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Kshetra Nath Sikdar and ors. Vs. Harasukdas Balkissen Das and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1927Cal538
AppellantKshetra Nath Sikdar and ors.
RespondentHarasukdas Balkissen Das and ors.
Cases ReferredImperial Bank of India v. Rai Gyaw Thu A.I.R.
Excerpt:
- .....the final decree in the same suit which was brought for enforcement of a mortgage by deposit of title deeds in the town of calcutta. the appellants are defendants 3 and 4. the defendant no. 1 purchased certain properties in the suburbs of calcutta by a deed dated the 29th of september 1919 for rs. 1,03,000. the area of the land purchased was 12 bighas odd. out of this he had sold to third parties about 2 bighas of land which is not the subject matter of the present litigation. the defendant no. 1 subsequently borrowed a certain amount of money from one torit bhusan roy by depositing the fcitle deed with him. he afterwards approached the manager of the plaintiff firm and asked for a loan of rs. 70,000 on the security of the property in question. the manager agreed. the plaintiff's case.....
Judgment:

B.B. Ghose, J.

1. These two appeals are against the preliminary decree and the final decree in the same suit which was brought for enforcement of a mortgage by deposit of title deeds in the town of Calcutta. The appellants are Defendants 3 and 4. The Defendant No. 1 purchased certain properties in the suburbs of Calcutta by a deed dated the 29th of September 1919 for Rs. 1,03,000. The area of the land purchased was 12 bighas odd. Out of this he had sold to third parties about 2 bighas of land which is not the subject matter of the present litigation. The Defendant No. 1 subsequently borrowed a certain amount of money from one Torit Bhusan Roy by depositing the fcitle deed with him. He afterwards approached the manager of the plaintiff firm and asked for a loan of Rs. 70,000 on the security of the property in question. The manager agreed. The plaintiff's case is that on the 21st of January 1920, the manager Kissen Gopal Bagri, advanced Rs. 25,000 which he made over to the attorney who was acting for Defendant No. 1 on condition that he would pay off the debt of Defendant No. 1 to Torit Bhusan Roy and after getting back the title deed deposit it with Kissen Gopal Bagri for the loan of Rs. 70,000 which Bagri had agreed to make on the mortgage of the property. The attorney got back the document and made over the title deed to Bagri under the direction of Defendant No. 1 on the 24th of January 1920, when Bagri made a further advance of Rs. 25,000 to the Defendant No. 1.

2. After getting the title deed of the Defendant No. 1, Bagri and Defendant No. 1 went to the office of the plaintiff's attorney Jatindra Nath Basu and a memorandum of the transaction already completed was drawn up by the attorney and signed by Defendant No. 1, Ganendra Krishna Mitter. The memorandum was in the form of a letter addressed to the firm, Further sums were advanced to the Defendant No. 1 on 29th January, 4th February and 12th February 1920, making up the total amount of Rs. 70,000 that was agreed to be secured by the mortgage. The money was advanced on hundis of which the Defendant No. 1 was the drawer as well as the acceptor. These hundis were not met on due dates but were renewed from time to time and the money thus advanced not having been paid the plaintiff has brought this suit for recovery of the sums due. The last series of hundis which the Defendant No. 1 drew are given at the foot of the plaint. Out of the 10 bighas of the property which remained with the Defendant No. 1 he sold to Defendants 5, 6 and 7, 2 bighas on the 24th of March 1920 for Rs. 47,500. On the 11th of May 1920 Defendants 5, 6 and 7 sold for Rs. 75,000 the entire quantity of land purchased by them from Defendant No. 1 to Defendants 3 and 4 who are the appellants before us. The Defendant No. 1 subsequently became insolvent and Defendant No. 2 is the Official Assignee in whom the interest of Defendant No. 1 is now vested.

3. Various questions were raised before the Subordinate Judge by Defendants 3 and 4 to the claim made by the plaintiff. The Defendant No. 1 did not appear to contest the suit. The Official Assignee also did not contest the suit. Defendants 5, 6 and 7 were not originally joined as defendants but they were added on the objection of Defendants 3 and 4. These defendants really contested the suit. In the Court below 15 issues were raised and the Subordinate Judge decreed the suit and directed that the plaintiff was entitled to the sum claimed with interest at the rate of 18 per cent per annum. There is some obscurity in the judgment with reference to the rate of interest. The plaintiff claimed 18 per cent interest in the plaint, but the Subordinate Judge observes that there was some claim for interest at an increased rate which he did not allow. No question, however, was raised as regards the rate of interest before us, or the amount found due in the final decree, so it is unnecessary to say anything further with reference to it.

