Case: Brahm Parkash Vs. Manbir Singh And Others

Ayyangar, J.1. These three appeals, which are before us on certificates of fitness granted by the High Court of Punjab, arise out of two suits for the recovery of amounts due on mortgages executed by one Mohinder Singh who was a contractor in Delhi. Mohinder Singh is now deceased and is now represented in these proceedings by his widow and son. Mohinder Singh owned as many as eight properties in Delhi and over one or other of these he created successively 24 mortgages between September 1943 and July 1944 and also executed a sale in respect of one item of these properties. The contentions urged in these appeals arise out of conflicts between the rights of some of these mortgagees inter se, or between some of them and the purchaser of one of the properties. It is however unnecessary for the purpose of deciding these points to set out the details of every one of these several mortgages or their history.2. Appeals 77 and 78 may first be considered. The facts necessary to appreciate the sole point raised by Mr. Achhru Ram. learned Counsel for the appellant Jagdish Chand are these: The property concerned in the two appeals is plot No. 1, Pusa road in Block 34 with a bungalow thereon. A mortgage for Rs. 10,000/was created over this and certain other properties (We are, however, not concerned with these other properties in favour of one Lajwana by Mohinder Singh by a deed dated October 1943.A few days later-on November 7, 1943- another mortgage was executed in her favour for Rs. 16,000/- under which the property No. 1, Pusa Road was given as security. Passing over certain intermediate transactions not material for the purposes of the present appeals, mortgage was created in favour of one Daulatram Narula inter alia on this property on January 21, 1944 to secure a sum of Rs.60,000/-, Two days later-on January 23, 1944-the appellant, Jagdish Chand, lent a sum of Rs. 10,000/- to Mohinder Singh and had a mortgage over the same property and others on February 25,1944 and March 14,1944, the first or Rs. 9,500/- and the second for Rs. 10,000/-. It ought to be mentioned that the consideration for several of the mortgages referred to earlier was in part a payment in cash to the mortgagor and in part the repayment in part satisfaction of previous mortgages, but this circumstance not being of any relevance we are not setting out the details of the consideration for the several mortgages. Lastly, and this is the mortgage which is of importance for the point raised in this appeal, on July 13,1944 Mohinder Singh created in favour of Pandit Sham Sunder an usufructuary mortgage for Rs. 1,25,000/out of which Rs. 84,000/- was reserved with the mortgagee for payment to Daulatram Narula the sum representing the principal and interest due on his three mortgages. It is common ground that on the date when the mortgage was registered Sham Sunder carried out his obligation and discharged the mortgages of Daulatram by paying him Rs. 84,000/-.3. The amount due to Lajwanti was not paid and she accordingly brought a suit on June 14, 1945 in the Court of the Senior Sub-Judge, Delhi for the recovery of her mortgage money which, after giving credit for the sums paid to her already by several subsequent mortgagees, came to Rs. 11657/5/4. She impleaded as party defendants to the suit the several subsequent mortgagees including the appellant - Jagdish Chand as well as Daulatram and Sham Sunders legal representatives as he himself was dead by that date. Just like Lajwanti another mortgagee-one Mukhamal in whose favour two mortgages, one dated February 1,1944 and another dated May 12,1944 for Rs. 10,000/- and Rs. 9,000/respectively, also filed a suit for the recovery of Rs. 15,302/- and odd. As in Lajwantis suit, the several subsequent mortgagees including Jagdish Chand, Daulatram and the legal representatives of Pt. Sham Sunder were also impleaded as defendants in this suit also.4. In these two suits the genuineness of the several mortgages was not seriously disputed and the only point on which contest was centered was as regards the respective rights of the several mortgagees inter se. We are concerned in these two appeals with the claim made by the legal representatives of Sham Sunder that they were entitled by reason of their discharging the mortgage-debt of Daulatram to whom they had paid Rs. 84,000/-out of the mortgage amount of Rs. 1,25,000/- to be subrogated to the rights and priorities of Daulatram under the mortgage dated January 21,1944 for Rs. 60,000/- as against the later mortgage of the 23rd January of Jagdish Chand even though there was no agreement in writing under which he stipulated for such a right. This contention was raised both in the suit by Lajwanti as well as in Mukhamals suit. It was contended on their behalf that though the Transfer of Property Act did not in terms apply, yet the equitable principle underlying its S. 92 viz, the right of a secured creditor who had discharges a prior encumbrances to be subrogated to the rights and priorities of the mortgagee whom he had redeemed, could nevertheless be invoked under S. 6 of the Punjab Laws Act. The learned trial Judge, however, while acceding to this in principle, held on the basis of certain authorities to which he referred that in the absence of a specific agreement stipulating for subrogation the subsequent mortgagee was not entitled to such an equity, on this ground the right of subrogation claimed by the legal representatives of Sham Sunder was rejected. From the rejection of this claim in the two suits Sham Sunders representatives preferred two appeals to the High Court and the learned Judges allowed the appeal holding that it was not an essential condition for claiming the right of subrogation that the creditor redeeming the mortgage should have entered into and express