Thevaraya Reddy and Others vs Venkatachala Pandithan and Others

Abdur Rahim, O.C.J.

The only question in this appeal is whether the appellants having deposited the money due from them on a mortgage, u/s 83 of the Transfer of

Property Act, can claim exemption from interest u/s 84 although they withdrew the amount afterwards. The money was left in Court for a year or

more but the title of the respondents as legal representatives of the mortgagee was then in dispute. The suit which settled their right was not

decided until after the appellants had withdrawn the money. Section 84 says "" when the mortgagor or such other person as aforesaid has tendered

or deposited in Court u/s 83, the amount remaining due on the mortgage, interest on the principal money shall cease from the date of the tender or

as soon as the mortgagor or such other person as aforesaid has done all that has to be done by him to enable the mortgagee to take such amount

out of court, as the case may be "". The legislature has drawn a distinction between the case of a tender and a deposit as to the date from which

interest shall cease to run. And this apparently for good reasons a tender in order to be valid must be made to the person entitled to receive the

money. But when only a deposit is made the mortgagor must do something more. He must do all that has to be done in order to enable the person

enittled to the money to receive it. Where the mortgagee as in this case is dead and the mortgagor not being sure as to who are the persons entitled

to succession and thus unable to make a valid tender, deposits the money in court, but withdraws it before the rightful heirs are ascertained, he

cannot be said to have done all that he could do to enable them to receive the money. In such cases the mortgagor cannot claim the benefit of

Section 84, for the money having been withdrawn before the persons entitled to it have established their right, it must be taken that so far as they

are concerned the deposit has never been made. The deposit in order to be effective u/s 84 must remain in Court until the mortgagee or his

successor in interest has been enabled or is in a position to draw it. This is the interpretation put upon Section 84 in Krishnaswami Chettiar v.

Ramaswami Chettiar ILR (1910) M. 44 which has been followed by Ayling, J. I may mention that we are not concerned here with the question

whether that case was rightly decided upon its facts for, it in possible that the mortgagor there had in addition to the deposit also made a valid

tender.

It appears however that after the suit was instituted the mortgagor again deposited the amount in Court. In calculating interest from that date the

amount deposited should have been deducted from the principal and interest allowed only on the balance. To that extent the decree will be varied ;

otherwise the appeals will be dismissed but in the circumstances of the case without costs. The respondent will be entitled to interest at 6 per cent.

on the amount decreed from the date of the decree of this Court. Time for payment six months.

Letters Patent Appeal No. 330 of 1914:--This appeal is dismissed.

Seshagiri Aiyar, J.

I entirely agree with the learned officiating Chief Justice. The main argument of Mr. Rangasami Aiyangar was that as no money is left outstanding

in the case of a tender, the legislature did not intend that in a deposit the money should be continuously in Court till drawn out. There is no analogy

between the two. When a debtor tenders money, he must do it only to the person legally entitled thereto. He takes the risk of deciding for himself

whether the offer he is making is to the proper person. In the case of the person to whom the tender is made, the latter can have no claim for

interest and can have no grievance if it is refused, as he had the option and right of claiming payment at once and had not availed himself of them.

On the other hand, a deposit is ordinarily made when the debtor is in doubt as to who is the rightful claimant. He wants to absolve himself from

future liability by leaving it to the Courtto hand the money over to the true owner. Nobody may be in a position to apply for payment immediately

as in the case of a tender. Consequently the money must be in deposit to be drawn out as soon as the legal rights of the parties are determined. I

am also of opinion that the term ''deposit'' implies that the money is in the hands of the Court until it is paid to the creditor. It may not infrequently

happen that between the deposit originally made and the time when the true owner is ascertained, the debtor has become insolvent or incapable of

meeting his obligations. This would be a good reason for expecting that the money must be in Court. Further, if the debtor wants to escape liability

for payment of interest, I do not see why he should not allow the money to be in Court. The fact that in a tender there may be advantageous

circumstances is no ground for departing from the obvious intent of the legislature in the case of deposits.

