Govindaswami Tevan vs Dorasami Pillai and Others

The question in this case relates to subrogation. Is the fourth defendant, the purchaser of items Nos. 1 to 26, entitled to stand in the shoes of

Chengammal, the first mortgagee, against the plaintiff, the puisne encumbrancer? Chengammal had a mortgage on items Nos. 1 to 13. The fourth

defendant agreed to pay off Chengammal''s mortgage with part of the purchase money and it was so discharged. He also agreed to discharge the

plaintiff''s mortgage with the remainder of the purchase money, but failed to do so. He contends that he is entitled on the principle of the decision in

Gokaldas Gopaldas v. Puranmal Premsukh Das ILR (1884) Calc. 1035 to keep alive Chengammal''s mortgage as it is for his benefit to do so. The

District Judge relying on Srinivasa Chari v. Gnanaprakasa Mudaliar ILR (1907) Mad. 67 has refused to uphold his contention, We may at once

say that the decision in Srinivasa Chari v. Gnanaprakasa Mudaliar ILR (1907) Mad. 67 has no application, There the first mortgagee had an

encumbrance upon many items of properties of which a few were conveyed to the purchaser, It was held that the payment having released the

remaining items from the encumbrance, it was impossible to assume the subsistence of the first mortgage upon the items purchased to be used as a

shield against the intermediate encumbrancer. The presumption in Gokal Das''s case for the benefit of the subsequent purchaser (see page 1046) is

rebutted when the intention to release the properties from the first charge is otherwise clear. In the present case it is clear on the facts that the

intention to keep alive the first mortgage as against the puisne encumbrancer cannot be presumed, as the object of the fourth defendant''s

transaction was not to keep alive a mortgage against the puisne encumbrancer, but to discharge the puisne encumbrance as well (see Jones on

Mortgages,"" Section 858). The question has been elaborately discussed by Mr. Justice Mookerjee in Surjiram Marwari v. Barhamdeo Persad

(1905) Cri.L.J. 288 and that decision has been followed in Bisseswar Prosad v. Lala Sarnam Singh (1907) Cri.L.J. 134. [see also Narayanasamy

Nayudu v. Narayana Rau ILR (1894) Mad. 62.]. The rule as to subrogation only applies when the purchaser has not covenanted to discharge the

previous encumbrance (see Sheldon on Subrogation, Section 28). In the present case both the previous mortgages were arranged to be

discharged by the purchase and not merely the first mortgage. As the principle of subrogation by payment to the prior encumbrancer rests upon the

presumption of an intention to keep alive the first mortgage as a shield against the puisne encumbrancer, we are safe in holding that that

presumption is rebutted when the transaction in question., contemplates the discharge of the puisne encumbrance by payment out of the purchase

money. We must therefore dismiss the second appeal with costs.