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Hasan Ali and ors. Vs. Laxmichand - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 16 of 1966
Judge
Reported inAIR1972Raj230; 1972()WLN198
ActsTransfer of Property Act, 1882 - Sections 61
AppellantHasan Ali and ors.
RespondentLaxmichand
Appellant Advocate R.N. Surolia, Adv.
Respondent Advocate M.C. Bhandari, Adv.
DispositionAppeal allowed
Cases ReferredKesar Kunwar v. Kashi Ram.
Excerpt:
transfer of property act - mortgage--subsequent stipulation that advance be paid before redemption--held, not bad law--not obligatory for defendant to file suit for recovery of money due.;it is clear that subsequent stipulation that the advances will be paid before the mortgaged property is redeemed is not bad in law.;the stipulation contained in the document dated 23-10-1941 kept the defendants' claim of rs. 23410.9 alive till the date the plaintiff mortgagor sought to redeem the property under mortgage of 1937. it was not obligatory on the defendants to have filed a suit for the recovery of 'he money due under the second agreement. they were well within their right to have waited for the day the mortgagor went to them to seek the redemption of the property and they were justified in..........must pay that amount in addition to rs. 2500/- and then alone he is entitled to redeem the mortgaged property. on behalf of the defendants it was also claimed that they made certain improvements and spent a sum of rs. 20/- and the mortgagor is liable to pay that amount as well. hasan ah and gulam hussain defendants alone contested the suit, whereas the other defendants did not nut in appearance and the case proceeded ex parte against them.3. the learned civil judge framed three issues. the defendants save up their claim for rs. 20/- on account of improvements. the learned judge after trial found that the subseauent agreement dated 23-10-1941 was not a mortgage, but in fact, it was a charge and the mortgagees are entitled to the amount under the subsequent agreement. he.....
Judgment:

J.P. Jain, J.

1. This is a second appeal by the defendants-mortgagees against the appellate judgment and decree dated 13-8-1965 Dassed by the District Judge. Udaipur in a suit for redemption.

2. The suit property is situated in village Avad; Tehsil Girwa District Udaipur and bears Municipal number 10/892. Laxmichand. plaintiff, the owner of the suit house, mortgaged this property with possession on 29-9-1937 with Hasan Ali. defendant No. 1 and Nazar AH. father of defendants Nos. 2 to 6 for Rs. 2500/-. The period of mortgage was stated to be eleven years in the mortgage deed. The mortgagor asked the defendants to take the mortgage amount and leave the property but they did not do it and as such, he instituted a suit for redemption on 21-8-1963 in the court of Civil Judge. Udaipur. The defendants admitted the mortgage and also the mortsase money. But it was pleaded that the Dlaintiff had borrowed more money which came to Rs. 2354/10/9 and by a Khata executed by him on 23-10-1941 it was agreed that the amount will be payable to the mortgagees when he redeems the DroDertv alreadv mortgaged with them on 29-9-1937. Accordingly, the defendants claimed that the plaintiff mortgagor must pay that amount in addition to Rs. 2500/- and then alone he is entitled to redeem the mortgaged property. On behalf of the defendants it was also claimed that they made certain improvements and spent a sum of Rs. 20/- and the mortgagor is liable to pay that amount as well. Hasan AH and Gulam Hussain defendants alone contested the suit, whereas the other defendants did not nut in appearance and the case proceeded ex parte against them.

3. The learned Civil Judge framed three issues. The defendants save up their claim for Rs. 20/- on account of improvements. The learned Judge after trial found that the subseauent agreement dated 23-10-1941 was not a mortgage, but in fact, it was a charge and the mortgagees are entitled to the amount under the subsequent agreement. He accordingly passed a preliminary decree in favour of the plaintiff against the defendants 'jointly and severally directing the plaintiff to pay a sum of Rs. 4854/10/9 on or before the 11th day of March. 1965. Other consequential orders were also passed.

