Charles Arnold White, Kt., C.J.
1. The facts necessary for determining the question which has been argued in this appeal may be put quite shortly thus : In February 1873 there was a mortgage of a house by the Plaintiff's vendor to the 1st defendant's predecessor in title (Exhibit I). In June of the same year there was a transaction (Exhibit II) between the same parties under which a further advance was made by the 1st defendant's predecessor in title. In 1889 there was a sub-mortgage by the 1st defendant's predecessor to the and defendant's predecessor in title. In 1904, the plaintiff purchased the equity of redemption. With regard to Exhibit II the Munsif held that the instrument was a mortgage and decided in favour of the 2nd defendant. The lower appellate court took the view that it was neither a charge nor a mortgage and accordingly decided against the 2nd defendant's contention that he was entitled to be redeemed in the plaintiff's suit.
2. Before passing to the question of the legal effect of Exhibit II, I propose to say one or two words with regard to the general question which was raised and that is to say, as to the power or right of the 2nd defendant to insist upon his being redeemed, and for the purpose of dealing with this question, I assume that Exhibit II amounts to a mortgage and I also assume that the law of limitation places no obstacle in the way of the 2nd defendant.
3. Now Section 61 of the Transfer of Property Act says that a mortgagor seeking to redeem any 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 any person through whom he claims, or property other than that comprised in the mortgage which he seeks to redeem. That section does not say so, in so many words, but I think the inference is clear, that where the property is the same the subsequent mortgagee is entitled to insist on being redeemed.
4. The point is discussed in all the text books and it is pointed out that one view is taken in Bombay and Madras and another view in Allahabad. It seems to me that the law upon this point, so far as this Presidency is concerned, is well settled. I do not think it necessary for me to discuss all the authorities which have been cited in the course of the argument and I content myself with referring to a passage in a judgment of this Court in the case of Doraisamy v. Venkataseshayya I.L.R. (1901) M. 108. The passage is as follows and it is found at p. 115 : 'Section 61 of the Transfer of Property Act, which is the same as Section 17 of the Conveyancing and Law of Property Act, 1881 (44 and 45 Viet, Cap, X 41), 'no doubt abolishes the doctrine of consolidation of mortgages' over different properties which doctrine was recognized by the courts in India, before the Act was passed Vithal Mahadeo v. Dand Mahamed Hensen (1869) 6 B.H.C.R. 90. But that very section implies - as is shown by the illustration, that if there are different mortgages in favour of one and the same person, not in respect of different properties, but the same property, the mortgagor cannot seek to redeem any one mortgage without redeeming the additonal mortgages also. The same principle will be equally applicable to a mortgagee having several mortgages over the same property, seeking to obtain an order for sale on one mortgage only. That seems to be a correct exposition of the law with regard to this question so far as this presidency is concerned.
5. Now, passing to the legal effect of Ex. II is it a charge or a mortgage or is it neither? The lower appellate court relied upon a decision in Madho Misser v. Sidh Binaick Upadhya I.L.R. (1887) C. 687. In that case the argument was that the instrument was a mortgage and if it was not a mortgage it was a charge. The court held that it was not a charge and the reason the} gave for so holding was this : 'This document seems to us not to create a charge at the time of its execution, but to operate only as a charge upon the land in question upon the non-payment of the principal.' That is the ground of decision given by the Calcutta judgment. I think a distinction may be drawn between the language of the instrument in the Madho Misser v. Sidh Binaick Upadhyaya I.L.R. (1887) C. 687 and the language of the instrument before us. In the Calcutta case the instrument runs thus : '* * If I do not pay the money according to the stipulation, then I declare in writing that I shall lose my right to 1 bigha and 7 cotas of Guzasta land situated in mouzah Kuthar. If I do not pay money according to the promise then the aforesaid Misser shall take possession of the land.' In the document before us the words are 'In default I shall on the security of the house site belonging to me * * * * pay and make good * * * the principal and interest.'
6. Moreover I feel some doubt as to whether I should be prepared to follow the decision of the Calcutta High Court based as it was upon the ground that the instrument did not create a charge at the time of its execution, but that it only operated so as to bring the charge into existence on non-payment of the principal money, that is on default. The contingency which the learned Judges had in view was the contingency of the mortgagor not fulfilling his covenant to pay.
7. I should doubt, if on that ground alone, the instrument could be properly held not to create a charge within the meaning of Section 100 of the Transfer of property Act.
8. As regards the question of limitation it was argued that in the view that the instrument merely created a charge although the 2nd defendant could not have recovered on it, his remedy being time-barred, he might rely on it for the purpose of showing that his mortgage rights were not extinguished by the operation of the Law of Limitation. In support of that argument we were referred to the case of Soobramania Aiyar v. Poovan I.L.R. (1902) M. 28 and Lakshmi Doss v. Roop Lal I.L.R. (1906) M. 178; to an English decision In re Marshfield (1887) L.R. 34.
