The facts are these. Defendants 1 to 3 are the owners of the property. They created 3 mortgages on it. The plaintiff is the 3rd mortgagee. Defendants 4 to 7 purchased the equity of redemption under a decree in a Small Cause Suit. In 1913, a suit was brought by the 2nd mortgagee to which the mortgagor and the prior and subsequent mortgagees were parties and he obtained a decree. It should be mentioned that the 2nd mortgage covered not only the property, but all the crops that may be grown on it until redemption. The 3rd mortgagee sued in 1914 on his mortgage making the mortgagors alone parties and purchased the property. Defendants 4 to 7 paid a good portion of the decree amount due to the 2nd mortgagee and then assigned their rights to defendants 9 and 10. These latter paid the balance of that decree. Satisfaction of the decree was entered. In execution of the decree on the 3rd mortgage, the property was brought to sale and from the sale proceeds the 1st mortgage was fully discharged. The question now related to the payment of the balance. Defendants 9 and 10 claim it as they contend that they have been subrogated to the position of the 2nd mortgagee. This is the principal question for decision.
There was an appeal to this Court (A. S. No. 391 of 1915) in the suit of the 3rd mortgagee and this Court declared by the decree that defendants 4 to 7 whom defendants 9 and 10 now represent are entitled to pay off the 2nd mortgage and to be subrogated to the position of the 2nd mortgagee. That was a decision inter parties and is binding on the plaintiff. But that direction in the decree can only affect payments made subsequent to the decree. The question, therefore, still has to be decided, whether a purchaser of the equity of redemption discharging an encumbrance on the property is not entitled to the benefit of subrogation. We see no reason why he should not have this right. Under Sect. 55, CL. 1 (g) of the Transfer of Property Act a purchaser is bound to pay off existing encumbrances. A Court purchaser is not free from this obligation. Sect. 91 of the Transfer of Property Act empowers the purchaser of the equity of redemption to redeem existing mortgages. Under Sect. 74 of the Act a subsequent mortgagee redeeming a previous one is entitled to stand in the shoes of the latter. This right is given by Sect. 101 to a purchaser and the section declares that what is beneficial to the purchaser shall be deemed to have been intended by him. Reading all these sections together we are clear that on principle, the purchaser of the equity of redemption is entitled to the right of subrogation.
Turning to the authorities quoted, Gokaldas Gopaldas v. Puranmal Premsukhdas(1) seems to recognise this principle in clear terms. The Judicial Committee while expressing unwillingness to extend the principle underlying Toulmin v. Steere(2) to India, point out that where there is no personal obligation to pay, the payer is entitled to subrogation. That is also the view taken in Udit Narain Misir v. Asharfi Lal(3) and in the earlier portion of the judgment in Satnarain Tewari v. Chowdhuri Sheo Baran Singh(4). As regards Bisseswar Prosad v. Lala Sarnam Singh(5) and the earlier case Surjiram Marwari v. Barhamdeo Persad(6) it is enough to say that in both of them, the learned Judges were dealing with agreements in which there were personal covenants on the part of the purchaser. Where there is such an undertaking to extinguish the mortgage the presumption that the person paying off the mortgage intended to keep alive that mortgage for his protection may be negatived. The observations in Govindasami Tevan v. Dorasami Pillai(7), should also be confined to cases of personal liability. We think for these reasons that defendants 9 and 10 are entitled to be subrogated to the position of second mortgagee.
It was next argued that as the second mortgage covered future crops on the property, the payment made by defendants 4 to 7 to save them from sale should not be deducted out of the money in Court. There is a fallacy underlying this argument. In execution of his decree, the second mortgagee proceeded to sell the crops then on the property. As defendants 4 to 7 had acquired the equity of redemption and had thereby become entitled to the crops on the land which they themselves had grown, they prevented the sale by paying a portion of the decree obtained by the 2nd mortgagee. This is an involuntary payment towards discharging the mortgage debt: and we can find no ground for refusing to recognise subrogation to the extent of the payment.
The last point relates to the right of the defendants to claim interest while enjoying the profits, of the land. Here again, there is a confusion of ideas underlying the contention. At the time that the equity of redemption was purchased, all the 3 mortgages were outstanding; when the 2nd mortgage was paid off, the first mortgage was still subsisting and there was also the decree on the 3rd mortgage. Consequently the purchasers of the equity of redemption could not and did not become full owners of the property.
In these circumstances, they had two distinct rights, viz., (a) right as owners of the equity of redemption and (b) right as 2nd mortgagees. By virtue of the 1st right, they were entitled to the crops of the land. In their right as mortgagees they were entitled to interest. We are therefore unable to agree with Mr. Somasundaram that either of these rights must be made subservient to the other. The portion of the decision in Satnarain Tewari v. Chowdhuri Sheo Baran Singh which deals with this question supports the appellant's contention. We are unable to follow the reasoning of the learned judges in this behalf, in Muthammal v. Razu Pillai on the facts found, namely that the sale became infructuous, the question we are considering did not arise for decision. There are certain dicta in that judgment relating to this question, which, with all respect, we are unable to accept. If the observations are confined to purchases, which were held to be invalid, that decision will not be against the view we are taking. Moreover we are strengthened by Izat-un-nisza Begam v. Partab Singh, in our view. The Judicial Committee held in that case that a purchaser of the equity of redemption is not a trustee for the mortgagor. In that view, the 3rd mortgagee who can claim the profits only as representing the mortgagor can have no claim against defendants 4 to 7 and their assignees, defendants 9 and 10.
The decision of the Subordinate Judge is right and we dismiss the Civil Miscellaneous Appeal with costs.
K. V. S.Appeal dismissed.