John Edge, Kt., C.J., Knox, Blair, Banerji, Burkitt and Aikman, JJ.
1. On the 23rd of April 1892, the plaintiffs, who are the respondents in this appeal, brought a suit in the Court of the Subordinate Judge of Gorakhpur praying for a decree for sale under Section 88 of Act No. IV of 1882 of the villages Birari and Bhadwa on a mortgage dated the 28th of April 1879, and also praying that in the event of the sale proceeds of the two villages not being sufficient for the satisfaction of the demand of the plaintiffs, an order might be entered in the decree for recovery of the balance of the amount which might be decreed from the other movable and immovable property of the defendants. The amount claimed was Rs. 17,906, of which Rs. 7,000 was claimed as principal and Rs. 10,906 as interest.
2. The only pleas raised in the written statement which are relied upon in the grounds of this appeal were that there was no condition in the mortgage-deed for the payment of interest after the due date, and that by reason of limitation the plaintiffs were not entitled to interest as damages.
3. The mortgage-deed was one not presenting any difficulties of construction. The principal money was Rs. 7,000, upon which interest at the rate of one rupee per centum per mensem was agreed to be paid. The condition as to the repayment of the principal and the payment of the interest was, as correctly translated, as follows:
I therefore covenant and execute this bond that the aforesaid sum (Rs. 7,000) with interest at the rate of one per centum per mensem from to-day's date until the date of realization within one year I shall pay and satisfy.' The other subsequent material clauses in the mortgage-deed were as follows:
In lieu of the said sum of money I mortgage and hypothecate the entire mauzas Birari and Bhadwa, tuppa Jhar Kola, pargana Mahawli, belonging exclusively to myself, and which are in no way alienated, and in my, this executant's, possession and occupation; and until I pay in full the whole of the amount of principal and interest at the aforesaid rate I shall not transfer the aforesaid shares to any one by sale or mortgage. When I pay off the principal with interest I shall obtain a registered receipt from the said Shaikhs. If I, from any reason whatsoever, pay the money into the Treasury of the Court, I shall not claim any costs incurred by me. * * * * If I fail to pay the money with interest on the due date, the said Shaikhs shall have power to recover the said sum of money together with interest at the rate of one per centum per mensem and costs from the mortgaged property and other properties movable and immovable belonging to me. * * * * The money which I shall pay shall first be credited towards interest and the balance towards the principal. If during the currency of the stipulated term the said mahajans should have any cause of uneasiness on account of any act on my part, the said mahajans shall have power to realise the principal and interest due to them from the person or property of this executant, the details of which are given above, and shall not wait for the expiry of the stipulated period.
4. The Subordinate Judge, who, through negligence or otherwise, apparently mistranslated the mortgage-deed, stated that on a perusal of the deed he was of opinion that the parties intended that interest should continue to run until payment, and that it was not intended that the payment of interest should be restricted to one year, and he gave the plaintiffs a decree for Rs. 17,906 with costs and future interest at the rate of 8 annas per centum per mensem, and ordered that if the amount decreed should not be paid within four months the property should be sold. The principal defendant appealed from that decree In consequence of a recent ruling of the High Court at Calcutta in Bikramjit Tewari v. Durga Dayal Tewari I.L.R. 21 Cal. 274, the appeal was referred to a Full Bench.
5. For the defendant-appellant it was contended that by the deed interest ran from the date of the deed (the 28th of April 1879) until payment within one year from that date, and if payment were not made within the year then that interest ran for one year from the date of deed and no longer, and that the other conditions of the deed binding the mortgagor not to transfer the mortgaged property and giving the mortgagees power in case payment was not made to recover the principal with interest were common form conditions which are inserted in nearly all mortgage-deeds in these provinces, whether the mortgage-deeds confine the mortgagee's liability for the payment of interest to interest during the term of the mortgage, or provide for the payment of interest not only during the fixed term of the mortgage but after the due date of the mortgage. It was also contended on behalf of the appellant that interest which might be allowed by a Judge under Act No. XXXII, 1839, upon a mortgage was of the nature of damages and was not of the nature of contractual interest, and in any event that it was not 'interest on the mortgage' within the meaning of Section 86 of Act No. IV of 1882, and that in this case the claim in respect of interest, either as called interest or as damages, after the expiration of the year from the date of the mortgage was barred by the Indian Limitation Act, 1877. For the appellant the following authorities were relied upon: Cooke v. Fowler L.R. 7 H.L. 27; Bishen Dayal v. Udit Narain I.L.R. 8 All. 486; Mansab All v. Gulab Chand I.L.R. 10 All. 85; Bhagwant Singh v. Daryao Singh I.L.R. 11 All. 416; Sri Niwas Ram Pande v. Udit Narain Misr I.L.R. 13 All. 330 and Gudri Koer v. Bhuboneswari Coomar Singh I.L.R. 19 Cal. 19.
