Puthanpurayil Nittookandi Kappalli Krishna Kurup and Another vs Kottikollon Mammad and Others

Pandalai, J.—This second appeal arises from a suit to recover by sale of the mortgaged property and from defendant 1 personally Rs. 747-

10-4 made up of Rs. 600, the principal due on a mortgage and Rs. 147-10-4, arrears of rent with interest thereon due under a contemporaneous

counterpart of a lease (marupat) both executed by defendant 1 to the plaintiffs'' predecessor-in-title. The defendants'' chief contentions were: (1)

that the personal remedy was barred by limitation, which both the lower Courts upheld and which is no longer in question, and (2) that the claim is

barred by Order 2, Rule 2, Civil P.C., which both Courts overruled and which the defendants press again in this second appeal.

The mortgage Ex. A is a usufructuary mortgage dated 6th March 1915 for Rs. 600 of the mortgagor''s kanom kuzhikanom interest in three

gardens held under a jenmi. It provided for three years'' possession by the mortgagee during which he was to pay the jenmi''s michavaram and

obtain receipts and appropriate the balance of the income in lieu of interest at 6 per cent on the principal. After the period of three years the

mortgagee was to receive Rs. 600 and surrender the property. If the mortgagor failed to redeem at the end of the period, the mortgagee could

continue in possession till he was paid off paying the jenmi''s michavaram and appropriating the balance for interest on the principal amount. If the

mortgagee was unwilling to continue in possession as above, he was given the right to realize the mortgage amount by bringing to sale the

mortgagor''s rights over the property and the mortgagor bound himself to personally pay any balance left unrealized by the sale.

It will be noticed that there is no covenant by the mortgagor to pay interest as such either during the period of three years or after. The only

method by which the mortgagee could get any interest is by taking possession and appropriating the balance of the income after payment of the

jenmi''s michavaram. By an arrangement very common in Malabar where the cultivator especially of cocoanut gardens clings with great attachment

to possession so as to keep the trees he has planted under his own eye and not hand them over to another whose interest in them is only temporary

and mercenary, the mortgagor on the same day as the mortgage, 6th March 1915, took back the possession given under the mortgage by Ex. B

called a ""marupat"" which means counterpart of a lease. Ex. B states that the mortgagor has taken back the possession of the property to be held

on pattom (lease) for three years. The lessee binds himself to hold this property for three years at an annual rent of Rs. 64 out of which he agreed

to pay Rs. 28 to the jenmi as michavaram and hand over the receipts to the lessor and also pay the remainder of Rs. 36 to the lessor as interest on

the mortgage amount and obtain the lessor''s receipts for the payments. Ex. B also provides that if the rent remains in arrears it is to bear interest at

12 per cent per annum and also that arrears of rent should be a charge on the equity of redemption.

It is admitted that both documents were parts of the same transaction in the sense that they were brought into existence by an arrangement made

at the same time for a common purpose. The mortgagor has remained in possession ever since the mortgage and lease. As he fell into arrears of

the rent provided in Ex. B, the mortgagee brought a suit O. S. No. 435 of 1923 and obtained a decree. This suit was brought in 1926 for Rs. 600

due under Ex. A and for subsequent arrears due under Ex. B.

The appellants'' (defendants) contention is that on the date of the former suit in 1923 the plaintiff had the right to sue for the principal under Ex.

A; that the payments under Ex. B are really and substantially for interest, and that as the plaintiff failed to sue for the principal in the former suit after

it became due, the present suit for it is barred Under Order 2, Rule 2, as it is a claim arising on the same cause of action as that on which the

former suit was founded. Both the lower Courts have overruled this contention.

The principle on which cases of this class fall to be decided was explained by the Privy Council in Kishen Narain v. Pala Mal AIR l922 P.C.

412:

If a mortgage deed provides for the payment of principal and interest as independent obligations, Order 2, Rule 2, Civil P. C., does not preclude

the mortgagee from suing to recover the principal by reason of his having previously sued for a personal decree for the interest due. But in the case

of a mortgage deed which upon a default in the payment of interest gives the mortgagee the right to realise both the principal and interest, if, upon

such a default occurring, the mortgagee sues to realize the interest from the property, the rule above referred to precludes him from afterwards

suing to realise the principal due, even if by his plaint in the first suit he has purported to reserve the right to do so.

