GANESHI LAL v. JOTI PERSHAD
Citation: [1953] 1 S.C.R. 243; 1952 INSC 56
Court: Supreme Court of India
Bench: BIJAN KUMAR MUKHERJEA , N. CHANDRASEKHARA AIYAR, NATWARLAL HARILAL BHAGWATI
Judgment date:
Case summary
1952 INSC 56. Supreme Court of India judgment dated 1952-11-07. GANESHI LAL v. JOTI PERSHAD. Read the judgment and case details on LawSphereX.
Judgment text
S. C. R. SUPREME COURT REPORTS 243 GANESH! LAL v. • JOTI PERSHAD. [MuKHEHJEA, CHANDHASEKHAHA ArYAH and BHAGWATI JJ. J Mortgage-Co-mortgagors-Redemption of entire mortgage by co-mortgagor paying less than amount really due-Right to contribution from others- Whether limited to their share on amonnt actnally paid- Principles of equity. On principles of equity, justice and good conscience, which apply to the Punjab (where the Transfer of Property Act, 1882, is not in force) if one of several joint mortgagors redeems the entire mortgage by paying a sum less than the·full amount due under the mortgage, he is entitled to receive from his co-mortgagors only their proportionate shares on the amount actually paid by him. He is not entitled to claim their proportionate shares on the amount which was due to the mortgagee under the terms of the mortgage on the date of redemption. Hodgson v. Shaw (40 E. R. 70), Digambar Das v. Harendra Narayan Panday [(1910) 14 C. W. N. 617] and Suryanarayana v.
Sriramulu [(1913) 25 M:. L. J. l6] referred to. Judgment of the High Court of Punjab at Simla affirmed. CrvrL APPELLATE JuHISDICTION: Civil Appeal No. 166 of 1951. Appeal from the Judgment and Decree dated September 15, 1948, of the High Court of Judicature for the State of Punjab at Simla (Mahajan and Teja Singh JJ. ) in Regular Second Appeal No. 1844 of 1945 from the Judgment and Decree dated June 5, 1945, of the Court of the District Judge, Gurgaon, in Civil Appeal No. 171of1943, arising out of the Judgment and Decree dated August 27, 1943, of the Court of the Subordinate Judge, Gurgaon, in Civil Suit No. 11 of 1943. Tarachand Brijmohanlal for the appellant. Gurubachan Singh (Radha Krishan Aggarwal, with him) for the respondent. 1952. November 7. The Judgment of the Court was delivered by Chandr:i. sekht1>r::v Aiyar J, . ~2 'CHANDRASEKHARA AIYAR J.
-The plaintiffs, Joti Prasad and Sat Narain, sued for partition and possession of their two-fifths share in the suit properties alleg'ing that the first defendant was alone in possession of the same, having redee'med a mortgage Ohandrasekhara executed by the joint family of which the plaintiffs and defendants were members, in favour of one Raghumal in the year 1896 on paying Rs. 5,800. Defendants 2 to 5 were impleaded as co-sharers. Out of them, defendants 2 and 3 admitted the claims of the plaintiffs. Defendant 4 ·died pending suit, and her name was struck off. Defendant 5 supported the first defendant. On the date of the trial court's decree, the two plaintiffs were held entitled to one-sixth share each. The first defendant resisted the plaintiffs' claim.
He contended that the redemption by him in 1920 was not on behalf of the joint family as alleged by the plaintiffs but on his own account as there had been a disruption of the joint family status much earlier, and that before the plaintiffs could get any relief, they were bound to pay him not merely a proportionate share in the sum of Rs. 5,800 which he paid to the mortgagee for redemption but their share in the original mortgage debt of Rs. 11,200. He also denied that the original mortgage was executed on behalf of the joint family. The Subordinate Judge, and on appeal, the High Court fouud that the original mortgage was a mortgage transaction of the joint family, and that the first defendant, G:i. neshi I,al, redeemed the mortgage on his own account and for his own benefit at a time when there was no longer any joint family in exist-ence.
It was further held by the trial court that the plaintiffs and other co-sharers were bound to pay their proportionate share· of the amount paid by the first defendant to redeem the mortgage, namely, Rs. 5,800. But from this a sum of Rs. 1,200 which he had already received by way of redemption of certain mortgage rights had to be deducted. The District J ndge enhanced this sum of Rs, 4,600 to S. C. R. SUPREME COUR'r RElPORTS 245 Rs. 5,000, as the first defendant had paid taxes due on the property up to 1940, but he confirmed the Ganeshi La. l main findings of the Subordinate Judge. A second v, appeal preferred by the first defendant was dismissed Joti Pershad. by the High Court at Simla (Mehr Chand Mahajan and Teja Singh J J. ). They repelled the contention Cha,,drasekhara of the first defendant that a suit for partition arrd Aiyar J. possession was not maintainable without bringing a suit for redemption. They also negatived his right to get a proportionate share in the amount of Rs.
