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Mamundi Kaduvetti Vs. Somasundara Chetty and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 866 of 1956
Judge
Reported inAIR1959Mad555
ActsTransfer of Property Act, 1882 - Sections 92; Madras Agriculturists Relief Act, 1938 - Sections 9A; Debt Law
AppellantMamundi Kaduvetti
RespondentSomasundara Chetty and ors.
Appellant AdvocateM.S. Venkataram Iyer, Adv.
Respondent AdvocateK.S. Desikan, Adv.
DispositionAppeal dismissed
Cases ReferredDigambar Das v. Harendra Narain
Excerpt:
.....the other co-mortgagors. although subrogation may amount to an assignment as it were of the mortgage paid off, it is the re-creation of the debt paid by virtue of the law and for a limited purpose varying with the interest of the person who redeems, the amount paid off, etc. the claim under subrogation is not by virtue of the execution of a mortgage. nor can it be said that the subrogee is in possession of the property mortgaged by virtue of the original mortgage. it is the payment and redemption which entitled the co-mortgagor to be in the possession of the property and not the execution of the mortgage by the original mortgagor. therefore, a co-mortgagor redeeming the mortgage cannot be considered, in every respect, to be in the position of or substituted for the original..........as well as the security. thus, although a subrogation amounts to en assignment as it were of the mortgage paid off, it is recreation of the debt paid off by virtue of the law and for a limited purpose varying with the interest of the person who redeems the amount paid off, etc.13. the question then for consideration is whether s. 9-a of act iv of 1938 would apply to such a claim, i.e. to a debt created as it were by the fiction of law. section 9-a(l) is as follows:"this section applies to all mortgages executed at any time before the 30th september 1947, and by virtue of which the mortgagee is in possession of the property mortgaged to him or any portion thereof."it is clear that in the present case sokkan's representatives are not in possession by virtue of a mortgage; nor can it be.....
Judgment:
1. This second appeal arises out of the decree of the learned Subordinate Judge of Tanjore in A. S. No. 138 of 1955 modifying that of the District Munsif of Pattukottai in O. S. No. 370 of 1953.

2. The plaintiff is the appellant in this second appeal. He filed the suit for redemption of a mortgage, Ex. A. 1 dated 22nd June, 1898 under the following circumstances. The suit properties and certain other properties were originally owned by one Muthu and his son Odayappa. They executed a possessory mortgage over certain items of properties in favour of one Sokkan Chettiar prior to 1898. On 22-6-1898 they executed a second usufructuary mortgage under Ex. A. 1 over those and certain other properties in favour of one Ramaswami.

The mortgagee was directed to redeem from out of the portion of the mortgage money left in his hands the earlier mortgage in favour of Sokkan, The second mortgagee however failed to so redeem. The right of the mortgagee under Ex. A. 1 was transferred to one Alagappan. On the side of the mortgagor there were a few transactions by way of sales of equity of redemption as a result of which the properties vested in regard to some items in the appellant's father, some others in Sokkan, and the remaining properties in one Karuppan and Arunachalam.

The result is that the three sets of persons abovenamed, namely, the plaintiff's father, Sokkan and Karuppan and Arunachalam, came to own the equity of redemption and were in the position of co-mortgagors. Thereafter suits for redemption were filed. O. S. Nos. 52 and 158 of 1926 were filed by Alagappan in the District Munsif Court of Pattukottai to redeem Sokkan's mortgage. O. S. No. 281 of 1952 was filed by Sokkan claiming as the owner of the equity of redemption under the transfer abovementioned to redeem Alagappa's mortgage. In those litigations a decree was ultimately passed decreeing redemption of Alagappan's mortgage by Sokkan as well as Karuppan and Arunachala.

In pursuance of the decree for redemption Sukkan paid a sum of Rs. 1092 and Karuppan and Arunachala paid a sum of Rs. 1226, redeemed Ex. A. 1 and entered into possession of the respective properties. Thereupon the appellant claiming under the purchase by his father filed the suit for redemption out of which the second appeal arises against the representatives of Sokkan.

2a. His case was that he was in the position of a co-mortgagor and was entitled to redeem the mortgage to which Sokkan and the other persons became entitled by virtue of being subrogated to the rights of Alagappan's mortgage, which they redeemed. The appellant's, further case was that Karuppan and Arunachala had executed a release of their rights in his favour. As regards the mortgage money payable for redemption, the appellant claimed that no amount was due as the debt was discharged under the provisions of Section 9-A of the Madras Agriculturists Relief Act, Act IV of 1938. the mortgagee under Ex, A. 1 having been in possession of the properties for more than 30 years.

