(SAIYED) ALAM ALI Vs. BENI CHARAN

JUDGEMENT

(1.) This is a defendant's appeal arising out of a suit for sale on the basis of a mortgage deed dated 2 September, 1919. The claim was mainly contested by the defendant-appellant who held a mortgage of 22 April, 1928, but claimed priority on account of the payment of two mortgage decrees which had been obtained before his mortgage on the basis of two earlier mortgages of 18th September 1909 and 20 July 1918. These mortgages were simple mortgages and the decrees were decrees for sale to which the present plaintiff as a, subsequent mortgagee had been impleaded. The mortgagor, in executing the third mortgage in favour of the defendant, had left Rs. 4,000 in the hands of the mortgagee for discharging one of the decrees and took Rs. 5,237 himself in order to pay off the other decrees, which he did. The defendant accordingly claimed that he should be given priority over the second mortgagee on account of the discharge-of the earlier mortgages of 1909 and 1918. The learned Subordinate Judge-has overruled this plea on four grounds. (1) That there was no evidence that the previous mortgage debt was to be kept alive for the benefit of the subsequent mortgagee as against the mortgagor. This ground in our opinion is untenable. The defendant must be presumed to have intended to keep alive the security which was for his benefit. (2) That there were some more mortgagors in the two mortgage decrees which were paid off. This circumstance-does not in our opinion affect the right-of the defendant to claim priority. (3) That the mortgage debts of the previous decree-holders were extinguished by the mortgage decrees and the securities also were accordingly extinguished. This is doubtful in view of the amendment of the old Section 89 which has now been replaced by Order 34, Rule 5. (4) That the money was not paid by the defendant under Section 74, T.P. Act, but was paid in performance of a covenant and therefore the defendant is not entitled to be subrogated to the rights of the prior mortgagees.

(2.) Two conflicting views have been expressed in cases of this Court. One view is that even though the old Section 74 corresponding to the new Section 92, T.P. Act, were not in terms applicable, on the principle underlying these section a third mortgagee who pays off a prior mortgage decree acquires a fresh charge on the date of the payment by him, which he can enforce by a separate suit within 12 years of the date of payment, and if made a defendant can claim priority as against the second mortgagee whose mortgage was prior to the payment by him but subsequent to the first mortgage. The other view is that if the sections do not in terms apply, the third mortgagee, who pays off the prior mortgage, merely acquires the rights and powers of the first mortgagee whom he had paid off and has no more extensive powers, and that accordingly he cannot claim priority at a time when the remedy of the prior mortgagee to enforce his claim has become barred by time. The rulings in support of the appellant are: Shib Lal V/s. Munni Lal 1922 19 ALJ 840, Mohammad Abbas Ali Khan V/s. Chotey Lal 1927 All 28 and Paras Ram V/s. Mewa Kunwar 1930 ALJ 890, while the case of Bansidhar V/s. Shiv Singh 1933 ALJ 1564 seems to be in support of the second view. As this case raises an important question of law which may arise frequently, we refer the following point to a larger Bench: Where a property has been the subject of two simple mortgages and a suit has been brought for sale on the first mortgage and decreed against the second mortgagee also; and subsequently a third mortgage is taken and this mortgagee has paid the decretal amount but has not obtained possession of the property; when the second mortgagee brings a suit for sale and makes the third mortgagee a party, is the third mortgagee entitled to claim a right of subrogation for the amount which he paid in discharge of the decree in the earlier mortgage suit, even though the period of limitation for a fresh suit on the first mortgage would now be barred?

(3.) Let the case be laid before the Chief Justice for the constitution of a larger Bench. Let the plaintiff-respondent be informed of the date of the hearing before the Full Bench. Opinion Sulaiman, C.J.