11,200 due on the mortgage. 'fwo other learned Judges gave leave to appeal under section 109 (c) of the Civil Procedure Code, as a substantial question of law was involved. Three points were argued before us by learned· counsel for the appellant; firstly, there was an assignment of the mortgage in favour of the appellant with the result that the entire rights of the mortgagee vested in him; secondly, even viewing the question as one of legal subrogation, he was entitled, under the principles of justice, equity and good conscience which governed the State of Punjab, as the Transfer of Property Act has not been applied to the State, to recover from the co-mortgagors not merely their shares in the sum of Rs. 5,800 which he had paid for redemption but their shares in the full amount of Rs. 11,200 due under the mortgage; and thirdly, that the suit for partition without asking for redemption was not maintainable. Points Nos. 1 and 3 have no force whatever. The registered .
deed of redemption does not contain any words of assignment. To say that Ganeshi Lal shall be the owner of the entire amount due from the mortgaged property is something different from stating that the security has been assigned in his favour. On the other hand, the endorsement of receipt of payment on the back of the mortgage deed itself and the statement of the mortgagee that he has released the mortgaged property from his mort- $age go to ,. ;how that there was no assignment. t 246 8 UPREME COD:RT REJPOR'l'S (1953] The non-maintainability of the snit does not seem to have been in issue either before the trial court or La,l J before the District udge, and it appears to have been P.. -shad. rais~d for the first time before the High Court.
It was pointed out by the learned Judges, and quite Ghandraselchararightly, that so long as no question of limitation was involved, there was no objection to a claim forredemp-tion and one for possession and partition being join-ed together in the same suit. Only the second point remains for consideration, and this raises an interesting question of law. It is . not denied that Ganeshi Lal who redeemed the prior mortgage is subrogated to the mortgagee's rights, but the controversy· is about the extent of his rights as subrogee. By virtue of the redemption, does he get all the rights of the mortgagee and hold the mortgage as a shield against the co-mortgagors for the full amount due on the mortgage on the date of redemption whatever he may have himself paid to get it discharged, or does he stand in the mortgagee's shoes only to the extent of getting reimbursed from the co-mortgagors for their shares in the amount actually paid by him?
'l'hoi lower courts have held that the latter is the correct position in law, but the appellant has challenged it as·unsound. '! 'he first two clauses of the present section 92 of the Transfer of Property Act run in these terms: "Any of the persons referred to in section 91 (other than the mortgagor) and any co-mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee. The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. " It is a new section and was inserted by the amend-ing Act XX of 1929. The original sections 74 and ,I S. C. R.
SUPREME COURT REPOHTS 247 75 conferred the right to redeem in express terms 1952 only on second or other subsequent mortgagees, Ganeshi Lal though the co-mortgagor's right to subrogation on v. redemption was recognised even before the Act. As Joti Per shad. the Transfer of Property Act has not been extended to the State of East Punjab, it is unnecessary to Ghandrasekhara decide whether section 92 is retrospective in its Aiyar J. operation, on which point there has been a conflict of opinion between the several High Courts. Section 95 of the Act which removed the confusion caused by the old section which, conferring on the co-mortgagor what was called a charge, a,nd thus seeming to nega-tive the application of the doctrine of subrogation, is also inapplicable to the present case. We therefore steer clear of sections 74 and 75 of the old Act and sections 92 and 95 of the present Act, and we are free to decide the question on principles of justice, equity and good conscience.
If we remember that the doctrine of subrogation which means substitution of one person in place of another and giving him the rights of the latter is essen-tially an equitable doctrine in its origin and application, and if we examine the reason behind it, the answer to the question which we have to decide in this appeal is not difficult. Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it, and it is well recognised that wheFe there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the - . , debtors.
Such being the legal position as among the co-mortgagors, if one of them redeems a mortgage over the property which belongs jointly to himself and the rest, equity confers on him a right to reimburse himself for the amount spent in excess by him in the matter of redemption; he can call upon the co-mortgagors to contribute towards the excess which he has paid over his own share. This proposition is postulated in several authorities. In the early case of Hodgson v. Shaw (1) Lord Brougham i;aid: (I) 3 My!. & K. 183; 40 E. R. 70, 248 SUPREME COURT REPOR'rs [1953] "'l'he rule is undoubted, and it is one founded on the plainest principles of natural reason and J·ustice, that the surety paying off a debt shall stan·d in the pl;,ce. of the creditor, and have all the rights which he has, for the purpose of obtaining his reimburse- Chandrasekhara rne it. '' 1 I have italicised the word "reimbursement".
Sheldon in his well-known treatise on Subrogation has got the following passage in section 13 of the Second Edition : " There is another class of cases in which he who has paid money due upon a mortgage of land to which he had some title which might be affected or defeated by the mortgage, and who was thus entitled to redeem, has the right to consider the mortgage as subsisting in himself, and to hold the land as if it subsisted, until others interested in the redemption, or who held also the right to redeem, have paid a contribution.
