Harbham Malde and Another vs Parbat Veja and Others

Baxi, J.—This appeal has been referred to me on a difference of opinion between the learned Chief Justice and Chhatpar J.

The point for determination in this appeal arises out of the following facts:

The common ancestor of the parties mortgaged with possession six fields in St. 1929 (1873 A.D.). The mortgage was to be redeemed after eight years and, therefore, it became liable to redemption in St. 1937 (1831 A.D.). In St. 1974 (1918 A.D.) the Defendant-Appellant''s father redeemed it and obtained possession of the fields of which he and his sons continue to be in possession since then. By 1918 A.D. the period of limitation for redeeming the mortgage according to the law of the Porbandar State had already expired in St. 1967 (1911 A.D.). In 1947 A.D. the Plaintiff Respondents sued the present Appellants in the Court of the Civil Judge, Junior Division. Porbandar, praying for redemption of their share of the fields and for partition. The Defendants pleaded that the Plaintiffs'' suit was barred by limitation. The learned Chief Justice held that on redeeming the mortgage in 1918 the Appellants'' father became subrogated to the rights of the original mortgagee and consequently the Plaintiff-Respondents suit was barred by limitation under Article 148 of the Limitation Act. Chhatpar J. however, held that as the redemption took place in 1918 when the provisions of the old Section 95 of the Transfer of Property Act were in force, the doctrine of subrogation did not apply to the case and consequently the suit was governed by Article 144 and remanded it for trial of all the issues including the issue of adverse possession. The appeal was decided by them on the principles of the Transfer of Property Act.

Before I discuss the provisions of the Transfer of Property Act, I would like to state at the outset the law before that Act, relating to the right of a co-mortgagor redeeming a mortgage against his co-mortgagor, Mulla in his Transfer of Property Act, 3rd Edition, states the law as follows (p. 599):

Redemption by a co-mortgagor was a case of subrogation and was so recognised in some cases before the Act.

The same principle has been reiterated by him (p. 561) as follows:

A co-mortgagor redeeming a mortgage is a simple case of subrogation for a co-debtor is a principal debtor in respect of his own share and a surety in respect of his co-debtor''s shares, and when a surety has paid the debt he is entitled to avail himself of all the creditor''s securities.

In support oil his proposition that redemption by a co-mortgagor was a case of subrogation, the learned author cites-Asansab Ravuthan v. Vamana Rau 2 Mad. 223 and-Pancham Singh v. Ali Ahmed 4 All 58. He cited two more cases from Printed Judgments also. In-Asansab Ravuthan v. Vamana Rau the right of the purchaser of a part of equity of redemption to redeem the entire mortgage was admitted. The following passage from the judgment states the law on the subject (p. 225):

It has long been the recognised doctrine of Courts of Equity in England-Cholmondeley (Marquis) v. Clinton 2 Jac. and W 1 that the owner of the equity of redemption of PART of an estate under mortgage is entitled to redeem the whole of the mortgaged estate if the mortgagee, as in this case, insists upon his right to have it so redeemed. When the former elects to pay the entire mortgage-debt he thereby puts himself in the place of the mortgagee redeemed and acquires a right to treat the original mortgagor as HIS mortgagor, and to hold that portion of the estate in which he would have no interest but for the payment as a security for any surplus payment he may have made The purchaser must redeem the entire estate, or not at all, if the mortgagee objects to his security being divided, and the rule of equity that makes it incumbent on him to pay more than what he would be found to pay as between himself and the original mortgagor gives him also a right to hold the village not included in his purchase as a security for the extra payment he may have made.

The doctrine of subrogation thus applied to a co-mortgagor redeeming a mortgage and he was entitled to treat the co-mortgagor as his own mortgagor.

When the Transfer of Property Act was enacted, Section 74, dealt with the rights of a mortgagee redeeming a prior mortgagee and Section 95 dealt with the rights of one of several mortgagors redeeming the mortgaged property. These sections disclosed many defects in their practical application and these defects had to be corrected by the process of judicial interpretation.

In- Shamsuddin Bhuya and Others Vs. On death of Haider Ali Bhuya one of his heirs Asadulla and Others, for instance B.K. Mukherjee J. pointed out how the narrow rule enacted by Section 74 which restricted the right of subrogation of a puisne mortgagee to redeem within the definite limits was given a wider and liberal interpretation by their Lordships in the Privy Council case of-Gopi Narain v. Bansidhar 27 All 325 and applied it to a puisne mortgagee paying dues of the first mortgage after a decree.

