Chanan Dass Mulchand vs Shrimati Tana Devi and Others

H.R. Khanna, J.—The question, as to whether the Plaintiff-Appellant is subrogated to the rights of Defendants and 8 as mortgagee of the house in dispute, arises for determination in this regular second appeal, against me judgment and decree of the learned Senior Subordinate Judge, Delhi, affirming on appeal the decision of the that Court by which the Plaintiff-Appellant''s suit was dismissed.

The brief facts of the case are that Jagan Singh, Dharam Singh, and Chander Sain, Defendants 4 to on-were the owners of the houses standing on four plots or land bearing Nos. 58, 59, 60 and 106 situated In Dev Nagar Karol Bagh, New Delhi. Defendants 4 to 6 mortgaged the above-mentioned four houses for Rs. 15,500/-% registered mortgage deed dated 1-8-1944 in favour or Harbans Singh and Mohar Singh Defendants 7 and 8. On ,24-10-1944 Defendants 4 to 6 mortgaged the above-mentioned four houses in favour of Ramo Devi, Defendant No. 2, for Rs. 2,000/- Rama Devi, Defendant No. 2 subsequently transferred her aforesaid mortgagee rights in favour of Ram Kaur, Defendant No. 10. On 25-1-1947 Defendants 4 to 6 mortgaged the above-mentioned four houses in favour or jana Devi, Defendant No. 1, for Rs. 1000/-. Tana Devi brought a suit on the basis of mortgage in her favour and obtained a decree on 8-8-1951 for recovery of the mortgage money by sale of the property. In the meanwhile Plaintiff who was a creditor of Jagan Singh, Defendant No. 4, obtained a money decree for the recovery of Rs. 2,000/- against Defendant No. 4.

In execution of that decree the Plaintiff got sold in Court auction the house in dispute, which stands on plot No. 60 and was one of the four houses which had been mortgaged by Defendants 4 to 6 in favour of Defendants 7 and 8. The Plaintiff purchased the house in dispute in that Court auction with the permission of the Court for Rs. 1820/- on 17-9-1951. The sale certificate was issued in favour of the Plaintiff on 7-6-1952 and it was recited therein that the sale in favour of the Plaintiff was subject to the mortgage in favour of Defendants 7 and 8 The Plaintiff paid Rs. 4600/- to Defendants 7 and 8 on 4-4-1952 as per receipt Exhibit P. 1 for redeeming me mortgage of the house in dispute in favour of those Defendants.

It has been mentioned earlier that Defendant No. 1 obtained a decree for recovery of the mortgage amount due to her by sale of the mortgaged property. In execution of that decree the house in dispute as well as another house were sold and were purchased by Chander Bhushan, Defendant No. 3. The Plaintiff brought the present suit for a declaration that he was the owner of the house in astute and that the sale of the house in favour of Defendant No. 3 was ineffective against the rights of me Plaintiff. According to the Plaintiff, Defendants 1, 2 and 9 on account of their gross neglect did not get their mortgagee rights mutated and as such he had no knowledge or their charge on the house in dispute. Chhajju Singh, Defendant No. 9, was also impleaded as a party in the suit because the house in dispute had been mortgaged in this favour by Defendant No. 4 for Rs. 1,000/- on 13-4-1944.

The suit was contested by Defendants 1, 3, 9 and 10 who pleaded that the Plaintiff was bound by the mortgages in their favour. Following Issues were framed by the trial Court:

(i) Whether the Plaintiff was competent to redeem the mortgage in favour of Defendants 7 and 8, and whether he acquired any rights in the suit house by virtue of such redemption?

(ii) whether Defendants 1, 2 and 9 fraudulently and by gross neglect failed to get their mortgages mutated and what Is its effect?

(iii) Whether the mortgages In favour of Defendants 1, 2 and 9 were prior to the mortgages in favour of Defendants 7 and 6?

(iv) If Issue No. 3 is proved, has the Plaintiff a preferential right as against these Defendants?

(v) Whether the Plaintiff has become, the owner of the suit house?

(vi) Relief?

The issues were decided against the Plaintiff are in favour of the Defendants and the Plaintiff''s suit was dismissed. In appeal before the learned Senior Subordinate judge the findings of the trial Court on issues 2 to 4 were not challenged. It was, however, contended on behalf of the Plaintiff-Appellant that by payment of Rs. 4600/- to, Defendants 7 and 8 at the time of the redemption of the house in dispute, the Plaintiff became subrogated to the rights of Defendants 7 and 8. This contention was not accepted by the learned Senior Subordinate Judge be-cause he was of the view that there had been only partial redemption of the mortgage in favour of Defendants 7 and 8. The Plaintiff''s appeal was, accordingly, dismissed.

