A P N VENKATACHALAM CHETTIAR Vs. ALAGARSWAMI CHETTIAR

JUDGEMENT

(1.) This appeal raises the interesting question whether a purchaser from the judgment-debtor of property which has been actually sold in execution of the decree on a puisne mortgage can, by reason of his purchase after the Court auction sale but before its confirmation and by reason of the discharge of the prior mortgage on that property before the confirmation of the Court auction sale, claim to be subrogated to the rights of the prior mortgagee as against the Court auction-purchaser. The facts are simple. The appellant is defendant 7, puisne mortgagee decree-holder and Court auction-purchaser. The plaintiffs are the sons of the private purchaser from the mortgagor. The first mortgage was to one Sami Chetty who is the brother of the plaintiffs father; next there was a. mortgage to defendant 7; thirdly, there was another mortgage to defendant 7 on which third mortgage, defendant 7 sued and got a decree. In execution of that decree on the third mortgage the property was purchased in Court-auction by-defendant 7 on 6 November 1926. On 3 December 1926, that is, just under a month after the Court sale, the judgment-debtor sold the same property to the plaintiffs father, the consideration for the sale being the discharge of the first mortgage in favour of Sami Chetty. The lower appellate Court finds that the first mortgage was probably discharged on 4 or 5th December 1926, that is to say, before the earliest date on which the Court sale could have been confirmed; and it is also found that possession "was given to the plaintiffs father. The only question, therefore is whether this transaction clothed the plaintiffs father with such an interest in the property as would entitle him to be subrogated to the rights of his brother Sami Chetty.

(2.) Now there is no allegation that the plaintiffs father purchased in good faith without knowledge of the Court sale. The rights of the plaintiffs therefore must be based on the actual possession of an interest in the property at the time when he discharged the first mortgage. I have not been referred to any case precisely similar to the present. The appellant-relies on a ruling in Govinda Padayachi V/s. Lokanatha Ayyar 1921 40 MLJ 114, which was a case in which a person who claimed subrogation claimed on the basis of a sale effected long after the confirmation of the Court sale and the private sale was further qualified by a direction that he should obtain a re-sale from the Court-auction-purchaser. That was therefore quite clearly a case in which the would be subrogator's vendor had no manner of title or interest in the property. Another case relied on by the appellant is that of Pichaiyappa Chetty v. Govindarajulu Mudali 1931 33 MLW 78, which is also a case in which the purchaser acquired no title at all as his vendor had no title and there was no material for holding that he purchased in good faith. The case of Chinna Alagumpernmal V/s. Vinayagathammal 1929 55 MLJ 861, is a case of a void sale by a de facto guardian, the purchaser discharging an othi on the property, but not doing so in good faith and having ab initio no title or interest in the purchased property. A similar case is that of Nanduri Saradamba V/s. Pattabhiramayya 1931 53 Mad 952, wherein cases in which the purchaser claiming subrogation claimed on the basis of a title which, though voidable, was for the time being good, are distinguished. On behalf of the respondent the cases quoted in the lower appellate Court's judgment are relied on.

(3.) Thus there is that reported in Syamalarayudu V/s. Subbarayudu (1898) 21 Mad 143, which is a case where the person who claims subrogation has title but that title is not good as against another person who had an earlier agreement to sell in his favour. It was certainly an instance of subrogation being allowed to a man whose conduct was not bona fide, but it was allowed on the strength of an interest subsisting at the time when he discharged the prior mortgage. Similarly the case in Chamaswami V/s. Padala Ananda (1908) 31 Mad 439, is one in which there was a subsisting title which was voidable but had not been avoided at the time when the prior encumbrance was paid off. So also the case in Palamalai Mudaliar V/s. South Indian Export Co. (1910) 33 Mad 334 was a case of a voidable transfer made in fraud of creditors which clothed the purchaser with title at the time when he discharged a prior encumbrance, though it was liable to be set aside at the instance of the creditors. It seems to me that the law on the subject is clear though its application to the facts of the present] case is not so simple. A mere volunteer who discharges a prior encumbrance has no right to claim subrogation; and if a person who has a title void ab initio and no other interest in the property dis-charges a prior mortgage, he is in the] position of a mere volunteer and cannot claim to be subrogated. Mere possession) alone is not sufficient to support a claim of subrogation unless that possession is accompanied by some interest in the property which the person in possession is entitled to protect. This, however may possibly be qualified if the discharge; of the prior encumbrance was necessary to prevent an immediate dispossession.; On the other hand, it is quite clear that a person who holds property under a title which, though voidable, is good for the time being, is entitled to claim subrogation to the rights of the mortgagee whom he has discharged.