Panaganti Ramarayanimgar vs Maharajah of Venkatagiri and Others

John Wallis, C.J.—This is an appeal from a decree of the Subordinate Judge of North Arcot in a suit for redemption brought by the first

plaintiff as assignee of the mortgagor, the Raja of Kalahasti, now impleaded as the third defendant, against the first defendant who is the assignee of

the original mortgagee, the Raja of Tuni. The mortgage deed, Exhibit A, provided for an advance of 11 lakhs on a usufructuary mortgage of the

properties comprised in Schedules A, B, C and D, but the Schedule D property may be disregarded as it is of small value and was only included

with a view to registration in the district in which it is situated. A decree for sale had been obtained by the mortgagees against the properties

comprised in Schedules A, B and C and the properties comprised in Schedules B and C had actually been sold by the mortgagees, but

proceedings were pending as to setting aside the sales. In the case of the Schedule C properties the sales were not ultimately set aside and the

advance of 6 out of 11 lakhs which was to be contingent on setting aside the sale was never made, and we have no concern with them. Of the

remaining 5 lakhs the recital shows that Rs. 2,50,000 was to be applied for the satisfaction of the decree against the A Schedule properties and

Rs. 2,50,000 was to be retained by the mortgagee and applied partly in payment into Court of the entire debt due by the mortgagor under the

decree of O.S. No. 7 of 1899 by which the 23 villages included in B Schedule had been ordered to be sold. At the date of the mortgage the

villages had been sold, but the sales had been set aside and an appeal against the order setting them aside was then pending and subsequently was

successful. The balance of the Rs. 2,50,000 was to be applied for the expenses of this litigation, and for the mortgagor''s expenses. The mortgagee

paid Rs. 1,93,617 into Court in satisfaction of the decree in O.S. No. 7 of 1899, and incurred certain expenses in connexion with the litigation.

There was a provision in the mortgage deed entitling the mortgagee, in the event of the sales being confirmed, to draw the amount deposited in

Court by the auction purchasers. The sales were afterwards confirmed by consent of the mortgagor on 31st January 1911, and the mortgagee''s

widow on 20th March 1911 sued to establish her right to the money deposited in Court by the auction purchasers, at the same time alleging that

the consent given by the mortgagor to the setting aside of the sales was fraudulent. This suit was settled and an order made for payment out, but it

is disputed whether the money so drawn on 24th April 1912 was Rs. 1,81,412-10-0 or Rs. 1,80,412-10-0 (Exhibit H4).

In the present suit the defendant has sought to recover on this head not only the difference between the sum paid into Court and the sum drawn

out by him, namely Rs. 12,000, and the expenses he incurred in connexion with the litigation, but also the balance with interest of the Rs. 2,50,000

which was never advanced to the mortgagor at all, on the ground that it must be deemed to have been kept by the mortgagee at the mortgagor''s

disposal. The Subordinate Judge declined to deal with these claims as he considered that this sum of Rs. 2,50,000 was not charged on the

Schedule A properties which it is now sought to redeem, but was the subject of a separate mortgage effected in the same instrument on the

Schedule B properties. It is however expressly provided in the deed that the properties in the four schedules were mortgaged for the whole eleven

lakhs, and were to be put in the possession of the mortgagees. Again, there is provision that the 5 lakhs lent on the properties A, B and D

Schedules, with which alone we are concerned, were not to be paid for four years, namely, until 13th March 1913, and that if the ""entire amount

was then paid the mortgagee was to put the mortgagor in possession of the properties. A different period of redemption, six years, was fixed for

the C Schedule properties if they come under the mortgage, and there was also a provision that if the sale of four other villages which had been

confirmed was set aside, they should be mortgaged against an advance of the auction-purchase money (about 2 lakhs) ""in the same way as the

villages mentioned in B Schedule herein."" There is really nothing in these provisions when properly understood to cut down the plain words of the

instrument by which the properties in the four schedules were charged in respect of the whole mortgage debt, The further fact, on which the

Subordinate Judge relies, that the mortgagee''s widow sued to establish her right to the money deposited in Court has really no bearing on the

question. We have, therefore, come to the conclusion that the decree must be modified by including in the mortgage debt the difference between

the amount paid into Court by the mortgagee and the amount drawn by him under Exhibit H4, as also his expenses in connexion with that litigation.

As regards the balance, the mortgagor in his written statement in O.S. No. 13 of 1911, dated 27th July 1911, Exhibit H1, alleged that the

mortgagee had failed to pay Rs. 53,226-13-11 and that there had been a failure of consideration to that extent. It was not suggested that anything

had been advanced to the mortgagor except the money paid into Court and the expenses of litigation, and as regards the balance, we think there

has been a clear failure of consideration and that the defendant is not entitled to recover.

The next question is whether compound interest is provided for. The mortgage is an anomalous mortgage, as it stipulates that, in case of non-

payment within two years of the period prescribed for payment and six years from the date of the mortgage, interest is to run at 1 rupee per

mensem, as to which the rents and profits are to be reckoned at 10 annas.

Further it is agreed that in the event of a failure to pay the mortgage money within six years as per the terms of the document, you shall enjoy the

income of the lands in respect of 10 annas out of the 1 rupee per mensem payable by us for interest, and that as regards the additional 6 annas we

(that is the mortgagors) shall add it to the principal and pay it on the security of the mortgaged properties.

It is said for the mortgagee that the intention was that the interest being added to the principal should bear interest as such. Effect may be given

to the provision about adding the interest to the principal by holding that it was intended not only to negative any liability on the part of the

mortgagor to pay interest as it fell due, but also to prevent redemption without payment of the interest. There is no provision for annual rests, and

compound interest would have to be allowed with monthly rests if at all. Seeing that this additional 6 annas is a penal post diem rate, I think it

would be going too far to infer an agreement to pay compound interest from the language of the instrument.

