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Madras High Court
Venkatasubbaiyar vs Subbarathinam Aiyar And Ors. on 20 February, 1914
Equivalent citations: (1914) 27 MLJ 134
Author: Tyabji


1. Before disposing of this Second Appeal, we consider it desirable to have findings on the following questions:

(1) Whether before the receipt of Exhibit VII by the 1st defendant, Doraisawmy Iyengar had agreed to receive payment of the amount due on the hypothecation bond from the usufructuary mortgagees under Exhibit VI, whether he had agreed to release the 1st defendant and whether he had received any payment from the usufructuary mortgagees or from the 1st defendant?

(2) Whether before the receipt of Exhibit VII the 1st defendant had entered into any and what contract, agreement or undertaking with Doraisawmy Iyengar with reference to the hypothecation debt? and (3) Whether any and what payments were made to Doraisawmy Iyengar before the decree in O.S. No. 235 of 1900 on the file of the Court of the District Munsif of Kulitalai ?

2. The findings will be on the evidence on record.

3. The finding is to be returned within one month from the date of receipt of this order. Time for objections, seven days.

4. [In compliance with the order contained in the above Judgment, the District Judge of Trichinopoly submitted the findings summarised in the opening of the Judgment.]

5. Judgment Sadasiva Aiyar J I accept the facts as found by the lower appellate Court. Those facts are:

(a) that the 1st defendant as mortgagor paid Rs. 230 and odd in October 1897 to Doraisawmy Iyengar who has obtained the assignment from the plaintiff of plaintiff’s rights as first mortgagee;

(b) that the person who obtained the second usufructuary mortgage from the 1st defendant paid at the 1st defendant’s request the balance of Rs. 1,800 and interest, due under the plaintiffs mortgage bond to the plaintiffs assignee in March 1898 after the 1st defendant had got notice in November 1897 from the plaintiff that the assignment was obtained by coercion and undue influence;

(c) that the 1st defendant has redeemed his second (usufructuary) mortgage by payment of money, including the money which the said mortgagee had paid to the plaintiff’s assignee at the 1st defendant’s request;

(d) that the plaintiff has by the decree Exhibit D (passed in a suit of 1900) succeeded in having it declared as against the plaintiff’s assignee Doraisawmy Iyengar that the assignment is not binding on the plaintiff;

6. On these facts, it is admitted by the plaintiff (who is the appellant in the Second Appeal before us) that he ought to give credit (in his claim in this suit for money due under his mortgage bond) to the 230 and odd rupees paid by the 1st defendant after the date of plaintiffs assignment to Doraisawmy Iyengar and before the date of the notice (Exhibit VII of November 1897, given by the plaintiff to the 1st defendant. The plaintiff however contends that the 1st defendant’s second mortgagee’s payment of Rs. 1,800 and interest in March 1898 was made at the 1st defendant’s risk as it was made after the notice of November 1897. In the first place, this notice (Exhibit VII) is worded as if the assignment by the plaintiff to Doraisawmy Iyengar by registered deed was altogether a void transaction and not a merely voidable transaction. There, is no trace of an intimation by the plaintiff in Exhibit VII that he intended to bring a suit against Doraisawmy Iyengar to have the assignment set aside. On the other hand (as I said before) it treats the assignment deed as of no legal effect at all. Now, the 1st defendant would have had no defence to a suit by Doraisawmy Iyengar on the plaintiff’s mortgage deed if that suit had been brought before the plaintiff had the assignment set aside by a decree obtained in a suit brought by him (plaintiff). (See Trimbak Bhikaji v. Shankar Shamrav (1913) I.L.R 36 B. 37, Rajah of Ramnad v. Aruna-chellam Chettiar (1911) 24 M.L.J. 592, and IV. American Cyclopedia page 62). The first defendant, therefore, was entitled, and, in fact, bound to treat Doraisawmy Iyengar as the owner of the mortgage right under the plaintiff’s mortgage bond till the assignment was so set aside by the plaintiff (and the plaintiff may or may not choose to do so). The first defendant was not bound to wait to pay up the money due on the mortgage charge binding on his property to the person owning the legal right in the mortgage till the plaintiff so chose to bring a suit and to obtain a decree, divesting the plaintiff’s assignee of the latter’s rights under the assignment. A decree so obtained by the plaintiff against his assignee might have the effect of canceling the assignment from the date of the assignment itself as between those two but it cannot be given that effect as against those who were bound to treat the assignment as valid till it was set aside and who made payments accordingly to the assignee in order to protect and conserve their own rights and interest. The case in Ramamurthi v. Secretary of State for India (1911) 24 M.L.J. 469, merely decided that a decree establishing A’s title to a land as against B was binding on B, if A’s title was set up by C as against B even in a suit by B against C. I do not think that that case is relevant to the decision of the question now in dispute, namely, whether payments made by a third person who is the owner of a land and who treated the assignee of a mortgagee over the land as the mortgagee entitled to receive the mortgage amount, the payments having been made before the assignment was set aside by the assignor through the instrumentality of the decision of a Court of Justice, whether such payments could be questioned by the assignor as payments made to a person who had no right to receive such payments. In other words, can the assignor ignore such payments and compel the owner of the land to make the payments again to him? I think that he cannot do so. It may be that the third person after he got notice that the assignor was disputing the validity of the assignment might have brought an interpleader suit but in the circumstances of the present case, I think that the 1st defendant was not bound to bring an interpleader suit as the assignment, on the assignor’s own case, was merely voidable and not void. An observation in Gopalakrishna Iyer v. Gopalalkrishna Iyer (1909) I.L.R. 33. Mad. 128, (at p. 130) is relied on by the appellant’s learned vakil. That observation is that” when the fact of the assignment” by the creditor” or its validity and operation is in dispute,” the safest course, for the debtor is to ask the assignor and the assignee to interplead and if he pays either of them, “he does so at his risk.” I do not think that this observation applies to cases where the creditor does not deny the fact of the assignment and only pleads that it is voidable by him and where the third person acts as an ordinary and reasonably prudent man would do to protect his own interests. The plaintiff was asked by the 1st defendant to give security against the plaintiff’s assignees claim and the plaintiff refused to do so. The plaintiff might have brought a suit at once against his assignee and obtained an injunction against the 1st defendant and the 1st defendant’s second mortgagee, preventing them making payments to the plaintiff’s assignee but he did not choose to do so. I therefore hold that the payments made to the plaintiff’s assignee before the plaintiff brought his suit to cancel the assignment deed are binding on the plaintiff and I would dismiss the second Appeal with costs.

Tyabji, J.

7. I agree generally.

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