MOHANLAL Vs. MOHOMAD SUJAT

JUDGEMENT

(1.) 1. This is an appeal from the decree of the Second Additional District Judge, Amraoti, in a suit instituted for enforcing a mortgage. The sole point for determination is whether the appellants, who are subsequent mortgagees, have acquired priority over the mortgage in suit by virtue of redemption of the first mortgage.

(2.) DEFENDANT 1, Jaikrishna, is the purchaser of the mortgaged field from Gopalsa, the original owner. As security for the payment of a part of the purchase money, namely Rs. 1,300, he executed a mortgage in favour of Gopalsa on 12th April 1924. He then executed a second mortgage on 8th August 1924 in favour of the plaintiff Mohammad Sujat. Again he executed a third mortgage on 21st April 1925 in favour of Gangaram who transferred his mortgagee rights to Mohanlal and Gopikabai, who were defendants 2 and

(3.) THE question whether Gangaram intended to keep the first mortgage alive is one of inference from the nature of the agreement and the surrounding circumstances of the transaction. To entitle anybody to invoke the equitable right of subrogation, he must either occupy the position of a surety of the debt or must have made the payment under an agreement with the debtor or creditor that he should receive and hold an assignment of the debt as security, or he must stand in such a relation to the mortgaged premises that his interest cannot otherwise be adequately protected: see Gurdeo Singh v. Chandrikah Singh (1909) 36 Cal 193. If there had been an express agreement between Gangaram and the mortgagor that by redeeming the first mortgage Gangaram was to receive and hold an assignment of 1st mortgage as security then it would appear that there could have been no dispute as to Ganga-ram's priority. But such an agreement need not be express; whether the payment was to extinguish or keep alive the prior mortgagee for the benefit of the subsequent mortgagee who pays depends upon the intention which may be gathered from the surrounding circumstances and from the consideration of what was to his interest: see Mohesh Lal v. Bawan Das (1883) 9 Cal 961. As their Lordships of the Privy Council observed in Gokaldas Gopaldas v. Puranmal Premsukhdas (1884) 10 Cal 1035, that when the estate is burdened by a succession of mortgages and the owner of an ulterior mortgage pays off an earlier mortgage, it is a matter of course, according to the English practice, to have it assigned to a trustee for his benefit, as against intermediate mortgagees, to whom he is not personally liable. But in India a formal transfer for the purpose of a mortgage is never made, nor is an intention to keep it alive ever formally expressed. Their Lordships, therefore, laid down the dictum that in the interests of justice, equity and good conscience, the intention of the party paying off the charge must be gathered from the consideration of what was to his interest. To quote their actual words: 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 right 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:" see also Malireddi Ayyareddi v. Adusamilli Gopalkrishnayya AIR 1921 PC 36.