At the hearing of the second appeal, the learned Counsel for the Appellant has argued that the Plaintiff Appellant was subrogated to the rights of Defendants and 8 on payment of Rs. 4600/- to them and the finding of the courts below in this respect is not correct. It is further contended that the mere fact of there having been partial redemption of the mortgage in favour of Defendants 7 and 8 by the Plaintiff would not prevent his being subrogated to the rights of Defendants 7 and 8 because the integrity of the mortgage had been split up. As against that the learned Counsel for the Respondents have argued that the ground about splitting up of the mortgage was not taken in the courts below and should not be allowed to bat taken for the first time in second appeal. It is further argued that there can be no subrogation in case of only partial redemption of the previous mortgage, contention has also been raised that the integrity of the mortgage in favour of Defendants 7 and 8 remained intact and as such also the Plaintiff could not by paying Rs. 4600/- be subrogated to the rights of Defendants and 8.

The first point which arises for determination 15 whether the Plaintiff has set up a case in the plaint about the spliting up of the mortgage and, in my opinion, the answer to this question must be in the affirmative, in paragraph 6 of the plaint it is distinctly stated that Defendants 7 and 8 who are the mortgagees of the four houses apportioned their mortgage money on those houses subsequent to the mortgage in their favour and reserved their mortgage debt on the house in dispute. The matter was also agitated in the lower Appellate Court. Perusal of, pargraph 13 of the lower Appellate court''s judgment goes to show that reliance was placed on behalf of the Plaintiff-Appellant on the observations in case Phula Singh v. Harnaman AIR 1941 Lah 421, that piecemeal redemption must be allowed if once the integrity of the mortgage had boon split up owing to redemption by one or several co-mortgagors. This matter is also embodied m ground No. 10 of the memorandum of appeal in this Court. It, therefore, cannot be said that the matter about the splitting up of the mortgage is being agitated for the first time in this Court or that the Respondents are being taken by surprise.

Coming to the second question as to whether there can be subrogation by partial redemption find that the law on the subject of Subrogation is Incorporated, in Section 92 of the Transfer of Property Act, which reads as under:

Any of the persons referred to in Section 91 (other than the mortgagor) and any co-mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee.

The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems.

A person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee Whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such persons shall be so subrogated.

Nothing in this section shall be deemed to confer a right of subrogation on any person unless the mortgage in respect of which the right is claimed has been redeemed in full.

The learned Counsel for the Respondents have late particular emphasis on paragraph 4 of the above sub-section wherein it is mentioned that there would be no right of subrogation on any person unless the mortgage in respect of which the right is claimed has been redeemed in full. Reliance has also been placed on AIR 1940 38 (Privy Council) AIR 1944 96 (Privy Council) and Simla Banking and Industrial Co. Ltd. Vs. Firm Luddar Mal Khushi Ram and Others, wherein it has been held that a person who claims a right of subrogation must pay the entire amount due under the encumbrance in respect of which subrogation is claimed and that payment of a portion only of the amount due under the encumbrance is not sufficient.

In my opinion, there can be no dispute so far as the general principle is concerned that a person who claims the right of subrogation must pay the entire amount due under a mortgage in respect of which subrogation is claimed. The above principle is, however, subject to the proviso that when the integrity of the mortgage is split up the mortgage should be looked upon as if it were in distinct parts with different considerations apportioned to each part of the property. Each part would then have to be treated as if it were the subject of a separate mortgage, in such a case, any person redeeming completely any one of such independent parts from the mortgagee would acquire the right of subrogation.

I may, in this connection, refer to a case janardan Sadasheo v. Madanlal Mangulal decided by a Division Bench Stone C. J. and Vivian Bose J., reported in AIR 1939 Nag 215 the head-note of which reads as under:

When a mortgage is split up it has to be Looked upon as if it were in distinct parts with different considerations asigned to different portions of the property, and it has therefore to be treated as if it were two independent mortgages. Consequently, if there is redemption of either part in full then the provisions of Section 92 are complied with so far as the part is concerned. Hence, a person who acquires the right of subrogation to such a part of the mortgage is entitled under Order 22 Rule 10, Code of Civil Procedure, to be substituted as decree-holder to the extent of this right.

