1938 (2) TMI 14 - HC - Indian Laws

Summary

Issues Involved:
1. Law of subrogation.
2. Retrospective effect of Section 92, Transfer of Property Act.
3. Partial subrogation.
4. Payment of mortgage from purchase money and subrogation rights.

Detailed Analysis:

1. Law of Subrogation:
The appeal raises two important questions regarding the law of subrogation. The case involves a mortgage granted by defendant 1 to Rangiah Goundan in 1918 and another mortgage to Rangaswami Naicken in 1922. Defendant 1 sold the suit land to defendant 4, who paid off part of the 1918 mortgage. Defendant 5, who later became entitled to the property, completed the payment. The plaintiff, as the assignee of the 1922 mortgage, brought action to enforce it. The key issue is whether defendant 5 can invoke the doctrine of subrogation to keep alive the 1918 mortgage for his benefit.

2. Retrospective Effect of Section 92, Transfer of Property Act:
Section 92, as inserted by the Amending Act of 1929, crystallizes the Indian law relating to subrogation and does not permit partial subrogation. The plaintiff contends that Section 92 has retrospective effect. However, the court references the general rule that statutes are presumed to have prospective intention unless explicitly stated otherwise. The court rejects the contention that Section 92 is retrospective, citing decisions from the House of Lords and previous judgments of the Madras High Court supporting this view.

3. Partial Subrogation:
The court examines whether partial subrogation was permissible under the law before the 1929 amendment. The judgments on this point are conflicting. The court refers to a decision of the Judicial Committee in Mali Reddi Ayya Reddi v. Gopalakrishnayya, which declared that partial subrogation is permissible. The court concludes that the contention against partial subrogation fails, citing that a purchaser paying off an earlier charge part by part may treat himself as buying that charge pro tanto.

4. Payment of Mortgage from Purchase Money and Subrogation Rights:
The plaintiff argues that for subrogation to accrue, payment must be in addition to the purchase money, not out of it. The court rejects this view, stating that the law of subrogation in India, as established by Privy Council decisions, does not support this theory. The court cites several cases where subrogation was allowed even when the payment was made out of the purchase money. The court emphasizes that the intention of the parties is crucial, and when a purchaser agrees to discharge multiple mortgages but fails to do so, he cannot claim priority over the unpaid mortgages.

Conclusion:
The court concludes that defendant 5 is entitled to subrogation rights but only to the extent of Rs. 6000, the amount he undertook to pay. The property should be re-sold, and from the proceeds, defendant 5 should be paid Rs. 6000 with interest at 6% per annum from 22nd May 1938. The balance, if any, should go to the plaintiff. The lower court's order regarding costs is vacated, and the plaintiff is directed to pay defendant 5's costs, fixed at Rs. 400.