1. These appeals arise out of two suits instituted by the Eastern Mortgage & Agency Company, Limited, op the basis of two separate mortgages executed by one Priomoyee Dasi and Mohini Mohan Das respectively. Appeal No. 495 of 1914 is against the preliminary decree in the suit to enforce the mortgage executed by Priomoyee Dasi and Appeal No. 268 of 1915 is against the final decree in that suit, while Appeal No. 544 of 1914 is against the preliminary decree in the suit to enforce the mortgage executed by Mohini Mohan Das and Appeal No. 275 of 1915 is against the final decree in that suit.
2. The mortgaged properties originally belonged to one Modusudan Das, who died in April 1865 leaving his widow Sham Peary Dasi the defendant No. 1 in the suits and five sons Mohini Mohan, Radhika Mohan, Lal Mohan, Khetra Mohan and Shosi Mohan, Shosi Mohan died unmarried and intestate on the 1st October 1865 and his one-fifth share thereupon devolved upon his mother Sham Peary. By an ekrar, dated the 29th September 1877, Sham Peary gave up the share inherited by her in favour of her sons, the document being executed in favour of Mohini Mohan who was the executor of the estate, for natural affection and in consideration of his paying an annuity of Rs. 1,800 a year, Mohini Mohan also executing an ekrar in her favour. One of the questions raised in the case is whether the said annuity is a first charge upon the said share. Mohini Mohan, whose original share was increased to a four annas by the surrender by Sham Peary, subsequently acquired the four-annas share of Khetra Mohan so that his total share became 8 annas. The third brother, Lal Mohan, died on the 18th December 1885 and his four-annas share was inherited by his widow, Priomoyee. The second brother Radhika Mohan had a four-annas share, but this litigation has nothing to do with that share.
3. On the 22nd September 1890, Mohini Mohan executed a mortgage in favour of the Eastern Mortgage & Agency Company, Limited, (who may be conveniently referred to as the Company) for Rs. 2,50,000, mortgaging his eight-annas share and executed a deed of management of the property in favour of Messrs. Garth & Weatherall, through whom the loan was raised. On the 7th November 1890 Priyomoyee executed a mortgage for Rs. 1, 20,000 in favour of the said Company in respect of her four-annas share.
4. The main provisions of the mortgage deed are that the deed is to be construed as an English mortgage as defined by the Transfer of Property Act, 1882, and the mortgagees shall have and exercise all the rights and remedies of an English mortgagee expressly including the power of sale, that the interest is to be at the rate of 91/2 per cent. payable half yearly, but that on punctual payment interest would be charged at the rate of 71/2 per cent., that until the mortgagees entered into possession the mortgaged properties shall be managed entirely (and without any interference whatever by the mortgagor) by Messrs. Garth & Weatherall so long as they fulfilled the terms and conditions, in the event of the death, resignation or dismissal of either of them by the survivor of them or failing such survivor by another duly qualified manager to be nominated by the mortgagees, the manager to have the fullest powers for the proper management and improvement, including the power to appoint and dismiss all servants and to make settlements with raiyats and farmers and to give leases and to institute and conduct and defend suits and will not be liable to dismissal except for misconduct or neglect of duty proved to the satisfaction of the mortgagees. The mortgagor shall not in any event execute any documents for the sale, mortgage or permanent lease or other alienation of any part of the mortgaged properties without the written concurrence of the mortgagees, 'it being the intention of the parties and being of the essence of the negotiation for the grant of the said loan that the mortgagor shall in no way interfere with the management of the mortgaged premises.' The managers in the first place were to pay the Government revenue and other outgoings, and in the second place to pay to the mortgagees interest at the times stated and in the third to pay all proper costs and charges for management and realization of rents and auditing and scrutinizing by professional auditors chosen by the mortgagees (if they think necessary) and in the fourth place to pay Rs. 2,400 to the mortgagor. The managers shall render to the mortgagee such accounts and information and such statements as to rent roll, etc., as may be called for by the mortgagees. If the manager for the time being fails to apply any part of the rents and profits in the manner provided by the deed the mortgagees may appoint (upon such salary or remuneration and with such powers of management as they shall think proper) such person as they in their absolute discretion shall think fit to be Receiver, and the mortgagees at their absolute discretion may from time to time suspend, remove or dismiss any Receiver and appoint another Receiver in his place. The power to appoint a Receiver shall not prejudice or affect any of the rights or remedies of the mortgagees as mortgagees and they shall not be liable for any loss or misapplication of the rent and profits by reason of any default, neglect or misappropriation of any manager or Receiver, and any Receiver, appointed as aforesaid, shall be forth with discharged by the mortgagees and the property shall be again managed as hereinbefore provided by a manager upon the mortgagor making good the deficiency on default in consequence of which the Receiver was appointed and upon the mortgagor paying all the expenses incurred in connection with the appointment and during the employment of the Receiver.
5. A scheme was prepared for the liquidation of the debts and set out in the schedule, according to which the principal and interest were to be paid off by the year 1317.
6. It is unnecessary to state the provisions of the mortgage bond executed by Mohini Mohan Das except that they were similar.
7. A deed of management was simultaneously executed by Priyomoyee giving full powers of management to Messrs. Garth & Weatherall; the terms being similar to those of the deed of management executed by Mohini Mohan Das on the 22nd September 1890.
8. Subsequently a deed of trust was executed by Priyomoyee Dasi on the 7th April 1897 in favour of Messrs. Garth & Weatherall for the better management of the properties. The properly was accordingly managed by Messrs. Garth & Weatherall, and for a few years payments were made by them of the principal and interest as provided in the scheme, then the payments became less. The sum of Rs. 2,400 which was to be paid to Priyomoyee was paid until the year 1898 and was then stopped. On the 10th February 1898 a deed of endowment was executed by Priyomoyee in favour of a deity (Pryabullas) by which certain properly was dedicated to it, and on the 14th December 1902 by a second deed of endowment certain other properties were dedicated by her to the deity. She died on the next day, the 15th December 1902.
9. Mr. Garth died on the 16th June 1904 and on his death the property was managed by Mr. Weatherall. He left for England on the 13th April 1908 and obtained a release on the 26th November 1908 from Sham Peary Dasi in consideration of Mr. Weatherall undertaking to appoint one Mr. Lockhart as trustee in his place. Mr. Lockhart was allowed to manage her estate and be remained in possession as manager in succession to Mr. Weatherall.
10. Priyomoyee died on the 15th December 1902 and Mohini Mohan died on the 28th December 1896 and thereupon their shares devolved upon Sham Peary, the mother of Mohini Mohan.
11. The suits upon the two mortgages were brought by the Company against Sham Peary as defendant No. 1 and Motilal Das, son of Khetra Mohun Das and who as the reversionary heir was joined as the defendant No. 2. The suits were decreed by the Court below, and the defendants have appealed to this Court.
12. The questions raised in the appeal which arises out of the suit upon Priyomoyee's mortgage are: 1st, whether there was intelligent execution of the mortgage deed and the deed of management by Priyomoyee and had she independent advice in the matter: 2nd, was the deed of mortgage properly attested within the meaning of Section 59 of the Transfer of Property Act: 3rd, whether there was legal necessity for Rs. 25,000 out of the one lac and twenty thousand raised upon the mortgage: 4th, whether the annuity of Rs. 1,800 a year in favour of Sham Peary is a charge upon the 4 annas share of the mortgaged properties: 5th, whether the stipulation to pay interest at 91/2 per cent, in case the interest was not paid punctually, is or is not a penalty: 6th, whether Messrs. Garth & Weatherall were the agents of the mortgagor or the mortgagees and whether it is competent to a mortgagee in this country to nominate and appoint an agent to manage the mortgaged premises for the purpose of relieving himself from the liability to which a mortgagee is subject when he enters into possession of the mortgaged properties. The last three questions are common to both the suits.
13. The first question for consideration, therefore, is whether there was intelligent execution of the mortgage deed and the deed of management by Priyomoyee and had she independent advice. The mortgage-deed was executed in the presence of Kunja Bebary Das the maternal uncle of the lady and Mohini Mohan Das her brother-in-law, and it was read over and explained to her by Babu Iswar Chandra Ghose, Pleader. The document bears an endorsement by Mohini Mohan Das and Khetra Mohan Das the then reversioners, who gave their consent stating that the arrangement was necessary.
