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Judgment
Somayya, J.—This second appeal arises out of a suit to enforce a mortgage deed executed by the first defendant in favour of one Ananthu
Ammal who assigned her rights to the fourth defendant from whom the plaintiff took in turn an assignment in 1933. The first defendant is the
executant of the document on which the suit is brought and defendants 2 and 3 are his sons. The fourth defendant is the assignor of the plaintiff.
The fifth defendant who is the appellant in this second appeal was impleaded as a subsequent mortgagee. The property mortgaged was a kanom
interest which defendants 1, 2 and 3 had. The period of twelve years under the kanom which was subsisting on the date of the mortgage sued
upon, expired after the mortgage and there was a renewal of the kanom about the time of Ex. I dated the nth April, 1932. The fifth defendant paid
a sum of Rs. 2,332-12-0 towards the renewal fee in respect of the. above-renewal of the original kanom. The claim advanced by the fifth
defendant is that he is entitled to priority in respect of the sum of Rs. 2,332-12-0. The trial Court disallowed the claim of the fifth defendant and on
appeal the decision of the trial Court was upheld. When the second appeal at first came on before me, I called for certain findings and the findings
have now been returned.
It is now clear that the fifth defendant was not only a subsequent mortgagee under Exs. V and VI both executed on the 11th April, 1932, but he
was also a mortgagee under Ex. III dated the 19th June, 1929. It is also clear that fifteen items are comprised in the suit mortgage and that items 1
to 9 out of them were the subject of the renewal for which the fifth defendant advanced a sum of Rs. 2,332-12-0. The original kanom under which
defendant 1 obtained an interest in the suit property was, it is admitted, executed on the 2nd of January, 1909. Ordinarily it would come to an end
on the 2nd of January, 1921. The mortgage, in favour of Ananthu Ammal as already stated, was executed on the 10th November, 1917, under Ex.
G. Ex. I shows that the renewal fee in respect of that kanom was, paid by the fifth defendant on the 11th April, 1932. On the same day he
obtained two mortgages Exs. V and VI executed by defendants 2 and 3. It appears there was a division between defendants 1, 2, and 3, that the
father reserved little or no property and that the two sons (defendants 2 and 3) divided the properties equally among them. Out of the sum of Rs.
2,332-12-0 payable for the renewal which the fifth defendant paid, it appears that a sum of Rs. 1,150 was by agreement allotted to the share of
the second defendant and a like sum of Rs. 1,150 to the share of the third defendant leaving a sum of Rs. 32-12-0. Ex. VI was executed by the
father on behalf of the second defendant Vanchi Aiyar. Ex. V was executed by the third defendant Krishna Aiyar. Ex. VI recites that the
arrangement as between the mortgagor and the fifth defendant was that Rs. 1,150 was payable by the second defendant, Rs. 1,150 by the third
defendant and Rs. 32-12-0 by the fifth defendant in his capacity as prior mortgagee, evidently referring to Ex. III in the case. Under the mortgage
evidenced by Ex. III, the fifth defendant had a mortgage of only item No. 9. The question is whether under these circumstances the appellant (fifth
defendant) can claim a charge which would prevail over the plaintiff''s mortgage. This claim is advanced by Mr. Rajah Aiyar, the learned advocate
for the appellant, on various grounds. One is that u/s 41 of the Malabar Tenancy Act, the landlord is given a charge described in these terms:
Renewal fees due to the landlord, if any, shall be a charge on the interest of the person from whom they are due in the holding in respect of which
they are due as at the time of the creation of such interest, and such charge shall have priority over all other charges on the same.
There are certain exceptions with which we are not now concerned. This charge given to the landlord, it is urged, can be availed of by the
appellant as his money went for the payment of the renewal fee. The rules of salvage lien, subrogation and the rule enacted in Section 92 of the
Transfer of Property Act read with Section 100 of the same Act are all invoked in favour of the appellant.
