Khub Lal Chaudhuri and Others vs Bechan Mandal and Others

Harries, C.J.—This is a plaintiffs'' appeal against concurrent decrees of the Courts below passed in favour of the defendants. It appears that defendant 1 and his cousin Zalim owed a sum of Rs. 400 to one Darsan Mandal. To pay off this sum each of them borrowed Rs. 200 from the plaintiffs, and on 21st October 1928, defendant 1 and Zalim each executed mortgage bonds in favour of the plaintiffs. By these bonds they mortgaged their respective shares in certain holdings. The landlord of defendant 1 and Zalim obtained a rent decree against both of them and in due course put the property to sale. This was part of the property covered by the mortgages executed by defendant 1 and Zalim. On 8th May 1935, the property was to be put up for sale in satisfaction of the rent decree, the decretal amount being Rs. 93. On that day defendant 1 paid Rs. 45 in part satisfaction of the decree and obtained an adjournment of the sale to 3rd June 1935.

On 3rd June 1935, the property was put up for sale and purchased by one Ramnath, a relation of the plaintiff, for Rs. 70. In August 1935 Ramnath took delivery of possession of the property. In the year 1936 the plaintiff brought two mortgage suits, one against Zalim and ''the other out of which this appeal arises against defendant 1. Zalim did not contest the suit and allowed it to be decreed ex parte. Defendant 1 however hotly contested the suit brought against him and alleged that the mortgage had been fully satisfied and discharged.

According to defendant 1, the mortgage was discharged by an arrangement entered into between the parties. As I have stated earlier, the holding in question in the present case was being put up for sale by the landlord in execution of a rent decree. Part of that decree had been satisfied and adjournment of the sale obtained. Defendant 1 had until 3rd June 1935, to pay the balance of the decree amounting to some Rs. 48; but it is said by arrangement between the plaintiffs and defendant 1 the latter refrained from paying the balance of the decree or from bidding at the sale and allowed the property which was worth, according to defendant 1, about Rs. 1500 to be sold to Ramnath as benamidar of the plaintiff for Rs. 70.

It was agreed that this forbearance on the part of defendant 1 should be regarded as a complete discharge of the mortgage. Both the Courts below have accepted the defendant''s version of the facts and have held that the mortgage was discharged. In second appeal however it has been urged that no oral evidence was admissible of this subsequent agreement which led to the discharge of the mortgage. Reliance has been placed upon Section 92, Proviso (4), Evidence Act, and that proviso is in these terms:

The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in Cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents.

The plaintiffs contend that defendant 1 in this case has sought to prove an oral agreement rescinding or modifying the original agreement or contract between the parties. The mortgage was a transaction required by law to be in writing and was in fact registered. That being so, it is urged that no oral agreement can be proved varying the terms of that document. On the other hand, it is argued by the respondents that it is always open to a mortgagor, to prove discharge or satisfaction of a mortgage by oral evidence. It is always open to a mortgagor to prove that on a certain day he paid the sum due under the mortgage. Such is not evidence of a subsequent oral agreement varying the terms of the mortgage. In the present case however defendant 1 cannot prove the discharge of this mortgage without proving an oral agreement varying one of the express terms of this contract. In the mortgage itself there is a stipulation as to payment and discharge and that term is in these words:

And whatever money or interest I will pay for this bond will be first set off towards interest and compound interest and after this set off towards interest and compound interest the remainder will be set off towards the principal, that is to say no payment will be set off towards principal so long as the dues towards interest and compound interest will remain unpaid. The payment (that will be made), I will at once write and get it written on the back of this bond. I will not raise any objection (regarding payment) without its being endorsed on the back of the bond. That is to say I will not produce any receipt or evidence of witnesses regarding plea of payment. If I produce it, it will be deemed useless and incorrect.

In short there is an express term in this mortgage that payment towards either principal or interest could only be made in a certain way, and unless endorsed on the mortgage it should not be regarded as a payment at all. In these circumstances is it open to the mortgagor to attempt to prove discharge or satisfaction in any other manner? As long as this term remains payment can only be proved by endorsements on the mortgage bond. What defendant 1 now seeks to do is to establish that the mortgage has been discharged by reason of a verbal agreement which is in conflict with the express terms of the mortgage. Until the term as to payment in the mortgage is varied, a transaction such as is put forward by defendant 1 can never amount to a discharge. In my view the whole case of defendant 1 depends on a verbal agreement which modifies and varies the terms of this written and registered document. No such variation or modification is admissible in evidence unless it has been made by a written and registered document. In my judgment the Courts below should not have admitted oral evidence in this case to prove the agreement alleged by defendant 1 which amounted to satisfaction of the mortgage.

Once any evidence of this agreement is excluded, then there is nothing to establish satisfaction of the mortgage. All that remains is the fact that Ramnath purchased the property and that defendant 1 neither paid the small balance of the decree nor bid for the property nor interfered in any way with Ramnath''s purchase. There is even nothing to show that Ramnath was in any way benamidar of the plaintiffs. Unless the evidence, which I hold is inadmissible, is admitted, the case made by defendant 1 that he has discharged the mortgage wholly fails.

The result therefore is that this appeal must be allowed and the decrees of the lower Courts set aside. I would pass a mortgage decree in favour of the plaintiffs for the principal amount together with interest at the rate of nine per cent. per annum simple from the date of the mortgage to the end of the period of grace. Three months is. given to defendant 1 to pay the sum due After the expiry of the period of grace the amount due will carry interest at the rate of six per cent, per annum simple. I would direct that each party pay their own costs here and in the Courts below.

Fazl Ali, J.

I agree.