1. The question which is in controversy between the parties in. this appeal is whether in a mortgage by way of conditional sale the mortgagor is found to pay interest at the agreed fate from and after the day upon which he should have discharged his obligations under the deed. In other words, is interest during the frost diem period, though not expressly provided for, to be calculated under the particular provisions of the deed at the same rate as that stipulated for during the agreed period of the currency of the bond
2. The position very shortly is as follows: The borrower should have re-paid, but did not re-pay, the principal and interest in December 1907, and though certain-payments of interest were made, the account at the commencement of this action on the 20th of October 1919, showed that Rs. 8,000 principal and Rs. 10,581 interest ware due. This was based upon the calculation that the express stipulation as to interest covered the whole period from the 8th of December 1902, down to the date of the institution of the suit Whilst it is, of course, proper that we should refer to and pay regard to decided cases; the main and important matters for our consideration are the exact terms of the document itself. When those have been considered, it is proper to see whether there are any decided cases so similar in their terms that the canons of construction that have bean used by other Courts will be of assistance to us. If so, it is our duty to avail ourselves of them.
3. The document, dated the 8th of December 1902, was executed by Mathura Prasad, who was the father of the defendants (appellants). It stated that he had for a period of five years mortgaged without possession a certain property in lieu of Rs. 8,000 to Raja Dhiraj Singh, that the money was to be applied in satisfaction of a decree, and then follow the words which have given rise to this question:
It is covenanted that I shall continue to pay interest at the rate of 11 annas per cent, per mensem annually. In case of default in payment of interest, it shall be a deed to the principal, and I shall pay interest thereon as well at the aforesaid rate. I, or my heirs, or representatives shall have no objection to it, nor shall I mortgage or sell the property to any other person until the payment of the mortgage-money.... In case of breach of promise and expiry of the stipulated period, the mortgagee shall become, the absolute owner of the property mortgaged, and, I, or my heirs, or representatives, shall have no objection whatever.... But if in any year I pay something towards principal in addition to the amount of interest, it will be not less than Rs. 500. I have, therefore, executed these few presents by way of a mortgage-deed by 'conditional sale, so that they may stand as authority and be of use when required.
4. The first point which stands out clearly is that for five years' the rate of interest was defined with precision. ISiowhere in the document is there any direct reference to what was to happen as regards interest if the mortgagor did not pay punctually or if in that event the mortgagee abstained from taking any proceedings for fore closure. As regards default in! payment of interest during the period between 1903 and 1907, be stipulate that he will not offer objection to interest being added to principal, and interest being paid on both, and in the same Sentence he couples up a promise not to mortgage or sell the property to any other person until the payment of the mortgage-money. A few lines above he had agreed to 'continue' to pay interest at the rate of 11 annas per cent, per mensem annually.
5. It is difficult to believe that the parties could have had any other intention than that if the mortgagor failed to pay in December 1907, the stipulations in the deed would remain in force and that the mortgagor would be bound to continue to pay interest at the agreed rate, calculated up to the time of tender or payment of principal and interest or the institution of a suit by the mortgagee. There is no suggestion that any lesser rate was agreed upon to come into force upon default. Nor is there any logical reason to think that the mortgagee would be willing for his money after 1907 to bear a smaller rate of interest. He could, on default have commenced a suit, but he was not hound to do so. Dr. Sen, however, contends that on the 8th of December 1907, the agreed interest at once stopped running and that there was, as between mortgagor and mortgagee, a definitely ascertainable debt, and that from that date the lender acquired a new and different right, namely, the right to bring a suit for foreclosure. We do not agree with this interpretation of the document and we are of opinion that the mortgagee's rights as regards principal and interest, as apart from proceedings, against the property, continued. The first case to which we may refer is that of Mathura Das v. Raja Narindar Bahadur 10 A. 39 : 23 A. 138 : 1 C.W.N. 52 : 6 M.L.J. 214 : Sar. P.C.J. 88 : 9 Ind. Dec. (N.S.) 25 (P.C.). In that case the material words of the deed were that the amount of the loan in full, principal a s well as interest, would be paid within a year. It is said in the deed:,
Until the payment in full of this amount, principal and 'interest, I shall not transfer either directly or indirectly the mortgaged property to any one else; and if I do, such a transfer should be deemed to be false and inadmissible.
