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Shamanand Das Vs. Baid Nath Das - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata
Decided On
Judge
Reported in(1895)ILR22Cal143
AppellantShamanand Das
RespondentBaid Nath Das
Cases ReferredMangniram Marwari v. Rajpati Koeri
Excerpt:
succession certificate act (vii of 1889), section 4 - right to maintain suit without certificate--suit on mortgage bond by heir--suit continued by parly substituted for plaintiff who has taken out certificate--interest at high rate--penalty--contract act (ix of 1872), section 74--precise sum not named but ascertainable. - .....limited to cases in which a court is asked to compel a debtor to pay,' that is to say, to make a personal decree against the debtor. to me it seems to have no application to a suit such as the present.'13. the act which the learned judges had then to consider was no doubt an act different from that with which we are concerned in the present case; but it will be observed that the language of section 2 of act xx vii of 1860, so far as the question which arises in this case is concerned, is very similar to the provisions of section 4 of the succession certificate act.14. in a more recent case, kanchan modi v. baij nath singh i.l.r. 19 cal. 336 where the question as to the construction of section 42 of the succession certificate act came to be discussed, this court observed as.....
Judgment:

Ghose and Gordon, JJ.

1. This was a suit to enforce a mortgage bond. The mortgage was executed in. favour of one Harihar Prasad. He died, leaving two sons, Jagadanand Das and Shamanand Das, both of them being minors at the time.

2. The suit was instituted on the 28th March 1892 by Jagadanand Das against the mortgagor, Baid Nath Das, for recovery of the money covered by the mortgage bond, and ho asked that the sum due might be realized by safe of the mortgage property, and he further prayed that in the event of the mortgage property being found insufficient to liquidate the entire amount, the balance might be recovered from the defendant personally and from his other properties.

3. We should here mention that Jagadanand Das, who was the elder of the two brothers, stated in his plaint that he was the sole heir of his father, and that he had taken out a certificate of heirship in order to enable him to collect the debts due to his father's estate.

4. The defendant in his written statement pleaded that the suit was not maintainable, because the plaintiff had not joined his brother as co-plaintiff in the suit, and that the interest sought to be recovered by the plaintiff, namely at the rate of Rs. 3-2, was a penalty, and could not therefore be allowed. He further set up a custom that prevailed in his family, under which he alleged no member of the family was entitled to mortgage the family property.

5. It appears that pending this suit Jagadanand Das died on the 18th August 1892. Thereupon, his brother Shamanand Das, who was still a minor, through his mother and guardian, asked to be substituted as a plaintiff in the place of his deceased brother. Some other persons, who are half brothers of Harihar Prasad, also applied to be made plaintiffs in the suit, but it is sufficient to dismiss their application by stating that the Court below held that it was beyond time, and therefore it could not be acceded to. So far as Shamanand Das was concerned, the Subordinate Judge allowed him to be substituted as plaintiff in the case in the place of his brother Jagadanand Das, he being of opinion that, being a minor, his (Shamanand's) application was not barred by the Law of Limitation.

6. The Subordinate Judge, upon the case coming up for trial, dealt with the contentions that were then raised before him, and he states that the contentions were-first, that the plaintiff Shamanand was not a minor; secondly, that the rule of primogeniture prevailing in defendants' family was a bar to the sale of the mortgaged property; and, thirdly, that without a certificate under the Succession Act, the plaintiff was not entitled to a decree. He negatived all these objections, and held that the plaintiff was entitled to a decree charging the mortgaged property for the satisfaction of his claim, but that the personal relief claimed in the plaint against the defendant could not be allowed, as it was barred by the Law of Limitation. In regard to the question of interest that was raised before him, the Subordinate Judge held that the plaintiff was entitled to claim interest upon the principal only at the rate of Re. 1-4 as agreed upon, and not the higher interest of Rs. 3-2, but that he could recover interest at that rate upon the interest accruing upon the principal, that is to say, that he was entitled to compound interest at the higher rate of Rs. 3-2 mentioned in the bond. We observe, however, that the decree that was drawn up under the signature of the Subordinate Judge allows interest at the higher rate upon the principal from the date of the institution of the suit.

7. Against this decree the defendant has preferred this appeal.

8. The first point that has been discussed before us by the learned Vakil for the appellant is that Jagadanand Das, the original plaintiff, was not entitled to sue without joining his brother, Shamanand Das.

9. As to this matter, it is sufficient to say that, though it was raised in the written statement, it was not insisted upon at the trial before the Subordinate Judge, nor has it been raised in the petition of appeal presented to this Court. It raises simply a question of non-joinder of parties, but it does not really affect the merits of the case, more particularly when upon the death of Jagadanand Das, Shamanand Das has been substituted as plaintiff in his place, and the suit has been allowed to proceed at his instance.

