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Malireddi Ayyareddi Vs. Adusumalli Gopala Krishnayya and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in58Ind.Cas.493
AppellantMalireddi Ayyareddi
RespondentAdusumalli Gopala Krishnayya and anr.
Cases ReferredIzzatunnissa Begam v. Partab Singh
Excerpt:
mortgage - equity of redemption, purchaser of, discharge of incumbrance by--subrogation, right of, acquisition of--transfer of property act (iv of 1882), sections 55(1), (g), 74, 91, 101--payment of puisne incumbrance effect of on purchaser's rights. - - 4 to 7 paid a good portion of the decree amount due to the 2nd mortgagee and then assigned their rights to defendants nos......3rd mortgagee sued in 1914 on his mortgage making the mortgagors alone parties and purchase d the property. defendants nos. 4 to 7 paid a good portion of the decree amount due to the 2nd mortgagee and then assigned their rights to defendants nos. 9 and 10. these latter paid the balance of that decree. satisfaction of the decree was entered. in execution of the decree on the 3rd mortgage, the property was brought to sale, and from the sale-proceeds the 1st mortgage was fully discharged. the question now related to the payment of the balance. defendants nos. 9 and 10 claim it as they contend that they have been subrogated to the position of the 2nd mortgagee. this is the principal question for decision.2. there was an appeal to this court (appeal suit no. 391 of 1915) in the suit of the.....
Judgment:

1. The facts are these. Defendants Nos. 1 to 3 are the owners of the property, They created three mortgages on it. The plaintiff is the third mortgagee. Defendants Nos. 4 to 7 purchased the equity of redemption under a decree in a Small Cause suit. In 1913, a suit was brought by the 2nd mortgagee to which the mortgagor and the prior and subsequent mortgagees were patties, and he obtained a decree. It should be mentioned that the 2nd mortgage covered not only the property, but all the crops that may be grown on it until redemption. The 3rd mortgagee sued in 1914 on his mortgage making the mortgagors alone parties and purchase d the property. Defendants Nos. 4 to 7 paid a good portion of the decree amount due to the 2nd mortgagee and then assigned their rights to defendants Nos. 9 and 10. These latter paid the balance of that decree. Satisfaction of the decree was entered. In execution of the decree on the 3rd mortgage, the property was brought to sale, and from the sale-proceeds the 1st mortgage was fully discharged. The Question now related to the payment of the balance. Defendants Nos. 9 and 10 claim it as they contend that they have been subrogated to the position of the 2nd mortgagee. This is the principal question for decision.

2. There was an appeal to this Court (Appeal Suit No. 391 of 1915) in the suit of the 3rd mortgagee and this Court declared by the decree that defendants Nos. 4 to 7 whom defendants Nos. 9 and 10 now represent are entitled to pay off the 2nd mortgage and to be subrogated to the position of the 2nd mortgagee. That was a decision inter parties and is binding on the plaintiff. But that direction in the decree can only affect payments made subsequent to the decree. The question, therefore, still has to be decided, whether a purchaser of the equity of redemption discharging an encumbrance on the property is not entitled to the benefit of subrogation. We see no reason why he should not have this right. Under Section 55, Clause 1(g) of the Transfer of Property Act a purchaser is bound to pay off existing encumbrances. A Court purchaser is not free from this obligation. Section 91 of the Transfer of Property Ant empowers the purchaser of the equity of redemption to redeem existing mortgages. Under Section 74 of the Act a subsequent mortgagee redeeming a previous one is entitled to stand in the shoes of the latter. This right is given by Section 101 to a purchaser and the section declares that what is beneficial to the purchaser shall be deemed to have been intended by him, Reading all these sections together, we are clear that on principle the purchaser of the equity of redemption is entitled to the right of subrogation.

3. Turning to the authorities quoted Gokaldas Gopaldas v. Puranmal Premsukhdas 10 C. 1035 (P.C.) seems to recognise this principle in dear terms. The Judicial Committee, while expressing unwillingness to extend the principle underlying Toulmin v. Steers (1817) 3 Mer. 210 to India, point out that, where there is no personal obligation to pay, the payer is entitled to subrogation. That is also the view taken in Vdit Narain Misir v. Asharfi Lal 35 Ind. Cas. 732 and in the earlier portion of the judgment in Sat Narain Tewari v. Chowdhury Sheobaran Singh 11 Ind. Cas. 649 . As regards Bisseswar Prosad v. Lala Sarnam Singh 6 C.L.J. 134 and the earlier case Surjiram Marwari v. Barhamdeo Persad 2 C.L.J. 288 , it is enough to say that in both of them, the learned Judges were dealing with agreements in which there were personal covenants on the part of the purchaser. Where there is such an undertaking to extinguish the mortgage, the presumption that the person paying off the mortgage intended to keep alive that mortgage for his protection may be negatived. The observations in Govindaswami Thevan v. Doraisami Pillai 6 Ind. Cas. 781 should also be confined to cases of personal liability. We think for these reasons that defendants Nos. 9 and 10 are entitled to be subrogated to the position of second mortgagee.

4. It was next argued that as the second mortgage covered future crops on the property, the payment made by defendants Nos. 4 to 7 to save them from sale should not be deducted out of the money in Court. There is a fallacy underlying this argument. In execution of his decree, the second mortgagee proceeded to sell the crops then on the property. As defendants Nos. 4 to 7 had acquired the equity of redemption and had thereby become entitled to the crops on the land which they themselves had grown, they prevented the sale by paying a portion of the decree obtained by the 2nd mortgagee. This is an involuntary payment towards discharging the mortgage debt, and we can find no ground for refusing to recognise subrogation to the extent of the payment.

5. The last point relates to the right of the defendants to claim interest while enjoying the profits of the land. Here again, there is a confusion of ideas underlying the contention. At the lime that the equity of redemption was purchased, all the three mortgages were outstanding ; when the 2nd mortgage was paid off, the first mortgage was still subsisting and there was also the decree on the 3rd mortgage. Consequently the purchase is of the equity of redemption could not and did not become full owners of the property.

6. In these circumstances, they had two distinct rights, viz., (a) right as owners of the equity of redemption, and (b) right as 2nd mortgagees. By virtue of the 1st right they were entitled to the crops of the land. In the in right as mortgagees they were entitled to interest. We are, therefore, unable to agree with Mr. Somasundaram that either of these rights must be made subservient to the other. The position of the decision in Sat Narain Tewari v. chowdhury Sheobaran Singh 11 Ind. Cas. 649 which deals with this question supports the appellants' contention.' We are unable to follow the reasoning of the learned Judges in this behalf in Muthummal v. Razu Pillai 44 Ind. Cas. 753 . On the facts found, namely, that the sale became anfractuous, the question we are considering did not arise for decision. There are certain dicta in that judgment relating to this question, which, with all respect, we are unable to accept. if the observations are confined to purchaser, which were held to be invalid, that decision will not be against the view we are taking. Moreover, we are strengthened by Izzatunnissa Begam v. Partab Singh 3 Ind. Cas. 793 in our view. The Judicial Committee held in that case that a purchase r of the equity of redemption is not a trustee for the mortgagor. In that view, the 3rd mortgagee who can claim the profits only as representing the mortgagor can have no claim against defendants Nos. 4 to 7 and their assignees, defendants Nos. 9 and 10.

7. The decision of the Subordinate Judge is right and we dismiss the Civil Miscellaneous Appeal with costs.


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