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Marimittath theruvil Moothachettiam Veettil Kelu Vs. Kuitiyil Machikandy Chekkara Chappan and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in172Ind.Cas.47
AppellantMarimittath theruvil Moothachettiam Veettil Kelu
RespondentKuitiyil Machikandy Chekkara Chappan and ors.
Cases ReferredRukku Shetty v. Rama
Excerpt:
mortgage - subrogation--payment by third party of usufructuary mortgage under bona fide belief that he had right to redeem--suit by real owner of equity of redemption for possession--whether can be resisted by plea of payment and adverse possession thereafter. - .....but it does not follow that because the 1st defendant is not a transferee or assignee of a mortgage right, he is not entitled in equity to be subrogated to those rights. the only other case quoted in second appeal on this point was periya aiya ambalam v. shanmugasundaram 38 m 903 : 22 ind. cas. 615 : 15 mlt 112 : 26 mlj 140 : 1 lw 119 : (1914) mwn 417, a case in which a trespasser dispossessed the mortgagee in possession and continued in possession himself, asserting a title adverse to the mortgagor, also; and it was held that time began to run against the mortgagor from the time that he came to know that the trespasser was setting up a claim adverse to the mortgagor.4. mr. kuttikrishna menon for the appellant at first argued that any person who pays off the mortgage is entitled.....
Judgment:

1. In 1853, the Karnavan of the Mootha Chettian Veettil Tarwad executed a usufructuary mortgage deed in favour of one kuttiassan. In 1871, the assignees of the mortgagee executed a surrender deed, Ex. III in favour of one Chappan, who claimed to be the karnavan of the M. Tarwad. It appears, however, that two bodies of people claimed to constitute the M. Tarwad and two rival karnavans (the plaintiffs and the 1st defendant) claimed the equity of redemption of this mortgage on behalf of these two bodies. In this suit it has been established by evidence to the satisfaction of the trial Court and the first Appellate Court that the present plaintiff has the rights of the mortgagor and that the 1st defendant, who actually purported to redeem the mortgage, had no right at all to do so. It has also been established that as long as 1878, the plaintiff was aware of the fact that the 1st defendant was holding the land, not merely as one who had acquired rights from the original mortgagee, but as the full owner of the property. In second appeal, Wadsworth, J. agreed with the lower Appellate Court that although the 1st defendant had no right to redeem, his long possession over a period greater than twelve years had established his title to the property by adverse possession. In this Letters Patent Appeal, the plaintiff contends that although the 1st defendant was eventually found not to be the owner of the equity of redemption; yet his act in paying off the mortgagee, entitled him to be subrogated to the rights of the mortgagee, that the plaintiff was not entitled to possession without redeeming the mortgage, and that as the plaintiff was allowed sixty years to redeem the mortgage, his suit was in time.

2. The principal points raised in this appeal were scarcely discussed at all before our learned brother, and so we have not been, given the benefit of his considered finding on the matters argued before us. He was, however, of opinion that the act of the 1st defendant extinguished the mortgage, as it was clear that it was not his intention to keep the mortgage alive, and that as soon as the mortgage was extinguished adverse possession began to run. The first case quoted for this purpose in Second Appeal was Bijai Bahadur v. Parameswari Ran AIR 1924 All. 834 : 78 Ind. Cas. 1026, where this question receives no discussion at all and is disposed of in these few words:

It cannot be said that by their redemption effected by means of the award, they became transferees or assignees of the mortgagee's rights.

3. There can by no doubt that this statement is correct: but it does not follow that because the 1st defendant is not a transferee or assignee of a mortgage right, he is not entitled in equity to be subrogated to those rights. The only other case quoted in second appeal on this point was Periya Aiya Ambalam v. Shanmugasundaram 38 M 903 : 22 Ind. Cas. 615 : 15 MLT 112 : 26 MLJ 140 : 1 LW 119 : (1914) MWN 417, a case in which a trespasser dispossessed the mortgagee in possession and continued in possession himself, asserting a title adverse to the mortgagor, also; and it was held that time began to run against the mortgagor from the time that he came to know that the trespasser was setting up a claim adverse to the mortgagor.