4. Three points have been raised before us by the learned advocate on behalf of the appellants and these points are covered by Issues 5, 6, 11, 12 and 13. The first point urged is that the memorandum is the sole evidence of the contract of mortgage, and as the document is not registered it is not admissible in evidence. Reliance is placed in support of the contention that this memorandum is inadmissible in evidence for want of registration and that no oral evidence is admissible to establish the mortgage on the case of Subramanian v. Luchman A.I.R. 1923 P.C. 50. The argument of the learned advocate is that having regard to the oral evidence given on behalf of the plaintiff it should be held that the memorandum dated the 24th of January 1920 constituted the bargain between the parties, and that being so the document ought to have been registered under Section 17 of the Indian Registration Act and as it is not registered it is inadmissible in evidence under the provisions of Section 49(c) of the Indian Registration Act. It is contended on the other hand on behalf of the plaintiff-respondent that this document only referred to a transaction which had already been completed by the deposit of the title deed and the advance of the loan, and the agreement to make a further advance, the memorandum did not constitute the bargain between the parties, and consequently did not require registration. He was also entitled to give oral evidence in proof of the contract of mortgage which was effected previously by the deposit of the title deed. It was further contended on behalf of the respondent that looking at the language of the letter it will be evident that it did not create any interest in immovable property as required by Section 17 of the Indian Registration Act and registration was not compulsory. Oral evidence cannot be gone into in order to ascertain whether a certain document creates a title in immovable property, in order to bring a document within the provisions of Section 17 of the Registration Act, but only the document should be looked into.

5. It was further argued that the oral evidence does not show that the memorandum was the bargain between the parties as is contended on behalf of the appellants. In order to decide the question whether it was necessary to have the document registered on the authority of the case of Subramanian v. Lutchman A.I.R. 1923 P.C. 50 on which the appellant relies, the decision should be carefully examined. At page 82 of the report the contentions of the parties are thus stated : Respondents counsel contended:

(1) that the original sub-mortgage was void inasmuch as it was effected by an instrument in writing which was admittedly not registered and relied upon Sections 17 and 49 of the Indian Registration Act, 1908; and (2) that oral evidence was not admissible, as the memorandum of the 15th July 1903, constituted the contract between the parties. (Section 91, Law of Evidence, Act I of 1872), The appellants, however, contended that though the terms of the deposit were embodied in a written document that document was a mere memorandum of and did not constitute the contract and, therefore, did not require to be registered, and that on the same ground oral evidence was inadmissible to prove and explain the deposit.

6. It seems to me that in order to ascertain whether there was any contract apart from the transaction embodied in the document itself, when oral evidence might be admissible to prove and explain the deposit of title deeds, as contended for by the appellants their Lordships examined the oral evidence in the case, which in their Lordships opinion, was conclusive that the memorandum of July 15, 1908, constituted the bargain between the parties. Their Lordships then examined the provisions of document which led to the same conclusion. The relevant portions of the document recited were these:

We hand you herewith title deeds &c....; This please hold as security, &c....; Please also hold this as further security.

7. From these terms their Lordships came to the conclusion that the memorandum in question was the bargain between the parties and that without its production in evidence the plaintiff could establish no claim, and as it was unregistered it ought to have teen rejected. I am unable to accept the argument of the appellants that this case supports the proposition that in order to decide whether a document falls within the provisions of Section 17 of the Indian Registration Act, or no, oral evidence should be gone into for the purpose of finding whether the document creates an interest in immovable property as contemplated by that section. It is undoubtedly a cardinal rule of evidence that where the terms of a contract have been reduced to writing, you cannot give any other evidence of the contract than the written document itself. But this rule applies only if the document was intended to be the embodiment in writing of the transaction and not if there was a complete oral contract before the writing was given and the document does not express and was never intended to express the whole agreement between the parties. The law on the subject has been laid down in a series of cases, the leading case in our Court being Kedarnath Datt v. Sham Lall Khetry [1873] 20 W.R. 150. This case was approved by the Privy Council in Sabramanian v. Lutchman A.I.R. 1923 P.C. 50 cited above. The law has also been laid down by the Privy Council in the case of Pranjivindas Mehta v. Chan Ma Phee [1916] 43 Cal. 895. The question is within what class the transaction in this case falls. Sir Richard Couch in delivering the judgment in the case of Kedarnath Dutt v. Sham Loll Khettry [1873] 20 W.R. 150 observed:

If this memorandum was of such a nature that it could be treated as the contract for the mortgage, and what the parties considered to be the only repository and appropriate evidence of 4heir agreement, it would be the instrument by which the equitable mortgage was created and would come within Section 17 of the Registration Act. But it was not a writing of that character. As I have said, the equitable mortgage was created by the agreement which was evidenced by the loan and the deposit of the title deeds. The promissory note, whether given either at the same time or some hours afterwards in pursuance of the understanding between the parties, was evidence of the terms upon which the loan was made viz., that the interest should be at the rate of 24 per cent. But as regards the contract between the parties if there had been no memorandum at all on the promissory note, there would have been a complete equitable mortgage. When we consider what the memorandum is, we find it is not the contract for the mortgage - not the agreement to give a mortgage for the Rs. 1,200 - but nothing more than a statement by Woomo Churn Banerjee of the fact from which the agreement is inferred. It is an admission by him that he had deposited deeds upon the advance of the money for which the promissory note was given.

