Sago Rai and Others vs Ramjee Singh and Others

Rowland, J.—This is an appeal by defendants 1 and 2 in a mortgage suit brought to recover Rs. 1258-12-9 principal and interest on the basis of a mortgage bond executed by the father of these two defendants for a principal sum of Rs. 600. The Munsif decreed the suit in part after allowing credit among other items to a payment of Rs. 375 made on 15th Baisakh 1337 F. and proved by oral evidence and by a receipt Ex. A which the Munsif found in spite of the denial of the plaintiff to have been granted by plaintiff 3 Ramdhani Singh in the name of plaintiff 2 Ramji Singh. In appeal the Subordinate Judge, while accepting the finding of the Munsif that this payment was in fact made, held that it was not open to the defendants to plead and prove, it in this suit, because of a stipulation in the bond that all payments are to be endorsed on the back of the bond and no other payments recognized unless so endorsed. The Subordinate Judge relied on the decision of this Court in Khub Lal Chaudhuri and Others Vs. Bechan Mandal and Others, , in the course of which the following observation occur:

In short there is an express term in this mortgage that payment towards either principal or interest could only be made in a certain way, and unless endorsed on the mortgage it should not be regarded as a payment at all. In these circumstances, is it open to the mortgagor to attempt to prove discharge or satisfaction in any other manner? As long as this term remains payment can only be-proved by endorsements on the mortgage bond.

In second appeal, it is pointed out that the learned Chief Justice and Fazl Ali, J., who decided that appeal had before them a case differing in its facts from the one before me. No doubt the stipulation in the mortgage bond was similar to that in the bond the effect of which I have to consider, but the transaction which the defendant set up as a defence to the suit, was one of a very different nature from that pleaded before me. It was that instead of requiring payment in cash of the balance due made the decree in pursuance of which the property was put up for sale, the mortgagee agreed with defendant 1 that in consideration of the latter not paying the balance of the decree or bidding at the sale but allowing property worth Rs. 1500 to be sold to a benamidar of the plaintiff for Rupees 70 the plaintiff on this part agreed that such conduct on the part of defendant 1 should be regarded as a complete discharge of the mortgage. It was held that evidence to prove this was inadmissible by reason of Section 92, Evidence Act. It is hardly easy to imagine any different result following from the facts of that case. Defendant 1 had set up a verbal agreement to modify and vary the terms of the written and registered document of mortgage, a document required by law to be registered. The Court had not before it a case of alleged payment in cash. More recently a Single Judge of this Court dealt with a case the facts of which bear a closer analogy to those of the case before me in Ram Kirpal Choudhury and Others Vs. Baleswar Choudhury and Others, . There, as here, the defendant had pleaded part payment of the mortgage debt, made in cash and evidenced by a receipt signed by and bearing the thumb impression of one of the plaintiffs. The point taken was that on a stipulation analogous to that in the bond before me it was not open to the defendants to rely on evidence other than endorsements on the mortgage bond in proof of payments. Khub Lal Chaudhuri and Others Vs. Bechan Mandal and Others, was distinguished on the facts, and it was pointed out that the former case had not abrogated but expressly recognized the principle that:

It is always open to a mortgagor to prove that On a certain day he paid the sum due under the mortgage. Such is not evidence of a subsequent oral agreement varying the terms of the mortgage.

Agarwala, J. held that the receipt constituted a valid discharge of the debt to the extent of the amount paid. The earliest case in which I can find the contention raised that no evidence of payment except an endorsement on the back of the bond can be admitted is Ramlal Chandra v. Gobind Karmokar (1900) C.W.N. 304, It was the second plea raised by the appellants in that appeal. All that the Judges said about it was: "The appellant''s second plea does not seem to require refutation." In that case the exact terms of the bond were not set forth and the principle on which the decision rested was not explained.

