Chunduri Venkataramanamma vs Basana Simon and Others

Srinivasa Aiyangar, J.—The main point for determination in this appeal is quite simple and depends almost entirely on the construction of a

single document. That document marked as Ex. 1 in the case, was an instrument of mortgage executed in favour of one Basana Simon by three

persons as mortgagors. The original plaintiff in the action claimed as the assignee of the mortgagors and he having died during the pendency of the

suit plaintiff 2 came on the record as his legal representative and he is the appellant in this Court.

The mortgage was with possession and in the suit the plaintiff claimed redemption primarily on the allegation that the whole of the principal and

interest due to the mortgagee under the instrument had been paid off by the usufruct There was also a claim for an account of the usufruct from the

mortgagee in possession and an offer in the alternative to pay off to the mortgagee whatever may on the taking of the accounts be found due to

him.

The plaintiff''s suit was dismissed on the ground that the whole amount due to the mortgages had not been realized by him from the usufruct, that

there was still a considerable amount due, that the provision in the instrument of mortgage was to the effect that the mortgagee should pay himself

the whole amount of principal and interest due only from the usufruct and that, therefore, the mortgagor''s representative had no right to claim to

pay off the balance due under the mortgage and redeem and recover possession of the property.

The question for determination is thus whether under the terms of the instrument of mortgage, the mortgagee can claim not only to be paid off the

whole of the balance of principal, and interest due to him according to account but he is entitled to recoup and recover the amount only by

appropriation of the net usufruct from property and to continue in possession of the property as long as this process of recoupment is going on.

In this appeal some question has been raised with regard also to the finding of the lower Court about the amount still due to the mortgagee on

the account'' taken. I shall refer later to the contentions with regard ''to it. But for the purposes of the present discussion I shall assume that a

considerable portion of the principal and interest is still due to the mortgagee and remains unrecouped by him from the usufruct.

No doubt the principle to start from in such cases is that the contract between the parties as embodied in the instrument and the terms thereof

should be looked at for the solution of the question. But it is as well to bear in mind that the contract is one mainly for the repayment of a debt and

the security for the same. There may no doubt be cases where in return for money advanced the mortgagee stipulates either directly or indirectly

for possession and enjoyment of the property for a particular period, or until the happpening of some contingency. In such cases undoubtedly it

would be right and reasonable that the possession and enjoyment stipulated for should be secured to the mortgagee. But though such stipulation for

possession and enjoyment of the mortgaged property may be valuable when there is no obligation on the part of the mortgagee to account for the

usufruct or when under the terms of the instrument of mortgage the usufruct is estimated at a figure agreed to between the parties, the case would

obviously be different when according to the terms of the instrument itself the mortgagee in possession has to account properly for the entire profits

and appropriate the same towards the interest and principal; in other words, though in cases where the profits or portion thereof is to-be taken in

lieu of interest or principal or portions thereof it may be said that the mortgagee has secured to him by the instrument of mortgage a beneficial

interest in the profits, the same cannot be said in the case where he can in law be compelled to account for every pie of the profits and to

appropriate the same towards the debt due. In the latter kind of cases the provision as to the taking of profits may properly be regarded only as;a

provision as and by way of security for the repayment of the debt. Even in this latter class of cases no doubt if the intention of the parties and the

terms and conditions in the contract are perfectly clear, the Court may be bound to enforce the terms and conditions if only on the ground as stated

by the House of Lords in the case of Bowes v. Shand [1877] 2 A.C. 455, that if the intention of the parties to a contract is clear and there is

nothing illegal, it must be regarded as a condition in the ''Contract and it is not for the Courts to enquire too curiously into the reasons, motives or

objects of the parties in providing for such stipulation.

It follows, therefore, from this that if on a fair construction of the contract it is found that the parties really stipulated for the appropriation of the

profits being the only manner in which the debt should be discharged and wiped out, then the Court would be bound to give effect to it though in

construing the contract itself the Court may bear in mind that in a case in which such a stipulation does not provide to secure to the mortgagee any

beneficial interest in the profits, but lays on him an obligation to account for the whole of the profits, the stipulation should be regarded as being

primarily one only in the nature of security for the debt.

