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(Gudimalla) Narasimham and anr. Vs. (Paidimarri) Venkata Subbayya and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1933Mad171
Appellant(Gudimalla) Narasimham and anr.
Respondent(Paidimarri) Venkata Subbayya and anr.
Cases ReferredJewan Lal v. Nilamani Choudhuri
Excerpt:
- - the alleged breach by the plaintiff is that he failed to pay off two creditors to whom he undertook to pay rs. the document is, in my opinion, perfectly simple and is capable of only one meaning, namely that the principal sum of rs. it seems to me that where there is a registered document like a mortgage setting out the terms of the contract, namely the interest, it is improper to look at the subsequent parol conduct for the purpose of interpreting the document. whether that was so or not, the question of compound interest was undoubtedly in controversy between the parties in the court of the district munsif as well as in the court of the subordinate judge, and the district munsif found against the claim of the plaintiff on this head......the plaintiff was awarded a decree by the district munsif for about rs. 356 and in appeal by the learned subordinate judge for rs. 2,982 odd. the discrepancy between the figures is mainly due to the difference in the findings of two courts as to the plaintiff's right to compound interest. the district munsif took a view which was adverse to the plaintiff on the question of compound interest, while the learned subordinate judge took a view in his favour. in second appeal by the defendants three points are raised: first, that the decree of the subordinate judge awarding compound interest to the plaintiff is wrong; second, that the decree of the subordinate judge awarding post diem interest to the plaintiff is wrong; and thirdly that the defendants should have been awarded compensation.....
Judgment:

Pandalai, J.

1. This was a suit upon a mortgage (Ex. A) in which the plaintiff was awarded a decree by the District Munsif for about Rs. 356 and in appeal by the learned Subordinate Judge for Rs. 2,982 odd. The discrepancy between the figures is mainly due to the difference in the findings of two Courts as to the plaintiff's right to compound interest. The District Munsif took a view which was adverse to the plaintiff on the question of compound interest, while the learned Subordinate Judge took a view in his favour. In second appeal by the defendants three points are raised: first, that the decree of the Subordinate Judge awarding compound interest to the plaintiff is wrong; second, that the decree of the Subordinate Judge awarding post diem interest to the plaintiff is wrong; and thirdly that the defendants should have been awarded compensation for alleged breaches of the mortgage contract by the plaintiff. The second and third points may be briefly dealt with as there is no substance in them. The argument is that the mortgage document (Ex. A) does not contain any clear stipulation for post diem interest and therefore it should not have been awarded. This argument is not correct. It has been held that even where there is no express stipulation in a mortgage document for post diem interest, such interest may be awarded either under a contract to be implied or as compensation and the usual practice is to award such interest at the contract rate. I think no fault can be found with this part of the decree.

2. So also as to the claim for compensation by the defendants. The alleged breach by the plaintiff is that he failed to pay off two creditors to whom he undertook to pay Rs. 900 out of the mortgage money. It is admitted that the plaintiff did not make the payment and that the defendants themselves paid off those debts. But all this took place prior to 1913. The suit was brought in 1925. The Subordinate Judge has held that whatever claim the defendants may have had to compensation for the breach by the plaintiff, which would be the difference between the interest payable to the plaintiff and the interest subsequent to the mortgage actually paid to the creditors by the defendants, it is barred by limitation. It was urged that this view of the question of limitation was wrong. But it is immaterial to decide that point; because even if it is competent for the defendants to raise that question, there are no materials on record on which any relief can be given. From the first the defendants nowhere stated what was the amount of compensation due to them. I am not inclined to go into the question of limitation for the purpose of remanding the case in case it was found in favour of the appellant.

3. The only substantial point in the appeal is that relating to compound interest. On this the District Munsif held that the mortgage document did not provide for it, while the learned Subordinate Judge held that it did. Ex. A is a Telugu document, very brief and extremely unconventional. It was probably prepared by a village document writer. But as it is it has to be interpreted on its own words. According to the learned Subordinate Judge the provision relating to interest is as follows:

The total sum due to you is Rs. 2,000. On this the interest is Rs. 0-14-3 per Rs. 100 per mensem. At this rate, with Salu-sari Vaddi (literally for every year-interest) we shall pay in four equal instalments of Rs. 600, each payable on 30th March of each year.

4. The District Munsif thought that 'salu-sari vaddi' which means literally interest for every year or interest calculated for every year means simple interest for every year at the agreed rate and that there was no provision in the document for compound interest on default of payment of the instalments. The learned Subordinate Judge took the view that the expression 'salu-sari vaddi' was ambiguous and that it may mean interest either 'calculated for each year' or with yearly rests.' Having so held, he proceeded to resolve the ambiguity by what he describes as the subsequent conduct of the parties from which he inferred that the intention of the parties was to pay and to be paid compound interest. In the first place I think the learned Subordinate Judge is not right in imputing any ambiguity to the expression 'salu-sari vaddi' There is no idea of rests or compound interest at all in it.

