K S MUTHUSWAMI CHETTIAR Vs. RAMASWAMI SAMIYAR

JUDGEMENT

(1.) The question for decision in this appeal is whether a transferee of immovable property is entitled to a charge on it in respect of the amount disbursed by him in paying off a mortgage on the property when he is not entitled to be subrogated to the rights of the mortgagee by reason of the fact that there does not exist a registered agreement of the nature of that contemplated in the third paragraph of Section 92 of the Transfer of Property Act.

(2.) The first paragraph of the section states that any of the persons referred to in Section 91 (other than a mortgagor) and a co-mortgagor shall, on redeeming the property subject to the mortgage, have, as regards redemption, foreclosure or sale, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or another mortgagee. The second paragraph says that the right conferred by the section is called the right of subrogation and a person acquiring such right is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. In the third paragraph it is provided that 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, if the mortgagor has, by a registered instrument agreed that he shall be so subrogated. In the present case there is no registered agreement, but it is contended by the appellant that this does not prevent the Court from granting him in the exercise of its equitable jurisdiction, a charge over the properties in suit. The argument is that Section 92 only applies in a case of subrogation, which means that the person redeeming the mortgage stands in the shoes of the mortgagee in every respect. A person who is merely entitled to a charge is not in the same position as a mortgagee. In the case of a mortgage there is a transfer of an interest in the property and the contract entered into between the mortgagor and the mortgagee is the governing factor. In the case of a charge no interest is transferred. A person entitled to a charge granted by the Court is confined strictly to the terms imposed by the Court and does not stand in the shoes of the mortgagee.

(3.) Before proceeding to discuss the question further, it will be well to set out the facts. On the 15 June, 1934, the appellant bought the properties in suit from the 2nd respondent and the father of the 3 respondent, who were joint. The consideration alleged was Rs. 3,500 of which Rs. 2,000 was to be paid in the discharge of a mortgage on the properties, Rs. 71-4-0 in cash, and the balance in the discharge of unsecured debts. On the 3 July, 1934, the appellant paid the amount due to the mortgagee, but he did not discharge the other debts and did not pay the Its. 71-4-0. On the 23 April, 1934, the 1 respondent filed a suit against the 2nd and 3 respondents to recover the amount claimed by him to be due on a promissory note, and on the 23 December, 1935, obtained a decree for Rs. 3,300 inclusive of interest and costs. On the 23 November, 1936, the 1 respondent attached the properties in suit. The appellant objected to the attachment, but his objection was overruled by an order of the Court, dated the 31 August, 1937. On the 6 October, 1937, the appellant filed the present suit under the provisions of Order 21, rule 63 of the Civil P. C.. The defence raised was that the transfer of the properties to the appellant on the 15 June, 1934, constituted a fraud on the creditors and therefore was void, under Section 53 of the Transfer of Property Act. The Subordinate Judge of Dindigul, in whose Court the suit had been filed, held that the sale did constitute a fraud on the creditors, but declared that the appellant was entitled to a charge on the properties in respect of the Rs. 2,000 which he had paid to the mortgagee and on this footing he dismissed the suit. On appeal the District Judge of Madura agreed with the Subordinate Judge. The 1 respondent then appealed to this Court, and his appeal was heard by Wadsworth, J., who disagreed with the opinion of the Courts below that the appellant was entitled to a charge. The learned Judge held that a person could not obtain a valid charge without there being a registered agreement. In his opinion the section made no difference between a person claiming a charge and a person claiming the right of subrogation. The present appeal is from this decision.