Hakim Saiyid Fida Ali and Others vs Rani Bhuneshwari Kuar and Others

Varma, J.—This is an appeal by the plaintiffs against the decision of the Subordinate Judge of Gaya, dated 26th February 1937, dismissing the plaintiffs'' suit with costs to defendant 1. The suit was dismissed on the ground of limitation. When the appeal first came up for hearing before us, we remanded the case by an order dated 16th August 1939 The findings have now arrived, and the appeal has been heard in the light of those findings also.

Defendants 11 (Syed Muhammad Waizul Haq) and 12 (Mt. Bibi Sogra), third party defendants, executed a mortgage bond on 27th May 1916, for a sum of RS, 2500 in favour of Hakim Syed Mohammad Taki alias Manjhley Saheb, father of the plaintiffs and son of defendant 13, fourth party. The rate of interest mentioned therein was Re. 1-8-0 per cent, per mensem simple. The suit was filed on 18th November 1935, and the amount claimed was Rs. 2500 plus Rs. 8756-4-0 the total coming to Rs. 11,256-4-0. On 20th January 1929, Hakim Syed Mohammad Taki, the mortgagee, died leaving the plaintiffs as his children, Mt. Shahzadi Begum as his widow and defendant 13 as his mother. By virtue of a registered deed of a family arrangement, dated 12th August 1929, executed by all the heirs of the mortgagee, the mortgage bond in suit was allotted to the share of the plain, tiffs who are her sons and daughters. By virtue of a sale deed dated 30th November 1917, the mortgagors, defendants third party, sold the mortgaged property subject to the mortgage debt in question to Sheikh Sujait Ali the ancestor of the defendants second party and their predecessor in interest and the defendants second party sold their equity of redemption in the mortgaged property to -defendant 1 in the farzi name of defendant 2 by several sale deeds. Six annas of the mortgaged property was sold to defendant 1 by Mt. Bibi Zohra, defendant 3 on 21st October 1925, by a sale deed (EX. 4), another four annas was sold to him by Muhammad Yahia, defendant 8, on 24th February 1926, by a document (Ex. 5) and another four annas was also sold to him by Sheikh Muhammad Yusuf, defendant 9 on 15th July 1926, by a sale deed (EX. 6). In these sale deeds the mortgage debt covered by the bond in question was acknowledged. The result of these transactions was that defendant 1 acquired the equity of redemption of the mortgage to the extent of 14 annas share. Mt. Bibi Fatma, defendant 10, who had a two annas share in the property did not part with her equity of redemption. Defendant 1 contested the suit and urged �hat the suit was barred by limitation, that the plaintiffs had acquired no interest in the mortgaged property and that by the acknowledgment in the sale deeds the plaintiffs'' claim was not saved from being barred by limitation. Defendants 3 to 14 did not appear in the suit though properly served with summonses and defendant 2 entered appearance in the suit but did not appear to contest the suit.

So far as the facts of the case are concerned, there is not much controversy before us. The only questions are, first, whether the lower Court was right in holding that though defendant 1 was bound by the acknowledgment of liability made by the defendants who are vendors in the sale deeds, (EXS. 4 to 6) there was no valid acknowledgment of the mortgage debt as the entire body of the mortgagors had not made the acknowledgment to keep the mortgage debt alive and so the plaintiffs'' claim was barred by limitation and, secondly, the question of interest. The lower Court has rightly held as follows:

It is not necessary that the acknowledgment should be made in a document to which the plaintiff need be a party, and an acknowledgment made in a document to which the plaintiff is not a party even is a valid acknowledgment. An admission of liability contained in a deed executed by the debtor in favour of a third person is a valid acknowledgment u/s 19, Limitation Act, and it is not necessary for its validity that it should be addressed or communicated to the creditor.... I therefore hold that defendant 1 is bound by the acknowledgment made in the sale deeds (Exs. 4 to 6). It is conceded on behalf of the plaintiffs that there is no acknowledgment of liability by Mt. Fatma, one of the daughters of Sheikh Sujaet Ali, as she did not convey her interest in the equity of redemption and which is 2 annas share only, to defendant 1. Therefore the acknowledgment made by the 14 annas cosharers of the equity of redemption is only binding on defendant 1.