It is urged that but for the payment of the renewal fee, the interest of the mortgagors would have come to an end entitling the landlord to recover
possession in which case all rights created by the kanomdar would have come to an end. The. plaintiff''s mortgage, the third defendant''s mortgage
and all other mortgages and any other interest created by defendants 1 to 3 would have disappeared and it is said that the act of the fifth defendant
in paying a large sum of Rs. 2,332-12-0 by way, of renewal fee saved the property for the benefit of all and that the principle of salvage lien
applied to this case. Reliance is placed on the decision of Varada-chariar and Stodart, JJ., in Chengalraya Reddi v. UdaiKavour (1935) 71 M.L.J.
(Supp.) 1. Next it is urged that even apart from the doctrine of salvage lien, the fifth defendant is subrogated to the rights of the prior charge holder
by the combined operation of Section 92, Clause (1) read with Section 100 of the Transfer of Property Act. It is pointed out that the fifth
defendant was a prior mortgagee of one of the items comprised both in the mortgage sued upon and also in the charge created in favour of the
landlord u/s 41 of the Malabar Tenancy Act. Therefore, the fifth defendant is a person who had the kind of interest set out in Section 91 of the
Transfer of Property Act and hence u/s 92, Clause (1) he would by the mere fact of payment to the prior charge-holder be subrogated to all the
rights of that charge-holder. Though it is only a charge that was created in favour of the landlord, it is urged that Section 100 of the Transfer of
Property Act as amended in 1929 expressly makes all the prior provisions laid down in the Transfer of Property Act as regards mortgages
applicable to the cases of charges. So, it is said, you must treat the prior interest in favour of the landlord as a mortgage and apply the rules laid
down in Sections 91 and 92 of the Transfer of Property Act. And lastly it is said that even if Section 92 of the Transfer of Property Act is held
inapplicable to cases of charges, the appellant would be entitled to invoke the benefit of what is usually referred to as the doctrine of conventional
subrogation. On the other hand, Mr. Sitarama Rao has advanced a very powerful argument that the appellant is not entitled to priority over his
client and that none of the rules of law invoked by the appellant would apply to this case. As regards Section 41 of the Malabar Tenancy Act, it is
urged that the charge created in favour of the landlord is one personal to the landlord, that it can be enforced only so long as the relationship of
landlord and tenant exists between the parties and that if for instance, the landlord conveyed his interest in the property after the transaction of
renewal, the charge could not be enforced even by him. It is also said that it is only where a renewal fee is outstanding in pursuance of proceedings
taken under the Act (sections 18 to 25) that a prior charge to the extent mentioned in Section 41 would come into existence. It is urged that the
landlord is not entitled to insist upon a renewal fee. His only right is to sue for eviction and even then the tenant may submit to eviction rather than
claim a renewal. If the tenant claimed a renewal, then under the Act the Court would have to consider his application which would have to be by
way of an independent application u/s 22 of the Act. The Court will then have to determine the amount to be paid as the renewal fee, the amount
of each instalment, the date on which each instalment would be due and make an order for the deposit within the time to be fixed in the said order
of the instalment or instalments on or before the dates fixed. u/s 25, if the deposit was made as ordered by the Court, the Court should execute a
renewal deed on the terms of the expiring transaction. In some cases the amounts may be directed to be paid in instalments, and Mr. Sitarama Rao
urges that even before all the instalments are paid, the Court in some cases is given the power to execute a renewal deed and that Section 41 of the
Act creates a charge for the unpaid renewal fee only in such cases. The argument comes to this. If the transaction of renewal is without resort to
Court, agreed upon between the parties, the landlord must take the amount of the renewal fee before executing the renewal; else he cannot have
any charge over the property in respect of any amount which he left uncollected before the renewal was granted. Section 41 of the Act would not
apply to such a case is the argument.
