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Chhadamrai and ors. Vs. Ram Naresh Misir and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1943All337
AppellantChhadamrai and ors.
RespondentRam Naresh Misir and ors.
Excerpt:
- - 27 a year, and it was agreed that in default of any payment of interest the obligee would be entitled to take possession of four specified plots and enjoy their usufruct in lieu of interest. what we have to do in the case before us is to interpret, as best we may, the bond of 24th june 1918; and the question for our adjudication is whether that bond operated as a mortgage from its inception or whether an interest in the property, within the meaning of section 58, t. thereafter, it is stipulated that in default of payment of interest the executant will put the obligees in possession of the 'mortgaged property' as detailed at the foot of the bond and that the obligees shall be at liberty to enjoy the usufruct and appropriate the profits to the interest......from a decision of a learned judge of this court. on 24th june 1918 a man named ganpat executed a bond in favour of two brothers, meghu rai and rekha rai, for a sum of rs. 399-15-9 with interest at 9 annas per cent, per mensem. under the terms of the bond the executants covenanted that he would regularly pay the interest, amounting to rs. 27 a year, and it was agreed that in default of any payment of interest the obligee would be entitled to take possession of four specified plots and enjoy their usufruct in lieu of interest. these plots were nos. 28/3, 10, 5/3 and 137. it was further provided that, if at any time the executant paid the money which had been advanced, he would be entitled to resume possession of the aforesaid four plots. i shall have occasion to consider the terms of the.....
Judgment:

Collister, J.

1. This is a plaintiffs' appeal under the Letters Patent from a decision of a learned Judge of this Court. On 24th June 1918 a man named Ganpat executed a bond in favour of two brothers, Meghu Rai and Rekha Rai, for a sum of Rs. 399-15-9 with interest at 9 annas per cent, per mensem. Under the terms of the bond the executants covenanted that he would regularly pay the interest, amounting to Rs. 27 a year, and it was agreed that in default of any payment of interest the obligee would be entitled to take possession of four specified plots and enjoy their usufruct in lieu of interest. These plots were Nos. 28/3, 10, 5/3 and 137. It was further provided that, if at any time the executant paid the money which had been advanced, he would be entitled to resume possession of the aforesaid four plots. I shall have occasion to consider the terms of the bond in greater detail at a later stage, for the appeal depends entirely upon the interpretation of this document.

2. On 30th May 1923 the heirs and legal representatives of the obligor executed a permanent lease in respect to plot No. 28/3 in favour of defendant 8; on 6th July 1926 they executed a usufructuary mortgage of plot No. 10 in favour of defendant 9; on 20th July 1929 they executed a permanent lease in respect to a portion of plot No. 5/3 in favour of defendant 6; and on 22nd July 1929 they executed a permanent lease in respect to another portion of plot No. 5/3 in favour of defendant 7. By the last-mentioned date the property specified in the bond of 24th Jane 1918 had all been transferred as a, result of these leases and usufructuary mortgage except plot No. 137--which is a bamboo clump--and l biswa, 11 dhurs out of plot No. 5/3. The transferees were duly put in possession of the property and the lessees have put up constructions. On 11th January 1937 Rekha Rai, one of the original obligees, and the successors-in-interest of Meghu Rai, the other obligee, instituted a suit to enforce the bond of 24th June 1918. Their case, briefly stated, was this: The interest under the bond of 24th June 1918 was duly paid until June of 1938, when default was made; and they then obtained possession of the four plots, except a portion of No. 28/3. In 1936 they were dispossessed by the transferees. They accordingly prayed for possession of the four plots and, alternatively, for a decree for money and for sale upon the alleged mortgage bond. They also claimed damages, but we are not now concerned with that claim.

3. Defendants first set were the legal representatives of Ganpat, the original obligor of the bond, and defendants second set were the transferees, Both sets of defendants contested the suit and set up various pleas, including a plea of limitation; but the only plea we are concerned with in this appeal was a plea that the bond of 24th June 1918 was a simple money bond at its inception, but was liable to be converted into a usufructuary mortgage on default of payment of interest; and since this did not occur until 1932 -- according to the allegations in the plaint -- the usufructuary mortgage in favour of the obligees was postponed to the permanent leases and the usufructuary mortgage which were effected in favour of defendants second set. During the pendency of the suit, the matter was compromised as between the plaintiffs and the defendants first set, it being agreed that the claim of the plaintiffs for possession of the property be decreed and that quoad ultra the claim be dismissed.