So far the reasoning of the lower Court is perfectly correct; but later on it says:

Thus, I find that there is no acknowledgment of the subsistence of the mortgage debt in question here in favour of the plaintiffs by defendant 10 who is one of the co-mortgagors. Co-mortgagors stand in the position of joint contractors, and one of several co-mortgagors cannot make an acknowledgment of liability so as to bind the others, and acknowledgment of liability by some of them, does not deprive the others of the benefit of limitation unless according to the provisions of Section 21, Limitation Act, the persons making the acknowledgment are authorised to do the same by the other co-mortgagors as the agents on the latter''s behalf. In the present case there is nothing to suggest the inference that defendants 3 to 9 were authorised by defendant 10 to make the acknowledgment of liability to the plaintiffs by virtue of the three sale deeds executed by g defendants 3 to 9 in favour of defendant 2. Therefore the mortgage debt in favour of the plaintiffs so far as it affects defendant 10 is barred by limitation.

...As a mortgage debt is indivisible without the consent of both the mortgagor and mortgagee, the plaintiffs, I hold, are not entitled to a proportionate mortgage decree against a fractional share of the mortgaged property

and then comes the ordering portion of the judgment which I have already quoted. It has been pointed out to us by the learned advocate for the appellants that in holding that the lower Court has lost sight of the fact that it was dealing with the case of a Mahomedan family where the shares are defined. In this connexion our attention has been drawn to the case in Mt. Waleyatunnissa Begum Vs. Mt. Chalakhi and Others, . In that case N, a Mahomedan, executed a mortgage in favour of on 29th Jeth 1822. The due date of payment stipulated in the bond was lith May 1915. The suit was instituted on 10th May 1927 just four days before the expiry of the period of limitation, against the heirs of the mortgagor who was then dead. One of the heirs S, however, was not impleaded as a defendant. Objection to this effect was taken in the written statement filed by the defendants in the suit, and on 2nd December 1927 the plaintiff made an application to bring S on the record as a defendant; the application was allowed and s was made a defendant on 24th January 1928 after the period of limitation had expired. An objection was therefore taken that the suit was barred by limitation not only as against S but also as against all the other defendants. The trial Court held that the suit was barred as a whole and not only as against S and accordingly dismissed the entire suit. The plaintiff appealed to the High Court against that decision. During the pendency of the appeal, one of the respondents T, one of the heirs of the mortgagor, died and no application for substitutidn was made within the period of limitation, with the result that the appeal abated as against T. The respondents contended, first, that the suit was rightly dismissed and secondly, that the abatement against T had the effect of the abatement of the entire appeal. Kulwant Sahay, J. in the course of his judgment, with which Khwaja Mahomed Noor J. agreed, observed:

The learned Subordinate Judge in the course of '' his judgment refers more than once to the principle that a mortgage is indivisible, and in his view the mortgage must be enforced as a whole or not at all. This is not a correct view of the law. There is no doubt that the general principle of law is that a mortgage contract is indivisible, but the law reports abound in cases where mortgages have been split up.... If, as in the present case, the parties being Muhammadans, the share of each of the heirs of the original mortgagor is defined by law, there seems to be no reason why the mortgagee cannot give up his mortgage lien on the share of any one of the mortgagors by making a proportionate deduction of the mortgage money and enforce his mortgage for the balance as against the shares of the other heirs who are on the record.

I need not mention the various cases upon which reliance was placed for coming to this conclusion. I respectfully agree with this view of the law and am of opinion that, although the "suit is barred with regard to 2 annas share of defendant 10, it is not barred with regard to the remaining annas in which the acknowledgment was within the period of limitation. The next question that arises for consideration is the question of interest. After remand the lower Court has sent a finding as to the amount of interest already paid; but the question that has been raised by Mr. Khurshed Hasnain, appearing on behalf of the appellants, is on the wordings of Section 7, Bihar Money-lenders (Regulation of Transactions) Act, 1939. That section runs as follows:

Notwithstanding anything to the contrary contained in any other law or in anything having the force of law or in any agreement, no Court shall, in any suit brought by a money-lender before or after the commencement of this Act in respect of a loan advanced before or after the commencement of this Act or in any appeal or proceedings in revision arising out of such suit, pass a decree for an amount of interest for the period preceding the institution of the suit, which, together with any amount already realised as interest through the Court or Otherwise, is greater than the amount of loan advanced, or, if the loan is based on a document, the amount of loan mentioned in, or evidenced by such document.

