MALIREDDI AYYAREDDI Vs. ADUSUMALLI GOPALA KRISHNAYYA

JUDGEMENT

(1.) The facts are these. Defendants Nos. 1 to 3 are the owners of the property, They created three mortgages on it. The plaintiff is the third mortgagee. Defendants Nos. 4 to 7 purchased the equity of redemption under a decree in a Small Cause suit. In 1913, a suit was brought by the 2nd mortgagee to which the mortgagor and the prior and subsequent mortgagees were patties, and he obtained a decree. It should be mentioned that the 2nd mortgage covered not only the property, but all the crops that may be grown on it until redemption. The 3rd mortgagee sued in 1914 on his mortgage making the mortgagors alone parties and purchase d the property. Defendants Nos. 4 to 7 paid a good portion of the decree amount due to the 2nd mortgagee and then assigned their rights to defendants Nos. 9 and 10. These latter paid the balance of that decree. Satisfaction of the decree was entered. In execution of the decree on the 3rd mortgage, the property was brought to sale, and from the sale-proceeds the 1st mortgage was fully discharged. The Question now related to the payment of the balance. Defendants Nos. 9 and 10 claim it as they contend that they have been subrogated to the position of the 2nd mortgagee. This is the principal question for decision.

(2.) There was an appeal to this Court (Appeal Suit No. 391 of 1915) in the suit of the 3rd mortgagee and this Court declared by the decree that defendants Nos. 4 to 7 whom defendants Nos. 9 and 10 now represent are entitled to pay off the 2nd mortgage and to be subrogated to the position of the 2nd mortgagee. That was a decision inter parties and is binding on the plaintiff. But that direction in the decree can only affect payments made subsequent to the decree. The question, therefore, still has to be decided, whether a purchaser of the equity of redemption discharging an encumbrance on the property is not entitled to the benefit of subrogation. We see no reason why he should not have this right. Under Section 55, Clause 1(g) of the Transfer of Property Act a purchaser is bound to pay off existing encumbrances. A Court purchaser is not free from this obligation. Section 91 of the Transfer of Property Ant empowers the purchaser of the equity of redemption to redeem existing mortgages. Under Section 74 of the Act a subsequent mortgagee redeeming a previous one is entitled to stand in the shoes of the latter. This right is given by Section 101 to a purchaser and the section declares that what is beneficial to the purchaser shall be deemed to have been intended by him, Reading all these sections together, we are clear that on principle the purchaser of the equity of redemption is entitled to the right of subrogation.

(3.) Turning to the authorities quoted Gokaldas Gopaldas v. Puranmal Premsukhdas 10 C. 1035 (P.C.) : 11 I.A. 126 : 8 Ind. Jur. 396 : 4 Sar. P.C.J. 543 : 5 Ind. Dec. (N.S.) 692 seems to recognise this principle in dear terms. The Judicial Committee, while expressing unwillingness to extend the principle underlying Toulmin v. Steers (1817) 3 Mer. 210 at p. 215 : 36 E.R. 81 : 17 R.R. 67 to India, point out that, where there is no personal obligation to pay, the payer is entitled to subrogation. That is also the view taken in Vdit Narain Misir v. Asharfi Lal 35 Ind. Cas. 732 : 38 A. 502 : 14 A.L.J. 662 and in the earlier portion of the judgment in Sat Narain Tewari v. Chowdhury Sheobaran Singh 11 Ind. Cas. 649 : 14 C.L.J. 500. As regards Bisseswar Prosad v. Lala Sarnam Singh 6 C.L.J. 134 and the earlier case Surjiram Marwari v. Barhamdeo Persad 2 C.L.J. 288, it is enough to say that in both of them, the learned Judges were dealing with agreements in which there were personal covenants on the part of the purchaser. Where there is such an undertaking to extinguish the mortgage, the presumption that the person paying off the mortgage intended to keep alive that mortgage for his protection may be negatived. The observations in Govindaswami Thevan v. Doraisami Pillai 6 Ind. Cas. 781 : 34 M. 119 : 20 M.L.J. 330 : 8 M.L.T. 132 : (1910) M.W.N. 390 should also be confined to cases of personal liability. We think for these reasons that defendants Nos. 9 and 10 are entitled to be subrogated to the position of second mortgagee.