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1980 DIGILAW 279 (MAD)

P. Sengottian v. B. Lakshmi

1980-07-24

S.SURYAMURTHY

body1980
JUDGMENT.— This is an appeal by the first defendant against the judgment and decree of the learned principal Subordinate Judge of Salem, in O. S. No. 26 of 1974 on the file of lis Court. The suit was originally instituted for a declaration of the plaintiff's title to the suit property and for an injunction restraining the first defendant, who was the only defendant at that time, from interfering with the possession of the suit house by the plaintiff. Subsequently, the plaint was amended, and the plaintiff sought recovery of possession. 2. The suit was not decreed either for injunction or for possession, but was decreed for recovery of the mortgage amount due under a document dated 22nd August, 1960 (marked as Exhibit A-2) with interest thereon from the date of the mortgage. By the decree drafted in accordance with the judgment, the first defendant was directed to pay the plaintiff a sum of Rs. 12,700. Impugning the judgment and decree of the learned Subordinate Judge this appeal has been preferred by the first defendant, who is the Court-auction-purchaser in pursuance of a decree obtained by the second defendant. 3. The suit property is a house which originally belonged to Kalivaradan. Kalivaradan mortgaged the suit house to one Velayudham on 22nd August, 1960, for Rs. 4,000. Exhibit A.2 is the registered mortgage deed executed by Kalivaradan. Kalivaradan would appear to have borrowed money from the second defendant, T. K. Subramaniam, on a promissory note. Therefore, T. K. Subramaniam (second defendant) filed O. S. No. 279 of 1969 on the file of the Sub-Court, Salem, against Kalivaradan on the foot of the promissory note executed by the latter and obtained an order of attachment before judgment on 29th July, 1969 and attached the suit house. On 11th February, 1970, Kailvaradan sold the suit property to the plaintiff for Rs. 7,000 directing the plaintiff to discharge the mortgage debt due under Exhibit A-2 and receiving the balance of Rs. 3,000 in cash alleged to have been paid before the Sub-Registrar at the time of the registration. According to the recitals in Exhibit A-1 the interest due on the mortgage till the date of Exhibit A-1 had been paid by Kalivaradan, and, therefore, only the balance of Rs. 4,000- was payable to the mortgagee Velayudham. The plaintiff claims to have repaid the sum of Rs. According to the recitals in Exhibit A-1 the interest due on the mortgage till the date of Exhibit A-1 had been paid by Kalivaradan, and, therefore, only the balance of Rs. 4,000- was payable to the mortgagee Velayudham. The plaintiff claims to have repaid the sum of Rs. 4,000 to the mortgagee and obtained an endorsement Exhibit A-3 dated 11th February, 1970, on Exhibit A-2 itself. 4. On 2nd November, 1972, the suit house was sold in execution of the decree obtained by T. K. Subramaniam in O. S. No. 279 of 1969. The first defendant purchased the suit house in Court-auction. Exhibit B-1, the sale certificate dated 1st December, 1973, was issued in his favour. When the first defendant attempted to take possession through Court, obstruction was offered by the plaintiff, it would appear that the warrant of delivery was re-issued, and the first defendant ultimately took possession on 12th January, 1974. A week prior to the first defendant taking delivery viz., on 5th January, 1974, this suit was filed for a declaration of the plaintiff's title to the suit property and an injunction as aforesaid. After the first de-defendant took possession, the plaint was amended seeking the relief of possession. The contention of the plaintiff was that the sale in Court-auction does not prevail over the sale in his favour despite the earlier attachment. 5. The learned trial Judge held that the sale in favour of the plaintiff was not valid, but directed the first defendant to pay the mortgage amount with interest thereon, as already observed. 6. The contention that the sale in Court-auction does not prevail over the sale in favour of the plaintiff despite the earlier attachment has not been reiterated here by Sri T. V. Balakrishnan, appearing for the contesting respondent. By reason of section 64, Civil Procedure Code, the sale in favour of the plaintiffs is void as against all claims enforceable under the earlier attachment effected in O. S. No. 279 of 1969, Sub-Court, Salem. 7. An endeavour was made to support the claim of the plaintiff that he is entitled to subrogation, and alternatively for reimbursement on the basis of the doctrine of unjust enrichment. 