Radhakishun Chamaria vs Zalim Singh

Dawson Miller, C.J.—This is an application in revision asking to set aside an order of the Subordinate Judge of Patna, dated the 2nd May 1924. The petitioner is the decree-holder in a mortgage suit. The opposite party, Zalim Singh, is one of five defendants in the suit who represent the original mortgagor. They did not defend the suit and judgment was pronounced against them ex-parte. There were two other defendants who were interested in part of the mortgaged property and who appeared and claimed certain priorities with respect to that property. Having failed in their defence as to one of the properties they appealed to the High Court where they were successful. The decree with regard to that portion of the property was accordingly modified but in other respects it was affirmed. The amount found due under the preliminary decree not having been paid within the period of grace allowed, the final decree was passed on the 14th September 1921 and the mortgaged property was ordered to be sold. When the petitioner proceeded to obtain execution of his decree the opposite party applied to the Subordinate Judge for amendment of both the preliminary and final decrees partly on the ground of clerical or arithmetical mistakes in the decrees and partly on the ground that the decrees did not carry out the directions in the judgment. Three points were taken before the Subordinate Judge, (1) that owing to a miscalculation in the schedule to the plaint an excessive amount of interest had been claimed and that this mistake had been reproduced in the decree with the result that the total balance claimed as due for principal and interest at the date of the suit was more than the plaintiff was entitled to, (2) that interest pendente lite had been awarded by judgment, and, (3) that interest at 6 per cent. upon the amount found due had been awarded by the decree from the expiry of the days of grace until realisation whereas on the true construction of the judgment no such interest had been allowed.

With regard to the first point it is admitted by Mr. Hasan Imam on behalf of the petitioner that an arithmetical mistake has crept into the preliminary decree but has pointed out that although in the item in question one year''s interest has been calculated in excess of that due, in the next item one year''s interest too little has been calculated and that there are other slight mistakes elsewhere. In these circumstances the parties have agreed that the decree shall be amended by making a proper calculation which has been done. In the result it is agreed that the balance due to the plaintiff for principal and interest at the date of the institution of the suit is Rs. 12,663-8-5 instead of Rs. 14,451 as stated in the plaint and in the decree. The costs will also be reduced proportionately.

With regard to the second and third points it becomes necessary to consider what directions were given in the judgment and whether the decrees as drawn up properly represent the effect of the judgment pronounced. First it is necessary to bear in mind that the plaintiff in his plaint claimed that an account be prepared of the principal amount and interest due under the mortgage bond and that a mortgage decree be passed for Rs. 14,451, besides costs and future interest till the day of realisation at the rate of interest entered in the bond. The material part of the judgment in which the plaintiff''s suit was decreed is as follows:

"Hence it is ordered that the suit be decreed with costs. There will be an ex parte decree against the absent defendants. Defendants to pay up the decretal amount within six months. In default the mortgaged property will be sold subject to the incumbrance mentioned above. As the interest has swelled to an abnormal amount I do not allow future interest at the bond rate. Interest at 6 per cent. per annum from this date till the date of payment." The preliminary decree as drawn up in pursuance of that judgment was, in so far as it is material, as follows:

"It is ordered and decreed that the suit be decreed with costs and that ex parte decree be passed as against the absent defendants, that the absent defendants should pay the decretal amount within six months and that in case of non-payment the mortgaged properties entered in Schedule 2 be sold at auction and as the interest has accumulated to a very great amount so future interest has not been awarded at the rate entered in the bond. Future interest may be calculated from this day to the date of realisation at the rate of 6 per cent. per annum, and as per bond Rs. 3,467 may be awarded to the plaintiff as pendente lite interest and that the sum of Rs. 1,247-2-6 be paid by the defendants to the plaintiff on account of the costs of this suit with interest thereon at the rate of 6 per cent. per annum from the date to the date of realisation." The pendente lite interest mentioned in the decree is interest at the bond rate from the institution of the suit to the date of the decree. The final decree passed in September 1921, after reciting that the decretal amount has not been paid within the period of grace and ordering the mortgaged properties to be sold and the money brought into Court, further orders "that the plaintiff do get Rs. 19,165-2-6 payable under the said preliminary decree with Rs. 25-7-3 as costs in this case as detailed below and also interest up to the date of realisation at the rate of 6 per cent. mentioned in the aforesaid decree and the costs including costs of this application be given to the plaintiff." It was contended that interest at the bond rate between the date of the institution of the suit and the date of the decree ought not to have been allowed in the decree as there was no specific direction in the judgment that any interest for that period should be awarded. It was further contended that although the judgment allowed interest at 6 per cent. per annum from the date thereof until the date of payment this must be taken to mean interest only up to the date ordered for payment, that is up to the expiry of days of grace, and that the preliminary decree and the final decree were both inaccurate in allowing interest at 6 per cent. from the date ordered for payment up to the date of actual realisation. The learned Subordinate Judge considered that his predecessor by whom the judgment had been delivered had not allowed any interest pendente lite and that this ought not to have been awarded in the decree. He also considered that the learned Judge in using the words "date of payment" meant not date of realisation but the date fixed for payment that is when the days of grace expired, and ordered the decrees to be amended accordingly. He relied upon the case of Tikait Krishna Prasad v. Surendra Mohan Kundu (1920) 5 Pat. L.J. 598 for the proposition that such words as "date of payment" or "date of realisation" used in a preliminary decree in a mortgage suit as the termination of the period for which interest is awarded must mean the date ordered for payment. The learned Judge does not appear, however, to have considered how this restricted meaning came to be applied to such expressions in a preliminary decree in a mortgage suit nor does he appear to have considered the effect of the provisions of Order 34 of the Civil Procedure Code'' which superseded the provisions of Sections 86 to 90 of the Transfer of Property Act and which laid down rules to be followed by the Court in drawing up mortgage decrees. According to the law in force when these sections of the Transfer of Property Act were applicable it was provided with regard to mortgage suits that in a suit for sale if the plaintiff succeeds the Court shall pass a decree to the effect mentioned in the first and second paragraphs of Section 86 and also ordering that in default of the defendant paying as therein mentioned the mortgaged property or a sufficient part thereof should be sold and applied in payment of the amount found due. Now Section 86 shows the nature of the decree which the Court shall pass if the plaintiff succeeds and provides that such decree shall order that an account be taken of what will be due to the plaintiff for principal and interest on the mortgage and for his coats of the suit, if any, awarded to him on the day fixed for payment or declaring the amount so duo at the date of such decree and nothing is said about any future interest after the period of grace has expired. The Court may have had discretion in awarding interest after the expiry of the days of grace but it is clear from the section that unless a special order was made to that effect in the judgment such interest could not be awarded by the decree. Order 34 of the CPC Rules 2 and 4 show nature of the preliminary decree which must now be passed. Under those rules whore in a suit for sale the plaintiff succeeds the Court shall pass a decree either ordering an account to be taken of what will be due to the plaintiff for principal and interest on the mortgage and for his costs, if any, awarded to him up to the expiry of the days of grace or must pass a decree declaring the amount so due and further the decree must direct that in default of payment within the period of grace the mortgaged property be sold and the proceeds after defraying expenses of the sale applied in payment of what is declared due to the plaintiff as aforesaid together with subsequent costs. The reason why the Courts held under the old law that directions in the preliminary decree awarding interest up to the date of realisation or the date of payment must be taken to mean upon the day fixed for payment was because the sections of the Transfer of Property Act directed that the decree should award interest only upto that date. Under the present law, however, Order 34, Rules 2 and 4 provide that the decree shall direct not only payment of the principal and interest on the mortgage up to the expiry of the days of grace but also payment of subsequent interest, that is to say interest up to the date when the property is sold and the claim realised. In the present case the judgment ordered that the suit be decreed with costs and had it ended there that would, in my opinion have been sufficient to enable a decree to be drawn up awarding the plaintiff the amount found duo for principal and interest at the bond rate up to the expiry of the days of grace. With regard to future interest after that date the matter lies in the discretion of the Court although it is usual to allow interest until actual realisation at 6 per cent. but in the absence of any express direction such interest would not be entered in the decree. In the present instance the learned Judge, exercising his discretion refused by his judgment to allow interest at the bond rate between the date of his decree and the expiry of the days of grace and ordered interest only at 6 per cent. per annum from the date of his decree till the date of payment. He was clearly entitled under the rules to order interest at 6 per cent. from the expiry of the days of grace until actual payment and in using the expression "day of payment" I have no doubt that he meant what he said and intended that interest should run at 6 per cent. until the date of actual payment and not merely, as would be presumed under the old law, up to the day fixed for payment. With regard to the interest which has been referred to as interest pendente lite that is between the date of institution of the suit and the date of the decree, the plaintiff having succeeded in the suit was entitled to interest at the rate and, in my opinion, the decree in such circumstances was properly drawn up allowing such interest even without any special order to that effect in the judgment. It may even be doubted whether under the rules as they now stand the learned Judge was entitled to reduce the rate of interest between the date of the decree and the expiry of the days of grace from the date stipulated in the bond to six per cent. as he did, but as no question was raised about this on behalf of the plaintiff either by appeal or otherwise the matter is not one with which we are concerned. In my opinion except as to the first point which has now been agreed between the parties the learned Judge was wrong in amending the decree.

The question was raised whether we were entitled under our powers of revision or otherwise to interfere with the order of the learned Subordinate Judge. The learned Judge in acting as he did purported to act under Sections 151 to 153 of the Civil Procedure Code. If he was entitled under those sections to set the matter wrong it seems to me that we are equally entitled under the same sections to set it right. The order of the learned Judge will be set aside and the decrees as originally drawn will be restored subject to the correction of the mistakes in calculation of the amount due at the date of the institution of the suit. The petitioner is entitled to his costs here and before the Subordinate Judge.

Mullick, J.

I agree. It is now settled that in a mortgage suit the plaintiff is entitled to interest at the bond rate from the date of the suit till the date fixed for payment unless the Court for any special reason thinks fit to reduce the interest during this period. It is also settled that on default the decree-holder is entitled to the Court rate of interest from the date fixed for payment till the date of actual realisation. In the present case we are bound, if possible, to construe the judgment of the 20th April 1916 on the assumption that the Court intended to comply with the law, and, therefore, I think it would be right to hold that the expression "future interest" in the judgment means interest from the date of the decree and that the words "date of payment" mean the date of actual realisation.

With regard to interest between the date of the suit and the date of the judgment, it is true that there is no express order; but I think the order is implied in the opening words of the judgment which are "hence it is ordered that the suit be decreed with costs." This means that the suit as laid in the plaint is decreed with costs. If the judgment had ended there the plaintiff would have been entitled to charge interest and compound interest till the date of actual realisation; but the judgment proceeds to restrict the claim in regard to interest by the subsequent directions which have been noticed above. Whether the Court was right in reducing the interest from the date of the judgment till the date fixed for payment is a point which has not been argued before us. All that we are called upon to decide is whether the Court intended to give interest pendente lite at the bond rate, and I think the answer is in the affirmative. The final decree therefore allowing interest at the bond rate up to the date of the judgment and at 6 per cent. from the date of the judgment till the date fixed for payment is in full conformity with the judgment. Similarly with regard to interest at 6 per cent. from the date fixed for payment till the date of actual realisation, there is no variance between the judgment and the decree.