5. It looks as if the learned Judge was so impressed with what he describes as subsequent conduct that he led himself to be convinced that it might be read into the document itself. The document is, in my opinion, perfectly simple and is capable of only one meaning, namely that the principal sum of Rs. 2,000 was to be paid in four yearly instalments of Rs. 500 each on 30th March of each year (beginning from 30th March 1910) with interest at the agreed rate of Re. 0-14-3 per cent per annum on the balance of principal remaining due for each year, that is, the year during which interest fell due. That being so, the agreement between the parties contained in the mortgage deed is only for simple interest and no compound interest can be awarded unless it has been specially agreed to: Jewan Lal v. Nilamani Choudhuri AIR1928PC80. The next point is whether, as the learned advocate for the respondent says, in ascertaining the meaning of the mortgage deed what is described by the learned Subordinate Judge as the subsequent conduct of the parties may be looked into; and if looked into, what is the result? It seems to me that where there is a registered document like a mortgage setting out the terms of the contract, namely the interest, it is improper to look at the subsequent parol conduct for the purpose of interpreting the document. There may be a subsequent agreement to alter the terms of a mortgage deed. If that is so, it is quite a different matter; and if any such agreement is pleaded, it will have to be proved as a fact and it must be supported by consideration. In this case there is no such question of subsequent agreement. No such agreement is either pleaded or found. The sole point then is whether from the subsequent conduct of the parties the meaning of the mortgage deed can be said to be something different from what it is. To make use of subsequent conduct for such purposes is improper. Assuming that it was admissible, the subsequent conduct adduced in this case is not sufficient to prove that at the time of the mortgage deed the parties agreed to compound interest. As to subsequent conduct there is only the inference to be drawn from Ex. 3 which was not put to defendant 1, but which is now sought to be used against him. In fact he himself produced it. He produced it for the purpose of showing not that he then agreed to pay compound interest but that he had paid Rs. 100 more to plaintiff than was admitted by him. But it appears that in Ex. 3 there are at the top the words with annual compound interest.' Ex. 3 is undoubtedly a document which came into existence long after the mortgage deed. Defendant 1 states that it was a voucher kept by him in which the plaintiff signed for the payments made to him. The first payment made was in November 1909 the mortgage itself being on 23rd April 1909. It nowhere contains the signature of defendant 1, and it appears to be a memorandum containing the date of the mortgage, the name of the mortgagee, the principal amount and interest described in these words:

Interest is settled to be paid at the rate of 14 annas and three pies per cent per mensem (with annual compound interest).

6. Now in this document tendered by the plaintiff as a memorandum of acknowledgments of payment and prepared either by him or on his behalf and given to defendant 1, to be kept as a voucher seven months at least after the mortgage deed 'compound interest' first occurs. I am not able to say how from this document said to have been kept by defendant 1 as a voucher and produced by him as such it is to be inferred that he had at the time of the mortgage agreed to compound interest. But it is pointed out that in the written statement it was not definitely denied that the plaintiff was entitled to compound interest under the mortgage deed. Whether that was so or not, the question of compound interest was undoubtedly in controversy between the parties in the Court of the District Munsif as well as in the Court of the Subordinate Judge, and the District Munsif found against the claim of the plaintiff on this head. What seems probable on this question of what is called subsequent conduct is that the plaintiff some time after the mortgage asked that the defendants should pay him compound interest, that on the contrary the defendants charged the plaintiff with having put them to loss by non-payment of the debts mentioned in the mortgage deed and that without any clear knowledge of their mutual rights they thought that if one gave up one claim the other would give up the other. I can find nothing which would affect the construction to be placed upon the mortgage document Ex. A and hold that the plaintiff is not entitled to compound interest. He is only entitled to simple interest at the rate mentioned in the mortgage.

7. The learned advocate for respondent 1 urged that even if he is not entitled to compound interest with annual rests his client is entitled at least to simple interest on the interest in arrear from the date of the first default. This is only a modified form of compound interest, I do not find any warrant for it any more than for a claim for compound interest with annual rests. This claim must also be disallowed. The result is that the decree of the Subordinate Judge must be varied by disallowing the claim for compound interest and also ordering an account by appropriating the payments made by the defendants as found by the learned Subordinate Judge towards interest, if any due in arrear on those dates. Before passing the decree, the office will draw up a calculation of the amount payable to the plaintiff on the, above footing. (On receiving the accounts, the Court delivered the following)

8. Judgment-- The account ordered has now been taken and it is ascertained that Rs. 2,015-11-3 is the amount due to the plaintiff on 17th April 1931. It is declared that this is the amount due on that date exclusive of costs, and there will be a preliminary mortgage decree fixing the date of payment on that date. The plaintiff will get costs on Rs. 1,300 and pay costs on the balance of the amount sued for in the Court of first instance. The plaintiff will get costs on Rs. 1,000 and pay costs on the balance of the amount appealed for in the lower appellate Court. The defendant-appellant will get costs in this second appeal on Rs. 700 and pay costs on the balance of the amount appealed for.


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