Chamroo Sahu and Others vs G.B. Stephen

Ray, J.—This is a plaintiffs'' second appeal in a suit for redemption of a mortgage and for recovery of Rs. 745-5 being the amount due to them from the defendant as per account given in the plaint.

The plaintiffs'' case was that the mortgaged property, a house, was mortgaged with possession by them to the defendant for a sum of Rs. 2500 by a registered mortgage bond dated 5-4-1985. Out of the consideration money Rs. 1000 only was paid at the execution and the balance, it was stipulated, was to be paid in October 1935, in default whereof the plaintiffs mortgagors would be entitled to realise it with interest at one per cent per month, but the defendant did not pay the amount though he continued to be in possession of the house. The plaintiffs, therefore, claim that by adjusting the proportionate amount of rental of the house that would have gone to satisfy the stipulated interest on the principal sum of Rs. 1500, had that been paid, against the principal sum of Rs. 1000, it is found that after satisfying the mortgage money a balance of Rs. 745/5, as claimed by them would be due to the plaintiffs. On this basis, the plaintiffs claim that it should be declared that the mortgage dues having been fully satisfied, the mortgage stands redeemed; that they should be put in possession of the property; and besides, the defendant should be ordered to pay them Rs. 745/5 being due to them as above, being the amount due in respect of rent of the house for the period for which the defendant was in occupation after the satisfaction, resulting in redemption, of the mortgage.

The plaintiffs'' claim is resisted by the defendant on the ground that the balance of consideration for the bond, that is, the sum of Rs. 1500 was duly paid to the plaintiffs on 25-9-1935, and in acknowledgment thereof, plaintiff 1 granted a receipt. It was, hence, contended that the plaintiffs'' claim for redemption was without any foundation and that the suit was premature inasmuch as according to the terms of the mortgage bond it was to expire not before April 1945, the present suit having been instituted on 21-9-1942.

The trial Judge held in favour of the defendant''s plea of payment and dismissed the suit for redemption as premature. The plaintiffs took up an appeal to the District Judge and the same was disposed of by the Second Additional District Judge who in agreement with the trial Judge dismissed the plaintiffs'' suit. Hence, the plaintiffs have preferred this second appeal.

Before dealing with the point raised in this appeal, it is necessary to notice the findings of fact recorded by the lower appellate Court. He observed:

In para. 5 of document the defendant has been given the option of rebuilding or repairing the house for carrying on his business and the plaintiffs do not contend that the house or a portion of it has been rebuilt by the defendant. The question is whether the defendant would do all this without having paid Rs. 1500 and the plaintiffs would allow him to make the necessary alterations in the house and continue in possession of it though he had not paid a major portion of the consideration money. In my opinion, the probabilities are wholly against the case set up by the plaintiffs, and it is not possible to disbelieve the defendant''s statement, supported as it is by a receipt which has been found by the Handwriting Expert to bear the signature of plaintiff 1. that he had paid Rs. 1500 on 25-9-1935, that is, before the expiry of the period fixed in the bond for payment of this portion of the consideration money...I fully agree with the learned Munsif that the evidence of the Government Handwriting Expert who has found the signature on the receipt to be of plaintiff 1 should be preferred to the evidence of the Handwriting Expert who was called at the instance of the plaintiffs. The evidence of the Handwriting Expert, the probabilities discussed above and the evidence of the scribe and the other D. Ws. together lead me to hold that the receipt in question is a genuine document and that Rs. 1500 had actually been paid by this defendant on 25-9-35.

With regard to whether the plaintiff was entitled to maintain a suit for redemption at the date of its institution, the learned Additional District Judge held:

The terms embodied in the bond clearly go to show that the mortgagee can continue in possession at least till April, 1945. The plaintiffs can redeem the mortgage at any time after April 1945, and before April 1946, but in no case can they file a suit for redemption before May 1945. The defendant is to continue in uninterrupted possession and one of the important recitals in the bond is that neither the mortgagors would be entitled to claim anything from the mortgagee on account of the profit from the house during the period of the mortgage nor would the mortgagee be entitled to recover any thing from the mortgagors as interest for this period. There is no substance in the contention of the plaintiffs that the income of the property was fixed at Rs. 25 and the claim on that basis is absolutely unfounded. Plaintiffs are therefore entitled to no relief at present and the suit has been rightly dismissed by the learned Munsif.

