Mehman Singh and another vs Mst. Prem Kaur and others

Chopra, J.—The only but somewhat important question of law involved in this appeal is whether the Redemption of Mortgages (Patiala) Act (9 of 2003 Bk.) applies to an application by one of the mortgagors for redemption of his share of the mortgaged land from a co-mortgagor who has redeemed the mortgage en payment of the entire amount. The facts regarding which there is no dispute, are these: One Sham Singh mortgaged 19 bighas and 11 biswas of land to Basant Singh for Rs. 750/- by a registered deed dated 28-1-1983 Bk. A further charge of Rs. 250/- was created by Sham Singh on 20-2-1986 Bk. The total mortgage-debt thus amounted to Rs. 1,000/-. The mortgagee was to keep possession of the land in lieu of interest on this amount. On Sham Singh''s death, his estate was mutated in favour of his collaterals, namely Gujar Singh Harnam Singh, Mehma Singh and Kartar Singh in equal shares. Out of them, Mehma Singh and Kartar Singh got the entire land redeemed on payment of Rs. 1,000/- to Basant Singh. Several years thereafter Gujar Singh and Harnam Singh submitted an application to the Collector for redemption of half the land from the co-mortgagors on payment of Rs. 500/- their own share of the mortgage-debt. This application is dated 9-6-1950. It was dismissed by the Collector under S. 10, Redemption of Mortgages Act on 29-9-1950.

Gujar Singh and Harnam Singh then brought the present suit for possession of their share of the land by redemption on payment of Rs. 500/-. The suit was filed on 26-3-1951, i.e., within one year of the Collector''s order. Before the suit was filed, the plaintiffs had gifted away their interest in the land to Mst. Prem Kaur by means of a registered deed dated 29-12-1950. Mehma Singh and Kartar Singh, the only defendants, challenged locus standi of the plaintiffs to file the suit on that ground. The plaintiffs thereupon presented an application praying that Mst. Ram Kaur''s name be substituted in their place in the plaint. Mst. Prem Kaur as well presented a separate application for the same purpose. The Sub-Judge, who was seized of the case, allowed this application, vide his order dated 14-8-1952, & directed that Mst. Prem Kaur be substituted in place of the original Plaintiffs. This order was made under O. 1, R. 10, C.P.C. The plaint was consequently amended and Mst. Prem Kuar was shown as the sole plaintiff. The amended plaint was presented on 23-8-1952. In the fresh written statement, the defendants took up various pleas, including that of limitation.

The trial Court agreed with the defendants and dismissed the suit on the ground of limitation alone. On plaintiff''s appeal, the Additional District Judge, Patiala, set aside that finding and directed the case to go back to the Sub-Judge for decision on the rest of the issues. The learned Additional District Judge is of the view that the Redemption of Mortgages Act does not apply, and that since the Collector had no jurisdiction to entertain an application for redemption by a mortgagor against his co-mortgagors, the suit need not have been brought within one year of the Collector''s order. He consequently accepted the appeal and remanded the case for decision of merits. This is defendants'' appeal.

Section 22, Limitation Act, lays down that where, after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall, in so far as he is concerned, be deemed to have been instituted when he was so made a party. Sub-section (2) of this section has no application because the assignment in favour of Mst. Prem Kaur was made before the suit was instituted. The suit, as regards Mst. Prem Kaur, has, therefore, to be deemed to have been instituted on 23-8-1952. The period of one year provided by Art. 14, Limitation Act for a suit to set aside the order of the Collector had by then expired. Shri Atma Ram, Learned Counsel for the respondents, frankly concedes that Art. 14, Limitation Act would stand in the way of the plaintiff and the suit would be barred by time if it be found that the Redemption of Mortgages Act applies and that the Collector did have jurisdiction to entertain and decide the application for redemption. He, however, contends that the tenor of the provisions in the Act indicates that it is meant to apply exclusively to contractual mortgages and not to those created merely by fiction of law. Particular stress is laid on the phrases "after the principal money becomes payable" and "his mortgage" in S. 4 of the Act, the relevant portion of which reads as follows:

The mortgagor or other persons entitled to institute a suit for redemption may, at any time after the principal money becomes payable and before a suit for redemption is barred, present a petition to the Collector applying for an order directing that his mortgage be redeemed, and where the mortgage is with possession that he be put in possession of the mortgaged property.

The argument is that the mortgagors, in their application to the Collector, did not want to redeem their original mortgage with Basant Singh on payment of the principal money secured under the mortgage. The mortgage had already been redeemed by Gujar Singh and Harnam Singh. What the plaintiffs in fact wanted was to pay off the charge or to redeem the new mortgage that was created in favour of Mehma Singh and Kartar Singh, the redeeming co-mortgagors, by fiction of law or on equitable principles. The Principal money secured under the original mortgage was Rs. 1,000/-. That had already been paid off. Tire plaintiffs were now to pay Rs. 500/- only and that too to their co-mortgagors and not Basant Singh. It is further pointed out that Basant Singh was not even made a party to the application. Counsel, therefore, contends that the application was misconceived and based on a wrong notion of law, the Collector could have no jurisdiction to entertain the application under S. 4, Redemption of Mortgages Ad or to dismiss it under S. 10 of that Act and consequently the Collector''s order has to be totally ignored.