agreement to that effect. It is from this decision of the High Court that these two appeals have been preferred.5. Mr. Achhru Ram, learned Counsel for the appellant did not dispute before us the correctness of the view expressed by the learned Judges of the High Court that in order to entitle a creditor to claim a right of subrogation it was not necessary that he should have entered into a written agreement stipulating for such a right. His submission, however, was on the following lines: Accepting the law as expounded by Sir Richard Couch in Gokuldas v. Ram Bux, 11 Ind App 126 (PC) at pp. 133-134 in the following terms:"In India the art of conveyancing has been and is of a very simple character, Their Lordships cannot find that a formal transfer of a mortgage is ever made, or an intention to keep it alive ever formally expressed ...... The obvious question to ask in the interests of justice, equity, and good conscience is, what was the intention of the party paying off the charge? He had a sight to extinguish it and a right to keep it alive. What was his intention? If there is no express evidence of it, what intention should be ascribed to him? The ordinary rule is that a man having a right to act in either of two ways, shall be assumed to have acted according to his interest. In the familiar instance of a tenant for life paying off a charge upon the inheritance, he is assumed, in the absence of evidence to the contrary, to have intended to keep the charge alive. It cannot signify whether the division of interests in the property is by way of life estate reminder, or by way of successive charges. In each case it may be for the advantage of the owner of a partial interest to keep on foot a charge upon the corpus which he has paid"as laying down the correct test for determining whether the right of subrogation could be claimed or not, Mr. Achhru Ram submitted that the law was that even where there was no express agreement stipulating for subrogation, the law would presume such a right on the ground that the payer intended to act in a manner most advantageous to him, but that this was only a rebuttable presumption which would be negatived on positive proof from the conduct or statements of such a creditor pointing to a contrary intention. In other words, that there was nothing to prevent its being shown that the creditor paying off the charge did not intend to preserve the mortgage which he discharged so as to obtain the priority which the discharged encumbrance enjoyed. He urged that in the present case, on the terms of the documents to which Sham Sunder was a party, such an intention not to keep alive the discharged encumbrance of Daulatram was clearly made out. In this connection he drew to our attention first the terms of the mortgage executed in favour of Sham Sunder on July 13, 1944 in which this Rs.84,000/- left with the mortgagee is referred to as being held by the latter in trust for the payment of the previous encumbrancer-Daulatram. Next, he referred us to the endorsements of discharge on the mortgages of Daulatram which read as if the amount due had been paid by Sham Sunder on behalf of the mortgagor-Mohinder. On this basis the contention was urged that any intention to obtain the benefit of subrogation was clearly negatived.6. We do not propose to discuss the merits of this contention, and it is not as if it is not capable of cogent refutation, because we are satisfied that the appellant should not be permitted to raise such an argument at this stage. In both the suits the legal representatives of Sham Sunder filed written statements in which they specifically stated that the discharge of the encumbrances of Daulatram was under circumstances in which they were entitled to claim the relief of subrogation. The question regarding the intention with which a prior encumbrance is discharged, whether it is with a view to obtain the priority of the mortgage paid off or not, in circumstances like the present would be a question of fact and would have to be answered on a conspectus of the entire circumstances of the case. If the appellant was disputing the plea of Sham Sunders representatives that the intention of Sham Sunder in discharging Daulatrams -mortgages was to retain the benefit of subrogation, it was for him to have raised it by proper pleading when an issue would have been struck and evidence led for or against such a contention. At the stage of the trial the only objection raised to the claim for subrogation was based on the absence of a written agreement which the appellant contended was a requirement of the law which had not been complied with. In one sense such a plea would appear to assume that the intention of the party Paying off the mortgage was to obtain the benefit of subrogation but that he had failed to comply with a requirement of the law in having that intention embodied in a document. This plea was accepted by the learned trial Judge and the claim for subrogation was disallowed but Sham Sunders representatives filed an appeal to the High Court. Again, at the stage of the appeal the only contention urged before the learned Judges was as regards this supposed requirement of the law that there should be a written agreement. When this plea was rejected it is obvious that on the pleadings the right to subrogation should be held to be established. The matter, however, does not stop here, because even at the stage of appeal to this Court no point was made that in the instant case the presumption in favour of a person having acted to his interest and so entitled to claim subrogation was displaced by clear evidence of the partys statements or conduct. Nor can even a trace of such plea be found in the statement of case filed in these appeals. We do not therefore consider it proper to permit learned Counsel to urge any such ground before us.