The learned Counsel appearing for the plaintiff appellants urges that the findings of the learned Courts below are vitiated and hence cannot be taken notice of by this Court in second appeal inasmuch they are based upon a piece of inadmissible evidence namely, the unregistered receipt Ex. A (1), his contention being that the payment of money which would affect an interest in Immovable property of the value of more than Rs. 100, as the mortgaged property in suit is, could be proved only by a registered instrument, and in this view EX. A (1) should not have been relied upon by the learned Courts below. Exhibit A (1) being ruled out, no other oral evidence would also be admissible to prove this payment. For this contention he prays in aid. the decisions in Ghulam Mahomed v. Sarkhru AIR 1934 Lah. 970 and the decisions in Shidlingappa v. Chenbasapa (79) 4 Bom. 235 and Venkayya v. Venkata Subbayyar (81) 3 Mad. 53 have been cited in reply by the learned Counsel for the opposite party. The cases need a brief consideration.

In Ghulam Mahomed v. Sarkhru AIR 1934 Lah. 970 the facts were that four oral mortgages were previously entered into between the parties. The receipt in question recited the fact of creation of those four oral mortgages and acknowledgment of consideration on that account. The receipt, therefore, came within the express terms of the provisions of Section 17(1)(c), Registration Act. If the decision rested there, it will not go far to support the contention of the learned Counsel for the appellants. Their Lordships in course of the decision while disapproving the authority of Venkayya v. Venkata Subbayyar (81) 3 Mad. 53 made certain observations which no doubt support the learned Counsel''s contention. Their Lordships observed:

It does not appear to us to matter whether that consideration was paid at the time or paid later.... With great respect we consider that the learned Judges have misconceived the terms of Section 17(1)(c). If they were right in this conclusion, Section 17(1)(c) would be unnecessary for Section 17(1)(b) would cover such a document.... It is clear therefore that Section 17(1)(c) must be very much wider than the definition given to it in the Madras decision. In our opinion Section 17(1)(c) is perfectly clear and the simple meaning of it is that any document which records the receipt of money due on a mortgage, or on any other instrument indicated in Section 17(1)(b) comes within it." (The italics are mine).

It is the italicised portion of the judgment which is very far reaching in its effect.

The next Lahore case in Wadhwa Singh v. Kunj Lal AIR 1938 Lah. 497 simply follows the case just mentioned. In that case too the receipt contained the terms of the mortgage and the report shows that there was no other regular deed of mortgage executed between the parties prior to the receipt. Under such circumstances, following the previous Division Bench decision of the same Court, it was held by a Single Judge of the Lahore High Court, that the receipt being (to use the words of the learned Judge) the ''sole repository of the transaction of the mortgage the terms of which were embodied in it must be held "inadmissible in evidence.'' Confining the authority of these decisions to what they actually decided, I do not think they support the learned Counsel''s argument to any very great extent except for the observations already quoted in italics with which I am to deal presently.

In Venkayya v. Venkata Subbayyar (81) 3 Mad. 53 there was a hypothecation bond dated 6-10-1873. Later, a part of the mortgage money was paid on 3-11-1877 and a receipt given therefore by the mortgagee. The question: arose whether this receipt answered the description of a receipt within the meaning of Section 17(1)(c), Registration Act. Their Lordships held that it did not. Innes J., who delivered the leading; judgment, said:

Now, a mere receipt does not acknowledge the receipt or payment of a consideration. A consideration imports something given or done or forborne on account of something to be given or done or foreborne on the other side. The payment of money due, which a receipt acknowledges, is not a payment on account of anything to be given, done or foreborne by the person to whom it is paid. It simply extinguishes protanto the debt due. A mere receipt, therefore, does not acknowledge the receipt or payment of a consideration.

His Lordship quoted with approval from his own previous judgment reported in Venkatarama Naik v. Chinnatharabu Reddi (71) 7 Mad. 1 from which I select the following passage as relevant:

The clause appears to me to apply to instruments of acknowledgment of payment made on account of some such act of the party receiving payment, as is necessary to effect the change desired in the rights of the respective parties; as an instrument acknowledging repayment of the amount due on a mortgage in which the legal estate having been conveyed a reconveyance becomes necessary; or an instrument acknowledging: the payment of a sum of money on account of the extinction of a right of easement, in which some act of the party receiving the money is necessary to effect the extinction of the right residing in him. When no act of the party receiving the payment is necessary to effect the change of rights aimed at, the payment, I conceive, does not properly come within the term ''consideration''.

In my judgment the view expressed in the aforesaid quotation accords with good sense.

