Soodamani Pattar and Others vs Somasundara Mudaliar and Others

This appeal arises from a suit brought by plaintiffs to recover possession of certain land with arrears of rent due thereon from 1888 to 1890 and

interest at 12 per annum on those arrears and with mesne profits from date of the plaint. The and in question belongs to defendants. On the 27th

July 1887, they mortgaged it to plaintiff''s family with possession for a period of 12 years for Rs. 14,000. On the 29th idem defendants took it

back under a lease of which Exhibit A is the counterpart, the contest in the suit related to three matters, viz., (1) to plaintiff''s right to cancel the

lease and to claim possession, (2) to. defendants'' right to pay rent in cash at the rate mentioned therein and (3) to three items in the account

claimed by plaintiffs from defendants on the footing of the mortgage and the lease.

As to the first, the District. Judge of Coimbatore recognized plaintiffs'' right to resume possession; as for the second he held that defendants

were entitled to pay rent in money at the rate mentioned in document A, and as regards the third he was of opinion that from the money rent for

three years, viz Rs. 7,200, the three amounts mentioned in the original decree ought to be deducted.

It is contended on behalf of appellant that the decision of the judge is wrong as to the 2nd and 3rd (sic) in contest whilst u/s 561 respondents

object to it so far as it upholds plaintiffs'' claim to resume possession.

The 1st question which we have to determine in this appeal is as to plaintiffs'' right to insist on payment of rent in paddy or its marked value at

the rate of Rs. 5 per salagai of paddy, we are of opinion that defendants are bound, both by the terms of the mortgage and of the lease, to deliver

the stipulated quantity of paddy as rent every year. In the instrument of mortgage B, the material words are ""you are to take the profits of the land

in lieu of interest and Sircar azan and Local Fund cesses payable every year,"" and they disclose an intention to assign the usufruct in consideration

to plaintiffs'' right to interest on the mortgage debt and of the other charges which they undertook to pay. This is also the intention which the nature

of the transaction as an usufructuary mortgage implies. Moreover, Exhibit B, reserves a right to defendants to make payments on account of the

principal before the expiration of 12 years, the period fixed for the redemption of the mortgage. In anticipation of payments in the exercise of such

right, the instrument provides as follow, with reference to the counter interest due thereon: "" we shall take from you at the end of every year paddy

at the rate of three salagais per 100 per annum."" This provision for payment of paddy for counter-interest shows that it was the intention that

neither party should have an advantage, over the other and that both alike should give and take paddy in lieu of interest and counter interest.

Turning to the counter-part of the lease, Exhibit A, the construction which Exhibit B suggests receives an accession of strength the operative

words in it are, ""We agree to pay you 847 salagais of paddy worth Rs. 2,400 per annum"" appear to us to denote the average value of paddy per

annum or its equivalent in money, but not to create an alternative right to payment in money at that rate every year, how muchsoever it may differ

from the market rate on the day when the paddy becomes due. If it had been intended to create such right the word ""or"" or other apt words would

have been used. The document proceeds to contemplate the contingency of defendants raising a second crop and provides for it in these terms,

We shall pay you in cash every year only Rs. 50 for the kandayam."" It is thus clear that the parties knew well how to express their intention aptly

when they desired to create an obligation to make a money payment only.

We are unable to agree with the Judge that Rs. 2,400 is all that defendants are bound to pay as rent under document A either under Sections 73

and 74 of the Indian Contract Act or u/s 26 of the General Stamp Act I of 1879.

It is provided by Section 73 that when a contract is broken, the breach entails on the party breaking it an obligation to pay compensation for

such loss as naturally arises in the usual course of things or as is contemplated by the parties to the contract to be likely to arise from that breach.

Section 74 premises a contract which names a specific sum as the amount to be paid in case of breach and provides that the compensation to be

awarded to the party aggrieved by the breach shall not exceed that amount. In the case before us, the compensation due u/s 73 is the market value

of paddy to be delivered on the day on which it should have been delivered whilst Section 74 is not applicable because the contract names Rs.

2,400 per annum not as a measure of liquidated damages but as the average annual money value of 847 salagais of paddy which the contract

reserves as annual rent for a period of 12 years. Nor do we think that Section 26 of the General Stamp Act has any application to document A.

That section enacts that when the value of the subject matter of any instrument chargeable with ad valorem stamp duty cannot be ascertained at the

date of its execution, nothing shall be claimable under such instrument more than the highest amount or the value for which, if stated in an instrument

of the same description, the stamp actually used would have been sufficient. It must be noted here that the case premised by the section is one in

which the value of the subject-matter of the instrument is not capable of being ascertained. But the subject-matter of document A, is under Clause

39 of the first schedule of the Act, the ""amount or value of the average annual rent reserved.

The rent reserved by A, is 847 salagais of paddy and its average annual value was estimated at Rs. 2,400 per annum. That it was the average

annual money value is clear from the language of the instrument and there is nothing on the record to show that the (estimated average was

insufficient. On comparing Section 26 and Article 39 of the present Act with Section 11 and Article 196 of Act XVIII of 1869 we observe that the

subject-matter of a lease exceeding 3 years was described in the last mentioned enactment as the total amount of rent payable under such lease

during the first year of the terms which as pointed out by a divisional bench of this Court in the Collector of Tanjore v. Ramasami Aiyar I. L. R 3

M 342 was an uncertain quantity incapable of being ascertained beforehand when the rent is payable in paddy and its money value is the market

value when the first year''s rent accrues due. In the present Act however, the value of the subject matter is that of the average rent reserved, which

may be estimated beforehand without much difficulty. It is not unreasonable to presume from the alteration in the description of the subject matter

of a lease that the probable intention was to designate as the subject matter the average value of the rent during the period of the lease instead of

the value of the rent in any particular year and thereby to enable parties to such lease to secure its exemption from the operation of Section 26 by

sufficiently estimating the average value before hand. As regards the deductions from the rent, allowed by the Judge, we see no reason to doubt the

correctness of his conclusions.

The rate at which the paddy is to be commuted into money is Rs. 5 according to the plaint whilst the rate at which it should be converted into

money is the market value of the paddy when it became due for each of the three years mentioned in the plaint. As there is no finding as to the

market value we direct the District Judge to ascertain it in execution of the decree.

As regards the claim to interest on arrears of rent there is no provision for it in document A. Having regard to the fact that the market rate was

high during the three years in question, we do not think it equitable to award interest on the arrears of paddy.

The decree of the Judge must therefore be modified by directing that defendants deliver to plaintiffs the paddy sued for or pay its value at the

market rates which prevailed on the 30th of Panguni of each year less the three amounts which have been deducted by the Judge. Respondents will

pay appellants'' costs in this Court.

In other respects the decree is confirmed.

As regards respondents'' memorandum of objections to the decree so far as it awards possession of the land to appellants the decision of the

Judge is correct. Apart from the condition in Exhibit A which reserves a right to plaintiffs to resume possession in case of default in paying rent, the

transaction on which the lease is engrafted is a mortgage with possession. The condition is therefore open to the construction that either rent & c,

should be paid regularly, or the mortgagee should be permitted to fall back on his right under the usufructuary mortgager Moreover there was

neither payment nor tender of the arrears at the hearing of the suit as contemplated by Section 114 of Act IV of 1882.

We dismiss the objections.