(Dondapati) Lakshminarasimha Rao and Another vs (Gundabatula) Raghavamma and Others

Venkataramana Rao, J.—This is a suit for the recovery of a sum of Rs. 583 being the balance of principal and interest alleged to be due on

the foot of a simple mortgage bond dated 28th October 1918 executed by defendants 1 to 4 for Rs. 340 in favour of the father of the plaintiffs and

defendant 5. Defendant 5 separated from the father of the plaintiffs and thereafter the interest in the mortgage bond vested in the plaintiffs'' father

and after their father''s death in the plaintiffs. The defence is that in fasli 1335 the amount approximately due and payable in respect of the mortgage

bond was about Rs. 400 and it was then arranged between the plaintiffs'' father and the defendants that the plaintiffs'' father should enjoy the land

item 1 of the plaint property, being one of the items in the mortgaged property, for a period of five years from fasli 1335 in full satisfaction of the

mortgage and the plaintiffs'' father was accordingly let into possession of the said land and the plaintiffs'' father and after his death the plaintiffs have

been in enjoyment of the rents and profits thereof and the mortgage has accordingly been discharged. The learned District Munsif who tried the suit

gave a decree in favour of the plaintiffs finding against the plea of the defendants. The learned Subordinate Judge reversed his decision and

dismissed the plaintiffs'' suit upholding the plea of discharge set up by the defendants.

It is contended in appeal on behalf of the plaintiffs by Mr. P. Somasundaram that the agreement pleaded is in contravention of Section 92(4),

Evidence Act, and therefore should not be received in evidence and all that the defendants would be entitled to will be to get credit for the rent

realized towards the mortgage debt and relied strongly on the decision reported in Bapanamma v. Krishnamma (1907) 30 Mad 231. I am of the

opinion that the agreement pleaded is admissible in evidence and is not in contravention of Section 92(4), Evidence Act. Section 92(4) prohibits

the admissibility of a subsequent oral agreement to rescind or modify any contract, grant, or disposition of property which is by law required to be

in writing or which has been registered according to the law in force for the time being as to the registration of documents but it does not preclude

the admissibility of any transaction or contract in satisfaction or discharge of the'' obligation arising thereunder. As observed by Sadasiva Ayyar, J.,

in Ariyaputhira v. Muthukumaraswami 1914 37 Mad 423 :

A mortgage might, even if created by a registered instrument, be proved to have been extinguished by letting in admissible evidence (including oral

evidence) of payment of the mortgage amount or by letting in admissible evidence of any other transaction which operates as a mode of payment.

The same view has been taken by our-genveu and Anantakrishna Ayyar, JJ., in Nookamma v. Dharmayya 1928 53 MLJ 863, and they held

that an oral agreement providing for repayment of a mortgage debt from the usufruct of the mortgaged property can be proved in evidence, and

observed that the arrangement amounted only to a means for discharging the debt by putting the simple mortgagee in possession of the property.

Two decisions were cited with approval, one of the Allahabad High Court in Ram Baksh v. Durjan (1887) 9 All 392 and the other of the Calcutta

High Court in Kamala Sihai v. Babu Nandan Mian (1910) 11 CLJ 39. The latter decision is on all fours with the facts of the present case. In that

case, to an action to enforce a mortgage the defence was that after the execution of mortgage the mortgagor placed the mortgagee in possession of

the mortgaged premises under an agreement by which the mortgagee was to continue in possession for seven years and to receive the profits in full

satisfaction of the amount due under his mortgage. The learned Judges held that the arrangement set up does not alter, contradict or add to or

subtract from the terms of the original agreement, but merely provides means for the satisfaction of the bond, and therefore evidence of such an

arrangement could be given without infringing the provisions of Section 92. Mr. Somasundaram contends that the decision, Bapanamma v.

Krishnamma (1907) 30 Mad 231, lays down a contrary principle and it was not considered by the learned Judges in Nookamma v. Dharmayya

1928 53 MLJ 863. It seems to me that, if the facts on which the decision in Bapanamma v. Krishnamma (1907) 30 Mad 231 was given are

examined, the decision in no way conflicts with the decision in Nookamma v. Dharmayya 1928 53 MLJ 863. In Bapanamma v. Krishnamma

(1907) 30 Mad 231 there was a registered deed of maintenance executed by A in favour of B to give the latter an annual payment by way of

maintenance. Subsequently, when the suit was brought to enforce the arrears of maintenance due thereunder, it was sought to be pleaded in

answer that A, unable to pay maintenance at the rate provided in the deed, entered into an oral arrangement with B under which he gave B

possession of a certain land to be enjoyed by her for her lifetime. The learned District Munsif in that case negatived the defence holding that

Section 92(4) precluded evidence of such an agreement being given. On appeal the learned District Judge was of opinion that it only provided for

its discharge and therefore evidence could be given and relied upon the decision in Ram Baksh v. Durjan (1887) 9 All 392. Their Lordships

disagreed with the view expressed by the learned Judge that the agreement provides means for a discharge and held that it substituted an obligation

varying or differing from that provided in the registered deed and therefore u/s 92, Evidence Act, evidence of such an arrangement could not be

given. In the course of the judgment their Lord-skips observe:

The plaintiff is entitled to future maintenance at the rate stipulated in the original agreement. But this being a suit for arrears of maintenance for

certain years, it was open to the defendant to plead as ho has pleaded that in discharge of the defendant''s obligation to pay maintenance for such

years she agreed to take and took possession of certain lands; and it is immaterial that she is alleged to have taken possession of the land in

pursuance of an agreement which cannot be proved. The case appears to be on all fours with Karampalli Unni v. T.V. Muthorakutti (1903) 26

Mad 195, and also to be governed by Gosetti Subba Row v. V. Narasimham (1904) 27 Mad 368. The defendant cannot prove the agreement to

discharge the claim for maintenance in the manner alleged, but he may prove that the arrears have been, in fact, discharged in the manner alleged.