Mulla has pointed out some of the defects in Section 95 in the following terms (p. 597):

Defects in the old section,-The old section was based on a passage in Macpherson 4th Ed., p. 145 on mortgages, but in view of the definition of the word "charge" in the Act its use in the section led to much confusion, for it had the effect of repelling the doctrine of subrogation and giving the redeeming co-mortgagor not the same right as the mortgagee but a mere charge which however, was not available against bona fide purchasers for value without notice. In some cases this had been expressly held to be the effect of the section, and in a Patna case Das J., sought to explain the section by saying that the co-mortgagor was not subrogated but had only a right of contribution. But at the same time the Courts very naturally showed some hesitation in repudiating the doctrine of subrogation. The Allahabad High Court held that the redeeming co-mortgagor''s charge took priority over subsequent mortgagees; and in-Lachmi Narayan v. Raj Narayan 54 Ind. Cas. 269 (Oudh) the redeeming co-mortgagor was held entitled to the benefit of a decree, which a mortgagee had obtained, declaring the mortgage valid and binding on the mortgagor''s family. Again the Nagpur Court construed the section as not affecting the co-mortgagor''s right of subrogation so that a co-mortgagor paying off a mortgage had not only a charge u/s 95 on the share of the other mortgagor but a right to enforce the mortgage as subrogated to the mortgagee.

The statement of law contained in Section 95 was taken from a text book and not much thought appears to have been given to its implications. The Transfer of Property Act was amended by Act XX of 1929 which came into force on 1st April 1930. Sections 74, 75 and 95 were repealed and two new sections were enacted in their place as Sections 92 and 95. The new Section 92 applied the doctrine of subrogation to a puisne mortgagee as well as to a redeeming co-mortgagor, and a co-mortgagor redeeming the property after the amending Act came into force i.e., after 1st April 1930 becomes subrogated to the position of the mortgagee whom he redeems and on redeeming the property be has as regards redemption, foreclosure or sale of the property the same right as the mortgagee whose mortgage he redeems may have against the mortgagor and time would run against him under Article 148 from the due date of the original mortgage. But are provisions of Section 92 retrospective in operation and do they apply to transaction closed before 1st April 1930? On this question there has been a difference of opinion amongst the various High Courts. The Allahabad, Bombay, Patna and the Calcutta High Courts held the view based on the construction of Section 63 of the amending Act that the section is retrospective. As regards the rights of a co-mortgagor redeeming the mortgaged property, a Full Bench of the Calcutta High Court held in- Umar Ali and Another Vs. Asmat Ali and Others, that Section 92 was net retrospective and that the right of a co-mortgagor redeeming before the amending Act came into force are governed by the provisions of the old Section 95, Transfer of Property Act. The Full Bench decision reversed the decision of that Court in-Rajkumari Debi v. Mukunda Lal AIR 1921 Cal. 166 which decided that a co-mortgagor seeking contribution must bring his suit within the period within which the mortgagee could have brought a suit to enforce his mortgage vide Umar Ali and Another Vs. Asmat Ali and Others, .

I shall first discuss Bombay decisions. In-Vishnu Balkrishna v. Shankareppa Gurlingappa AIR 1942 Bom 227 the High Court held the view that Section 92 was retrospective in operation. In arriving at this decision it followed the Full Bench Rulings of the Allahabad High Court in- Hira Singh and Others Vs. Jai Singh and Others and- Tota Ram and Others Vs. Ram Lal and Others and its own decisions in - Subraya Kuppa Joshi Vs. Timmanna Subraya Bhatta, ;- Isap Bapuji Amiji Vs. Umarji Abhram Adam, and - Tukaram Ganpatrao Surve Vs. Atmaram Vinayak Gondhalekar, . This last mentioned case decided that the provisions of Section 53A of the Transfer of Property Act which was added by the amending Act of 1929 were retrospective. The reasoning in that case applies with the same force to Section 92. In-''Subraya v. Timmanna'', the High Court expressed itself on the whole in agreement with the view of the Allahabad High Court in-''Tota Ram v. Ram Lal and-''Hira Singh v. Jai Singh'', and of the Calcutta High Court that Section 92 must be regarded as retrospective. It is true that this case was actually decided on the ground that it was not a case of a co-mortgagor redeeming the mortgaged property and, therefore, did not come within the purview of Section 92 and the decision is obiter on the question of the retrospective operation of Section 92 but it is entitled to weight as it was given on a consideration of the views of the various High Courts. Mulla has noted this decision in his Transfer of Property Act (p. 555) while discussing the question whether Section 92 is retrospective. Therefore, I would accept it as authority for the proposition that Section 92 is retrospective. In-Vasudeo Bhikaji v. Balaji Krishna 26 Bom 500, however, it was held that a co-mortgagor who redeemed the whole mortgage was not a mortgagee and that he had merely a charge on the property. But that decision was given in 1902 and had not to take into account the effect of the new Section 92. Therefore in the light of the view of the Bombay High Court based on stare decisis I venture to think that the case of a co-mortgagor redeeming the entire mortgage even before 1st April 1930 would be governed by the new Section 92.