4. Mr. Kuttikrishna Menon for the appellant at first argued that any person who pays off the mortgage is entitled to be subrogated to the rights of the mortgagee; but so wide a proposition has nowhere found support. It is true that in Syamalarayudu v. Subba Rayudu 21 M 143, the proposition that a person paying off a mortgage was entitled to be subrogated to the mortgagee's rights was laid down very broadly: but there was no discussion as to the circumstances under which such a right would accrue to a person paying off a mortgage debt. That case was rather an extreme one in which the person who paid off the debt acted fraudulently, and it has nowhere been followed without qualification. Syamalarayudu v. Subba Rayudu 21 M 143, was approved in Ghamaswami v. Padala Anandu 31 M 439, but it was pointed out that a trespasser or volunteer was not entitled to the rights of subrogation. That a trespasser or volunteer who pays off the mortgage debt is not entitled to rights of subrogation has been laid down consistently in a very large number of cases in England, America and India; (See for example Gurdev Singh v. Chandrikah Singh and Chandrikah Singh v. Rash Behari Singh 36 C 193 : 1 Ind. Cas. 913 : 5 CLJ 611, M. P. Venkatachari v. Karuppan Chetty : AIR1934Mad256 , and Narayana Kutti Goundan v. Pahammal 36 M 426 : 15 Ind. Cas. 206 : 11 MLT 174 : (1912) MWN 353 : 22 MLJ 364, but even in the cases quoted on behalf of the 1st defendant, it is assumed that if a person believes in good faith that he is entitled to redeem the mortgage, either under the belief that he is the mortgagor or that he has some other rights in the property which would entitle him to redeem, he would be entitled to the rights of the mortgagee by way of subrogation or a like equitable principle. In Nasiruddin v. Ahmad Hussain AIR 1926 PC 109 : 97 Ind. Cas. 543 : 3 CWN 731 : (1926) MWN 812 : 25 ALJ 20 : 38 MLT 3 : 31 CWN 538, a sale of property took place, and it was found that such a sale was invalid owing to the existence of a prior contract of sale; but it was held by their Lordships that as the purchaser of the property, in the belief that the property belonged to him, redeemed the mortgage, he was entitled to stand in the shoes of the mortgagee whom he had paid off. In Ramacharan Lonia v. Bkagwandas Maheshri 48 A 443 : 95 Ind. Cas. 898 : 24 ALJ 622 : AIR 1926 PC 68 : (1926) MWN 503 : 53 IA 142 : 3 CWN 783 : 31 CWN 198 : 38 MLT 18 (PC), where a purchaser from a manager of a joint Hindu family paid off a simple mortgage but the sale was subsequently set aside by some other members of the family, their Lordships held that the purchaser was entitled in equity to the rights of a usufructuary mortgages although the mortgage that he redeemed was only a simple mortgage. That the rights of a mortgagee can be acquired by those who purport to obtain the equity of redemption by a void transaction as well as by a voidable one by the principle of subrogation is made clear in Nasiruddin v. Ahmad Hussain AIR 1926 PC 109 : 97 Ind. Cas. 543 : 3 CWN 731 : (1926) MWN 812 : 25 ALJ 20 : 38 MLT 3 : 31 CWN 538 (PU), just quoted and in the judgment of Sundara Ayyar, J. in Narayana Kutti Goundan v. Pachammal 36 M 426 : 15 Ind. Cas. 206 : 11 MLT 174 : (1912) MWN 353 : 22 MLJ 364. That question as to how far rights can be acquired in India by subrogation was very fully discussed by this learned Judge. At page 434, he clearly recognises the rights to subrogation of one claiming under a void or voidable transaction who bona fide believing himself to have a title to the property discharges (an encumbrance) on it and claims a charge as against the owner. The argument put forward before our learned brother that the mortgage became extinguished by the act of the 1st defendant seems never to have been accepted, although Mohesh Lal v. Bawan Das 9 C 961 : 13 CLJ 221 : 10 IA 62 : 4 Sar. 424 : 7 Ind. Jur. 382 (PC) has been quoted to us in support of that proposition. In that case the person who paid off the mortgage was he who had created it, and the question whether his act extinguished the mortgage or not arose only because he had acted in two capacities, as an owner of the property and as an agent of another to whom the property really belonged. Their Lordships held that it must be assumed that when he paid off the mortgage-debt he intended to discharge it, i.e., he acted in the capacity in which he had created the mortgage. This in effect means that the mortgage-debt was paid off by the mortgagor himself which, unless an intention to keep alive that mortgage is expressed, causes the mortgage to be extinguished. When a person who is not a mortgagor, under a mistaken claim pays off a mortgage debt, he cannot extinguish it; for he has no right to do so. The only person who can extinguish a mortgage is the person who is entitled to redeem that mortgage and merge the mortgage in his own rights of mortgagor or mortgagee. Whatever, therefore, might have been the intention of the 1st defendant, he did not in fact extinguish the mortgage and was entitled if he paid off the mortgage in the bona fide belief that he was entitled to do so, to subrogation of the mortgagee's rights.

