1. The appellant in this case is the 2nd defendant. The facts not disputed are, the plaintiff had lent the 1st defendant a sum of Rs. 12,500 on an equitable mortgage of his house by means of a promissory note and pledge of title-deeds as security. In the beginning of March, 1925 plaintiff was informed that the 1st defendant was selling the house to the 2nd defendant under an arrangement that the 2nd defendant should discharge the mortgage. On 10th March, 1925, 1st defendant paid Rs. 900 to P.W. 2 on behalf of the plaintiff in full discharge of the interest clue on the mortgage and undertook to pay the principal within a week and that if the principal was not so paid further interest would accrue until the date of payment. 2nd defendant bought the house on 5th March, 1925. According to him he made a valid tender of Rs. 12,500 to the plaintiff on 16th March, 1925 within a week of grace but the plaintiff refused to have anything to do with him. According to the plaintiff there was no valid tender. The principal sum was deposited in the High Court on 22nd October, 1925. Plaintiff in this suit sues for interest Rs. 925 which he claims due to him as having accrued between 10th March, 1925 and 22nd October 1925. The Lower Court gave a decree for the sum against both the defendants personally. The 2nd defendant appeals.
2. The main contention, of course, is that as the plaintiff refused his valid tender made within a week of grace plaintiff is not entitled to any interest, and the chief point for decision is what happened on the 16th March and whether there was then a valid tender of the whole sum due. 2nd defendant was the purchaser of the equity of redemption and as such was of course entitled in law to tender the mortgage amount.
3. The alleged tender was made at the Cosmopolitan Club. Plaintiff as P.W. 1 admits that the 2nd defendant, D.W. 3 and the agent of 1st defendant came to him at the Club, that the 2nd defendant asked him to receive the money and give him receipt and that he replied 'I will take it from you if Sami Naidu (the mortgagor) says so.' Later on in his deposition he says, 'He (i.e., 2nd defendant) did not bring money on the 16th or show it to me' : that is all the account the plaintiff gives of this incident, and his is the only evidence on his side about it. How he knew that no money was brought he does not explain. 2nd defendant's version as D.W. 2 is that the three persons abovenamed went to the Club and told plaintiff that they had brought the money, that plaintiff asked 'Who are you'; 2nd defendant said 'I am the purchaser as you know'; plaintiff then refused to receive the money saying 'I have nothing to do with you. The mortgagor must come.' 2nd defendant says he had the money Rs. 7,000 in cash and the rest in the form of a draft on the Imperial Bank, that he did not show the plaintiff all the money as he would not listen to the offer, but showed him his 'bulging pocket' and said he had it. Two witnesses on his side, D.Ws. 3 and 4 state that the plaintiff refused to receive the money. We regard the evidence of D.W. 3, a vakil of the High Court and a disinterested party, as most reliable on this point. He says that when they told plaintiff they had come to pay he said, 'Who are you? I do not know you. I had no dealings with you. My transactions were with the 1st defendant.' D.W. 3 was not cross-examined on this part of his evidence and we accept his account. From this it is clear that the plaintiff refused emphatically' to have any dealing with the 2nd defendant. At the bar his learned Advocate sought to defend him by alleging that he really did not know who the 2nd defendant was. It is highly significant that plaintiff never gave that reason himself in the witness box and had he ventured to do so, he would have been at once confronted with his own statements in the plaint paragraph 6 that in the beginning of March (obviously some date before the 16th) he was informed of the sale of the house to the 2nd defendant and of the arrangement that 2nd defendant was to discharge the mortgage, and in paragraph 8 that he actually himself sent a letter to his vakil with whom he deposited the title-deeds to hand them over to the 2nd defendant, and again in paragraph 9 where he clearly admits that he was looking to the 2nd defendant as well as the 1st defendant to pay him the mortgage amount. P.W. 2 says that he himself told the plaintiff on the 10th March of the sale in favour of the 2nd defendant. It appears to us futile for the plaintiff to argue that he did not know who the 2nd defendant was. His profession of ignorance of who the 2nd defendant was when 2nd defendant came to the Club was therefore a mere pretence in order to give a colour of justification to his point blank refusal to negotiate. We are quite ' satisfied that the plaintiff knew perfectly well who 2nd defendant was and that he knew him to be the purchaser of the property. If the reason which the plaintiff gives in his evidence for not dealing with the 2nd defendant, namely, that the mortgagor must also consent, had been really stated by him, then that was also not the true reason but a mere excuse to cover his refusal to deal with the 2nd defendant at all. The 1st defendant's agent D.W. 4 was then present with the 2nd defendant and the plaintiff's statement that he did not then know him to be an agent of the 1st defendant is wholly disingenuous since this man was present at the previous payment of Rs. 900 interest to P.W. 2 on behalf of the plaintiff. It is significant of the plaintiff's real attitude that he does not claim that he told the 2nd defendant that he should pay the amount to P.W. 2 whom on his own case he had authorised to receive the money. It is quite obvious that he was not going to receive the money from the 2nd defendant under any circumstances or at any time or place. The real reason for his pettish refusal to receive the money appears to be pique because he had himself expected that 1st defendant would sell the house to him and annoyance at having been forestalled by 2nd defendant.
4. The plaintiff's determination to have nothing whatever to' do with the 2nd defendant in this matter is manifested by his subsequent conduct. Foiled in his attempt to pay the plaintiff at the Club, the 2nd defendant sent him two registered letters en-'closing a cheque for Rs. 12,500, namely, Exhibit III on 19th March, 1925 and Exhibit IV on 23rd March, 1925; of both of these the plaintiff refused to take delivery. These he refused, he says, because the covers bore no indication that they contained a cheque. Quite obviously therefore he did not know that they did not contain cheques for the principal plus whatever interest he then thought was due to him in payment of the debt. It is perfectly clear that he was determined not to receive payment from the 2nd defendant under any circumstances. It is not without significance that the plaint omits to mention both the incident at the Club and these subsequent letters. We are satisfied from the evidence that the plaintiff categorically refused to deal with the 2nd defendant at all or to entertain even the idea of receiving the money from him, that he thus put it out of the power of the 2nd defendant to pay the debt.
5. It is contended for the plaintiff that, even so, such a refusal to treat with the 2nd defendant will not avail the 2nd defendant unless he actually himself made a legal tender which the plaintiff was bound to accept and it is argued that the 2nd defendant did not as a matter of fact have the money with him. 2nd defendant says he had it in the form of cash and a draft, and that when the plaintiff refused to receive it he paid most of the cash and the draft into the Indian Bank the same day. His Pass Book shows that on 16th March, 1925 he got a cheque book and paid in Rs. 4,200 in cash and Rs. 6,680 by draft; we are not altogether satisfied that he had time after the interview at the Club, said to have been at about 3 P.M. (see Ex. D), to have paid in this sum to the Indian Bank. It appears to us more probable that he had before he went to the Club already paid in these sums into the Bank and that what he took with him to the plaintiff was his cheque book. This conclusion is supported by the evidence of P.W. 2 to whose house the party had gone just before going to the Club expecting to find the plaintiff there and to pay him there. P.W. 2, whose respectability gives his evidence much weight, deposes that 2nd defendant then told him he had his cheque book with him and that he had already put the money into the Bank and that he had no money with him. We are not satisfied that the 2nd defendant has told the truth in this matter and believe that, realising that his offer of a cheque might not be held to be a legal tender, he has endeavoured to improve upon the truth. However we are satisfied that if he had not the cash with him, he had his cheque book and that he had not less than Rs. 12,500 in the bank so that he could then and there have written out a cheque for the full amount which would have been honoured. He was able and willing to pay by cheque if plaintiff would accept a cheque or by cashing the cheque at once if plaintiff wanted cash. The facts as found by us therefore are that the 2nd defendant was entitled in law to pay up this debt, that he went with his cheque book to the Club ready to give the plaintiff a cheque or cash for the full amount and that the plaintiff prevented him doing so by refusing point blank to have any dealings with him What is the effect in law of such a position in fact? The law in India is to be found in Section 38 of the Contract Act and Section 84 of the Transfer of Property Act, So far as Section 38 of the Contract Act governs the case, we are satisfied for reasons given that the 2nd defendant made an offer of performance which was not accepted. The plaintiff argues first that the offer was not a legal offer, in other words, that the offer, if accepted, would not constitute performance, and secondly that it was not made at the proper time and place and under the circumstances set out in Sub-section (2) of the section. His first contention rests on the broad proposition that tender of a cheque is not valid tender. As a universal proposition that is hardly correct. Tender by cheque will be valid tender if the person to whom it is tendered is willing to receive payment by a cheque. But in the present case the negotiations never got so far. The plaintiff refused at the outset to receive the money in any form or shape. It was open to him, had he allowed the matter to go on and the 2nd defendant had tendered a cheque, to refuse the cheque and demand cash, and there was still time for the 2nd defendant to go and bring cash. But instead of that he refused to have the payment in any shape and by this tactics put it out of his power to receive payment in cash and, therefore, to object now to the form of the payment. It is quite clear from the evidence that his objection was not to the form of the payment but to payment in any form. Where a party thus refuses to entertain the idea of payment at all and puts it out of power of the tenderer to offer payment in a manner acceptable to the creditor, the offer of performance by a person then able to carry out the promise in its entirety is a valid tender in spite of the form of it being itself not legal tender. The tender, whether by cash or draft or by a cheque was a valid tender unless the plaintiff refused the form of it; the plaintiff did not refuse the form of it, and therefore it was valid See, so far as the English law is concerned, Jones v. Arthur (1840) 59 R.R. 833 and Polglass v. Oliver (1831) 149 E.R. 7. The same principle has been applied in India. See Haji Mahomed Mozaffer Ali v. Asraf Ali 25 Ind.Cas. 93.
6. As to the second point, it also was not an objection put forward at the time of tender. Plaintiff can object neither to the time nor place. He had been summoned by phone to the negotiations going on in P.W. 2's house and P.W. 2 was holding himself Out as under authority from the plaintiff to receive payment although the promissory note had not then been endorsed to him. Plaintiff had refused to go to P.W. 2's house. 2nd defendant therefore could no less than pursue the plaintiff to the place where he was. As to the reasonable opportunity of ascertaining that the 2nd defendant was able and willing there and then to fulfil his obligation, plaintiff clearly had such an opportunity if he had not himself refused to ascertain anything at all. Under Section 38 of the Contract Act, therefore, the 2nd defendant was absolved from responsibility for non-payment.
7. Does that imply that the running of interest stopped? Section 84 of the Transfer of Property Act says that where a tender has been made of the amount due on a mortgage interest shall cease from the date of the tender. Obviously a party cannot come into Court and say 'There was no tender because I refuse to listen to any tender.' Here if the 2nd defendant had had the amount in cash and went to the plaintiff intending to offer it and the plaintiff stopped his mouth by refusing to deal with him at all, one could not hold that there was no valid tender which stopped the running of interest. It seems to me to make no difference if the 2nd defendant had instead of cash his cheque book ready to give the plaintiff a cheque for the full amount or to cash that cheque and give the amount in cash according as the plaintiff chose and was prevented from doing so because the plaintiff refused to allow him to deal with him at all and was evidently determined to receive neither cash nor cheque. We are satisfied that there was a valid offer if the plaintiff would have listened to it and that the plaintiff refused improperly to listen and thereby is estopped by his own conduct from claiming that interest will not cease to run. See Jagat Tarini Dasi v. Naba Gopal Chaki I.L.R. (1907) C. 305. Kripa Sindhu Mukerji v. Annada Swndari Debi I.L.R. (1907) C. 34 and Lal Batcha Sahib v. Arcot Narainaswami Mudaliar I.L.R. (1910) M. 320. The same principle governs English law. An act equivalent to dispensing with the production of money is a waiver of the necessity of tender. It is equal to saying, 'You need not produce the money because I will not take it. See Thomas v. Evans (1808) 103 E.R. 714, Darglas and Phillips v. Paluck 1 Rev. Rule 793 and Ex parts Danks (1852) 42 E.R. 1138.
8. No question arises in this case whether the tender was a continuing offer until the money was paid into Court.
9. The 2nd defendant asserted, and the fact was not denied by the plaintiff or put in issue, that from 16th March, 1925 till 22nd October, 1925, 2nd defendant had more than Rs. 12,500 in the bank to meet the demand of the plaintiff at any time if the plaintiff was willing to receive the payment.
10. We cannot regard the judgment of the Lower Court as satisfactory. It contains many misstatements and misquotations of the evidence. It blames the 2nd defendant for not furnishing circumstances of time and place of tender as called upon within two weeks of the date of framing issues. The order as a matter of fact says 'date of payment' and not 'date of tender'. The Lower Court goes on to remark that the plaintiff had therefore 'no means of meeting the 2nd defendant's case that tender was made on the 16th'. But that date is clearly stated in the 2nd defendant's written statement and further particulars were given when Exhibits I and III were filed on the 26th and 27th April. There is no question of any surprise being sprung upon the plaintiff. The Judge further seems to regard the principal question to be whether the 2nd defendant took Rs. 12,500 in cash. We have indicated that that was not the principal question. By some curious reasoning which we do not follow the Judge argues that the 2nd defendant could not have had at his disposal more than Rs. 4,200 in cash and Rs. 6,680, the amount of the draft which he deposited in the bank on the 16th. Why the 2nd defendant could not have produced or had in his possession more cash than he paid into the bank we do not see. The Judge twice over misquoted the plaintiff as saying that he did not know the 2nd defendant before. The plaintiff nowhere 'I says so. The Judge further seems obsessed by the idea that the 2nd defendant had no right to make a tender at all unless there was some fresh contract between him and the plaintiff. But the 2nd defendant as the purchaser of the equity of redemption was in law entitled to discharge the mortgage debt : without any further contract. The Judge assumes that P.W. 2 was authorised to receive payment for the plaintiff on the 16th but this is wrong. The promissory note was not endorsed for collection to P.W. 2 until the next day. A tender to P.W. 2 on the 16th would not have been a legal tender.
11. We must hold for reasons already given that there was a valid tender of the money due to the plaintiff on the 16th and that interest ceased to run from that date, and the plaintiff has therefore no cause of action. The suit therefore fails and must be dismissed. The 1st defendant has not appealed. but obviously if the interest is not due at all he cannot be held liable in law for it. Moreover as the appeal brought by the 2nd defendant alone is preferred against the whole decree on a ground common to both defendants it may, under Order 41, Rule 4, be set aside against both. We may add that we do not understand why the Judge gave a personal decree against the 2nd defendant. There was in his view no privity of contract between him and plaintiff.
12. We reverse the decree of the Lower Court and dismiss the plaintiff's suit with costs to 2nd defendant in this Court. We direct that in the Lower Court all parties will pay their own costs as neither plaintiff nor 2nd defendant put forward the whole truth and nothing but the truth. 1st defendant has not appealed.