1. One Saminatha Pillai was the head of a joint Hindu family of which defendants 2, 3 and the husband of the fifth defendant were members. He mortgaged some of the property, item (I) in the plaint, in 1902 to one Sella-thachi, and in 1904 assigned his half share in the plaint items to the first defendant, who is the wife of the second defendant. The son of Sellathachi sued on the mortgage, got a decree and brought the property to sale in execution. The sale was held. but before confirmation, the first defendant raised money from the plaintiff on a hypothecation bond, the plaintiff undertaking to pay up the sale amount and release the property. The plaintiff did so and the decree was thereby satisfied. In a partition suit by the third defendant in 1909, O.S. No. 41 of 1909 on the file of the Kumbakonam Subordinate Court, to which the first defendant, but not the plaintiff, was a party, that Court held that the assignment by Saminatha Pillai to the first defendant was a sham. The first defendant had therefore no interest in the property which she could transfer by mortgage to the plaintiff. The plaintiff, therefore, sued to recover her loan with interest by the sale of the mortgaged property or by a charge on item (I). The District Munsif held that the plaintiff was entitled to such a charge. The Subordinate Judge agreed with that, but interpreted the nature of the charge as a subrogation of the rights and remedies of the first mortgagee and held that, as the right of the first mortgagee to enforce the mortgage arose, on the terms of it, on 19.1.1903, a suit by the first mortgagee would at the date of the plaintiff's suit, have been barred and that therefore the plaintiff having no higher rights than that of the prior mortgagee, was likewise barred from enforcing the charge. He therefore dismissed the suit and the plaintiff has appealed.
2. That the plaintiff is, by her payment, subrogated to the rights and remedies of the prior mortgagee, as held by both the lower Courts, does not, to my mind, admit of doubt. As puisne mortgagee he was clearly interested in clearing the property of the prior mortgage. She is entitled to be subrogated to the charge which she has paid off. The point for decision is whether, when she paid it off, she is to be subrogated to it in its original form as a mortgage charge, or to it in the form into which it had developed, viz., the right to sell the property in discharge of the mortgage decree. I think the latter view is the correct one.
3. The essence of subrogation is that the party paying off a charge becomes in equity the assignee of that charge. It would seem to follow that he is subrogated to the charge in the form which it has assumed when his assignor in equity is (by a legai fiction) supposed to make the assignment. It is difficult to see how an assignment can have the effect of, so to speak, set-ting back the hands of the clock of evolution, and reviving a form out of which the charge has already developed, so that the charge assigned is not the charge as on the date of assignment, but some previous and outworn state thereof. It is still more difficult to adopt such a theory when the charge, out of which the charge at the date of assignment has developed, had already vanished, not by process of development, but by efflux of time. If the charge assigned is still a charge which has become unenforceable as a mortgage charge by efflux of. time, then naturally subrogation is time barred. But if it is a charge which has become unenforceable as a mortgage charge because it has developed into a decree charge, I cannot see why the party entitled to subrogation should be relegated to the unenforceable charge and denied the enforceable one. If the unenforceability of the mortgage charge as such is the test by which the right of subrogation is to be denied, it is difficult to see why a mortgage charge unenforceable at the date of assignment because it has passed into a decree, should nevertheless be held enforceable by a subrogee, while a similar charge unenforceable at the date of assignment because of efflux of time, is not enforceable by the subrogee. The logical result of such a theory would be that in all cases where a mortgage charge has ripened into a decree, and the property has been saved from Court sale to the mortgagors by the discharge of the decree debt by means of a fresh mortgage, there can be no subrogation and such a method of discharging a mortgage decree debt would no longer be feasible for the judgment-debtors.
4. It appears to me then that the proper doctrine is that the subrogee or assignee in equity steps into the shoes of the prior mortgagee at the point where he is standing, and takes over whatever rights and remedies he possesses at the moment when his lien on the property is paid off. The view of the Lower Appellate Court is no doubt supported by two rulings, Sreemati Raghumani Devi v. Mukandalal Bandopadhyaya (1920) 25 CWN 283 and Sichanand Misra v. Gajmohan Lal (1922) 68 IC 707. The forme recognises that its view is bound to produce hardship in certain cases. The view set out in these cases seems to me also one of difficulty. It would appear to involve the proposition that the assignee in equity takes something less than the rights of his assignor, since in the hands of the assignor the mortgage charge has taken on a new lease of life through the decree, while in the hands of the assignee it may be already dead. In the Privy Council case Mahomed Ibrahim Hussain Khan v. Ambila Pershad Singh (1912) ILR 39 C 527 : 22 MLJ 468 (PC), the mortgage charge when paid off had not ripened into a decree, and is thus hardly in point. In a case like the present, where there are no equities in favour of the mortgagors, who are hoping, without paying a pie towards the discharge of the prior mortgage, to take the property wholly free of it, I am not prepared to follow the doctrine laid down in the above two cases. As I have stated, I find it difficult to see how, when a mortgage is no longer alive as a mortgage but has suffered a change into a decree for sale, and cannot therefore any longer be enforced as a mortgage by the prior mortgagee it is nevertheless alive as a mortgage and enforceable as such by the puisne mortgagee who has paid it off in its shape as a decree debt, or how that payment can reverse the process of conversion it has passed through and revive it again as a mortgage charge. I hold therefore that plaintiff is subrogated to the decree charge held by the prior mortgagee, i.e., the right to hold the property to sale to discharge the decree debt; and that right is free of any restriction that it should be worked out within the period of limitation for the enforcement of the original mortgage.
