Nagar Damodara Shanbhogue vs Chandapur Pujary and Others

Plaintiff is the appellant. He sued for the recovery of a sum of Rs. 37,065-9-11 by sale of the mortgaged properties on the strength of a

usufructuary mortgage deed, Ex. A, which according to the plaintiff''s contention contains a personal covenant to pay, whereby he is enabled to sue

for the sale of the mortgaged properties though the mortgage deed is styled as a usufructuary mortgage. The learned Subordinate Judge dismissed

the suit by reason of his findings on issues Nos. 3 and 4. On a construction of the terms of the mortgage deed, he has held that there was no

personal convenant to pay the mortgage amount and the suit for sale of the mortgaged properties is not therefore maintainable. This is the main

question argued in this appeal. The suit mortgage deed Ex. A. is an unduly long document and a full translation of it is given in the judgment of the

lower Court. For the purpose of deciding the point at issue, the following extract from the document would suffice:

As we represented to you that there is some extra income in the property, till the term stated here below, you should give us credit to a sum of Rs.

6,625 from the principal amount and you have agreed thereto out of concession to us. Deducting the said sum of Rs. 6,625, on payment (when

paid) in one lump sum in the Kalavadhi Vishu Sankramana of Dundeebi year 1922-237 of the balance of Rs. 4,000 as also any arrears of rent that

may remain due with your consent from any member of our family who may take the properly on rent from you on the responsibility of the

property, you shall receive the same and make over the property and documents as also the receipts which you obtain from the creditors. If we fail

to pay the aforesaid amount on the due date as stated above, thereafter, unless we pay on Kalavadhi Vishu Sankramana of any year, we have no

right to ask you to receive the amount and surrender possession during any other time of any year, and from the date of default on the due date

until we discharge all rights under this deed, you shall not only enjoy the properties but shall also be entitled to appropriate the income towards the

interest due to you on the principal amount and we shall have no right to claim any excess income from you. If you do not consent to allow any

arrears of rent against the members of our family, this deed shall be no bar to your right of recovering the same on the responsibility of the said

properties. If in addition to the aforesaid sum of Rs. 1,500 left in anamath with you to pay the aformention ed creditors, any excess sum is found

due to them and paid by you, the excess so paid and if the assessment be enhanced at the time of survey, the sum so enhanced also, together with

interest at 8 percent] per annum from the respective dates of payment, we are liable to pay on the responsibility of the ildarwar property (property

mortgaged usufructuarily), and we shall pay at the time of the final discharge of the amounts under this deed (when the accounts in respect of this

deed are finally settled) the said sum also.

This deed was executed on September 11, 1892 and it is specifically stated in the body of the deed that possession of the properties was

handed over to the mortgagee on sap ildarwar (usufructuary mortgage pure and simple). A period of 30 years is fixed for redemption and by

reason of the enjoyment of the properties by the mortgagee for that period, the entire interest due on the principal sum of Rs. 10,625 for the said

period of 30 years and also a portion of the principal amount, namely Rs. 6,625 must be taken to have been paid off. At the end of that period the

balance of principal remaining due is only Rs. 4,000. Provision is also made in this deed for the grant of portions of the mortgaged property on

lease to any member of the family of the mortgagors and the arrears of rent remaining due are also payable along with the balance of the principal

amount on the specified date at the end of the 30 years term. In the case of a usufructuary mortgage, there must be delivery of possession to the

mortgagee coupled with an authorisation to retain such possession until payment of the mortgage money, and receive the rents and profits in lieu of

interest or in part payment of the mortgage money. An usufructuary mortgagee as such has no right to institute a suit for sale of the mortgaged

property, but must only continue to enjoy the same till redemption. If in such a mortgage deed, there is an express personal covenant to pay the

money, apart from words merely indicating the time and the mode of redemption, a suit for sale may be instituted, but not otherwise. Even to sue

for the mortgage money u/s 68, Transfer Property Act, it must be shown that by the terms of the deed the mortagagor has bound himself to repay

the same. So far as the claim for the recovery of the balance of principal, namely Rs. 4,000, is concerned, we are unable on a proper construction

of the terms contained in the deed, to read any personal covenant to pay the same. Any such covenant should be clear and unconditional in the

undertaking to pay. Several decisions were cited on either side in the course of the arguments and we find that each case turns upon the

construction to be placed on the particular wording of the document. The usufructuary mortgage deed which was considered in Luchmeshar Singh

v. Dookh Mochan Jha 24 C.677 contained a clause.

Having paid the principal money in the month, of Chart 1297, we shall take back the document and the land.

The learned Judges held that:

such a provision is merely what is generally known, as a proviso for redemption which fixes the minimum time within which the mortgagor can

redeem.

In respect of an exactly similar clause contained in a usufructuary mortgage deed, our High Court held that it did not amount to a personal

covenant to pay: Hakeem Patte Muhammad v. Davood 30 Ind. Cas. 569 : 39 M. 1010 : 18 M.L.T. 209 : 29 M.L.J. 525 : (1915) M.W.N. 852.