4. Being dissatisfied with this judgment and decree, plaintiff Laxmi-chand preferred an appeal and the learned District Judge, Udaipur who heard the appeal held that the defendants were not entitled to recover the amount of Rs. 2354/10/9 at the time of redemption as the claim with respect to this agreement dated 23-10-1941 was time barred. He placed reliance on Lallu Singh v. Ram Nandan AIR 1930 All 136 (FB): Kesar Kunwar v. Kashi Ram 30 Ind Cas 777 = (AIR 1915 All 480) and Baldeo Rai v. Murli Rai (1912) 16 Ind Cas 638 All). In the result, he allowed the appeal and modified the decree of the trial court and directed the plaintiff to pay into the court a sum of Rs. 2500/- only on or before 13th day of December. 1965. The cross-obiection with regard to costs filed by the defendants was dismissed. It is this judgment and decree that has been assailed in this Court by the mortgagees.

5. During the pendency of the second appeal Hassan AH died and in his place, his legal representatives have been brought on record Mr. Surolia represents all the appellants and Mr. M. C. Bhandari represents the mortgagor-respondent.

6. On behalf of the appellants it has been contended that the subsequent agreement dated 23-10-1941 is admitted by the plaintiff. According to this document dated 23-10-1941 plaintiff admitted that he owed a sum of Rs. 2354/10/9 on that date. In this agreement it was also acknowledged that a mortgage with possession was alreadv made with the lenders for Rs. 2500/-. It was further stated in this agreement that Laxmichand had no cash money with him to pay off the amount of Rs. 2354/10/9 nor was he in a position to pay interest on that amount. His residential house is alreadv in possession of the mortgagees. He therefore made that mortgaged house as a security for the repayment of this amount of Rs. 2354/10/9. On account of this agreement it was held by the trial court that it was not a mortgage but the. transaction created only a charge. Thp lower appellate court also agreed with this view. It is true that the learned Judge of the trial court, after having come to the conclusion that it was a charge, abruptly came to the conclusion that Issue No. 2 which runs to the following effect:--

'(2). Whether there was a charge of Rs. 2354/10/9 on the mortgaged property which the plaintiff promised to pay before redeeming the mortgage and he was entitled to redeem it without paving the total amount of Rs. 4854/10/9?'

must be decided in favour of the defendants. He did not discuss whether the liability of Rs. 2354/10/9 was enforceable at the time of redemption. The lower appellate court, after having agreed with the view taken by the trial court that the subsequent transaction of 23-10-1941. was only a charge, was of the opinion that this claim was time-barred and as such. it could not have been claimed in a suit for redemption of the mortgaged property which took pace on 29-9-1937. The logic advanced by the lower appellate Court is that if the defendants had filed a suit for the recovery of the amount under the subseauent transaction, they could not have been successful to recover the amount on that date and something which the defendants could not recover directlv. could not be allowed to recover indirectly.

7. If the second transaction was only to the extent of creating a charge, the matter would have been different. But there is another stipulation contained in the same document dated 23-10-1941 which has not obviously been considered by the lower appellate court. This stipulation is that if the mortgagor redeems the property at any time, then he will be bound to pay this amount of Rs. 2354/10/9 before he can recover possession of the mortgaged property, on payment of Rs. 2500/-. Thus, the plaintiff has qualified his right of redemption and agreed that before he redeems the property, under mortgage, he will pay the amount under the subsequent agreement. Learned counsel on behalf of the appellants lavs stress on this Dart of the agreement. According to him, it is this stipulation which keeps his demand of Rs. 2354/10/9/ alive upto to the day, the redempton is sought by the mortgagor. He is using this part of the agreement as a shield for redemption. His submissions are therefore two fold: One is that in view of this stipulation, the amount under the second agreement does not become time-barred and that apart, his contention is that the Question of limitation cannot be pleaded when it is taken up in defence. Two is that, he wants the enforcement of this agreement. He places reliance on a decision of this Court in Ali Mohammad v. Ramniwas: AIR 1967 Raj 258 on the Other hand. Mr Bhandari reiterated the argument which prevailed with the lower appellate court. According to him. the decision of this Court, relied upon by Mr. Surolia, is not good law and it needs reconsideration and in support of his submission, he places reliance on AIR 1930 All 136 (FB).

