P.K. Krishnamurthi Chettiar vs K.S.A.S. Sathappa Chettiar and Others

Madhavan Nair, J.—The 3rd defendant is the appellant. The question for decision in this appeal is whether he is entitled to the right of

subrogation to the extent of Rs. 1181-12-7 the balance of consideration on the first mortgage which he has paid off.

The facts are these:- The suit property was subject to four mortgages. The first mortgage is dated 20th November, 1918. The 3rd defendant

has paid off the balance of the mortgage debt, namely, Rs. 1181-12-7. The second mortgage is dated 22nd April, 1921, and the mortgagee under

it is the present plaintiff. The third mortgage with which we are not concerned is dated 30th November, 1921, and the fourth mortgage, dated 18th

January, 1922, is in favour of the 3rd defendant the appellant-Under this mortgage he had to pay from out of the consideration the balance of the

first mortgage. He paid it on 19th January, 1922. At that time he did not know of the existence of the plaintiff''s mortgage and when he came to

know of it he prosecuted the 1st defendant for ""cheating"". In the circumstances the appellant claims that he is entitled to the right of subrogation as

against the plaintiff to the extent of the mortgage debt which he has paid off. The Lower Court disallowed the contention. The question has been

dealt with in paragraph 11 of its judgment. The learned Subordinate judge says ""I do not think that an encumbrancer who in pursuant of the

agreement between the mortgagor and the mortgagee pays a portion of the mortgage money towards a prior mortgage is entitled to priority or

subrogation of the prior mortgage rights."" Apparently the learned Judge treated the 3rd defendant as an agent of the mortgagor'' in paying off the

balance of the mortgage debt and therefore he thought that the payment was on behalf of the mortgagor and not on behalf of himself. This ground

of his decision is not tenable at all. In fact, Mr. Bhashyam Aiyangar for the respondents did not base his argument on this principle. His argument is

this: that at the time when the payment was made the 3rd defendant did not know of the existence of the plaintiff''s mortgage and therefore it cannot

be presumed that he intended to keep the first mortgage as a shield against the second mortgage of the plaintiff. It appears to us that the question is

a very simple one and has been decided once for all by the Privy Council in (1884) L.R. 11 I.A. 126 (Privy Council) . In that case, their Lordships

pointed out that a man having a right to act in either of the two ways, that is, either ,to extinguish or keep alive a mortgage, shall be presumed to

have acted according to his interest. In this case the presumption should be that when the appellant paid off the prior mortgage he intended to keep

that mortgage against all subsequent mortgages. But Mr. Bhashyam Aiyangar contends that the presumption should be held not to arise because he

did not know at that time that the second mortgage existed. But the knowledge of the existence of the second mortgage is not a material

consideration in pleading ""the presumption,"" as has been held in Ganyadhara v. Sivarama ILR (1884) 8 Mad. 246. In that case the learned Judges

referred to the case, (1884) L.R. 11 I.A. 126 (Privy Council) . and treated the presumption as a general one the operation of which is not

restricted by the question whether the man who makes the payment knew of the existence of the subsequent mortgage or not. The same conclusion

was arrived at in And Thevan v. Nagayasami Chettiar (1927) 55 M.L.J. 369. In Chidambara Nadan late a Minor but now declared a Major and

Another Vs. Musuvati Muni Nagendrayyan and Others, it was held that a payment made by the subsequent mortgagee in discharge of a prior

mortgage debt cannot be considered to be a payment made on behalf of the mortgagor. These three decisions dispose of the ground on which the

Lower Court''s judgment is based, and also the contention urged before us by Mr. Bhashyam Aiyangar. We therefore set aside the decree of the

Lower Court and declare that the appellant is entitled to get priority over the plaintiff''s mortgage to the extent of the balance of the consideration

which he has paid off with reference to the first mortgage, that is, the sum of Rs. 1181-12-7 together with interest.

The case will be remanded to the Lower Court for passing a final decree giving the appellant priority in the manner indicated above. The

appellant is entitled to costs here and in the Court below with respect to the amount on which he has succeeded.

The Court-fee will be refunded.