14. In considering these transactions the circumstances under which they took place should be borne in mind. Both Priyomoyee and Mohini Mohan Das had debts due for very large amounts to Ruplal and Raghunath Das, the amount due by Priyomoyee being Rs. 95,000 and that due by Mohini Mohan about Rs. 2,50,000. Mohini Mohan had borrowed Rs. 2,50,000 from the plaintiff Company through Messrs. Garth & Weatherall only two months before and he had to pay a commission of 10 per cent, to those gentlemen for raising the loan. He had appointed them as managers of the estate which was mortgaged on certain terms. Ruplal and Raghunath Das had obtained a decree against Priyomoyee and proceedings in execution were pending. She tried to raise money elsewhere but did not succeed. It appears that under these circumstances her uncle Kunja Behary asked Mohini Babu to procure advance of money from the plaintiff Company, and Mohini Babu said that he could induce the plaintiff Company to advance money on conditions on which he himself had borrowed money from the Company. Those conditions were that 10 per cent. of the money borrowed from the Company was to be paid to Messrs. Garth and Weatherall who would manage the estate, the interest payable being 91/2 per cent. to be reduced in case of punctual payment to 71/2 per cent. The evidence shows that Priyomoyee then called in her cousin Babu Debendra Nath Das (a Pleader), her Dewan Bhagawan Ghose and Kunja Babu her maternal uncle and after consulting them settled to borrow money from the plaintiff Company on such conditions. Afterwards Messrs. Garth & Weatherall and Mohini Babu came to the house of Priyomoyee and she offered to borrow Rs. 1,20,000 from the plaintiff Company. Tw0 drafts, one of the mortgage deed and the other of the deed of management, were then sent by Messrs. Garth & Weatherall to the lady. They were practically on the same terms as those executed by Mohini Mohan, the only difference being that out of the balance of the profits of the property Rs. 2,400 a year were to be paid to the lady where as in the case of Mohini Mohan, the balance of the profits was to be divided half and half between him and Messrs. Garth & Weatherall. Mohini Mohan appears to have been a leading banker at Dacca. He was an adult male and mixed in European and Indian societies. If he could not raise the loan on better terms, it is not to be expected that the lady could do so herself. It was under these circumstances that the documents were executed. The drafts were taken to Iswar Babu who was one of the leading Pleaders of Dacca and was her legal adviser. He 'touched up' the drafts, and interpreted, them in Bengali to the lady. We do not think that the case of Annoda Mohun Rai Chowdhri v. Bhuban Mohini Debi 28 C. 546 : 11 M.L.J. 164 : 28 I.A. 71 : 5 C.W.N. 489 : 3 Bom. L.R. 386 : 8 Sar. P.C.J. 58 (P.C.) relied upon on behalf of the appellants applies to the present case. In that case the mortgage bond was read out fluently (i.e., without stopping anywhere) to a purdanashin lady and there was no evidence to show that the document was explained to her at all. In the present case the drafts (which are in English) were interpreted to Priyomoyee by reading 2 to 4 lines at a time, and it took about 3 hours to do so. Ten or twelve days afterwards the deeds were executed when they were again explained to her by giving out the substance of each of the deeds in Bengali. She was surrounded by her own people. There was, as already stated, her relation Babu Debendra Nath Das (a Pleader, banker and zemindar), and Kunja Behary her maternal uncle was also there and these two gentlemen used to look after her affairs. Her old servant Ganga Narain was also there. Babu Iswar Chandra Ghose, a Pleader of the family, advised her and explained the drafts and the deeds to her, and the reversionary heirs Mohini Mohan and Khetra Mohan were present at the execution of the deeds and were consenting parties to the arrangement. It is true that BABU Iswar Chandra was the Pleader of Mr. Garth also and it is urged that he was not a proper person to advise the lady. It would have been better had some other Pleader been engaged for the purpose But as we have said, the terms were almost the same as those of the deeds executed by the lady's brother-in law Mohini Mohan. Then, again the lady had only a widow's interest in the estate. Mohini Mohan and Khetra Mohan were the reversionary heirs and it was certainly their interest to protect the estate which would ultimately come to them or to their heirs. They gave their consent and the consent is endorsed on the documents themselves. It is true the lady consented to the draft being adopted on the Pleader Iswar Babu assuring her that the deeds would not prejudice her. But having regard to the fact that her brother-in-law Mohini Mohan had already entered into a similar arrangement, and no better arrangement could be secured elsewhere, the Pleader cannot be said to be wrong in saying what he said to the lady. The Pleader told the lady that the properties would come back to her by 1317. That no doubt was the expectation of. the parties, but it was nothing more than this, that according to the scheme the debt due would be paid off by 1317, there was no guarantee that she would get back the property if for any miscalculation or untoward circumstanced, the debt was not paid off by 1317. We will presently refer to what the lady said in later documents on the point. It is contended, however, that there is nothing to show that the Pleader Iswar Babu explained to Priyomoyee, a young pardanashin lady, the position in which she was placing herself, that she could not dismiss Messrs. Garth & Weatherall, however fraudulent their conduct might be, unless the mortgagees were satisfied of such misconduct, that the mortgagees would not be accountable for any loss which might be due to the default or misconduct of Messrs. Garth & Weatherall and that such loss would fall upon herself; there is also nothing to show that the attention of the lady was drawn to the clause in the mortgage bond that a Receiver could be appointed with such powers of management as the mortgagees thought proper, nor is there anything to show that the Pleader told her that the power of sale and the clause restraining alienation of the property by the mortgagor was void in law.
15. It is no doubt true that the mere translating deeds or communicating the substance there of to a purdanashin lady is not sufficient. But the evidence shows, as stated above, that the drafts were interpreted and explained to her by the Pleader Iswar Babu. The powers given to Messrs. Garth & Weatherall and the liabilities of the parties concerned were expressly stated in the deeds, and if they were properly interpreted and explained (and there is no reason to think that they were not) the lady became aware of the provisions. The clause restraining alienation of . the mortgaged property is generally inserted in mortgage bonds in this country, though of course it does not prevent alienation subject to the rights of the mortgagee.
16. The question of intelligent execution has been raised 24 years after the execution of the deeds. The Pleader who explained the deeds to the lady, Kunja Behary, her uncle and the reversionary heirs, Mohini Mohan and Khetra Mohan, are all dead. At this distance of time it cannot be expected that the witnesses should remember the details of what the Pleader stated to the lady and the witnesses Debendra Nath and Ganga Narain do not remember the words which the Pleader Iswar Babu used in interpreting the drafts or giving out the substance of deeds and are unable to give the details. But even assuming that the Pleader had not drawn the attention of the lady to all the provisions of the deed and to the precise position in which she was placing herself by appointing Messrs. Garth & Weatherall nominated by the mortgagees on the conditions stated in the mortgage deed and the deed of management, we do not think, having regard to the fact that her own brother-in-law Mohini Mohan had under similar circumstances to raise money by executing a mortgage and a deed of management on practically the same terms, that the Pleader's advice on the matters referred to above would really have made any difference in the result.
17. No doubt it is difficult to explain an English mortgage specially to a purdanashin lady, and had the deeds of mortgage and management stood alone, there might be force in some of the arguments addressed on behalf of the appellants, and we might have attached more importance to the fact that the lady agreed to the arrangement on her being assured that the estate would come back by 1317. But there are subsequent documents executed by the lady and they leave no room for doubt that she was aware of her position under the deeds. In 1897 she executed a deed of trust (Exhibit 7) in favour of Messrs. Garth & Weatherall (by which the deed of management was revoked), in which the deed of mortgage was referred to. The trust deed, which fully set out the powers of management given to those gentlemen and which were more extensive than those given in the deed of management, was interpreted and explained to her by the Pleader Iswar Babu and the witness Kalidyal Ghose. This document, however, was also in English and is an elaborate one. But then she executed a deed of endowment oh the 10th February 1908, i.e., about eighteen years after the deeds of mortgage and management were executed, there is a recital in it of the circumstances under which deeds of mortgage and management were executed. Then again, in Exhibit 2 (another deed of endowment) executed by the lady on the 24th December 1902, that is 12 years after the mortgage, there is also a recital of the arrangement entered into under the deeds of mortgage and management. It is stated in the latter deed that if no untoward circumstance intervened' the entire, debts of her husband would have been liquidated in a short time and under that impression she had placed the management of the properties in the hands of two European gentlemen; but that 'unfortunately on account of various adverse circumstances intervening in the management of the properties' the allowance granted for her maintenance had been stopped since 1898. It appears, therefore, that although the money payable under the mortgage had not been paid as stipulated in the mortgage deed, and although her own allowance had been stopped for several years, there was no complaint in either of the said two documents that she had executed the deeds of mortgage and management without properly understanding them. On the other hand, they go to show that the lady was fully aware of the arrangement made by the deeds of mortgage and management. These two deeds of endowment were in the Bengali language. There is evidence to show (and the evidence is one-sided) that they were read over and explained to her and she had the advice of her maternal uncle Kunja Behary and her relations and servants when she executed them. Babu Ananda Charan Roy, another leading Pleader of Dacca, appears to have been consulted in connection with the deed of endowment; Exhibit 11. There is an endorsement on the deed by Khetra Mohan Das the then sole reversioner, which runs as follows: 'Having learnt and understood the contents of this deed with the advice of my well-wishers and friends and on a full consideration of my personal interests I give my full consent to this gift.' It was attested by the Pleaders Iswar Babu and Debendra Babu besides four other Pleaders and several other persons, and Exhibit 12 the second deed of endowment was also attested by Pleaders Debendra Nath and Ananda Chandra, her servant Radha Ballav, her maternal uncle Kunja Behary and several other persons. It is true the lady died the day after she executed the deed of endowment Exhibit 12, but no case was made in the Court below that she did not understand the contents of the deed. The lady died in 1902, so that she lived for twelve years after the execution of the mortgage. During all these years the deeds of mortgage and management were never challenged by the lady. On the contrary their validity was recognized by her in the deeds of endowment. Not only is that so, but the defendant No. 1 Sham Peary Dasya herself never challenged it before the present suit. Having regard to all these circum stances, we are of opinion that the first contention on behalf of the appellants must be overruled.
18. The next question is whether the deed of mortgage was properly attested within the meaning of Section 59 of the Transfer of Property Act. The deed bears the names of Mohini Mohan Das and Kunja Behary Das as attesting witnesses and there is an attestation clause which runs thus: 'Signed, sealed and delivered by the above-named Srimati Priyomoyee Dassi in the presence of Kunja Behary Das and Mohini Mohan Das, and after the deed was read and explained by Babu Iswar Chandra Ghose, Pleader, she being identified also by them, Mohini Mohun Das, Kunja Behary Das.' Both Mohini Mohan and Kunja Behary are dead. Babu Debendra Nath Das (Pleader) a cousin of Priypmoyee, in whose presence she executed the deed, has been examined on behalf of the plaintiffs. It is true he as not an attesting witness but he says that both Mohini Mohan and Kunja Behary were present when Priyomoyee affixed her signature on the deed. We are referred to a passage in his cross-examination where he said, ' Priyomoyee was in a south room where we all including Is war Babu were, while he read the Exhibit 5 and gave out its purport somebody took the Exhibit 5 inside the south room and she signed it in my presence and in the presence of some others whom I forget.' It is contended on behalf of the appellant that as the witness says that she signed the deed in the presence of 'some others' whose names he has forgotten, there is no evidence that she signed it in the presence of Mohini Mohan and Kunja Behary. A few lines after that, however, the witnesses says, 'Mohini Babu and Kunja Babu signed the Exhibit 5 as its witnesses in the room in which we all sat.' And the witness in his examination-in-chief is positive in his statement that Priyomoyee signed the mortgage bond in the presence of Mohini Mohan, Kunja Behary and himself. The words 'some others' must, therefore, be taken to refer to some persons other than Mohini Mohan and Kunja Behary. We are also referred to the evidence of Ganga Narain Bose where he stated, 'Kunja Babu and Debendra took the deeds inside the room in which Priyomoyee was, to secure her signature thereon. Priyomoyee signed the mortgage deed at that lime.... Iswar Babu, Kunja Babu and Mohini Babu signed the mortgage deed as its attesting witnesses.' It is contended that both the attesting wit-nesses Kunja and Mohini Mohan cannot be said to have been present when she signed the mortgage deed. But there is the positive evidence of the Pleader Debendra Babu, and having regard to the distance of time at which the witnesses were giving their depositions no better evidence on the point could reasonably be expected. There is no specific plea taken in the Written statement that there was no proper attestation of the mortgage deed; but the sixth paragraph there of in which the defendant put the plaintiff to prove the due execution of the mortgage may cover such a plea. However, having regard to the evidence adduced, we think it sufficiently proved; that the mortgage deed was attested by the two witnesses Mohini Mohan and Kunja Behary.