7. An endeavour was made to support the claim of the plaintiff that he is entitled to subrogation, and alternatively for reimbursement on the basis of the doctrine of unjust enrichment. By reason of section 92 (iii) of the Transfer of Property Act, “A person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor, has by a registered instrument agreed that such person shall be so subrogated.” There is no such agreement in writing and registered in favour of the plaintiff in the instant case. 8. In Lakshmi Ammal v. Sankara Marayana Menon1. Full Bench of this Court has held that a person who paid off the earlier mortgages and claimed a right of subrogation was not entitled to subrogation in respect of the mortgages discharged by him as the third clause of section 92 of the Transfer of property Act applies to all persons who acquire an interest in the mortgaged property by advancing monies to discharge prior encumbrances and is not restricted to persons other than purchasers and mortgagees, that the first clause of that section must be construed in the light of the third clause and that if section 92 of the Transfer of property Act as amended by Act XX of 1929was restrospective and was applicable to the case, the third clause of that section was fatal to the appellant's (in that case) claim inasmuch as the mortgagor had not by a registered instrument agreed that the appellant (in that case) should be subrogated to the rights of the mortgagees whose debt he had discharged. In that case, the appellant had been given a usufructuary mortgage of property which was subject to three prior simple mortgages in consideration of an advance of Rs. 8,000 made by him to the mortgagor, the appellant undertaking to pay off these prior mortgages. As a matter of fact be paid off the two first mortgages, but he did not pay off the third mortgage. The third mortgagee brought a suit for sale on the foot of his mortgage, and the appellant set up in this suit a claim to be substituted for the two prior mortgagees whose debts he had discharged. As a matter of fact be paid off the two first mortgages, but he did not pay off the third mortgage. The third mortgagee brought a suit for sale on the foot of his mortgage, and the appellant set up in this suit a claim to be substituted for the two prior mortgagees whose debts he had discharged. The lower appellate Court rejected this claim, holding that it was not sustainable in the face of section 92 of the Transfer of Property Act. It should be mentioned that the mortgages in question were antecedent in date to the amendment introduced by section 92 into the Act. The case has been argued on the assumption that section 92, as held by a full Bench in Tota Ram v. Ram Lal1, is retrospective. Assuming that it is, I think that the third paragraph of the section is fatal to the appellant's claim. This paragraph runs: “A person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such person shall be subrogated”. “The appellant has advanced money to the mortgagor with which mortgages have been redeemed. But it was argued that some person other than a mortgagee is intended. But the section does not say so and there is no apparent reason why a person who has advanced money for the purpose named in the section should not be regarded as within the section simply because the mortgagor has given him a mortgage to secure the advance made. But in such a case the right to subrogation is made by the section a matter of express contract between the mortgagor and the person who has advanced him the money. There is no right of subrogation unless the mortgagor has by registered instrument agreed that the person advancing the money shall be subrogated in respect of the mortgage or mortgages discharged. No such agreement is forthcoming in this case”. (Per Cornish, J.). 9. There is no right of subrogation unless the mortgagor has by registered instrument agreed that the person advancing the money shall be subrogated in respect of the mortgage or mortgages discharged. No such agreement is forthcoming in this case”. (Per Cornish, J.). 9. In the same case, Varadachariar, J., has considered the contention regarding the applicability of section 92 of the Transfer of Property Act, and has observed that, “There can be little doubt that the proper method of interpreting the first clause is to construe it in the light of the third clause of the same section. It will be seen from the report of the Special Committee which considered the bill that they assumed that under the previous state of the law a transferee from a mortgagor who has undertaken to discharge a prior mortgage debt cannot by the mere fact of paying off a prior mortgage claim subrogation, though in certain circumstances, the Court may presums as intention on his part keep alive the security thus paid off by him. To meet such cases, they recommended the provision now enacted as the third clause of section 92 whereunder a person advancing money to a mortgagor to pay off a prior mortgage shall be subrogated to the rights of the mortgagee thus redeemed only if ‘the mortgagor has by registered instrument agreed that such person shall be so subrogated”. Again, he has observed that, “There is well-established distinction between cases in which a person who has a pre-existing interest in property pays off a prior charge on that property for the protection of his own interest and cases in which a person acquires an interest in property only by reason of his advancing money to pay off an existing mortgage debt. It seems to me that the first clause of section 92 must be held to relate to the first type of cases above referred to and the third clause to the second type.” In the same case, Venkataramana Rao, J., has observed, that “The first