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Managi Singh and ors. Vs. Saheb Ram Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Judge
Reported in3Ind.Cas.289
AppellantManagi Singh and ors.
RespondentSaheb Ram Singh and ors.
Cases ReferredRani Sunder Koer v. Rai Sham Krishen
Excerpt:
mortgage-decree - merger of contract into decree--interest to be allowed, whether on the aggregate or principal sum--high court rules on original side do not apply to mofussil--practice. - .....only. in this view of the matter, he made the usual mortgage decree and directed that after the date fixed in the decree for the repayment of the money, only the principal amount of the mortgage would carry simple interest at 6 per cent, per annum.2. the defendants have now appealed to this court and on their behalf the decision of the subordinate judge has been challenged on two grounds, namely, first, that they are entitled to credit for the sum of rs. 175 disallowed by the court below; and secondly, that the covenant for payment of compound interest was not enforceable. on behalf of the plaintiffs-respondents, the decree has been attacked by way of cross-appeal, on two grounds, namely, first, that the sum of rs. 500 for which the mortgagors have been allowed credit was never paid.....
Judgment:

1. This appeal arises out of a suit for the enforcement of a mortgage security executed by two of the appellants in favour of the plaintiffs-respondents on the 9th February 1899. In the Court of first instance, two questions were raised, namely, first whether the plaintiffs were entitled to enforce the covenant as to the payment of compound interest, and secondly, whether, the defendants were entitled to credit for a sum of Rs. 675 for which no deduction had been made in the plaint. The Subordinate Judge held, upon the first question, that the covenant for the payment of compound interest was enforceable and upon the second question, that the defendants were entitled to credit for a sum of Rs. 500 only. In this view of the matter, he made the usual mortgage decree and directed that after the date fixed in the decree for the repayment of the money, only the principal amount of the mortgage would carry simple interest at 6 per cent, per annum.

2. The defendants have now appealed to this Court and on their behalf the decision of the Subordinate Judge has been challenged on two grounds, namely, first, that they are entitled to credit for the sum of Rs. 175 disallowed by the Court below; and secondly, that the covenant for payment of compound interest was not enforceable. On behalf of the plaintiffs-respondents, the decree has been attacked by way of cross-appeal, on two grounds, namely, first, that the sum of Rs. 500 for which the mortgagors have been allowed credit was never paid as a matter of fact, and secondly, that interest after the date fixed for repayment ought to have been allowed not merely upon the principal sum secured by the mortgage, but upon the aggregate amount due on that date.

3. As regards the first question raised on behalf of the appellants, it is sufficient to say that we are not prepared to differ from the Subordinate Judge. The sum of Rs. 175 for which credit is sought, is composed of two payments, one of Rs. 100 and the other of Rs. 75. As regards the sum of Rs. 100, one witness testifies to the alleged payment but, as the Subordinate Judge observes, it is difficult to believe that the amount was actually paid under the circumstances stated. As regards the remaining sum of Rs. 75, it was paid not in partial satisfaction of the mortgage but only to enable the mortgagees to recoup themselves the costs they had incurred with a view to institute a suit to enforce the mortgage, which they abandoned at the request of the mortgagors, The learned Vakil for the appellants points out that the evidence indicated that a sum less than Rs. 75 had been actually spent by the mortgagees for the purpose. The evidence, however, upon this point, is contradictory and the deposition of one of the witnesses called by the mortgagors themselves certainly tends to show that very nearly Rs. 75 'had been spent. We are, therefore, not prepared to disturb the decision of the Subordinate Judge upon the first point taken on behalf of the appellants.

4. As regards the second point taken on behalf of the appellants, it is clear that the covenant for the payment of compound interest is enforceable in law. What is really suggested is that there was an understanding between the parties that this particular covenant would not be enforced. The deposition of Gajadhar Prosad, however, who was called as a witness by the defendants themselves, makes it clear that there was no such agreement; what was apparently arranged was that the compound interest would be remitted if the mortgage money was duly-paid. Admittedly this has not been done. There is no question, therefore, that the covenant is enforceable and that the mortgagors are not entitled to claim remission of the compound interest.

