Act. Now apart from any such contention not having been raised in the written statement or his having sought for an issue in the matter, even if such a point is allowed to be raised being one of law arising on the material that stands on record, it cannot be said that the plaintiff who has purchased the mortgagor's right under the deed Ex. 16 is not entitled to redeem a part of it, and more so, when a specific agreement has been provided in that regard. Now the right to redeem any of the two properties by the mortgagor remained with the defendant No. 3 by an express term in the mortgage-deed Ex. 10. Thereby he was given a right to redeem this particular suit property by payment of Rs. 20,000/- to defendant No. 1. It was, therefore, not necessary for him to also redeem the other property before he can be said to have redeemed in full the property in question. The second condition can, therefore, be said to have been fulfilled by him.

7. The dispute, therefore, centres round the third condition referred to above while setting out the contentions of the learned advocates for the parties. While Mr. Nanavati says that no such condition is further required to be established by the plaintiff and that in fact it should be presumed that he paid off to redeem the property for himself and for protection of his own interest. The question thus is whether any such condition is required to be gone into viz., as to whose money was paid by the plaintiff viz., of himself or that of the mortgagor before claiming benefit under para (1) of Section 92 of the Act. We have already pointed out hereabove, on an analysis of Section 92 that the redemption of the property of the mortgagee claiming a right of subrogation under the first paragraph of Section 92 must not be on behalf of or on account of the mortgagor as the mortgagor and that way his agent or a representative has been excluded from any such persons referred to therein. If, therefore, the plaintiff pays off the money for redemption of any mortgagee's right, he must do so, and redeem it with his own money and not out of the money retained by him under an agreement with the mortgagor for paying off the same i.e., out of the consideration of the amount to be paid to him. Thus apart from authority, it appears clear that the Court has to be satisfied on the evidence on record that he did not pay for the mortgagor in redeeming the property or out of his money to claim a right of subrogation under paragraph (1) of Section 92 of the Act.

8. Mr. Nanavaty for the appellant, however, urged that while paragraph (1) of Section 92 of the Act relates to the character of a person who redeems, paragraph (3) relates to the character of money. While considering the applicability of paragraph (1) of Section 92, according to him, once he is a person referred to in Section 91 i.e. when the character of a person entitled to redeem is not in question, the question as to how and form where the money was paid becomes irrelevant. As to how and where from the amount for redeeming the property came would be a matter only falling under paragraph (3) of Section 92 of the Act. In other words, according to him, once it is shown that he had a pre-existing interest or charge on the property and had redeemed the property in full, he would fall under Section 92 paragraph (1) of the Act. Both the paragraphs, he urged, are mutually exclusive. He took support for that proposition by a reference to the notes on Section 92 from Mulla's Transfer of Property Act, Fifth Edition, at page 595, which flow from various decisions on the point. They read thus:-

'The right of authority clearly seems to be in favour of the view that the two paragraphs are mutually exclusive and that the first paragraph deals with persons who having a pre-existing interest in the property redeems a prior mortgage to protect his own interest, and that a person who acquires interest only by advancing money with which the prior mortgage is satisfied does not come within the first paragraph even though he secures his advance by a mortgage or becomes a purchaser. Such a person comes within the third paragraph and can only claim subrogation if there be an agreement between him and the mortgagor in writing registered. The right of subrogation is denied to such a person on a variety of grounds, e.g., that such a person when he pays over the retained money either himself or through the mortgagor does not pay his own money and cannot be said to redeem the price mortgage himself or that he only performs his own obligation under this covenant, and covenant includes subrogation, or that he pays the mortgagor's money as his agent and the redemption is by the mortgagor. But the real reason seems to be that such a person having no preexisting interest does not come within the first paragraph and that although he is a person who comes within the third paragraph he cannot claim subrogation because there is no registered agreement giving him that right as required by that section. Prior to the amendment such a person could only claim not legal but only conventional subrogation, i.e., subrogation based on agreement express or implied and after the amendment he cannot claim legal subrogation as laid down in the first paragraph but can only claim conventional subrogation as modified by the third paragraph if he satisfies the requirements of that paragraph. The third paragraph has by requiring the agreement to be in writing registered has restricted the application of the doctrine of equitable or conventional subrogation.'

