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Govinda Kangani Vs. Murugesa Mudali - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1931Mad720
AppellantGovinda Kangani
RespondentMurugesa Mudali
Cases ReferredTangya v. Trimbak
Excerpt:
- - if the basis of the plaintiff's right is clearly understood it will be seen that the appellant's arguments should be rejected. he was therefore 'clearly interested in satisfying atmaram's decretal claim. the statement of claim proceeds on the well-known equitable doctrine that if a stranger pays off a mortgage on an estate he presumably does not intend to discharge the mortgage but to keep it alive for his own benefit. having regard to the special facts of our case it is interesting to note that what was sold to the plaintiff in the case in tangya v......rights as a charge-holder to the extent of rs. 480 over the suit properties which consist of two items. item 2 belonged to defendant 2 and item 1 was purchased in his name and in the name of his concubine, lakshmi am-mal, but having regard to the findings both the items should be treated as belonging to defendant 2. item 2 was mortgaged by him on 1st march 1910 to one shankarappa mudali. he and his concubine afterwards mortgaged both the items to the same person for rs. 100 on 2nd may 1910 (see ex. c-1). on 2nd december 1918 one shunmugarn chetty and one narayanaswami chetty obtained a decree in o.s. no. 530 of 1918, against defendants 2 to 4. defendant 1 obtained an assignment of this decree. the suit properties were attached in 1919 and sold; and were purchased by defendant 1. on 2nd.....
Judgment:

Madhavan Nair, J.

1. Defendant 1 is the appellant. The facts necessary for the disposal of this second appeal may be briefly stated as follows : The plaintiff brought a suit for a declaration of his rights as a charge-holder to the extent of Rs. 480 over the suit properties which consist of two items. Item 2 belonged to defendant 2 and item 1 was purchased in his name and in the name of his concubine, Lakshmi Am-mal, but having regard to the findings both the items should be treated as belonging to defendant 2. Item 2 was mortgaged by him on 1st March 1910 to one Shankarappa Mudali. He and his concubine afterwards mortgaged both the items to the same person for Rs. 100 on 2nd May 1910 (see Ex. C-1). On 2nd December 1918 one Shunmugarn Chetty and one Narayanaswami Chetty obtained a decree in O.S. No. 530 of 1918, against defendants 2 to 4. Defendant 1 obtained an assignment of this decree. The suit properties were attached in 1919 and sold; and were purchased by defendant 1. On 2nd October 1920 while the properties were under attachment a portion of item 1 was sold to the plaintiff by the mortgagor, i. e., defendant 2: sea Ex. A. It mentions that the amount of Rs. 250 mentioned therein was borrowed to discharge the mortgage debts of Sankarappa Mudaly and one Annammal with whose mortgage we are not concerned in the present case. On 10th October 1920 he paid off Rs. 480 to Sankarappa Mudali, who held, as already stated, mortgages over both the items. On 26th October 1920, i. e., 16 days afterwards, the remaining portion of item 1 and item 2 were mortgaged to the plaintiff: sea Ex. B. It mentions that the plaintiff discharged the mortgaged debt of Sankarappa Mudaly. ' It is clear from the recitals in Exs. A and B ' as stated by the learned Subordinate Judge that Lakshmi Ammal borrowed, money ' from the plaintiff to discharge the prior mortgage debts ' on those properties. As regards the exact amount borrowed, the lower Courts accepted the evidence of the plaintiff that he paid Rs. 480 into the hands of Sankarappa Mudaly and thereby discharged his mortgages over the two items. These facts are not disputed by the appellants. The lower Courts found that inasmuch as the sale and the mortgage to the plaintiff were after the attachment of the properties by the decree-holders in O.S. 530 of 1918, Exs. A and B were void under Section 64, Civil P. C, as against defendant 1. This position is not disputed by the plaintiff-respondent. What ha argued was that though the sale and the mortgage are invalid transactions, since he paid off the mortgages over the two items in favour of Sankarappa Mudaly, he should be considered in law to be subrogated to the mortgage rights of Sankarappa Mudaly over the suit pro-perties to the extent of Rs. 480. This argument was accepted by the lower Courts and a declaration was given to that effect in plaintiff's favour. I may here state that the parties agree that of the sum of Rs. 480, Rs. 230 may be taken to represent the mortgage over item 1.