The facts of the case in Shidlingappa v. Chenbasapa (79) 4 Bom. 235 were similar to the last mentioned case in Venkayya v. Venkata Subbayyar (81) 3 Mad. 53. The receipts of which admissibility was under consideration were in respect of several sums paid on account of the mortgage debt. Sargent C.J. held that their non-registration did not offend against Section 17(1)(c), Registration Act of 1877. He said:

The use of the technical term ''consideration'' implies, that the person himself to whom the money is paid, limits or extinguishes his interest in the land in consideration of such payment, whereas such limitation or extinction, (if there can be said to be any), as results from the payment on account of the mortgage debt is the legal consequence of such payment, and not the act of the mortgage.... Undoubtedly the payment reduces the sum due at the time on the mortgage, and thus modifies the account between the mortgagor and mortgagee; but it does not operate to limit or confine: within narrower limits the right or interest of the mortgagee in the land, which is simply to have the payment of the principal and interest secured on the mortgaged premises by some one or other of the remedies available for the purpose.

One of the implications of the decisions reported in Venkayya v. Venkata Subbayyar (81) 3 Mad. 53 and Shidlingappa v. Chenbasapa (79) 4 Bom. 235 no doubt is that unless the receipt by itself acknowledges receipt of payment of consideration as distinguished from payment or receipt of what is due by the time as a debt and contains terms-amounting to creating, declaring, assisting, limiting or extinguishing any interest to or in immovable property of a value of Rs. 100 or upwards it does not require registration. There is no precedent, however, cited before us which deals with a case similar to the present one. In the case before us, the mortgage deed had created a mortgage-interest in immovable property Within the meaning of Section 17(1)(c). That mortgage deed also contained an acknowledgment of consideration as all deeds of transfer generally do in this country. The question, that in such a case arises, is whether any subsequent payment of the balance of the consideration money and its acknowledgment would either in law or in fact, amount to acknowledgment of "the consideration on account of the creation of an interest in immovable property," Clauses (b) and (c) of Section 17, Sub-section (1) are complementary. Clause (b) contemplates instruments (reading the section so far as it is material for the purpose of the present case) creating an interest in immovable property and Clause (c) contemplates instruments acknowledging receipt or payment of consideration on account of such creation. The two documents, taken together make up the whole transaction. Besides, one of the purposes of enacting Clause (c) may be to prevent endeavours to evade the law of registration by passing a receipt containing such recitals as would properly find place in a regular deed. A case is easily conceivable as it very often happens that the creation of interest and acknowledgment of receipt or payment of consideration on account of such creation are contained in the same document. In such cases it is not easy to understand why the Legislature should insist upon the necessity of registering a receipt the object of which, as understood between the parties, is to create evidence of payment of money due on account of consideration. In my judgment, where such is the case, a receipt acknowledging balance of consideration money is not a receipt acknowledging consideration on account of the creation of an interest in Immovable property. The word ''consideration'' has been defined in the Contract Act. There it will be found a promise to pay or to do a thing is also a consideration. Where it is settled between the parties that the consideration money will be paid later, there the promise to pay is the consideration and subsequent payment is nothing but a discharge or fulfillment of that promise. It has not been established in this case that the receipt (Ex. A 1) contains any such recital as would go to declare or create an interest in Immovable property. On the contrary, the mortgage has already been created and given effect to by the registered document of 5-4-1984. No fresh interest, therefore, can be said to have been either declared or created, or otherwise dealt with by the alleged receipt. In view, however, of the facts of this particular case and the view that I am taking as to its bearing upon the question of law, the question in the abstract form in which it has been raised need not be finally decided for the purpose of this ease.

At the time of mortgage the consideration was partly paid and partly promised. It was then agreed that in the event of the mortgagee''s failure to pay the promised amount by October, 1935, the mortgagor would be entitled to realise it with interest thereon at Rs. 1 per cent, per month. From this stipulation it is clear that the payment of this sum had nothing to do by way of creation or declaration or extinction or limitation of the mortgage. The unpaid balance of the mortgage money was to be considered as a debt due from the defendant to the plaintiff with a stipulation to carry interest from after a certain specified date. The receipt, therefore,'' can be viewed in the light of an acknowledgment of payment or satisfaction of a debt. This disposes of the learned Counsel''s only argument advanced before us.

It was represented to us that the plaintiffs had deposited in Court the entire mortgage money on 21-5-1945, and it was, therefore, urged that the relief of the redemption of the mortgage may be granted on the basis of such deposit. As this was beyond the scope of this appeal, the parties were given time to come to terms but unfortunately they have not been able to adjust their differences. This Court has no materials before it to hold that a valid deposit has been made by the plaintiffs so as to enable them to redeem the mortgage. This is outside the scope of this suit, and, therefore, of this appeal, and we cannot, therefore, accede to this request of the learned Counsel.

In the stated circumstances, there is no other alternative but to dismiss this appeal. The appeal,-therefore, fails and is dismissed with costs.

Fazl Ali C.J.

I agree.