5. The other side contends that the mere payment will not avail in this case to create a charge in favour of the plaintiff. I do not agree. Let us suppose that the Ist defendant had herself found the money to satisfy the decree from her own funds and had herself thus averted the sale. The property would have come to her then. In the partition suit the Ist defendant, who pleaded that the assignment to her was no sham, would certainly have been entitled in that suit, when the assignment was held to be a sham, to a refund, by way of charge on the property, of the money paid from her own funds to save the property. It is difficult to see how the plaintiff, her mortgagee, can be in a worse position than she; and, if the first defendant could, had she paid off the mortgage with her own funds, in the partition suit have been given a charge on the property for the amount paid by her, the plaintiff, who ought to have been a party to the partition suit and was not, would in that suit, had she been made a party, have been given a charge of the same nature as the charge to which the first defendant would have been entitled had she spent her own money in saving the property to the family.
6. On this part of the case, the appellant has relied strongly on a Privy Council case in Sukhi v. Ghulam Safdar Khan (1921) I.L.R. 43 All. 469 : 42 MLJ 15 (PC) and that case certainly bears analogy to the present case. There the owners by succession to the equity of redemption and the rights of the first mortgagee had mortgaged both to the plaintiff and held these up as a shield in a suit by the puisne mortgagee to enforce his mortgage, to which suit the plaintiff was not a party. The plaintiff on the date of the suit by the second mortgagee had parted with her ownership rights and held only the third mortgagee's rights over the property. The Privy Council held that the plaintiff ought to have been made a party to the suit by the second mortgagee as well as the plaintiff's mortgagors, who were in the shoes of the first mortgagee and held the equity of redemption, and that, as she was not made a party she must in her suit to enforce her mortgage be relegated to the rights she would have been entitled to enforce in the second mortgagee's suit if she had been made a party to it; and the. Privy Council held that she was entitled to enforce her mortgage to the extent of the amount to which her mortgagors were benefited by the decree in favour of the second mortgagee in his suit, since she would have been, under her own mortgage, entitled to enforce it up to that extent at least against her mortgagors in the second mortgagee's suit.
7. I think the principle of this case applies to the present. In their partition suit the present respondents were not entitled to ignore the assignment to the first defendant before the Court had set it aside and omit to include in that suit the mortgagee of the property under Ist defendant, viz., the plaintiff. Plaintiff is therefore entitled to be put in the position she would have been in had she been a party to that suit. I must take it that, since the first defendant fought for the genuineness of the assignment, the Court would have held against it even if the plaintiff ha'd been there to support it. On that finding would the Court then have granted the plaintiff a charge on the property to the extent of the amount she paid to discharge the mortgage decree on the property ? I can see no valid reason why it should have refused that. The plaintiff was obviously then a person interested in the discharge of the prior mortgage and would in that suit have been properly subrogated to the right of recovering what she had paid to satisfy the prior mortgage decree an'd if the present respondents in their partition suit wished to "divide the property free of that encumbrance, it would have been incumbent on them to free it by payment to the plaintiff of the amount which she had paid in order to free the property. The plaintiff must now therefore, as far as can be done, be relegated to the position she would have held and be held entitled to the relief she would have been entitled to, had she been made a party to the partition suit.
8. I hold, therefore, that the plaintiff is entitled to a charge on the whole of item (I) of the plaint property to the extent of the amount paid by her for the cancellation of the Court sale.
9. The only other question is whether plaintiff was entitled in law to enforce this lien by way of suit or whether she ought to proceed by way of execution from the point at which the prior mortgagee left off. I am of opinion that the proper procedure was by way of suit. The decree had been satisfied in the execution proceedings, and no one can execute a satisfied decree, see Sundara Reddiar v. Subbiah Koundan (1913) 34 MLJ 28 and Gopi Narain Khanna v. Bansidhar (1905) ILR 27 All 325 (PC). The fact that, the person claiming to execute the decree was in the latter case a defendant in the suit does not seem to me to affect the general principle laid down in these cases.
10. The Second Appeal is therefore allowed. I reverse the decree of the lower appellate Court and restore that of the District Munsif, interest at 6 per cent. being continued up to the date of payment. The plaintiff will get her costs throughout on the amount decreed from the contesting respondents, defendants 2 and 6, who will get costs from her throughout on the amount disallowed. The sixth defendant's memorandum of objections is dismissed with costs.