6. For the plaintiffs-respondents it was contended that, according to the mortgage-deed, interest as such was payable, not only for the term of the mortgage but after the due date, and in any event that the Court could allow interest after the due date under Act No. XXXII of 1839, and that interest so allowed was not to be considered as damages but as interest which the parties had within their contemplation when the mortgage-deed was made, as they must be presumed to have known the provisions of Act No. XXXII of 1839, and that that Act might be applied if the principal and interest due under the mortgage were not paid on the due date. It was also contended on behalf of the respondents that interest allowed by a Court under Act No. XXXII of 1839 on the non-payment of the principal and interest on the due date of a mortgage was 'interest on the mortgage' within the meaning of Section 86 of Act No. IV of 1882. For that proposition the judgment in Bikramjit Tewari v. Durga Dyal Tewari I.L.R. 21 Cal. 274, was relied upon. It was also contended that a Court could decree interest under Act No. XXXII of 1839 notwithstanding that the period of limitation prescribed by art.116 of the second schedule of the Indian Limitation Act, 1877, had expired before the suit had been brought. It was contended that this was the legitimate conclusion to be deduced from the case reported. The other cases relied upon on behalf of the respondent were the following: The anonymous case in 4 Taunton 876; Price v. The Great Western Railway Co. 16 M. and W. 244 and London, Chatham and Dover Railway Co. v. South Eastern Railway Co. L.R. 1 Ch. Div. 120.
7. In our opinion the construction of the mortgage-deed admits of no doubt. The term was one year from the 28th of April 1879. The mortgagees could on the expiration of that year sue for and recover the principal moneys remaining due at the expiration of that year; in certain events the mortgagees could before the expiration of that year sue for and recover the principal and interest due at the date of their suit, On the other hand, the mortgagor could, by payment to the mortgagees or into the Treasury of the Court of the principal and interest due, redeem the mortgage even before the expiration of the year. The payment of post diem interest was not provided for by the mortgage-deed, and certainly, according to the ordinary construction of such deeds in these provinces, which we believe to be correct, was not contemplated by the mortgagor. The conditions in the mortgage-deed binding the mortgagor not to transfer the mortgaged property, and giving the mortgagee power to recover the principal money with interest if the mortgagor failed to pay the principal with interest on the due date, are ordinary conditions commonly inserted in mortgage-deeds in these provinces, whether it is intended that interest shall run only to the due date or shall run not only to the due date but after due date and until the principal sum 9hall have been paid. Such conditions are never construed in this Court as indicating that interest shall continue to run after the due date.
8. It may be said that if the mortgagees had not construed the mortgage-deed as providing that interest should continue to run after the expiration of the year which began on the 28th of April 1879, why did they not bring their suit within the period prescribed by Article 116 of the second schedule of the Indian Limitation Act, 1877? It is possible that the mortgagees may have misconstrued the mortgage-deed, and it is also possible that they may have taken the same view of the law as was taken in Bikramjit Tewari v. Durga Dyal Tewari I.L.R. 21 Cal. 274, and have been unaware of the application of Article 116 of the second schedule of the Indian Limitation Act, 1877. It is useless to speculate as to the reasons which may have influenced the mortgagees. What we have to decide is, what was the mutual intention of the parties as evidenced by the mortgagee-deed. We have said that in our opinion the construction of the mortgage-deed is not open to doubt. If the construction of the mortgage-deed were open to doubt, we, sitting here to administer the law, would be bound in justice, equity and good conscience to construe the mortgage-deed in favor of the mortgagor and against the mortgagees on any doubtful point. It requires but little knowledge of borrowers and of money-lenders in these provinces to be aware that it rarely happens that a small zamindar or an agriculturist has legal assistance of any kind in the negotiation for a loan on mortgage or in the preparation or approval of a mortgage-deed. The borrower goes to the money-lender, and it is the money-lender who prepares the mortgage-deed and who is responsible in ninety-nine cases out of one hundred for the language used in it. The money-lender is a shrewd man of business; the needy zimindar or needy agriculturist may understand the cultivation of land and the value of crops and seeds, but, until taught by bitter experience, he has but the most hazy conception of legal phraseology. It would be as reasonable to construe a doubtful contract between a spider and a fly against the fly as it would in these provinces be to construe a doubtful provision in a mortgage-deed against the mortgagor.