and third clauses of section 92 must be read together. The first clause enunciates no new principle (vide section 74 of the Transfer of Property Act since repealed.) It applies to all persons who have an interest in the equity of redemption and are under no personal obligation to discharge prior incumbrances. The first clause enunciates no new principle (vide section 74 of the Transfer of Property Act since repealed.) It applies to all persons who have an interest in the equity of redemption and are under no personal obligation to discharge prior incumbrances. The third clause has been enacted to confer a benefit on persons who advance money to discharge as incumbrance only ‘if the mortgagor has by a registered instrument agreed that such persons shall be subrogated’. The clause is intended to apply to all persons who acquire an interest in the mortgaged property by advancing moneys to discharge prior incumbrances……..” 10. In Subbarayudu v. Lakshminarasamma 1, this principle has been re-affirmed. Repelling the contention that defendants 6 and 7 in that case who had obtained a sale deed and advanced” money with which the decree debt was satisfied, were entitled to subrogation under clause (1) of section 92 of the Transfer of Property Act, Venkataramana Rao, J., has observed that this contention was directly opposed to the interpretation placed on the section by the Full Bench decision in Lakshmi Animal v. Sankara Narayana Menon 2. It was held in that case that, “Where a property subject to two mortgages is sold to a third party for the purpose of discharging a decree on the earlier of the two mortgages and the said decree has been discharged, the purchaser aforesaid is not entitled as against the second mortgagee, to be subrogated to the rights of the prior mortgagee who has been discharged unless there is a registered agreement in his favour reserving his right of subrogation as required by section 92 (tit) of the Transfer of Property Act as amended in 1929”. After referring to his earlier observations in Lakshmi Ammal v. Sankara Narayana Menan 2, Venkataramana Rao, J., has observed that this was also view taken by Varadachariar, J., and Cornish, J., and since the date of that decision, the matter was considered by a Full Bench of the Allahabad High Court and a Full Bench of the Nagpur High Court, and the view taken by the Full Bench of our High Court was affirmed. 11. 11. In Hira Singh v. Jai Singh 3, a Full Bench of the Allahabad High Court has held that: “the vendees having paid the amounts which under their contracts of sale they were bound to pay as part of their sale consideration, and not having obtained any agreement in writing registered from the mortgagor that they would be subrogated to the rights of the prior mortgagee, they were not entitled, according to the third para-graph of section 92 of the Transfer of Property Act, to any such benefit. Subrogation can arise in two ways, (I) by agreement; and (2) by operation of law. The first paragraph of section 92 of the Transfer of Property Act deals With subrogation arising by operation of law and third paragraph deals with subrogation by agreement. The two paragraphs are mutually exclusive the first parargraph refers to a person redeeming a mortgage himself and the third to a person who advances money with which a mortgage is redeemed” It was further held that it was unnecessary to decide Whether a vendee can come under the third paragraph of section 92 , as in the absence of a registered agreement by the mortgagor that the vendees would have a right of subrogation the conditions of the third paragraph of section 92 of the Transfer of Property Act were not fulfilled. 12. This question was considered by a Full Bench of the Nagpur High Court in Taibai v. Wasudeorao and another1. It has been held therein that, “A purchaser of a property with whom is left part of the consideration of the sale in his favour for paying off a mortgage but in whose favour there is no express agreement of subrogation in writing registered is not entitled to claim subrogation against a later mortgagee under section 92 of the Transfer of Property Act as amended by Act XX of 1929.” 13. In Muthuswami Chettiar v. Ramaswami Samiyar2, speaking for the Bench, Leach, C.J., has observed that, “In Lakshmi Ammal v. Sankara Narayana Menon3, a Full Bench of this Court held that the first paragraph of section 92 of the Transfer of Property Act applies only to a case in which a person who has a pre-existing interest in the property pays off a prior charge for the protection of his own interest and that the 3rd paragraph refers to a case in which a person acquires as interest in property only by reason of advancing money to pay off an existing mortgage debt. Admittedly the appellant had no pre-existing interest in the properties, and consequently the 3rd paragraph of the section applies to him. In these circumstances the appellant clearly cannot claim to be subrogated to the rights of the mortgagee whose debt he discharged.” Again, it was laid down that, “Since the amendment of the Act is 1929 the Court cannot hold a transferee who has discharged as encumbrance on the property to be subrogated to the rights of the mortgagee unless an agreement in writing has been entered into between him and the transferee and the document has been registered.” 