2. It will be observed from the facts narrated above that at the time when the plaintiff discharged Sankarappa Mudaly's mortgage over items 1 and 2 (that is 10th October 1920) he had purchased only item 1 barring 5 cents of it; and he obtained a subsequent mortgage, Ex. B in his favour over the two items, only 16 days after the actual payment. The sale and mortgage being invalid (and treating the non purchase of 5 cents of item 1 on 2nd October 1920 as immaterial for the purpose of his argument). Mr. Viswanatha Ayyer contends that the plaintiff is entitled to be subrogated to the rights of the mortgagee Sankarappa Muddy only with respect to item 1 (that is, to the extent of Rs. 230) and not with respect to his rights as mortgagee over item 2, inasmuch as at the time when ha paid off Sankarappa Mudaly he had not acquired any rights to item 2 at all.

3. With respect to the mortgage over item 2 the argument of the learned advocate is that the plaintiff should be considered to be a mere volunteer; and that therefore the lower Court was wrong in having given him a decree declaring a charge on the properties to the full extent of Rs. 480. I do not think that this argument was put forward in the lower Court. The first Court gave the plaintiff a declaration stating that he was entitled to the mortgagee's rights of one Annammal also over the properties, and the main question for the appellate Court's decision was whether this was so or not. I have not stated in this judgment the facts relating to the controversy on this point. The lower appellate Court found in favour of the appellant regarding Annammal's mortgage and to that extent modified the decree of the District Munsif with the result that the plaintiff got a declaration in his favour only to the extent of Rs. 480 relating to one Sankarappa Mudaly's mortgages. However as the question now argued is one of law; arising on undisputed facts and as a general ground was taken in the memorandum of appeal to the lower appellate Court-see ground 4 that the alleged payment made by the plaintiff of the mortgage debts are' all voluntary'-I allowed the appellant to argue the point. If the basis of the plaintiff's right is clearly understood it will be seen that the appellant's arguments should be rejected. Inasmuch as it should be taken that the sale under Ex. A is invalid and it confers no rights on the plaintiff, his right to recover the money due on the mortgage on item 1 paid off by him to Sankarappa Mudaly must stand in my opinion on the same footing as his right to recover the money paid by him to clear off the mortgage on item 2. I am mentioning this not for the purpose of inviting the conclusion that if the plaintiff's right to the mortgage money due on item 1 is conceded it must follow that his rights to the mortgage money on item 2 should also be declared. I am only mentioning this to show that the plaintiff's right as regards the two items must in law stand on the same footing. I shall now explain what that footing is. By the decree in O.S. No. 530 of 1918 and the subsequent execution proceedings the appellant purchased items 1 and 2 subject to Sankarappa Mudaly's mortgage rights over them. It cannot be disputed that defendant 2, the owner of the properties had an interest in paying off the mortgage to Sankarappa Mudaly. Ha could keep that charge on the mortgage properties alive in his favour by satisfying the mortgage claim if it was in his interest to do so. I think the plaintiff could claim the same benefit by virtue of his having paid that mortgage amount to Sankarappa Mudaly at the instance of defendant 2. If defendant 2 could claim to stand in the shoes of the mortgagee then it must follow the plaintiff claiming through him is also entitled to occupy the same position as defendant 2. In this case there is no doubt that though the actual payment of the mortgage amount to Sankarappa Mudaly was made by the plaintiff it was done at the instance of defendant 2. As stated in the judgment of the lower appellate Court it is clear from the recitals in Ex. A that

Lakshmi Ammal (identical with defendant 2 as the owner) borrowed...to discharge the prior mortgage debts.

4. That this is the true principle, which should be applied to this case appears to be clear from the decision in Tangya v. Trimbak, [1916]40 Bom.646, which closely resembles the present case. In that case the father of defendant 1 mortgaged two lands, Survey No. 19 and a moiety of Survey No. 172 to one At-maram for Rs. 2,250. Atmaram obtained a decree upon his mortgage and on 12th June presented an application for the sale of the mortgaged property. On 27th June 1905 defendant 2 in execution of a money decree which he had obtained against Daga brought the properties to sale and purchased them himself on 13th April 1907. When the properties were put up for sale on account of Atmaram's decree defendant 1 borrowed a sum of Rs. 2,463 from the plaintiff in order to-pay Atmaram's decretal amount and with the money so borrowed the decree-amount was paid off and the sale of the property was averted. On 17th February 1907 Daga executed a sale deed in plaintiff's favour in regard to a moiety of Survey No. 172 for a total consideration of Rs. 4,000 made up of Rs. 2,463 already advanced together with other sums. In 190S the plaintiff who was in possession was ejected from possession as result of a suit filed by defendant 2.. Thereupon the plaintiff brought a suit in which as against defendant 2 he claimed that

since Atmaram's mortgage had been paid off with his moneys he should be declared to stand in the shoes of Atmaram with the result that his advance of Its. 2,463 should be recoverable by the sale of the mortgaged land in the hands of defendant 2.