19. The third contention raises the question whether there was legal necessity for the whole amount. Legal necessity to the extent of Rs. 95,000 is admitted, that being the debt which was due under a bond executed by the husband of the lady in favour of Ruplal and Raghunath Das; and the said debt was paid off out of the consideration for the mortgage bond advanced by the plaintiff Company. The only question, therefore, is whether there was necessity for the balance namely Rs. 25,000. The evidence shows that out of one lac and twenty thousand Mr. Garth deducted his commission Rs. 12,000 and paid the balance of Rs. 1,08,000 to Kunja Babu, the uncle of the lady. So there remains Rs. 13,000 to be accounted for. The mortgage deed in reciting the necessity for the loan refers to the debt created by the husband of the lady and 'also certain other moneys due to Sreemuty Syam Peary Dassya, the mother of the late Babu Lal Mohan Das, and which are the first charge upon the said estate.' It is contended on behalf of the appellant, first, that it is not shown that it Wan absolutely necessary for the lady to pay a commission of Rs. 12,000 to Mr. Garth for raising the loan; and, secondly, that there were, in fact decrees obtained by Syam Peary which the lady had to pay and they were, in fact, paid out of the consideration. In dealing with the question of legal necessity, however, we must bear in mind that the then reversioners Mohini Mohan and Khetra Mohan gave their full consent to the mortgage. There is an endorsement on the mortgage bond which rune as follows: 'We, Mohini Mohan Das and Khetra Mohan Das, both having reversionary interest in the estates set out in the schedule above written and being fully cognisant of the terms of the above mortgage deed, Hereby notify that we consent to the same as being an arrangement necessary for the saving of the estate from sale and we agree to abide by the terms thereof,' and the execution of this note was admitted by them before the Registrar. The consent given by the reversioners would certainly raise a presumption of the existence of the necessity [see Debi Prosad Chowdhry V. Golap Bhagat 19 Ind Cas. 273 : 40 C. 721 : 17 C.W.N. 701 : 17 C.L.J. 499.]. In the recent case, Hari Kishen Bhagat v. Kashi Parshad Singh 27 Ind. Cas. 674 : 42 I.A. 64 : 17 M.L.T. 115 : 19 C.W.N. 370 : 13 A.L.J. 223 : 2 L.W. 219 : 21 C.L.J. 225 : 28 M.L.J. 565 : 17 Bom. L.R. 426 : (1915) M.W.N. 511 : 42 C. 876 (P.C.) the Judicial Committee observed that the requirement of the law that an alienation by a Hindu widow must be proved to have been made by her for valid and legal necessity, (the onus of proving which rests heavily on the alienee) may be fulfilled by proving the consent or concurrence of the reversioners to the transaction, which consent, however, must be established by positive evidence that upon an intelligent understanding of the nature of the dealings they concurred in binding their interests.'
20. It is pointed out that Rs. 500 was paid to Khetra Mohan for obtaining his consent. But the mere fact that Rs. 500 was paid to one of the reversioners does not, we think, rebut the presumption as to existence of the legal necessity arising from the consent given by reversioners. So far as the payment of Rs. 12,000 to Mr. Garth is concerned, we do not think it can be contended that there was no necessity for such payment. Mohini Mohan, the brother-in-law of the lady, only two months before raised a loan of Rs. 2,50,000 through Messrs. Garth & Weatherall and he had to pay 10 per cent. commission to them. If Mohini Mohan had to pay that commission, it cannot be expected that the lady could raise the loan on payment of commission at a lower rate. The 10 per cent. commission, it must be remembered, included the costs of stamps, registration and other incidental expenses. However that may be, we think that, in the circumstances, it cannot be said that there was no necessity for payment of the sum of Rs. 12,000 as commission. Then as to the payment of the decrees of Shyam Peary, it is true that the copies of the execution proceedings have not been produced. But the plaintiffs have proved that the records of the execution cases brought by Shyam Peary had been destroyed, and were not in existence. The plaintiffs have also examined Ganga Narain Bose who was in the service of the lady, and he stated that Shyam Peary obtained five or six decrees for her maintenance against her sons or their representatives and that she had realised all the debts from Priyomoyee, Rs. 3,300 or 3,400 Rupees 1,500 and 1,600 were paid to Shyam Peary in satisfaction of two decrees in his presence out of the moneys borrowed on the mortgage bond. It was the defendant Shyam Peary to whom these payments are said to have been made. Her servant Radha a Bullav was actually present in Court and looking after the case on her behalf. But he was not examined nor any account books produced by her to show that the moneys were not paid to her in satisfaction of her decrees for maintenance. The ekrarnama, Exhibit A, dated the 29th September 1877 shows that Rs. 150 per month was payable to Shyam Peary. It is more likely that she would proceed against her daughter-in-law and not against her son for realising the said annuity and the deed of endowment, Exhibit 11, executed by Priyomoyee states that Shyam Peary had obtained decree for a large sum of money due to her on account of her allowance against Mohini Mohanand was about to recover the money by executing it against herself alone. Having regard to the fact that: the moneys due to Shyam Peary were recited in the mortgage bond as 'immediate, pressing necessity' and that the reversioners who had full knowledge of the terms gave consent to it as an arrangement necessary for saving the estate from sale, we think the evidence adduced on behalf of the plaintiff is sufficient for proving legal necessity. Then, in the release, dated the 26th November 1908, executed by Shyam Peary herself in favour of Mr. Weatherall, there is an admission that Priyomoyee obtained a loan of Rs. 1,20,000 from the plain-tiff. There is a similar statement in the agreement executed by her in favour of Mr. Lockhart on the same day. Radha Ballav Das, her ammuktear, who was looking after the case on her behalf was a witness to the deed of release and the deed was drafted by Babu Ananda Chandra Roy, Pleader, at the instance of the said Radha Ballav. The fact that Rs. 1,08,000 (after deducting the commission to Mr. Garth) was paid to the lady was never challenged during the lifetime of Priyomoyee; on the contrary, it was admitted by her in subsequent documents and lastly by Shyam Peary herself in that deed of release. Having regard to the positive evidence and the circumstances, we think that the Court below is right in holding that there was legal necessity for the entire amount advanced under the mortgage.
21. The next question is whether the annuity agreed upon to be paid to Shyam. Peary is a charge upon the share of the estate which she inherited from her son Soshi Mohan. The ekrarnama executed by Mohini Mohan Das recites that there was some litigation over the said share, that she was intending to institute a regular civil suit for recovery of the share, and that she expressed her willingness to give up her claim to the share on receipt of a monthly allowance of Rs. 150 by executing a ladani to that effect. The operative part of the deed then states as follows: 'You shall receive Rs. 150 net during your lifetime from the aforesaid share, you shall not be able to make a gift, sale, bai, heba, of it. Myself and the succeeding executor shall pay yon the aforesaid money every month and if I or they do not pay it you shall be entitled to recover it by suit from the share left by my aforesaid deceased brother.'
22. It will be seen that the lady was to get the annuity from the aforesaid share, and entitled to recover it by suit from the share, and we have no doubt having regard to the terms of the deed that the annuity was made a charge upon the share. The only reason given by the learned Subordinate Judge for holding otherwise is that the property is not specified in the deed. But the property can be easily ascertained, and that being so, it does not matter that no schedule of property is given in the deed. In the case of Ramsidh Pande v. Balgobind 9 A. 158 : A.W.N. (1887) 15 : 5 Ind. Dec. (N.S.) 538 where the debtor had pledged all her wealth and property' to her creditor, it was held that the maxim 'certum est quod certum reddi potest' applied, overruling the contention that the property was not described by metes and bounds or by name.
23. The description is no doubt wide, but not uncertain. As pointed out by Cotton, L.J. in Montague v. Earl of. Sandwich (1886) 32 Ch. D. 525 : 55 L.J. Ch. 925 : 54 L.T. 502 'I think it is an established rule, that where the covenant is to charge the real estate, which can be ascertained by existing facts and circumstances, for example if there is a covenant to charge all the real estate which a man has at a particular time, that covenant will itself make a charge. But where the covenant is to charge, not all or any definite portion of a man's estate, but only that which is worth 1,000 a year, or which would be sufficient to secure 1,000 a year, then from the indefiniteness of the matter referred to there will be no charge unless an instrument is afterwards executed to give effect to the covenant; and it remains simply a covenant to be enforced as against the assets of the covenantor.'