The A Schedule villages were leased by the mortgagee under Exhibit I, which was of even date with the mortgage deed, Exhibit A, but was not

to take effect until the beginning of the next fasli. I agree with the Subordinate Judge that the defendant has not shown that the mortgagee did not

get possession until the beginning of the fasli and that he has no claim on that head, The mortgagor, however, did not pay the rent reserved by the

mortgagee under the lease, Exhibit I, and two questions arise: (1) whether the arrears of rent and interest thereon are charged on the mortgaged

property, and (2) whether such charge is enforceable against the mortgagor''s assignee in a suit brought by such assignee for redemption. There is

no express charge in Exhibit A, and there has been considerable discussion as to the meaning of the Telugu words in Exhibit I, on which the first

defendant relies as imposing a charge. It is common ground that the arrears of rent are charged on the produce and fruits of the villages included in

the lease, which are the identical villages in Schedule A of the mortgage, and that they are also charged on the other lands of the mortgagor-lessee

not included in Schedule A. The contest is, as to whether the words mean that arrears are charged on the income of the villages leased and on the

other properties of the mortgagor-lessee as well as the villages leased, or whether they are charged on the other lands of the mortgagor-lessee

exclusive of the Villages leased. In spite of the ingenious arguments of the learned Advocate General for the plaintiff it seems to me most unlikely

that it was the intention to charge these arrears on all the other lands of the mortgagor-lessee including the other lands in the mortgage, Exhibit A,

but excluding only the lands out of which the arrears arose, which it is very usual to charge in such cases. The learned Government Pleader and

Mr.Nagabhushanam, two of the most experienced Telugu practitioners in this Court, who kindly came to our assistance, are clearly of opinion that

this is not the meaning, and the Chief Interpreter, whose own language is Telugu, though inclined to take the other view, does not deny that the

words are susceptible of this meaning. The Telugu word ""Gaka"" he says means ""besides"" or ""excepting"" according to the context. Applying that

test, I have no hesitation in holding that here it means ""besides,"" and that the lands out of which the arrears were to arise were charged in the usual

way as well as the mortgagor''s other lands, which appear to have been charged by way of additional security.

The next question is whether the mortgagor would be bound to pay off the charge for arrears of rent before recovering possession of the

mortgaged property, and if so, whether the plaintiff as assignee of the mortgagor is under the like obligation. Any rights of the kind which the

mortgagee may have against the mortgagor are prima facie enforceable on general equitable principles against the assignee of the equity of

redemption, as explained by Lord Selborne, L.C., in Jennings v. Jordan (1881) 6 App. Cas., 698 . The decision of the Privy Council in Bohra

Thakur Das v. Collector of Aligarh I.L.R.,(1910) All, 612 does not, I think, affect this rule in any way. In that case there was a provision in the

mortgage deed that the usufructuary mortgagee in possession should pay any subsequent enhancement of revenue on the mortgaged properties out

of the rents and profits and deduct the amount so paid from the malikhana or allowance which was payable by him out of the said rents and profits

to the mortgagor. He duly paid the enhancement on some of the mortgaged properties to Government, but paid the malikhana to the mortgagor

without making the deduction. In these circumstances the Judicial Committee held that it would be inequitable to allow him to charge this sum

against the assignees of the equity of redemption of other properties included in the mortgage when they sought to redeem those properties. The

mortgagee had incurred the loss by paying the malikhana in full when he was not bound to do so, and there was no reason for charging this loss

against the assignee of the equity of redemption. I think that the observations in some of the cases of their Lordships about applying this doctrine to

assignees, which were referred to by my learned brother, related to the consolidation of mortgages as abolished in the absence of a contract to the

contrary. The rule did not arise under Vint v. Padget (1858) 2 De G. & J., 611, as is pointed out in that case.

The question whether the mortgagee is entitled to resist redemption unless he is paid these arrears, which are charged by Exhibit I not only on

the properties mortgaged by Exhibit A but also on the other properties of the mortgagor, has been argued with reference to the provisions of

Sections 61 and 62 of the Transfer of Property Act; Section 61 reproduces without material alteration Section 17 of the Conveyancing Act, 1881,

which is described in the marginal note as ""restriction on consolidation of mortgages."" Under the doctrine of consolidation the mortgagee was

entitled to insist against the mortgagor and the assignees of the equity of redemption that they should not be allowed to redeem the properties

mortgaged under one mortgage without at the same time redeeming other mortgages created by the mortgagor in favour of the mortgagee or his

assignors or which had become vested in them, subject to this: that, where redemption was sought by assignees of the equity of redemption, the

other mortgages must have vested in the assignee at the date of such assignment: Jennings v. Jordan (1881) 6 App, Cas., 698 and Pledge v. White

[1896] AC., 187 . The section provides that a mortgagor seeking to redeem any mortgage shall be entitled to do so without paying any money due

under any separate mortgage made by him ""on property other than that comprised in the mortgage which he seeks to redeem."" It abolished, in the

absence of a contract to the contrary, the consolidation of distinct mortgages on separate properties, and is often spoken of as having abolished the

consolidation of mortgages, as in Kay and Elphinstone''s Precedents in Conveyancing, Volume 2, page 60, 5th Edition. The mortgagee''s right to

insist as against the mortgagor and the assignees of the equity of redemption that the other mortgages on the properties actually sought to be

redeemed should be discharged, whether or not such mortgages comprised other properties as well, was probably regarded as a case of tacking

rather than of consolidation. The reconveyance, which in England is an incident of redemption, could scarcely be claimed so long as the property

was subject to any mortgage in favour of the mortgagee against whom redemption was sought, and his right to insist on the property sought to be

redeemed being fully cleared appears to be preserved by Section 17 of the Conveyancing Act. This was the view of the section taken by Mr.

