1. Suit upon a hypothecation deed. In second appeal three arguments were advanced, which are 7 M.L.J. 222 ; 7 Ind. Dec. 174 that the suit is barred by limitation, 1 C.W.N. 229 that defendant was not liable as the hypothecation bond was executed to discharge certain decree debts for which she was not legally liable, and 1 Ind. Cas. 49 ; 13 C W.N. 1004 that the clause providing for compound interest was penal and should be relieved against.
2. The suit hypothecation bond provides for payment of the principal on 12th May 1900, and it is conceded that, if the Court vacation be excluded, the plaint was presented within 12 years of that date. But it is argued that, as the bond contains a clause that in default of payment of interest every 6 months the principal and interest will become immediately recoverable, the cause of action accrued upon the first default for all that then remained owing of the whole debt. The authorities relied on in support of this proposition are Perumal Ayyan v. Alagirisdmi Bhagavathar 7 M.L.J. 222; Sitab Chand Nahur v. Hyder Malla 1 C.W.N. 229 ; 12 Ind. Dec. 854 which followed Hemp v. Garland (1843) 4 Q.B. 519 ; 12 L.J.Q.B. 134 ; 3 G. & D. 402 ; 114 B.R. 994 and Reeves v. Butcher (1891) 2 Q.B. 609 and the obiter dictum of Seshagiri Aiyar, J. in Narna v. Ammani Amma 35 Ind. Cas. 418; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126 ; 31 M.L.J. 865 to the effect that if the mortgagee claimed interest at the enhanced rate it might well he argued that that became due when the first default was committed.
3. The important clauses in the suit document are in these terms:--'We shall pay in cash the interest accruing due from this date at the rate of Rs. 1-4-0 per cent, per mensem, once in every 6 months, and the principal amount on the 30th Chittarai of Andu 1075 (12th May 1900) and shall get back this document and the other documents given herewith. In default, we shall pay, whenever you require, the interest accruing due for the days overdue at the aforesaid rate, and the principal amount. In case of default in the payment of the interest according to the due date, you may recover, whenever you require and without reference to the due date fixed for the payment of the said principal amount, the aggregate principal and interest amount found due on adding to the principal the interest due every six months together with the interest due at the aforesaid rate on such aggregate amount.' I read these clauses as creating a right in the mortgagee to recover at his option, in case of default in payment of interest regularly every six months, the principal and interest before the date fixed for payment of the principal. But nothing has come out at the trial to show that the mortgagee exercised his option in that way and made a requisition for payment of the principal at any time prior to the transfer of his interests to the plaintiff by the assignment of 8th January 1909, by which date the principal had long become due under the other terms of the hypothecation deed. I think we should follow the recent decision of this Court in Narna v. Ammani Amma 35 Ind. Cas. 418 ; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126 so far as it decides that a mortgagee is not bound to take advantage of a default; and that the learned Judges of the Calcutta High Court who decided Sitab Chand Nahar v. Hyder Malla 1 C.W.N. 229 ; 12 Ind. Dec. 854 were wrong in applying the principle of Article 75 of the Limitation Act, which deals with defaults on promissory notes and instalment bonds, to suits upon mortgages, which are governed by Article 132, when the mortgage bond contains a clause leaving it to the option of the creditor to enforce the provision for immediate payment of the whole.
4. The case of Girindra Mohun Roy v. Bacha Das 1 Ind. Cas. 49 was one of an unregistered instalment bond which did not create a charge upon immoveable property. The finding that in the circumstances of that case which were governed by Article 75, mere abstinence of the plaintiff from bringing a suit to recover the whole amount did not amount to a waiver, will not affect the principles upon which Narna v. Ammani Amma 35 Ind. Cas. 418 ; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126 was decided and this suit has to be decided.
5. I am further of opinion that the words 'whenever you may require,' which occur in the suit hypothecation bond, should not be construed as equivalent to 'immediately' or 'forthwith'--whioh was the meaning given to the words on demand' in Perumal Ayyan v. Alagirisami Bhagavathar 7 M.L.J. 222 ; 7 Ind. Dec. 174 and that in this respect we should follow the decision of this Court in Gopanna Mannadiar v. Muttu Velmani Gopanna Mannadiar No. 27 of 1910.
6. In the absence of any overt act on the part of the plaintiff's assignor to indicate that he did at any time require payment of the principal amount before it became due in the regular course on 12th May 1900, I think that the suit is not time barred. I do not consider the demand for compound interest at the time of instituting the suit constitutes such an overt act as to have a retrospective effect on the accruing of the cause of action. Moreover, I read the clause for recovery of the principal as independent from the stipulation in the document for compound interest. The other two contentions may be briefly disposed of.
7. In the suits, Original Suits Nos. 11 of 1696 and 308 of 1897, in which decrees were obtained against the minor she was represented by her mother as guardian ad litem. It is not alleged that the guardian ad litem acted in fraud of the minor's interest or that her interest was adverse to the minor (in which case she might have been removed under Order XXXII, Rule 9). The defendant is, therefore, bound by those decrees.
8. Lastly, in defendant's written statement she pleaded that, if she was liable at all under the suit hypothecation deed, the amount recoverable from her was only Rs. 732-3-10, and not Rs. 1,088-13 2 as claimed in the plaint.
9. As the Appellate Court's decree provided only for payment of the lesser amount of these two, it is not open to the appellant to contend now that even this amount should be reduced. The second appeal must be dismissed with costs.
