http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8  

PETITIONER: BRAHM PARKASH

       Vs.

RESPONDENT: MANBIR SINGH AND OTHERS

DATE OF JUDGMENT: 14/03/1963

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA SINHA, BHUVNESHWAR P.(CJ) SHAH, J.C.

CITATION:  1963 AIR 1607            1964 SCR  (2) 324

ACT: Mortgage-Marshalling-Purchaser   also  mortgagee  of   other property of mortgagor-If disentitled to marshalling-Transfer of Property Act, 1882 (4 of 1882) 8. 56.

HEADNOTE: MS  the  owner  of properties A, 13 and  C  created  several mortgages  over  them.  The appellant was one of  the  mort- gagees  of  properties  A  and  B and  MG  was  one  of  the mortgagees  of property C. Subsequently, the mortgagor  sold property B to MG.  One of the mortgagees of properties A and B  filed  a  suit  for recovery of  the  money  due  on  the mortgage.  MG claimed that the mortgage debt should first be satisfied out of property A not sold to him.  This claim  to marshalling was allowed.  The appellant contended that under s.  56 of the Transfer of Property Act a purchaser  who  was also a mortgagee marshalling and that marshalling should not have  been  allowed in the present case as it was  bound  to prejudice the appellant. Held,  that  MG  was entitled to marshalling.   When  s.  56 refers to a subsequent purchaser it does not exclude a  pur- chaser  who has a mortgage over some other property  of  the mortgagor  not connected with the proceedings.  Further,  it could  not follow as a matter of law that  marshalling  must necessarily prejudice a subsequent mortgagee.  The  question of  prejudice  is  purely  one of  fact  and  is  intimately connected  with the value of the property against which  the mortgagee is directed to proceed in the first instance.  The appellant  was  not  entitled to the  benefit  of  the  last portion  of  s. 56 as he had not raised any plea as  to  the value  of  the  property  showing  that  marshalling   would prejudice him.

JUDGMENT: CIVIL      APPELLATE          JURISDICTION          Civil Appeals Nos. 76 and 77 of 1961. Appeals from the judgment and decree dated May 19, 1955,  of the Punjab High Court in Regular  325

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8  

First Appeals Nos. 28, 12 and 13 of 1948 respectively. Gopal  Singh for R. S. Narula, for the appellant (in  C.  A. No. 76 of 1961). Achhru  Ram  and Naunit.Lal, for appellant No. I (in  C.  A. Nos. 77 and 78 of 1961). Bishan  Narain and B. P. Maheshwari, for respondents Nos.  9 and 18 to 20 (in C. A. No, 77 of 1961). 1963.  March 14.  The Judgment of the Court was delivered by AYYANGAR  J.-These  three appeals, which are  before  us  on certificates of fitness granted by the High Court of Punjab, arise  out of two suits for the recovery of amounts  due  on mortgages   executed  by  one  Mohinder  Singh  who  was   a contractor in Delhi.  Mohinder Singh is now deceased and  is now  represented in these proceedings by his widow and  son. Mohinder  Singh owned as many as eight properties  in  Delhi and  over one or other of these he created  successively  24 mortgages  between  September 1943 and July  1944  and  also executed a sale in respect of one item of these  properties. The  contentions  urged  in  these  appeals  arise  out   of conflicts  between  the rights of some of  these  mortgagees inter  se, between some of them and the purchaser of one  of the  properties.  It is however unnecessary for the  purpose of deciding these points to set out the details of every one of these several mortgages or their history. Appeals  77  and  78  may first  be  considered,  The  facts necessary to appreciate the sole point raised by Mr.  Achhru Ram,  learned Counsel for the appellant-- Jagdish Chand  are these : The property con- 326 cerned in the two appeals is plot No. 1, Pusa Road in  Block 34 with a bungalow thereon.  A mortgage for Rs. 10,000/- was created  over  this and certain other  properties  (we  are, however not concerned with these other properties) in favour of  one Lajwanti by Mohinder Singh by a deed  dated  October 19,1943.   A  few  days later-on  November  7,  1943-another mortgage  was  executed in her favour for  Rs.  16,000/under which  the property No. 1, Pusa Road was given as  security. Passing over certain intermediate transactions not  material for  the  purposes of the present appeals,  a  mortgage  was created in favour of one Daulatram Narula inter alia on this property  on  January  21,  1944 to  secure  a  sum  of  Rs. 60,000/-.   Two  days  later  -  on  January  23,   1944-the appellant,  jagdish  Chand, lent a sum of  Rs.  10,000/-  to Mohinder  Singh and had a mortgage executed on No.  1,  Pusa Road.   Daultram Narula, the mortgagee under the deed  dated January  21,  1944 obtained two further mortgages  over  the same. property and others on February 25, 1944 and March 14, 1944,  the  first  for Rs. 9,500/- and the  second  for  Rs. 10,000/-.   It ought to be mentioned that the  consideration for several of the mortgages referred to earlier was in part a payment in cash to the mortgagor and in part repayment  in part   satisfaction   of   previous   mortgages   but   this circumstance  not being of any relevance we are not  setting out  the  details  of  the  consideration  for  the  several mortgages.   Lastly,  and this is the mortgage which  is  of importance for the point raised in this appeal, on July  13, 1944, Mohinder Singh created in favour of Pandit Sham Sunder an usufructuary mortgage for Rs. 1,25,000/- out of which Rs. 84,000/-was  reserved  with  the mortgagee  for  payment  to Daulatram  Narula  the sum representing  the  principal  and interest  due on his three mortgages.  It is  common  ground that  on  the  date when the mortgage  was  registered  Sham Sunder  carried  out  his  obligation  and  discharged   the mortgages of Daulatram by paying him Rs. 84,000/-.  327

