Skip to content


Ramabhadra thevar and ors. Vs. Arunachalam Pillai and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1926Mad601; 95Ind.Cas.108; (1926)50MLJ468
AppellantRamabhadra thevar and ors.
RespondentArunachalam Pillai and anr.
Cases ReferredHukam Singh v. Babu Lal. The English Law
Excerpt:
.....of the security bond to defendants was a condition precedent to the plaintiffs' claim to the mortgage money and was prepared to hold that the suit was not maintainable owing to the failure of the plaintiffs to execute and deliver security bond according to the covenant in ex. the minor, however, having attained majority offered at the trial to recognize the mortgage as binding on him and to receive the amount due thereon and the subordinate judge 'owing to the good sense displayed by both parties' proceeded to settle all questions arising on ex. the clause as to the furnishing of the security bond seems to be clearly a clog on the equity of redemption as the mortgage money cannot be claimed without such bond and no time is provided within which (after 14th september, 1910) such..........by ayling and tyabji, jj., there were disputes among the mortgagee's representatives, and the money deposited was not taken out for a year after which the mortgagors withdrew it. ayling, j., thought that krishnaswami chettiar v. ramaswami chettiar : (1923)45mlj166 , governed the case and that the ruling should be sustained in the absence of a reference to a full bench. tyabji, j., on the other hand, thought the ruling in krishnaswami chettiar v. ramaswami chettiar : (1923)45mlj166 , was wrong and that velayudha nayakar v. hyder hussan khan sahib ilr (1918) a 245, was the correct view on the ground that it was not shown that the english differed from the indian law and that the english law makes a tender perfect and complete unless the party impeaching its completeness shows an.....
Judgment:
ORDER

Phillips, J.

1. The first point for consideration is the construction of the mortgage deed executed by the father of the defendants Nos. 1 to 3 in favour of the 1st plaintiff's manager, 4th defendant. The 1st plaintiff on his own behalf and on behalf of his minor son, 2nd plaintiff, sold certain property to the father of 1st defendant under Ex. 1 on nth September, 1909. There was a prior mortgage on this property, dated 9th February, 1908. As there was this prior mortgage and also because one of the vendors was a minor, the 1st defendant's father did not pay the whole of the purchase money, but retained a sum of Rs. 4,625. On the 15th September, 1909 the 1st defendant's father hypothecated the property he bought for this amount and stipulated that the 1st plaintiff should execute a security bond for Rs. 6,000 on or before the 14th September, 1910. The relevant provisions in this mortgage deed which we have to construe are as follows:

I shall pay the aforesaid amount of principal together with the interestas soon as you execute and get registered before the 14th September, 1910, a security bond in respect of immoveable properties estimated by the mediators at Rs. 6,000If security is not given before the said stipulated date, I shall up to the date on Which the security is given, add interest on principal and interest on interest at the said rate with twelve months' rests and pay you, the amount of principal and interest accruing due

2. The Lower Court has held, and I think rightly held, that the execution of this security bond was a condition precedent to the demand for the mortgage money and that therefore this suit for the money is not maintainable because the security bond had not been executed, but as the parties came to an agreement during the suit that the mortgage should be adjusted by means of this suit and that the suit should not be dismissed, the Lower Court proceeded with the trial and held that there was no obligation on the 1st plaintiff to execute a security bond on any particular date and that therefore the mortgagor must pay compound interest on the amount of the mortgage from September, 1910, because the deposit made in Court was not a valid deposit, being conditional. This conclusion is somewhat inconsistent with the finding that the execution of the security bond was a condition precedent to the enforcement of the mortgagee's right, and it is now contended for the appellant that the 1st plaintiff was bound to execute the security bond after the date fixed therefor, namely, 14th September, 1910, and that therefore when the mortgagor deposited the mortgage amount coupled with a request for the execution of the security bond it was a valid tender under Section 83 of the Transfer of Property Act, although it was coupled with this condition. The question therefore for determination is whether the mortgagee was under an obligation to execute the security bond, an obligation which can be enforced by the 1st defendant. To adopt the interpretation put upon the document by the Lower Court is to hold that the mortgage is irredeemable except at the option of the mortgagee, and this would constitute a clog on the equity of redemption which cannot be enforced. Consequently, if the language is ambiguous, I think that we must adopt an interpretation which would remove that clog. The document itself is an extraordinary document because it provides that on default by the mortgagee the mortgagor is to be penalised, and similarly if the mortgagee fulfils his bargain and the mortgagor commits default, the mortgagee is to be penalised by the compound interest being reduced to simple interest. However this may be, I think it is undoubted that there was an obligation on the mortgagee to execute this security bond, and consequently that obligation could be enforced by the other party to the contract. He was therefore entitled to demand a security bond before paying the money, and the execution of the security bond was not left to the will of the mortgagee to perform at any time he chose. If that is the correct view, the deposit of the mortgage money coupled with a request for the security bond is not a deposit coupled with a condition outside the contract for the condition was one enforceable under the contract. The deposit was therefore a valid deposit under Section 83.