24. In some cases in our Court a general description of property has been held not to constitute a charge. See Gunoo Singh v. Latafut Hossain 3 C. 336 : 1 C.L.R. 91 : Ind. Dec. (N.S.) 801; Najibulla Mulla v. Nusir Mistri 7 C. 196 : 8 C.L.R. 454 : 3 Ind. Dec. (N.S.) 675 and Jagatdhar Narain Prasad v. A.M. Brown 33 C. 1133 : 10 C.W.N. 1010 : 4 C.L.J. 121. But in the first case there was merely a covenant not to alienate any property of the debtor until payment of the money advanced, and there were no expressions to indicate an intention to charge any property. In the second it was observed that a charge can only be created where specific property is mentioned. But as pointed out in the Tagore Lectures, 1876, at page 172 (foot note), 'But this dictum seems to be based upon a misapprehension of a passage in Sugden's Vendors and Purchasers, to the effect that a covenant to convey and settle lands will not be a specific lien on the lands of the covenantor, a proposition which is deduced by the learned author from the case of Mornington v. Keane (1858) 2 De G. & J. 292 : 27 L.J. Ch. 791 : 4 Jur. (N.S.) 981 : 6 W.R. 434 : 44 E.R. 1001 : 119 R.R. 134 where there was a covenant merely to settle lands of a particular value which, as pointed out by the Lord Chancellor, was a very different thing from a covenant to charge either the whole or a definite portion of a person's estate. But the decision itself may per- haps be supported on the ground that there was no intention on the part of the grantor to create any charge whatever on his property.'
25. In the third case the bond stated that if the creditor failed to repay the loan the creditor would be entitled to recover the debt by sale of 'the Nyagaon Factory' and from 'his (the debtor's) person and other properties,' and it was held that it was a general admission of liability which was merely that the creditor could recover his debt as provided under the law and created no special lien on the Nyagaon Factory.
26. It is to be observed that the question in all such cases is one of intention. In equity no charge can be created unless there is an intent to charge:' see Omrao Begum v. Secretary of State 19 I.A. 95 : 19 C. 584 : 6 Sar. P.C.J. 192 : 9 Ind. Dec. (N.S.) 832 (P.C.).
27. It will further be observed that in all the above three cases the question raised was whether there was a mortgage which, under Section 58 of the Transfer of Property Act, must be of specific immoveable property,' and difficulty in such a case is likely to arise from a general description.
28. In the last two cases noticed above the learned Judges relied upon the fact that the document was not registered in Book I (which is a register of documents relating to immoveable properties) but in Book IV as showing the intention of the parties not to create any charge.
29. It is unnecessary, however, to discuss this question further, as in the present case the plaintiff admitted the existence of the charge in the mortgage deed itself. In stating the necessity for the loan taken by Priyomoyee, the indenture of mortgage states, 'certain other moneys due to Shyam Peary Dasya the mother of the late Babu Lal Mohan Das and which are a first charge upon the said estate.'
30. Then again in the plaint itself there is a clear and distinct admission by the plaintiffs themselves that the annuity was a first charge. In the first paragraph of the plaint the plaintiffs refer to the moneys due to Shyam Peary as being 'a first charge upon the estate of late Lal Mohan Das.' The plaintiffs, therefore, actually took the mortgage subject to the charge. We are accordingly of opinion that the annuity of Rs. 1,800 a year in favour of Shyam Peary is a charge upon the share which she inherited from her son Lal Mohan, and that the plaintiffs' mortgage is subject to that charge.
31. The fifth question is whether the stipulation to pay interest at 91/2 per cent. is in the nature of a penalty. The mortgage deed provided that interest at 91/2 per cent. was to be paid by equal half yearly payments, but that if the interest at the rate of 71/2 per cent. was paid before the half yearly day appointed for payments of interest, the mortgagees shall accept the same in lieu and in satisfaction of interest at 91/2 per cent. If the stipulation was to pay interest at 71/2 per cent., and on default of payment on a certain date interest was to be paid at 91/2 per cent. there is no doubt that it could be treated as a penalty. In the converse case it would not be a penalty according to English Law. In Wallis v. Smith (1882)21 Ch. D. 243 : 47 L.T. 389 : 52 L.J. Ch. 145 : 31 W.R. 214 Jessel, M.R. referring to the rule of equity stated by Mr. Justice Heath in Hardy v. Martin (1783) 1 Bro. C.C.419n : 28 E.R. 1214 viz. that 'It is a well-known rule in equity that if a mortgage covenant be to pay 5 per cent., and if the interest be paid on certain days then to be reduced to 4 per cent., the Court of Chancery will not relieve if the early day be suffered to pass without payment; but if the covenant be to pay 4 percent., and if the party do not pay at a certain time, it shall be raised to 5 per cent., then the Court of Chancery will relieve,' observed: 'It was settled so early as that, I am sorry that it was so settled, because anything more irrational than the docrine I think can hardly be stated. It entirely depended on form and not on substance.'
32. On behalf of the defendants we were referred to the case of Union Bank of London v. Ingram (1881) 16 Ch. D. 53 : 60 L.J. Ch. 74 : 43 L.T 659 : 29 W.R. 209 where Jessel, M.R. held that a mortgagee in possession is entitled on accounts being taken to charge the mortgagor with the higher rate of interest under a proviso in the mortgage deed for reduction of interest on punctual payment. In the case of Wallingford v. Mutual Society (1880) 5 A.C. 685 : 50 L.J.Q B. 49 : 43 L.T. 258 : 29 W.R. 81 Lord Hatherley observed (see page 702): The form adopted long since-I do not know whether it is still continued or not--in mortgages was when you wished to reserve in reality interest at 4 per cent, to reserve the interest by contract at 5 per cent, but to mitigate the severity of that contract in the event of the money being paid by a certain day. It is not a penalty on non-payment (though it seems a fine distinction) when you say that your contract shall be made for interest at 5 per cent., to be reduced, in the event of your punctual payment, to 4 per cent.; but it is a relaxation of the terms of that original contract, not taking it by way of penalty at all, but a relaxation of your contract which you would merit and purchase by paying at a definite and fixed time. It that and fixed time were exceeded, then the original contract revived in all its force; Sometimes mortgage deeds being somewhat unskilfully drawn, interest at 4 per cent, was reserved by the con-tract to be raised to 5 per cent if there was non-payment at a particular day; and although that brings the case to an extremely fine and nice distinction, it all the better illustrates the rule which has been applied at all times by the Courts, with reference to this question of penalty. If there had been indulgence at any time upon given terms, as long as those terms are observed, the indulgence lasts. When those terms are departed from the indulgence at once fails, and the original contract is revived in full force 'The question appears to have been considered in two cases in this country.
33. In the case of Kirti Chunder Chatterjee v. J.J. Atkinson 10 C.W. N. 640 a sum of money was borrowed at a certain rate of interest Subsequently on a settlement of interest between the parties it was agreed that a lower rate of interest would be chargeable on the amount remaining due, if paid within a certain date, but if not so paid the higher rate originally contracted for would be payable, and it was held that the stipulation for the payment of interest at the higher rate cannot be regarded as a penalty that being the rate contracted for. Maclean, C.J., observed: 'Then it is said that this provision as to a higher rate of interest by reason of default of payment on the 31'st March, was a penalty, within Section 74 of the Contract Act. I should have been glad if I could have taken that view; but the authorities are against it. Here. the higher rate of interest was only that originally payable under the bond: and the new bargain under the endorsement WAS merely a concession to the defendant, of which he failed to take advantage. This is not the case of a lower rate of interest being mentioned in the bond, with a provision that, if the debt be not paid, a higher rate shall prevail as from the date of the loan. Here the higher rate was originally contracted for; it cannot then be regarded as a penalty'
34. In the case of Kutub ud-din Ahmad v. Bashir-ud-din 5 Ind. Cas. 635, 7 A.L.J. 394 : 32 A. 448 Stanley, C.J. after stating 'that according to the English authorities it is well settled that if a mortgagee stipulate for a higher rate of interest in default of punctual payment he must reserve the higher rate as the interest payable under the mortgage and provide for its reduction in case of punctual payment, and if he do so he will be entitled to recover the higher rate, but that he cannot effect his object by reserving the lower rate and then fixing a higher rate in case of non-payment of the lower rate at the appointed time, such an agreement being considered in equity as in the nature of a penalty', observed 'this rule is not altogether intelligible'. He referred to the observation of Jessel, M.R., in Wallis v. Smith (1882) 21 Ch. D. 243 : 47 L.T. 389 : 52 L.J. Ch. 145 : 31 W.R. 214 quoted above, but he was of opinion that an agreement on the part of a mortgagee to accept on punctual payment interest at a lower rate than the rate agreed to be paid was free from objection, and accordingly upheld the decree of the Court below which a warded the higher rate of interest. Banerji, J, was inclined to hold at the hearing of the appeal that the provision as to interest was an attempt to circumvent the rule of law as to penalties but in the face of English authorities and in the absence of authority in this country to the contrary, agreed with, Stanley, C.J.
35. If the question were res integra, we would have been prepared to hold that there should be no distinction in principle between a stipulation to pay a certain rate of interest to be reduced to a lower rate on punctual payment, and a stipulation to pay a certain rate of interest to be raised to a higher rate in the event of nonpayment of the interest punctually: the object being to ensure punctual payment, and not to settle the damages, it would be a penalty whatever might be the form in which the agreement is expressed. But it appears from the cases cited above that in England, it is settled law that where there is a contract to pay a higher rate of interest to be reduced to a lower rate on punctual payment, the stipulation to pay the higher rate is not a penalty. In the case of Union Bank of London v. Ingram (1881) 16 Ch. D. 53 : 50 L.J. Ch. 74 : 43 L.T. 659 : 29 W.R. 209 Jessel, M.R. allowed the higher rate of interest on default of punctual payment, though the learned Judge himself in the subsequent case observed that 'anything more irrational than the doctrine can hardly be stated. It entirely depended on form and not on substance.' In Wallingford v. Mutual Society (1880) 5 A.C. 685 : 50 L.J.Q.B. 49 : 43 L.T. 258 : 29 W.R. 81 also Lord Hatherley, although referring to the distinction as an 'extremely fine and nice distinction', held the stipulation to pay at the reduced rate in the event of punctual payment to be a relaxation of the original contract to pay at a higher rate, 'not taking it by way of penalty at all, but a relaxation of the contract which the debtor would merit and purchase by paying at a definite and fixed time.' The two Indian cases cited above appear to have followed the rule of English Law, and Maclean, C.J., held in the case reported as Kirti Chunder Chatterjee v. J.J. Atkinson 10 C.W.N. 640 that the stipulation to pay the higher rate was the original contract, and, therefore, was not a penalty.
