- (1.) THIS is defendant's appeal.
(2.) THE house in dispute belonged to one Mohd. Ali Khan. On August, 22, 1958 Mohammad Ali Khan executed a mortgage by conditional sale in respect of this house in favour of Lakshmi Ram for consideration of Rs. 1300/- payable with interest at the rate of 1% per mensum. Lakshmi Ram made transfer of his interest as mortgagee in favour of Hardeo Prasad on Feb. , 3, 1960 for a sum of Rs. 1525/- Hardeo Prasad instituted suit No. 602 of 1961 against the heirs of Mohammad Ali Khan, the mortgagor for foreclosure claiming recovery of the mortgage amount. Preliminary decree was passed in his favour on Nov. , 29, 1962 for a sum of Rs. 2472. 25 and the time granted to the judgment-debtor for the payment was up to May 29, 1963. This was, it appears, extended subsequently but the judgment-debtor the defendants were unable to discharge the decretal amount which was to be paid up to Nov. 19, 1963. THE equity of redemption relating to this mortgage was transferred by the defendants to Jamuna Prasad on Oct. , 29, 1963 for a sum of Rs. 6000/ -. Out of the sale consideration Jamuna Prasad made payment of Rupees 2472. 25 to Hardeo Prasad the decree-holder on Nov. , 6, 1963 and in this manner the decree was satisfied. THEreafter the defendants Nos. 1 and 2 brought original suit No. 1217 of 1964 against Jamuna Prasad contending that they were minors and the sale dated Oct. , 29, 1963 was made without authority for and on their behalf. It was claimed that their interest to the extent of half in the house could not be conveyed to Jamuna Prasad under this instrument. This suit was decreed for cancellation of the said deed of sale on Aug. , 31, 1966 in respect of half share belonging to the defendants 1 and 2. Jamuna Prasad instituted the suit giving rise to this appeal on Sept. , 15, 1966 in recover the sum of Rs. 1236. 12 pertaining to the share of the defendants 1 and 2 besides Rs. 423. 88 as interest. THE plaintiff Jamuna Prasad died on Jan. 16, 1969 and the suit has been pressed by his legal representatives substituted on the record. THE defendants 1 and 2 contested the suit pleading that the sale dated Oct. 29, 1963 was void and they are not under liability to the plaintiff for any part of the said amount. Learned Additional Munsif, Deoria decreed the suit in favour of the plaintiff on Feb. 16, 1970 being of the view that Jamuna Prasad was subrogated in place of the mortgagee upon payment having made by him on Nov. 6, 1963 of the sum of Rs. 2472. 25 to Hardeo Prasad and further that the Plaintiff is entitled to benefit under S. 70 of the Contract Act. These findings were affirmed also by the learned Additional District Judge in appeal on Oct. 12, 1974 and the suit decreed thus ultimately for foreclosure in favour of the legal representatives of Jamuna Prasad-deceased plaintiff. Aggrieved against the decree the defendants 1 and 2 have filed this appeal. Learned counsel for the appellants urged in the first place that the view taken by the Courts below to the effect that Jamuna Prasad the deceased plaintiff was subrogated in place of the mortgagee upon payment made by him on Nov. 6, 1963 of a sum of Rs. 2472-25 to Hardeo Prasad, is erroneous. According to S. 91 (a) of the Transfer of Property Act any person who has any interest in or charge upon the property mortgaged or in or upon the right to redeem the same may redeem the mortgage. Jamuna Prasad acquired interest in the property by virtue of the purchase made by him on Oct. 29, 1963 vide Ex. 15. It may, therefore, be said that he became entitled to redeem the mortgage under S. 91 (a ). The question, however, remains as to whether Jamuna Prasad could claim to be subrogated in place of the mortgagee. To this the answer has to be in the negative. The reason is that in accordance with S. 92 of the Transfer of Property Act the person entitled to subrogation is one other than the mortgagor. In view of S. 59a the expression 'mortgagor' includes a person deriving title from him. Jamuna Prasad was thus, in other words, in the position of a mortgagor and as such he could not be entitled to subrogation under S. 92. (See Piarey Lal v. Dina Nath, AIR 1939 All 190, Simala Banking and Industrial Company Ltd. v. Firm Ludder Mal Khushi Ram, AIR 1959 Punj 490 ). In the case of Piareylal v. Dina Nath, AIR 1939 All 190 (supra) the plaintiff had purchased the equity of redemption and thus had derived his title from the mortgagor and being, therefore, a mortgagor within the meaning of S. 59 A he was held not to be entitled to the right of subrogation under S. 92. The same view was taken in AIR 1937 Nag 372 (FB ).