8. I will first take up the decision of this Court in Ali Mohammad v. Ramniwas. In this case, the plaintiff mortgaged two shops in favour of the defendants to secure a loan of Rs. 1565/- by a registered mortgage deed dated 22nd August. 1'927. The mortgage was of a usufrutuarv character. Redemption was sought on payment of Rs. 1565/-The redemption was resisted by the mortgagees. Besides other claims, the defendants set up a claim to a sum of Rs. 886/12/6. According to them, it was advanced to the mortgagor as a further loan. It was claimed by the mortgagees that before redemption could be sought, the plaintiff must be made to nav this amount of Rs. 886/12/6 in addition to the mortgage money. The advance of Rs. 886/12/6 was admitted by the plaintiff and it was also conceded that the mortgagor had agreed that he would redeem the mortgaged property after having paid the sum of Rs. 886/12/6. This advance was proved to have been made on 1st August. 1941. It was contended on behalf of the plaintiff that the amount advanced under the subsequent agreement was a simple loan and the defendant's claim with respect to it was obviously barred by time and therefore, it could not the claimed along with the mortgage money at the time of redemption. It was also held in that case that the subsequent loan only created a charge and did not constitute a mortgage.

Modi J.. who decided that case, placed reliance on the principles approved by their Lordships of the Privy Council in Aditva Prasad v. Ram Ratan Lal AIR 1930 PC 176 and observed as follows:--

'It may also be made clear in this connection that it has not been shown to me that Ex. A-2 was compulsorilv registr-able at the time it came to be executed in that State. Now bearing the principles which have been laid down by the Priw Council in AIR 1930 PC 176. let us see how they apply to the present case. The relevant entry in Ex. A-2 says that the plaintiff mortgagor had taken a . total amount of Rs. 886/12/6 from the defendants mortgagees and that there was a usu-fructuray mortgage of the plaintiff's two shops with the defendants and further that whenever he will redeem that mortgage he will redeem it after paving the said amount of Rs. 88612.6. As I look at this entrv it fulfils, in my opinion, all the essential ingredients of the charge laid down in Section 100 of the Transfer of Property Act.

The intention of the parties is clear that the security under the mortgage would also be available for the cash advances taken by the plaintiff from the defendants. For what else could be meant by saving that before the mortgagor will redeem the property under the mortgage, he shall pay off the cash advances. If, I may say so. the present case stands on a stronger footing than the case in (1908) ILR 32 Bom 386 -- Janardan Vishnu Kulkarni v. Anant Lakshmanshet -- which was approved by the Priw Council in Aditva Prasad's case. AIR 1930 PC 176 referred to above.'

9. A similar objection that the claim was time barred was canvassed before that Court. Thp learned Judge met that objection in the following manner:--

'Then as to the objection of limitation regarding the recovery of this amount, on the ground that it had been advanced/or acknowledged in 1941, and therefore had become time barred at the date of the suit. I am of opinion that this has no force. In the first place, it must be remembered that the various articles of Limitation Act in Schedule I thereof, apply to suits and applications and not to pleas raised by wav of defence and. therefore, the law of limitation cannot operate as a bar to a plea taken in defence. Thus a mortgagee can lawfully set up in his defence a mortgage deed as a shield even though his right to enforce it may have become statute barred. Likewise a tacking agreement or bond to a mortgage when pleaded in defence stands on the same footing and. therefore, the plea that if a suit were to be brought on its basis, it would be barred by time, can be of no avail.'

10. The words 'mortgage deed' are underlined by me. It appears that the learned Judge meant to say subsequent agreement and not mortgage deed.