36. Now the question is, what was the real contract in the present case. Clause 1(3) of the mortgage deed no doubt stipulated for the payment of interest at 9 1/2 per cent, to be reduced to 7 1/2 per cent, on punctual payment, but the scheme for liquidation of the mortgage debt which is a material part of the deed shows that interest was calculated at 7 1/2 per cent. only, in construing a document effect should be given to all parts of it. Now taking Clause 1(3) together with the scheme, it appears that the intention of the parties was that interest should be paid at 7 1/2 per cent., and on default at 9 1/2 per Cent.; otherwise we would have expected the calculation of interest in the scheme at 9 1/2 per cent., if that was the 'original contract.' It is true that interest at 9 1/2 per cent, was paid in the years in which there was default in punctual payment, but that by itself would not affect the rights of the parties under the contract, if the payments were made under a mistake as to their rights under the contract, and the payments made by Messrs. Garth & Weatherall can be of very little value, if any, on the question of intention of the mortgagors themselves.
37. Section 74 of the Indian Contract Act does away with the distinction between penalty and liquidated damages and under the section as amended by Act VI of 1899, the Court has the power to grant relief if the contract contains any stipulation by way of penalty. It is true the contract in the present case was entered into before the amendment, but the amendment does not appear to have made any real change in the law, the only difference being that if the stipulation is penal, relief can now be granted under the provisions of the section and it is not necessary for Courts to resort to their equitable jurisdiction in order to grant relief.
38. The mortgagees, however, are entitled to reasonable compensation for non-payment of interest punctually. But 2 per cent., does not represent the damages which the creditor suffered for non-payment of the interest on the date fixed. The reasonable compensation to which he is entitled would be the interest on 7 1/2 per cent, interest in respect of payments not punctually made. We accordingly hold that the plaintiffs are entitled to interest upon interest at the rate of 7 1/2 per cent, from the date of the bond up to the date which may be fixed for payment.
39. The last question is whether Messrs. Garth & Weatherall were the agents of the mortgagor or the mortgagees and whether it is competent to a mortgagee in this country to nominate and appoint an agent to manage the mortgaged properties and at the same time relieve himself from the liability to which a mortgagee is subject when he enters into possession of the mortgaged properties.
40. We have, therefore, to see whether or not under the terms of the mortgage, Messrs. Garth & Weatherall became agents of the mortgagor or the mortgagees. If they were the agents of the mortgagees, the latter would be bound to account as mortgagees in possession and must bear the loss, if any, caused by Messrs. Garth & Weatherall as if they had actually entered into possession.
41. Mortgage deeds in the English form generally contain an appointment of, or a power for the mortgagee to appoint a person to be Receiver of the mortgaged premises, by means of which mortgagees are able to obtain the benefit of possession without its disadvantages.
42. It is contended on behalf of the appellant that this practice should not be recognized in this country. It is further contended that having regard to the provisions of the mort gage deed even in England the Receiver would be treated as agent of the mortgagee. Lastly, it is contended that whatever the English Law may be on the subject, having regard to the deed of mortgage in this case, the mortgagees cannot be heard to say that Messrs, Garth & Weatherall were not their agents.
43. The manner in which mortgagees in England acquired the power of Appointing a person to be the Receiver of the mortgaged premises was traced by Lord Justice Rigby in the case of Gaskell v. Gosling (1896) 1 Q. B. 669; 65 L. J. Q.B. 435. The learned Judge pointed out that having regard to the exceptional severity with which a mortgagee in possession was treated in a suit for redemption and made to account, the Court favored any means which would enable the mortgagee to obtain the advantages of possession without its drawbacks, and observed: 'Mortgagees began to insist upon the appointment by the mortgagor of a Receiver to receive the income, keep down the interest on incumbrances, and hold the surplus, if any, for the mortgagor, and to stipulate often that the Receiver should have extensive powers of management. Presently mortgagees stipulated that they themselves should in place of the mortgagor appoint the Receiver to act as the mortgagor's agent. This made no difference in the Receiver's position, and imposed no liability on the mortgagee appointing. Though it was the mortgagee who in fact appointed the Receiver, yet in making the appointment the mortgagee acted, and it was the object of the parties that he should act, as the agent for the mortgagor. Lord Cranworth in Jefferys v. Dickson (1866) 1 Ch. 183 at p. 190; 35 L.J. Ch. 876 : 12 Jur. (N.S.) 28l 14 L.T. 208 : 14 W.R. 322 stated the doctrine of the Courts of Equity on the subject to the effect following. The mortgagee, as agent of the mortgagor, appointed a person to receive the income, with directions to keep down the interest of the mortgage, and to account for the surplus to the mortgagor as his principal. These directions were supposed to emanate, not from the mortgagee, but from the mortgagor; and the Receiver, therefore, in the relation between himself and the mortgagor, stood in the position of a person appointed by an instrument to which the mortgagee was no party. Lord Cranworth in the case referred to was speaking of a mortgage of lands; but the same doctrine applies to all kinds of property, being founded, as it is, not upon any considerations peculiar to the law of real property, but upon the contract between the debtor who give a and the creditor who takes the security. Of course the mortgagor cannot of his own will revoke the appointment of a Receiver, or that appointment would be useless.'
44. The grounds urged on behalf of the appellant in support of the contention that the practice should not be followed in this country are as follows: In England a landowner has always an attorney at his elbow, and can take care of himself, whereas in this country mortgagors generally are helpless. The power of sale which the mortgagee possesses in England is recognized in this country only in a limited form under Section 69 of the Transfer of Property Act, and the proviso to that section shows that a Receiver in this country except in exceptional cases is an agent of the person appointing him. The law on the subject in England is due to the practice of English conveyances adopted to get rid of the responsibility of mortgagees and the practice itself is not very old. Section 69 of the Transfer of Property Act goes to negative the existence of such a practice in this country. In America there is conflict of authority on the question whether a mortgagee who nominates and procures the appointment of a Receiver is responsible for his default. See Jones on Mortgage, 6th Edition, Section 1537A. Even in England in 1811, in the case of Hutchinson v. Masareene (1811) 2 Ball. and Beaty. 49 the trustees were treated as the agents of the mortgagees and the losses caused by the trustees were held to fall upon the creditor. That appears to have been the law in England before the practice, to which Rigby, L.J., refers, had grown up.
45. There is a good deal of force in these arguments. A private Receiver deriving his power from the appointment of a mortgagee is almost unknown to Indian people. (See Woodroffe on Receivers, 2nd Edition, page 167.) ' No case in which a private Receiver, deriving his power from the appointment of a mortgagee, has come up to the Courts of this country and the question is one of considerable importance and requires careful consideration. We think, however, that it will be unnecessary to decide this question in the present case, if as contended on behalf of the respondent, Messrs. Garth & Weatherall were appointed by the mortgagor and were agents of the mortgagor and acted as such.
46. In support of the contention that under circumstances similar to those of the present case the Receiver is treated as an agent of the mortgagee even in England, reliance is placed on the cases Vimbos Ltd., In re (1900) 1 Ch. 470 : 69 L.J. Ch, 209; 82 L.I. 597 : 48 W.R. 520 : 8 Hanson 101 Robinson Printing Co. v. Chic Ltd. (1905) 2 Ch. 123 : 74 L.J. Ch. 399 : 93 L.T. 262 : 63 W.R. 681 : 12 Hanson 314 : 21 T.L.R. 446 and Deys v. Wood (1911) 1 K.B. 806 : 80 L.J.K.B. 553 : 104 L.T. 404 : 18 Manson 229. In these cases the appointment of the Receiver was made by the mortgagees and in the deed of mortgage.
47. In the first case powers were given to the Receiver to enter into compromise in the interests of the mortgagees and to sell the mortgaged property or concur in selling it. There was nothing said about the Receiver keeping down the interest, there was no direction to him to pay any surplus over to the mortgagor, and nothing was said about the Receiver being the agent of the mortgagor. It was under these circumstances that Cozens Hardy, J., observed: 'It is remarkable that that power differs in almost every material respect from the ordinary power which is given to mortgagees. There is nothing to say that the Receiver is to be the agent of the mortgagor, who is solely to be responsible for his acts and defaults, as in the Conveyancing Act. There is nothing whatever to say what he is to do with moneys which he receives. There is no direction to him to keep down the interest on the mortgage, or pay any arrears or surplus over to the mortgagor. There are none of those provisions one finds in an ordinary receivership deed, and it does seem to me that the Receiver in these circumstances was the agent of the persons who appointed him, not the agent of the mortgagor; and it follows from that, of course, that the debenture holders themselves would be answerable for all the faults and omissions of the Receiver.'
48. In the second case debentures gave power to the holders to appoint a Receiver to take possession of the assets, carry on the business, sell the property, make any arrangements he should think expedient in the interest of the debenture holders and apply in a specified way the moneys received, but they did not provide that the Receiver was to be the agent of the mortgagors.
49. Warrington, J., observed that there is no general rule of law as to the. position of the Receiver and referring to the observation of Cranworth, L.C. in Jefferys v. Dickson (1866) 1 Ch. 183 at p. 190; 35 L.J. Ch. 876 : 12 Jur. (N.S.) 281 14 L.T. 208 : 14 W.R. 322 , said: 'The Lord Chancellor is there dealing with a Receiver appointed under the ordinary power, that is to say, either by the mortgagor himself in pursuance of provisions in the mortgage deed or by the mortgagee under similar provisions, or under the Act then subsisting--namely, Lord Cranworth's Act. In all these cases there was an express provision that the Receiver should be the agent of the mortgagor. See the remarks of Rigby, L.J. in Gaskell v. Gosling (1896) 1 Q.B. 669 : 65 L.J.Q.B. 435.' and held following Vimbos Limited, In re (1900) 1 Ch. 470 : 69 L.J. Ch, 209; 82 L.I. 597 : 48 W.R. 520 : 8 Hanson 101. that the Receiver was not the agent of the mortgagor.