5. Mr. Kuttikrishna Menon contends that the appellant-plaintiff is entitled to succeed whether the transaction was mala fide or bona fide. If it was mala fide, then it was impossible for him to acquire rights adverse to the mortgagor, on the principle that a mortgagee or one who get into possession through him cannot set up a title adverse to the mortgagor unless he first surrenders the mortgage. In Hillaya Subbaya v. Narayanappa Timmaya 36 B 185 : 12 Ind. Cas. 913 : 13 Bom. LR 1200, a revarsioner, to support, his title to the property mortgaged by a widow and sister of the last male holder got into possession from the successors-in-interest to the mortgagee. It was held that even though he set up a paramount title to the property, yet since he had got into possession through the mortgagee, he could not be allowed to claim toe property adversely to the mortgagor. In Pasupati v. Narayana 13 M 335, the 1st defendant held as a tenant from the plaintiff and had attorned to him and it was held that the 2nd defendant, who had come into possession by collusion with the 1st defendant, was precluded from denying the plaintiff's title and was liable to the plaintiff for the rent collected by him from the 1st defendant. In this case, the principle enunciated by Mr. Kutti Krishna Menon is clearly expressed as follows:

The principle is that he came in by collusion with the tenant who could not deny the landlord's title and that unless he was also precluded from, denying the landlord's title the tenant would have only to part with the property to another person in order to bring the landlord's right in dispute.

6. It is not necessary, however, to pursue the discussion of this point further, because we are clearly of opinion that the transaction between the mortgagee and the 1st defendant was a bona fide one. We feel that it is not open to the 1st defendant, who has all along, even before he paid off the mortgage, been claiming the property as his own and leading evidence to show that all his acts were those of a person entitled to the property, to now contend that as he was acting mala fide; and there is, moreover, no justification on the evidence for such a contention.

7. If the 1st defendant was subrogated to the rights of the mortgagee, the further question arises whether the plaintiff is barred by limitation from being allowed to redeem. The most authoritative decision of this Court is that of the Full Bench in Periya Aiya Ambalam v. Shanmugasundaram 38 M 903 : 22 Ind. Cas. 615 : 15 MLT 112 : 26 MLJ 140 : 1 LW 119 : (1914) MWN 417. There, a person trespassed on the property in 1898 and dispossessed a usufructuary mortgagee. In 1908, when he erected some buildings on the land the mortgagor came to know of the trespass and remonstrated with the trespasser, who denied the mortgagor's right. It was held that from 1908 the trespasser was holding adversely not merely to the mortgagee, who had a right to possession, but to the mortgagor also, because he was ousting the mortgagor by erecting the buildings on the property, which only the mortgagor had a right to do. A passage from the judgment of Batty, J., in Tarubai v. Venkatrao 27 B 43, at p. 68, was approved as setting out the law on the question as to how far possession by a trespasser could be held to be adverse to the mortgagor when the mortgagor had no right to possession. It is