6. No payment was made, and some eight years after the deed the suit was commenced for the usual mortgage-decree. The Subordinate Judge passed a decree for the sum of Rs. 2.2,813. It was the amount of the principal alone with one year's interest; and, therefore, he disallowed the claim of the plaintiff to the remaining; seven years' interest at the rate stipulated in the deed. The plaintiff came to the High Court, and the decision of the Subordinate Judge was affirmed, and in that state of the case the plaintiff as pealed to the Privy Council. Their Lordships had, without hesitation, that although there was no express term carrying on the obligation to pay interest at the agreed rate of 1-6 per cent, per mensem, that, nevertheless there was an obligation upon the defendant to make that payment and that on the ordinary construction of the words, they were in accordance with the usual intention of the parties to a simple mortgager. If, in the present case under consideration, on the ordinary construction of the words they are in accordance with the usual intention of the patties to a simple mortgage, as we believe them to be, we shall be coming to a right decision in holding that the defendants (appellants) must pay after the 8th of December 1907, interest at the same rate as they had agreed to nay before that dale. We are of opinion that this case of Mathura Das v. Raja Narindar Bahadur 10 A. 39 : 23 A. 138 : 1 C.W.N. 52 : 6 M.L.J. 214 : Sar. P.C.J. 88 : 9 Ind. Dec. (N.S.) 25 (P.C.) is a very useful authority, which gives his clear and distinct guidance.
7. Now we come to the case of Bindesri Naik v. Ganga Saran Sahu 20 A. 171 : 2 C.W.N. 129 : 25 I.A. 9 : 7 Sra. P.C.J : 273 : 9 Ind. Dec. (N.S.) 471 (P.C.), another Privy Council case, and again from a decision of this High Court. It possesses this additional advantage that the documents which came up for consideration were mortgages by way of conditional sale. When referring to the decision of this Court, their Worships of the Privy Council said:
Their Lordships do not think that, according to the tenor of the mortgage; deeds, it wag intended that the capital sums should cease to bear interest, upon the arrival of the time stipulated for their payment.
8. Then after staling that the Judges of this High Court had confined their attention to a single passage in the document rather than taking into consideration the whole provisions of the deeds, their lordships continued:
In the present case, by the deed of the 21st of August 1875, it is stipulated in general terms that interest at 18 per cent, per annum is to run upon the principal sums advanced, without any limitation as to the period of its currency. And it is also stipulated that in default of punctual payment at the end of each year the creditors are to be at liberty to treat interest as principal and to recover it from the mortgaged property.
9. Therefore, in that case there being no express provision as to what were to be the mutual rights and obligations after the date fixed for payment, the rate of interest was held to continue throughout the currency of the whole liability.
10. Finally, we may refer to the case of Sarah Dasi v. Jogendra Narayan Basu 25 C. 246 : 13 Ind. Dec. (N.S.) 165. In that case a mortgage did contained a covenant to pay principal end interest at a fixed rate in two years, and a further covenant not to transfer the mortgaged property until payment of principal aid interest, and also on failure of payment of interest for one year to treat the amount after the lapse year as principal. The Calcutta High Court held, following the case of Mathura Das v. Raja Narindar Bahadur 10 A. 39 : 23 A. 138 : 1 C.W.N. 52 : 6 M.L.J. 214 : Sar. P.C.J. 88 : 9 Ind. Dec. (N.S.) 25 (P.C.) that the obligation continued so long as mortgage subsisted.
11. We are therefore, of opinion that having regard to the terms of the whole document, its general tenor implies an obligation on the tart of the borrower on the making of default to be liable for subsequent interest of the rate mentioned in the bond. There being no dispute as to the amount, we dismiss this appeal with costs.