Case: Sri Sankari Prasad Singh Deo Vs. Union Of India And State Of Bihar(And Other Cases)

by Sir Reshbehary Ghose in his Law of Mortgage in India, vol. I Edn. 5. He says at P. 354, pointing out that co-mortgagors stand in a fiduciary relation:"I should add that an assignee of a mortgage is entitled, as a rule, to recover whatever may be due on the security. But if the stands in a fiduciary relation, he can only claim the price which he has actually paid together with incidental expenses."The right of the co-mortgagor who redeems the mortgage is spoken of as the right of reimbursement at p. 372 in the following passage:"strictly speaking, therefore, when one of several mortgagors redeems a mortgage, he is entitled to be treated as an assignee of the security which he may enforce in the usual way for the purpose of re-imbursing himself."14. The redeeming co-mortgagor being only a surety for the other co-mortgagors, his right is, strictly speaking, a right of reimbursement or contribution, and in law, when we have regard to the principles of equity and justice, there should be no difference between a case where he discharges an unsecured debt and a case where he discharges a secured debt. It is unnecessary for us to decide in this appeal whether S. 92, T. P, Act, was intended to strike a departure from this position when it states that the co-mortgagor shall have the same rights as the mortgagor whose mortgage he redeems, and whether it was intended to abrogate the rule of equity as between co-debtor and provide for the enforcement of the liability on the basis of the amount due under the mortgage; and this is because, as has been already stated, we are governed not by the statute but by general principles of equity and justice. If it is equitable that the redeeming co-mortgagor should be substituted in the mortgagees place, it is equally equitable that the other co-mortgagors should not be called upon to pay more than he paid in discharge of the encumbrance,15. In this connection reference may be made with advantage to the decision of Sir Asutosh Mookerjee and Teunon JJ. In Digambar Das v. Harendra Narayan Panday, 14 C. W. N, 617, where the question arose as regards the rate of interest and the period for which redeeming co-mortgagor would be entitled. There is an elaborate examination of the nature of the right of subrogation obtained by one of several joint co-mortgagors who redeems the mortgaged property, and in the course of the discussion the following observations occur :"In so far as the amount of money which he is entitled to recover from his co-mortgagors is concerned, he can claim contribution only with reference to the amount actually and properly paid to effect redemption to which sum he can add his legitimate expenses, ...The substitution, therefore, of the new creditor in place of the original one, does not place the former Precisely in the position of the latter for all purposes. .. .. . If therefore, one of several mortgagors satisfies the entire mortgage debt. though upon redemption he is subrogated to the right and remedies of the creditor, the Principle has to be so administered as to attain the ends of substantial justice regardless of form; in other words, the fictitious cession in favour of the person who effects the redemption, operates only to the extent to which it is necessary to apply it for his indemnity and protection"16. There is a definite expression of opinion by the Madras High Court on the point in the decision reported in Suryanarayana v. Sriramulu, 25 M. L. J. 16. In that case, a purchaser of a half share of the equity of redemption claimed to recover half of the amount of the mortgage on the security of the other share in the hands of the defendant, and it was held that as his purchase of the decree on the mortgage was prior to his purchase of the equity of redemption he was entitled to the full amount claimed by him. The learned Judges, distinguish the case from one where one of two mortgagors discharges an encumbrance binding on both and say that in such a case the mortgagor doing so could not recover from his co-mortgagors more than a proportionate share of the amount actually paid by him.17. After, this father lengthy discussion of the subject, we consider it unnecessary to notice and comment on the several decisions cited for the appellant. It may be said generally that they only lay down that in cases where the Transfer of property Act, as it stood originally or as amended in 1929, is not applicable, we are governed by the principles of equity, justice and good conscience, and that Ss. 92 and 95 embody such principles. None of the cases deals with the extent or degree of subrogation, and there is nothing in them which runs counter to the view that the doctrine must be applied along with other rules of equity, so that the person who discharges the mortgage is amply protected, and at the same time there is no injustice done to the other joint debtors. He who seeks equity must do equity, and we shall be violating this rule if we give effect to the appellants contention. The High Court, in our opinion, reached the correct conclusion.18. The parties are not agreed on the shares to which the plaintiffs are entitled and this is because after the date of the final decree some of the branches have become extinct by the deaths of their representatives. Whether under customary law in the Punjab, uncles exclude nephews or they take jointly, and whether succession is per stirpes or per capita, was the subject of disagreement at the Bar before us. This question must therefore be left over for determination by the trial Court, and, the case will have to go back to that Court for effecting partition and delivery of possession according to the shares to which the plaintiffs may be found entitled.1