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8  

The amount due to Lajwanti was not paid and she  accordingly brought  a  suit on June 14, 1945, in the Court  of  the  Se nior-Sub-judge, Delhi for the recovery of her mortgage money which, after giving credit for the sums paid to her  already by  several subsequent mortgagees, came to  Rs.  11,657/5/4. She  impleaded as party defendants to the suit  the  several subsequent  mortgagees.  including  the  appellant  -jagdish Chand   as  well  as  Daulatram  and  Sham  Sunder’s   legal representatives  as he himself was dead by that date.   Just like  Lajwanti  another  mortgagee  one  Mukhamal--in  whose favour two mortgages, one dated February 1, 1944 and another dated  May  12, 1944 for Rs. 10,000/-and Rs.  9,000/--  res- pectively,  also  filed  a  suit for  the  recovery  of  Rs. 15,302/-  and  odd.   As in  Lajwanti’s  suit,  the  several subsequent mortgagees including jagdish Chand, Daulatram and the  legal  representatives  of Pt. Sham  Sunder  were  also impleaded as defendants in this suit also. In these two suits the genuineness of the several  mortgages was  not  seriouly  disputed and the  only  point  on  which contest was centred was as regards the respective rights  of the  several mortgagees inter se. We are concerned in  these two appeals with the claim made by the legal representatives of  Sham Sunder that they were entitled by reason  of  their discharging  the mortgage-debt of Daultram to whom they  had paid  Rs.  84,000/-  out  of  the  mortgage  amount  of  Rs. 1,25,000/-to  be subrogated to the rights and priorities  of Daulatram under the mortgage dated January 21, 1944 for  Rs. 60,000/-  as  against the later mortgage of January  23,  of Jagdish Chand even though there was no agreement in  writing under which he stipulated for such a right.  This contention was  raised  both  in the suit by Lajwanti  as  well  as  in Mukhamal’s  suit.   It was contended on  their  behalf  that though the Transfer of Property Act did not in terms  apply, yet  the equitable principle underlying its s. 92 viz.,  the right 328 of   a   secured  creditor  who  had  discharged   a   prior encumbrancer  to be subrogated to the rights and  priorities of  the mortgagee who he had redeemd, could nevertheless  be invoked  under  s. 6 of the Punjab Laws  Act.   The  learned trial  judge, however, while acceding to this in  principle, held  on  the  basis  of certain  authorities  to  which  he referred  that  in  the  absence  of  a  specific  agreement stipulating for subrogation the subsequent mortgagee was not entitled to such an equity.  On this ground the right of the subrogation  claimed  by the legal representatives  of  Sham Sunder  was rejected.  From the rejection of this  claim  in the  two suits Sham Sunder’s representatives  preferred  two appeals to the High Court and the learned judges allowed the appeal  holding that it was not an essential  condition  for claiming   the  right  of  subrogation  that  the   creditor redeeming  the mortgage should have entered into an  express agreement  to that effect.  It is from this decision of  the High Court that these two appeals have been preferred. Mr.  Achhru Ram, learned Counsel for the appellant  did  not dispute  before us the correctness of the view expressed  by the  learned  judges  of the High Court  that  in  order  to entitle  a creditor to claim a right of subrogation  it  was not  necessary  that he should have entered into  a  written agreement  stipulating  for  such a  right  His  submission, however, was on the following lines : Accepting the Law,  as expounded by Sir Richard Couch in Gokuldass Gopaldass v. Ram Bux Scochand (1), in the following terms :               "In India the art of conveyancing has been and               is  of a very simple character.   Their  Lord-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8  