Stress was laid on the clause "" has done all that has to be done by him to enable the mortgagee to take such amount out of Court"". If the money

is not in Court''s deposit, I do not think it can be said that the requirements of this clause are satisfied by an original deposit and its withdrawal. If

the money is not in Court, as soon as the rights of the parties have been pronounced upon, an application will have to be made for depositing the

money again in Court. A further application to draw it out will have to follow. It seems to me that the debtor will not be doing all he can, if he has

withdrawn the money.

I am of opinion that Krishnasami Chettiar v. Ramasami Chettiar ILR 38 M. 100 was rightly decided. Whether on the facts the judgment might

have been different is not what we have to consider but the principles there enunciated are sound.

It was sought to be argued that every deposit implies an antecedent tender and as in the present case, notice of deposit was given to all the

possible claimants, the deposit must be regarded as a legal tender. It is clear that the right to the money was disputed and therefore none of the

creditors was in a position to claim the money and that is the essence of a tender. I see no force in this contention.

I agree that under O. XXIV Rule 3 of the CPC interest was not allowable upon the sum paid into Court after the institution of the suit. I agree

with the order as to costs.

Phillips, J.

I agree with Ayling, J., that this appeal should be dismissed, but unlike him I am not prepared to agree with the ruling in Krishnaswami Chettiar

v. Ramaswami Chettiar ILR (1905) A. 25, for in that case a mortgagor deposited money in Court, sent notice to the mortgagee who refused to

accept the amount. This in effect amounted to a tender through Court and Section 84 of the Transfer of Property Act lays down very clearly that

when a tender has been made interest ceases to run. It also ceases to run. when the mortgage money has been deposited in Court and the

mortgagor has done all that has to be done by him to enable the mortgagee to take such amount out of Court. When therefore the mortgagee has

been in a position to draw the money from court and has refused to do so, interest ceases to run just as in the case when the mortgagee refuses a

tender, out of court--So far as I can see there is no provision;:in the Act, whereby interest is again to run if the deposit is withdrawn after the

mortgagee has refused to receive it. The cessation of interest is the penalty imposed upon the mortgagee for refusal to accept the money when

offered and this penalty is not remitted because he changes his mind when it is too late. With all respect therefore I venture to differ from the

reasoning of the judgment in Krishyiadwami Chettiar v. Ramaswami Chettiat ILR (1910) M. 44

In this case, however, the circumstances are different. One of the mortgagees died and there was a dispute as to who were the legal

representatives. If, therefore, the mortgagors had made a tender to one of the two sets of claimants they ran the risk of tendering to the wrong

person, in which case the tender would not be valid. To avoid this difficulty, or for some other reason, the mortgagors deposited the amount in

Court, but it was not drawn because of the dispute as to the rights of the respective claimants. Until that dispute was settled the mortgagee could

not draw the money out of Court, for the Court was not in a position to know who were the rightful mortgagees. It is, however, contended that this

dispute did not affect the mortgagors, as they had done all that they had to do to enable the mortgagees to draw the money. No doubt they had

taken all the active steps necessary, but because they withdrew the deposit before the dispute was settled, the mortgagees were unable to draw the

amount. Prior to the settlement of the dispute, the mortgagee could not draw the money because of the dispute and after settlement they could not

draw it because the money was not there. If the mortgagors had left the money in Court until the dispute was settled, they would have done all they

had to do when the deposit was made and notice issued to the mortgagees ; but as they failed to leave the deposit in court sufficiently long to

enable the mortgagees to draw the amount they failed to do all that they had to do and consequently interest did not cease to run.

A further objection is taken that interest has been allowed on the amount deposited after this suit was filed. This is clearly wrong as under

Order XXIV Rule 3 of the Coda of Civil Procedure interest on the amount deposited ceases as soon as plaintiff receives notice of the deposit. I

therefore agree in the. order proposed.