The argument is no doubt ingenious but it is based on wrong hypotheses. A co-mortgagor on redeeming the mortgaged property acquired the same rights, as regards redemption, foreclosure or sale of such property, as the mortgagee whom he redeems may have against the mortgagors. No new mortgage is created in his favour, nor is he merely a charge-holder. The effect of redemption is that the co-mortgagor is subrogated to the position of the mortgagee. So far as the other mortgagors are concerned, the mortgage is not extinguished but continues to subsist, with the only difference that its benefit is transferred to the person who had paid it off. The other mortgagors have to get their shares redeemed from the redeeming co-mortgagor who steps into the shoes of the original mortgagee. The doctrine of subrogation is embodied in S. 92, T.P. Act, which, inter alia, lays down:

Any of the persons referred to in S. 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 lie 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.

Subrogation in its wide significance means that one person is substituted to the rights of another. The substitution may arise by devolution, assignment, supposition of law, or by application of the principles of equity, justice and good conscience. Independent of assignment, contract or devolution a right of subrogation is recognized by law under certain circumstances. This is called legal subrogation. The doctrine of subrogation, in relation to mortgages, is dealt with in S. 92, T.P. Act. The principle of reimbursement is enacted in S. 69, Contract Act, and that is to the effect that a person who is interested in the payment of money which another is bound to pay and who, therefore, pays it, is entitled to be reimbursed by the other. In-these cases also subrogation rests upon doctrines of equity and principles of natural justice. In places where the Transfer of Property Act, as in this State, is not in force, such subrogation arises from the principles of equity, justice and good conscience. These principles are very clearly explained in Pomercy on Equity Jurisprudence, Vol. III, Arts. 1221-2 as follows:

Where a party interested in the premises, who is not personally and primarily liable as the principal debtor for the whole mortgage debt, pays the mortgage to the holder thereof, he is entitled to regard the transaction as an equitable assignment of tire mortgage to himself and to keep it alive as security of his own rights against others, who are owners of or interested in the land. Any such person who redeems, no matter how small a portion of the premises he may own, or how partial may be his interest, must redeem the entire mortgage by paying the whole mortgage debt. The doctrine of contribution among all those who are interested in having the mortgage redeemed, in order to refund die redemptory the excess of his payment over and above his own proportionate share, and the doctrine of equitable assignment in order to secure such contribution, are the efficient means by which equity completely and most beautifully works out perfect justice and quality of burden.

A person subrogated to the rights of the mortgagee cannot be said to acquire merely a right of contribution from the co-mortgagors of their share of the mortgage-money. On the other hand, he acquires all the rights, as regards redemption, foreclosure or sale, which the original mortgagee possessed. His position is not that of a mere charge-holder, but is the same as that of the mortgagee for whom he is substituted. In other words, he stands in the position of the mortgagee as regards the non-redeeming co-mortgagors qua their shares, but holds his own share free from the mortgage. Before amendment of S. 92, T.P. Act by Act 20 of 1929 there was a conflict of decisions as to the position of a co-mortgagor redeeming a mortgage. Some cases held that the redeeming mortgagor stepped into the shoes of the mortgagee whom he redeemed. Other cases, on the other hand, took the view that the redeeming co-mortgagor acquired only a charge on the shares of the co-mortgagors as from the date of the payment made by him. The conflict was, however, set at rest by the amendment which now makes it clear that a redeeming co-mortgagor is subrogated to the rights of the mortgagee whom he redeems.

In the Punjab, where the Transfer of Property Act has not been applied, the matter is decided on principles of equity, justice and good conscience. In some of its earlier decisions the Lahore High Court seems to have adopted the former view, viz., that the redeeming co-mortgagor merely acquired the position of a charge-holder. But in - AIR 1934 248 (Lahore) ), Hilton J. held that a mortgagor redeeming the entire mortgage is entitled to avail himself of all die creditors'' securities and is, therefore, subrogated to his rights in respect of the mortgage. The matter was again considered by a Division Bench of that Court in AIR 1938 184 (Lahore) , and Tek Chand J. in the course of his judgment with which his learned colleague agreed, observed:

It is well settled that if a subsequent mortgagee or purchaser pays off a mortgage, he is subrogated to the rights of the prior mortgagee whose debt he discharges, If this is so, there is no reason why one of the co-mortgagors, who pays off the entire mortgage, should not be equally subrogated. Indeed, it seems to me that the position of the co-mortgagor is much stronger than that '' of a subsequent mortgagee or purchaser who pays off a prior mortgagee, for, under the law, it is incumbent on the co-mortgagor to pay the entire mortgage charge before he can redeem his own share of the mortgage. This equitable principle has long been recognized in England, and it appears to have been followed by the Courts in India before the Transfer of Property Act was ''passed in 1882.

