The main legal point established in the judgment is that the presumption of a puisne encumbrancer acting for his own benefit when discharging an earlier mortgage applies regardless of knowledge of intermediate mortgages or variations in the subsequent mortgage.

Wadsworth, J.

1. This appeal arises out of a suit on a mortgage, the appellant being the third defendant who claimed priority by, reason of his having discharged a decree on an earlier mortgage. The following are the essential facts : On 26th December, 1917, the first defendant along with one Ramaswami mortgaged 10 items (of which each of the mortgagors owned five) to Janaki for Rs. 300 with interest at 11 1/2 per cent, the deed of mortgage being Ex. I. On 9th September, 1919, the first defendant charged 4 of the 5 items to which he was entitled under a security bond Ex. A in favour of the second defendant in a sum of Rs. 400. This security bond was assigned to the plaintiff under Ex. B in 1927. On 31st August, 1924, the first defendant mortgaged the four items covered by the security bond Ex. A and 14 other items not covered by either of the prior deeds to the third defendant for a sum of Rs. 800 with interest at 15 per cent. The deed, Ex. III, does not refer to the security bond Ex. A, but it recites that out of the consideration-a sum of Rs. 550 is retained with the mortgagee to discharge the decree on the first mortgage, Ex. I. A sum of Rs. 100 was retained to pay off an usufructuary mortgage with which we are not now concerned and a sum of Rs. 150 was stated to have been paid on the day of the deed to the mortgagor in cash. Now the evidence is that the amount recited as having been paid in cash was not so paid; but that on 5th November, 1924, the third defendant paid a sum of Rs. 707 to discharge Ex. I, this payment being evidenced by Ex. II. The third defendant subsequently purchased the equity of redemption in the 4 items covered by Ex. A from the Official Receiver in the insolvency of the first defendant. The present suit on the basis of Ex. A filed by the Assignee plaintiff was launched on 6th October, 1931. The third defendant is interested in the hypotheca in three capacities. He is the purchaser of the equity of redemption from the Official Receiver. He has rights under his puisne mortgage Ex. III and he claimed priority by reason of his having discharged the earlier mortgage Ex. I.

2. Both the Courts below have held that the third defendants right to subrogation does not exist because he cannot be held to have had any intention to keep the original mortgage Ex. I alive. They rely on three considerations in arriving at this conclusion, firstly, on the fact that he was ignorant of the existence of the intermediate charge, Ex. A, secondly on the facts that Ex. I was a joint mortgage binding other properties as well as those mortgaged by the succeeding documents and that Ex. III covered not only all the items bound by Ex. I but also 14 other items and carried a higher rate of interest. Thirdly, the consideration which weighed most with the Courts below was that at the time of Ex. III, the third defendant made no enquiries as to the amount due under the decree on the first mortgage. It has been held in Krishnamurthy Cheitiar v. Sathappa Chettiar (1932) 64 M.L.J. 523 : I.L.R. 56 Mad. 517 and Andi Thevan v. Nagayasami Chettiar (1927) 55 M.L.J. 369, that ignorance of the existence of an intermediate mortgage is no ground for refusing to draw in favour of the person who discharges the first encumbrance the presumption that he intended to act for his own benefit and keep alive the original mortgage as a shield against any danger which might threaten his puisne mortgage. As to the addition of other properties in the later mortgage and the substitution of a different rate of interest two cases have been cited Velayuda Reddi v. Narasimha Reddi (1916) 32 M.L.J. 263 and Gopal Chunder Sreemany v. Herembo Chunder Holdar I.L.R. (1889) 16 Cal. 523 as authority for the position that such variations do not affect the presumption which would be drawn in favour of the person who discharges the earlier encumbrance. I have not been referred to any case in which there was the added complication of the first mortgage being a mortgage