Decision:
0[ds]In both the suits the legal representatives of Sham Sunder filed written statements in which they specifically stated that the discharge of the encumbrances of Daulatram was under circumstances in which they were entitled to claim the relief of subrogation. The question regarding the intention with which a prior encumbrance is discharged, whether it is with a view to obtain the priority of the mortgage paid off or not, in circumstances like the present would be a question of fact and would have to be answered on a conspectus of the entire circumstances of the case. If the appellant was disputing the plea of Sham Sunders representatives that the intention of Sham Sunder in discharging Daulatrams -mortgages was to retain the benefit of subrogation, it was for him to have raised it by proper pleading when an issue would have been struck and evidence led for or against such a contention. At the stage of the trial the only objection raised to the claim for subrogation was based on the absence of a written agreement which the appellant contended was a requirement of the law which had not been complied with. In one sense such a plea would appear to assume that the intention of the party Paying off the mortgage was to obtain the benefit of subrogation but that he had failed to comply with a requirement of the law in having that intention embodied in a document. This plea was accepted by the learned trial Judge and the claim for subrogation was disallowed but Sham Sunders representatives filed an appeal to the High Court. Again, at the stage of the appeal the only contention urged before the learned Judges was as regards this supposed requirement of the law that there should be a written agreement. When this plea was rejected it is obvious that on the pleadings the right to subrogation should be held to be established. The matter, however, does not stop here, because even at the stage of appeal to this Court no point was made that in the instant case the presumption in favour of a person having acted to his interest and so entitled to claim subrogation was displaced by clear evidence of the partys statements or conduct. Nor can even a trace of such plea be found in the statement of case filed in these appeals. We do not therefore consider it proper to permit learned Counsel to urge any such ground beforeconsider this submission wholly without substance. When S. 56 refers to a subsequent purchaser it does not obviously exclude a purchaser who has some mortgage over property with which these proceedings are not concerned. His mortgage rights over some other property of the mortgagor is wholly irrelevant or considering his rights qua purchaser of one of the properties to which opening words of S.56 apply. The construction contended for, in our opinion, has only to be stated to be rejected.(2)the other submission of learned Counsel was that the learned Judges failed to give effect to the last portion of S. 56 under which marshalling is not to be permitted so as to prejudice the rights inter alia of the mortgagees or other persons claiming under him, i.e., under the original mortagagor. Learned Counsel pointed out that the appellant having proved his mortgage and the fact that it was subsisting, the learned Judges of the High Court ought to have held that any direction as to marshalling must necessarily prejudice him. We are unable to agree that this follows as any matter of law. The question of prejudice is purely one of fact which has to be pleaded and the necessary facts and circumstances established. It is obvious that the question of prejudice would be intimately connected with the value of the property against which the mortgagee is directed to proceed in the first instance. If even after paying off such a mortgage there is enough left for payment over to the subsequent encumbrances referred to in the last portion of S. 56 it would be manifest that there would be no question of prejudice. If therefore the appellant desired to invoke the benefit of the last portion of S. 56 he should have made some plea as to the value of the property and shown how it would prejudice his rights as a subsequent encumbrancer. He however made no such plea and no evidence was led as to the value of the property. Even at the stage of the appeal in the High Court the contention that to allow marshalling in favour of the subsequent purchaser Mukhamal would result in prejudice to him was admittedly never put forward before the learned Judges. As the point is one not of pure law but springs from the factual inadequacy of the property mortgaged to him to discharge his debt it is too late for the appellant to raise such a plea in this Court.