The same view was held in a latter case on the construe; ion of an almost similar provision: Rangayya Pillai v. Narasimha Lyengar 47Ind. Cas. 852

: AIR 1919 Mad. 847 : (1918) M.W.N. 672. In another case decided by the Calcutta High Court, where the covenant was.

when I or my heirs shall pay, I shall take back this deed and enter on the land.

It has been held that this does not amount to a personal covenant to pay but it is only a conditional statement which would not entitle the

mortgagee to insist on giving up possession and recovering the money by sale of the property. The terms of the clause in the deed in question in the

present case relating to the payment of the balance of the mortgage money are in our opinion very similar to the clauses which were the subject of

the consideration in the cases referred to above. The case relied on by Mr. Seetharama Rao for the appellant are, in our opinion, distinguishable

from the present, in the mortgage deeds dealt with in Ramayya v. Guruva 14 M. 232 and Udayana Pillai v. Senthivelu Pillai 19 M. 411 : 6 M.L.J.

210 there was a clear and unambiguous personal covenant to pay. In the latter case the covenant ran as follows:

On the expiry of the term I shall pay the said Rs. 200 and redeem the lands.

In the former case, it is worded thus:

It is settled that we should pay the principal amounts to you in three instalments within this period.

Such being the wording of the clause, there was no difficulty in holding that there was a personal covenant to pay. In those deeds there was a

further clause that in default of such payment the mortgagee should continue to enjoy the property in the aforesaid manner till redemption. In view

of the fact that there was a clear and unequivocal personal covenant to pay the money, as an independent provision, the learned Judges held that

the effect of the subsequent clause for continuance of enjoyment in case of default in such payment was not to nullify the previous covenant to pay

on a certain day. These decisions would be authorities in favour of the plaintiff''s contentions in the present case if Ex. A does contain a clear and

unconditional personal covenant to pay as in those cases. Not only is such a personal covenant to pay absent in Ex. A, but there is also a provision

that in case of default in the redemption of the mortgage on the due date at the expiry of the term, the mortgagee should continue in possession and

enjoyment of the property appropriating the income towards the interest due on the balance of the principal amount. As observed by the lower

Court, this provision is presumably for the benefit of the mortgagee because he has the advantage of enjoying the entire mortgaged property in lieu

of interest due on only a portion of the principal sum, namely Rs. 4,000. This may sound something like a penal provision in case of default in the

payment of the entire mortgage money at the end of the stipulated term of 30 years. In the Full Bench decision in Sivakami Ammal v. Gopala

Sundram Ayyan 17 M. 113 : 4 M.L.J. 50 the clause was:

I shall pay you the said mortgage amount of Rs. 3,000 in Chithrai kalawadi of the year 1883 and take back this deed of mortgage with possession.

This was held to be a clause containing a covenant to pay. Even in the later Full Bench decision in Kangaya Gurukal v. Kalimutha Annavi 27 M.

526 the clause was almost similar.

Thereafter on the 30th Panguni Bhavaye&r causing the aforesaid Rs. 200 to be paid (on paying the aforesaid Rs. 230) we shall (redeem) or

(recover back) our land.

These decisions do not materially help the appellant in this case. One other decision relied on by him is the one reported in Rangaswami

Ayyangar v. Veeraraghavaehari 76 Ind. Cas. 1003 : AIR 1924 : Mad. 513 : 18 l.w. 620 : (1923) M.W.N. 789 : 33 M.L.T. 73 : 46 M.L.J. 56.

This seems to be in support of his contention rather than the other decisions. The particular clause from which the personal covenant to pay was

inferred is as follows:

Having paid the amount of the principal by July 7, 1927, having endorsed on the said deed, I shall enjoy the said land.

Bat in Ex, A, there are no words, such as ""we shall take back and enjoy the lands,"" ""we shall redeem and take back lands"" What is stated

therein is, that on payment of the balance of the principal money the mortagagee should receive it and make over property to the mortgagors. That

is only a provision for redemption in which the duty of the mortgagee after redemption of the mortgage is expressly specified. On a careful

consideration of the specific term in Ex. A, we agree with the view of the lower Court and hold that there is no personal covenant to pay the

balance of the mortgage money so as to, entitle the plaintiff to claim the relief, namely, sale of the mortgaged property for the realization of this

amount.

So far as the arrears of rent due in respect of the leases granted to the members of the family are concerned, there is no doubt a provision in

the deed that those sums are also payable along with the balance of the principal amount at the time of redemption. But there is a further definite

clause which clearly entitles the mortgagee irrespective of such a provision, to recover those arrears on the responsibility of the mortgaged

property. It means that he can enforce the charge created on the property in respect of those arrears of rent, unfettered by the restrictions

contained in this deed as to the time and mode of redemption. The mortgaged properties having been made security for the recovery of those

arrears of rent under this deed, there is no bar to the enforcement of the charge in the present suit by asking for the sale of those properties.