9. Mr. Desai for the respondents has referred to a decision in which the distinction has been brought out by a reference to the decisions of the Madras and Allahabad High Courts by Subba Rao, J., in : AIR1950Mad186 , Dadi Appala Naidu v. Kolluru Shivalingam. While considering the effect of the previous decisions of the Madras High Court, he has first referred to the observations of Varadachariar, J., in Lakshmiammal v. Sankaranarayana Memon, AIR 1936 Mad, 171 (FB) in the following passage:

'There is a well established distinction between cases in which a person who has a pre-existing interest in property pays off a prior charge on that property for the protection of his own interest and cases in which a person acquires an interest in property only by reason of his advancing money to pay off an existing mortgage debt. It seems to be that clause (1). S. 92 must be held to relate to the first type of cases above referred to and clause 3 to the second type.'

Venkataramana Rao, J.

states the law to the same effect but in different terms. He says:

'The first clause enunciates no new principle (Vide S. 74, Transfer of Property Act, since repealed). It applies to all persons who have an interest in the equity of redemption and are under no personal obligation to discharge prior incumbrances. Clause 3 has been enacted to confer a benefit on persons who advance money to discharge an incumbrance only 'if the mortgagee has by a registered instrument agreed that such persons shall be subrogated'. The clause is intended to apply to all persons who acquire an interest in the mortgaged property by advancing moneys to discharge prior incumbrances and there is no warrant for restricting the scope of that clause to persons other than purchasers or mortgagee.'

Then as observed in that case, in view of certain observations in Srinivasulu v. Damodaraswam Naidu, AIR 1938 Mad 779, some doubt on the correctness of those observations was thrown. They came to be, therefore, considered by Venkataramana Rao, J., in greater detail in his judgment reported in Subbarayudu v. Lakshminarasamma, AIR 1939 Mad, 949. After exhaustively considering the case-law on the subject he adhered to the view expressed by him in the Full Bench judgment in AIR 1936 Mad. 171 (F.B.). The Madras view came to be followed in Hira Singh v. Jai Singh : AIR1937All588 , Before that in Tota Ram v. Ram Lal : AIR1932All489 , the view taken was that puisne mortgagee was entitled to subrogation viz., by his coming under the persons referred to in Section 91. This is precisely what Mr. Nanavati wants us to go by. But this decision was disapproved by the Bench of five Judges of the same Court by holding that a puisne mortgagee if he was using mortgagor's money and not his own, he acquires no right by himself by his payment. That decision is contained in : AIR1937All588 . Sulaiman, C. J., after accepting the law as enunciated in the Madras decisions has set out the broad propositions. They are as under:-

'Now it is well known that subrogation can arise in two ways (1) by agreement and (2) by operation of law. Paragraph 1 deals with subrogation arising by operation of law and paragraph 3 deals with subrogation by agreement. It is necessary that there should be an agreement for subrogation, that the agreement should be in writing and that it should be a registered instrument. It would be impossible to hold that these two paragraphs overlap each other, for, paragraph 3 requires certain stringent conditions which are not found in paragraph 1. They must therefore be mutually exclusive. The basic difference underlying these two paragraphs consists in this that paragraph 1 refers to a person redeeming property and the paragraph 3 to a person who advances money with which a mortgage is redeemed.'

Then come the material observations and they are:-

'Where a person himself redeems a mortgage, that is to say, pays the mortgage money out of his own pocket and not merely discharges a contractual liability to make the payment, he is entitled to the rights of subrogation under paragraph 1 if he is one of the persons enumerated in S. 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 utilised 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 . . . . . . . . . . . . He is really not himself redeeming the mortgage but redeeming it as the agent of the mortgagor.'

Similar view has been expressed by the Patna High Court in Bansidhar Dhandania v. Kaloo Mandar, AIR 1938 Pat 532. The material observations are:-

'The first paragraph of S. 92 would undoubtedly have entitled the appellant as purchaser of the equity of redemption to subrogation if he had redeemed the prior mortgages on his own account and independently of any agreement with the mortgagor who is specifically excluded in this paragraph, but, the appellant paid off the prior mortgagees with moneys that were left with him for the purpose by the vendors-mortgagors.'

