1. The main question for determination in this appeal is whether the plaintiff is entitled to seek recovery of the amount advanced by him on the mortgage of two items of property described in the plaint schedule, by means of sale thereof through Court. Exhibit A dated 20-4-1946, on the terms of which the decision depends is styled as a document of mortgage with possession. After reciting that a sum of Rs. 650/- is received from the mortgagee and the properties are left in his possession for a period of two years, it states that immediately after the expiration of the said period the mortgagor will pay the amount to the mortgagee and in case of default the mortgagee may continue to be in possession of the properties. Defendant 1 and his wife defendant 2 have executed the document stating that they have signed it also as guardians of their three minor sons defendants 3, 4 and 5. Defendant 5 died during the pendency of the suit.
2. The suit from which this appeal arises was filed after the lapse of two years from the date of the mortgage for realisation of the principal sum with interest by sale of the properties alleging that possession of the properties was not delivered to the plaintiff and that the mortgage was effected for purposes binding on the family of defendants. Denying these allegations defendants pleaded that plaintiff is not entitled to the relief asked for and has only the right to be in possession of the properties.
3. Both Courts have held that plaintiff obtained and is in possession of the mortgaged properties and the finding has to be taken as correct. On the question of legal necessity needlessly raised with regard to one item of property and about the right of plaintiff to claim payment of money there are divergent findings, the trial Court's view being in favour of plaintiff and that of the appellate Court against him. Consequent on this the decree passed by the learned Munsif for payment of the amount has been reversed and the suit dismissed. Plaintiff has appealed.
4. Item I which is a land belongs to defendant 2 according to the sale deed in, her favour and so the mortgage with respect to this cannot be questioned by the other defendants. The mere fact of others having joined her in executing the deed cannot imply that they have interests in the property subject to the mortgage. Consideration of legal necessity can arise in regard to only the other item which is a house as it is admittedly ancestral or joint family property. The inclusion of this in the mortgage cannot be said to have been imprudent or improper as part of the consideration for Exhibit A is shown to have been utilised for discharge of a prior mortgage debt and the deed mentions that the balance was required for expenses of the marriage of the daughter of defendants 1 and 2. Neither of these defendants has stepped into the witness-box to deny this. The evidence and probabilities support the version of plaintiff and the mortgage of both items of property must be held valid.
5. The learned Sub Judge has stated that the mortgage is purely usufructuary, there is no covenant express or implied for payment of the amount and therefore a decree for sale cannot be granted. Sri Krishnamurthy learned counsel for the appellant contends that this is not correct and not warranted by the provisions of law applicable to the case or fair construction of Exhibit A. The mortgage is not one in which the entire debt is to be discharged by the creditor appropriating the income of the properties during a certain or any period. The income is meant to be a substitute for interest and the debtor is free from obligation to pay interest as the mortgagee is given a right to enjoy the usufruct of the properties. There is no provision for the income being applied to any extent towards the principal amount and irrespective of the quantum of the Income or the period during which it is received by the mortgagee, the principal sum has to be repaid to the mortgagee for possession of the properties being restored to the mortgagors.
In addition there is a specific undertaking in the deed for payment of the amount at the end of two years. The mortgage has thus the characteristics of what is termed usufructuary and what Is called simple. It cannot be regarded a purely usufructuary mortgage as stated by the learned Sub Judge but may be called a simple usufructuary mortgage. A mortgagee under such a mortgage was in -- '13 Mys. CCR 145 (A)' considered to have a right to sue for realisation of the mortgage debt ay sale of the mortgaged property. This case has been followed and similar relief granted in --'S.N. Rajan v. Govindaraj Mudaliar', AIR 1953 Mys 1 (B). The case in -- '13 Mys CCR 145 (A)' was decided before the Transfer of Property Act came into force in Mysore but is based upon the principles and reasoning adopted by other courts in applying the provisions of the Transfer of Property Act. -- 'Ramayya v. Guruva', 14 Mad 232 (C) and -- 'Kangaya Gurukal v. Kalimuthu Annasei', 27 Mad 526 (PB)(D) are preferred to support the appellants' claim. Sri Gopalswamy Iyengar learned counsel for respondents argued that the covenant for repayment is qualified by the succeeding condition that the mortgagee is to continue in possession of the properties if the amount is not paid and read as a whole the document does not confer a right on the mortgagee to sue for payment of the mortgage debt.