12.The amount of arrears of rent together with interest at 12 per cent, per annum claimed by the plaintiff as per Schedule B is Rs. 22,030-7-4. We

may first dispose of the question, as regards the claim for interest. There is no provision in Ex. A for payment of any interest on the arrears of rent,

though there is specific provision for the payment of interest at 8 percent, per annum on two other items of debt. No contract for the payment of

interest on arrears of rent is set up in the plaint. That being so the claim for interest is clearly unsustainable and must be disallowed. If the amount of

interest is eliminated from the claim, what is due for arrears of rent alone is Rs. 12,547-15-0. The learned Subordinate Judge has found that the

particulars of the arrears of rent as given in Schedule B. are correct, except as to the value of rice given therein. The quantities of rice which

remained due as arrears of rent are mentioned in that schedule and they are in conformity with the settlement made by the several defendants

showing the quantities of rice which remained due to the plaintiff as arrears of rent. It is said that there are some inaccuracies in the accounts when

compared with the lease deeds and receipts. This is not clearly made out, though there was some cross-examination of the plaintiff en this point. It

is unlikely that when the lessees chose to settle the accounts with the mortgagee, they would have subscribed their signatures in token of such

settlement without satisfying themselves as to the correctness of the figures mentioned therein. As regards the price of rice claimed by the plaintiff,

as noted in Schedules B-l to B-10, the lower Court has made a deduction of 10 annas per mura, and subject to this deduction the prices noted

therein have been allowed. We accept that finding. The plaintiff would therefore be entitled to Rs. 12,547-15-0 less the sum calculated at 10 annas

per mura on the total quantity of rice due as arrears of rent, namely, Rs. 1,122-8-0.

It is urged on behalf of the respondents that the arrears of rent due by the several members of I he family could not be made a legitimate charge

on the mortgaged property. The lower Court is of this opinion and seems to proceed on the footing that the leases provided for in the mortgage

deed Ex. A should be those taken by any member of the family as representing the whole family. But there is nothing in the terms of the mortgage

deed to restrict the nature of the leases contemplated in the mortgage deed in the aforesaid manner. This intention as would appear from the whole

trend of the mortgage deed is that the mortgagee should lease out different portions of the mortgaged property to several members of the family, as

such a course would be convenient for maintaining themselves out of the usufruct, at the same time paying rent to the mortgagee which would

represent the interest due to him on the principal amount. Under the mortgage deed the whole of the mortgaged property is made responsible for

he realization of the arrears of rent due by any member of the family in respect of the lease taken by him. Such an arrangement appears to have

been brought about in the interests of all the members or the family without prejudice to the rights of the mortgagee.

We cannot therefore regard the charge created in respect of the arrears of rent as not binding on the family of the mortgagors as a whole.

Moreover this very mortgage deed having been found to be valid and binding on the whole family in the former suit which was brought by some of

the present defendants and others in which the mortgagee was arrayed as one of the defendants, it is not now open to the defendants to reopen the

question of the validity and binding character of this mortgage by setting up a plea which might and ought to have been set up in the former suit:

vide Exs. B and B-l. The learned Subordinate Judge has found on issue No. (1) that the question of the validity of the plaint mortgage is res

judicata by reason of the former decision, but failed to give due effect to that finding when dealing with this objection, which is after all one of the

grounds on which the validity and binding character of the mortgage can questioned. We hold that the former decision operates as a bar to the trial

of this particular ground of objection set up for invalidating the mortgage. Even on the merits this objection seems to be futile for the reasons

already set forth.

There are two other items of the claim as per Schedules C and D. The amount of Rs. 6729-4-1 is claimed to be due to the plaintiff on account

of the enhanced assessment paid from time to time together with interest as provided for in the mortgage deed. A sum of Rs. 2,305-14-6 is

claimed on account of the payments made in excess of Rs. 1,500 to words the discharge of prior debts. The particulars for this claim are set forth

in Schedule D. The lower Court has found the amount claimed in Schedules C and D to be correct and due to the plaintiff. But according to the

terms of the mortgage deed, these sums are payable to the mortgagee at the time of redemption by the mortgagors, when the final account should

be taken. For the reasons already stated, we hold that there is no distinct personal covenant to pay these sums and therefore the plaintiff has to

continue in possession till the mortgage is redeemed by payment of these sums as also the sum of Rs, 4,000 which is the balance of principal still

due. The present suit brought for the recovery of these sums by sale of the mortgaged properties is not sustainable.

In the result the appeal is partly allowed and a decree is given in plaintiff''s favour for a sum of Rs. 11,425-7-0 (on account of the arrears of

rent claimed in Schedule B) with subsequent interest thereon at 6 per cent, per annum from the date of suit till the date fixed for payment and also

proportionate costs in both Courts, and thereafter with interest at 6 per cent, per annum in the aggregate amount. Time for payment is four months

from this date. In case of default in payment the mortgaged properties will be sold, subject to the usufructuary mortgage lien of the plaintiff under

Ex. A. Liberty is reserved to him to bring a portion only of the mortgaged properties to sale for the realization of this decree amount, free from

such usufructuary moitgage lien. The respondent''s costs in both the Courts proportionate on the value of the claim disallowed should be paid by

the plaintiff.