3. There remains then the question whether the mortgage money ceases to bear interest from the date of deposit under the terms of Section 84 of the Transfer of Property Act. Notice of the deposit was sent to the plaintiff, but he refused to accept the money and subsequently the 1st defendant withdrew the amount from Court. On similar facts it was held in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 that interest did not cease to run, the ground for the decision being that the deposit must be left in Court in case the mortgagee changes his mind. This decision is somewhat at variance with the decision in Velayuda Nayakar v. Hyder Hussan Khan Sahib ILR (1918) A 245, where it was held that once a tender had been made and refused, interest ceases to run, although in that case the money had been taken back from the mortgagor by the lender after refusal by the mortgagee. The decision in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 was considered in Thevaraya Reddy v. Venkatachala Pandithan (1879) 10 ChD 434 where Ayling and Tyabji, JJ. differed. The case went up in appeal and was decided in Thevaraya Reddy v. Venhatachala Pandithan (1878) 10 ChD 388. I was one of the members of that Bench and dissented from the decision in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 , and apparently Abdur Rahim, Offig. C.J., was inclined to the same view, although he held that it was not necessary to decide the point. On the other hand Seshagiri Aiyar, J., was of opinion that Krishnaswami Chettiar v. Rama-swami Chettiar : (1923)45MLJ166 was rightly decided. The question has been considered in Hnkam Singh v. Babu Lal, and there a Bench of that Court followed my judgment in Thevaraya Reddy v. Venkaiachala Pandithan (1878) 10 ChD 388, and accepted the reasoning therein. I have very little to add to my judgment in that case, but I will add a few words regarding the decision in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 , from which I venture to differ. In the judgment in that case the question was asked whether when the mortgagor had deposited the money and issued a notice to the mortgagee he had not done all that has to be done by him to enable the mortgagee to take the amount out of Court; and can he then withdraw the money even before the mortgagee appears to claim it? The answer was given in the negative; and a further question was asked why should he be at liberty to do so because the mortgagee appears and refuses to take it? The answer I would give to that question is that the mortgagee is under a duty to take the money when tendered and the cessation of interest on his refusal is a penalty for not performing his duty of submitting to redemption. A mortgagor might be able to collect the mortgage money and interest accrued to date of deposit, but unable to raise any more to meet further interest. Is he to be compelled either to forego his undoubted right to redeem, or else to leave his money lying idle, until the mortgagor chooses or is compelled to accept it? In the case of an usufructuary mortgage the injustice to the mortgagor is obvious as he is deprived of the benefit of his property and of his money. One consideration which appears to have escaped the notice of the learned Judges in that case is that if the mortgagor leaves his money in Court deposit after refusal by the mortgagee it might lapse to Government before the amount is withdrawn; who, in that case, is to bear the loss, the mortgagor or the mortgagee? In the present case the deposit was made in 1913 and this suit was not brought until 1922. If, therefore, the 1st defendant had left the money in|deposit, the money woud long ago have lapsed to Government. Section 84 is very clear and says that interest shall cease when once the mortgagor has done all that he can to enable the mortgagee to draw the money. When a mortgagee has received notice that the money is actually in Court and that he can draw it at that time, what more can be done by the mortgagor to enable him to draw it? Proceeding strictly on the interpretation of the section I still adhere to my opinion that Krishna-swami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 is wrong and I am inclined to think that the legislature did not intend to make the law in India identical with the law in England. In England when a tender has been made it is also necessary that the mortgagor should always be ready to pay the amount, but the burden of proving that he is not so ready is on the mortgagee. I take it therefore that, when there has been a tender and there is no evidence of any subsequent refusal to pay, the provisions of the English Law would be complied with, and the tender would be valid, except perhaps in cases where it was shown that the tenderer had subsequently derived profit from the money tendered.