Justice Wright in In re Salmon. Ex parte The Trustee [1903] 1. K.B., 147 . Though all the incidents of mortgages in England and in India are not

the same, there is some difficulty in the way of holding that the Indian Legislature, when reproducing Section 17 in Section 61 of the Transfer of

Property Act, intended it to have a different operation in India. The marginal note to Section 61 which is ""right to redeem one of two properties

separately mortgaged"" shows that the right of separate redemption does not arise under the section, when, as here, the property sought to be

redeemed is also included in another mortgage. Assuming this to be so, the question is whether in India the mortgagor or his assignee should be

allowed to redeem one mortgage without paying off the other mortgage, which comprises the same properties and other properties as well. In

Ganga Rai v. Kirtarath Rai I.L.R(1911) . All., 398, Stanley, C.J., was of opinion that he might but the decision in In re Salmon. Ex parte The

Trustee [1903] 1. K.B., 147 , was not cited before him. There are also observations in Tajjo Bibi v. Bhagwan Prasad I.L.R (1894) , All, 295

which question whether any right of consolidation at all is recognised in Section 61. I do not consider it necessary to decide this question, because

in that case, which was followed in Khuda Bakhsh v. Alim-un-nissa I.L.R.(1905) , A11., 313, it was decided that, where it is sought to redeem a

usufructuary mortgage on properties which are also subject to a simple mortgage, the mortgagor has an express statutory right u/s 62(b) of the

Transfer of Property Act to recover possession of the mortgaged properties without paying off the simple mortgage. The fact that the property

usufructuarily mortgaged is also the subject of a simple mortgage, apparently, in the opinion of the legislature, affords no reason why the mortgagee

should be entitled to retain possession if the mortgagor is in a position to discharge the usufructuary mortgage; and I think that to this extent we

should follow Tajjo Bibi v. Bhagwan Prasad I.L.R.,(1894) All., 295 and Khuda Bakhsh v. Alim-un-nissa I.L.R.,(1905) All., 313. Exhibit A no

doubt is not a simple usufructuary mortgage, as it contains certain provisions as to interest, and also a covenant to pay, but that affords no reason

why possession should not be given without insisting on the redemption of the simple mortgage created by Exhibit I.

Mr. Venkatarama Ayyar further contended, for the appellants, that the mortgage, Exhibit A, and the lease, Exhibit I, containing the charge for

arrears, which were executed on the same day, really form one transaction, and referred to the recent decision of the Privy Council [Abdullah

Khan v. Basharat HusainI.L.R., (1918) All., 48 where a mortgage and a lease were treated as one transaction, and contended that the decision of

the Allahabad Court in Khuda Bakhsh v. Alim-un-nissa I.L.R.(1905) All., 313, must be treated as overruled in so far as it treated the mortgage

and the lease imposing a charge for arrears of rent as separate transactions. If this be so, he contended that the arrears form part of the principal

due under the anomalous mortgage created by Exhibit A and Exhibit 1 taken together, and that redemption ought not to be allowed until the whole

principal is paid. Assuming, however, that Exhibit A and Exhibit 1 formed part of the same transaction, it was a transaction by which the suit

properties were usufructuarily mortgaged for the principal debt under Exhibit A and were further made the subject of a simple mortgage for the

arrears of rent with interest at 10 annas per cent. The mortgagee''s enjoyment of the usufruct was in lieu of part of the interest on the principal due

under Exhibit A, and had no reference to the simple mortgage created by Exhibit I for arrears of rent and the interest thereon.

In these circumstances I have come to the conclusion, though not without some hesitation, that effect ought to be given to the principle

recognized in Section 62(b) of the Transfer of Property Act, and that the plaintiff ought to be allowed to recover possession of the property

usufructuarily mortgaged under Exhibit A without discharging the simple mortgage created by Exhibit I. The claims regarding the misdescription of

a village, the fact that one of the villages was allowed to be sold for arrears of revenue, and the alleged fraudulent compromise of the litigation as to

setting aside the sale of the villages in Schedule B are all claims for breach of contract sounding in damages. Such damages are not charged upon

the mortgaged property, and the appellant in my opinion has failed to show why the assignee of the equity of redemption should be required to pay

them in as a condition of redemption. I concur with the order proposed by my learned brother.

Seshagiri Ayyar, J.

This is a suit for redemption and the very large number of questions which it has given rise to render it necessary that the facts should be stated

at some length. The original owner of the property was the Raja of Kalahasti. He mortgaged under Exhibit A the suit property and three other sets

of property to the Raja of Tuni. At the time of the mortgage, decrees had been obtained by the Raja of Venkatagiri against the properties

comprised in Schedule A to the deed of mortgage. The amount of the decrees was nearly two lakhs and fifty thousand rupees. This sum was paid

by the Raja of Tuni to satisfy the decrees. Decrees had also been obtained by Raja Venugopaul, a member of the Venkatagiri family, to the extent

of two lakhs of rupees on B Schedule properties and four other villages. At the time of the mortgage all the 27 villages had been sold in Court

auction. The judgment-debtor applied to set aside these sales. The first Court confirmed the sales of four villages and set aside the sales as regards

the other villages. Against the order setting aside the sales as well as against the order confirming the sales appeals were preferred to the High

