P.V. Dixit, J.
1. This revision petition arises out of a suit filed by the applicant to recover Rs. 600/- advanced to Bhilusingh and his son Gajrajsingh. The present opponents are the legal representatives of Bhilusingh, who is now dead. The plaintiff's case is that on 13-2-1954, at the time of the loan transaction, Bhilusingh and Gajrajsingh executed a deed in his favour promising to repay Rs. 600/- after two years and giving possession of certain land to the plaintiff for appropriating the rent and profits thereof in lieu of interest on Rs. 600/-; and that he was put in possession of the land but was dispossessed after nearly two years.
One of the pleas of the opponents in their defence is that the deed dated 13-2-1954 being a mortgage deed is not admissible in evidence as it is unregistered. The Civil Judge, Second Class, Kasrawad, who is trying the suit tried the question of the admissibility of the document as a preliminary issue and held that the deed in question is a usufructuary mortgage and does not contain any personal covenant to repay. Rs. 600/_ and that it is inadmissible even for the collateral purpose of proving the receipt of Rs. 600/- by the defendants. The plaintiff has, therefore, come up in revision to this Court.
2. It is common ground that if the nature and the terms of the mortgage are such that it does not involve any personal liability to pay the debt, then the unregistered document cannot be received in evidence in a suit for the refund of the amount, and that if there is a personal covenant,it would be admissible in evidence. The question whether there is or is not a personal covenant to repay is a matter of construction of the terms of the deed.
Mr. Sanghi, learned counsel for the applicant, relying on Maharaja Ramnarain Singh v. Adindra Nath Mukherji, AIR 1916 PC 119 and on certain observations in Mahomed Haji Wall Mahomed v. Ramappa, AIR 1929 Nag 254, argued that a loan prima facie involves a personal liability, that the nature and terms of the security may negative any personal liability, and that though in a usufructuary mortgage there is no personal liability express or implied, yet if in a usufructuary mortgage-deed there is a clause by the borrower promising to repay by a particular time, that would import a personal liability to pay in such a mortgage.
It was said that by the deed in question, the plaintiff was given a right to appropriate the pro-fits of the land in lieu of interest, that in the deed there was no provision as to how the amount of Rs. 600/- would be paid, and that the borrowers did not bind themselves to pay Rs. 600/- out of any mortgaged property or fund but by the insertion of the clause in the deed that
vkids pqDrs lky nks esa ns nsosxsa o gekjh tehuge okohl ys ysosaxs**
they undertook a personal liability to pay the amount.
I am unable to accede to the argument of the learned counsel for the applicant that the deed contains a personal liability to pay the mortgage debt. The Privy Council has no doubt laid down in AIR 1916 PC 119 (i) that a loan prima facie involves a personal liability (ii) that such a liability is not displaced by the mere fact that security is given for repayment of the Joan with interest, but (iii) that the nature and terms of such security may negative any personal liability on the part of the borrower.
But as pointed out in the Full Bench decision in AIR 1929 Nag 254, this does not mean that every mortgage includes a personal covenant to repay the money lent unless it is negatived expressly or by necessary implication by the terms of the bond or the circumstances of the case. By observing that a loan prima facie involves a personal liability, but the nature and terms of such security may negative any personal liability on the part of the borrower, the Privy Council emphasized the fact that it is the nature and the terms of the security that ultimately determine the existence or absence of any personal liability.
In AIR 1916 PC 119, their Lordships dealt with the case of a usufructuary mortgage in which the mortgagor had covenanted that if for any reason the rent fell short of the loan advanced, the mortgagee could recover the deficit from the mortgagor. It was contended on behalf of the mortgagee that this assurance on the part of the mortgagor amounted to a personal covenant to pay and the High Court had held that the deed did create a personal covenant or at least did not negative it. The Privy Council rejected this contention that the deed contained any personal covenant to pay.
The view that the personal liability of the borrower to repay the loan depends upon the nature and terms of the security was reiterated by the Privy Council in another case reported in Maharaj Ram Narayan Singh v. Adhindra Nath Mukherji, AIR 1916 PC 169. In that case also it was suggested on behalf of the mortgagee that a personal covenant to repay the money lent exists in everymortgage transaction unless it is negatived expressly or by necessary implication by the terms of the bond or the circumstances of the case. Repelling this argument, the Privy Council observed :
'The Subordinate Judge and the High Court have assumed, from the mention in that document that the Rs. 1,30,000 had been advanced that it might be inferred that it was the intention of the parties that the Maharaja Ram Narayan Singh should be personally liable to repay the advance.
Their Lordships do not draw that inference from that document. On the contrary, their Lordships draw the inference from that document that the Maharaja Ram Narayan Singh did not intendi that he should be personally liable for repayment of any portion of the money advanced, except to the extent and in one or other of the events mentioned in the extracts which have been already given.'