5. As regards the first point taken on behalf of the plaintiffs-respondents, it is contended that the sum of Rs. 5C0 for which credit has been allowed was never paid. The evidence of the defendants upon this point, however, as the Subordinate Judge observes, is quite trustworthy. The amount is alleged to have been paid by the mortgagors in order to induce the mortgagees not to bring a suit to enforce their security. The very circumstances that they desisted for a considerable time from enforcing their rights shows that a substantial payment must have been made. and we are not prepared to accept the denial of one of the mortgagees that the sum of Rs. 500 was not paid.

6. The second ground urged on behalf of the respondents raises the question, whether it was obligatory upon the Court to allow interest, if any, from the date fixed for re-payment in the decree upon the aggregate sum due upon that date. In our opinion this question must be answered in the affirmative. As was observed by their Lordships of the Judicial Committee in Rani Sundar Koer v. Rai Sham Krishen 34 C. 150 : 5 C.L.J. 106 : 11 C.W.N. 249 : 4 A.L.J. 109 : 17 M.L.J. 43 : 9 Bom. L.R. 304 : 2 M.L.T. 75 when a decree has been made on the basis of a mortgage and a date for payment of whatever might be due thereupon has been fixed in the decree, the matter in controversy passes from the domain of contract into the domain of judgment. The decree decides finally the rights and liabilities of the parties, which must thenceforth be ascertained by a reference to the decree and to the decree alone. It is not open to either party to go behind the decree and rely upon the terms of the original contract. We must take that the interest to be allowed after the date fixed for payment, should have regard to the aggregate sum due on that date and not merely the principal amount mentioned in the bond. This view is also supported by the provisions of Section 209 of the Civil Procedure Code, which is regarded by their Lordships of the Judicial Committee in Rani Sunder Koer v. Rai Sham Krishen 34 C. 150 : 5 C.L.J. 106 : 11 C.W.N. 249 : 4 A.L.J. 109 : 17 M.L.J. 43 : 9 Bom. L.R. 304 : 2 M.L.T. 75 as a possible source of the power of this Court to allow interest after the date fixed for re-payment. But although we hold that the Subordinate Judge ought to have allowed interest, if any, upon the aggregate sum due on the date fixed for re-payment, the respondents are not necessarily benefited, because, as was conceded by the learned Vakil for the respondents, it is open to the Court not to allow interest at all upon the aggregate sum and that in any event it is open to the Court to determine the rate at which interest should be allowed. No doubt, according to the usual practice (upon which the rules framed by this Court under Section 104 of the Transfer of Property Act for cases on the original side are based), interest is allowed at 6 per cent. The rules in question, however, do not of their own force, apply to the mofussil. But although the Court would hesitate in any ordinary case to depart from what has been the well-settled practice as to the rate of interest in mortgage suits after the date fixed in the decree for re-payment, there can be no question that in any special case where the circumstances justify a reduction in the rate of interest, the Court would be prepared to make the necessary order in the interests of justice. In the case before us, the rate of interest agreed upon by the parties in the mortgage contract was sixteen and a half per cent, compound interest with annual rests. In the course of six years, inspite of the payment of a considerable amount by the mortgagors, the amount decreed to mortgagees exceeds double the amount of principal advanced under the mortgage security. Under these circumstances, we are of opinion that this is a case in which interest after the date fixed in the decree for payment should not be allowed at the rate of six per cent. We, therefore, direct that the decree of the Court below be modified to this extent, namely, that the interest after the date fixed for payment, be calculated upon the aggregate sum payable on that date under the decree, but at the rate of three per cent, per annum.

7. As the appellants have failed in their contentions, and, as the respondents have practically gained nothing by their cross-appeal, the parties will pay their own costs in this Court.


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