At the hearing before us, Section 63, Contract Act, was referred to and contrasted with Section 62. It is said that what was set up in Khub Lal Chaudhuri and Others Vs. Bechan Mandal and Others, , was an agreement within the terms of Section 62, Contract Act, to substitute a new contract for an existing one or to rescind or alter the existing one. Now such an agreement is clearly within the terms of Section 92, Evidence Act, and cannot be proved by anything other than a registered document. On the other hand cases which fall within Section 63, Contract Act, are not agreements varying the original terms or substituting a new contract. In these eases Section 92, Evidence Act, has no application. Section 63, Contract Act, provides that every promise may dispense with or remit, wholly or in part, the performance of the promise made to him or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit. Judicial decisions have distinguished a promise to accept a different kind of satisfaction in the future, that is to say a new agreement within the meaning of Section 62 from the actual remission or dispensing with a part of what was promised, that being within Section 68. Thus in Collector of Etah Vs. Kishori Lal and Another Section 68, Contract Act, was referred to and it was said:

In the case of a satisfaction of the debt or remission of a part of the debt there is no contradicting or varying, or adding to, or subtracting from the terms of the contract, and oral evidence may be adduced to prove the payment of a part of the debt and remission of the balance.

Similarly in Balasundara Naicker and Another Vs. Ranganatha Aiyar and Others, it was said:

What Section 63, Contract Act, permits is not an agreement to remit but an actual remission. That is, when a portion of the sum is paid, the creditor may say, "I do not want the rest. You need not pay any more" Looked at from this point of view, we think that Section 92(4) does not touch any act of a creditor which extinguishes a debt by taking a smaller sum of money.

These cases are distinguishable from the Bombay case in Jagannath v. Shanker AIR 1920 Bom. 115 in which a defendant sought to prove that by an agreement entered into beforehand the mortgagee had promised that if Rs. 800 were paid to him he could give a discharge for the entire mortgage debt of Rs. 2000. It seems clear (although the matter was not put in that way by the Bombay Judges) that what the defendant pleaded would have been a novation of contract coming within Section 62. The result of a promise dispensing in whole or part with the performance of a contract has been considered in Chunna Mai Ram Nath v. Moolchand Ram Bhagat AIR 1928 P.C. 99. It was held that the appellants, who had dispensed with the performance by the respondents of a certain promise, could not recover damages for the breach of a promise touching the performance of a thing they wholly dispensed with.

Now I will state more precisely the facts before me. The stipulation in the mortgage bond was to this effect:

When I shall pay any kist I shall get the payment endorsed on the back of the bond. Except such endorsement on the back of the bond any other receipt or oral or documentary evidence regarding payment will not be entertainable in Court and will be null and void.

The receipt Ex. A is to this effect. "Realized on 15th Baisakh 1337 F. in respect of the instalment bond dated 5th May 1925 through Jagdeo Rai Rs. 375 received." It was no doubt open to the mortgagee to refuse to appropriate towards the mortgage debt any payment which might be made by his debtor and not endorsed on the mortgage bond, but assuming that the creditor had the option of appropriating this sum of Rs. 375 to some other account, even let us say, of treating it as a separate advance by the debtor to himself, what on the face of the receipt has actually been done? The condition that the creditor need not appropriate it to the mortgage debt has on the face of the receipt been waived by the creditor himself, for the receipt shows in the clearest possible terms that the creditor has in fact appropriated the payment to the mortgage debt, notwithstanding that he has in bond reserved himself power not to do so. In my opinion, there was waiver of this stipulation in the mortgage bond when the mortgagee appropriated the payment in question as a part satisfaction of the mortgage debt. But it is urged for the respondents, there has been no waiver of the promise that evidence other than en-dorsement shall not be entertainable in Court. Let us see what the promise was. The mortgagor undertook, (a) that he should not offer any other evidence, (b) that if he did the Court should not receive it. To the latter promise the Court was not a party and is not bound by it. If evidence is tendered what the Court is to see is whether it is admissible under the Evidence Act and not whether in tendering it some breach of contract has been committed. If in tendering the evidence the mortgagor has committed a breach of his undertaking the plaintiffs remedy is to sue for damages for the breach, if he has the hardihood to do so.

With respect I am of opinion that Ram Kirpal Choudhury and Others Vs. Baleswar Choudhury and Others, , was correctly decided by Agarwala, J., and the appeal must succeed. The appeal will be allowed, the decision of the lower appellate Court set aside and that of the Munsif restored. The costs of appeal to the District Judge and to this Court will be borne by the plaintiffs. Leave to appeal under the Letters Patent is granted.