SETH RADHAKISHAN RAMLAL PALLIWAL Vs. BABU HAZARILAL

JUDGEMENT

(1.) THE following points have been referred to us for decision: (1) When a prior mortgagee obtains a renewal and sues the mortgagor and mesne incumbrancer on the subsequent mortgage, must the prior mortgage itself be in time (apart from renewal) for the plaintiff to obtain priority over the mesne incumbrancer? (2) In order to decide this, is it necessary to decide whether a subsequent mortgagee is bound by an acknowledgment in favour of a prior mortgagee? If so, is he so bound? (3) Does the Money-lenders Amending Act of 1939 apply to suits instituted from 1st April 1935 to 19th March 1937? In dealing with the first question we assume that the suit is based on the subsequent mortgage, as in the present case.

(2.) THE facts may be briefly stated as follows. In 1904 certain property was mortgaged to A for a sum that was repayable by instalments, of which the last was payable on 17th May 1916. On 13th May 1924, accounts were made up and the same property was mortgaged for the sum found due, which was repayable by instalments, of which the last was payable in 1944. In the meantime the property had been mortgaged to B in 1915 for a sum repayable after ten years; on 8th June 1928, accounts were made up and a second mortgage was executed for the amount found due and a further sum then advanced. On 23rd December 1935, A sued to enforce his mortgage of 1924, impleading B as a puisne mortgagee on the strength of the mortgage of 1928. B pleaded that he was entitled to rely on his mortgage of 1915, and was therefore a prior mortgagee. To this A replied that he (A) was entitled to rely on his mortgage of 1904 and was therefore prior to B. The above is a simplified statement of the facts but is sufficiently accurate for the purposes of this reference. An issue was framed on the question which mortgagee was entitled to priority against the other.

(3.) IN that case the money borrowed under the mortgage in suit was utilised to pay off a mortgage executed not in favour of the plaintiff but in favour of a third person, though the word "subrogation" was not, used. The right of subrogation is dealt with in Section 92, T.P. Act, as amended in 1929. By that Act certain persons on redeeming property subject to a mortgage or persons who have advanced to a mortgagor money with which the mortgage has been redeemed are subrogated to the rights of the mortgagee whose mortgage has been redeemed. Before the amendment of 1929 subrogation eo nomine was not mentioned in the Transfer of Property Act, but certain limited rights of subrogation were conferred by Sections 74 and 75 on a subsequent mortgagee who had paid off the amount due on the next prior mortgage. It will therefore be seen that the provisions of the Transfer of Property Act do not apply to the case where a person takes a second mortgage in renewal of an earlier mortgage and seeks to use that earlier mortgage as a shield against a mesne incumbrancer, nor did they apply to the facts in Mahomed Ibrahim Hossain Khan v. Ambika Pershad Singh (12) 39 Cal. 527 which was decided on principles of equity. The provisions of Section 101 have also no application because there has been no merger of rights.