9. When by a mortgage-deed it is provided that the principal and interest at an agreed rate shall be payable at a certain time, and the mortgagor fails to make payment on or before that date, it is, subject to the provisions of the Indian Limitation Act of 1877, competent to a Court in its discretion to allow interest after the date certain under Act No. XXXII of 1839, provided that the parties have not contracted themselves out of that Act. It is seldom that the provision in the Act enabling a Court to allow interest when a demand in writing has been made could apply in a transaction of mortgage.
10. It is quite clear that the interest which a Court may allow under Act No. XXXII of 1839 is not contractual interest. The allowance of such interest under Act No. XXXII of 1839 and the rate which may be allowed depend, not upon the agreement of the parties, but entirely on the discretion of the Court. It is allowed as compensation for the breach of contract, in the one case to pay at the time certain, and in the other case for non-compliance with demand in writing, and is damages, although the amount of such damages is ascertained by allowing interest at a rata fixed by the Court in the particular case. There is on this point no difference in principle between Act No. XXXII of 1839 and Section 28 of the 3rd and 4th William IV, Chapter 42. In England interest allowed as damages under Section 28 of the 3rd and 4th William IV, chapter 72 does not become a debt until judgment, when it becomes part of the judgment-debt.
11. It is obvious to our minds that article 116 of the second schedule of the Indian Limitation Act, 1877, would apply to any claim to have interest allowed under Act No. XXXII of 1939 in respect of the non-payment on the due date of the money due under a registered mortgage-deed, if the suit was not brought within six years of the breach of contract.
12. Turning now to Act No. IV of 1882, it seems to us to be clear, upon a comparison of the provisions of Sections 83, 84, 86, 88 and 92 of that Act that the interest on payment of which in addition to the principal money a mortgagor may prevent foreclosure or sale or obtain redemption is the interest which be contracted to pay, and the payment of which was secured by the mortgage-deed. Those who were responsible for the drafting of the Transfer of Property Act, 1882 (Act No. IV of 1882) were not always careful to use the same terms to express the same meaning, yet it is not conceivable that it was intended that a mortgagor should be entitled to redeem under Section 92 upon payment of the principal money and the contractual interest due under the mortgage-deed, on the day fixed by the Court, plus the costs of suit, if any, awarded to the mortgagee, and that in order to avoid a sale under Sections 88 and 89 he should be obliged to pay, not only the principal moneys and the contractual interest due under the same mortgage-deed on the day fixed by the Court, plus the costs of suit, if any, awarded to the mortgagee, but in addition such interest as might be allowed by a Court under Act No. XXXII of 1839, and yet, if the decision in Bikramjit Tewari v. Durga Dayal Tewari I.L.R. 21 Cal. 274 be correct, that is the result of Sections 89, 89 and 92 of Act No. IV of 1882. For example, it is agreed between the parties in this case, through their counsel and vakils respectively, that the amount due for principal and interest up to the expiration of the year of the mortgage is Rs. 7,840, and that, if the decision first referred to of the Calcutta High Court is correct, the decree for principal and interest to the date of suit must be for Rs. 17,906. This suit was instituted on the 23rd of April, 1892. On the 22nd of April, 1892, the mortgagor might have deposited in Court under Section 83 of Act No. IV of 1882 the 'amount remaining due on the mortgage,' which was, if our construction of the mortgage be correct, Rs. 7,840, and then Section 84 would have applied: or the mortgagor might, on the 22nd of April 1892, have instituted a suit for redemption, and under Section 92 of Act No. IV of 1882 he would have been entitled to a decree for redemption conditional on his paying to the defendants or into Court the sum of Rs. 7,840 and the costs of suit, if any, awarded to the defendants. There is no question under Section 92 of interest which may be allowed under Act No. XXXII of 1839. The term 'the