3. This claim was contested by the respondents who claimed under Sokkan. They pleaded that certain items claimed in the plaint were not the subject matter of mortgage under Ex. A. 1, that certain other items were lost to the mortgagee by reason of adverse possession etc., and that as regards the remaining items Sokkan and his representatives were entitled to retain what they purchased from the mortgagor. They also contested the claim of the appellant as to the applicability of the provisions of S. 9-A of Madras Act IV of 1938.

4. The District Munsif held that four of the items mentioned in the plaint were not included in the othi, and that therefore the appellant was not entitled to redeem them. He further held that the appellant has lost, title to about 20 items on account of adverse possession of the same by third parties and that the plaintiff was entitled to redeem only the remaining items. The District Munsif accepted the case of the appellant that he was entitled to the benefits of Madras Act IV of 1938 and that by reason of the possession and enjoyment of the mortgaged items by the mortgagee, for over 80 years, he held that the appellant was not bound to pay any amount towards the redemption. In the result a decree for possession was passed.

5. An appeal was preferred against the decree of the District Munsif by the contesting defendants to the Sub-Court. The learned Subordinate Judge affirmed the finding of the trial court in regard to the title of the appellant to the various items of the properties. He however, held that the appellant was liable to pay the share of the mortgage money attributable to the properties sought to be redeemed together with the aliquot share of the moneys expended for the redemption and that such liability was not liable to be discharged under the provisions of S. 9-A of Madras Act IV of 1938. The learned Subordinate Judge, therefore, directed the quantum of debt to be ascertained in the final decree. The plaintiff has filed the second appeal against the decree of the lower appellate court.

6. The only question argued on his behalf is as to the applicability of Section 9-A of Madras Act IV of 1938, to the present case. It may be noticed that the mortgage which is sought to be redeemed is Ex. A-l dated 22nd June 1898, Sokkan and his representatives who are in possession of the properties by virtue of the decree for redemption in O. S. No. 281 of 1926 are in the position of co-mortgagors who have redeemed that mortgage. The contention on behalf of the appellant is that a co-mortgagor on redemption becomes entitled to subrogation of the original mortgage, and that the appellant who seeks to redeem in the present suit is redeeming that mortgage, and that therefore the provisions of Section 9-A would apply.

7. Mr. M.S. Venkatarama Iyer, the learned counsel for the appellant, contends that the position of Sokkan on redemption of the mortgage, Ex. A-l, is that of a transferee of that mortgage, and therefore the appellant would be entitled to relief under Section 9-A of the Madras Agriculturists' Relief Act of 1938. In support of his contention he relied upon the decision in Rahimansa Rowther v. Madras Islamia Educational Institution, where it was held that the case of a co-mortgagor redeeming the mortgage is an instance of subrogation, and that the redeeming mortgagor has not merely a charge to the mortgage as to his share but he stands in the shoes of the mortgagee in regard to the shares of other mortgagors; and such a right as a mortgagee relates back to the date of the mortgage, which has been redeemed. At p. 407 (of Mad LJ): (at p. 368 of AIR) Subba Rao J. observed referring to Sections 91, 92 and 95 of the Transfer of Property Act thus:

"Under the aforesaid sections it is obvious that the co-mortgagor will be subrogated to the rights of the mortgagee if he redeems the mortgage. To put in other words he will be substituted for the mortgagee whom he paid off."

The learned Judge again observed at p. 408 (of Mad LJ): fat p. 368 of AIR):

"Indeed S. 92 of the Transfer of Property Act clearly slates that the co-mortgagor redeeming the mortgage has the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee."

Reliance was placed upon the observation contained in Arumuga v. Chockalingam, ILR 15 Mad 331, that the term mortgagee in Article 148 of the Limitation Act includes an assignee of a mortgagee and even a en-mortgagor by whom the mortgaged property has been redeemed.

8. The learned advocate for the appellant, therefore, contends that Sokkan being subrogated to the rights of the mortgagee, under Ex. A-1, would be in the same position as the original mortgagee, namely, Ramaswami, and he would be liable to be redeemed on the same terms and conditions, and that therefore the provisions of Section 9-A, the Agriculturists' Relief Act, 1938, would apply to the instant case.