In that case and in Muhammad Hafiz v. Muhammad Zakariya AIR 1922 P.C. 23, the mortgages were simple mortgages containing default

clauses giving the mortgagee the right to sue for the principal on default of payment of interest on the stipulated dates. Even in such cases, if

according to the deed there are independent obligations for the payment of principal and interest, the mortgagee is not debarred by Order 2, Rule

2, by suing for a personal decree for interest alone from suing subsequently for the principal. The question in such cases therefore does not depend

on whether the agreement for interest and principal is expressed in one or more documents or whether the documents, if more than one, all arose

out of one transaction. The document or documents must be examined to see whether the obligation on which the former suit for interest was

based was independent of that on which the subsequent suit is brought.

In this case the obligation to pay principal and that to pay rent, which was the equivalent of interest, arose independently of each other. The

mortgage being usufructuary, in the absence of a special covenant to pay, there would ordinarily be no personal obligation on the mortgagor''s part

to repay the principal, nor would the mortgagee be entitled to sue for sale. The plaintiffs'' right in this case to sue for sale for the principal is entirely

due to the special covenant to that effect in the mortgage deed. As for interest, the mortgage deed does not provide at all for it, because the

mortgage being usufructuary, the mortgagee was to be in possession and appropriate the income in lieu of interest. The defendants'' obligation to

pay the income arose entirely out of the lease back by which he engaged to hold the property as lessee and his payments under the lease are legally

payments of rent. Neither the fact that these payments if made would be appropriated by the lessor-mortgagee towards interest for which as such

the mortgage did not provide, nor the fact that if the payments were not made, they would be charged on the equity of redemption, can change the

legal character of the payments. There is no provision in either of the two documents making the right of the mortgagee to sue for the principal

depend in any manner on the failure of the mortgagor-lessee to pay the rents regularly. It cannot be doubted that after the expiry of the three years

of the lease, the plaintiff was entitled to take back possession even if the rents were being regularly paid, and to enjoy the property either by himself

or through another lessee; nor can it be doubted that after the three years the plaintiff would be entitled to sue for sale and realize the principal even

if the plaintiff had taken back possession and there could therefore be no question of the defendants being in default of rent. These considerations

show that the former suit was brought on an obligation or cause of action with which the right of suit for the mortgage money had no legal

connexion and that the present suit, so far as it is for principal is founded on the right of suit provided by the mortgage deed and so far as it is for

rent for a period subsequent to the old suit on the lease. Neither of these claims can be said to be included in the cause of action for the old suit

which was for rent till then due.

The above is supported by the decision in Muhammad Hussain v. Abdul Ghafur Khan AIR 1922 Lah. 111 in which the facts were similar. To

the same effect is Ralia Ram v. Amir Chand AIR 1923 Lah. 203. In both these cases it was held that the institution of the former suit based on the

lease was no bar to a subsequent suit based on the mortgage and the observations in Madhwa Siddhanta v. Venkataramanujulu Naidu [1903] 26

Mad. 662 were distinguished. In the latter case there was a usufructuary mortgage and a lease back. The mortgage provided for repayment at the

rate of Rs. 65-10-0 per month, made up of Rs. 35 for principal and Rs. 30-10-0 for interest at 14 annas per cent. The mortgagee was to pay

himself the interest at the above rate by letting out the property and if the rents derived fell short the mortgagors bound themselves to pay the

deficiency every month.

The mortgage deed also provided for compound interest on the monthly payments in arrears. By the lease back of even date the mortgagors

took back the property as tenants at a rent of Rs. 30-10-0 per month agreeing to pay compound interest on rent in arrears at the rate mentioned in

the mortgage deed and also agreeing to surrender possession of the property on 30 days'' notice. The mortgagors made some payments but fell

into arrears and remained in possession when the suit was brought for the recovery of the principal amount and interest at the agreed rate.

