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Soma Pursa and ors. Vs. Narayana Bhatta and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtChennai
Decided On
Reported inAIR1935Mad1045; 159Ind.Cas.1034; (1935)69MLJ760
AppellantSoma Pursa and ors.
RespondentNarayana Bhatta and ors.
Cases ReferredIn South African Territories v. Wallington
Excerpt:
- - those cases are authorities in support of the view that a suit like the present is one to enforce an agreement to lend money on a mortgage and that such a suit does not lie. bankey lal air1934all449 .it was there held that the unpaid portion of a loan does not constitute a debt due by the mortgagee to the mortgagor and as such cannot be attached under the provisions of the civil procedure code and that it is a contract to lend money which cannot be specifically enforced, the only remedy being a suit claiming damages on account of the failure of the promisor to perform his part of the contract......month with nine per cent, interest and that this was a distinct agreement from the agreement to lend money. he therefore held that the plaintiff's claim was not one to enforce specific performance of an agreement to lend money and, as it had been contended, which would have excluded the suit from the cognizance of the small cause court. it is difficult to see how the learned trial judge arrived at such a conclusion. he refers to yadhavendra bhattu v. srinivasa babhu : air1925mad62 which he says is the case which more nearly approaches the facts of the present case. there the second defendant executed a mortgage in favour of the first defendant. out of the consideration a small balance was not paid. the plaintiff sued for the recovery of that balance on the strength of an assignment.....
Judgment:

Horace Owen Compton Beasley, Kt., C.J.

1. Under Ex. A which is a hypothecation bond, a sum of Rs. 3,500 was expressed to be advanced by the mortgagee to the mortgagors. An amount of Rs. 855 was, however, agreed to be left with the mortgagee on condition that the mortgagee would pay that amount within a month to the first mortgagor together with interest thereon at nine per cent, per annum from the date of the instrument to the date of payment. The mortgagors agreed to pay interest at nine per cent, per annum on the full amount of Rs. 3,500 although they were not to receive Rs. 855 until later from the date of the hypothecation bond for one year and eight per cent, thereafter. The first mortgagor assigned the Rs. 855, before-mentioned to the plaintiff who sought to recover that amount with interest from the defendants whose mother was the mortgagee. The learned Subordinate Judge held that the amount claimed had become a debt owing by the mortgagee to the firt mortgagor which was intended to be paid within one month with nine per cent, interest and that this was a distinct agreement from the agreement to lend money. He therefore held that the plaintiff's claim was not one to enforce specific performance of an agreement to lend money and, as it had been contended, which would have excluded the suit from the cognizance of the Small Cause Court. It is difficult to see how the learned trial Judge arrived at such a conclusion. He refers to Yadhavendra Bhattu v. Srinivasa Babhu : AIR1925Mad62 which he says is the case which more nearly approaches the facts of the present case. There the second defendant executed a mortgage in favour of the first defendant. Out of the consideration a small balance was not paid. The plaintiff sued for the recovery of that balance on the strength of an assignment made by the third defendant who himself had obtained a similar assignment from the second defendant-It was held that the suit was a suit to enforce an agreement to lend money on a mortgage and that such a suit did not lie and that it was open to the plaintiff to sue for damages for breach of the agreement to lend money. In that case Anakaran Kasmi v. Saidamadath Avulla I.L.R.(1879) 2 Mad. 79 Rajagopala Aiyar v. Sheik Davood Rowther (1917) 34 M.L.J. 342 and Sheik Galim v. Sadarjan Bibi I.L.R. (1915) 43 Cal. 59 were referred to. Those cases are authorities in support of the view that a suit like the present is one to enforce an agreement to lend money on a mortgage and that such a suit does not lie. Another case directly in point is Khunni Lai v. Bankey Lal : AIR1934All449 . It was there held that the unpaid portion of a loan does not constitute a debt due by the mortgagee to the mortgagor and as such cannot be attached under the provisions of the Civil Procedure Code and that it is a contract to lend money which cannot be specifically enforced, the only remedy being a suit claiming damages on account of the failure of the promisor to perform his part of the contract. In the course of the judgment a number of authorities are referred to in support of this view. In South African Territories v. Wallington (1898) A.C. 309 there was a contract to lend money to a company payable by instalments upon the security of debentures to be issued by the company and on page 315 Lord Herschell says:

The transaction was not in its nature a contract of purchase; it was an agreement on the one side to lend money for a term of years, and on the other side to give the lender the specified security for his loan. I am at a loss to see how an agreement of this description can create a debt from the lender to the borrower.

2. Turning to the Specific Relief Act, I think that the third illustration to Section 21(a) also covers this case and specific performance of such a contract as this could not be enforced. This suit was not a suit claiming damages for breach of a contract to lend and a decree has been given in favour of the plaintiff by the lower Court on the footing of a debt owing by the defendants to the plaintiff. As I have said before, I cannot see any distinction which is material between the facts of this case and the reported decisions cited. The fact that the Rs. 855 were to be paid within one month with nine per cent, interest can make no difference because that interest merely represents a return of the nine per cent, interest which the mortgagors had to pay from the date of the instrument which provides for a payment of nine per cent, interest on the full amount of Rs. 3500 though the mortgagors had not received the Rs. 855. Had there not been this provision for the payment of nine per cent, interest on the Rs. 855, the mortgagors would have over-paid interest to the mortgagee.

3. Upon the footing of a suit to recover a debt the plaintiff's suit stood to be dismissed. The decree of the lower Court must, therefore, be set aside and substituted therefor, there must be a decree dismissing the plaintiff's suit with costs. The Civil Revision Petition must be allowed with costs.


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