10. The next ground that has been raised before us on behalf of the appellant is that the plaintiff was not entitled to get a decree without a certificate of succession as provided by Section 4 of the Succession Certificate Act.

11. As to this matter, it appears that, although a decree was asked for by the plaintiff both against the mortgaged property and against the debtor personally, still the only decree that was pronounced by the Court below was a decree against the mortgaged property. No relief was granted against the defendant personally. Section 4 of the Succession Certificate Act VII of 1889 provides:

No Court shall-(a) Pass a decree against a debtor of a deceased person for payment of his debt to a person claiming to be entitled to the effects of the deceased person or to any part thereof; or (b) proceed upon an application of a person claiming to be so entitled, to execute against such a debtor a decree or order for the payment of his debt;' and so on.

12. The question here is whether the decree that has been passed by the lower Court is a decree against 'the debtor for payment of his debt.' This question seems to have been considered in two cases before this Court. In the case of Raghu Nath Shaha v. Poresh Nath Pundari I.L.R. 15 Cal. 54, where the question was raised with reference to the language of Section 21 of Act XXVII of 1860, Wilson, J., in delivering the judgment of the Court, observed as follows: 'The words of the section are that no debtor of any deceased person shall be compelled in any Court to pay his debt to any person 'without a certificate. It seems to me that this is limited to suits against a 'debtor,' and can have no application to a suit against a purchaser of a mortgaged property, who is in no sense a debtor; secondly, it seems to me that the words are limited to cases in which a Court is asked to compel a debtor to pay,' that is to say, to make a personal decree against the debtor. To me it seems to have no application to a suit such as the present.'

13. The Act which the learned Judges had then to consider was no doubt an Act different from that with which we are concerned in the present case; but it will be observed that the language of Section 2 of Act XX VII of 1860, so far as the question which arises in this case is concerned, is very similar to the provisions of Section 4 of the Succession Certificate Act.

14. In a more recent case, Kanchan Modi v. Baij Nath Singh I.L.R. 19 Cal. 336 where the question as to the construction of Section 42 of the Succession Certificate Act came to be discussed, this Court observed as follows:

Section 4 says: 'No Court shall pass a decree against a debtor for payment of his debt,' and so on. A mortgagee might ask for a decree against the person of the debtor, but the Court is not bound to make a personal decree; it might, if the facts permit, make a decree only against the property mortgaged by the defendant; and in the circumstances of the present case it was quite open to the Court of First Instance-in fact, it was its duty-to refrain from making a personal decree and to pass a decree charging the property in the hands of the defendants, second party, for satisfaction of the claim of the plaintiffs. The relief that the plaintiff's asked for in the suit was not for recovery of the debt, Ml but as observed by Sir Barnes Peacock in the Full Bench decision in Sarwar Hossein Khan v. Gholam Mahomed B.L.R. Sup. Vol., 879 : 9 W.R. 170, it was a suit for the recovery of an interest in immoveable property. The question that the learned Judges had to decide in that case was no doubt a different question. It was one of limitation, but we take it, as it has always been understood in this Court, that a suit to enforce a charge against immoveable property is a suit for the recovery of an interest in immoveable property; and if that be the correct view to take, it seams to be obvious that the plaintiffs were entitled, notwithstanding the absence of a certificate under the Succession Certificate Act, to sustain the decree that had been pronounced in their favour by the Court of first Instance, that being a decree charging the immoveable property in the hands of the second party defendants.

15. There, no doubt, no personal relief was asked for against the mortgagor, and the decree that was allowed by the Court below was a decree against the mortgaged property in the hands of the assignee of the mortgaged premises, but still the question that we have to decide in this case came, though incidentally, to be considered by the Judges who dealt with that case.

16. In the case of Janki Bullav Sen v. Hafiz Mahomed Ali Khan I.L.R. 13 Cal. 47 a somewhat different view seems to have been adopted; but it will be observed upon a consideration of that case that the precise question which we have to decide in the present case was not then discussed.

17. In the present case, no decree was passed by the Court below against the debtor personally, and the only relief that has been granted by that Court to the plaintiff is a relief against the property mortgaged; and though no doubt the property is liable to be sold only in the event of the defendant failing to pay the money due under the mortgage by the time fixed by the Court, it could hardly be said that that is a decree against the debtor for payment of his debt, properly so called. We are inclined to think that the construction put upon the words of Section 2 of Act XXVII of 1860, which are in effect very similar to Section 4 of the Succession Certificate Act, by Wilson, J., in the case to which we have already referred, is the right construction, and may be adopted in the present case.