The learned vakil for the respondents when questioned as to whether the mortgagee was not under the instrument of mortgage under an

obligation to account for the whole of the amount of profits and whether the case can be regarded as one in which any beneficial interest in the

usufruct can be regarded as secured to the mortgagee, frankly admitted that though there was the obligation on the mortgagee to account and

though it can not be said that there was any beneficial interest secured to the mortgagee in any of the conditions with regard to the usufruct, still his

contention was that on a proper construction of the contract the discharge of the mortgage debt by appropriation of the usufruct was the only kind

of discharge contemplated or provided for in the deed and that, therefore, as a mere condition of the contract his client, the'' mortgagee, is entitled

to take his stand on it

The question then is whether such is the proper conclusion to which a consideration of the entire document leads. The scheme of the document

is as follows: The principal sum advanced was Rs. 1,500. Interest thereon is provided at 12 annas per cent. per mensem. Then the document

proceeds to describe the salt pans which are mortgaged by the instrument, and it is stated that possession of the property has also been given to

the mortgagee. Provision is also made for the mortgagee thereon obtaining license and patta in respect of the pans in his own name. But what

follows is somewhat curious. It is in these terms:

Thereafter Badanna out of us should obtain a cowle from you and pay to you towards the principal and interest of this bond Rs. 250 within the end

of July of every year until this debt is discharged; that if it is not so paid you should lease out the salt adda along with others near by to other ryots

without consulting us and after deducting the expenses of repairs etc., according to your proper accounts, the balance amount may be credited

towards this debt until it is discharged as stated above, and that whatever damage may be caused to the said salt beng or to the salt therein by acts

of God or State, any of us present should, after deducting payments pay the balance from our other properties.

The document then proceeds to provide for interest on the said sum of Rs. 250 if default should be made in the payment of the same on the

due date and also the principal and interest on the bond becoming payable, such default being made, in one lump sum without regard to future

instalments. The document also contains a provision that the mortgagors themselves shall pay the quit rent and other taxes with regard to the

mortgaged property and winds up with the covenant worded as follows: ""So soon as this debt is discharged it should be delivered into our

possession.

On a careful consideration of the whole of the document it is perfectly clear that the intention of the parties to this document was that though for

purposes of security possession and license and patta were to be transferred to the mortgagee, it was contemplated that the mortgagors themselves

or one of them on their behalf should, obtaining a cowle, cultivate the land and without any reference whatever to the actual produce of the value

thereof pay to the mortgagee every year towards the interest and principal a sum of Rs. 250. No doubt the provision is that if default be made in

the payment of this amount regularly, the whole of the balance of the debt should become due and payable at once. That undoubtedly

contemplates personal liability to pay, though on the happening of a condition. There is also the provision made for the mortgagors paying the

balance of the debt in the event of damage being caused to the salt pans or the salt therein by acts of God or State. There is again the provision for

payment by the mortgagors of the quit rent and other taxes in respect of the land. The concluding sentence in the instrument that as soon as the

debt is discharged the property should be delivered possession of to the mortgagors, should in these circumstances be construed only in the light of

the other covenants and with special advertence to the fact that no beneficial interest in the usufruct is at all given to the mortgagee, but the

mortgagee is under an obligation to account for the whole of the profits.

The last provision above referred to is not to the effect that as soon as the debt is discharged only in the manner provided above in the

document, possession of the mortgaged property should be redelivered to the mortgagors.

Having regard to all these provisions, it seems to me impossible to accept the contention on the part of the defendants-respondents that the

only manner in which the parties contemplated the discharge of the debt was by the application of the usufruct of the land. The primary provision in

the document for the discharge of the debt has nothing whatever to do with the usufruct and it was admitted before us that according to the terms

thereof the mortgage amount was payable within ten or eleven years of the date of the mortgage. The provision for the mortgagee leasing the

property himself is only in default of the annual payment of Rs. 250 by the mortgagors.