Court. It was in this state of things that the deed of mortgage was executed. It provided that in case the order of the first Court setting aside the

sales was confirmed, these 23 villages should be given as security for a further sum of two lakhs and fifty thousand rupees. In the High Court the

order of the Court below as regards the 23 villages was reversed and sales were confirmed. The purchasers paid into Court about a lakh and

eighty thousand rupees. At the time of the mortgage the Raja of Tuni paid into Court one lakh and ninety-one thousand rupees believing that the

order of the lower Court would be confirmed by the High Court. The mortgagor, the Raja of Kalahasti, was also indebted to one Narasingirjee, a

sowcar of Hyderabad, to the extent of six lakhs of rupees. The condition in the deed of mortgage is that if this sum is paid by the Raja of Tuni to

the sowcar, the properties comprised in Schedule C, which were under mortgage to the sowcar, should be included in Exhibit A. Schedule D

refers to a small property in Tuni which apparently was included in order that the Registrar of Tuni may have jurisdiction to register the deed.

Exhibit A was dated 13th March 1909. The mortgagee did not pay the Hyderabad sowcar. Consequently, the C Schedule properties never

formed part of the mortgage. As regards the B Schedule properties they were also excluded from the mortgage as the sales in respect of them

were confirmed by the High Court. So the only properties which remained as security to the mortgagee were properties comprised in Schedules A

and D. The Raja of Tuni, the mortgagee, died in December 1913 and in December 1913 his widow transferred the rights under Exhibit A to the

first defendant. Against the mortgagor a decree was subsequently obtained by the Mahant of Tirupati in execution of which the equity of

redemption in A Schedule properties was put up toy sale. The plaintiff in this case purchased the said equity on 22nd of October 1915. He has

instituted this suit to redeem the A Schedule properties from the first defendant. So the parties before the Court are not the original mortgagor and

mortgagee, but persons who have acquired title from them either by Court sale or private transfer.

The plea of the first defendant is that the A Schedule properties are security not only for two lakhs and fifty thousand rupees advanced to pay

off the encumbrances on them but also for all the monies received by the mortgagor at the time of the mortgage. He has made further claims for the

payment of large sums of money by way of damages, etc., due to the default of the mortgagor.

The Subordinate Judge held that three separate mortgages were constituted by the document and that each set of properties was liable only for

the particular amounts which were advanced to pay off the encumbrances on them. As regards the various payments claimed, he practically

disallowed them all.

The first question in the appeal is whether the learned Subordinate Judge was right in splitting up Exhibit A into three separate mortgages. I

agree with the learned vakil for the appellant that the process adopted by the Subordinate Judge is against the plain language of the document.

After setting out the items of consideration, the document provides:

It is agreed that interest on this at the rate of Rs. 0-10-0 per cent per mensem be given. For this we have mortgaged the properties in the schedule

herewith attached.

A little lower down it is stated:

We agree that these mortgaged properties do stand security for the entire amount of this deed.

Again after referring to the possibility of the auction in respect of the 23 villages being confirmed, the document continues:

And this mortgage document is executed after making you believe that, in case, we act contrary to the aforesaid condition, our entire estate

including these mortgaged properties and all the moveable and Immovable properties shall stand security.

As against these provisions, the learned Advocate-General who appeared for the plaintiff drew our attention to another clause which says:

When these four villages are adjudged in our favour either in the appeal in the High Court or in the Privy Council, we shall give them also to you for

mortgage for the money of the auction sale along with the villages mentioned in Schedule herein.

The contention was that there was an intention to create a separate, mortgage in respect of the B Schedule properties. I do not think that this

implication follows from the language used. It is clear that this clause contemplated a further advance in excess of the eleven lakhs already secured

and contemplated the execution of a new deed of mortgage which would be supplemental to Exhibit A. The fact that the four villages should be a

sort of annex to the B Schedule properties is not a reason for holding that there was a distinct and separate mortgage on the said B Schedule

properties alone. It seems to me, having regard to the provisions to which I have referred, that the mortgage must be taken to have been indivisible,

and that whatever monies went into the hands of the mortgagor were chargeable upon the properties which the mortgagee took possession of. In

this view, it becomes necessary to ascertain the actual sum the mortgagor appropriated out of the money paid to pay off the decrees on the B

Schedule properties. As I said before, the mortgagee paid into Court Us. 1,93,617-0-0. The amount realized by the sale of the twenty-three

villages in Court auction was Rs. 1,81,419-10-0 (Vide Exhibit H2). But although this was the amount that the purchasers paid into Court it is not

clear whether the whole of it was drawn out by the mortgagee. The amount that he paid in was received by the decree-holder. Exhibits H4, H5

and H6 show that a cheque for Rs. 1,80,412-10-0 was given to him on 24th of April 1912. The records do not show what became of the

balance. it was suggested that the balance might have been drawn by the mortgagee earlier. The other side disputed this suggestion. Therefore

there must be a finding by the lower Court regarding the amount paid to the Raja of Tuni from out of the sale amounts deposited in Court. In my

opinion, to the extent of the difference between the sum paid by him and the sum drawn out by him he was entitled to a charge upon the A

Schedule properties, and to that benefit the first defendant is entitled. This disposes of the first contention.