5. The learned Judges upheld this plea. Shah, J.'s judgment explains the principle on which the plaintiff's claim was allowed. That principle is thus stated by the learned Judge:

I desire to add a word with reference to Mr. Bhat's argument that neither the plaintiff nor defendant 1 was interested in satisfying the mortgage claim of Atmaram at the time when the sum of Rs. 2,463 was paid by the plaintiff. It is clear that, in spite of the previous purchase by defendant 2 at the Court sale of the two survey numbers, the equity of the redemption in the other property mortgaged to Atmaram was vested in defendant 1 at the time. The mortgage decree in favour of Atmaram was against him and was being executed against him at the time. He was therefore 'clearly interested in satisfying Atmaram's decretal claim. He could keep the charge on the mortgaged property alive in his favour by satisfying the mortgage claim, if it was to his interest to do so; and the plaintiff could claim the same benefit in virtue of his having paid the whole amount due under the mortgaged decree to Atmaram at the instance of defendant 1.

6. Batchelor, J. also explained the principle in the same way and then referred to Butler v. Bice [1910] 2 Ch D.277 in support of his conclusion. In that case the following observation occurs:

The statement of claim proceeds on the well-known equitable doctrine that if a stranger pays off a mortgage on an estate he presumably does not intend to discharge the mortgage but to keep it alive for his own benefit.

7. The learned Judge observed that the plaintiff's position in the case before him is:

if there be any difference, somewhat stronger than what was Butler's position; for while Butler was a mere stranger the plaintiff is claiming through a person with a clear interest in releasing the mortgage.

8. On one fact the present case is a stronger one in favour of the plaintiff than the one in Tangya v. Trimbak, for here, the plaintiff, when he paid the money had at least an invalid mortgage over one item in his favour while in the Tangya v. Trimbak case the plaintiff did not have any shred of title, ostensible or real, to support the case. The sale to him of one item of the property was effected only after Atmaram was paid off with the money but by the plaintiff. I should here state that the plaintiff in Tangya v. Trimbak, seems to have been in possession of the property as a lessee for a term of years; but it is clear from the judgment that his position as a lessee had nothing to do with the loan that he paid to defendant 1 to pay off Atmaram's mortgage. Having regard to the special facts of our case it is interesting to note that what was sold to the plaintiff in the case in Tangya v. Trimbak was only one item off property belonging to defendant 1 and with the money borrowed from him the mortgage on two items was paid off as in the present case. The decision in Tangya v. Trimbak, was followed in Shankar Mahadev v. Bhikaji Ramachandra A.I.R.1929 Bom.139, wherein the following proposition of law is stated by Baker, J.:

Now it is manifest that a person who is a stranger to the mortgage and has no right to any part of the equity of redemption cannot redeem, and therefore any payment made by him to the mortgagee of the mortgage money would prima facie amount to a transfer of the mortgage right, and, as has been laid down in Tangya v. Trimbak, being a stranger, he would be entitled to be subrogated to the position of the mortgagee.

9. I would therefore hold, on the strength of the above decisions and the principle explained in Tangya v. Trimbak, that the plaintiff-respondent is entitled to be subrogated to the rights of the mortgagee Sankarappa Mudaly with respect to item 2 also, even though at the time when he paid off the mortgage debts he (that is, the plaintiff-respondent) had no legal title to the properties. The doctrine of the subrogation on which his right is based is an equitable doctrine and it will be surely inequitable to refuse the plaintiff's relief in this case; for, if the relief is refused, it will enable the appellant to enrich himself unjustly to the extent of Rs. 250, the mortgage amount due on item 2. He has purchased the property subject to these two mortgages and in the plaint in O.S. No. 958 of 1920 his assignors claimed relief only in respect of the equity of redemption in the properties. If the appellant's argument is accepted the position will he this : namely, that he will be entitled to hold item 2 free of an encumbrance of Rs. 250, 'not one rupee of which' to use the language of Batchelor, J., in Tangya v. Trimbak, 'he has ever paid himself,'

but every rupee of which has come from the pockets of the plaintiff.

10. I think such a result should be avoided if it is legally possible to do so.

11. For the above reasons, I hold that the decree of the lower Court is right but the lower Court has allowed in favour of the plaintiff interest on Rs. 480. This, he is not entitled to; he will be entitled to a charge on Rs. 480, the amount paid by him to Sankarappa Mudali together with interest on the total mortgage amount, Rs. 300. The decree of the lower Court will be modified to this extent. In other respects that decree will stand and the second appeal is dismissed with costs. In the view that I take of this second appeal no other question of law arises for decision.

12. The memorandum of objections is also dismissed with costs.


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