The same view was also expressed by the Calcutta High Court in Mukaram Marwari v. Muhammad Hossain, AIR 1936 Cal 42. The observations therein are to the effect that it is well settled on authorities, that, if the debt is the debt of the person who paid, or is a debt which he has covenanted to pay, his payment of it raises no right of subrogation, but is simply a performance of his own obligation or covenant. It would thus appear that apart from these authorities, even Mulla's Commentary does say that the person falling under Section 91 must be redeeming a prior mortgage to protect his own interest and that excludes a case where he does it not for his benefit or interest but for the mortgagor or on his account. That distinction has to be there, for, by express words in Section 92 paragraph (1) the person excluded from getting a right of subrogation is the mortgagor. Thus not only he must be a person falling under Section 91(a) having pre-existing interest or charge, he must not be redeeming the property as a nominee or agent of the mortgagor as the mortgagor cannot have a right to subrogate. The decisions referred to by different High Courts amply support that proposition. Reverting back to the decision in : AIR1950Mad186 , a similar argument was advanced, as done by Mr. Nanavati before this Court, and that was negatived. The argument advanced was that when defendants Nos. 2 and 3 purchased the property under Ex. D-11 on 7th October 1933, they had a pre-existing interest in the property being the puisne mortgagees under Ex. D-2 dated 29th June, 1930, and therefore they would be entitled to the right of subrogation under the first paragraph of Section 92. Learned counsel said that the existence of an interest in the property on the date of the sale-deed was sufficient and it did not matter whether a prior mortgage was discharged not to protect his interest but only pursuant to an agreement entered into with the vendor. If this argument was accepted as observed by Subba Rao, J., it would be destructive of the principles on which he purported to rely upon. Then he has observed as under:-

'The distinction between legal subrogation and conventional subrogation is that in the case of the former the person having the pre-existing interest discharges the prior mortgage to protect his interest and by meeting an obligation in excess of his liability; whereas in the latter case he would be discharging only an obligation he had undertaken under a specific agreement.'

This view has been also accepted by the High Court of Bombay in Vithaldas Bhagvandas Darbar v. Tukaram Vithoba Khatri, 43 Bom, L.R. 225 = (AIR 1941 Bom. 153) The pertinent observations are that 'inasmuch as part of the consideration for sale of land 5/2 was retained by the plaintiff for the discharge of incumbrances on the land, that money should be regarded as the money of R and there the plaintiff was not entitled to subrogation under the first part of the section.' That was followed in another case of Narayan Divakarappa Hubli v. Parameshvarappa Bhimappa Yarcad. 44 Bom. L. R. 20 = (AIR 1942 Bom 98), wherein it was observed that as the plaintiff used the mortgagor's money when he paid off the first mortgage, he got no right, by his payment, to subrogate to the first mortgagee. In other words, the view taken in the earlier decision of the Full Bench of the Allahabad High Court in : AIR1932All489 was no good law and was not followed by the Allahabad High Court in certain circumstances. In fact a contrary view was taken in : AIR1937All588 , by a Bench of five Judges and it was held that if towards the part of the consideration a puisne mortgagee was using the mortgagor's money and not his own, he acquires no right by himself. In view of all these decisions, it can be easily held that a redemption of the mortgaged property must have been made by the plaintiff so as to fall under paragraph (1) of Section 92 of the Act by his own money and not that of the mortgagor. He has to pay out of his own pocket with a view to protect his own interest and not merely by having to discharge the contractual liability to make that payment on behalf of the mortgagor. What matters, therefore, is, with whose money the payment was made and the property redeemed? If it is clearly and purely the money of the plaintiff and that has nothing to do with the mortgagor, he would fall under paragraph (1) of Section 92 of the Act. If that is not so he can be said to be acting for and as an agent or a representative of the mortgagor. Since the mortgagor is excluded from having any such right of subrogation under Section 92(1), any such redemption made on behalf of and on account of the mortgagor would be tantamount to saying that the mortgagor had himself redeemed it. In the case of Sita Ram v. Sharda Narain Singh : AIR1950All682 , the Full Bench of seven Judges held as under:-

'A Vendee from mortgagor who pays off the prior mortgage out of the money left with him by the vendor mortgagor, and is bound to pay it under the terms of the contract cannot claim to be subrogated to the rights of the mortgagee whom he pays off without a registered instrument expressly creating such rights of subrogation being executed by the mortgagor-vendor.'

In paragraph (47) of the judgment which has been delivered by Lal, J., the position that we made clear at the outset by referring to the provisions contained in Section 92 itself is well brought out. The observations are:-

'The respondent is certainly a person enumerated in S. 91. He can claim subrogation provided he is not the mortgagor or his agent. But one finds that the money with which he paid off the prior encumbrance had been left with him by the mortgagor. It is that money which he paid in satisfaction of the mortgage. Nothing was paid by him out of his own funds. In the circumstances I am of the opinion that the view taken by the Full Bench case of : AIR1937All588 , which says that in a case like the present the person paying off the mortgage debt is the agent of the mortgagor, is correct. Since the respondent has made the payment as the agent of the mortgagor, he is in a position no better than that of a mortgagor. As such he cannot claim subrogation.'