4. The trial Court found that the suit was barred by limitation and it also found that the bond of 24th June 1918 was in its inception a money bond, which became a usufructuary mortgage in 1922, and this was postponed to the transfers in favour of defendants second set. The suit was accordingly dismissed as against the defendants second set; but in terms of the compromise between the plaintiffs and defendants first set the suit was decreed against the latter in respect to plot No. 137 and in respect to 1 biswa, 11 dhurs of plot No. 5/3, which were not included in any of the deeds of transfer in favour of defendants second set. Upon an appeal by the plaintiffs the learned Judge of the lower appellate Court decreed their claim for Rs. 399-15-9 with interest at the rate of 9 annas per cent. per mensem from June 1936 and a decree was drawn up under Order 34, Rule 4, Civil P. C. The learned Judge found that interest had been duly paid up to 1932, that in that year default was made, that the plaintiffs were put in possession of a portion of the property and that they were subsequently dispossessed in 1936. He also found that the bond of 24th June 1918 was a mortgage bond from the date of execution and that it therefore took precedence over the permanent leases and the usufructuary mortgage in favour of defendants second set; but the learned Judge was of opinion that the plaintiffs were not entitled to possession under the terms of the bond and he accordingly decreed the suit for sale, as already stated. The defendants second set preferred a second appeal to this Court and the learned Judge has modified the decree of the lower appellate Court by directing that the sale shall be subject to the three permanent leases and the usufructuary mortgage bond in favour of defendants second set. The learned Judge says:

The main question for determination in the-appeal is whether under the bond of 1918 the mortgage arose at once in favour of the plaintiffs and as such it takes precedence over the permanent leases and the usufructuary mortgage, in favour of the defendants second set or whether the mortgage arose for the first time in 1932, when default was made in payment of interest as alleged by the plaintiffs and found by the lower appellate Court, and therefore the mortgage, having come into existence in 1932, must be postponed to the permanent leases and usufructuary mortgage in favour of the defendants second set.

5. The learned Judge felt himself constrained sitting singly, to follow the authority of a Bench of this Court in Harnandan Rai v. Nakchhedi Rai ('06) 3 A.L.J. 691; but it would appear that, had it not been for that authority, he would have been inclined to hold that the bond of 24th June 1918 was a simple mortgage bond from its inception, liable to be converted into a usufructuary mortgage deed on default of payment of interest. In Harnandan Rai v. Nakchhedi Rai ('06) 3 A.L.J. 691 the plaintiffs sued for possession of property on the foot of an alleged deed of mortgage which was executed in favour of a certain mahajan. From the reported judgment it appears that for consideration the executants agreed to put the mahajan into possession of certain land 'on 1st Asarh of that year in which the interest will remain unpaid on 15th Jeth Badi.' It was then provided that, if the said mahajan did not obtain possession or was dispossessed, he would be at liberty to realise the money due to him by means of a suit. Then came this passage: 'The land mortgaged shall remain hypothecated and pledged in lieu of the aforesaid amount of debt so long as it is not paid off.' The property specified in the deed was proprietary rights in sir and khudkasht. On 22nd June 1902 default was made in payment of interest and by that time Act 2 of 1901 had been passed and it provided for the creation of exproprietary rights. At p. 692 the learned Judges say:

It is contended that, as no default was made until 22nd June 1902 and that date was subsequent to the passing of Act 2 of 1901, this deed did not operate as a deed of mortgage until after Act 2 of 1901 had found its place in the statute-book, and the contention of learned Counsel for the respondent is that the language used in the deed shows that it was only a money bond in its inception and did not operate and was not intended to operate as a deed of usufructuary mortgage until the date on which the default was made.

6. The learned Judges then say:

After carefully considering the words used in the deed, we agree with the interpretation which respondents' learned Counsel puts upon the deed.