The conclusion that I have thus arrived at is that the provision with regard to the discharge of the debt in the last sentence of the document is a

provision not limited to the discharge of the debt in any particular manner, but to the discharge of the debt in any manner whatsoever including the

discharge by payment by the mortgagors. This conclusion is further in consonance with the fact that the mortgagee is given no beneficial interest

whatever in the usufruct and has-been laid under the obligation to account for the whole of the profits. I might also add that the conclusion I have

arrived at-is in accordance with the general principle of all cases of mortgage that unless the disability to redeem is made out clearly, the Court

should lean in favour of allowing redemption by the mortgagors on payment of the debt secured. It now remains only to examine some of the cases

that have been cited before us in the course of the argument.

The decision in the case of Thirugnana Sambanda Pandara Sannadhi v. Nallathambi [1892] 16 Mad. 486, relied upon on behalf of the

respondents, is the first that has to be examined. No doubt in that case the general rule having regard also to the provisions of Section 62, T. P.

Act, was stated to be that the right to redeem and the right to foreclose are co-extensive. The case itself was decided on a construction of the

instrument of mortgage with regard to which it was held, that the event on which the obligation to surrender was to arise was the realization of the

principal moneys and interest from the profits of the mortgaged property and that possession by the mortgagee until the happening of that event

was of the essence of the transaction. Even after the passing of the Transfer of Property Act reports are full of instances in which it was held as a,

principle of construction of documents, that unless the contrary intention appears clearly, the time fixed for the payment of the mortgage money is

so fixed for the convenience of the debtor-mortgagor. I. am disposed to consider it undesirable that any such rule should be imposed; even with

regard to construction of documents and that while, generally speaking, there may be a leaning towards considering the period fixed in an

instrument of mortgage as having been fixed for the convenience of a debtor, still if the intention should be clear that the mortgagor stipulated for

the condition of his being in possession for a specific period, the same should be given effect to.

In the case of Rose Ammal v. Rajarathna Ammal [1900] 23 Mad. 83, Mr. Justice Shepherd, even after referring to the decision in the case of

Thirugnana Sambanda Pandara Sannadhi v. Nallathambi [1892] 16 Mad. 486, held that a question for the postponement of mortgage money is

prima facie intended for the benefit of the mortgagor, though the parties to an instrument of mortgage may, however, by the language of their

contract, show their intention that the redemption may take place only at the end of a given time. This case was subsequently cited with approval

and followed by Subraunania Iyer and Moore, JJ., in the case of Chinnasamy Reddiar and Another Vs. Krishna Reddy and Others, . The same

principle was again enunciated and followed by Benson and Wallis JJ., in the case of Radhakrishna Panda v. Madhava Naick [907] 17 M.L.J. 83.

It was there held that the general rule is that the debtor is at liberty to discharge the mortgage debt at any time unless the terms of the document

clearly prohibit it and fix a time before which it is not to be paid.

In Aga Muhammadally Beg Sahib Vs. Chendragiri Venkatappayya and Others, , it was no doubt held that a provision permitting the

mortgagor to make a payment of the entire mortgage amount on a particular date providing in case of default for the mortgagee continuing in

possession of the property for a prescribed term, was held not to give the mortgagor a right to redeem except on that date. But that part of the

decision may require reconsideration in the light of the judgment of their Lordships of the Judicial Committee in the case of Mohamed Sher Khan v.

Seth Sami Deval AIR 1922 P.C. 17. In Aga Muhammadally Beg Sahib Vs. Chendragiri Venkatappayya and Others, the Court clearly held that,

on a perusal of the document, it was clear that there was no personal covenant to pay, and further an estimate of Rs. 20 having been fixed in

respect of the annual usufruct, it was a clear case in which a beneficial interest in the usufruct was reserved for the mortgagee: because the

mortgagee taking the usufruct every year was to give credit only for the sum of Rs. 20 towards the debt. I am, therefore, satisfied that having

regard to the various clauses and condition in the instrument of mortgage under consideration in this case, the plaintiff is entitled to redeem the

mortgage at any time on payment of the whole of the balance of the principal and interest due. I might also observe that the raison d''etre of the

decision of the Lordships of the Judicial Committee in the case of Mohamed Sher Khan v. Seth Sami Dayal AIR 1922 P.C. 17 above referred to,

is that u/s 60, T. P. Act, the mortgagor is given by statute a right to redeem the property at any time after the principal money has become payable

and that statutory right cannot be defeated by any agreement between the parties themselves, The expression "" payable "" would no doubt have to

be construed with reference to the person regarding whom it is used in the context. If used with reference to the mortgagor it would signify the right

of the mortgagors to pay up the amount due obliging the mortgagees to accept the same; and with reference to the mortgagee it would signify the

right of the mortgagee to claim payment.