[His Lordship nest dealt with the defendant''s claim for certain sums said to have been expended by him on behalf of the mortgagor, and

continued:]

Now I shall deal with the claims put forth in Schedule B to the written statement. One item may be disposed of in a few words. It is the last

item. A sum of Rs. 5,000 is claimed as the costs incurred by the mortgagee in contesting the appeal which was presented to the High Court against

the order of the lower Court setting aside the sales of the 23 villages comprised in the B Schedule. In Exhibit A there is this clause:

Whatever disputes may arise with reference to the rights of the estate, we shall ourselves bear the charges that may be incurred and if it happens

that you spend that amount, we shall pay you the same with interest at the rate of Rs. 0-10-0 per cent per mensem on the security of these

properties.

That is a clear provision that if the mortgagee should in our expenses in securing his rights under the mortgage, the mortgagor should pay him

that amount, and that he should charge it on the properties mortgaged. However, the question whether any money was spent by the mortgagee or

his transferee in the litigation has not been enquired into. There must be a finding on the question whether any, and if so what, amount was spent by

the first defendant or his assignor in the litigation relating to the B schedule properties.

I shall next deal with the question whether the plaintiff is bound to pay the sum of Rs. 13,000 mentioned in Schedule B. This claim was put

forward under the following circumstances. In Schedule A to Exhibit A among the jiroyati lands the village of Muchivoyi is included. It was

conceded that this was not a jiroyati village but an inam village. The case for the first defendant is that by the inclusion of Muchivoyi among the

jiroyati villages he and his transferor had suffered damages to the extent of Rs. 13,000, and that amount must be made good by the plaintiff. Before

the Subordinate Judge a number of defences founded on facts and on law were put forward with great insistence: on the facts he came to the

conclusion that the story of the first defendant should not be accepted. I do not think it necessary to examine the grounds on which this opinion was

based, because in my opinion, the question can be disposed of on a point of law. Granted that the first defendant was damnified by this wrong

description of the village, the claim arising there from is not recoverable as against the purchaser of the equity of redemption. The decision of the

Judicial Committee in Bohra Thakur Das v. Collector of Aligarh I.L.R.(1910) All., 612. seems to be conclusive on the question. In that case, the

point was whether the enhanced revenue paid by the mortgagee in possession could be recovered against the purchaser of the equity of

redemption. Their Lordships say, in page 619:

In the present suit it is not the mortgagor who is seeking to redeem the property and it seems to their lordships that any equity that might have been

invoked against him does not arise against the plaintiffs.

The arguments of counsel on both sides related specifically to the question whether the assignee is liable, and the portion of the judgment I have

extracted dealt with that argument. The case before the Board related to the right which the mortgagee possession had u/s 65, Clause (c), The

same principle is applicable to rights arising under Clause (a) of the section. There are other authorities bearing upon the same question, namely,

Subbiah v. Rami Reddi I.L.R., (1916) Mad., 959 , Srinivasa Chari v. Gnanaprakasa Mudaliar (1907) I.L.R., 30 Mad., 67 and Syed Ibrahim

Sahib v. Armugathayee (1915) I.L.R., 38 Mad., 18. In Foa''s Landlord and Tenant, 5th Edition, page 406, the same rule is enunciated. Reliance

was placed on behalf of the appellant on AIR 1915 Mad 633 in which it was stated that an assignee of the mortgagor is liable to all the charges

which the mortgagor himself was bound to pay. It seems to me that this proposition has been too broadly stated. There is no reference to Bohra

Thakur Das v. Collector of Aligarh I.L.R.,(1910) All., 612 n that case at all. Therefore, in my opinion, the Subordinate Judge is right in holding that

whatever may be the first defendant''s rights in this matter against the Raja of Kalahasti, he is not entitled to enforce them against the plaintiff. The

same observations apply mutatis mutandis to the claim of four thousand rupees alleged to be due in consequence of the mortgagor having allowed

the assessment on the village of Velanpudi to fall into arrears. A further claim of Rs. 50,000 said to be due ""on account of the mortgagor

compromising with the purchasers confirming the sale of 22 villages of B schedule,"" stands on the same footing. If this claim is well-founded to any

extent it can be enforced only against the mortgagor and is not claimable against the plaintiff for the reasons already given.

Another claim was for interest at the enhanced rate of one per cent. The document provides for repayment within four years and grants a

further period of two years by way of indulgence. Then comes a clause which provides:

And it is agreed that if on the said date we do not pay in one lump sum the entire amount as per the terms of the document, we do pay interest on

the entire amount that may be found due to you till then as per the terms of the document at the rate of Re. 1-0-0 per cent per mensem calculated

from then until payment of the whole amount to you.

It was contended for the appellant that the enhanced interest commenced from the end of the fourth year and not from the end of the sixth

year. After having had the vernacular document read to me, and having regard to the context, I feel no hesitation in holding that the enhanced

interest was to commence at the end of the sixth year and not at the end of the fourth year. Therefore that claim goes. Then, it was argued that the

first defendant is entitled to compound interest from the end of the sixth year upon the additional interest of six annas. I am unable to agree with this

contention either. The language of the document is that this additional interest of six annas should be added to the principal. No doubt it was open

to the draftsman to have inserted a clause that if it was not paid regularly it shall bear interest. But that is not the language of the document. I see no

reason for spelling out a provision for compound interest unless there is an express stipulation therefor. There is no provision so far as I am aware

for the payment of interest annually, and consequently you cannot say from what period interest upon interest is to be calculated; and again there is

no provision as regards the rate of the compound interest. It was argued before us, that this rate must be one per cent, because after the end of the

sixth year the clause relating to enhanced interest was expected to come into operation. That again is a matter for speculation. In my opinion the

Subordinate Judge was justified in saying that unless there is an express stipulation for compound interest, the Courts are not at liberty to read into

a document conditions in that behalf, not only as regards the period of rests but also as regards the rate of interest.