9. Again with regard to this question it is not necessary for me to express any final opinion because in my view the instrument is a mortgage. It seems to me it satisfies the requirements of Section 58, Sub-section (b), of the Transfer of Property Act. In support of the contention raised on behalf of the respondent that it was not a mortgage, we were referred to two Calcutta cases Royguddi Sheik v. Kali Nath Mookherjhee I.L.R. (1906) C. 985 and Gobinda Chandra Pal v. Dwakanath Pal I.L.R. (1908) C. 837 I do not think that we get much assistance from either of these decisions. It was argued on behalf of the respondent that the document could not be construed as a mortgage because it did not in express terms, confer a power to sell. No authority was cited in support of this proposition. On the other hand Mr. Srinivasa Aiyangar was able in his reply to call our attention to a decision of the Privy Council in Sri Raja Papamma Rao v. Sri Virapratapa H.V. Ramachandra Razu 6. It is true the words of the instrument there in question were not the same as the words here. The words in the Privy Council case no doubt come much nearer to a power of sale than the words in the instrument before us. But in the Privy Council case a power of sale was' inferred from the words which did not give the power in express language.
10. Mr. Srinivasa Aiyangar was also able to call our attention to a Bombay case Motiram v. Vitlal I.L.R. (1888) B. 96 in which the language of the document was the same as in the case before us. In that case it was held that the instrument amounted to a mortgage.
13. I think the court of first instance is right and that the instrument amounts to a mortgage. An issue will have to go back to the lower appellate court. I leave my learned brother to deal wth this.
Krishnaswami Aiyar, J.
14. I wish to add a few words. I am unable to agree with the decision of the Calcutta High Court in Madho Misser v. Sidh Binaik Upadhyaya I.L.R. (1887) C. 687. Although it is possible to distinguish the facts of that case from those of the present it must be admitted that the Calcutta case proceeds upon the principle that it is impossible to create a charge on a condition and the charge will not be effective on the happening of that condition. The Allahabad High Court also in Harjas Roi v. Naurang (1906) A.L.J. 220 appears to take the the same view. The facts of that case are also distinguishable. But although the facts are so distinguishable, the principle laid down in that case does not commend itself to me. Sections 5 and 21 of the Transfer, of Property Act seem to me to recognise the principle of a valid charge being created on the happening of a condition. The decision of this Court in Cooling v. Saravana I.L.R. (1888) M. 69 is based upon it. I see nothing opposed to any principle of law that there should be a charge created on the happening of a condition where the condition itself is first stipulated and the condition happens afterwards. That being my view I dissent from the conclusion arrived at by the Subordinate Judge.
15. Now the next question to be dealt with is whether the instrument in the case creates a mortgage or a charge. The distinction between mortgage and charge is rather fine sometimes. Of course, there is no difficulty in distinguishing a mortgage by conditional sale from a charge. But the difficulty arises where a distinction has to be drawn between a simple mortgage and a charge. A charge is said be created by act of parties or by operation of law.
16. In so as far as it is created by operation of law, that is a circumstance which distinguishes a charge from a mortgage which is created by act of parties. But there are cases where a charge is created by the act of parties and the question is, what is the distinction between a charge and a mortgage, where the mortgage is a simple mortgage and the charge is created by the act of parties. I have been in considerable doubt during the course of the argument as to whether we have succeeded in getting hold of any principle by means of which we could distinguish a mortgage from a charge. But having heard the matter fully discussed by Mr. Srinivasa Aiyangar, I have B been able to make up ray mind and I wish to express the conclusion at which I have arrived. I think a covenant to pay is an essential element of a simple mortgage. It has been held that it is not necessary that there should be a formal transfer of any interest in property in words. And I think the authority of the Privy Council decision in Sri Rajah Papamma Rao v. Sri Vira Pratap H.V. Ramachendra Razu I.L.R. (1896) M. 249 goes so far as this. Then it is also not necessary to constitute a simple mortage that the instrument should state that the mortgagee shall recover his money by sale of the mortgaged property. The decision in Datto Dudheswar v. Vithu I.L.R. (1895) B. 408 carries the matter a little further than the Privy Council case and I venture to think that it carries it as far as it is necessary to go for the purpose of this case. Therefore following the authority of Datto Dudheswar v. Vthu I.L.R. (1895) B. 408 I hold that the transaction in this case is a mortgage.
17. Now the question remains as to what we shall do in this case. The Subordinate Judge in paragraph 8 of his judgment refers to the question as to the priority of plaintiff's sale over Exhibit II. The plaintiff's sale deed is registered and Exhibit II is unregistered. It has been pointed out by Mr. Srinivasa Aiyangar that his sub-mortgage which is registered is dated 1886 and anterior in point of time to the plaintiff's sale deed and that he would still be in a position to claim priority over the plaintiff's sale deed. Well, that is a question for the Subordinate Judge to decide. We should probably have considered it ourselves and decided it here but for the fact that Mr. Srinivasa Aiyangar raises also another question as to whether plaintiffs sale was not with notice of Exhibit II. No doubt, this question was not raised before; but having regard to the fact that the plaintiff only claimed in the appellate court priority in respect of his instrument being registered andthesecoqd defendant's document Exhibit II, being unregistered we ought not to deny the second defendant an opportunity of proving that the plaintiff had notice of Exhibit II.
18. The issue that we shall remit to the Subordinate Judge to try will be whether the plaintiff's purchase is free from the mortgage under Exhibit II as against the 2nd defendant by reason of the sale being registered and Exhibit II being unregistered. The and defendant will be at liberty to raise in his plea of notice to the plaintiff at the time of his purchase of Exhibit II, and the Subordinate Judge will take further evidence on the issue and return his finding in 8 weeks from this date when there will be 10 days for objections.
[The appellant having died no further action was taken in the case. - ED.]