In a still later case - AIR 1942 135 (Lahore) Bhide J. repelled the contention that the position of a redeeming co-mortgagor is merely that of a charge-holder in the following terms:

The Learned Counsel contended that the position of Khuda Bakhsh was merely that of a charge-holder and in support of his contention he referred to AIR 1931 744 (Lahore) But according to the latest decision of this Court (see AIR 1938 184 (Lahore) in which previous rulings were considered the position of a co-mortgagor, who redeemed the entire mortgage, is that of a mortgagee and not of a mere charge-holder in respect of the share of the other co-sharers.

In - '' Mukh Narain Singh and Others Vs. Ramlochan Tiwari and Others, it is held that a co-mortgagor who has redeemed a mortgage is subrogated to the position of the mortgagee, and a suit against him by the other mortgagors for redemption is governed by Art. 148 and time runs against the plaintiff from the due date of the original mortgage. In - AIR 1934 97 (Nagpur) it was observed that an owner of a part of the mortgaged property, who pays off the entire security, "steps into the shoes of the mortgagee of the property redeemed by him where it is advantageous to keep the former incumbrance alive." In - K. Chengalroya Reddi Vs. Udai Kavour by her agent Mohanmull Choreda (deceased) and Others, (G), Varada-chariar J. at p. 764 of his judgment while dealing with the change brought in by the Amendment of 1929, observed-

Till 1929 a co-mortgagor why pays off a prior mortgage could by reason of the payment acquire a charge only as from the date of the payment and his charge would thus be postponed to intermediate encumbrances. Under the amendment introduced in 1929 he is placed in the same position as a puisne mortgagee paying off a prior mortgage and both of them are by the application of the principle of subrogation given the same priority as the mortgagee, whose mortgage they discharged, enjoyed.

An identical view is taken in a number of other decisions, such as Narotam Das Vs. Sanwal Dass and Others, ); - Umar Ali and Another Vs. Asmat Ali and Others,

The result, therefore, is that Mehma Singh and Kartar Singh, the redeeming mortgagors, got an equitable assignment of the mortgagee''s rights in their favour and they were entitled to keep the mortgage alive as security of their rights against the other mortgagors. Learned Counsel for the respondents frankly concedes that the Redemption of Mortgages Act applies not only to the original parties to a mortgage hut equally applies to their representatives-in-interest either by devolution or assignment. This is a proposition that is well recognized and cannot be disputed. That being so, I do not see any valid reason why the same results should not follow where one of the mortgagors is subrogated to the position of the mortgagee by redeeming the mortgage in its entirety. In my opinion, therefore, one of the mortgagors is entitled to present an application, under S. 4, Redemption of Mortgages Act, for redemption of his share of the mortgaged property from his redeeming co-mortgagor, and die Collector is within his rights to order the same or refuse it. Gujar Singh and Harnam Singh availed themselves of the speedy and summary remedy provided by the Act, but they failed to get any relief from the Collector. Section 12 of the Act makes the order of Collector conclusive, but subject only to the result of the suit that may be brought by the party aggrieved to establish his rights in respect of the mortgage. Limitation provided by Art. 14, Limitation Act for such a suit is one year. The order of the Collector becomes final after expiry of that period. The present suit, brought more than one year after the Collector''s order, is thus clearly hit by the influx of time.

Shri Atma Ram, Learned Counsel for the respondents, has referred to a decision of the Lahore High Court in - ''Mahomed Ali v. Ghulam Nabi'', AIR 1936 Lab, 290 (K). The judgment under appeal also is solely based on that decision. There, the learned Judges did not finally decide the question, but simply expressed their doubts regarding the actual position of a redeeming co-mortgagor. The relevant portion of the judgment reads as follows:

In the first place, we are doubtful whether the respondent could, under any circumstances, be deemed to be a mortgagee of the land so as to attract the operation of the Redemption of Mortgages Act, his legal position being merely that of a charge-holder. Secondly, all that the appellants claimed from the Revenue Authorities under the provisions of the Redemption of Mortgages Act was an adjudication of the rights of co-mortgagors inter se and all that the Revenue authorities decided was, that such complicated questions would be better decided in a regular suit.

The doubt arose because of the learned Judges view that the position, of the redeeming mortgagor is merely that of a charge-holder. The latter portion of the observation again rests on the assumption that the rights of a redeeming mortgagor, as against his co-mortgagor, are no better than those of a charge-holder and that the relation of a mortgagor and mortgagee is not created between them. As already observed, this view no longer holds the field and is not now favoured by most of the High Courts in India, and in some of its later decisions by the High Court of Lahore as well. In my judgment, therefore, where the original mortgage is redeemed by one of the several mortgagors, the other mortgagors are entitled to the benefit of the provisions of the Redemption of Mortgages Act and may apply to the Collector for redemption of their share of the land from the redeeming mortgagor.

In the result, the appeal is allowed, judgment and decree of the Additional District Judge are set aside and those of the trial Court restored. The parties, however, are left to bear their own costs.