7. They accordingly found that, since the proprietary rights of the executants of the deed had become subject to a usufructuary mortgage after the commencement of Act 2 of 1901, they acquired exproprietary rights. With respect I have no difficulty in agreeing that, since the usufructuary mortgage did not come into existence until after the passing of Act 2 of 1901, the executants of that deed would become exproprietary tenants; but whether that deed was nothing more than a money bond up to 22nd June 1902 is another matter altogether. That case was, however, decided with reference to the terms and recitals of the bond which was there in controversy, and that document is not before us; all we have is certain extracts from it which have been cited by the learned Judges. No document can be properly construed unless all its terms are seen and each document must be construed separately with reference to its own particular terms. What we have to do in the case before us is to interpret, as best we may, the bond of 24th June 1918; and the question for our adjudication is whether that bond operated as a mortgage from its inception or whether an interest in the property, within the meaning of Section 58, T. P. Act, only passed when default was made in 1932, with the result that no mortgage came into existence until after the execution of the permanent leases and the usufructuary mortgage which were executed in favour of defendants second set. In other words, what we have to decide is whether the bond of 24th June 1918 did or did not operate at its execution as a 'transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced.' There was a clear intention of the parties that a usufructuary mortgage should come into existence when default was made in payment of interest. The question is, what was intended to be the effect of the bond prior to that contingency. It was not a simple mortgage bond because it contains no covenant, express or implied, that in the event of the mortgage money not being paid according to the contract the property should be put to sale. If, therefore, there was a mortgage at all, it was what is now known as an anomalous mortgage. Learned Counsel for the respondents, however, contends that at its inception the document of 24th June 1918 was not a mortgage bond at all, but was a money bond.

8. At this stage it is necessary to examine the bond in question. First there is a mention that the executant has received Rupees 399-15-9 in cash from the obligees and it is agreed that interest at 9 annas per cent. per mensem, amounting to Rs. 27 per annum, shall be regularly paid. Up to this point there is no mention of any property as affording security for the loan; but there is also no covenant to repay the principal sum advanced. Thereafter, it is stipulated that in default of payment of interest the executant will put the obligees in possession of the 'mortgaged property' as detailed at the foot of the bond and that the obligees shall be at liberty to enjoy the usufruct and appropriate the profits to the interest. There is then another mention of the 'mortgaged property;' and at the end it is agreed that on payment of the entire money due to the obligees the executant shall be entitled to take back the property, and the recitals end with the following words: 'I therefore with pleasure write this arki mortgage deed so that it may be of use when needed.'

9. It is clear that the obligees had a right, created by the bond itself and therefore coming into existence at the date of execution, to take possession of the property as soon as defaults were made in any payment of interest. In the ease of a simple mortgage bond the mortgagee has a right to put the property to sale in the event of payment not being made according to the contract; but he has no immediate right to proceed against the property. Nevertheless, an interest in the property is incontestably transferred, within the meaning of Section 58, T. P. Act, upon execution, and in my opinion, the same principle applies to the bond which we are endeavouring to interpret. The obligees had no immediate right, to take possession, but a right to take possession upon the default in the payment of interest was created by the bond itself and, therefore, an interest in the property passed to the obligees in the same way as such interest passes in the case of a simple mortgage bond. In all mortgages --other than possessory mortgages--the interest in the property which is created by the bond does not become enforceable until the happening of a certain contingency and in the case before us such interest in the property became enforceable upon default in payment of interest due upon the principal sum. There was thus a 'transfer of an interest in the property' within the meaning of Section 58, T. P. Act, contingent upon default being made in payment of the stipulated sum of Rs. 27 being the amount of interest annually due to the obligees. The right to take possession of the property upon the happening of a particular contingency came into existence at the date of execution of the bond in the same way as the right to put the property to sale upon a breach of the contract under a simple mortgage bond comes into existence when the bond is executed. The conclusion is, I think, irresistible that the bond of 24th June 1918 was a mortgage bond from the date of its execution the intention of the parties being that the property specified at the foot of the bond should be security for the debt. It was not a simple mortgage bond, but was a mortgage of a kind which by the Amending Act 20 of 1929 came to be known as an anomalous mortgage.

10. In my opinion this appeal should be allowed and, since the plaintiffs did not appeal against the refusal of the lower appellate Court to decree their claim for possession, the decree which that Court passed should be restored. Learned Counsel for the appellants agrees that execution should first proceed against such portion of the secured property as was free of transfer.

Allsop, J.

11. I concur. The representatives-in-interest of the original mortgagor did not appeal against the decree of the lower appellate Court.

Bajpai, J.

12. I agree.

13. We allow this appeal and set aside the judgment of the learned Judge of this Court and we restore the decree of the lower appellate Court with this modification that execution shall first proceed against the property other than the property which was transferred by means of permanent leases and a usufructuary mortgage bond to defendants second set. Execution may proceed against the last mentioned properties in the event of satisfaction not being obtained by execution against the property which was free from these transfers. The plaintiffs-appellants are entitled to their costs in this Court. Costs in the Courts below will be as directed by the lower appellate Court.


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