             ships cannot find that a formal transfer of  a               mortgage is ever made, or an intention to keep               it  alive ever formally  expressed............               The  obvious question to ask in the  interests               of               (1)   (1884) L. R. 11 1. A. 126,133-134.                329               justice, equity, and good conscience, is, what               was the intention of the party paying off  the               charge?  He had a right to extinguish it and a               right   to  keep  it  alive.   What  was   his               intention?  If there is no express evidence of               it, what intention should be ascribed to  him?               The ordinary rule is that a man having a right               to  act  in  either of  two  ways;.  shall  be               assumed   to  have  acted  according  to   his               interest.   In  the  familiar  instance  of  a               tenant  for life paying off a charge upon  the               inheritance, he is assumed, in the absence  of               evidence to the contrary, to have intended  to               keep  the  charge alive.   It  cannot  signify               whether  the  division  of  interests  in  the               property   is  by  way  of  life  estate   and               remainder,  or by way of  successive  charges.               In  each case it may be for the  advantage  of               the  owner  of a partial interest to  keep  on               foot  a  charge upon the corpus which  he  has               paid." as laying down the correct test for determining whether  the right of subrogation could be claimed or not, Mr. Achhru Ram submitted  that  the law was that even where  there  was  no express agreement stipulating for subrogation, the law would presume  such a right on the ground that the payer  intended to  act in a manner most advantageous to him, but that  this was  only a rebuttable presumption which would be  negatived on  positive proof from the conduct or statements of such  a creditor pointing to a contrary intention.  In other  words, that  there was nothing to prevent its being shown that  the creditor  paying off the charge did not intend  to  preserve the  mortgage  which  he  discharged so  as  to  obtain  the priority which the discharged encumbrance enjoyed.  He urged that  in the present case, on the terms of the documents  to which  Sham  Sunder was a party,, such an intention  not  to keep  alive  the  discharged encumbrance  of  Daulatram  was clearly  made  out.   In  this connection  he  drew  to  our attention 330 first  the terms of the mortgage executed in favour of  Sham Sunder  on  July 13, 1944, in which this Rs.  84,000/-  left with  the  mortgagee  is referred to as being  held  by  the latter  in  trust  for  the  payment  of  the  previous  en- cumbrancer--Daulatram.    Next,  he  referred  us   to   the endorsements of discharge on the mortgages of Daultram which read  as if the amount due had been paid by Sham  Sunder  on behalf  of  the  mortgagor--Mohinder.   On  this  basis  the contention  was  urged  that any  intention  to  obtain  the benefit of suborgation was clearly negatived. We do not propose to discuss the merits of this  contention, and it is not as if it is not capable of cogent  refutation, because  we are satisfied that the appellant should  not  be permitted to raise such an argument at this stage.  In  both the  suits  the legal representatives of Sham  Sunder  filed written  statements in which they specifically  stated  that the  discharge  of the encumbrances of Daulatram  was  under circumstances  in  which  they were entitled  to  claim  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8  