Now I come to the claim which I have purposely refrained for consideration to the end, because it raises very many difficult questions. This

claim is said to arise thus. On the date of Exhibit A the mortgagor took a lease of the A schedule properties under Exhibit I. The annual rent

stipulated was Rs. 18,750 payable by instalments. There is a provision for interest if instalments were not regularly paid. Then comes the clause in

dispute. The question is whether this clause makes only the income of the A schedule properties security for the amount of rent or whether it makes

the corpus also security. The Subordinate Judge has held that only the income was charged, The Bench Clerk of this Court was of the same

opinion. The Chief Interpreter practically agreed with the Bench Clerk. I requested two leading Telugu vakils to give their translation of the clause.

They do not quite agree among themselves; but they practically differ from the interpretation placed by the Bench Clerk. I am not myself unfamiliar

with the language, but as I felt that I should not take upon myself the responsibility of giving the translation, I tried my best to get some authoritative

interpretation of the clause. I must confess that I am no better now than I was at the outset. Everything depends upon the meaning to be attached

to the word ""gaka"" in the clause. In the dictionary it is translated into ""besides"" and ""except."" As the learned Chief Justice humorously remarked in

the course of the argument, one meaning would have ''the effect of including the mortgaged properties, and the other that of excluding the same.

Very learned arguments were advanced on both sides on the construction of this clause. I prefer not to express any opinion finally, as in the view I

am taking its interpretation is not necessary for the disposal of the case. I have purposely refrained from indicating my view as the question may

again come up in some form or other and I would be hampering the Judge who may have to hear such a case by indicating my opinion. I shall, for

the present, assume that a charge is created by Exhibit A upon the corpus of the A schedule properties and proceed to deal with the case on that

footing. The effect of this assumption is that there are two mortgages, one under Exhibit A and the other under Exhibit I. It is common ground that

the rent agreed to be paid under Exhibit I was not paid. For a portion of it a decree has been obtained and the other portion is outstanding. The

question is whether the first defendant can compel the plaintiff to pay this decree amount and balance of amount outstanding before redeeming the

A Schedule properties. One minor contention was raised by the learned Advocate-General in respect of the decree amount. He contended that as

the first defendant''s transferor had chosen to take a personal decree he must be deemed to have waived his right to charge the same upon the

property. I do not think that this contention is well-founded. Under Order XXXIV, Rule 14, notwithstanding that a decree has been obtained, it is

open to a mortgagee to claim a charge in respect of it by a separate suit, and I think that that right he can exercise by compelling the mortgagor to

pay it before redemption. One other question which was argued at some length need not be considered very minutely. That question was whether

Exhibits A and I form one transaction. It is a mixed question of fact and law. In the document Exhibit A, it is stated:

So that henceforth, you yourself may as you please effect Amarakam and all other things.

Thus it was left to the option of the mortgagee to grant a lease of the property to whomsoever he pleased. As was pointed out by the Judicial

Committee in Abdullah Khan v. Basharat Husain I.L.R.,(1913) All. 48 (P.C.) even if the lease had been provided for in Exhibit A itself, there

would be no question of accountability as between the mortgagor and the mortgagee. The same view was taken by the Board in Partab Bahadur

Singh v. Gajadhar Bakhsh Singh I.L.R.(1902) , All., 521. In Khuda Bakhsh v. Alim-un-nissa, I.L.R.,(1905) All., 313 , where the rent was made a

charge upon the property, it was held that the mortgagee cannot compel the mortgagor to pay it before redeeming the property. In the cases

quoted on the other side, the Courts construed the documents before them as simple mortgages. Madhwa Sidhanta Onahini Nidhi v.

Venkataramanjulu Naidu I.L.R(1903) . Mad., 662 Juggeewundas Keeka Shah v. Ramdas Brijbookundas (1841) 2 M.I.A., 487 and Vasudevan

Atisseripad v. Govinda Menon (1915) 2 L.W., 853. It may be open to argument whether those documents should not have been regarded as

usufructuary mortgages. But the decisions were based upon the view that they were simple mortgages. Therefore, those cases do not help the

appellant at all. As regards Altaf Ali Khan v. Lalta Prasad I.L.R.,(1897) All., 496 it is enough to say that in all the subsequent cases in that Court

this decision was regarded as having turned upon the particular facts of the case. Therefore, we start with this proposition that notwithstanding the

mortgagor is himself the lessee it is not a necessary presumption that the lease is a part of the transaction of the mortgage. Consequently, ordinarily

no question of the payment of the lease amount would arise before redeeming the mortgage. But in this case the question is complicated by the

assumption I have made that there is a second mortgage upon the property created by Exhibit I. This second mortgage must be regarded as a

simple mortgage. The further point to be considered is whether Exhibit A creates a usufructuary mortgage. Because if it is such a mortgage, then

u/s 62, Clause (b), of the Transfer of Property Act the mortgagor can by paying the principal money alone redeem it. There are two clauses in the

document which require attention, before pronouncing an opinion upon its nature. The first is where a provision is made for the payment of the

mortgage amount within six years. I do not think this provision is inconsistent with Exhibit A being regarded as a usufructuary mortgage. Under the

definition clause in Section 58, Sub-clause (d), where the mortgagor delivers possession and authorizes the mortgagee to retain such possession

until payment of the mortgage money, the mortgage will be regarded as usufructuary. If we turn to Section 62, Clause (b), we find it contemplates

a term being prescribed for the payment of the mortgage money. As was pointed out in the course of the argument, the fixing of the term is not

necessarily synonymous with covenanting to pay at a particular time. If we turn to the history of the legislation, it is clear that Section 58, Clause

(d), is modelled upon what is known as a Welsh mortgage. In a Welsh mortgage (see Fisher on Mortgages, Sections 10 to 12) there is a

conveyance to the creditor and there is a provision for the enjoyment of rents and profits by the mortgagee either until payment of interest and

principal or in lieu of interest. That is exactly what the Indian Legislature has provided for in the Transfer of Property Act, and as I understand the

document to have provided only for the payment of principal and interest within a particular time, there is no covenant for payment by this clause.