'Damodara Shanbhogue v. Chandapur Pujary', AIR 1933 Mad 613 (E) cited for this position is distinguishable as the terms of the document on the consideration of which the right of sale was held to be not available to the mortgagee in that case are different from those in the present case. It is however stated that -- '14 Mad 232 (C)' which has been relied upon in -- '13 Mys CCR 145 (A)' lays down the correct rule and that the words 'on the expiry of the terms I shall pay the said sum and redeem the lands' in -- 'Udayana Pillai v. Senthivelu Pillai', 19 Mad 411 (F) were rightly held to constitute a personal covenant to pay. It is also observed that
'In those deeds there was a further clause that in default of such payment the mortgagee should continue to enjoy the property in the aforesaid manner till redemption. In view of the fact that there was a clear and unequivocal personal covenant to pay the money as an independent provision the learned Judges held that the subsequent clause for continuance of enjoyment in case of default in such payment was not to nullify the previous covenant to pay on a certain day'.
A clause of that kind is as stated in -- '14 Mad 232 (C)' at p. 234
'one In favour of the mortgagee extending his security beyond the prescribed period and does not take away the right arising out of the covenant to pay, to sue for sale of the mortgaged property'.
'Mahomed Abdullah v. Mahomed Yasin', AIR 1933 Lah 151 (G) cited for respondents is to some extent against the plaintiff's claim but this is dissented from in -- 'Mohd. Saeed v. Abdul Alim', AIR 1947 Lah 40 (FB) (H) where a Full Bench answered the question
'When a mortgage with possession contains a personal covenant to pay the principal by a certain date ..... does it cease to be a purely usufructuary mortgage or does it become at the same time a simple mortgage on which the mortgagee can bring the mortgaged property to sale'
in the affirmative. Mahajan J., as he then was, while delivering the opinion expressed:
'To my mind it is a settled proposition of law that if a deed of mortgage contains a personal covenant to pay the principal mortgage debt or interest by the mortgagor such a covenant implies the right of sale unless there is some specific term to the contrary'.
Since there are no such words in Exhibit A the plaintiff must be held to be entitled to a decree for sale according to the above decisions. The decision of the Calcutta High Court in -- 'Pitambar Purkait v. Madhu Sudan Mandal', 6 Ind Cas 153 (I) is also to the same effect. The mortgagor in that case took a loan and executed a mortgage deed agreeing to repay the money on a certain day. The instrument provided that the mortgagee would be placed in possession and during the period of such possession the profits would be set off against the interest due on the sum advanced. The judgment states
'It is well settled that when an instrument of mortgage gives a right to possession and also contains a covenant to pay thus presenting a combination of a usufructuary and simple mortgage the two rights are independent and the mortgagee may sue for sale though he may have given up possession.'
6. The learned Munsiff while upholding the plaintiff's claim granted a decree for payment of the amount by the defendants personally. This is not what the plaintiff sought in the plaint and he was therefore justified in filing cross-objections to the decree under appeal before the Sub Judge. The dismissal of the suit by the appellate Court is based on an erroneous view of law and wrong interpretation of Exhibit A. The appeal has to be consequently allowed and a decree for realisation of the principal sum of Rs. 650/- by sale of the plaint schedule properties has to be passed. On the ground of defendants being held to be agriculturists, learned counsel for respondents pressed for an account of the income of the properties from the date of the mortgage being taken and for the amount due to plaintiff being reduced by fixing a reasonable rate of interest for the debt and adjusting the residue of the income towards principal after appropriation for interest.
Apart from the permissibility of this course being doubtful when the understanding between the parties is reduced to writing and it is not shown to be vitiated by defects invalidating it, the contention implies that the income was more than what may be deemed to be a fair return for the loan. The materials placed before the court for fixing these are very meagre. Defendants 1 and 2, as already stated, have not given evidence in the case and there is only a suggestion that plaintiff attempted to lease the land for more than Rs. 300/- and possibility of two or more mulberry crops per year being raised in the land. There is absolutely no proof of the plaintiff having realised any amount or the mulberry crop being raised at any time. In these circumstances, there is no justification for the principal sum mentioned as payable in the deed being reduced and the income whatever it is, must be taken to represent the interest for the debt.
7. The decrees of the Courts below are set aside and in lieu thereof there will be a decree in plaintiff's favour for Rs. 650/-, the amount being payable in two annual instalments from this date and on default of such payment the plaint schedule properties will be sold and proceeds of such sale appropriated towards the said amount. Plaintiff will have his costs throughout.
8. Order accordingly.