The real position of law, therefore, is that in addition to the two requisite conditions about the plaintiff having a pre-existing interest or charge on the property and about his having redeemed the same in the full, he has further to show that he was paying the amount from his own pocket and his own money for the protection of his own interest and not out of the amount retained by him - as of the mortgagor - for that purpose under a covenant so as to be said that he acted and redeemed the property as an agent or a representative of the mortgagor. That is an essential condition to be fulfilled before falling under paragraph (1) of Section 92 of the Act. While therefore the distinction pointed out between the two paragraphs is true, before one can fall under Section 92(1) of the Act, he has to show that he was not redeeming it on account of the mortgagor.

10. A reference was made by Mr. Nanavati to a decision in the case of Chapalal v. Y. Nabi Khan, reported in AIR 1960 Mys, 289. In that case, the appellant had purchased the suit property in execution of a money decree subject to prior encumbrances. The respondent had purchased the same property prior to the Court auction from the judgment-debtor and had discharged a prior usufructuary mortgage on the property but of his own funds. The respondent obstructed delivery of possession to the appellant. On those facts it was held that the respondent as the purchaser of the mortgaged property had sufficient interest therein within the meaning of Section 91(a) and on redemption of the prior mortgage was entitled to subrogation. His case fell within the first part of Section 92. The head-note appears to be rather misleading. If we peruse that judgment, we find that the finding of the Court below was that 'the money which has been paid to Adiramaiah, the mortgagee, belonged to the first respondent himself and not to the mortgagor. As such, it cannot be said that first respondent is the representative of the mortgagor'. In other words, it was found that the money with which the property was redeemed was of that person himself and in no way he was the representative of the mortgagor. It is that which is said to be the essential condition before one can claim to get any right of subrogation under para (1) of Section 92 of the Act.

11. x x x x x

12. It was urged by Mr. Nanavati that redemption of the mortgage property by paying off the dues of defendant No. 1 must be presumed to have been made for the protection of his right or interest in that property and there has been no positive material on record to negative or rebut the same. He invited a reference to a decision in the case of Braham Prakash v. Manbir Singh : [1964]2SCR324 , where it observed that the ordinary rule is that 'a man having a right to act in either of two ways, shall be assumed to have acted according to his interest'. In other words, it was said that his paying off the dues of the defendant No. 1 can well be taken to have been for the protection of his interest which already existed under the general charge created as per the deed Ex. 12, which later on merged in the decree passed in Suit No. 152 of 1949. Normally speaking, that would no doubt be so. But any such presumption is always rebuttable. In the present case apart from the fact that there is nothing to show about his having paid defendant No. 1 for the protection of any such pre-existing interest, his own deed Ex. 15 dated 13-5-1952 read with the agreement of sale Ex. 14 shows otherwise viz., by saying that he shall pay defendant No. 1 out of the consideration amount which otherwise he would have received. Instead, the plaintiff retained that amount and paid off the dues of defendant No. 1 it was thus the mortgagor's money which he paid, and it does not matter through whose hands the money was paid. He thus acted for and on behalf of the mortgagor. The person who thus redeemed the property by paying off defendant No. 1's dues under his first mortgage was no other than the mortgagor. His case, therefore, would not fall under paragraph (1) of Section 92 of the Act - any such mortgagor is excluded from persons getting a right of subrogation thereunder. His case would fall under paragraph (3) of Section 92 - as person having advanced money to the mortgagor for paying off the dues of the first mortgagee- defendant No. 1 and when that is so, the necessary requirements contemplated in that paragraph have to be fulfilled viz., of having obtained a writing duly registered from defendant No.3 for getting any such right of subrogation in place of defendant No. 1 on his redeeming the same.