relief of subrogation.  The question regarding the intention with which a prior encumbrance is discharged, whether it  is with a view to obtain the priority of the mortgage paid  off or  not,  in  circumstances  like the  present  would  be  a question  of  fact  and  would have  to  be  answered  on  a conspectus of the entire circumstances of the case.  If  the appellant  was  disputing  the plea  of  Sham  Sauder’s  re- presentatives   that  the  intention  of  Sham   Sunder   in discharging Daulatram’s mortgages was to retain the  benefit of  suborgation, it was for him to have raised it by  proper pleading  when an issue would have been struck and  evidence led for and against such a contention.  At the stage of  the trial the only objection raised to the claim for subrogation was  based on the absence of a written agreement  which  the appellant  contended was a requirement of the law which  had not been complied with.  In one  331 sense such plea would appear to assume that the intention of the party paying off the mortgage was to obtain the  benefit of  subrogation  but  that he had failed to  comply  with  a requirement of the law in having that intention embodied  in a  document.   This plea was accepted by the  learned  trial judge and the claim for subrogation was disallowed but  Sham Sunder’s representatives filed an appeal to the High  Court. Again, at the stage of the appeal the only contention  urged before  the  learned  judge was  as  regards  this  supposed requirement  of  the  law that there  should  be  a  written agreement.   When this plea was rejected it is obvious  that on the pleadings the right to subrogation should be held  to be  established.  The matter, however, does not  stop  here, because  even at the stage of appeal to this Court no  point was made that in the instant case the presumption in  favour of a person having acted to his interest and so entitled  to claim  subrogation  was displaced by clear evidence  of  the party’s statements or conduct.  Nor can even a trace of such plea  be  found  in the statement of  case  filed  in  these appeals.   We do not therefore consider it proper to  permit learned Counsel to urge any such ground before us. This  was the only point urged in these appeals  which  fail and  are  dismissed  with  costs-one  set  payable  to   the executors of the will of Pt.  Sham Sunder. Civil Appeal 76 of 1961. This  appeal  arises  out of the suit  by  Lajwanti  already referred  to.  The appellant is one Brahm Parkash  in  whose favour  Mohinder Singh executed a mortgage for Rs.  15,000/- on  May 2, 1944.  The property mortgaged was plot No. 44  in Block 17 A with the superstructure on it and plot No. 19  in Block  No. 5. Brahm Parkash was the twentieth  defendant  in Lajwanti’s  suit.  Plot No. 14 of Block No. 13 was  sold  by Mohinder to one Mukhamal Gokul Chand by deed dated April 28, 1944.  It is 332 the  claim of this Mukhamal to marshalling that is the  main subject  of controversy in this appeal.  As we  have  stated earlier Lajwanti’s mortgage dated October 19, 1943, for  Rs. 10,000/- comprised of several properties including plot  No. 14 which on April 28, 1944, had been sold to Mukhamal.   Now Mukhamal  who had been impleaded as a subsequent  transferee in   Lajwanti’s  suit  claimed  that  he  was  entitled   to marshalling  on  the principle to be found in s. 56  of  the Transfer of Property Act which runs as follows :               "56.   If the owner of two or more  properties               mortgages  them to one person and  then  sells               one  or  more  of the  properties  to  another               person.,  the  buyer is, in the absence  of  a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8  

             contract to the contrary, entitled to have the               mortgage-debt satisfied out of the property or               properties not sold to him, so far as the same               will extend,               but  not so as to prejudice the rights of  the               mortgagee or persons claiming under him or  of               any  other  person who has  for  consideration               acquired   an   interest   in   any   of   the               properties." This  claim  was however disallowed by the trial  Judge  for reasons  to which it is not necessary to  advert.   Mukhamal Gokul  Chand filed an appeal to the High Court in  which  he made  the same prayer, The learned judges of the High  Court upheld  Mukhamal’s  contention  that  he  was  entitled   to marshalling and directed that Lajwanti should proceed  first against plot 44 and only for the deficiency, if any  against plot   14  which  Mukhamal  had  purchased.   ’It   is   the correctness  of  this decision that is challenged  by  Brahm Parkash  in  this  appeal.  Mukhamal  Gokul  Chand  has  not entered appearance and the appeal has been heard ex parte. Before  dealing  with the correctness of this  direction  as regards  marshalling it is necessary to mention one  further fact.  Mukhamal’s appeal to the  333 High  Court-Appeal 28 of 1948 was filed out of time  with  a petition  for condonation of delay under s. 5 of the  Indian Limitation Act and the learned judges condoned the delay and entertained the appeal.  The legality and propriety of  this order condoning the delay is convassed before us by  learned Counsel  for  the  appellant.  The facts  relevant  for  the consideration  of  this point are briefly as follows  :  The prelliminary decree of the trial judge from which the appeal No.  28  of  1948 was filed was  dated  April  28,1947.   An application for the grant of certified copies     was   made on  October 16, 1947 and the copies were ready for  delivery on  October  28, 1947.  The appeal,  however,  was  actually filed only on March, 10, 1948-admittedly after the period of limitation  had expired.  The application to the High  Court for  condoning this delay was supported by an  affidavit  by one  Amar  Nath.  Before setting out the  contents  of  this affidavit  it must be mentioned that the disturbed state  of the  Punjab  at  the time of the partition  was  taken  into account by the legislature and by East Punjab Act 16 of 1947 the  period from September 19, 1947, to November  15,  1947, was directed to be excluded in computing limitation for  any purpose  of  the  Limitation  Act including  S.  5,  In  the affidavit in support of the application for the  condonation of the delay it was stated that the firm of Gokul Chand  had handed  over the papers to their Munim on or about  November 1, 1947, for filing an appeal but the Munim who was a Muslim went  away  to Pakistan without handing over  the  certified copies  of the judgment to the parties and that  the  copies were  received  from Pakistan on March 4, 1948, a  few  days before  the affidavit was sworn and that  immediately  after the  receipt of the papers the appeal was filed at Simla  on March  10,  1948.  The learned Judges in dealing  with  this application observed :               "In  1947-48 unprecedented events occurred  in               Delhi with the result that in some cases the               334               whereabouts of close relations were not  known               for  months.   In  the  present  case  not   a               syllable is to be found on the record to  show               that the affidavit of Amar Nath was untrue  in               any  particular.   That being so,  I  have  no