No doubt as long as the mortgagee is in possession, he and all those claiming under him represent the mortgagor's possession. If the mortgagee in possession is dispossessed on grounds affecting only his right, as, for instance, his right as heir to represent the original mortgagee, or his right to possession in spite of a third party's lien on the property, then the dispossession of the mortgagee obviously does not imperil or call in question any right of the mortgagor, and the mortgagor is not concerned or entitled to insist on being immediately restored to possession; and the possession taken is not adverse to him and cannot cause time to run against him. To give the mortgagor a right to insist on immediate possession, there must be an unequivocal ouster preventing the possession of the mortgagor from continuing altogether, by leaving no room for doubt that the person taking possession does not profess to represent the mortgagor, but to hold in spite of him. In such a case the mortgagor is as effectually and unmistakeably displaced as if there had been no mortgagor at all. When an ouster takes place in that manner the mortgagor knows that no one is in possession who can represent or continue his possession, or who is entitled preferentially to possession, and, therefore, he becomes entitled (and it is necessary and his duty, if he does not want his right to be barred) to possession immediately.

8. In that case, it was found that the mortgagor had no knowledge of the dispossession of the mortgagee and so the latter part of the above passage was an obiter dictum. Batty, J., in his very elaborate judgment, has discussed scores of cases; but we have been unable to find in his judgment any justification for the contention that a mere assertion by a person in possession of the property, when the mortgagor has no immediate right to possession which is not coupled with some act definitely interfering with the rights of the mortgagor, would amount to an ouster of the mortgagor which would force him to take some immediate action under pain of losing his rights to the property by adverse possession. In most of the cases quoted, as in the Full Bench case Periya Aiya Ambalam v. Shanmughasundaram 38 M 903 : 22 Ind. Cas. 615 : 15 MLT 112 : 26 MLJ 140 : 1 LW 119 : (1914) MWN 417, the mortgagee was ousted from possession, and it was held that such a dispossession would entitle the mortgagor to bring a suit to have the mortgagee restored to possession, and Batty, J. in the passage above quoted states that it is the duty of the mortgagor to do so. In none of the very many cases referred to by Batty, J. does it appear that a person entered into possession of the land with permission of the mortgagee and did nothing more adverse to the mortgagor than assert a title, although there are a few passages in the judgment of Batty, J., one of which has been quoted above, which might suggest that a mere assertion by a person in possession denying the rights of the mortgagor, amounted to an ouster of the mortgagor; yet in none of the cases was it so held. On the other hand, there are passages in the judgment of Batty, J., which suggest that a mere assertion of title would not be sufficient. For example, at p. 65, he says:

And according to the case put by Lord Kedesdale in Hovenden v. Lord Anneseley (1806) 2 Schedule & Lef 624, of a tenent disallowing the landlord's title and attorning to another, if the landlord being appraised of it acquiesces the possession of his tenant becomes adverse and the Statute of Limitation will run against him. This, however, would not, under the rulings which follow Womesh Chunder v. Raj Narain Roy 10 WR 15, above cited, apply in India apparently in the case of a suit for posssesion against a trespasser when the owner is not entitled to immediate possession. Thus the owner could have no power to sue for possession during the currency of an ijara, and time would run against him, therefore, only on its termination, though prior to that he might possibly have had a right to bring a suit for declaration of title, which it would be discretionary with the Court to give or refuse.

9. After discussing another batch of cases, he states at the bottom of p. 66 Page of 27 B.-[Ed]:

The result is, as above indicated, if there has been no ouster by 'open and notorious' act of taking possession, then the person relying on his possession to defeat a title, must show that it was of such a nature, and involved the exercise of rights so irreconcilable with those claimable by the plaintiff, as to give the plaintiff occasion to dispute that possession (or, in other words that it was such as to give a cause of action or right to sue for possession) throughout the twelve years next preceding suit. The mere existence of the claim without possession, actual or constructive, will not suffice as a bar to a title proved or admitted. And even where there is possession, if it has commenced without any act of dispossession, and is susceptible of explanation by reference to a title not inconsistent with the rights of the person against whom it is so set up, or of one holding on behalf of such person or temporarily entitled to exorcise his rights, there can be no necessity to call that possession in question, unless and until interference with the right of the person against whom it is alleged has been manifested by affecting his existing right, or has otherwise been brought to his knowledge.