9. The question is whether a co-mortgagor redeeming the mortgage is to be considered in every respect to be in the position of or substituted for the original mortgagee. In Mulla's Transfer of Property. Act, 4th Edn. at page 534 it is stated:

"A co-mortgagor redeeming a mortgagee is a simple case of subrogation for a co-debtor is a principal debtor in respect of his own share and a surety in respect of his co-debtor's share and when a surety has paid the debt, he is entitled to avail himself of all the creditor's securities."

The effect of a co-mortgagor redeeming a mortgage however is not the same as a stranger redeeming a mortgagee under Section 92(3). In the latter case the stranger would bo completely subrogated to the rights of the mortgagee he redeems. But in the case of a co-mortgagor the result on redemption of the mortgage would be that the mortgage as to his share would be extinguished and would subsist only in regard to the shares of other co-mortgagors and in regard to which alone he would stand in the position of a mortgagee. In Asansab v. Vamana Row, ILR 2 Mad 223 it was held that where the person in the position of a co-mortgagor pays the entire mortgage debt he puts himself in the place of the mortgagee redeemed and acquires a right to treat the other mortgagors as his mortgagors and to hold that portion of the estate in which he would have no interest but for the payment as a security for any surplus payment he might have made. At page 225, the learned Judges observed:

"It has long been the recognised doctrine of courts of Equity in England that the owner of the equity of redemption of a part of an estate under mortgage is entitled to redeem the whole of the mortgaged estate if the mortgagee as in this case insists upon his right to have it so redeemed. Where the former elects to pay the entire mortgage debt he thereby puts himself in the place of the mortgagee redemeed and acquires a right to treat the original mortgagor as his mortgagor and to hold that portion of the estate in which he would have no interest but for the payment as a security for any surplus he might have made."

10. This decision was rendered before the Transfer of Property Act. In a case from the Punjab where the Transfer of Property Act does not apply, Ganesblal. v. Jothiprasad, , the Supreme Court held that where one of the. co-mortgagors redeems a mortgage over the property which belongs jointly to himself and the rest, equity as embodied in the doctrine of subrogation confers on him a right to reimburse himself for the amount spent in excess by him in the matter of redemption, and that he can call upon the co-mortgagors to contribute towards the excess which is paid over his own share and a co-mortgagor so paying stands in the mortgagee's shoes only to the extent of getting reimbursed from the co-mortgagors for their shares in the amount actually paid by him and not for the whole amount clue on the mortgage. This is also the law under the Transfer of Property Act-

11. It is, therefore, clear that when one of the . two co-mortgagors discharges an encumbrance binding on both, the person so discharging could not recover from his co-mortgagor more than the proportionate share of the amount actually paid by him. That is to say that the mortgage in its original form is not enforceable as regards the amount due on it but it is only the proportionate liability of the property other than his own to which he would be entitled to under subrogation. That the subrogation does not mean a complete substitution of the subrogee in the place of the mortgagee as if the claim is to be enforced on the original mortgage, is made clear in the decision in Digambar Das v. Harendra Narain, 5 Ind Cas 165 (Cal). In that case a question arose as to whether the co-mortgagor who was subrogated to the original mortgagees rights was entitled to the interest after the date of payment. It was held that the Court when invited to enforce the right of subrogation can exercise its judicial discretion in the award of interest and in the determination of the period for which it was to be allowed. In such a case there would be no complete subrogation as the subrogee was not entitled to the interest at the rate mentioned in the document The learned Judges observed at page 168 thus:

"In fact if we remember for a moment the principle upon which the doctrine of subrogation rests it becomes obvious that the court has discretion so far as any right as to interest and the period during which it is to run are concerned. It is only by a fiction of law that the mortgagor who redeems the security is substituted in the place of the original creditor, and although it is sometimes said that the substitute is put in all respects in the place of the party to whose rights he is subrogated, even a superficial consideration will show that the statement Is too broad and requires qualification. In so far as any question of priority is concerned, he no doubt enjoys the same advantage as the original mortgagee and is entitled to priority over subsequent mortgagees from his co-mortgagor. In so far as the amount of money which he is entitled to recover from his co-mortgagors is concerned, he can claim contribution only with reference to the amount actually and properly paid to effect redemption, to which sum he can add his legitimate expenses. In so far as interest on these sums is concerned, he cannot claim it for any period antecedent to the redemption. The substitution, therefore, of the new creditor in place of the original one, does not place the former precisely in the position of the latter for all purposes."