" Be it noted that what is spoken of here is a contribution: Dealing with the subject of subrogation of a surety by payment of a promissory note and citing the observations of the Alabama Court, Harris says in his work on Subrogation (1889 Edition) at page 125: "The rule is, that a surety paying a debt, shall stand in the place of the creditor; and is entitled to the benefit of all the securities which the creditor had for the payment of the debt, from the principal debtors; in a word, he is subrogated to all the rights of the creditor; the surety, however, cannot avail. himself of the instrument on which he is surety, by its payment. By payment it is discharged and ceases to exist, and the payment will not, even in equity, be considered an assignment; the surety merely becomes the creditor of the principal to the amount paid for him.
" To compel the co-debtors or co-mortgagors to pay more than their share of what was paid to the credito1· or mortgagee would be to perpetrate an inequity or injustice, as it would mean that the debtor who is in a l96 position to pay and pays up can obtain an ad vantage Ganeshi Lal for himself over the other joint debtors. Such a v. result will not be countenanced by equity; fitte Joti Pershad •. favouritism shown by law to a surety, high as it is, -does not extend so far. The surety can ask to be Chandrasekhara · • indemnified for his loss: he can invoke the doctrine Aiyar J. of subrogation as an aid to his right of contribution. Sheldon says in section 105 of his book: ""' - " The subrogation of a surety will not be carried \ further than is necessary for his indemnity; if he buys up the security at a discount, or makes his payment in a depreciated currency, he can enforce it only for what it cost him. He cannot speculate at the expense of his principal; his only right is to be .
d,, repa1 . • In section 178, Harris is still stronger.! "Since subrogation is founded on principles of equity, the surety who would avail himself of the doctrine and invoke equity must do equity; and while he is entitled to a reimbursement in all that he pays out properly for his principal, debt, interest and cost, he is not entitled, in any way to recover more than he has paid. For instance, if he pays the debt of his principal, in depreciated currency, the rule would seem to be that he could demand from the principal only . the value of that currency at the time he made the payment. Nor would he upon principles of equity be permitted to purchase the debt at a discount and then be subrogated to collect the whole face value of the debt, and especially if he held securities, 'y or if the creditor held securities which would fall into his hands, out of which to pay the debt; because the securities are trust funds for the purpose, and set aside .
for the payment of that debt and an assignee of trustee cannot speculate in the purchase of claims against the fund in his hands. It would· not be equality; it would not be equity. " While it can be readily conceded that the joint debtor who pays up and discharges the mortgage stands in the shoes of the mortgagee, and seoures to himself the benefit of the security by such payment, the extent to which he can enforce his right as ag~inst the other joint debtors is a different matter altogether. In his monumental work on Equity Cha. •d_rasekhara Jurisprudence, Pomeroy points out that he will be subrogated to the rights of the mortgagee only to the exteBt necessary for his own equitable protection. (See page 632 of Volume IV of the Fifth Edition by Symons).
Clearer still is the passage found at page 640 of the same book: " The mort,qagor himself who has conveyed the premises to a grantee in such manner that the latter has assumed payment of the mortgage debt becomes an equitable assignee on payment, and is subrogated to the mortgagee, so far a& is necessary to enforce his equity of reimbursement or exoneration from such grantee. " It is as regards the excess of the payment over his own share that the right can be said to exist. Pomeroy says this at pages 660 aud 661 : "In general, whenever redemption by one of the above-mentioned persons operates as an equitable assignment of the mortgage. to himself, he can keep the lien of'it alive as security against others who are also interested in the premises, and who are bound to contribute their proportionate shares of the sum advanced by him, or are bound, it may be, to wholly exonerate him from and reimburse him for. the entire payment .........
The doctrine of contribution among all those who are interested in having the mortgage redeemed, in order to re fund the redemptor the excess of his payment over and above his own proportionate share, and the doctrine of equitable assignment in order to secure such contribution, are the efficient means by which equity completely and most beauti-fully works out perfect justice and equality of burden, under these circumstances .................. " Whatever the difference might be between the English law and the J11dial) law as re! l'ards the right 19 to enforce decrees and securities for the due payment 6! 1 of a debt in the case of a surety who discharges a Ganeshi Lal simple money debt and a surety who pays up a m ]Je of Art. 22-Construction of statutes. The Abducted Persons (Recovery and Restoration) Act (Act LXV of 1949) does not infringe art. 14, art. 15, art. 19 (1) (d), (e) and (g), art. 21 or art.
22 of the Constitution and is not unconsti-tutional on the ground that it contravenes a,ny of these provisions. The physical restraint put upon an abducted person in the process of recovering and ta. king that person into custody without any allegation or accusation of any actual or suspected or appre· bended commission by that person of any offence of a criminal or quasi. criminal nature or of any act prejudicial to the State or the public interest, and delivery of that person to the custody of the officer in charge of the nearest camp under s. 4 of the Abducted Persons (Recovery and Restoration) Act (LXV of 1949) is not arrest and detention within the meaning of art. 22 (1) and (2) of the Constitution. The said Act does not therefore infringe the fundamental right guaranteed by art. 22 of the Constitution.
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