18. There was another view which was presented to us by the learned Vakil for the respondent with reference to Section 4 of the Succession Certificate Act, and that is that it has no application to a case like the present where the original plaintiff had obtained a certificate under the Succession Certificate Act, and another person was, during the pendency of the suit, substituted in his place as the heir of the deceased plaintiff. It is perhaps not necessary, in the view that we have already expressed, to decide this question, but it seems to us that it is extremely doubtful whether the Legislature ever intended that this section should apply, not only to a case where a person claims to recover money under the title of succession to the original creditor, but also to a case, where, upon the death of that person during the pendency of the suit, some other person is substituted in his place as plaintiff in the cause.

19. We therefore overrule the contention of the defendant on this head.

20. The third objection that was raised before us was in regard to the interest allowed by the Court below. The words of the mortgage bond, so far as they bear upon this matter, are as follows:

I will pay interest for the said amount at the rate of Re. 1-4-0 per cent. per mensem. And at the end of a year, i.e., 365 days, from the date of the mortgage bond, I will pay the whole amount of interest due on the principal for that year. If I do not pay the interest in this way at the end of each year, I will be guilty of neglect. You will by instituting suit realize interest upon the arrears of interest (which will be regarded as principal) and upon the principal mentioned in the mortgage bond at the rate of Rs. 3-2-0 per cent. per mensem, from the mortgaged property and from my heirs, assigns and representatives and from my other properties. I will continue to pay interest upon the principal for every year from the date of the mortgage bond at the end of that year as long as the amount of the mortgage bond is not paid. In default of payment you will act according to the condition stated above. I will repay this money within three months from date and redeem the mortgaged property and mortgage bond. I will get the payments of interest or of principal endorsed (as often they will be made) on the back of the mortgage bond. I will take no separate receipt or releases, nor will produce any (in evidence). If produced they will be at once rejected by the Court as inadmissible. If I fail to pay up the principal money within the said specified time I will continue to pay up interest upon the principal at the rate of Re. 1-4-0 per cent. according to the said stipulation in the bond up to the date of the institution of the suit, and from the date of institution of the suit to that of the decree, and from the date of the decree to that of the realization of the amount.

21. As already mentioned, the Court below has held that the plaintiff is not entitled to recover the higher rate of interest, namely, Rs. 3-2-0, upon the principal amount, but that he is entitled to such interest upon the interest accruing year after year. The question whether the mortgagee has a right to compound interest at the higher rate of Rs. 3-2-0 is not free from difficulty, but having regard to the judgment of a Full Bench of this Court in the case of Kala Chand Koyal v. Shib Chunder Roy I.L.R. 19 Cal. 392 delivered by Pigot, J., we think that the plaintiff is not entitled to this higher rate of interest, it being in the nature of a penalty within the meaning of Section 74 of the Contract Act. In that case, the provision in the bond was that the principal should be repaid with interest on the due date, and that on failure thereof interest should be paid at a higher rate from the date of the bond up to date of realization; and the question that was discussed was whether this provision amounts to a provision in the nature of a penalty such as under Section 74 of the Contract Act could not be enforced. The majority of the Court followed the decision of this Court in the case of Mackintosh v. Grow I.L.R. 9 Cal. 689, and held that the said provision amounted to a stipulation for payment of a penalty, and therefore it could not be given effect to. The learned Judges had, in deciding that case, to consider the correctness of another judgment of this Court, namely, in the case of Baij Nath Singh v. Shah Ah Hossein I.L.R. 14 Cal. 248, and Pigot, J., with reference to this case and to a case decided by the Madras High Court, made the following observations:

I think that the objection made in the judgment in Baij Nath Singh v. Shah Ali Hossein I.L.R. 14 Cal. 248, that cases such as the present do not come within Section 74 of the Contract Act, because no sum is named, is not one to which effect ought to be given. By the fixing of a rate of interest the sum to become payable, at any rate, as the Madras High Court says, at the time when default is made, is fixed, and this is what the section contemplates.

' Upon the second question I think that when the provision in the contract in question amounts to a provision for a penalty (or, which is the same thing, stipulates for a sum in case of breach within the meaning of Section 74) that that goes to the whole sum which may accrue due under the provision, although it may be that by non-payment for an indefinite time the aggregate amount ultimately payable may greatly exceed the amount-the fixed and ascertainable amount-to be due at time of default. I think they cannot be separated, and that Section 74 applies to all, that is, that it applies to the money claimed at the increased rate of interest from the date of the bond until realization.

22. These last observations were made especially with reference to the question that was raised in the case, whether the plaintiff could not recover the higher rate of interest from and after the due date, and it was held that the provision as to the increased interest was a provision which could not be separated, and that therefore Section 74 of the Contract Act applied both to the period before the due date as also to the period subsequent thereto.