10. The chief question raised in this case is one of limitation. The material terms of the hypothecation deed sued on bearing on this question are set out by my learned brother in his judgment. It is conceded that Article 132 of the Limitation Act applies and that if time is taken to run from the due date fixed in the deed the suit is in time. Under that Article time begins when the money sued for becomes due;' the question, therefore, for decision is when did the money become due in the present case, was it at the date fixed in the deed or, as the appellant contends, at the date of the first default This depends primarily on the construction to be placed on the default clause in the deed, referring to non-payment of the six-monthly interest on the due date. The words used are 'you may recover whenever you require.' That clearly gives an option to the mortgagee to anticipate the due date and call in his whole money if he so chooses; but he is not bound to do so. It is not alleged that the mortgagee made any demand for his money before the due date. He apparently did nothing either to take advantage of his option or, on the other hand, to waive his right to do so. It seems to me that when a due date is fixed and an option is given to the creditor to change it, it will be unreasonable to presume that he did change it when he did nothing at all to produce that effect. Plaintiff has sued on the footing that the due date has not been changed and to presume otherwise will be entirely to his prejudice now, as his suit will have to be dismissed. If there is evidence that he did exercise his option the position is clear; but in the absence of such evidence, I am not prepared to make any presumption to his prejudice.
11. The appellant has argued that the ques-when the money became due is independent of the question whether the mortgagee exercised his option or not, and be has relied on the case of Sitab Chand Nahar v. Hyder Malla 1 C.W.N. 229 . That would depend upon whether the exercise of the plaintiff's option was or was not a condition for the defendant's obligation to pay before the due date to arise. Defendant was not bound to pay unless the plaintiff required her to do so, on the terms of the document here. In the Calcutta case cited the learned Judges held that on the document before them the creditor's right to recover the whole money accrued to him at once on the default of the debtor and that he had only a right to waive his right to recover that money if he so chose; of course on that view when the creditor was not shown to have waived his right his cause of action began on the date of default. The terms of that document are not fully set out in the report; but if there was nothing in it to interfere with the creditor's option to call in his whole money on default, I am not prepared to follow the ruling as it is against the view of this Court in Narna v. Ammani Amma 35 Ind. Cas. 418 ; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126 which, with all respect to the Judges of the Calcutta Court, is, I think, correct. The principle that a man need not take advantage of a default clause in his own favour is, it seems to me, overlooked in the Calcutta case.
12. Furthermore, in the present case money is to be paid by the defendant only on the mortgagee requiring her to do so. The words when you require' have been held to imply a condition in Nettakaruppa Goundan v. Kumarosami Goundan 8 M.L.J. 167 and in the recent case of Goppanna Mannadiar v. Muttu Velmani Gopanna Mannadiar No. 27 of 1910. The interpretation put on the words 'on demand' in a hypothecation deed in the earlier Madras case cited for the appellants, Perumal Ayyan v. Alagirisami Bhagavathar 7 M.L.J. 222 viz. that it is equivalent to 'forthwith', has not been adopted in the later cases. See also Karunakaran Nair v. Krishna Menon 10 M.L.T. 258 and Vythilinga Nadan v. Narayana Sami Ayyan 16 M.L.J. 364. I am, therefore, unable to treat that case as an authority and must follow the more recent decisions of this Court. 'You may recover whenever you require' is conceded to be tantamount to 'We shall pay whenever you require.'
13. For the above reasons I hold that the plaintiff's cause of action arose only on the due date fixed and I agree that the suit is not barred by limitation.
14. The appellant raised a further argument that the plaintiff having sued for compound interest which became payable only on default, he should be taken to have exercised his option based on the default and, therefore, his cause of action for the whole money should also be taken to have arisen on the date of default. It is difficult to follow this argument as, on the terms of the deed, the enhanced interest becomes payable on default quite independently of any exercise of his option by the mortgagee; and, therefore, his claim for such interest cannot be treated as any indication of his having exercised his option to call in his full amount within the due date. Reliance was placed on the observation of Seshagiri Aiyar, J. in Narna v. Ammani Amma 35 Ind. Cas. 418 ; 4 L.W. 77 ; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126. But that is to the effect that if the claim is for enhanced interest it may well be argued that that became due when the first default was committed.' The observation has no reference to the principal sum. I read it as referring to that portion of the enhanced interest which accrued for the period anterior to the due date fixed for the payment of the principal, and possibly such interest may be argued to be barred. Such a question, however, is not raised in this case and, therefore, need not be considered.
15. Appellant next contended that, on a proper construction of the hypothecation deed, interest on interest accrued due before the due date fixed, viz., 12th May 1900, was alone payable and not compound interest generally as charged by the plaintiff. The language of the deed is ambiguous and is capable of this construction, though the construction that it gave compound interest generally is also possible. It is not necessary to decide the question on the language of the deed, as defendant admitted in her written statement that on a proper calculation of the money due under the deed Rs. 732-3-10 were due and that as the appellate decree is given on that footing, she cannot be heard in second appeal on any question intended to reduce the amount still further either on the ground of construction or on the ground that the provision as to compound interest is a penal one. The provision for compound interest from the date of default is not necessarily a penal one.
16. It was finally urged that the suit mortgage, which was executed by the defendant's guardian to save her property from being sold in execution of the decree obtained against her with her mother as guardian ad litem, should be held to be not binding on her, because her mother was not a proper guardian for her in that suit. The question whether a guardian ad litem is a proper guardian or not is for the Court trying that suit to decide. Defendant cannot be allowed to raise the objection now, particularly as to allegation of fraud or legal capacity of the guardian is made
17. I agree. The second appeal is dismissed with costs.