The document, in all its essentials, is a usufructuary mortgage. The words Vaddi boghyam are almost conclusive as to what the parties intended.

The same cannot so easily be said of another clause. That is in these terms:

And ourselves, our heirs, and our representatives, do stand liable along with the security of these mortgaged properties and other properties, and

shall discharge the amount of this document fully as per all the terms contained in this document.

Does this clause provide for a covenant to repay? In Coote on Mortgages, Volume I, page 120, the usual form of a covenant to repay is given

thus:

That in consideration of the sum advanced by the mortgagee or mortgagees, the receipt of which is acknowledged, the mortgagor covenants with

him or them for payment of the principal on a fixed day with interest in the meantime.

In the document in question there are no doubt words which say ""We shall discharge the amount of this document fully as per all the terms

contained in the document."" Whether that is only the explanation of the security clause or whether it should be construed as an independent

covenant to pay is a matter of some doubt. On the whole, I am inclined to the view that this is a usufructuary mortgage. In the pleadings, it has

throughout been assumed that this is a usufructuary mortgage, and no question was raised in the Court below that it should not be so regarded. The

words Vaddi bhoghyam are very strong and indicate that the parties intended to execute such a mortgage.

Even granting that this clause should be construed as a covenant to repay, I am not satisfied that the document as a whole should not be

regarded as a usufructuary mortgage. In Fisher on Mortgages, in dealing with Welsh mortgages, the law is thus stated in paragraph 12:

Although in an ordinary Welsh mortgage, there is usually no covenant for payment, yet the existence of an express covenant to pay the principal

and interest on demand is not inconsistent with a provision that the mortgagee shall hold until payment, nor does it affect such a provision so as to

lead to forfeiture, or to let in foreclosure.

Therefore, the existence of a clause like the one we find in Exhibit A is not inconsistent with the whole document being regarded as a

usufructuary mortgage. That would have been the construction placed upon a Welsh mortgage, and I fail to see why the same should not apply to a

usufructuary mortgage. After all what we have to see is whether the essential provisions of a document are such as to constitute it a deed of

usufructuary mortgage. A penal clause should not be construed as affecting the main character of the document.

The large number of cases quoted to show that where there is a covenant to repay in a usufructuary mortgage the document should be

construed as an anomalous mortgage, do not much help the solution of the problem. In those cases the question was whether a suit for sale would

lie at the instance of a usufructuary mortgagee. The learned Judges in almost every one of them held that the covenant for payment enabled the

mortgagee to sue for sale. They were not considering the question whether this clause would destroy the essential nature of the document. I do not,

therefore, refer to these-decisions.

Granting for a moment that Exhibit A should be regarded as an anomalous mortgage, the further question is whether the plaintiff should be

compelled to consolidate the amounts due under it and under Exhibit I. The right of redemption is given by Sections 60, 61 and 62, of the Transfer

of Property Act. Section 60 enables the mortgagor on payment or tender, at the proper time and place, of the mortgage money, to require the

mortgagee to deliver the mortgage deed and to deliver possession of the mortgaged property. This section has been construed to mean that there

should be no fractional redemption. But where the amount due on a particular mortgage is either tendered or paid the mortgagor''s right to demand

possession of the property is clear. Section 61, as I read it, secures a further right to the mortgagor. What it says is that a mortgagor should not be

compelled, in seeking to redeem one mortgage, to pay money due upon another mortgage, Notwithstanding, the contention of the learned

Advocate-General I am prepared to hold that the converse is implied in Section 61. If it is not a mortgage on property other than that comprised in

the mortgage, a mortgagee may ask that the money due to him upon the same property in respect of another mortgage should also be paid to him.

Apparently, this rule applies only to cases of mortgages of the same description. It was held in Tajjo Bibi v. Bhagwan Prasad I.L.R., (1894) All.,

295 by Sir John Edge, C.J., and Burkitt, J., that a mortgagee has no right to compel a mortgagor to consolidate a usufructuary and a simple

mortgage. Even if Exhibit A is regarded as an anomalous mortgage, and Exhibit I a simple mortgage, the principle of that decision would apply.

Upon the question as to what meaning should be attached to the word ''on property other than that comprised in the mortgage,'' I think it

unnecessary to express any opinion. I am inclined to think that it is a case of omission by the legislature to provide for cases where the whole or a

portion of the mortgaged property comprised in the first mortgage is added to in the second mortgage. Ganga Rai v. Kirtarath Rai I.L.R., 1911)

All., 893, relied on by the learned Advocate-General, seems on the facts to contemplate cases where the second mortgage comprised property

included in the first mortgage. But there is no clear judicial pronouncement on the question and therefore I am not prepared to regard it as any

authority. On the other hand, the opinion of Wright, J., stated with some hesitation, in In re Salmon Ex parte The Trustee [1903] 1 K.B., 147

suggests a different conclusion.

