Ballabhdas vs Hiralal

V.R. Newaskar, J.—The only question involved in this second appeal is as regards the construction of the document sued upon. The facts giving rise to it are as follows:-

On 16-4-1943 defendants Hiralal Mannalal obtained a loan of Rs. 917/- from Gattulal and Harinarayan and executed a document in their favour whereby they transferred possession of their land consisting of 14 survey numbers situated in the village Amzera. It was agreed in the said document that the lender would enjoy the usufruct of the property for a period of nine years i. e., from Samvat Year 2000 to S. Y. 2008 (both the years inclusive), at the end of which the debtors would pay back Rs. 917/- and obtain the possesssion of the land. It was further agreed that in case they fail to make the payment as aforesaid it was open for the vendors to continue in possession of the said land subject to the same contitions and to secure there payment of their loan by getting the property sold through Court. Gattulal died after the execution of the said document and the present suit is brought by his sons plaintiffs Nos. 1 to 4 and Harinarayan on the allegation that the defedents performance of the contract to sell the land in their favour presumably by treating the said document as incorporating an agreement to sell the land to the plaintiffs.

The suit was resisted by the defendants who denied the transaction. They also denied their liability to execute any sale-deed, They raised question regarding limitation. It was also contended that the document sued upon is unregistered and could not therefore be made the basis of a suit. The defence under the Money Lenders Act and Interest Act were also raised.

Besides defendants Hiralal and Mannalal defendant Vesta was also impleaded as the third defendant because he was in possession of the property under a sub-lease created by the plaintiff No. 1.

The trial Court dismissed the suit holding that the document sued upon amounts to a mortgage and was therefore inadmissible in evidence either for the purpose of creating an interest in the immovable property or for the purpose of enforcing personal covenant incorporated in it. The suit was consequently dismissed. On appeal the appellate Court agreed with this view and dismissed the appeal.

The present second appeal is directed against that decision.

As indicated above the sale question is whether under the terms of the document as indicated above a suit for the recovery of Rs. 917/- advanced as loan is competent in face of the non-registration of the said document.

Mr. Garge for the appellants sought to contend that the document is not a mortgage-deed but in fact is a lease. He further contended that even assuming that it was a mortgage there was a personal covenant and in the absence of invalidity of the mortgage due to non-regitration of the document it was competent for the plaintiffs to enforce it as a bond by reason of the said personal covenant.

On the other hand it was contended behalf of the respondents by Mr. Choudhari that although as unregistered deed of simple mortgage containing a personal covenant to pay which is clearly severable from the test of the document if unregistered as a bond where it is clear that the borrowers had clearly agreed to repay the amount personally. But, according to the learned counsel, in the present case the document constructed as a whole indicates that the borrowers have not undertaken any personal obligation to pay. It was clearly mentioned in the deed that in default of payment by them the lenders could recover the amount by the sale of the property mentioned in the deed through Court. The learned counsel relied upon the decision reported in Mohanlal Ganeshram Vs. Gajraj Singh Bhilu Singh and Others, in support of his contention.

In my opinion the contention put forward on behalf of the respondents is correct and deserves to be accepted. In a case reported in 11 Indian Appeals 83 Narotam Das Vs. Sheo Prakash Singh, the question was as regards the construction of a document sued upon. Under the terms of the document the executant and hypothecated the whole of his propery in Taluka Chandipur Birhar Fizabad District. The said Taluka of Chandipur Birhar was at the time of the execution of the deed under the management under the Encumbered Estates Act The executant admitted the receipt of loan mentioned in the document and agreed to repay the same with interest within two years. The mode of repayment was indicated in the document and it was agreed that the executant would not receive any profits until the debt in question was paid off. Nor would he contract any further debts. It was further agreed that in case the estate was released from the management under the Encumbered Estates Act he would immediately first of all pay the said debt to the said banker. Then was the term in the event of any breach of contract taking place on my part, the said banker is at liberty to institute a suit within the time fixed in this bond and recover his money. I will not transfer or mortgage to anyone the hypothecated property till tha principal and interest of this debt is paid up. In coming to the conclusion as regards construction of the document their Lordships of the Privy Council observed: -

Looking at the whole of this deed, their Lordships cannot place any other interpretation upon it than that it was a mere hypothecation of the Taluka which was then under management

Their Lordships refused to treat the document as involving a personal contract by the debtor to pay out of his personal estate.

In another case reported in 22 Indian Appeals 68 Kalika Singh Vs. Parosram some what similar question arose. In that case the plaintiff sued on the basis of a bond dated 23-8- 879 to recover a sum of Rs. 17,880/- treating the bond as a subsisting continuing obligation for payment of the Rs. 2000/- and interest as well as for the larger sum. In the course of their judgment their Lordships considered the effect of the term contained in the bond. They observed:-

It was suggested in the course of the argument, that although the payment of the debt in the mode and form agreed upon had become impossible, the obligation to pay the debt (the existence and amount of which is admitted in the bond) remained and might he enforced against the appellants. In the first place, their Lordships observed that no such case is raised in the pleadings of apparently was argued in the Courts below; and further, that their Lordships have only a translation of the instrument containing the admission. It is impossible to say that the case if put forward in the Courts below might not have been met by some evidence, or that the exact wording of the bond might not have been important from this point of view. In the next place, although an unqualified admission of a debt no doubt implies a promise to pay it, their Lordships are not prepared to hold that that is necessarily so where there is an express promise to pay in a particular manner. It must depend on the construction of the instrument in each case; and their Lordships think in the present case that the admission of the debt by which the obligation is prefaced in the bonds of 1877 and 1879 does not import unqualified or unconditional promise to pay, but is referable to the particular obligation, or (in other words) is introduced for the purpose only of fixing the amount for which the obligation is given, and which the obliger agrees to pay in the stipulated manner and not otherwise.

The decision in Mohanlal Ganeshram Vs. Gajraj Singh Bhilu Singh and Others, , is to the same effect.

Having regard to the opinion expresed in these cases there is no doubt that in case the document sued upon clearly indicates that the debtor had agreed to pay the amount not personally but only out of the property either mortgaged or hypothecated the suit ought to fail. Now the document clearly stated that on failure on the part of the borrowers to repay the amount at the end of nine years it was open for the vendors to secure recovery of their loan by sale of their property mentioned in the deed through Court and till then to enjoy the property as before. In face of this clear indication as regards the mode of repayment of their debt it is difficult to say that the defendants Nos. 1 and 2 had undertaken a personal liability to pay the amount. The document sued upon being unregistered cannot be enforced as a mortgage bond nor can it be treated as a simple money bond as there is no personal covenant to pay apart from out of the property itself.

The contention of Mr. Garg that it is a lease is clearly untenable. On reading the document as a whole it appears to be a mortgage of a simple usufructuary Sort of an anomalous mortgage. The relationship of borrower and lender is indicated and there is a clear provision for realisation of the amount by sale of the mortgaged property through Court and there is no term to pay apart from this mode. The suit therefore ought to fail, fail as on a mortgage deed because it is not registered and fail as a simple money bond as there is no personal obligation under its terms.

For these reasons the appeal has no force and it is dismissed with costs.