The argument based upon Forbes v. Maharaj Bahadur Singh (1935) 71 M.L.J. (Supp.) 1 and Vyraperumal v. Alagappa ILR (1931) Mad. 469
is not entitled to much weight as the decisions stand upon the peculiar provisions in the Bengal Tenancy Act in the first case and the Madras
Estates Land Act in the other. Taking the first decision, the question was whether the existence of the relationship of landlord and tenant was
necessary at the time when the proceedings were taken to enforce the payment of rent. u/s 65 of the Act a charge is created for arrears of rent.'' If
that had stood alone and the decision had dealt with the effect of that section, it would have been of much value to this case. But the Judicial
Committee proceeded mainly on the inference to be drawn from the provision in Section 148(h) of the Bengal Tenancy Act. Clause (h) of Section
148 which is now Clause (o) provides that the right to apply in execution of a decree for arrears of rent by a transferee of the decree could be had
only if the transfer was also of the landlord''s interest in the land itself."" Ordinarily, a evrey decree obtained by one person can be transferred to
another person."" A who obtained a decree for rent can normally transfer the right in the decree which he has obtained in favour of another and the
transferee can ordinarily execute that decree, but the Bengal Tenancy Act provides that a transfer of the decree alone without a transfer of the
landlord''s interest in the land itself was not valid. It is mainly on account of this provision that the Judicial Committee came to the conclusion that a
landlord who had parted with his interest, in the zamindari could not enforce the charge given by Section 65. The decision in Vyraperumal v.
Alagappa (1935) 71 M.L.J. (Supp.) 1 proceeded again on the provision in the Madras Estates Land Act contained in Section 128 of that Act.
Section 5 of the Estates Land Act confers a charge for the arrears of rent. If that had stood alone, it would have been another matter. But Section
128 provided that where in execution of the decree an order for sale had been passed and then a person who is interested in the land paid the
amount, the person paying under those circumstances would be entitled to the charge which the landholder was given u/s 5 of the Estates Land
Act. The learned Judges found an indication in the Act itself that the charge was not to Be had if the payment was made before the order for sale
mentioned in Section 128 of the Act. There is no provision in the Malabar Tenancy Act similar to Section 148(h)(now 0) of the Bengal Tenancy
Act or Section 128 of the Estates Land Act. Section 41 stands by itself and I consider that the decisions in Forbes v. Maharaj Bahadur Singh
I.L.R.(1931) Mad. 469 and Vyraperumal v. Alagappa (1935) 71 M.L.J. (Supp.) 1 do not cover the present case.
The principle of salvage lien which is urged by Mr. Rajah Aiyar has been applied in India to cases of payments of rent the non-payment of which
would have wiped out all subsidiary interests in the land. In Chengalraya Reddi v. Udai Kavour (1935) 71 M.L.J. (Supp.) 1 Varadachariar and
Stodart, JJ. had to deal with this question. The plaintiff in that case was the owner of certain villages included in the Karvetnagar zamindari. The
second defendant was a usufructuary mortgagee of nearly 232 villages in that zamindari and under the mortgage, the mortgagee was to pay about
Rs. 70,000 per annum towards the peshkush payable by the zamindar. Some of the other defendants were also usufructuary mortgagees of other
portions of the estate. For certain arrears of peshkush the villages held by the plaintiff and some others were all sold and in order to have the sale
set aside, the plaintiff paid Rs. 73,500 being the sum due for arrears of revenue, land cess, interest, etc. The plaintiff then filed the suit out of which
the appeal arose for recovery of that sum with a first charge on the property. The plaintiff pleaded an express contract with the second defendant
by which he was to get a first charge prevailing over the second defendant''s interest but that was found against. So the question was whether apart
from any agreement the plaintiff who paid the peshkush due on the entire zamindari was entitled to a first charge. The doctrine of subrogation, the
principle of salvage lien and the other provisions of law were all invoked in aid of the plaintiff. The learned Judges held that the plaintiff was entitled
to a first charge on the principle of salvage lien. On page 19, Varadachariar, J., referred to the difficulty in the way of applying the theory of
subrogation in view of certain observations in prior decisions. On page 20 he proceeded thus:
If the law relating to salvage lien can be held to furnish a true analogy, the right to priority over all the other interests will be a logical consequence;
and this seems to be the trend of the Irish decisions referred to by Mitter, J. The following observations of Lord St. Leonards in In re Thorp 4, put
the reason for this view in terms which are identical with those employed in cases of maritime salvage, He that pays the salvage has a prior
encumbrance over every other charge and interest because so far as any interest is left to anybody it is acquired by that payment.