Section 62 deals solely with usufructuary mortgages. If Section 61 applies, the further question would be whether, when the equity of

redemption in both the mortgages has passed to a third party, he can be compelled to redeem both the mortgages. In England, it was held in Vint

v. Padget (1858) 2 De G. & J., 611 , that where the equity of redemption has passed to a stranger, he is bound by the same equities as the

mortgagor. This decision was followed in some later cases. However, very soon eminent Judges began to doubt the soundness of the rule

established in that case. Lord Watson in Jennings v. Jordan (1881) 6 App. Cas., 698 , says

The doctrine appears to me to have its root in equity. If A has separately mortgaged two estates to B, it seems to be just and reasonable that a

Court of equity should decline to aid A in redeeming one of these estates, except upon condition of his paying to B. The other mortgage debt,

which might be insufficiently secured. But the equitable character of the considerations which have led to the growth and the development of the

doctrine, as against purchasers of the mortgagor''s equity of redemption, is by no means so apparent.

In Menter v. Carr [1894] 3 Ch., 498, Lindley, L.J., stated that the rule subjecting the assignee of the equity to the same limitation as the

mortgagor is a harsh one and should not be extended by analogy. In Pledge v. Carr [1895] 1 Ch.; 51, Lord Herschell stated:

we cannot overrule Vint v. Padget (1858) 2 De G. & J., 611 for that was the decision of a Court co-ordinate in jurisdiction with ourselves.

The matter was taken to the House of Lords in Pledge v. White [1896] A.C., 187 . There can be no doubt from the judgment of the learned

Lords that they did not regard Vint v. Padget (1858) 2 De G. & J., 611 , as justifiable on principle. Lord Halsbury, the Chancellor said:

I confess I lament the conclusion to which it has been found necessary to come, although I believe the strict principle upon which it rests is founded

in our law at present, and in dealing with a technical system it is better to adhere to a principle when once established, than to create a greater

confusion by dissenting from it.

Lord Watson stated:

for my own part, I should have desired if possible to decide otherwise; but I am compelled to say that I concur with the reasoning and the

conclusions of my noble and learned friend.

Lord Davey, who delivered the leading judgment in the case, stated:

I am of opinion that the application of the doctrine of consolidation to a case like the present has been too long considered part of the equitable

jurisprudence of this country to be altered at the present time, and it is not so unreasonable as to demand a reversal of it by this House.

More recently, Mr. Justice Neville stated in Sharp v. Rickards [1909] 1 Ch., 109 :

I do not think that the case of Vint v. Padget (1858) 2 De G. & J., 611 , has any general application. It stands on a very peculiar footing. It was

upheld in Pledge v. White [1896] A.C., 187, but it appears from the judgment of Lord Davey that this was only because it had stood so long that

the House of Lords thought it might do harm to reverse it, not because they approved any principle which it established.

While such is the view held in England, is there any justification for importing such a technical rule of law into this country. If we examine the

course of development which the English and the Indian law has undergone on this question, it will be clear that the principle of Vint v. Padget

(1858) 2 De G. & J., 611, should not be extended to India. In England the right of redemption itself was regarded as an equitable right, because

there was a conveyance to the mortgagee which vested the property in him. Before his legal ownership is displaced, a conveyance is necessary.

Having regard to this view of the rights of the mortgagor and mortgagee, it was first held that a mortgagor may be compelled to redeem all the

mortgages he had executed to the same mortgagee, whether it be on the same or on different properties.

The cases base this right on the well known principle that he who seeks equity must do equity. In one case it was stated that a mortgagee had a

right to consolidate because by allowing the redemption of any one mortgage his securities in respect of others may be impaired. This principle was

found to be irreconcilable with the theory that there should be no clog on the equity of redemption. Gradually, eminent Judges leaned to the view

that consolidation of mortgages on different properties should be discouraged. The legislature stepped in and by Section 17 of the Conveyancing

Act restricted the right of consolidation to mortgages on the same property. Before the intervention of the legislature, cases like that of Vint v.

Padget (1858) 2 De. G. & J., 611, extended the obligation to assignees of the equity of redemption. Therefore, it was held by the House of Lords

that the principle of stare decisis should be applied to this class of cases.

Now, what do we find in this country? Here, the mortgagee is not the legal owner of the property. In the majority of cases, there is no

conveyance to him. The Regulations before the Transfer of Property Act did not recognize the legal ownership of the mortgagee. The common law

of the country, apart from legislation, regarded the mortgaged property as a bare security. The vernacular expressions denoting mortgages connote

a pledge and no more. Therefore, the right of redemption is and has been a legal right in India. There is no question of the mortgagor being

required to do equity. Consequently, it would ordinarily be a denial of an undoubted right to compel the mortgagor to redeem other mortgages. Of

course, if the legislature has so prescribed, considerations based on prescriptory rights can have no bearing on the subject. From what I have

stated above, it must be clear that whereas in England gradually the right of consolidation is being curtailed, as being inconsistent with the theory

that no clog should be placed on the right of redemption, we would be enlarging in this country the right to consolidate which is purely the creature

of the legislature. Bearing these facts in mind, I find no reason for importing the rule of Vint v. Padget (1858) 2 De G. & J., 611, into India. Section

61 only speaks of the mortgagor and the mortgagee. In my opinion, whatever may be the rights of the mortgagee to compel the mortgagor to

consolidate mortgages upon the same property before redemption, the rule is not applicable against persons who are the purchasers of the equity

of redemption. In the present case, neither the mortgagor nor the mortgagee are before the Court. In both cases we have the transferees. I would

therefore hold that the first defendant cannot compel the plaintiff to pay the amount due under Exhibit I before he is allowed to redeem the property

comprised in Exhibit A. Before we finally dispose of this case, there must be findings on the two points indicated by me. [Their Lordships

accordingly called for findings from the lower Court on receipt of which the High Court passed a final judgment on 19th April 1920.]