1. This appeal has arisen out of a suit for recovery of Rs. 1,153-12-0 alleged to be due on a mortgage bond. The appellants are purchasers of the mortgaged property by the kabala Ex. B. The appellants claim that the property was mortgaged to them for Es.390 on 3rd Baisakh 1329. Two days later they purchased the property for Rs. 800 and out of the consideration of the two transactions Rs. 7.00 was paid in satisfaction of a prior mortgage of Samiruddin and the property was sold to them free of encumbrances, the existence of the plaintiff's mortgage being concealed from them.
2. It is urged on their behalf that the plaintiffs are not entitled to enforce their mortgage -without refunding Rs. 700 paid by the appellants to redeem the prior mortgage. The Court of first instance has found that Samiruddin's mortgage was paid off by the mortgagors previously. The lower appellate Court finds that inasmuch as the amount of the prior mortgage was admittedly actually paid by the mortgagors, the appellants cannot claim that they are entitled to recover the amount from the plaintiffs as subsequent mortgagees before the latter can put the property to sale to enforce their mortgage.
3. It is clear that if, as found by the first Court, the prior mortgage was paid off by the mortgagors previously to, and independently of, the appellant's purchase, the prior mortgage was extinguished as the mortgagors could have had no advantage in keeping it alive and could not have intended to do so, but, assuming that the prior mortgage was paid off, as claimed, from the consideration of the kabala at the time of the purchase, by agreement between the mortgagors and the purchasers, must the prior mortgage to regarded as extinguished or can the purchasers hold it as a shield to protest their property against the puisne mortgagees? This is a question which depends entirely on the circumstances in which the mortgage of Samiruddin was paid off. The learned Subordinate Judge has unfortunately come to no finding as to what these circumstances were : he disposed of the matter by simply saying that the appellants are not entitled to claim the money paid to Samiruddin (the prior mortgagee) because, on their own case they did not pay any thing, to Samiruddin in addition to the consideration of the kabala. But the appellants' claim is that the amount paid to Samiruddin was included in the amount paid for the kabala so that the argument of the learned Subordinate Judge appears to be entirely futile.
4. Although ordinarily when the interests of the mortgagor and mortgagee are united in the same person, it is not necessary for him to keep them distinct; equity will keep them distinct when it is the intention of the party, express or implied, that they should be so kept distinct; it depends on the intention actual or presumed of the person in whom the interests are united; and this person will be presumed to intend that which is most to his advantage; a mortgage substantially satisfied may be kept alive in equity only when this is requisite to the advancement of justice : Bhawani Kuar v. Mathura Prosad  7 C.L.J. 1. On this principle it has been held both in England and America that in the case of a purchaser of the equity of redemption as against subsequent encumbrances of which he had no notice, where it is for his advantage that the charge should be kept alive, an intention against merger should be presumed. For instance in the case of Young v. Morgan 89 Ills. 199 cited in Sheldon on Subrogation Section 25, it was held that if a purchaser has paid off a mortgage in ignorance of the subsequent encumbrance he could, in spite of its discharge, claim the benefit of subrogation to its lien. Intention will be presumed where it is for the purchasers' benefit to keep the charge alive : Estates Purchase Co. v. Willoughby  A.C. 321, Re : Gibbon, Moore v. Gibbon  1 Ch. 367, Manks v. Whitely  1 Ch. 735 and Whitely v. Delaney  A.C. 132. In India the principle is embodied in Section 101, T.P. Act, as follows:
Where the owner of a charge or other incumbrance on immovable property is or becomes absolutely entitled to that property, the charge or incumbrance shall be extinguished, unless he declares, by express words or necessary implication, that it shall continue to subsist, or such continuance would be for his benefit.
5. So that non-merger is presumed when it is to the interest of the payer of the charge.
6. It would be manifestly unjust that where a purchaser has by fraud been kept from the knowledge of a subsequent encumbrance, the puisne mortgagee should be allowed to reap an advantage from a transaction to which he was a stranger at the expense of the purchaser to whom the property was sold as free of encumbrances and, as pointed out, there is authority for holding that in such cases an intention to keep alive the prior mortgage can be presumed in the interests of justice.
7. This principle was adopted in Gokul Das Gopal Das v. Puranmal Premsukhdas  10 Cal. 1035 and many following cases in some of which the rule is applied also in the case of purchasers who are not mortgagees : Prayag Narain v. Chodi Rai  7 I.C. 979 and in cases where the purchasers had no notice of the subsequent encumbrance : Audi Thevan v. Naguyasami Chettiar A.I.R. 1928 Mad. 703 and Durasami Naidu v. Panadai Asari  M.W.N. 592.
8. Whenever the Court has to presume an intention it takes no heed of what might have been present in the mind of the person, but only considers whether the continuance of the charge would have been for hi3 benefit at the time the payment was made : cf. Mahomed Ibrahim v. Ambika Prasad  39 Cal. 527. Thus, in the present case, if it is found that the mortgage of Samiruddin was paid off, as claimed out of consideration of the kabala, and that the continuance of the charge would be for the benefit of the appellants as purchasers of the property, the fact that they were actually unaware of the second mortgage at the time of their purchase would not prevent them retaining the prior mortgage as a shield against the sale of the property by the puisne mortgagees without refunding to the appellants the amount paid to satisfy the prior mortgage.
9. The Court should find whether at the time of their purchase:
(1) The appellants had no knowledge of the puisne mortgage.
(2) It was agreed with the vendor that the prior mortgage should be paid off from the consideration money and it was so paid off.
(3) Whether the nominal continuance of the charge would at that time have been for the benefit of the appellants?
If these questions are answered in the affirmative the claim of the appellants would be established.
10. The appellate Court having come to no findings on these points, the case must go back for decision in the light of these observations. Costs to abide by the final result.
11. I agree.