It is true that in a simple mortgage there is a personal liability express or implied and there is none in a mortgage by conditional sale or in a usufructuary mortgage. But whether a particular transaction is a simple mortgage or a mortgage by conditional sale or a usufructuary mortgage is a question of the construction of the terms of the deed embodying the transaction. If from the terms of the instrument, a personal covenant to pay can be made out, the fact that the mortgage has been described as a usufructuary mortgage will not prevent the mortgagee from suing the mortgagor for the recovery of the loan amount.
3. Now, in the instant case the document sought to be admitted in evidence stated that the lender would be enjoying the rents and profits of the land in lieu of the interest on Rs. 600/-, that the borrower would pay after two years Rs. 600/-in a lump sum and take back the land, and that in case he failed to repay Rs. 600/- even after two years then the creditor would continue to enjoy the profits of the land in lieu of interest till the amount of Rs. 600/- was paid,
In my opinion, these terms do not import a personal covenant to pay Rs. 600/-. They merely give the borrower an option of paying Rs. 600/-and redeeming the property. A mere promise to pay does not import a personal liability for such a covenant is to be found in every form of mort-gage. The essential thing to see is whether the covenant creates a legal obligation which does not merely give the borrower the option of paying the loan amount and redeeming the security but also confers on the mortgagee a right enforceable against the mortgagor to realise his money otherwise than out of the mortgage security.
In Mulla's Transfer of Property Act, (fourth edition) it has been stated at page 443 that
'a promise to pay does not give the right of personal remedy if the mortgagor binds himself to pay only out of the property mortgaged or a particular fund. It is always a matter of construction whether there is a covenant enforceable against the person of the mortgagor personally.'
Thus a promise to pay cannot be said to contain a personal covenant to pay if in the event of the mortgagor's non-payment it does not give the mortgagee the remedy of enforcing the promise to pay.
In the present case, the borrowers no doubt stipulated that they would pay Rs. 600/- after two years and take back the land. But there is no covenant to pay enforceable against the borrower personally. On the other hand, the deed provided that if the borrower failed to pay the amount after two years, then the creditor would continue to remainin possession of the land and enjoy the profits thereof in lieu of interest on Rs. 600/-, until the amount was repaid. When there is such a condition, it cannot be said that there is an absolute covenant to pay the amount of Rs. 600/-. An absolute cove-inant cannot be coupled with a condition.
4. Mr. Sanghi, learned counsel for the applicant, cited various authorities in support of his contention that there was a personal covenant to pay in the deed under consideration. All those cases are only illustrative of the rule that it is to the nature and terms of the security that one must look to for determining whether there is or is not a personal covenant on the part of the borrower to repay the loan amount.
All those cases are distinguishable of the terms and nature of the deeds considered therein. In Jag Sahu v. Mt. Ram Sakhi, AIR 1922 Pat 167, the 'Palna High Court considered the case of a mortgage deed where a due date was fixed for payment of the mortgage money and there was no clause such as the one present here that in the event of the mortgagor's failure to pay the amount on the due date, the mortgagee would continue in possession of the mortgage security and enjoy the profits of the security in lieu of interest.
It was held by the Patna High Court that there was a personal covenant on the part of the borrower to pay the mortgage amount. Quite apart from the fact that in the present case mere is no covenant to pay the amount of Rs. 600/- on a certain date, the Patna case is not an authority for the proposition that whenever there is a term in the mortgage-deed for payment of the mortgage money on a particular date, that imports a personal liability to pay.
The essence of a usufructuary mortgage is that the mortgagee looks to the rents and profits for the satisfaction of his advance and if no time limit is fixed for payment there can be no forfeiture. It is this forfeiture that gives rise to the remedies of foreclosure and sale. If there is no forfeiture the mortgagee is not entitled to the remedies that spring out of it.
But from this it does not follow that in the absence of a forfeiture clause, the mortgagee is entitled to recover the money personally from the borrower. There must be an express agreement on the part of the borrower to pay the amount personally in a usufructuary mortgage. In Matnura Singh v. Palakdhari Rai, AIR 1940 Pat 512, the deed that was considered provided that the mortgagor shall pay in one lump sum the principal amount in the month of Jeth 1334 Fasli and after getting the endorsement of the payment made on the Rahan deed from the creditor shall take back the land.
There was no condition that if the money was not paid within the time fixed, the mortgagee would continue to enjoy the profits of the security or that the bond would remain in force. The learned Judges found that the hypothecation clause in the deed was curious and that what was mortgaged and hypothecated was not for payment of the principal but to secure payment of interest on it. It was in these circumstances that the learned Judges of the Patna High Court held that there was on the part of the borrower a plain promise to repay the principal amount.
It may be that in AIR 1940 Pat 512 the mortgage deed curiously provided that the mortgage was not for the payment of principal but to secure the payment of interest on it. But if there was such a term, then the transaction could notbe called a mortgage. I think it cannot be argued with any degree of force that where there is a mortgage and the mortgagee is put in possession of the security and directed to enjoy the profits of the security in lieu of interest and is required to restore back the land on receiving the principal amount, the mortgage security is not for the payment of the principal but only to secure payment o interest on it.