Mr. Khurshed Hasnain relies upon the expression "loan advanced" and urges that Rs. 2500 being the amount of loan advanced the total interest realisable on it is Rs. 2500. Therefore, although 2 annas of the loan is time-barred, the interest should be allowed to run up to the extent of the loan advanced. The argument is very ingenious but after careful scrutiny does not commend itself to me. When a part of the loan is time-barred, it appears to me that that part should be deemed not to have been advanced. Interest is a thing which has to accrue and cannot be said to have been realisable on the very date on which the loan is advanced and if a part of the loan advanced is a barred loan, if I may use this expression, the creditor should not be allowed to take advantage of this barred loan. Interest on a loan is realisable only if the loan itself is realisable. But in the present case on the argument of the appellants themselves the loan was split up into two parts--one realisable part due to the acknowledgment made by persons interested in that part and the other non-realisable part due to the absence of any acknowledgment on the part of the persons interested in it. On the argument advanced the creditor would be allowed to realise interest even for that portion of the debt which standing by itself has been declared to be barred. This view is supported by a decision of the Federal Court in AIR 1940 19 (Federal Court) under similar circumstances. A suit was brought to enforce a mortgage, dated 1st January 1915, executed by Debindra Prasad Sukul, defendant and Birendra Prasad Sukul, defendant 1 for Rs. 1,00,000 carrying interest at 8 annas per cent, per mensem compoundable every second year. The plaintiffs in the suit were entitled only to 2/6th share in the mortgage deed, the rest having gone to the defendants. The Courts below found that there was a legal necessity for RS. 25,000 only, which represented an un paid purchase money for properties taken by both, while Rs. 25,000 went into the pocket of Deblndra alone. The amount claimed in the plaint was 1/6th of Rs. 1,00,000 plus corresponding interest. The Courts below had passed a decree for RS. 12,500, that is 1/6th of Rs. 75,000, and interest at contract rate up to the date fixed for the payment in the decree. Having held that Section 7 of Act 7 of 1939 was applicable, Sulaiman, J. observed as follows:

If the principal sum due from the defendant-appellants were taken to be Rs. 12,500, and if the principle of Section 7 were to apply and the plaintiffs are to be given interest up to the date of the suit, not exceeding the principal sum, then the total amount due up to 26th April 1929, when the suit was brought would be Rs. 25,000 only. According to the accounts as appended to the decree of the first suit, the amount of principal and interest calculated up to that date exceeds Rs. 28,000. It is contended on behalf of the appellants that this amount should be reduced to Rs. 25,000.

The learned advocate for the plaintiff, however, contends before us that as the sum of Rs. 1,00,000 is mentioned in the mortgage deed, the maximum limit for the award of interest is that figure, and therefore the amount awarded by the Courts below, being well below it, cannot be reduced. It seems difficult to accept this argument, when the plaintiffs themselves have broken the integrity of the mortgage and split up the liability.

This is exactly the argument advanced before us and, when on the argument of the appellants themselves in the present suit the integrity of the mortgage has been broken and the liability has been split up, the mortgagors who were still held liable for the loan should not be made to pay interest on the loan originally advanced. Sulaiman, J. further observed as follows:

It could not have been the intention of the Legislature that if there are several executants who have borrowed various sums and the creditor sues one of them for his separate share only, having already realized the balance from the others, then the maximum prescribed for the amount of interest to be decreed against him is not to exceed the aggregate of the various sums borrowed by him as well as all the other pro forma defendants, who are not really being sued. The only reasonable interpretation to put on the section is to read it as referring to the claim brought against the particular defendant who is sued, and the amount which is due from him alone and is the subject-matter of the claim.

Varadachariar, J. observed:

Though the respondents'' contention has the merit of plausibility and ingenuity, it seems to me that on, a reasonable interpretation of the section the appellants'' liability for interest up to the date of the institution of the suit must be limited to Rs. 12,500.

Gwyer C.J. agreed with the other learned Judges. In the present case the only difference is that in the case before the Federal Court the plaintiffs sued a particular defendant and not the others whereas in. the present case the suit against one of the defendants is time-barred. But the principles laid down in that decision apply with equal force to the facts of the present case. I am, therefore, of opinion that this argument on the question of interest advanced by Mr. Khurshed Husnain cannot succeed. In the result, the appeal will be allowed to this extent that the plaintiffs will get a decree for 14 annas of the loan advanced, that is to say, seven-eighths of the loan advanced and they will be entitled to interest equal to 14 annas of the loan advanced, that is to say, seven-eighths of the loan advanced, up to date of the suit. After that they will be entitled to interest at the rate of 6 per cent, per annum simple on the total sum for the period of grace and the same interest will continue till realization. The period of grace will be three months from this date. The appeal is allowed to this extent. The appellants will be entitled to costs in proportion to their success throughout.

Manohar Lall, J.

I agree. The Judgment of the Federal Court in AIR 1940 19 (Federal Court) is a complete answer to the contention raised by the mortgagee on the amount of interest realizable.