Boddam, J., on the original side, dismissed the suit holding that the mortgage was a purely usufructuary one which did not give the plaintiff the right

of suing either for principal or for interest and that the plaintiff having been given legal possession under the mortgage and let out the property to the

mortgagors as tenants had only himself to thank if he did not recover possession from his tenants. In appeal a Bench of three Judgee held that the

mortgage and the lease back should ha read together to determine the rights of the parties, and so read the mortgage did contain a covenant to pay

principal find interest in instalments and also conferred a power on the mortgagee to take possession of the mortgaged property and apply the

usufruct in the discharge of interest and principal.

They therefore awarded the plaintiff a decree. That decision was not concerned with the effect of Order 2, Rule 2, but only with the

construction of the mortgage then in question. It is only an application of the rule that where there are several contemporaneous documents

evidencing a transaction, they must all be read together for determining the rights of the parties. In this connexion reference may be made to

Ramarayanimgar v. Maharaja of Venkatagiri AIR 1921 Mad. 183, where in a case of a usufructuary mortgage and lease back, where the lease

contained a clause making the arrears of rent a charge on the mortgaged and other property, it was held that the rights under the mortgage and

those under the lease are so far distinct from each other as to entitle the mortgagor to redeem the mortgage on payment of the principal sum due on

the mortgage deed without at the same time having to pay the arrears of rent though charged on the equity of redemption. That would seem to

supply the test whether the two obligations are one or independent so as to constitute the same or different causes of action. If in this case the

defendant mortgagor is, as he appears to be, entitled to redeem the plaintiff''s mortgage and to recover possession on payment of Rs. 600 without

having at the same time to pay whatever arrears of rent may be due by him though charged on the equity of redemption (for which latter amount

the plaintiff''s remedy would be by a separate suit) it is impossible to contend that the plaintiff''s old suit on the lease can operate as a bar Under

Order 2, Rule 2, to the present one.

The appellant however referred to two later cases from Lahore, viz., Rala Ram v. Diwan Chand, AIR 1921 Lah. 225, and Diwan Chand v.

Ralla Ram, AIR 1926 Lah. 559. In the latter case the usufructuary mortgage dated 29th April 1914 was for Rs. 1,000 for a term of 18 months

and the lease back of the same date was for a period of 11 months for a monthly rent of Rs. 4. In June 1917 the mortgagor being still in possession

as tenant the mortgagee brought a suit for Rs. 120 claimed as arrears of rent. Only Rs. 4 was decreed, the rest of the suit being dismissed on the

ground that the tenancy had expired at the end of 11 months. In May 1919 the mortgagee brought a suit for Rs. 1,256 being the principal amount

of Rs. 1,000 and the balance claimed as arrears of interest. That suit was dismissed as barred Under Order 2, Rule 2, a decision which was

upheld by the Lahore High Court in February 1921. Then the mortgagee brought a third suit claiming possession and the question was whether the

suit for possession was affected by Order 2, Rule 2, and it was held that it was. That is not the present question which is whether the mortgagee''s

second suit in that case for money was so affected. All that the cited decision says about that matter is that the ground of decision was that the two

deeds should be read together. This is of no help to us in deciding the present case. We are not prepared to follow the other decision cited as it

does not appear to give sufficient weight to the consideration whether though forming parts of the same transaction the obligation under the

mortgage and the obligation under the lease are, having regard to the intention of the parties, to be treated as independent. If so, the fact that they

arose out of the same transaction would not attract the bar Under Order 2, Rule 2: see Saminathan v. Palaniappa [1914] 41 I.A. 142, where the

Privy Council said that the rule is directed to securing the exhaustion of the relief in respect of a cause of action and not to the inclusion in one and

the same action of different causes of action even though they arise from the same transaction.

In this case we have no doubt that the arrangement whereby the mortgagor was to remain in possession as lessee under the mortgagee was

one intended to benefit the mortgagor himself and the agreement to pay rent was therefore as much in his own interest as in that of the mortgager.

The attempt to make use of Order 2, Rule 2 in this connexion is to convert what was intended as a shield into a sword.

The second appeal fails and is dismissed with costs.