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8  

             doubt that there was sufficient cause for  not               filing  the appeal in time.  In these  circum-               stances  I  condone the delay  in  filing  the               appeal-Regular 1st Appeal No. 28 of 1948." Learned Counsel for the appellant submitted that the learned judges  had not required the petitioner for  condonation  to explain  each day’s delay, thus departing from the  accepted tests for condonation under s. 5 of the Limitation Act.   We are  not,  however, persuaded that the learned  Judges  were either unmindful of the principles on which delay should  be excused  or  went wrong in the exercise  of  the  discretion which they undoubtedly possessed and that, in any event,  we do  not consider that this is a fit case in which we  should interfere in appeal. Coming  now  to the merits of the  appeal,  learned  Counsel strenuously urged that the learned judges of the High  Court had  misapplied  the  principles underlying  s.  56  of  the Transfer  of Property Act in directing Lajwanti  to  proceed first against the property not sold to Gokul Chand.  In this connection learned Counsel urged two points : (1) that on  a proper construction of s. 56 and the principle underlying it the  benefit  of  marshalling  could not  be  claimed  by  a purchaser  who happened to be a mortgagee in respect of  any property  belonging  to  the  mortgagor.   Learned   Counsel pointed out that Mukhamal Gokul Chand had a mortgage under a deed  dated February 9, 1944, over certain  properties  with which  the  appellant is not concerned.   We  consider  this submission wholly without substance.  When s. 56 refers to a subsequent  purchaser  it  does  not  obviously  exclude  ;a purchaser who has  335 some mortgage over property with which these proceedings are not concerned.  His mortgage rights over some other property of  the mortgagor is wholly irrelevant for  considering  his rights  gua  purchaser  of one of the  properties  to  which opening  words of s. 56 apply.  The  construction  contended for, in our opinion, has only to be stated to be rejected. (2)  The  other submission of learned Counsel was  that  the learned judges failed to give effect to the last portion  of s.  56 under which marshalling is not to be permitted so  as to  prejudice  the rights inter alia of  the  mortgagees  or other  persons claiming under him, i.e., under the  original mortgagor.   Learned Counsel pointed out that the  appellant having  proved  his  mortgage  and  the  fact  that  it  was subsisting,  the learned judges of the High Court  ought  to have  held  that  any  direction  as  to  marshalling   must necessarily prejudice him.  We are unable to agree that this follows as any matter of law.  The question of prejudice  is purely  one  of  facts  which has  to  be  pleaded  and  the necessary  facts  and  circumstances  established.   It   is obvious  that the question of prejudice would be  intimately connected with the value of the property against which  the- mortgagee is directed to proceed in the first instance.   If even after paying off such a mortgage there is enough   left for payment over to the subsequent encumbrancer referred  to in the last portion of s. 56 it would be manifest that there would  be  no  question  of  prejudice.   If  therefore  the appellant desired to invoke the benefit of the last  portion of  s. 56 he should have made some plea as to the  value  of the property and shown how it would prejudice his rights  as a subsequent encumbrancer.  He however made no such plea and no  evidence was led as to the value of the property.   Even at the stage of the appeal in the High Court the  contention that  to  allow  marshalling in  favour  of  the  subsequent purchaser-Mukhamal-would  result  in prejudice  to  him  was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8  

admittedly 336 never  put forward before the learned judges.  As the  point is  one  not  of  pure law  but  springs  from  the  factual inadequacy of the property mortgaged to him to discharge his debt  it is too late for the appellant to raise such a  plea in this Court. The appeal fails and is dismissed. Appeals dismissed. 336