Then the learned Judge referred to the decision of the Judicial Comunittee in Dakshina Mohun Roy Chowdhry v. Saroda Mohun Roy
Chowdhry where the doctrine of salvage lien was applied and after referring to another decision of the Judicial Committee in (1932) ILR 59 463
(Privy Council) he proceeded thus:
The discussion of Nugenderchander''s case 7, the reference to the salvage doctrine and the use of the expression '' first charge '' seem to us
unmistakable in their significance"", when it is borne in mind that the judgment of the Board was delivered by Sir John Wallis, who was quite familiar
with the discussion of this topic in the Indian Courts, not merely by reason of his long stay here, but also by reason of his having been counsel for
one of the parties in Rajah of Vizianagaram v. Rajah Setrucherla Somasekhararaj I.L.R.(1931) Mad. 4613.
After repelling the argument based upon Section 35 ''of the Madras Revenue Recovery Act and Section 72(c) of the Transfer of Property Act,
the judgment was wound up in these terms:
I do not therefore feel that there is anything like a consistent or comprehensive policy indicated by the Indian Legislation which precludes us from
giving due effect to the latest decision of the Judicial Committee, when we find that the principle of priority affirmed therein necessarily results from
the very reasoning on which Mr. Justice Mitter, Mr. Justice Mahmood and Mr. Justice Bhashyam Aiyangar have rested their conclusions in
support of a charge in favour of a co-owner paying the entire land revenue due on land held by himself and others.
Stodart, J., Also held that this principle would apply. The application of the doctrine of salvage lien does not depend upon the question whether
the demand which was met was a charge and a first charge on the property. If it was a first charge, the doctrine of subrogation also would be
helpful. If all that is relied upon is the rule of subrogation, then the demand which was paid would have to be a charge on the property. By the
doctrine of subrogatien, the person whose money goes to pay off an earlier demand due to another person gets only the rights of the person whose
dues were paid off with his money. But the doctrine of salvage lien which is applied to cases of this kind is based upon wider grounds. In the case
of maritime salvage or salvage from fire, if the person who rescued the goods did not spend the money which he did and save the goods, all the
persons who had various interests in those goods would have lost the whole of it. The property over which they had interest was saved for them by
the act of the plaintiff. In the case of payment of Government revenue which was the case that arose in (1914) L.R. 41 I.A. 91 (Privy Council) if
the Government revenue had not been paid, the sale would have been confirmed and all the persons who had a mortgagee''s interest in the various
portions of the estate would have lost their right altogether. Their interest was therefore saved by the act of payment made by the plaintiff and that
was the reason why the plaintiff was held entitled to a right which prevailed over all the interests which were saved by the payment. Similarly, in this
case, if the payment had not been made by the fifth defendant, the landlord would have had the right to eject the kanomdar and with it all the rights
of the plaintiff as mortgagee would have been lost. It is urged by Mr. Sitarama Rao that under the Customary Law of Malabar, the plaintiff would
still have been entitled to be paid the value of improvements on eviction by the landlord or jenmi but that is not the question with which we are
concerned. What we are concerned with is whether the right that is now sought to be enforced in this suit, namely, the right to enforce the
mortgage, would not have been lost if the payment had not been made by the fifth defendant. It is clear that the plaintiff would have lost his
mortgagee''s right whatever may have been the case about his right to be paid the value of improvements. I am therefore of opinion that the
doctrine of salvage lien applies and that the fifth defendant is entitled to a prior charge in respect of the sum which he paid.
Mr. Sitarama Rao urges that the fifth defendant abandoned the right to a-prior charge because he took Exs. V and VI from defendants 2 and 3.