23. It was contended before us by the learned Vakil for the respondent, relying upon certain observations of this Court in the case of Mangniram Marwari v. Rajpati Koeri I.L.R. 20 Cal. 366 that Section 74 of the Contract Act had no application to this case, because no sum was named as the amount to be paid in the event of a breach of the contract to pay; that the amount would vary with the time for which payment was withheld; and that, with regard to compound interest, there was but one rate stipulated, viz., Rs. 3-2-0, and that therefore it could not be regarded as a penalty. We observe, however, that the first portion of this argument, as we understand it, is the same that was used by Mitter, J., in the case of Baij Nath Singh v. Shah Ali Hossein, but it does not seem to have been accepted as correct by the majority of the Judges who composed the Full Bench in the case of Kala Chand Koyal v. Shib Chunder Roy. They rather adopted the view of the law that was expressed by the Madras High Court in the case of Nanjappa v. Nanjappa I.L.R. 12 Mad. 161. The learned Judges in that case, with reference to this question, observed as follows:

It is said there is in the present case no sum named within the meaning of Section 74 of the Contract Act, and that therefore that section is not applicable. To that argument we would reply that, though no sum is named in rupees, the extra sum payable is fixed and ascertainable beforehand or at any rate at the time when default is made. To hold that more than this is required, and that it is necessary that the exact sum should be mentioned in the bond, is in our judgment to countenance an easy mode of avoiding the effect of the section altogether.

24. We may add with reference to the case of Mangniram Marwari v. Rajpati Koeri, which was relied upon by the learned Vakil for the respondent, that the terms of the bond which the learned Judges were then called upon to consider are not identical with the terms of the bond in the present case.

25. It will be observed that the stipulation between the parties was that the interest would be payable at the end of each year, and that in default of payment of such interest at the rate of Re. 1-4-0 per cent per. mensem, the mortgagor should have to pay compound interest at the increased rate of Rs. 3-2-0 per cent. per mensem; and that in default of payment of interest at the end of each year the creditor would be entitled to sue for the interest at the increased rate. So that, although no sum was named in the mortgage itself as would be payable upon a breach of the covenant on the part of the mortgagor, still the amount which the mortgagee would be entitled to recover from the mortgagor in the event of default of payment of interest at the end of each year was at once ascertain able, and in this view of the matter we think that the provision with which we are concerned falls within the scope of Section 74 of the Contract Act; and we do not see it is possible to divide this provision into two parts, one of the parts being applicable to the principal, and the other part to the interest. The whole provision, as it seems to us, was one entire provision in the nature of a penalty which the mortgagor incurred in the event of default on his part to pay the stipulated interest at the end of each year; and though in regard to compound interest there is but one rate (Rs. 3-2-0) mentioned, it is a rate higher than that at which interest was payable, if there was no breach of the covenant, and in this sense may well be regarded as a penalty.

26. Upon these grounds we are of opinion that the mortgagee is not entitled to enforce the penal provision in the mortgage bond as regards the higher rate of interest.

27. While, therefore, we think that the decree of the Court below should in the main be confirmed, we are of opinion that it should be modified so as to allow the plaintiff to recover interest at the rate of Re. 1-4-0 per cent. per mensem upon the principal from the date of the bond to the date of realization as also compound interest at the same rate; and we direct that a decree be drawn up in accordance with this declaration in terms of the Transfer of Property Act. Costs in proportion.

1 No debt recoverable without a certificate.

[Section 2: No debtor of any deceased person shall be compelled in any Court to pay his debt to any person claiming to be entitled to the effects of any deceased person or any part thereof, except on the production of a certificate, to be obtained in manner hereinafter mentioned or of a probate, or letters of administration, unless the Court shall be of opinion that payment of the debt is withheld from fraudulent or vexatious motives, and not from any reasonable doubt as to the party entitled.]

2 Proof of representative title a condition precedent to recovery through the Courts of debts from debtors of deceased persons.

[Section 4: (1) No Court shall-

(a) pass a decree against a debtor of a deceased person for payment of his debt to a person claiming to be entitled to the effects of the deceased person or to any part thereof, or

(b) proceed upon an application of a person claiming to be so entitled, to execute against such a debtor a decree or order for the payment of his debt, except on the production, by the person so claiming, of

(i) a probate or letters of administration evidencing the grant to him of administration to the estate of the deceased, or

(ii) a certificate granted under Section 36 or Section 37 of the Administrator-General's Act, 1874, (II of 1874) and having the debt mentioned therein, or

(iii) a certificate granted under this Act and having the debt specified therein, or

(iv) a certificate granted under Act XXVII of 1860 or an enactment repealed by that Act, or

(v) a certificate granted under the Regulation of the Bombay Code No. VIII of 1827 and, if granted after the commencement of this Act, having the debt specified therein.

(2) The word 'debt' in Sub-section (1) includes any debt except rent, revenue or profits payable in respect of land used for agricultural purposes.]


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