'In the second place once it is held that the transaction embodied in Ex. A2 properly operates as a charge on the property already under mortgage, the question of limitation to my mind becomes futile for the charge as stipulated in Ex. A-2 itself, was to come up for enforcement at the time of redemption and not before and consequently, the defendants were entitled to enforce it when the plaintiff mortgagor brought his suit for redemption. My conclusion therefore is that this amount is perfectly recoverable in law, from whichever angle one may look at it.'

11. The learned Judge then held unhesitatingly that the amount of Rs. 886.12.6 operated as a charge on property under mortgage and was within time and the plaintiff must pay that amount also in addition to the mortgage money. As noticed above, the facts of this case are very much similar to the case in hand. In the present case, it is a common ground that the subsequent agreement dated 23-10-1941 operated as a charge and it contained a clear stipulation that without the payment of the subsequent debt, the mortgagor would not be able to redeem the mortgaged property. I am in respectful agreement with the observations referred to above. Learned counsel for the respondent pointed out that a mortgage deed cannot be set up as a shield as observed by the learned Judge. I have already noted above that the mistake is clerical and the learned Judge only meant to say as the context says, that a mortgagee can lawfully set up in his defence a subsequent agreement as a shield. This mistake does not change the ratio of the decision. On behalf of the respondents Lallu Singh's case. AIR 1936 All. 136 was read in detail. The facts of the Allahabad case were very much distinguishable from the facts in the present case. It was held in the Allahabad case that the very mortgage was invalid and it was found that there being no mortgage, no mortgagor, no mortgagee, there could be no redemption. The suit was held to be a suit for recovery of possession. Mr. Bhandari placed reliance on the following passage from Dr. Sir Rashbehari Ghose's Law of Mortgage. Vol. 1. Edn. 5, p 241 referred to in the Allahabad decision at page 156:--

'The question whether a mortgagor may redeem the mortgage on payment of the money due on foot of his security without also discharging other debts due from him to the mortgagee in spite of an agreement to the contrary has given rise to some controversy. The solution however, is not very difficult. Of course, if the land is charged by way of mortgage with the repayment of such debts, the mortgagor can redeem only on payment of all the moneys so secured. But if there is no pledge of the land, a mere agreement to pay other debts which may be due to the mortgagee as one of the conditions of redemption, will not be binding upon the mortgagor so as to prevent him from redeeming on payment of the second debt only.'

12. Their Lordships further said that the case quoted at the foot, including Sheo Shankar v. Parma, (1904) ILR 26 All 559 on which the above passage is based are all cases in which such a covenant was held to be a clog. This is now an exploded doctrine and cannot be be accepted in view of subsequent cases. The last word on the subject has been said by their Lordships of the Privy Council in Shankar Din v. Gokal Prasad, (1912) ILR 34 All 620 (PC) in which it has been held that:

'There is nothing in law to prevent the parties to a mortgage from coming to a subsequent arrangement qualifying the right to redeem. In this case the mortgage which it was sought to redeem was dated in 1816, and in 1870 the mortgagors had, in consideration of certain additional benefit reserved to them under a compromise, agreed to subject their right of redemption to certain conditions. The deed having been lost, the onus was on the plaintiffs to prove the terms of the mortgage, so as to show that the suit was not barred by Section 6, Oudh Estates Act (1 of 1860) (see Raja Kishan Dutt Ram Pandey v. Narendar Bahadoor Singh, (1875) 3 Ind. app 85 (PC) which onus he was found unable to discharge. Held (affirming the decision of the Judicial Commissioner of Oudh) that the plaintiffs were not in any case entitled to redeem as long as there was no breach by the defendants of the covenants contained in the compromise'

13. Their Lordships further held that there is a long current of authorities which support the view that stipulations to pay, occurring in subsequent bonds, which do not create a charge are binding on the mortgagor and those bound by his personal obligations, such as heirs or donees, but not on transferees for considerations. It was further observed:--