In the present case it is significant that the primary provision and scheme set out in the deed of mortgage was for the payment annually of a sum

of Rs. 250 by or on behalf of the mortgagors to the mortgagee without any reference to the usufruct, and, therefore, it must be held that apart from

other provisions the mortgage amount became payable under the terms of the deed at any rate by the end of the period calculated on the said basis

of Rs. 250 per annum, that is to say, as stated at the bar, in ten or twelve years. If, therefore, under the instrument of mortgage the amount became

payable at the end of such period on the application of the principle enunciated by their Lordships of the Judicial Committee in the case of

Mohamed Sher Khan v. Raj Seth Sami Dayal AIR 1922 P.C. 17 it is clear that the right to redeem accruing to the mortgagor then cannot be

deemed to have been taken away by any other condition in the contract. The lower Court was, therefore, wrong in dismissing the plaintiff''s suit.

The plaintiff is in my judgment, therefore, entitled to a decree for redemption of the mortgaged property on the payment of what may be found due

to the mortgagee on the taking of the accounts.

The learned vakil for the appellant attempted to attack the finding of the learned Subordinate Judge with regard to the figures. It was argued

that the lower Court should have found that a larger amount than has been given credit for to the mortgagor had been received by the mortgagee

from the profits. It has been found that from the date of the mortgage in 1903 till 1908 the mortgagors were themselves in possession. There arises

therefore with reference to that period no question of accounting. As regards the period of two years, 1909 and 1910, the lower Court has found

that only a sum of Rs. 183 payment of which was endorsed on the lease, had been received by the mortgagee. With regard to the subsequent

period from 1910 - 14 the mortgagors are credited from 1911 at Rs. 250 per annum and no question therefore can really be raised with regard

thereto. The Subordinate Judge has found that in respect of the years 1909-10 only a sum of Rs. 183, payment of which was endorsed on the

lease had been received by the mortgagee. I see no reason to interfere with that finding. The lower Court has given reasons for the finding it has

arrived at with regard to the figures in the various years and I do not feel persuaded that the lower Court was wrong in respect of any of the

figures. I accept therefore the findings of the lower Court with regard to the amount.

In the result, therefore, the appeal is allowed and the dismissal of the suit by the lower Court is set aside, and instead there will be a decree in

favour of the plaintiff for redemption of the suit mortgage on payment of the balance of principal and interest due as hereinafter set out. Interest at

12 annas per cent per mensem will be calculated on the principal sum of Rs. 1,500 from the date of the mortgage up to date, and the payments

found due and set out in paras. 31 and 34 of the Subordinate Judge''s judgment will first be appropriated towards the interest due under the bond.

If after such appropriation it should be found that at any time all the interest due had been paid off, the balance of any payment will be applied to

the reduction of the principal amount, and on such reduction the principal amount so paid off will cease to carry interest any further. The balance of

the principal amount will carry further interest at the contract rate till time fixed for redemption. On these findings the case is remanded to the lower

Court for the taking of further accounts from the dates of the judgment of the lower Court, and fixing a date for redemption and pissing a final

decree. Defendants-respondents 2 to 4 are exonerated from the plaintiff''s claim. No costs. The respondents will pay the appellant her costs

throughout subject to payment by the plaintiff-appellant of the costs of the defendants-respondents both in this and in the lower Court

proportionate to the amount of the plaintiff''s claim over and above the mortgage amount for which amount the Court-fee paid by plaintiff will be

disallowed.

Phillips, J.

In this case I have found it difficult to arrive at the true meaning of the mortgage-deed in suit and feel considerable doubt as to whether there is

any personal covenant to pay by the mortgagors, except in certain contingencies, which have not occurred. As, however, it is clear from the terms

of the document that the parties contemplated its discharge within 12 or 13 years and that period has long elapsed, I accept my learned brother''s

view that the mortgage amount is now payable and the time for redemption has arrived and agree in the order proposed.