The argument is put thus. Under Exs. V and VI it was provided that the mortgage created under those documents was to be subject to the
plaintiff''s mortgage. He urges, therefore, that the fifth defendant did not intend to keep alive any right of priority which he might have otherwise had
on the application of the doctrine of salvage lien. It has been held that where a vendor of immovable property who has got a charge over the
property sold for any unpaid purchase money takes an inferior security, for example, a promissory note, he does not lose the statutory charge
which is given to him u/s 55 of the Transfer of Property Act. The reason is that the mere fact that the vendor takes an inferior charge or a
promissory note does not deprive him of the higher charge or the higher security which is given under the law. I think the same principle applies to
this case. It is after all a question of intention as the learned advocate concedes. If it is a question of intention to be gathered from the
circumstances, the fifth defendant could not have intended to give up the higher right which he had merely because he took a mortgage which gave
him a very much inferior right. The mortgage might have been taken for the reason that he wanted to have alright available against all subsequent
alienations. If it was a mere charge, a person who took a sale of the property subsequently without notice of the charge might be in a position to
urge that he is protected. Bona fide alienees might claim that they are not affected by the prior charge of which they had no notice actual or
constructive. It might be for that reason that the mortgages under Exs. V and VI were taken by the fifth defendant. It might also be mentioned that
the fifth defendant might have desired to secure the personal liability of the executants of the mortgage which he might not otherwise have. This
argument therefore fails. It was then urged that u/s 72 of the Transfer of Property Act, a mortgagee is only entitled to add the money which he pays
for preserving the property from destruction, forfeiture of sale and claim it as part of his mortgage money. As pointed out by Varadachariar, J., in
Chengalrqya Reddi v. Udai Kavour I.L.R.(1931) Mad. 4613 the fact that a mortgagee under ordinary circumstances has the right given to him u/s
72 does not mean that if a payment was made under circumstances which would give the right of a prior charge, his rights are limited even in such a
case to that given u/s 72 of the Act. As I hold that the doctrine of salvage lien applies, it is unnecessary to consider the question whether Section
41 of the Malabar Tenancy Act is retrospective and whether the mortgages created before the passing of the Act would be subject to the charge
created u/s 41 of the Act.
Another question raised is whether the charge that is created u/s 41 prevails over the interest of the defaulter as it stood when the renewal was
granted or as it stood when the original kanom was granted in his favour.
Mr. Rajah Aiyar argues that his client was a prior mortgagee and that the case would be covered by Section 92(1) of the Transfer of Property
Act. It is conceded that the fifth defendant was a prior mortgagee under Ex. III of one of the items of the properties. Ordinarily, therefore, if he
paid off a prior mortgage, he would be entitled to the rights of subrogation given under that section. What is urged on the other side is that in Exs.
V and VI a statement is made that the fifth defendant paid only Rs. 33-12-0 as the prior mortgagee and that the balance was advanced by him
under the arrangement set out in Exs. V and VI. This argument is not entitled to any weight. It is because he was already a mortgagee, he
advanced the money and the total amount was distributed as regards all but Rs. 33-12-0 by the two mortgages taken from defendants 2 and 3 for
the reasons already set out. This does not mean that the fifth defendant''s payment of the Rs. 2,300 was not in his capacity as a mortgagee. I
therefore think that as a prior mortgagee, the fifth defendant was entitled to take advantage of Section 92(1) of the Act.
It is then said that it is only if the payment was made to discharge a prior mortgage that the principle of subrogation enunciated u/s 92 would
take effect. But Section 100 of the Transfer of Property Act provides that all the provisions contained in the Act as regards mortgages should be
applied to cases of charges. Hence if there is no other difficulty, the plaintiff will be subrogated to the prior charge by the combined operation of
Section 92(1) and Section 100 of the Act. But the only question is whether the landlord had a charge u/s 41 which would prevail over the
plaintiff''s mortgage which was created before the date of the Act; and secondly is the charge created in favour of the landlord one personal to him
and is not available to the person paying off that amount? I put the question to Mr. Sitarama Rao whether if the landlord and tenant agreed
amicably to grant and take a renewal on terms which are in conformity with the principles of the Malabar Tenancy Act and also provided for a
charge in respect of the unpaid renewal fee, the landlord would be entitled to transfer the charge right which he secured under the contract between
file parties. The learned advocate was not able to suggest any reason why in such a case the transferee would not be entitled to enforce the charge.