mortgage money' of Section 92 is thus defined by Section 58(a)--'the principal money and interest of which payment is secured for the time being are called the mortgage money.' We do not suppose that anyone would suggest that interest which might be allowed by a Court under Act No. XXXII of 1839 could be brought within that definition, unless the parties had specially agreed in their deed that any interest which might be allowed by a Court under Act No. XXXII of 1839 should be deemed to be interest secured by the deed. We have never seen a deed containing such an agreement. Even without the light afforded by a consideration of Sections 83, 84, 90, 92 and 94 of Act No. IV of 1882, we should have had no doubt that the term 'interest on the mortgage' of Section 86 must be interest due on the mortgage and not interest allowed by a Court under Act No. XXXII of 1839: the latter interest is neither due nor does it become due on the mortgage; it becomes due under the decree of the Court and under that decree alone, and consequently is not part of the amount on default of payment of which the mortgaged property as such may be sold under Section 89. When in a suit for sale under Sections 88 and 89 a Court allows under Act No. XXXII of 1839 interest post diem, its decree, so far as such post diem, interest is concerned is not a decree for sale under Section 88, but is a decree for money which can be executed in the manner provided for the execution of simple money decrees. It is only under the Transfer of Property Act, 1882 (Act No. IV of 1882), that a Court can in a suit on a mortgage make a decree for sale of the mortgaged property as such, and a Court has not jurisdiction to extend those sections by decreeing a sale of mortgaged property if the interest which it allows under Act XXXII of 1839 be not paid.
13. The mortgage-deed in this case was made on the 28th of April 1879. The only decree for sale of the mortgaged property which could be made in this suit was a decree under Section 88 of Act No. IV of 1882. It would work a grievous hardship on a second mortgagee who had advanced his money in 1883 on the same security, having taken the precaution to inform himself by a search in the office of the Registrar of Deeds as to the nature of the previous incumbrance, and who trusted to the provisions of Act No. IV of 1882, if his rights were postponed, and the first mortgagee should under a decree under Act No. XXXII of 1839 be entitled to be paid out of the proceeds of a sale of the mortgaged property the interest allowed to him by the Court under Act No. XXXII of 1839 before any portion of the proceeds of such sale should be applied towards discharging the second mortgage. Such was not, in our opinion, the intention of the Legislature when passing Act No. IV of 1882 and enacting Section 295 of Act No. XIV of 1882.
14. The appellant has limited the relief which we can afford to him in this appeal by his prayer in his memorandum of appeal, which is: 'that the award of post diem interest to the amount mentioned in the valuation of this appeal be set aside and the suit to that extent be dismissed.' The amount mentioned in the valuation of the appeal is Rs. 9,750. Deducting that sum of Rs. 9,750 from the amount decreed by the Court below, we give the plaintiffs a decree for the balance, and order that upon the defendant-appellant paying to the plaintiffs or into Court such balance on or before the 27th of November next, the plaintiffs should deliver up to the defendant-appellant or to such person as he may appoint all documents in the possession or power of the plaintiffs relating to the mortgaged property, and shall transfer the property to the defendant-appellant free from all incumbrances created by the plaintiffs, or any of them, or any person claiming under them, or any of them; but that, if such payment is not made on or before the 27th of November next, the mortgaged property or a sufficient part thereof be sold, and that the proceeds of the sale after defraying there out the expenses of the sale, be paid into Court and applied in payment of the said amount found due by us to the plaintiffs, and that the balance, if any, be paid to the defendant-appellant or other persons entitled to receive the same. We vary the decree below, and allow this appeal to the extent above mentioned with costs to the appellant in this Court, and otherwise dismiss the suit.