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. Points Nos. 1 and 3 have no force whatever. The registered deed of redemption does not contain any words of assignment. To say that Ganesh Lal shall be the owner of the entire amount due from the mortgaged property is something different from stating that the security has been assigned in his favour. On the other hand, the endorsement of receipt of payment on the back of the mortgage deed itself and the statement of the mortgagee that he has released the mortgaged property from his mortgage go to show that there was no assignment.6. The non-maintainability of the suit does not seem to have been in issue either before the trial Court or before the District Judge, and it appears to have been raised for the first time before the High Court. It was pointed out by the learned Judges, and quite rightly, that so long as no question of limitation was involved, there was no objection to a claim for redemption and one for possession and partition being joined together in the same suit.The original Ss. 74 and 75 conferred the right to redeem in express terms only on second or other subsequent mortgagees though the co-mortgagors right to subrogation on redemption was recognised even before the Act. As the Transfer of Property Act has not been extended to the State of East Punjab, it is unnecessary to decide whether S. 92 is retrospective in its operation, on which point there has been a conflict of opinion between the several High Courts. Section 95 of the Act which removed the confusion caused by the old section which conferring on the co-mortgagor what was called a charge, and thus seeming to negative the application of the doctrine of subrogation, is also inapplicable to the present case. We therefore steer clear of Ss. 74 and 75 of the old Act and Ss. 92 and 95 of the present Act, and we are free to decide the question on principles of justice, equity and good conscience.There is a definite expression of opinion by the Madras High Court on the point in the decision reported in Suryanarayana v. Sriramulu, 25 M. L. J. 16. In that case, a purchaser of a half share of the equity of redemption claimed to recover half of the amount of the mortgage on the security of the other share in the hands of the defendant, and it was held that as his purchase of the decree on the mortgage was prior to his purchase of the equity of redemption he was entitled to the full amount claimed by him. The learned Judges, distinguish the case from one where one of two mortgagors discharges an encumbrance binding on both and say that in such a case the mortgagor doing so could not recover from his co-mortgagors more than a proportionate share of the amount actually paid by him.17. After, this father lengthy discussion of the subject, we consider it unnecessary to notice and comment on the several decisions cited for the appellant. It may be said generally that they only lay down that in cases where the Transfer of property Act, as it stood originally or as amended in 1929, is not applicable, we are governed by the principles of equity, justice and good conscience, and that Ss. 92 and 95 embody such principles. None of the cases deals with the extent or degree of subrogation, and there is nothing in them which runs counter to the view that the doctrine must be applied along with other rules of equity, so that the person who discharges the mortgage is amply protected, and at the same time there is no injustice done to the other joint debtors. He who seeks equity must do equity, and we shall be violating this rule if we give effect to the appellants contention. The High Court, in our opinion, reached the correct conclusion.The parties are not agreed on the shares to which the plaintiffs are entitled and this is because after the date of the final decree some of the branches have become extinct by the deaths of their representatives. Whether under customary law in the Punjab, uncles exclude nephews or they take jointly, and whether succession is per stirpes or per capita, was the subject of disagreement at the Bar before us. This question must therefore be left over for determination by the trial Court, and, the case will have to go back to that Court for effecting partition and delivery of possession according to the shares to which the plaintiffs may be found entitled.