14. In considering a contention similar to the one advanced before me that the plaintiff is entitled to an equitable relief, Leach, C.J., has observed as follows: “That being the position, is the Court to defeat the very object of the amendment by giving equitable relief in the form of a charge? Equity follows the law and in ray opinion that maxim applies in full force here. To accept the argument which has been presented to the Court would mean setting the section at naught, and this cannot be done.” Therefore, the plaintiff is not entitled to claim subrogation in respect of the mortgage which he has discharged, nor has he claimed any such right in the plaint. The suit is a suit for declaration of title and recovery of possession simpliciter. No right of subrogation has been claimed in the plaint. In fact, no reimbursement even has been claimed in the plaint. The suit is a simple suit for recovery of immovable property. The suit is a suit for declaration of title and recovery of possession simpliciter. No right of subrogation has been claimed in the plaint. In fact, no reimbursement even has been claimed in the plaint. The suit is a simple suit for recovery of immovable property. “No cause of action shall, unless with the leave of the Court, be joined with a suit for the recovery of immovable property except: — (a) claims for mesne profits of arrears of rent in respect of the property claimed or any part thereof; (b) claims for damages for breach of any contract under which the property or any part thereof is held: and (c) claims in which the relief sought is based On the same cause of action.” (Vide Order 2 , rule 4, Civil Procedure Code.) The relief by way of declaration of the right of subrogation and enforcement of the right as a subrogee and the relief by Way of reimbursement cannot be claimed in this suit, and have not been claimed in this suit. Without the plaintiff asking for these reliefs ana without any allegations in the plaint which would entitle the plaintiff to these reliefs, the learned Subordinate Judge was prepared to grant a decree for the principal mortgage amount with interest thereon and has granted a decree for Rs. 12,700. 15. The grievance of Sri. O. V. Balasami, the learned counsel for the appellant, is not that the plaintiff has taken him by surprise, but that the learned Subordinate Judge has taken him by surprise and the grievance is well-founded. The learned Subordinate Judge has granted not only more than what the plaintiff wanted, but more than what he has asked. It may be seen from Exhibit A-3 that only a sum of Rs. 4,000 was paid, if at all, towards the mortgage by the plaintiff. There is also recital in the sale deed itself that the entire interest due till that date had already been paid. Nevertheless, the learned Subordinate Judge has granted interest to the plaintiff at 15 per cent, per annum from the date of the mortgage, viz., 22nd August, 1950. This relief has been granted to the plaintiff without the plaintiff asking for the same and without his paying any court-fee thereon. 16. Nevertheless, the learned Subordinate Judge has granted interest to the plaintiff at 15 per cent, per annum from the date of the mortgage, viz., 22nd August, 1950. This relief has been granted to the plaintiff without the plaintiff asking for the same and without his paying any court-fee thereon. 16. The learned counsel for the contesting respondent-plaintiff endeavoured to support the judgment of the learned Subordinate Judge by contending that on the basis of the doctrine or unjust enrichment, the plaintiff would be entitled to a decree for the amount by way of reimbursement. The plaintiff did not make the payment under any mistake. The payment was made as a volunteer and knowing full that the property wag brought to sale under the attachment effected earlier to the sale deed. Therefore, the plaintiff is not entitled to rely on the doctrine of unjust enrichment to claim reimbursement. In fact, reimbursement cannot be claimed by the plaintiff, because his payment was on 11th February, 1970, and the suit was filed more than three years after the alleged payment, viz., on 7th January, 1974. The suit for recovery of money under section 69 of the Indian Contract Act would be barred by limitation. By introducing the doctrine of unjust enrichment, the provisions of section 92 (iii) of the Transfer of Property Act would be rendered otiose. That cannot be done. Moreover, the subrogee can proceed only against the hypotheca claiming a money decree against the first defendant. The learned Subordinate Judge has given him a larger relief than what he would have been entitled to as a subrogee viz., a right to proceed against the first defendant as well as the properties in his hands, including the hypothecs. Such a relief, I believe, was not in the contemplation of the plaintiff himself. 17. In these circumstances, the appeal is allowed, the judgment and decree of the learned Subordinate Judge are set aside, and the suit is dismissed with costs throughout. R.S. ----- Appeal allowed.