Case Janardhan Bhagwan Dass Vs. Sham Lal Nand Lal and Others, has also some bearing on the matter and its head-note reads as under:

The provisions of Section 92 of the Transfer of Property Act do not apply to the Punjab. A co-mortgagor who has redeemed the whole mortgage cannot be taken to nave teen subrogated to all the rights of the original mortgagees because he can in no case be regarded to hold a mortgage at least on his own share of the mortgaged property. By redeeming the previous mortgages the co-men-gagor became entitled to reimbursement of the amount paid by him in respect of the shares of his other co-mortgagors and succeeded to the rights of the previous mortgagees only to this extent. It will be in accord with the principles of justice, equity and good conscience that each of the other mortgagors may redeem his share of the property by payment of the proportionate amount actually paid by the redeeming Co-mortgagor, the integrity of the original mortgages is no longer in existence. It will be In accordance with the principles of justice, equity and good conscience to allow the other co-mortgagors to redeem their share of the property on payment of the proportionate amount of the mortgage money.

The next question which arises for determination is whether the mortgage in favour of Defendants 7, and 8 was split up. In this connection I find that there were tour houses which were the subject matter of that mortgage. The receipt, Exhibit P-1, executed by Defendants 7 and 8 in favour of the Plaintiff about the payment of Rs. 4600/- itself shows that prior to the receipt of Rs. 4600/- one or the mortgaged houses had already been got redeemed by one Bakhshi Surat Singh on payment of Rs. 8,/45/- to the mortgagees. In the circumstances, the integrity of the mortgage relating to the four houses in favour of Defendants 7 and 8 could not be deemed to have remained in fact and as such it could not be possible for the Plaintiff to have redeemed the whole of that mortgage. It is also obvious that Defendants 7 and 8 having already received Rs. 8,745/- on account of the mortgage of one of the tour houses in their favour, could not receive that amount over again from the Plaintiff. Moreover, receipt Exhibit P-1 shows that out of the mortgaged amount the mortgagees apportioned a sum of Rs. 3633/- for the house in dispute and the amount of Rs. 4600/- which was received by them was on account of Rs. 3633/- as principal and Rs. 967/- as interest. Receipt Exhibit P-1, in my opinion, clearly shows that the integrity of the mortgage was split up by Defendants 7 and 8. In the circumstances, the Plaintiff, whose Interest was confined only to the house in dispute out of we tour mortgaged houses, was justified in paying the snare of the mortgage money which was claimed by Defendants 7 and 8, by apportioning the mortgage money, in respect of the house in dispute. The redemption from Defendants 7 and 8, so far as the house in dispute is concerned, was full.

The learned Counsel for the Respondents have cited AIR 1942 50 (Privy Council) and Shiva Harakh Rai Vs. Akbar Ali and Others, Both these authorities relate to the enforcement of a claim for partial redemption against mortgagees who were not willing to allow such redemption. It was held on the facts of those cases that there was no splitting up of the integrity of the mortgage and partial redemption could not be allowed. In my opinion, the dictum laid down in those cases cannot be of much assistance in a case about subrogation relating to mortgage where the mortgagees are willing parties to split the mortgage and allow separate redemption of each part. Moreover I am of the view that the question as to whether there was a splitting up of the integrity of the mortgage would depend upon the facts of each case. Looking to all the facts of the present case, I am of the opinion that mortgage in favour of Defendants 7 and 8 was subsequently split up by them by apportioning the mortgage money on the four mortgaged properties and thus each mortgaged property was treated as if it were the subject of a separate mortgage, me Plaintiff by redeeming the house in dispute on payment of Rs. 4600/- became subrogated to the rights of Defendants 7 and 8 and thus became a mortgagee of the house for that amount.

The Plaintiff sought a declaration that he was the owner of the house in dispute. The above relief cannot be granted to him but the lesser relief about mis having been subrogated to the rights of Defendants 7 and 8 and about his having become a mortgagee of the house in dispute to the extent of Rs. 4600/- can be granted. I, accordingly, accept the appeal, set aside the judgments and decrees of the Courts below, and grant a decree for declaration in favour of the Plaintiff against the Defendants that he has been subrogated to the rights of Defendants 7 and 8 on payment of Rs. 4600/- and is thus a mortgagee of the house in dispute for that amount, considering all circumstances, I leave the parties to bear their own costs throughout.