TOTA RAM Vs. RAM LAL

JUDGEMENT

(1.) This case has been referred to a Full Bench for a decision of the following point of law, namely: Where a third mortgagee professes to keep in his hand a part of the mortgage money in order to pay off the first and second mortgages and pays of only the first mortgage, whether in a suit by the second mortgagee to enforce his mortgage it is open to the third mortgagee to insist on his being treated as a first mortgagee whose mortgage must be paid of before the plaintiff brings the mortgaged property to sale.

(2.) The facts of the case are stated in the referring judgment and briefly are as follows: One Ram Chandra was the owner of a certain property. He mortgaged the same for a sum of Rs. 200 to one Paras Ram on 19 October 1915. The next year on 16 October 1916, he made a simple mortgage of the same property in favour of one Ram Lal and one Ganga Sahai, son of Tika Ram. The second mortgage was for a sum of Rs. 400 and Ram Lal and Ganga Sahai kept a portion of the mortgage money with themselves to pay off Paras Ram. Ram Lal and Ganga Sahai however did not pay off Paras Ram and their suit out of which the present appeal has arisen is for recovery of a sum of Rs. 176 principal amount and interest.

(3.) Ram Chandra sold the property on a date which is unknown to one Ganga Sahai, son of Shimbhoo and this Ganga Sahai made a simple mortgage of the property sold to the present appellants, (defendants 3 to 5), Ram Chandra, Tota Ram and Durga, for Rs. 2,000 on 29 July 1926. Out of the mortgage consideration of Rs. 2,000 a sum of Rupees 676-3-0 was left with the mortgagees for payment to Paras Ram, a sum of Rupees 730-8-0 was left with the mortgagees to pay the second mortgage held by the plaintiff-respondents, Ram Lal and Ganga Sahai, son of Tika Ram, a sum of Rs, 557-13-6 was similarly left with the mortgagees to pay off a simple money decree held against the vendor and a sum of Rs. 35-7-6 was paid in cash to the vendor. On 29 November 1926, the heirs of Paras Ram were paid by the appellants a sum of Rs. 704-12-0 in full satisfaction of the first mortgage, dated 19 October 1915. The second mortgage not having been discharged, Ram Lal and Ganga Sahai, son of Tika Ram have claimed their money. The appellants were impleaded as the third mort gagees and they pleaded inter alia that they had satisfied Paras Ram's mortgage and without paying that amount the plaintiffs were not entitled to get the property in question sold by auction. We have to consider whether in the circumstances of the case the appellants were subrogated to the position of Paras Ram. The point raised in this appeal has given rise to conflicting decisions, although it must be said that in this. Court the majority of cases has decided that a third mortgagee paying off the first mortgage in the circumstances of the present case is not entitled to be subrogated to the position of the first mortgagee. The earliest important case-on this point is the Full Bench decision in Muhammad Saddiq V/s. Ghaus Muhammad [1911] 33 All. 101 It was a case of a purchaser from the mortgagor paying off the first mortgage, and it was held in the circumstances of the case that it was never the intention of the purchaser to keep the first mortgage alive. It was pointed out that at the date of the sale the intention of the purchaser was to pay off and extinguish the first mortgage and not to keep it alive. Then it was pointed out that if the date of payment be the crucial date on which the intention to keep alive or extinguish was to be entertained then the written statement showed that no idea of keeping alive the first mortgage was entertained at the date of payment because it was not even mentioned by way of defence and the point was raised subsequently as an "afterthought."