V.C. Venkatasubbiah vs T. Lakshmipathi and Another

Phillips, J.—The 1st defendant is the appellant and he is one of two mortgagors. He does not dispute the execution of the mortgage-deed

and his liability, to some exteflt ; but he pleads an agreement with the plaintiff, under which the 2nd defendant, one of the mortgagors, was.

exonerated by the plaintiff, on payment of a sum of Rs. 900, and a portion of the mortgage-money was remitted. Both the District Munesiff arid the

Subordinate Judge have disbelieved the oral evidence, as to this agreement and it is sought to be proved by Exhibit II. This purports to be a

receipt, executed by the plaintiff to defendants 1 and 2 and it goes further and says that the money is received towards the entire discharge of the

debt, due by the 2nd defendant and he undertakes to execute a deed of relinquishment of right, at his cost. If this does evidence the agreement that

there should be a remission in the amount of the mortgage-money, it is clearly inadmissible in evidence, as it would require registration, being a

document, which affects a right to immovable property of the value of over Rs. 100. The contention that it can be used'' to prove this agreement,

because :it also purports to be a discharge, cannot be accepted. Either it is not evidence of the agreement, in which case it will be admissible as a

receipt; if it is evidence of the agreement, it requires registration. The two cases relied on by the appellant, Karampalli Unni Kurup v. Thekku Vitti

Mutherakutti (1903) 26 Mad. 195 and Gosetti Subba Bow v. Vararigonda Narasimham (1904) 27 Mad. 368 relate only to the proof of oral

agreements and do not discuss the question of the admissibility of documents, which are said to prove such agreements. As regards the

admissibility of unregistered documents, I may refer to Chundoom Lakshmana Setti v. Duggisetty Ghenchu-ramayya (1918) 7 L.W. 229. The

Subordinate Judge having found that he cannot believe the oral evidence, it must be held that there was no such agreement and this plea must be

disallowed.

A further point is raised that the interest provided for in the mortgage-deed is penal and should be relieved against. The conditions in this deed

are somewhat unusual; for, there is a provision for the payment of one instalment of principal, together with the interest thereon every year and in

default there is a provision for a certain rate of interest. No doubt the default rate is slightly higher then the rate provided for, in the body of the

document and compound interest is to be paid. Considering the unusual nature of the document, I agree with the Subordinate Judge that this

provision cannot be held to be by way of penalty.

The Second Appeal is accordingly dismissed with costs.