50. In the third case also there was no provision that the Receiver shall be the agent of the mortgagor. He was to have power not only to take possession of the property and to carry on the business, but be was to sell the property comprised in the debentures. He might make any arrangements in the interest of the debenture holders and finally any moneys in his hands were to be applied in satisfaction of the debentures. Scrutton, J., observed, 'If he exercises his power to sell, it must be by virtue of and for the purpose of realizing the charge created by the debentures; the business is carried on for the sole benefit, so far as the provisions of the document are concerned, of the debenture holders, and in my opinion, having regard to all the points I have mentioned, he is their, agent.' As pointed out by Farwell, L.J., (in the course of argument in the Court of Appeal), it was not like an ordinary receivership deed which provides for the payment of any surplus, beyond what is necessary to satisfy what is due to the mortgagee, to those who may be entitled to it; the proceeds of any assets were apparently payable under it to the debenture holders only. At page 821, Vaughan Williams, J., observed that the object of the appointment of the Receiver was really the sale and realization of the security to the satisfaction of the debenture debts, and the provisions went to show that it was intended that the Receiver should be Receiver on behalf of the mortgagees and not on behalf of the mortgagors.
51. The present case is distinguishable from the above three cases on the following grounds:
(1). The managers, though nominated by the mortgagees, were not appointed by them.
(2). The mortgagees were not parties to the deed of appointment, and the managers were no parties to the deed of mortgage.
(3). There was a direction to the managers to keep down the interest and to apply the income as laid down in the deed of mortgage.
(4). There was a destination as to the surplus (if any) of the income, (a) in the case of Priyomoyee (after payment of Rs. 2,400 to her) to the managers themselves as part of their remuneration over and above the 15 per cent., and (b) in the case of Mohini Mohan one half to the managers and the other half to the mortgagor himself; and no portion of the surplus was to go to the mortgagees in either case.
52. It may be pointed out here that in Hutchinson v. Lord Maserene (1811) 2 Ball. & Bearty. 49 cited before us, the trustees were appointed by the creditors who had obtained the power of appointment from Lord Maserene; the latter did not appoint the trustees nor bad he any power to remove them and it was accordingly held that the loss occasioned by the default of the trustees should fall upon the creditors who appointed them. In Gaskell v. Gosling (1896) 1 Q.B. 669 : 65 L.J.Q.B. 435 also it appears that it was the trustees of the debenture holders who appointed the Receiver and had the power to remove him without notice to the mortgagors, although the Receiver under the terms of the agreement was to be the agent of the mortgagors who were to be liable for his acts and defaults.
53. We have next to see whether under the deed of mortgage Messrs. Garth & Weatherall became the agents of the mortgagees or of the mortgagor.
54. Now, paragraph IV of the mortgage deed contemplates possession by the mortgagor, 'until the mortgagees shall enter into and take possession of the mortgaged premises.' Paragraph VI (2) provides for payment of the Government revenue and other charges by the mortgagor, and the production of the receipts of payment by the mortgagor to the mortgagees, and paragraph VII deals with the management of the property and sets forth the provisions relating to management 'until the mortgagees shall enter into and take possession of the mortgaged premises.' We will deal with these provisions later on. But in the first place, Messrs. Garth & Weatherall were to manage the mortgaged premises (without any interference by the mortgagor) so long as they fulfilled the terms and conditions, and in the event of their death resignation or dismissal of either of them, by the survivor of them, or failing such survivor by another qualified manager who would be nominated by the mortgagees provided that any manager subsequently so appointed by the mortgagees shall, if required by the mortgagor, give security for the proper performance of his duty and management. It thus appears that the first managers (Messrs. Garth & Weatherall), though nominated by the mortgagees, were appointed by the mortgagor. Messrs. Garth & Weatherall were no panties to the mortgage deed, the indenture being between the mortgagor and the Company (the mortgagees) The mortgagees again were no parties to the deed of appointment which was between the mortgagor and Messrs. Garth & Weather-all.
55. We were referred on behalf of the appellant to Key and Elphinstone's Precedents in Conveyancing, 10th Edition, Vol. II, page 81, where the specimen form shows that the appointment is made by the mortgagor with the concurrence of the mortgagee as indicating that the mortgagees are no parties to it, and there is a proviso (see page &4) that the Receiver shall be deemed to be in all respects the agent of the mortgagor, and that the mortgagee shall not under any circumstances be answerable for any loss or misapplication or default, etc., of the Receiver. But the passage at page 83 (bottom), 'and the Receiver covenants with the mortgagee and also as a separate covenant with the borrower,' and the passage at page 85, 'In consonance with the premises the borrower with the concurrence of the mortgagee here by appoints the Receiver,' show that the mortgagee is also a party to the appointment.
56. The form give a in Davidson's Precedents and Forms at page 1016 shows that the mortgagor, the mortgagee and the Receiver are all parties to the deed of mortgage. That form is one in which the Receiver is appointed by the mortgage deed itself, and the Receiver is, therefore, a party to it. There are other forms in which the Receiver is appointed by a separate deed, which is more convenient. A form where the appointment is made by a separate deed contemporaneously with the deed of mortgage is given at page 287 of Key and Elphinstone, and that shows that the parties are (1) the mortgagor, (2) the mortgagee, and (3) the Receiver. See also Prideaux's Precedents, Volume I, page 781, where the appointment is made by the mortgage deed itself and page 1045 where the appointment is made by a separate deed; Wood and Jarman's Conveyancing, Volume II, pages 158-159; Encyclopaodia of Forms and Precedents, Volume IX, page 210 (see page 912, Clause 4).
57. It appears, therefore, from all the forms that the mortgagee and the Receiver are parties to the deed of mortgage and to the deed of appointment, and the reason why it is stated that the Receiver 'is to be deemed the agent of the mortgagee' appears to be that the mortgagee being a party to the deed; a question may arise that he is the agent of the mortgagee.
58. In the present case, however, such a question does not arise. As already stated Messrs. Garth & Weatherall are no parties to the mortgage deed, nor are the mortgagee's parties to the deed of appointment.
59. Paragraph VII, Clause (2), of the deed of mortgage lays down the powers of management conferred upon the managers more fully detailed in the deed of management, which will be presently referred to. The main provisions in the deed, which are relied upon on behalf of the appellant as showing that Messrs. Garth & Weatherall were the agents of the mortgagor, are as follows:
(1) That the managers shall not be liable to dismissal except for misconduct or neglect of duty or of the terms of the deed proved to the satisfaction of the mortgages.
(2) The managers shall at all times render to the mortgagees all such information and accounts as shall be called for, and specially for the purpose of any audit or scrutiny which the mortgagees may think necessary at any time.
(3) For the purpose of Satisfying and in forming themselves as to the management of the mortgaged premises or as to the circum stances thereof or for the purpose of any audit or scrutiny, the mortgagees may from time to time and at any time call for and require to have furnished to them by the managers for the time being a statement of the then existing rent roll of the mortgaged premises and the production of all documents required to verify the same.
60. The provisions relating to the appointment by the mortgagees of a manager in the event of the mortgagor failing to execute powers of attorney or other deeds which might be necessary to enable the manager for the time being to carry on the management, and those relating to the appointment of a Receiver will be dealt with later on.
61. The first provision referred to above is that the mortgagor shall have no power of dismissal except for misconduct or default proved to the satisfaction of the mortgagees. It does not appear reasonable that the manager should be nominated by the mortgagees and the mortgagor will have no power to dismiss him without the concurrence of the mortgagees, even if he is guilty of misconduct. But apparently the plaintiffs, an English Company, did not agree to advance the Joan, except upon the conditions that the mortgaged property would be managed by persons in whom they had confidence. It was not only Priyomoyee, but Mohini Mohan also agreed to have the loan on that condition, which is expressly stated in the deeds. It is true, as observed by Lord Macnaghten in Samuel v. Jarrah Timber and Wood Paving Corporation Ltd. (1904) A. C. 323 at p. 327 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276 'Necessitous men are not truly free men', and that observation applies with much greater force in this country bat at the same time the mortgagees had to safeguard their interest and to see that the estate was managed by persons whom they trusted, in order to ensure the payment of the interest and the principal according to the sliding scale as provided in the bond. If under these circumstances the mortgagees made it a condition that the estate must be managed by particular persons and the mortgagors agreed to it and acted upon it for about 18 years, it cannot now be urged that the managers must be treated as agents of the mortgagees on the ground that the contract was an unreasonable one. Besides although the managers could not be dismissed even for misconduct without the concurrence of the mortgagees it does not follow that the mortgagees could arbitrarily refuse to be satisfied even if there was misconduct on the part of the managers. The mortgagor was not given an absolute power of dismissal, but a power reserved to the mortgagor to dismiss the manager at the will of the mortgagor would defeat the very object of the provisions. If the mortgagor had' such a power, the manager could be dismissed the very next day. The object being to secure regular payment of the interest and principal as provided in the scheme, the parties agreed to have the estate managed by persons in whom the mortgagees had confidence without interference by the mortgagor, and it was necessary, therefore, to restrict the power of the mortgagor to dismiss the managers unless the mortgagees were satisfied of such misconduct, and, therefore, with their concurrence. But because their appointment was irrevocable except as provided for in the deed it does :not follow that they ceased to be the agents of the mortgagor: and it is to be observed that the mortgagees had no power of dismissing Messrs. Garth & Weatherall, except as provided in Clause 6 and in paragraph VIII, which relates to the appointment of a Receiver and which will be dealt with later on.
