Valliammal vs Ramaswamy Goundar and Others

Wadsworth, J.—The plaintiff is the appellant. Her husband advanced money under two mortgages, Exs. C and D, to one Palani Goundan

and his son. These mortgages are dated respectively, 1917 and 1918. Ex. C was itself a renewal of a still earlier mortgage, Ex. II, between the

same parties. In 1923 in execution of a money decree against the son of Palani Goundan the properties were sold in court auction and purchased

by a Chettiar gentleman who in 1924 sold those properties to the first defendant, one of the conditions of the sale being the discharge of the

mortgages, Exs. C and D, which bound the properties. We do not know whether Palani Goundan or his son were agriculturists. The defendants

are admittedly agriculturists. On 9th July, 1924, the first defendant (the purchaser) executed the suit mortgage, Ex. A, for a sum of Rs. 10,000 in

favour of the plaintiff''s husband binding the properties covered by Exs. C and D and a considerable extent of other properties belonging to the first

defendant. The consideration for the suit mortgage was the discharge of the earlier mortgages Exs. C and D in favour of the plaintiff''s husband, the

discharge of a promissory note executed by the first defendant to a third party and a sum of money advanced in cash. The suit was filed on the

basis that the defendants were entitled to the benefits of Act IV of 1938 to the extent of the cancellation of the interest outstanding 011 Ex. A on

1st October, 1937, and the scaling down of subsequent interest to 6 1/4 per cent. The defendants successfully contended in the lower Court that

they were entitled to relief, so far as the portion of the consideration made up of the discharge of the earlier mortgages was concerned, on the basis

that the principal of the debt was the principal of Exs. D and II, the earlier mortgages discharged by Ex. C.

It is contended in appeal that the relief available to the defendants should have been restricted to that conceded in the plaint. It seems to us that

the matter is covered by authority adverse to the appellant. The decision in Doraikannu Odayar Vs. Veerasami Padayachi alias Veerasami

Chatrakondar, applied the principle of Perianna''s case, Perianna Goundan Vs. Sellappa Goundan and Others, , to a case of renewal and it was

held that a person who by reason of the purchase of property bound by mortgage is under a liability to discharge that mortgage and subsequently

discharges that liability by the execution of a fresh document can be said to be renewing his own pre-existing liability. More recently we have had

to deal with a case in which the original mortgagor was not shown to be an agriculturist; and in Palani Goundan Vs. Peria Goundan, , it was

observed that it is immaterial whether or not the debtor had the character of an agriculturist when the debt was originally incurred if it was incurred

prior to 1st October, 1937. From these decisions it follows that the first defendant when he purchased the property became a debtor to the

plaintiff''s husband to the extent of the liability under the existing mortgages binding that land and when he discharged those liabilities by executing a

fresh mortgage he can claim that the original principal of the earlier mortgages was included in the principal of the fresh mortgage to the extent to

which the amount due under those mortgages contributes to the consideration of the fresh mortgage. It has been suggested that the fact that Ex. A

binds property not covered by the pre-existing mortgage should affect the question whether Ex. A is a renewal of those previous mortgages. It

seems to us that this is immaterial, the only question being whether the debtor under Ex. A was a debtor under the pre-existing mortgages. The

extent of the security under the later mortgage will not govern the answer to this question. Nor will the answer to the question be affected by the

fact that the later mortgage comprises an additional consideration besides the discharge of the earlier mortgages. That portion of the consideration

which is made up of the discharge of the earlier mortgages will be scaled down on the basis of the principal of those mortgages. This is the view

taken by the lower Court and we therefore dismiss the appeal with costs.