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Avudai Ammal Vs. Chinna Ramasami Naick and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1925Mad129
AppellantAvudai Ammal
RespondentChinna Ramasami Naick and ors.
Cases ReferredSundra Reddiar v. Subbiah Koundan
Excerpt:
- - the learned judge observes at page 282: 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 that mortgage, but to keep it alive for his own benefit. the charge referred to is the bank's charge, which the plaintiff says was kept on foot in his favour, and the question is whether his position is well founded......rs. 3,350 on 28th july, 1912, and paid the amount to veerappa's vakil in discharge of the decree debt. the mortgage deed ex. c, in favour of the plaintiff was executed on 16th august, 1912, and the stamp paper for the deed was purchased on 27th july, 1912.2. both the lower courts have found in favour of the plaintiff's contention that he is entitled to priority over the second mortgagee.3. it has been urged before me that the plaintiff is a volunteer and that he had no subsisting interest on the date of his mortgage, to enable him to get the benefit of the principle of subrogation and that in order to stand in the shoes of the first mortgagee, veerappa naick, the plaintiff ought to have had an interest in the mortgaged property, before he discharged the amount due to veerappa.....
Judgment:

Devadoss, J.

1. The question argued in this Second Appeal is whether the third mortgagee is entitled to priority over the second mortgagee. There were three mortgages, one of 1900 in favour of one Veerappa Naick, Ex. B. another in 1904 in favour of the 2nd defendant Ex. 1, and the third in favour of the plaintiff in 1912, Ex. C. Veerappa Naick brought a suit and obtained a decree without impleading the 2nd defendant as a party. In order to discharge the decree, the mortgagor borrowed from the plaintiff Rs. 3,350 on 28th July, 1912, and paid the amount to Veerappa's Vakil in discharge of the decree debt. The mortgage deed Ex. C, in favour of the plaintiff was executed on 16th August, 1912, and the stamp paper for the deed was purchased on 27th July, 1912.

2. Both the lower Courts have found in favour of the plaintiff's contention that he is entitled to priority over the second mortgagee.

3. It has been urged before me that the plaintiff is a volunteer and that he had no subsisting interest on the date of his mortgage, to enable him to get the benefit of the principle of subrogation and that in order to stand in the shoes of the first mortgagee, Veerappa Naick, the plaintiff ought to have had an interest in the mortgaged property, before he discharged the amount due to Veerappa and reliance is placed on Gurdeo Singh v. Chandrihah Singh and Chandrikah Singh v. Rashbehari Singh (1909) 36 Cal. 193 and Govinda Padayachi v. Lokanatha Aiyar A.I.R. 1921 Mad. 51 In Gurdeo Singh v. Chandrikah Singh and Chandrkah Singh v. Rashbehari Singh (1909) 96 Cal. 193 the learned Judges observe:

That principle is, that subrogation as a matter of right is never applied in aid of a mere volunteer. Legal substitution into the rights of a creditor for the benefit of a third person takes place only for his benefit, who, being himself a creditor satisfies the lien of a prior creditor or for the benefit of a purchaser, who extinguishes the encumbrances upon his estate or of a co-obligor or surety, who discharges the debt, of an heir, who pays the debts of the succession. Anyone who is under no legal obligation or liability to pay the debt, is a stranger and, if he pays the debt, he is a mere volunteer.

4. Now the question is whether a person, who advances money for the purpose of getting a mortgage and pays the consideration for the mortgage of a prior encumbrancer is a volunteer or not. The authorities cited by the learned vakil for the appellant do not support him in the contention that the mortgagee who pays off the prior encumbrance is volunteer. In Govinda Padayachi v. Lokanatha Aiyar A.I.R. 1921 Mad. 51, the learned Judges find that the person, who claimed priority, did not get any title to the property. At page 120 they observe:

Their claim therefore rests only on the fact that they made payments to free property from encumbrances, in the belief that in the future they might acquire from a third party an interest in that property, by which their payments could be justified. On these facts no authority supports their claim to reimbursement.

5. The case in Karuppan Ambalagaram v. Sakuth Levvai (1904) 14 M.L.T. 478 does not support the appellant's contention. In Venhatarama Reddi v. Rangiah Chetti A.I.R. 1922 Mad. 249 also the person who claimed to stand in the shoes of a prior encumbrancer was a volunteer. That a person who takes a mortgage interest or any other interest in the property is entitled to keep alive a prior encumbrance, which he pays off, requires no authority. In Butler v. Rice (1910) 2 Ch. 277 the facts were that the plaintiff advanced 450, on the representation of Mr. Rice that the property was his and that the Bank had lien on the property : The plaintiff paid off the debt, due to the Bank and got possession of the title deeds. It turned out afterwards that the property did really belong to his wife Mrs. Rice. Warrington, J., on the facts held that the plaintiff was entitled to priority, in respect of the amount paid by him to the Bank. The learned Judge observes at page 282:

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 that mortgage, but to keep it alive for his own benefit. The statement of claim asks for a declaration, that the plaintiff is entitled to a charge on the Manor Road property for 150 and interest at 5 per cent. The charge referred to is the Bank's charge, which the plaintiff says was kept on foot in his favour, and the question is whether his position is well founded. In the first place, I find from the facts I have stated that it was not the intention of the plaintiff, nor indeed is it possible to suppose that any sensible man would have such an intention to discharge the property from the debt. There are only two questions which have to be dealt with, in order to arrive at the further conclusion that in equity the debt is still kept alive. The first is this; is it material that the owner of the property, the mortgagor, has not requested the person who paid the money to make the payment? And secondly is the plaintiff's right affected by the further intention that, when the transaction was fully carried out, his position should be secured by a legal mortgage for 300 and guarantee of 150

6. In that case, the learned Judge held that even if Mr. Rice was not a party to the transaction, the plaintiff was entitled to stand in the shoes of the Bank, so far as the amount which he paid to discharge the debt due to the Bank, was concerned. It is unnecessary to refer to all the cases quoted at the Bar. It is sufficient to refer to the case reported in Ram Narayan Sah v. Sadheo Singh A.I.R. 1922 Pat. 181, the facts of which are very similar to those of the present. In that case, it was held that a mortgagee who advanced money to pay off prior encumbrances was entitled to be subrogated to the rights of the prior encumbrancer. The learned Judges rely on the Privy Council decision, in Het Ram v. Shadi Ram A.I.R. 1918 P.C. 34 and Sukhi v. Gulam Safdar Khan A.I.R. 1922 P.C. 11. Their Lordships of the Privy Council in the latter case, feel no difficulty in holding that:

The law remains as it certainly was, before the Transfer of Property Act, 1882, namely, that an owner of a property who is in the rights of a first, mortgagee and of the original mortgagor has acquired at a sale under the first mortgage is entitled at the suit of a subsequent mortgagee who is not bound by the sale or the decree on which it proceeded, to set up the first mortgage as a shield.

7. I find against the appellant so far as this contention is concerned.

8. The next contention is that Section 47 is a bar to this suit. I do not see how Section 47 can be a bar. When a person wants to have the benefit of the discharge of a prior encumbrance be can only bring a suit on the encumbrance, he cannot claim to be substituted for the plaintiff in the mortgage decree obtained by the prior encumbrancer and execute the decree. The amount due to the prior encumbrancer having been paid off, there can possibly be no decree, which has to be realised by execution. That being so, a suit is the only remedy. This point is set at rest by the decision in Sundra Reddiar v. Subbiah Koundan : (1913)24MLJ28 .

9. In the result the appeal fails and is dismissed with costs. Time for redemption by the appellant three months.


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