In such a case, the mortgagee may have no right to bring the property to sale, but he has a right to remain in possession of the property until the amount of the advance is paid off. The property mortgaged is thus security for the payment not only of the principal but also of the interest on it. Learned counsel also relied on Ramakkammal v. C. G. Subbarathnam Iver, AIR 1953 Mad 13. Under the mortgage-deed in that case it was stipulated that the mortgagee should enjoy the property in lieu of interest.
There was also a stipulation that the mortgage amount would be paid by the mortgagor. The mortgagor failed to give possession to the mortgagee and made considerable profits from and out of the rents. It was held on a construction of the deed in that ease that the mortgagee was entitled to sue for sale under Sections 67 and 68 of the Transfer of Property Act and that even otherwise there was a personal covenant to pay the mortgagee.
Paragraph 7 of the judgment in that case makes it very clear that there the mortgagor had expressly promised to pay the mortgage amount on demand with interest thereon at the rate of four annas per cent per month from the date of default. There was thus a clear covenant to pay the mortgage amount. In Sivakarni Ammal v. Gopala Sa-vundram Ayyan, ILR 17 Mad 131, the mortgage-deed that was considered contained the term :
'If I fail to pay the mortgage amount in the said Kalavadi, then you shall receive the said mortgage amount in the Chittrai Kalavadi of whatever year I may pay it, deliver the said lands to my possession having cleared off the arrears of Government revenue, and also give back the bond.'
It was held by a Full Bench of the Madras High Court that the bond contained a covenant to pay. The judgment of the Full Bench is very short and does not give any reasons at all for the conclusion that the mortgage contained a covenant to pay. It will be noticed that in the order of reference to the Full Bench in the Madras ease the First clause was regarded as covenant to repay the money in the cultivation season of 1883 and the second clause was construed as one for the immediate benefit of the mortgagee in limiting the discretion of the mortgagor to repay the money and redeem the land thus not affecting the first clause containing the covenant to pay. It was observed in the order of reference to the Full Bench :
'Naturally the mortgagee was anxious not to be called upon to give up his security except at a season when the land could not, in the nature of things, be bringing him in any profit.'
There is thus a distinction between the present case and the case reported in ILR 17 Mad 131. The observations in AIR 1929 Nag 254 at p. 255 that 'the insertion in a usufructuary mortgage of a covenant by the mortgagor to repay the consideration money on a particular date may entitle the mortgagee to a personal decree against the mortgagor', relied upon by the learned counsel for the petitioner, as already pointed out, do not mean that whenever the mortgagor stipulates to repay the consideration money on a particular date thatis conclusive of the existence of a personal covenant to pay,
5. In my judgment, the present case is somewhat analogous to the case of Luchmeshar Singh v. Dookh Mochan Jha, ILR 24 Cal 677, In that case, the mortgagor stipulated that 'having paid the principal money in the month of Chait 1297 we shall take back the document and the land. In case we fail to repay the principal money at due date the Sudbharna bond shall remain in force.' These words were held by the Calcutta High Court not to import a personal covenant to repay but merely to express the right of redemption.
Identically the same question was considered in Kamal Nayan Prasad v. Ram Nayan Prasad., AIR 1930 Pat 152 where the mortgagor covenanted that he shall pay off the entire 'zarpeshgi' money in one lump sum to the 'thikkadara' and take back pos~ session of the leasehold property, and that in the event of his failure to pay the amount, the Patta shall remain in force and intact till the repayment of 'Zarpeshgi' money. The Patna High Court held that this condition did not constitute a covenant to repay.
6. In Wadhawa Singh v. Kunj Lal, AIR 1938 Lah 497, the plaintiff instituted a suit for the recovery of Rs. 900/- which he alleged he had paid to the defendant as consideration for certain mortgages which had been set aside in an earlier suit filed by one person alleging that the mortgagor had no right to mortgage the property. One of the mortgages was unregistered and the question arose whether the unregistered deed was admissible in evidence to support the plaintiff's claim for the refund of consideration.
The deed recited that the mortgagee had been put in possession of the mortgaged land and that he would remain in possession till redemption by the mortgagor by payment of the mortgage money in the month of Magh or Jeth and that during this period the mortgagee was to receive rents and profits accruing from the property and appropriate the same in lieu of interest. It was held by the Lahore High Court relying on ILR 24 Cal 677 that the mortgage was really a usufructuary mortgage and did not contain any personal covenant for repayment of the debt by the mortgagor and that, therefore, the deed was inadmissible for the purpose of supporting the plaintiff's claim for the recovery of Rs. 900/-.
7. For the foregoing reasons, I am of the view that the learned trial Judge arrived at the right conclusion in holding that the unregistered deed in question did not not contain any personal covenant on the part of the defendants for repayment of the debt and was, therefore, inadmissible in evidence. This petition is, therefore, dismissed. Having regard to the question decidedd, I leave the parties to bear their own costs of this petition.