13-15. x x x

16. The contention made out by Mr. Desai, the learned advocate for the defendant No. 2, was that this very plaintiff had filed a Civil Suit No. 15 of 1953 in the Court of the Civil Judge (J.D.) at Junagadh, wherein it was prayed that the property in suit was not liable to sale in pursuance of a decree passed in favour of defendant No. 2 on the allegations that the property was purchased by him and that he was in possession thereof by virtue of his ownership in pursuance of an agreement dated 6-10-1948. This suit was filed against defendant No. 2 and defendant No. 3 of the present suit. The suit was required to be filed as his application given in Darkhast No. 270 of 1952 filed by defendant No. 2 for sale of the suit property had come to be dismissed by the Court on 7-10-1952. The suit was then filed on 28-1-53. In the meantime, it appears that the suit property was sold in a Court auction and it came to be purchased by defendant No. 2. That led the plaintiff to withdraw the suit - it being, in his view infructuous - by giving an application Ex. 81 on 29-1-54 wherein he stated that the right, title and interest of the suit property has been sold away and that, therefore, he does not think it property to prosecute his suit. He has then stated that he may be permitted to withdraw his suit without prejudice to his lawful rights and remedies in the suit. The Court permitted him to withdraw the suit directing him to pay the costs of defendant No. 2. It was urged by Mr. Desai that this was a withdrawal pure and simple and the order passed thereon did not give him any permission to file a fresh suit on the same cause of action or in respect of the same subject-matter in the suit. Such a suit, according to him, will be hit by the provisions contained in Order 23, Rule 1(3) of the Civil Procedure Code. Rule 1 of Order 23 provides as under:-

'1. (1) At any time after the institution of a suit the plaintiff may, as against all or any of the defendants, withdraw his suit or abandon part of his claim.

(2) Where the Court is satisfied:-

(a) that a suit must fall by reason of some formal defect, or

(b) that there are other sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of the suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or abandon such part of a claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of a claim.

(3) Where the plaintiff withdraws from a suit, or abandons part of a claim, without the permission referred to in sub-rule (2), he shall be liable for such osts as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim. xx xx xx'

It was, thus, urged that the plaintiff was precluded from instituting the present suit which, according to him, was in respect of the same subject-matter since he had not obtained any such permission as required under Order 23, Rule 1, clause (2) of the Civil Procedure Code. This contention was resisted by Mr. Nanavati on various grounds. He tried to urge in the first instance that both the application and the order passed thereon must be read together and that when the permission for withdrawal from the suit was granted by the Court, it should be taken or deemed to have been in view of the prayer made in the application itself. In support thereof, he invited a reference to the case of Khudi Rai v. Lalo Rai, AIR 1926 Pat. 259, where it was held as follows:-

'Where an application is made by a plaintiff to withdraw from a suit with liberty to bring a fresh suit on which an order is passed giving the permission to withdraw from the suit, although nothing is said in the order as to the plaintiff's liberty to institute a fresh suit on the same cause of action, that order ought to be read along with the petition and construed as granting permission to file a fresh suit.'

While we agree that the application and the order passed thereon have to be read and considered together, the permission must appear to have been given provided the same is so claimed as required under Order 23, Rule 1(2) of the Code.l on a perusal of the application Ex. 81 given by the plaintiff in that suit, he has not sought for any such permission giving him liberty to institute a fresh suit in respect of the subject-matter of such suit or such par of a claim. All that he claims is that he may be permitted to withdraw the suit, and if it has been stated that he withdraws the suit without prejudice to his lawful right and remedy, it cannot mean to convey in any manner that he claimed liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of a claim as required under Order 23, Rule 1, clause (2) of the Civil Procedure Code. There is no reference to the provision made under which permission is sought for as well. That may not matter. But what he has to ask for is such permission, referred to in sub-rule (2), which is so essential so as to avoid any such bar contemplated in clause (3) of Rule 1 of Order 23 of the Code. Such a permission is neither sought for and none granted by the Court so as to say that the bar in instituting a fresh suit in respect of the same or similar subject-matter as one of the suit cannot exist. If these words were there in the application and if the Court were to pass an order that he is so permitted, we would have been inclined to assume the grant of such permission as was done in the case of Narayana Tantri v. Nagappa, AIR 1918 Mad 126. In that case, in the petition it was prayed for withdrawal of a suit with liberty to bring a fresh suit. The Court had merely endorsed the word 'permitted' and the matter went to the High Court. It was held that the order should be construed as having impliedly granted leave to file a fresh suit. There can arise no difficulty in going so far, if the application really disclosed the mind of a man that he was seeking permission to withdraw the suit with liberty to file a fresh suit in respect of the same subject-matter, Such express words in the application were essential and the same must have been granted by the Court so as to avoid or get over any such bar contemplated under Order 23, Rule 1(3) of the Civil Procedure Code.

17-18. x x x

19. Appeal dismissed.


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