62. Under the 2nd and 3rd provisions referred to above, Messrs. Garth & Weatherall were bound to render such information and ac counts as might be called for by the mortgagees for the purpose of satisfying them selves as to the management or for audit or scrutiny which they may think necessary and to submit statements of rent roll of the estate and documents for verifying the same, if so required by the mortgagees. This, however, appears only for the information of the Company as to how the mortgage estate was being managed and for scrutiny if the Company required the account. It does not appear that the managers were to account to the mortgagees in the same manner as an agent is liable to render accounts to his principal and which Messrs. Garth & Weatherall covenanted to render to Priyo moyee, as appears from the deed of appointment. The mortgagees in order to protect their interests were interested in seeing that the revenue and other charges were regularly paid, and the rents and profits duly applied in .payment of the principal and interest as laid down in the mortgage deed, and in order to satisfy themselves of the same they reserved the power of calling for information and accounts and for auditing the same if thought necessary by them. We do not think it was intended to reserve to the Com pany any direct control over or power of interfering with the management of estate, but the provisions appear to have been made for the protection of their interest and only as a check to prevent any mismanagement or misapplication by the managers. The mortgagees could not sue Messrs. Garth & Weatherall if the latter refused to account to the former, except through the mort gagor.
63. On the other hand, the deed of management to which the mortgagees were no parties shows that Messrs. Garth & Weatherall were appointed managers by Priyomoyee. It recites that it was one of the conditions on which the Company agreed to advance the loan that she should appoint Messrs. Garth & Weatherall as managers of the estate, which was to be managed entirely by them without any interference by her. Those persons were accordingly appointed her managers, attorneys and agents to collect the rents and profits in her name, and the powers of management set forth in the deed were to be exercised in her name and for her benefit but without any interference by her. They were to get a commission of 15 per cent. on the gross collections, which was to cover all charges of management and collections including costs of litigations for realizing rents. They were to keep down interest, pay Rs. 12,600 a year to the mortgagees as provided in the mortgage deed, and Rs. 2,400 a year to the mortgagor (Priyomoyee) and they were to get the balance of the income, if any, as their remuneration in addition to the 15 per cent.
64. The deed further provided that the managers were faithfully to account to Priyomoyee, keep books of account which shall be open to her inspection, and once every year, if so required, furnish to her a clear statement of the income and expenditure of the estate, but that they were not to be dismissed or removed from the office of manager except with the written consent of the mortgagees.
65. It will be seen, therefore, that it was Priyomoyee who appointed Messrs. Garth & Weatherall though they were nominated by the mortgagees, and they were to act as her agents and exercise all the powers of management in her name. They were to keep books of account open to her inspection and faithfully to account to her. There was no such covenant with the mortgagees. That being so, the mere fact that Messrs. Garth & Weatherall were, under the terms of the mortgage deed, liable to submit to the mortgagees all such information and accounts as might be called for by them for the purpose of satisfying themselves as to the proper management of the mortgaged premises or for the purposes of auditing and scrutiny, if thought necessary by them, did not constitute them agents of the mortgagees. As already stated, the mortgagees had no power of dismissing Messrs. Garth & Weatherall, and all that the mortgagees were entitled to get was Rs. 12,600 a year as provided in the mortgage deed, and the balance of the profits, if any were to go to Messrs. Garth & Weatherall as part of their remuneration and, therefore, as agents of the mortgagor. In the case of Mohini Mohan, half of the surplus profits were to go to him, and the other half to the managers. The mortgagees were not to get anything over and above Rs. 12,600 a year. Having regard to all the provisions of the deed of mortgage and management we think that Messrs. Garth & Weatherall were the agents of the mortgagors.
66. There was no provision in the deed of mortgage that Messrs. Garth & Weatherall were to account to Priyomoyee and that is because they were no parties to it. It was necessary, however, to provide in the deed of mortgage that the managers would be liable to submit information and accounts to the mortgagees if required by them, because the latter, in the absence of any authority from the mortgagor, would have no power to call for the same from the managers, and they (the mortgagees) were no parties to the deed of appointment.
67. It is pointed out that it is not expressly stated in the mortgage deed that Messrs. Garth & Weatherall were to be the agents of the mortgagor, but such a statement is necessary where, as in the English cases cited before us, both the mortgagee and the Receiver are parties to the deed. Here Messrs. Garth & Weatherall were appointed by Priyomoyee alone by a separate deed of appointment to which the mortgagees were no parties, and all the provisions of the deed show that they were to be agents of hers only. It was unnecessary under these circumstances to make an express statement that they were to be the agents of the mortgagor.
68. Paragraph VIII of the mortgage deed pro vided that if the manager for the time being failed to apply any part of the rents and profits as provided in the deed, then the mortgagees would be able to appoint any person, upon such salary and remuneration and with such powers of management as they shall think fit to be Receiver of the rents and profits of the mortgaged premises and the mortgagees would, at their absolute discretion, be able from time to time to suspend, remove or dismiss any Receiver in his place, and that the mortgagees shall not incur any personal liability in respect of or be personally answerable for any loss or misapplication of the rents or profits of the mortgaged premises or any part thereof by reason of any default, neglect or misappropriation of any manager or Receiver. It was further provided that 'any Receiver appointed as aforesaid shall be forth-with discharged by the mortgagees, and the mortgaged premises shall be again managed as hereinbefore provided by a manager upon the mortgagor making good the deficiency or default in consequence of which the Receiver was appointed, and upon the mortgagor paying all the expenses incurred in connection with the appointment and during the employment of the Receiver.' This clause makes clear the distinction between a Receiver who could be appointed and dismissed by the mortgagees (though the latter would not be liable for his default or misapplication) and a manager who was to be appointed by the mortgagor and into whose management the estate was to revert on the mortgagors making good the deficiency which led to the appointment of the Receiver by the mortgagees. Clause 6 of paragraph VII provided for the dismissal of the manager by the mortgagee, if the mortgagor failed to execute powers of attorney or other deeds in order to enable the managers to properly carry on the management. It will be seen that Clause VIII related to the appointment of a Receiver by the mortgagees only in certain events, and only then they could exercise the absolute powers given to them. So long as they fulfilled the conditions, Messrs. Garth & Weather all could not be removed by the mortgagees.
69. The mortgagees, however, never appointed a Receiver, and the provisions relating to the power of the mortgagees to appoint a Receiver never came into operation, nor did the contingency contemplated in Clause 6 of paragraph VII ever arise. If they had, the questions raised on behalf of the appellant, viz., whether in such a case the Receiver should be treated as agent of the mortgagor or the mortgagees and whether the English Law on the point should be followed in this country, would have required consideration. As it is, so far as Messrs. Garth & Weatherall were concerned, we think that they were agents of the mortgagor. It will be observed that Messrs. Garth & Weather all were to yet 15 per cent. on the gross collection as their commission and the remainder of the income (after payment of the amounts specified in the deed of management) by way of remuneration in addition to the said 15 per cent., whereas in England the Receiver's commission does not exceed 5 per cent. under the Statute, but the mortgagees were to get nothing beyond their principal and interest. It also appears that in some respects the powers given to Messrs. Garth & Weather-all were more extensive than those which a Receiver has in England. It may have been imprudent to appoint them on such terms and with such powers, but that cannot affect the construction of the deeds nor make them agents of the mortgagor.
70. The evidence shows that Messrs. Garth & Weatherall were treated and acted as agents of the mortgagors. After the death of Mohini Mohan, Sham Peary made an application for Letters of Administration. Thereupon Messrs. Garth & Weatherall made a petition to the District Judge of Dacca on the 13th January 1897 (see Exhibit B), in which they stated that accounts had been rendered from time to time to Mohini Mohan up to the end of 1301, that Mohini Mohan had been in the habit of taking advances from them and that he had overdrawn Rs. 12,844. On account of such advances, and for the reasons stated in the petition they prayed that a Receiver or Administrator might be appointed of the moveables and also immoveable properties other than those under the management, as the estate was likely to suffer loss and damage if left in. the hands of Sham Peary, his heiress. A similar application was made by the Bank of Bengal (Dacca Branch) as a creditor of the deceased for the appointment of a Receiver. It appears from the order of the District Judge, dated the 29th January 1897, passed upon that petition that Sham Peary in showing cause stated that no adjustment of accounts since the year 1301 had been made with the managers. So the adjustment of accounts up to that year was admitted. The District Judge appointed the Nazir of his Court as Administrator. The order sheet (Order No. 7, dated the 16th February 1897) shows that accounts were filed by Messrs. Garth & Weatherall, and the Administrator was directed to examine them. All this goes to show that at that time both Sham Peary and Garth & Weatherall proceeded on the footing that the latter were accountable to the mortgagor. If they were the agents of the mortgagees, the mortgagor or his. Administrator could riot call upon them to account, and the Court could not order such accounts except in a suit for redemption.
71. Then in the deed of endowment, dated the 14th December 1902, Priyomoyee distinctly stated that she had placed the management of the properties in the hands of Messrs. Garth & Weatherall. This deed was, as we have seen, attested among others by Debendra Nath Das, Pleader, and Kunja Behary Das, who managed her affairs, and there is no suggestion that she did not understand this document.
72. Then again in the subsequent deed of endowment, dated the 10th February 1898, (which was consented to by the then sole reversioner Khetra Mohan) she made a similar statement. Admittedly her allowance of Rs. 2,400 a year was stopped from the year 1898, and if these gentlemen were the agents of the mortgagees, Priyomoyee would certainly have complained to the Company that her allowance had been stopped or that Messrs. Garth & Weatherall were mismanaging the properties. This shows how the arrangement was understood by the parties. Lastly, in the release executed by Sham Peary herself on the 26th November 1908 in favour of Mr. Weatherall, it is stated, 'after looking into and examining the accounts which you have up to this day submitted to me and to my predecessors and upon taking into consideration the effect thereof, upon receipt of the cash tahbil of this day according to the jamakharach submitted by you and with the advice of well-wishers and persons having knowledge of law I execute in your favour this deed of release in respect of all acts done by yon and Mr. Garth, and after his death by you alone.' This unmistakably shows that Messrs. Garth & Weatherall acted as the agents of the mortgagor. The accounts were admittedly submitted up to 1301, and the release by Sham Peary is only consistent with their being the agents of the mortgagor, If they were not the agents of the mortgagor Sham Peary would not have given a release to Mr. Weatherall.