It has been held that a subrogee can acquire no greater rights than the party for whom he is substituted. It has also been held that if the subrogee wants to enforce his rights over the mortgage redeemed he would be governed by the rules of limitation which would be applicable to the mortgage redeemed. But his right differs from that of an assignee of a debt by reason of the basis of the law as to subrogation being the outcome of the principles of equity. He would not for instance be entitled to enforce the entire claim on the mortgage if he had paid only a smaller amount and the subrogation in that case would he limited to the amount paid. In the case of a mortgage where there is more than one person interested in the equity of redemption and one of such persons pays the entire mortgage, what he would get on subrogation would not be an assignment of the entire mortgage right, as it would mean that he would be the mortgagee of his own property, but a right to proceed on the basis of the mortgage against the other properties to recover that portion of the debt attributable to those properties on the principles of contribution. This, however, is not a mere right of contribution recognised in Ss. 82 and 100 of the Transfer of Property Act. This is a right by virtue of an assignment as it were of the mortgage to the subrogee to the extent necessary to do justice to him. In Sheldon on Subrogation, 2nd Edn. page 264, it is stated:

"If the security is a mortgage, and the whole debt is paid to save the estate of the party paying it, by one of two tenants-in-common who have, since the giving of the mortgage, acquired the equity of redemption, the assignment of the mortgage to this co-tenant will not extinguish its claim in favour of the other, who had paid nothing. That share of the mortgage debt which belonged to such an assignee to pay is extinguished; his title to his portion of the mortgaged property is perfected; and he is subrogatcd to the rights of the mortgagee as to the other share, and may call upon his co-tenant to pay him the proportion of that share or be foreclosed of the right to redeem....As between the purchasers in common of an estate bound by a joint lien, each share is obliged to contribute only its proportion of the common burden, and beyond this amount is to be regarded as the surety of the others, and if the owner of one share is called upon to pay more than its due proportion of the debt, such owner or his creditors will be entitled to stand in the place of the satisfied creditor to the extent of the excess which ought to have been paid out of the other shares."

12. But subrogation to the rights of a mortgagee differs from the case of an assignment of the mortgage debt as such, because (1) the subrogation is by the process of law and only to the extent necessary, and (2) in the case of an assignment there is an assumption of the continued existence of the debt while subrogation follows the payment of the debt. I have already pointed out that, in the case of a co-mortgagor redeeming the subrogation is restricted both in regard to the debt as well as the security. Thus, although a subrogation amounts to en assignment as it were of the mortgage paid off, it is recreation of the debt paid off by virtue of the law and for a limited purpose varying with the interest of the person who redeems the amount paid off, etc.

13. The question then for consideration is whether S. 9-A of Act IV of 1938 would apply to such a claim, i.e. to a debt created as it were by the fiction of law. Section 9-A(l) is as follows:

"This section applies to all mortgages executed at any time before the 30th September 1947, and by virtue of which the mortgagee is in possession of the property mortgaged to him or any portion thereof."

It is clear that in the present case Sokkan's representatives are not in possession by virtue of a mortgage; nor can it be said that the claim under sub-rogation is a claim by virtue of the execution of a mortgage. This section cannot obviously apply to a case of subrogation, because the right of subrogation is not by virtue of the execution of the mortgage. It is a right under the law on payment of the mortgage amount by one of the persons mentioned in Section 91 of the Transfer of Property Act. Nor can it be said that the mortgagee is in possession of the property mortgaged by virtue of the original mortgage. It is the payment and redemption which entitled the co-mortgagor to be in possession of the property and not the execution of the mortgage by the original mortgagor. I am, therefore, of the opinion that a co-mortgagor redeeming the entire property and being surrogated to the rights of the mortgagee in regard to the excess payment of mortgage money paid by him could not be in the position of a mortgagee within the meaning of Section 9-A of Madras Act IV of 1938, and therefore, the claim of such a co-mortgagor for subrogation cannot be discharged by virtue of that section.

14. The conclusion arrived at by the learned Subordinate judge is, therefore, correct. This appeal fails and is dismissed with costs. No leave.


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