Subbaraya Pillai vs Pichaipillai Udayan and Another

King, J.—This appeal is concerned with 3 acres 53 cents of land in Varahur with Survey No, 231/3, which in 1906 was mortgaged by one

Ayyasami Padayachi to one Muthusami Udayan for Rs. 100. In 1910 Ayyasami Padayachi and his wife Kamakshi further mortgaged a house for

Rs. 250 to the same Muthusami Udayan. In 1921, Ayyasami Padayachi being then dead, his widow sold the equity of redemption in this land by

two contradictory sale deeds to Muthusami Udayan''s son Pichaipillai Udayan, the plaintiffs, and to defendant 1. The dispute which inevitably arose

between the rival vendees was referred to arbitration and an oral award was pronounced in November 1921 by which defendant 1 was to keep

the property and pay Rs. 750 to the plaintiff in discharge of his two mortgages. If default was made in payment plaintiff was to have the right to

bring this property to sale. No payment was made, disputes broke out again, and in 1923 the Sub-divisional Magistrate, Ariyalur, took action u/s

145, Criminal P.C.

On 30th January 1923, defendant 1 gave a statement before the Sub-Magistrate, Perambalur (Ex. D) in which he undertook to pay Rs. 750 to

plaintiff by 1st September and to give him the right of proceeding against this property and two other items of property if he failed to do so and

promised, if plaintiff would agree to this proposal and refrain from entering upon the suit land, to drop the proceedings before the Sub-divisional

Magistrate. Plaintiff expressed his agreement in a statement made on the same day to the same Sub-Magistrate, and the proceedings u/s 145 were

duly dropped. Defendant 1 has still made no payment, and in 1928 he sold the suit property to defendant 2. In 1929 plaintiff filed the suit out of

which this second appeal arises, claiming a sum of Rs. 1,400 (Rs. 750 with interest) to be realized by the sale of the suit property and by the

personal liability of defendant 1. In his suit plaintiff based his claim to a charge on the property upon the oral award. The learned District Munsif

held that the oral award created a valid charge and defendant 2 purchased the property with knowledge of plaintiff''s rights. He accordingly

decreed plaintiff''s suit as prayed for. Against this decree defendant 2 alone appealed. In the appeal the learned Subordinate Judge of Trichinopoly

confirmed the finding that defendant 2 had notice of plaintiff''s rights, but held that the oral award did not create a valid charge. The appeal

however did not succeed, as the Subordinate Judge held that a charge was created by the two statements of 1923 before the Sub-Magistrate.

Defendant 2 has now filed this second appeal.

In second appeal plaintiff placed no reliance upon the oral award, and the main argument was whether the recitals of Ex. D constituted that

document a mortgage or a charge. Mortgage'' is defined in Section 58 and ''charge'' in Section 100, T.P. Act, and the crucial consideration which

emerges from these definitions is this: that if any document can be construed as a mortgage it cannot be a charge. The learned Subordinate Judge

holds that Ex. D was ''intended'' to be a charge, and was not ''intended'' to be a mortgage. The distinction between a charge and a simple mortgage

is a very subtle one and to judge of the intention'' of parties we must look to the language alone in which their intentions are expressed. What then

are the essentials of a mortgage? They are set out in a judgment of a Bench of this Court reported in Rama Brahmam and Others Vs.

Venkatanarasu Puntulul and Others, as four in number; (i) it must be created by act of parties; (ii) it must be for a debt; (iii) it must be of specific

property; (iv) it must involve a covenant to pay; and in Balasubramania Nadar Vs. Sivaguru Asari and Another, , two other features of a document

are held not to be essential for constituting it a mortgage. These are (a) formal transfer of interest and (b) an express power of sale. Now it is clear

upon a perusal of Ex. D that the four essentials mentioned above are all present though the two non-essentials may be absent. Ex. D therefore must

be a mortgage if this is the law to be applied to its construction and the learned advocate for the respondent has not been able to refer me to any

authority which overrules or casts any doubt upon the law as so propounded. I must therefore rule that Ex. D is a mortgage. As it has not been

attested or registered it is invalid as a mortgage, but being invalid as a mortgage, not from any defect in its recitals but for non-compliance with

subsequent statutory requirement it is conceded that it cannot be held to be a charge. In the result then respondent''s case as based upon Ex. D

must fail. Respondent however now puts forward yet a third alternative case, that he is entitled to a decree upon the original mortgage of 1906

which had been kept alive by various payments and acknowledgments up till the date of his plaint. Although, as pointed out for the appellant, there

is no such alternative prayer at the end of his plaint to this effect, passages in paras. 8 and 14 show that respondent had this alternative prayer in

mind, and I think this point may fairly be considered. It is based mainly upon a decision of the Privy Council reported in Har Chandi Lal v. Sheoraj

Singh AIR 1916 PC 68. It seems to me that that case is clearly distinguishable from the present case. There a mortgagee took second mortgages

in substitution of a first, and those second mortgages were held not to be binding on the mortgagor. Their Lordships say:

It does not appear to be consistent with equity or good conscience that the defendants having successfully maintained that the transaction

embodied in the two deeds of 1887 was not binding on Mt. Nandan, and consequently did not bind them, should now claim the benefit of that

transaction as a release of the mortgage of 1876.

In the present case there is no fraud played upon the mortgagee. He simply took a mortgage without realising that it was a mortgage and that he

ought to have it attested and registered. Defendant 2 is putting forward a technical plea which he is entitled to put forward and which, though it

affects the validity of Ex. D as a mortgage, does not release defendant 1 from his personal obligation under it. I cannot see that Har Chandi Lal v.

Sheoraj Singh AIR 1916 PC 68 can be applied to the facts of this case. Respondent finally falls back upon the analogy of insufficiently stamped

promissory notes, and argues that if the promisee of such a note can sue upon the original cause of action, the mortgagee of an invalid mortgage

ought to be permitted to sue on the valid mortgage which the invalid mortgage was intended to discharge. But it seems to me that this part of the

law regarding promissory notes depends upon the special characteristics of negotiable instruments, and in the absence of authority I am unable to

extend it from promissory notes to mortgages. In the result this appeal must be allowed and respondent''s suit dismissed with costs throughout as

against defendant 2. The decree against defendant 1 is confirmed.