10. In a case like the present, it is difficult to see what the plaintiff could have done. As we have found that the 1st defendant was entitled by subrogation to the rights of the mortgagee, the plaintiff could not have obtained possession without redemption. It has been argued that when an adverse claim was put forward, the plaintiff was bound to file a suit for redemption; but it seems preposterous that a person who has 00 years to redeem should be forced to redeem at an earlier date, merely because somebody is asserting some right or putting forward an adverse claim. No suit would he for an injunction, it is true that the plaintiff could have brought a suit for a declaration of his title, which the Court might or might not have granted; but even that which would not prevent the running of time against him if an assertion by the 1st defendant of his paramount rights amounted to adverse possession. It would, therefore, appear that the correct test to apply to a case of this kind, is whether the possession and acts of the person claiming adversely can be referred to any legal right that he possesses. If so, then the true owner is not bound to sue (indeed he cannot sue except for a declaration) merely because adverse assertions of title are being made.

11. It has been further argued by Mr. O.T.G. Nambiar that if the defendant acquired a right to be paid off the mortgage debt, such a right, as he had, was nothing more than a charge on the property. In 'the two cases quoted in support of his contention, one mortgagor redeemed the mortgage, and it' was held that after twelve years' possession adverse to. the joint mortgagor, the right of the joint mortgagor became barred. Section 95 of the Transfer of Property Act give a mortgagor who pays off the entire mortgage debt only a charge on the property against a co-mortgagor, and so obviously such a charge would not be the same as the rights of a mortgagee by subrogation. Mr. O.T.G. Nambiar has been unable to refer us to any case in which it has been held that any one who has acquired the rights of a mortgagee by subrogation or similar equitable principle acquired only a charge. Mr. Nambiar has also referred us to Rukku Shetty v. Rama-chandrayya 49 M 29 : 92 Iad. Cas. 312 : 49 MLJ 631 : 22 LW 685 : AIR 1926 Mad. 81 : (1925) MWN 866, in which a mortgagee purported to a transfer not merely his mortgage rights but the full rights of ownership. It was there held that the transferee immediately began to hold the property adversely to the mortgagor and that the rights of the mortgagor against the mortgagee were barred after twelve years. The reason for this is clear from Article 134 of the Indian Limitation Act, which states that where a mortgagee or a trustee in breach of his trust purports to transfer the property to another person, the period of limitation is twelve years from the date of the transfer. A transfer of a mortgage has here been assimilated to a breach of trust, and time begins to run even when the mortgagor has no knowledge of the transfer. Obviously that decision has no application to a case like the present and can be applied only to cases which are hit by a. 134 of the Limitation Act. We, therefore, hold that the claim of the plaintiff is not barred by limitation.

12. Another point seems to have been raised by the 1st defendant in second appeal, which our learned brother found it unnecessary to consider in his view of the effect of the transaction between the 1st defendant and the mortgagee. The 1st defendant claimed that the plaintiff was not entitled to redeem the kanom or first mortgage without also redeeming the second mortgage. Wadsworth, J., however, held that this argument was not sustainable; and Mr. Nambiar has not raised the contention in this appeal that in any event the plaintiff could not succeed, even though we hold that the 1st defendant was subrogated to the rights of the mortgagee and the plaintiff's suit to redeem is in time.

13. In the result, we allow the appeal, but in view of the- fact that no attempt was made to argue the case fully before our learned brother and the case here argued has been on entirely different grounds, we order both parties to bear their own costs both in this appeal and in second appeal. The respondents will bear their own costs and those of the appellant in the lower Appellate Court. The suit is remanded to the trial Court for the passing of a suitable decree after taking account of the improvements.


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