(3.) UPON reference to the deed of sale dated Oct. 29, 1963 executed in favour of Jamuna Prasad it is manifest that the decretal amount was left in the hands of the vendee as part of the sale consideration for the purpose of being paid of to the decree-holder namely, Hardeo Prasad. The mechanical process of payment is not so material if it is known definitely as in the instant case as to whom the money belonged and whose money it was that was being paid. Where as in the instant case the money is paid by the mortgagee out of the money left in his hand by the mortgagor; it is a money belonging to the mortgagor and not the money belonging to the mortgagee. The test applied is as to whom the money belonged which is paid. If the vendee or the mortgagee has taken the property and undertaken as a part of the sale consideration or the mortgage money to discharge a prior debt he is making the payment out of the money which really belongs to the transferor and is not paying the money which belongs to him; (See Hira Singh v. Jai Singh, AIR 1937 All 588 (FB) ). Reference in this connection may also be made to the decision of the Privy Counsel in Lala Man Mohan Das v. Janki Prasad (AIR 1945 PC 23 ). Para 3 of S. 92 of the Transfer of Property Act says that a person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the right of the mortgagee if the mortgagor has by a registered instrument agreed that such person shall be so subrogated. In the case of Lala Man Mohan Das the Privy Council pointed in reference to this provision contained in S. 92 of the Transfer of Property Act that a right of subrogation can be claimed by the vendee only if the mortgagor has by a registered instrument agreed that he shall be so subrogated. There is admittedly no such agreement entered into in the instant case. The decretal amount in the present case was paid by Janki Prasad from out of the sale consideration which was left in his hands by the vendors upon the execution of the deed of sale dated Oct. 29, 1963 and as held in the case of Mahesh Lal v. Mahant Bawan Das, (1883) ILR 9 Cal 961 (PC) cited with approval by their Lordships in the Full Bench decision in Hira Singh (AIR 1937 All 588) (supra) the vendee was in such a case taken to have paid all the amount for and on behalf of the mortgagors out of the sale consideration without being entitled for that reason to subrogation. The mortgagor in other words entrusted the vendee with that part of the sale consideration for the specific purposes of the same having paid to Hardeo Prasad the mortgagee and no question of subrogation in favour of Jamuna Prasad arises on this count. The other contention raised by the appellants' learned counsel is that Jamuna Prasad plaintiff was not entitled to the benefit of S. 70 of the Contract Act. The argument advanced is that the defendants Nos. 1 and 2 having been minors, the sale executed on Oct. 29, 1963 was void in respect of their share in the property and in case it is held that the plaintiff Jamuna Prasad was eligible to the benefit under S. 70 of the Contract Act, this would nullify the effect of S. 11 of the Contract Act. According to the learned counsel the liability under S. 70 of the Contract Act is based on implied contract and in this case no such liability can be said to arise since the contract was void. In support of this contention the learned counsel placed reliance on Bankey Behari Prasad v. Mohendra Prasad (AIR 1940 Pat 324) (FB ). The decision in the Full Bench case of the Patna High Court proceeded on assumption that S. 70 of the Contract Act is an instance of implied contract. On this basis it was observed that a minor cannot be made liable on such a contract. It was stated that the basis of a suit under S. 70 is contractual and, consequently, a minor cannot be sued in this connection. Further, it was said that if S. 70 of the Contract Act applies to minors then S. 11 could be wholly defeated in many cases. I have not found it possible to agree with this line of seasonings advanced by the learned counsel. The foundation for the claim made under S. 70 of the Contract Act is not a contract expressed or implied. The liability is quasi-contractual; it may resemble as being that of a contract but in reality it does not rest upon contractual obligation. It is immaterial, therefore, that there is no contract executed in such a case or that the alleged contract is found ab initio or rendered void subsequently for any reason. A contract hit by S. 11 of the Contract Act is no doubt void; the same is the position in respect of a contract made in contravention of Art. 299 (1) of the Constitution. The requirements under Article 299 (1) have been held to be mandatory and if they are not observed the contract is void. All the same, it has been held that in case where Art. 299 (1) has not been observed the plaintiff remain entitled to benefit under S. 70 of the Contract Act. In Mulam Chand v. State of U. P. (AIR 1968 SC 1218), their Lordships of the Supreme Court made it clear that the juristic basis of the obligation under S. 70 is not founded upon any contract or tort but upon a third category of law, namely quasi contract or restitution. It was also made clear that for purposes of Section 70 it is of no consequence that the contract in question is void. At Page 1222 it was laid down:- "but if money is deposited and goods are supplied or if services are rendered in terms of the void contract, the provisions of S. 70 of the Indian Contract Act may be applicable. In other words if the conditions imposed by S. 70 of the Contract Act are satisfied then the provisions of that section can be invoked by the, aggrieved party to the void contract. The first condition is that a person should lawfully do something for another person or deliver something to him; the second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously, and the third condition is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions are satisfied, S. 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restorer the thing so done or delivered. The important point to notice is that in case falling under S. 70 the person doing something for another or delivering something to another cannot sue for the specific performance of the contract, nor ask for damages for the breach of the contract, for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delivers something. So where a claim for compensation is made by one person against another under S. 70, it is not on the basis of any subsisting contract between the parties but on a different kind of obligation. The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or restitution. ";