'The mere existence of a subsequent mortgage or charge created by a subsequent deed not per se makes it incumbent on the mortgagor to pay the money due in respect of such mortgage or charge as a condition precedent to the redemption of an anterior mortgage. It is only a stipulation contained in the subsequent mortgage deed, or deed of charge, viz., that the mortgagor shall not redeem without payment of subseauent advances, which binds him to do so. This is clear from the terms of Section 61. T. P Act, which provides that: 'A mortgagor seeking to redeem anv one mortgage, shall, in the absence of a contract to the contrary, be entitled to do so without paying any money due under any separate mortgage, made by him. or by anv person through whom he claims, on property other than that comprised in the mortgage which he seeks to redeem.'

It is. therefore, 'the contract to pay' and not the nature of the subseauent transaction which creates the obligation. In Khuda Baksh v. Alimunnissa -- (1905) ILR 27 All. 313 -- it was held that in the absence of a stipulation in a deed of further charge that the redemption shall not take place without payment of subseauent advance, the mortgagor can redeem without paving subsequent advances though charged on the mortgaged property. There is no warrant for the proposition that the creditor cannot recover sums due under later bonds, unless they amount to usufructuary mortgages. No case has ever gone to this length, and in practice such a second mortgage with possession is rare, if it can take place at all. The mortgagee being already in possession, the mortgagor cannot agree to deliver possession again. He can only authorize the mortgagee to retain possession till subsequent advances are paid.'

14. Following the observations referred to above, it is clear that subseauent stipulation that the advances will be paid before the mortgaged property is redeem-ed is not bad in law. In (19121 ILR 34 All. 620 (PC), it was held by their Lordships of the Privy Council that there is nothing in law to prevent the parties to a mortgage from coming to a subseauent arrangement qualifying the right to redeem. This case was also referred to in the Allahabad case.

15. In view of what has been discussed above, the decision of Modi J. is correct and I am in respectful agreement with the same and it needs no reconsideration as it is based on the Privv Council decision referred to above. The lower appellate court has referred to the Allahabad Full Bench case. As discussed above, it does not support the plaintiff's case. Rather it lends support to the contention urged on behalf of the mortgagee. Baldeo Rai v. Murli Rai (1912) 16 Ind. Cas 638 (supra) was also referred to by the lower appellate court. In this case it was only decided that the subsequent bond did not amount to a mortgage. It has not been canvassed here by anv party that the subseauent agreement dated 23-10-1941 was a mortgage. As already noticed above, it is common ground between the parties that it was a charge on the property already mortgaged. Kesar Kunwar v. Kashi Ram. 30 Ind. Cas 777 = (AIR 1915 All 480) (supra) has also been referred by the lower appellate court. In that case, the second transaction was held to be a simple mortgage and on that premise, it was held that the mortgagor was entitled to recover the possession of the property without paving the money due under the second mortgage. In this view of the matter. I am clearly of the opinion that the stipulation contained in the document dated 23-10-1941 kept the defendants' claim of Rs. 2354.10.9 alive till the date the plaintiff mortgagor sought to redeem the property under mortgage of 1937. It was not abligatory on the defendants to have filed a suit for the recovery of the money due under the second agreement. They were well within their right to have waited for the dav the mortgagor went to them to seek the redemption of the property and they were iustified in using that agreement for enforcing their claim for the amount of Rs. 2354-10-9. The agreement cannot be said to be foreign to law and it is auite valid.

16. In the result the appeal succeeds, the appellate judgment and decree passed by the lower appellate court is set aside and a preliminary decree passed by the trial Court is restored with the modification that the plaintiff shall pay a sum of Rs. 4854.10,9 on or before 10-7-1972. Respondent shall pay costs of the appellants throughout.

17. Learned counsel for the respondent prays for leave to appeal to the Division Bench. In view of the fact that the point is well settled. I do not think it to be a fit case for grant of leave. The leave is refused.


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