4. As the question is one of some importance and there is a divergence of views in this Court, I think that the question should be referred for decision to a Full Bench. Accordingly the appeal is submitted to a Full Bench for decision.

5. The Memorandum of Objections is dismissed with costs.

Odgers, J.

6. This was a suit for an amount due on a mortgage or in default of payment for sale. The 1st plaintiff and 4th defendant were brothers. The 2nd plaintiff was son of 1st plaintiff and a minor at the date of suit. Defendants 1 to 3 were brothers and undivided. In 1909 1st plaintiff and 4th defendant sold some of their family properties to the father of defendants 1 to 3, and for the protection of the minor (2nd plaintiff) a mortgage bond, Ex. A. was executed by the father of defendants 1 to 3 to the 4th defendant as head of his family. On a partition between 4th defendant and 1st plaintiff, the amount of the bond fell to share of plaintiffs 1 and 2. Two questions are raised in appeal to us (a) that the Subordinate Judge's construction of Ex. A was wrong, (b) that interest on Ex. A ceased by reason of a deposit by defendants 1 to 3 in Court under the terms of Section 83, Transfer of Property Act. By Ex. A the mortgagor undertook to repay 'as soon as you execute and get registered before 14th September, 1910, a security bond in respect of immove-able properties estimated by the mediators at Rs. 6,000 in order that no disputes might arise in the matter of the said sale propertics since there arc included therein the properties given as security under a deed executed for Rs. 400 by you and your younger brother Arunachalam Pillai for and on behalf of the said minor Govindaswami also on 9th February, 1908, to Peruvalandan Papavinasam Aiyangar, and get this back with endorsement of payment made thereon.' The document proceeds 'If security is not given before the said stipulated date, I shall, up to the date on which the security is given, add interest on principal and interest on interest at the said rate with twelve months' rests and pay you the amount of principal and interest accruing due in that manner, and take this back with endorsement of payment made hereon.' Security was not furnished by the date named. The Subprdinate Judge found that the delivery of the security bond to defendants was a condition precedent to the plaintiffs' claim to the mortgage money and was prepared to hold that the suit was not maintainable owing to the failure of the plaintiffs to execute and deliver security bond according to the covenant in Ex. A. The minor, however, having attained majority offered at the trial to recognize the mortgage as binding on him and to receive the amount due thereon and the Subordinate Judge 'owing to the good sense displayed by both parties' proceeded to settle all questions arising on Ex. A and decided that the deposit made by the defendant being conditional was invalid and that interest consequently did not cease to run. He gave a decree for plaintiffs for amount claimed subject to the deduction of the amount paid by defendants 1 to 3 to satisfy Papavinasam Aiyangar's decree (which had been obtained since the date of Ex. A) which has now been agreed at Rs. 865 plus costs and 6 per cent interest. Under the circumstances it is perhaps unfortunate that the Subordinate Judge did not act on his first inclination and dismiss' the suit. The clause as to the furnishing of the security bond seems to be clearly a clog on the equity of redemption as the mortgage money cannot be claimed without such bond and no time is provided within which (after 14th September, 1910) such security bond is to be furnished and compound interest is to run 'up to the date on which the security is given.' Therefore interest is to run on for any length of time until the mortgagee thinks fit to render himself competent to accept it by executing the security bond This appears to render the clause invalid. The minor has, however, become a major and has offered to accept mortgage money. The real question is therefore the second, the question as to the deposit. On 6th August, 1913, the father of defendants 1 to 3 deposited the necessary amount in Court and tendered it to 4th defendant who however refused to take it out, whereupon the Court referred the father of defendants 1 to 3 to a regular suit by its order, dated 15th November, 1913. The Subordinate Judge held that the tender was not unconditional because defendants 1 to 3 requested that 4th defendant should first furnish security as provided for in Ex. A before he drew the money. The Subordinate Judge holds that the condition is against the terms of Ex. A. This I am unable to understand as the money can clearly not be taken by the mortgagee unless and untila security bond is provided as stated in Ex. A. I do not see how under the circumstances this can be regarded as a conditional deposit so as to render the deposit invalid. The main question argued before us however was as to the consequent cessation of interest for another reason, viz., that although defendants made a deposit and kept the money in Court for about a year, they subsequently withdrew: it. This is a pure question of law on which there is some apparent conflict of opinion.