The view of the Patna High Court as expressed in some of its earlier decisions was that Section 92 was not retrospective but in- Tika Sao and Others Vs. Hari Lal and Others, it was held on a construction of Section 63 of the amending Act that Section 92 was retrospective except in certain cases not material to present discussion. In- Mukh Narain Singh and Others Vs. Ramlochan Tiwari and Others, it was held that a co-mortgagor redeeming a mortgage was subrogated to the position of a mortgagee and a suit against him by the other mortgagors for redemption was governed by Article 148 and time ran against the Plaintiff from the due date of the original mortgage. This case was cited with approval- Raghavendracharya Appacharya Katti Vs. Vaman Shriniwas Deshpande, . In-''Raghavendracharya''s case'', redemption by the co-mortgagor was made after 1st April 1930 and that case is not, therefore, strictly in point but its approval of the Patna decision- Mukh Narain Singh and Others Vs. Ramlochan Tiwari and Others, , is significant and shows the trend of opinion of the Bombay High Court.

I shall now turn to the Full Bench decision of the Calcutta High Court in - Umar Ali and Another Vs. Asmat Ali and Others, in which the application of the doctrine of subrogation in the case of a co-mortgagor redeeming the property before the amending Act of 1929 came into force was repelled. The learned Judge held that in cases arising before the amendment of 1929 the Courts are governed by the old Section 95 of the Act and that Section 92 cannot have a retrospective operation. That case overruled-Rajkumari Debi v. Mukunda Lal AIR 1921 Cal. 166 which treated the redeeming co-mortgagor as in the position of an assignee of the original security. But whiles overruling this decision, the learned Chief Justice observed that it was "not statute law". Thus even in Calcutta the trend of opinion before the Full Bench case was in favour of applying the doctrine of subrogation to the case of a co-mortgagor redeeming before the amendment.

It is not necessary to discuss the case law in greater detail. The difficulty of applying Section 92 retrospectively may be felt in cases which are governed by the Transfer of Property Act and to which the provisions of Section 95 have to be literally applied. Even in such cases there is a strong body of judicial opinion in favour of the retrospective operation of Section 92. That view is based on a careful consideration of the construction of Section 63 of the amending Act of 1929. My learned brother Chhatpar J. distinguished Bombay decisions on the ground that they were all cases of a mortgagee redeeming a prior mortgage. But if a subsequent mortgagee can claim subrogation by the retrospective operation of Section 92, with great respect I am unable to see how the same retrospective operation can be denied in principle to the case of a redeeming co-mortgagor. Section 63 of the amending Act does not justify the construction whereby Section 92 can be partly retrospective and partly prospective in operation. Another argument for holding that a co-mortgagor has no claim to be subrogated to the place of the mortgagee is that by terms of the old Section 95 of the Act a co-mortgagor redeeming the mortgage extinguishes it and after its redemption nothing is left to which he can be a subrogee, and all that he can claim is a charge on the property. A literal application of the old Section 95 supports this view but if Section 92 is held retrospective then the co-mortgagor''s rights must be determined by reference to the new Section 92. The Bombay High Court is definitely in favour of the retrospective operation of the section and if the present case had to be decided by applying the provisions of Transfer of Property Act literally then I would prefer the view of the Bombay High Court supported as it is by other High Courts.

This case, however, is not governed by the Transfer of Property Act which was never appealed to the Porbandar State. It was not in force even when the suit was filed. Therefore, in determining the rights of the parties we have to be guided not by the strict letter but by the spirit of the Act and we must take into account "the equities crystallised by the Act" ''18 K.L.R. 89''. Now in considering what these equities are, it is legitimate to bear in mind the state of law prior to the Transfer of Property Act. We should also bear in mind that Section 95 has been clumsily drafted and some of its defects had to be rectified judicially. Even the Calcutta High Court applied the doctrine of subrogation inspite of Section 95 before- Umar Ali and Another Vs. Asmat Ali and Others, . By enacting the new Section 92 the Legislature brought the law into conformity with the equitable doctrine of subrogation and a strong body of judicial opinion holds that the amending Act intended that the section should be retrospective. Therefore, I do not see why this High Court should reject the concensus of opinion in favour of the retrospective effect of Section 92 and feel compelled to follow the provisions of Section 95 literally which was admitted on all hands to be defective. In my view Section 95 did not fully state the equities of a co-mortgagor redeeming the mortgage and consequently we must apply the provisions underlying Section 92 to the present case.

With respect, therefore, I agree with the learned Chief Justice that the Respondents'' suit is liable to fail as barred by limitation. Consequently I allow the appeal and set aside the decree passed by Shri Justice Jhala and order the suit to be dismissed with costs throughout.