If that is so, I see no reason why when the charge is created by the operation of law u/s 41 of the Malabar Tenancy Act, a person paying that
amount, if he would otherwise be entitled to be subro gated is not entitled to enforce that charge.
Then as regards the question whether the right given under that section is personal and can be enforced only so long as the relationship of
landlord and tenant subsists, the argument is based on the authority of the decision in Forbes v. Maharaj Bahadur Singh I.L.R.(1931) Mad. 4613
and (1914) L.R. 41 I.A. 91 (Privy Council) As I have already said, those decisions do not seem to me to apply to a case under the Malabar
Tenancy Act. There are no indications as in the other Acts to lead one to the conclusion that the right given is a personal right and that it can be
taken advantage of only so long as the relationship of landlord and tenant subsists. The difficulty is whether the right that is created u/s 41 in the
year 1930 would apply to a case of a mortgage which was created before 1930. The plaintiff''s mortgage was created in 1917. That was a
mortgage of the kanom interest which the mortgagor had under the kanom created in 1909. As pointed out by Mr. Sitarama Rao, the kanomdar
would be entitled to continue in possession until evicted by the landlord in due course of law. The mortgagee''s right would prevail so long as the
mortgagor''s right subsisted, and prior to that Act, the landlord had no charge in respect of the unpaid renewal fee. It is therefore urged that
whatever might be the case of a mortgage created after the Act, effect ought not to be given to Section 41 in such a way as to affect the interest
created prior to the Act. There is considerable force in this argument. Mr. Rajah Aiyar urged that Section 41 is declaratory in terms and if it is
declaratory undoubtedly the rule of law is that it is retrospective. The rule that ordinarily retrospective effect should not be given to an enactment is
subject to the qualification that if there is a clear implication to that effect in the enactment, the provisions may be held to be retrospective. Mr.
Rajah Aiyar''s contention is that the wording of Section 41 that renewal fee due to the landlord shall be a charge on the interest of the person as at
the time of the creation of such interest necessarily involves the retrospective effect because the section talks of the charge on the interest of the
person as at the time of the creation of such interest. It is urged that a contrary conclusion would deprive a large number of cases of the benefit
conferred u/s 41. As I said before, I think it unnecessary to consider this question.
Mr. Sitarama Rao advanced another argument based on the last portion of Section 41, which runs thus:
and such charge shall have priority over all other charges on the same except the charge for the revenue and any dues thereon payable to
Government or to a local authority and made a charge thereon by any law for the time being in force.
The argument is that the charge created under the prior part of the section is declared here to have priority only over other charges on the
property and not over the mortgages on the property. It is said that the word '' charge'' should be understood in the same sense in which it is used
in the Transfer of Property Act and that therefore while subsequent charges might be affected, a mortgage would not be affected. The answer to
this appears to me to be that the latter portion of Section 41 on which so much reliance is placed is only, intended to provide that the priority
conferred in the first portion of the section is not to prevail over a charge for the revenue and any dues thereon payable to Government or to a local
authority and made a charge thereon by any law for the time being in force. If the first portion stood alone, namely, that the renewal fee due to the
landlord shall be a charge on the interest of the person as at the time of the creation ,of such interest, it is conceded that even subsequent
mortgagees would be affected except in the possible case of the mortgagees being bona fide mortgagees without notice actual or constructive of
the charge. Otherwise, the charge created under the first portion of the section would prevail over subsequent mortgages also. It is not therefore
easy to infer from the latter portion which seems to have been put in to provide for a negation of the charge in certain cases. It does not mean that
it does not prevail against mortgages and that only subsequent charges are affected.
The result is that the appellant will be entitled to priority in respect of Rs. 2,332-12-0 together with interest at six percent per annum from the
date.of payment nth April, 1932, over the sale proceeds of items 1 to 9. These properties will be sold separately and the rights adjusted.
The appellant will have his costs from the plaintiff respondent in all the Courts.
No leave.