As I understand this judgment, what their Lordships meant is that the agreement itself is inadmissible in evidence as the obligation under the

original agreement is sought to be varied or substituted; but in so far as the arrears are concerned, putting the plaintiff in possession, of the lands,

might be pleaded as a discharge of the arrears: vide Vaidyanatha Rao v. Kandappa Chetti 1931 54 Mad 889. I do not agree with Mr.

Somasundaram that the language used by their Lordships ''arrears have been in fact, discharged"" indicates that an account should be taken of the

value of the rents and profits. Even assuming it was so, in that, case, probably as the agreement itself could not be pleaded in discharge of the

obligation, their Lordships were inclined to the view that the actual realisations. from the land may be admissible in evidence for proving payments

in discharge of the arrears. The learned Judges do not refer to Ram Baksh v. Durjan (1887) 9 All 392, nor dissent from, the view expressed

therein where a contemporary oral agreement putting the mortgagee in possession of the property was allowed to be pleaded in discharge; on the

other hand, the reference to the two decisions, Karampalli Unni v. T.V. Muthorakutti (1903) 26 Mad 195 and Gosetti Subba Row v. V.

Narasimham (1904) 27 Mad 368, seems to support the view that if the agreement was really one which would discharge the obligation, it is

permissible to plead such an agreement. In Karampalli Unni v. T.V. Muthorakutti (1903) 26 Mad 195, the action was to recover rent for two

years under a registered lease. The defendant pleaded a subsequent oral agreement by the plaintiff to remit a portion of the rent each year. For one

of the years he filed a receipt by which the plaintiff accepted payment at a reduced rate. Their Lordships held that the oral agreement is

inadmissible as-being in contravention of the terms of the registered deed, but the discharge as evidenced by the receipt is permissible though a

reduced rate was accepted. The reasons alleged by the learned Judges were that

Under Section 63, Contract Act, a promisee may remit in whole or in part the performance of the promise made to him or may accept instead of it

any satisfaction which he thinks fit. The fact that he did so in pursuance of an alleged prior oral agreement is immaterial and the discharge as such

will take effect u/s 63.

In Gosetti Subba Row v. V. Narasimham (1904) 27 Mad 368 a suit was brought on the basis of a usufructuary mortgage deed and the defence

raised by the mortgagor was that under an oral agreement with the mortgagee half the mortgaged property had been redeemed by payment of Rs.

600 and that he is in possession of the property redeemed. Their Lordships held that such an agreement could be pleaded. Their Lordships

observe at p. 372:

The original contract remains and is not rescinded or modified; but he (the mortgagor) says that by an oral agreement made between himself alone

and the plaintiffs adoptive mother and guardian, that is the plaintiff''s representative, (who is the mortgagee) a new and separate agreement has

been made between them whereby it has been agreed that he should be permitted to redeem half the mortgaged property by paying off half the

mortgage money and receiving back possession of half the lands mortgaged. What he alleges is that as between himself and the plaintiff he is

discharged from the contract so far as that is possible. ***** Section 92, Evidence Act, does not apply to such a case * * * and the proviso only

applies where the original is rescinded or modified and does not apply where a subsequent contract is made independent of the original contract

that one party shall be discharged from it so far as that can be done as between the parties to the subsequent contract, and I know of no provision

of law which prevents such a subsequent contract being proved even though it be an oral contract only.

In this case the contract was that the property should be put into possession for a period of five years. In my opinion, the oral contract is

admissible, and further the oral contract was followed by delivery of possession of land. Therefore the contract to let and the letting into possession

for five years operate as a discharge of the obligation and in no way offend the proviso to Section 92. Mr. Somasundaram relied on the Full Bench

decision in Mallappa v. Matum Nagu Chetty 1919 42 Mad 41. In that case, in a suit upon a mortgage bond, an oral agreement by which the

mortgagee agreed to accept a lesser sum was held inadmissible in evidence on the ground that the effect of the arrangement was to alter the terms

of the original contract. Seshagiri Ayyar, J., observed that

An agreement which in future will have the effect of putting an end to the liability must be regarded as a subsequent agreement modifying the

original contract.

Therefore where the agreement operated as a present discharge of the obligation, Section 92(4) does not prevent evidence of such an

agreement being given. Further in this case the agreement to take and taking possession of the land for a period of five years were deemed by the

parties as fulfilment of the obligation under the bond and not in any way altering the terms of the contract by taking a lesser sum than was provided

in the bond; Therefore the Full Bench decision does not apply to the facts of this case. Thus, the mortgage must be deemed to have been

discharged. In this view, the decision of the lower appellate Court is right) and the second appeal fails and is dismissed with costs.

(Leave refused).