73. It is contended in this Court that no importance should be attached to the deed of release executed by Sham Peary, an old lady in her dotage. But in her written state- ment she did not attack the said deed nor plead that it was not binding upon her, and no issue was raised as to the validity thereof. It appears from the evi dence that her servant Radha Bullav Das attested the deed. This Radha Bullav signed her name in the written statement and looked after this litigation on her behalf, and was actually present in Court at the trial and he was not examined. Under these circumstances we are unable to discard the deed of release as being of no value.
74. The deed of release was to be kept in the custody of the Bank of Bengal and was not to operate until a trust deed executed by Mr. Weatherall was to reach the hands of Mr. Lockhart, who was appointed manager in his place. In the agreement executed by Sham Peary in favour of Mr. Lockhart on the same day it was stated, 'I am entitled to take away from him (Mr. Weatherall) the management and possession of the properties'', and that Mr. Weatherall had resigned according to her wishes, and the provisions of that agreement show that Mr. Lockhart became her agent. Mr. Lockhart, it appears, was appointed on new terms by Sham Peary, and he managed the estate as her am-mukhtear paid moneys to the Company from 1908 to 1910, as shown in the statements annexed the plaint. The defendant in her written statement (paragraph 22) stated that Mr. Lockhart had been appointed manager by the plaintiff Company without her knowledge and consent, and that he remained as their agent until May 1910 that he had committed various acts of mismanagement and misappropriated large sums of money, and that the plaintiffs, in order to avoid their responsibility to the defendant, had caused a suit for accounts to be instituted against Mr. Lockhart in the name of Mr. Weatherall by suppression of material facts. Mr. Weatherall, it is true, promised to execute a power of attorney in favour of Mr. Lockhart, who had been nominated a trustee by Sham Peary and the Company in the interval pending the execution of the deed of trust by Mr. Weatherall in his favour. Mr. Weatherall did not execute the deed of trust, and the order sheet dated the 30th January 1913 shows that Mr. Weatherall instituted a suit against Mr. Lockhart. But the fact remains that Sham Peary did execute a release in favour of Mr. Weatherall and which can only be upon the footing that he was the agent of the mortgagor, and the defendant has not attempted to substantiate the allegation that Mr. Lock-hart was appointed manager by the plaintiff Company without her knowledge or consent.
75. We do not see how Sham Peary after herself having made the statements which she did in the release referred to above, and given a release to Mr. Weatherall, can say that Messrs. Garth & Weatherall were the agents of the mortgagees, or hold the Company liable for their misconduct, if any.
76. Lastly in the letter, dated the 19th September 1909, (Exhibit XL) written by Sham Peary to Messrs. Gillander Arbuthnot & Co. (the agents of the mortgagees) there is not a word of complaint against the Company or about any mismanagement by Messrs. Garth & Weatherall. The letter was drafted by the Pleader Gagan Chandra Ghose, who says that he explained it to Sham Peary and the letter bears an endorsement to that effect. This gentleman states that he used to write letters, give legal advice and watch whether any property of the estate was going to be ruined on account of the bad management of Messrs. Garth & Weatherall, and he used to get a retainer of Rs. 25 per month from Sham Peary for such services. He, however, says that he never asked Messrs. Garth & Weatherall about their management of the estate nor thought it his duty to ask them anything bearing on the management of the estate. He admits that he saw tabular statements (gross collections, Government revenue, cesses, landlord's rents, establishment charges, net income, amount to be paid for interest formed the principal headings or columns of such tabular statements) submitted by Messrs. Garth & Weatherall at the place of Sham Peary, that every year such tabular statements used to be submitted to Sham Peary, and that in the columns of interest and principal the amounts due to the Company were mentioned. He says that Messrs. Garth & Weatherall used to send similar statements to the plaintiff Company, but he did not see any statement being sent, he only saw such statements ready to be sent. He further says that every year auditors from the plaintiff Company used to come to Dacca to check the management account kept by Messrs. Garth & Weatherall, and gives the name of one of the auditors as Kamikhya Nath Sen. This Kamikhya Nath was the accountant of Messrs. Gillanders and he says that the Company were never in possession and never interfered with the management thereof by Messrs. Garth & Weatherall. He admits that he went to Dacca on several occasions and states the business for which he went there. He was not cross-examined as to whether he had at any time audited the accounts of Messrs. Garth & Weatherall. He was examined on commission in March 1914, while Gagan Chandra Ghose was examined in April 1914. Kali Dyal Ghose, who was the head clerk of Messrs. Garth & Weatherall, says that no member of Gillanders' firm ever came to the firm of Messrs. Garth & Weatherall to make any enquiry about the income and expenditure of the mortgaged estate, and does not remember if any accounts were submitted to them. He says that Messrs. Garth & Weatherall had a power of attorney from the plaintiff Company to look after their interest, but that was three years after the execution of the mortgage deeds. One Jonmeyjoy Dutt, who was in the service of Messrs. Garth & Weatherall as the peshkar of their zemindari office, was examined by the plaintiffs and he says that he does not know if they sent any account to the Company. Mr. Grazebrook of the firm of Messrs. Gillanders Arbuthnot & Co. has deposed that the plaintiff Company had nothing to do with the annual collection or expenditure or the management of the mortgaged properties, that Messrs. Garth & Weatherall were not their agents and no statements were called for by the Company from them.
77. It appears, therefore, that there is conflict of testimony upon the question whether tabular statements were sent by Messrs. Garth & Weatherall. But even assuming that they did submit tabular statements to the Company, that fact by itself would not constitute them agents of the Company, as the latter were entitled under the terms of the mortgage to get information and accounts from the manager for satisfying themselves as to the management of the mortgaged premises. It is contended that the mortgagees ought to have removed Messrs. Garth & Weatherall when they defaulted in paying the principal and interest as provided in the scheme. But we do not know the reasons why they defaulted, and although the mortgagees had the power under Clause VIII, they were not bound to exercise that power. On the other hand if Messrs. Garth & Weatherall were the agents of the mortgagees, it is remarkable that the mortgagor did not complain to the Company about such default although yearly statements were submitted by Messrs. Garth & Weatherall to the mortgagor, and although the allowance payable to Priyomoyee herself had been stopped. We have seen that Priyomoyee in the deeds of endowment stated that unfortunately on account of various adverse circumstances intervening in the management of the properties,' her allowance had been stopped since 1898.
78. The plaintiffs have produced a large number of decrees to show that rent suits were instituted by Messrs. Garth & Weatherall in the name of the mortgagors and copies of mutation proceedings to show that they got themselves registered as managers for the mortgagors under the Land Registration Act and subsequently as trustees. If Messrs. Garth & Weatherall were the agents of the plaintiff Company, the mortgagors would have complained of their mismanagement to the Company; and it is remarkable that throughout the long period from the date of mort- gage to the date of the suit there was not a word of complaint to the Company by Priyomoyee, Mohini Mohan, or even by Sham Peary after their death.
79. It is to be observed that there is no evidence that Messrs. Garth & Weatherall actually mismanaged the estate, or were guilty of misconduct or neglect of duty. It is contended that they must have satisfied themselves before they took over the management that the income was sufficient to meet the payment of Rs. 12,600 a year to the mortgagees and Rs. 2,400 a year to Priyomoyee, besides the 15 per cent. commission for themselves, and. even a balance of profits was anticipated, the whole of which was to go to them in the case of Priyomoyee and a moiety of which was to be received by them in the case of Mohini Mohan and that the facts that the payments were made for the first few years as stipulated in the deeds and then became less show that there was at any rate mismanagement by them in sub sequent years.
80. But there was no evidence as to why the payments became less in subsequent years. Debendra Nath Das who managed the 4-annas share of Gobindarani (widow of Radhika Mohan) says that the net income of the share was between Rs. 12,000 and Rs. 13,000. He, however, managed that share without any. remuneration. Then he says that during two years the realization was less on account of a litigation for a chur. We have seen what Priyomoyee herself said in. the deed of en dowment on the point although her own allowance had been stopped, and having regard to the fact that accounts had admittedly been submitted to Mohini Mohan until 1301, it is very unlikely that the mortgagors would not have complained at any time if there was misappropriation or mismanagement by Messrs. Garth & Weatherall.
81. If they were the agents of the mortgagors, the Company would not be responsible even if there was any mismanagement by them but the absence of any complaint on the part of the mortgagor during such a long period has a bearing on the question whether Messrs. Garth & Weatherall acted as agents of the mortgagor.
82. There remains only one other point raised in this Court.
83. Moti Lall Das (the son of Khetra Mohan), who is the reversionary heir, is the defendant No. 2 in the suit, and a contention is raised on his behalf that the arrangement between Sham Peary and Mohini Mohan by which the former gave up the right (which she inherited from her deceased son Sashi Mohan) in favour of the latter in consideration of the maintenance of Rs 150 a month is not binding upon him (Moti Lall Das) after the death of Sham Peary. The question was not raised in the Court below and in a suit upon the mortgage, no question of title paramount should he gone into. This contention is accordingly disallowed.
84. The result is that the decree of the Court below will be varied in this way. It will be declared that the property mortgaged to the extent of the 4-annas share which Sham Peary inherited from Sashi Mohun is subject to the charge of Rs. 150 a month in her favour. The interest under the deeds of mortgage executed by Priyomoyee and Mohini Mohan respectively will be calculated at the rate of 71/2 per cent. together with simple interest at that rate upon the amount of interest which was not punctually paid. The principle of calculation will be according to that adopted in the plaint. The usual mortgage decree will be prepared in each of the suits giving the defendants six months' time from this date (3rd April 1917) for redemption. In all other respects the appeals will be dismissed with three-fourths costs, except that in calculating the costs incurred on account of Court-fee, the costs will be proportionate in inverse ratio to the success of each party, and only one hearing fee will be allowed in the appeals against the final decrees.