7. Section 84, Transfer of Property Act, reads as follows:

When the mortgagor or such other person as aforesaid has tendered or deposited in Court under Section 83 the amount remaining due on the mortgage, interest on the principal money shall cease from the date of the tender or as soon as the mortgagor or such other person as aforesaid has done all that has to be done by him to enable the mortgagee to take such amount out of Court, as the case may be, the relevant words to the present case being in the last clause

8. In Velayuda Nayakar v. Hyder Hussan Khan Sahib ILR (1918) A 245, a case of tender, the Court held that 'tender' does not imply that the tenderer must always be ready to pay and that the cases to the contrary in English Law and in Calcutta did not apply. There does not appear to be any distinction drawn in the section between tender and deposit, In Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 , a case of deposit, it was held that a continuance of the deposit was necessary to obtain the benefit of the section. The English cases as to the necessity for continued readiness to pay in the case of tender were relied on and the case in Velayuda Nayttkar v. Hyder Hussan Khan Sahib ILR (1918) A 245, distinguished on the ground that there was there no allegation of a subsequent demand by the mortgagee for the amount and that mortgagor failed to pay and also because the matter was clearer as regards deposit as distinquished from tender. 'We cannot speak of a person having deposited in Court if he has withdrawn his deposit.'

9. In Thevaraya Reddy v. Venkatachala Pandithan (1879) 10 ChD 434, a case heard by Ayling and Tyabji, JJ., there were disputes among the mortgagee's representatives, and the money deposited was not taken out for a year after which the mortgagors withdrew it. Ayling, J., thought that Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 , governed the case and that the ruling should be sustained in the absence of a reference to a Full Bench. Tyabji, J., on the other hand, thought the ruling in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 , was wrong and that Velayudha Nayakar v. Hyder Hussan Khan Sahib ILR (1918) A 245, was the correct view on the ground that it was not shown that the English differed from the Indian Law and that the English Law makes a tender perfect and complete unless the party impeaching its completeness shows an absence of readiness to pay. He examined the English Law and added that the facts in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 , and in the case before him were different. On this difference of opinion a Letters Patent appeal was taken and the decision is reported in Thevaraya Reddy v. Venkatachala Pandithan (1878) 10 ChD 388. It was heard by a Bench of three judges of whom my learned brother was one. Abdur Rahim, Offg. C.J., held that the interpretation of Section 84 in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 was that 'The deposit in order to be effective under Section 84 must remain in Court until the mortgagee or his successor in interest has been enabled or is in a position to withdraw it.' Seshagiri Aiyar, J. held that Krishnaswami Chettiar v. Rama-swami Chettiar : (1923)45MLJ166 was rightly decided. Phillips, J., on the other hand though that this decision was wrong. He said 'the cessation of interest is the penalty imposed upon the mortgagee for refusal to accept the money when offered and this penalty is not remitted because he changes his mind when it is too late.' The learned Judges, however, held that, in the case before them, the circumstances were different and as the mortgagors failed to have the deposit in Court sufficiently long to enable the mortgagees to draw the amount they failed to do all they had to do under the section. This opinion of Phillips, J., in Krishnaswami Chettiar v. Ramaswami Chettiar : (1923)45MLJ166 has recently been approved by the Allahabad High Court in Hukam Singh v. Babu Lal. The English Law is set forth inter alia in Bank of New South. Wales v. O'Connor.

10. In Fisher on Mortgages (6th Edition), Section 1851, it is stated that 'interest will cease to run upon the mortgage debt from the time at which a proper tender of the whole amount is shown to have been made. But it ought to appear, that, from the time of the tender, the money was kept ready by the mortgagor, and that no profit was afterwards made of it; apon proof of the contrary whereof the interest will still run.' The principle in English Law being apparently that if the mprtgagor was to have the benefit of cessation of interest on the mortgage, he must not have earned interest on the money elsewhere in the meantime.

11. In this state of the authorities, I think it is desirable that the point should be settled. The point is essential to the appeal which therefore should be referred to a Full Bench as proposed by my learned brother.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //