1. This appeal is concerned with 3 acres 53 cents of land in Varahur with Survey No, 231/3, which in 1906 was mortgaged by one Ayyasami Padayachi to one Muthusami Udayan for Rs. 100. In 1910 Ayyasami Padayachi and his wife Kamakshi further mortgaged a house for Rs. 250 to the same Muthusami Udayan. In 1921, Ayyasami Padayachi being then dead, his widow sold the equity of redemption in this land by two contradictory sale deeds to Muthusami Udayan's son Pichaipillai Udayan, the plaintiffs, and to defendant 1. The dispute which inevitably arose between the rival vendees was referred to arbitration and an oral award was pronounced in November 1921 by which defendant 1 was to keep the property and pay Rs. 750 to the plaintiff in discharge of his two mortgages. If default was made in payment plaintiff was to have the right to bring this property to sale. No payment was made, disputes broke out again, and in 1923 the Sub-divisional Magistrate, Ariyalur, took action Under Section 145, Criminal P.C.
2. On 30th January 1923, defendant 1 gave a statement before the Sub-Magistrate, Perambalur (Ex. D) in which he undertook to pay Rs. 750 to plaintiff by 1st September and to give him the right of proceeding against this property and two other items of property if he failed to do so and promised, if plaintiff would agree to this proposal and refrain from entering upon the suit land, to drop the proceedings before the Sub-divisional Magistrate. Plaintiff expressed his agreement in a statement made on the same day to the same Sub-Magistrate, and the proceedings Under Section 145 were duly dropped. Defendant 1 has still made no payment, and in 1928 he sold the suit property to defendant 2. In 1929 plaintiff filed the suit out of which this second appeal arises, claiming a sum of Rs. 1,400 (Rs. 750 with interest) to be realized by the sale of the suit property and by the personal liability of defendant 1. In his suit plaintiff based his claim to a charge on the property upon the oral award. The learned District Munsif held that the oral award created a valid charge and defendant 2 purchased the property with knowledge of plaintiff's rights. He accordingly decreed plaintiff's suit as prayed for. Against this decree defendant 2 alone appealed. In the appeal the learned Subordinate Judge of Trichinopoly confirmed the finding that defendant 2 had notice of plaintiff's rights, but held that the oral award did not create a valid charge. The appeal however did not succeed, as the Subordinate Judge held that a charge was created by the two statements of 1923 before the Sub-Magistrate. Defendant 2 has now filed this second appeal.
3. In second appeal plaintiff placed no reliance upon the oral award, and the main argument was whether the recitals of Ex. D constituted that document a mortgage or a charge. Mortgage' is defined in Section 58 and 'charge' in Section 100, T.P. Act, and the crucial consideration which emerges from these definitions is this: that if any document can be construed as a mortgage it cannot be a charge. The learned Subordinate Judge holds that Ex. D was 'intended' to be a charge, and was not 'intended' to be a mortgage. The distinction between a charge and a simple mortgage is a very subtle one and to judge of the intention' of parties we must look to the language alone in which their intentions are expressed. What then are the essentials of a mortgage? They are set out in a judgment of a Bench of this Court reported in Rama Brahman v. Venkatanarasu Pantulu : (1912)23MLJ131 as four in number; (i) it must be created by act of parties; (ii) it must be for a debt; (iii) it must be of specific property; (iv) it must involve a covenant to pay; and in Balasubramania Nadar v. Sivaguru Asari : (1911)21MLJ562 , two other features of a document are held not to be essential for constituting it a mortgage. These are (a) formal transfer of interest and (b) an express power of sale. Now it is clear upon a perusal of Ex. D that the four essentials mentioned above are all present though the two non-essentials may be absent. Ex. D therefore must be a mortgage if this is the law to be applied to its construction and the learned advocate for the respondent has not been able to refer me to any authority which overrules or casts any doubt upon the law as so propounded. I must therefore rule that Ex. D is a mortgage. As it has not been attested or registered it is invalid as a mortgage, but being invalid as a mortgage, not from any defect in its recitals but for non-compliance with subsequent statutory requirement it is conceded that it cannot be held to be a charge. In the result then respondent's case as based upon Ex. D must fail. Respondent however now puts forward yet a third alternative case, that he is entitled to a decree upon the original mortgage of 1906 which had been kept alive by various payments and acknowledgments up till the date of his plaint. Although, as pointed out for the appellant, there is no such alternative prayer at the end of his plaint to this effect, passages in paras. 8 and 14 show that respondent had this alternative prayer in mind, and I think this point may fairly be considered. It is based mainly upon a decision of the Privy Council reported in Har Chandi Lal v. Sheoraj Singh AIR 1916 PC 68. It seems to me that that case is clearly distinguishable from the present case. There a mortgagee took second mortgages in substitution of a first, and those second mortgages were held not to be binding on the mortgagor. Their Lordships say:
It does not appear to be consistent with equity or good conscience that the defendants having successfully maintained that the transaction embodied in the two deeds of 1887 was not binding on Mt. Nandan, and consequently did not bind them, should now claim the benefit of that transaction as a release of the mortgage of 1876.
4. In the present case there is no fraud played upon the mortgagee. He simply took a mortgage without realising that it was a mortgage and that he ought to have it attested and registered. Defendant 2 is putting forward a technical plea which he is entitled to put forward and which, though it affects the validity of Ex. D as a mortgage, does not release defendant 1 from his personal obligation under it. I cannot see that Har Chandi Lal v. Sheoraj Singh AIR 1916 PC 68 can be applied to the facts of this case. Respondent finally falls back upon the analogy of insufficiently stamped promissory notes, and argues that if the promisee of such a note can sue upon the original cause of action, the mortgagee of an invalid mortgage ought to be permitted to sue on the valid mortgage which the invalid mortgage was intended to discharge. But it seems to me that this part of the law regarding promissory notes depends upon the special characteristics of negotiable instruments, and in the absence of authority I am unable to extend it from promissory notes to mortgages. In the result this appeal must be allowed and respondent's suit dismissed with costs throughout as against defendant 2. The decree against defendant 1 is confirmed.