8. Now I shall recite the terms of the letter in this case. It runs thus:

I applied to you for a loan of Rs. 70,000 which you agreed to advance on a deposit of the litle deeds of No. 23 Paitpara Road. I accordingly deposited with you the original conveyance from Phashupati Nath Deb in my favour, dated the 29th September 1919 which is the only document I received from my vendor on purchase of the property. I never had any other title deeds relating to the property. You have advanced to me Rs. 25,000 already land are going to advance a further sum of Rs. 25,000 today on my assurance that there is no encumbrance affecting the property. The further sum of Rs. 20,000 will be advanced by you when required by me. Yours faithfully, Ganendra Kissen Mitter.

9. It seems to me that this letter comes directly within the observations made by Sir Richard Couch which I have cited above that it is not the contract for the mortgage, nor the agreement to give a mortgage, but it is a statement made by Ganendra of the fact that he had deposited the little deed of the property in suit as the plaintiff had agreed to advance the money on the mortgage of the property. The mortgage had already been effected by the deposit of the title deed and the letter did not itself create any title and did not constitute the bargain between the parties. The document, therefore, does not, in my opinion, require registration. (After considering evidence His Lordship proceeded). The contention raised on behalf of the appellants that this transaction cannot be proved for want of registration of the memorandum therefore fails.

10. The next contention on behalf of the appellants is that there has been a discharge of the debt which was incurred on the dates on which the first series of hundis were drawn by the renewal of the hundis. The different dates of renewal of the sums for which the renewed hundis were given will be found in the abstract prepared and printed at pages 114 and 116 of the third part of the paper-book. Reliance is placed on Section 62 of the Contract Act, and it is urged that the old debt having been substituted by the acceptance of the new hundis those debts had been paid off and the debt for which the mortgage was effected by deposit of title deed does not subsist; and it is further urged that the date of the earliest of the hundis on which the suit is brought is 18th April 1920, which is posterior to the date of the purchase of the property by Defendants 5, 6 and 7 which was made on 24th March 1920, and the earlier debts having been paid off the vendors of the appellants obtained the property free from the plaintiff's mortgage. It is also urged that the plaintiff having entered in his books that the old hundis had been paid off for which new hundis had been drawn, he cannot now rely upon the old debt to enforce his mortgage. Reliance is placed upon the case of Exp. Barclay [1802] 7 Ves. 596 and it is argued that in that case if the old bills had not been retained the Lord Chancellor would have held that the old debt had been discharged. With regard to that case it seems to me that it is hardly possible to maintain the contention of the learned advocate, as there is no expression of any opinion as to what would have been held if the old bill had not been retained, and the debt remained unpaid. The question is whether if a creditor without being paid takes a new promissory note from the debtor in order to extend the time for payment or for any other purpose but has not been actually paid, is it to be considered that the old debt is discharged? This question arose in the case of Alexander Stewart v. Delhi and London Bank, Limited [1872] 17 W.R. 201 where this Court on an appeal from the Original Side affirmed the decision of the trial Judge. The relevant portion of the head note which gives a correct summary of the law laid down in that case runs thus:

Though a receipt on the back of a bill of exchange or promissory note prima facie imports that the bill or note has been paid, yet the receipt is capable of being explained and if it appears that the bill or note has not been paid, and that another bill or note was substituted for it, the Court will not be justified in concluding that the party who gave up the note in that way meant that the debt secured by the note was to be considered to have been paid.

11. The general rule in England may be cited from Leake's well-known work on Contract (7th edition) at page 671, where the following passage oocurs:

Whether a bill or note of the debtor is given and taken in satisfaction or as conditional payment is a question of fact as to the intention shown by the parties, the presumption being that it is conditional payment with a recourse to 1he original debt if the bill is not paid; but if the bill is out standing in the hands of a third party the remedy of the creditor is still further suspended until the bill or note gets back to his hands.

12. In this case the notes all came back into the hands of the creditor. But it is contended on behalf of the appellants that Section 62 makes an alteration in the circumstances as stated above. The section runs thus : If the parties to a contract agree to subsitute a new contract for it or to rescind or alter it the original contract need not be performed. It is argued that a new contract was substituted in this case. The answer to this contention is that whether there was an agreement to substitute a new contract or not is a question of fact depending on the intention of the parties. The true rule seems to me that one should Look to the substance of the matter and not to mere form. Where a creditor has not been actually paid but he takes a renewed bill or promissory note for his debt in order to give time to the debtor and receive some consideration by way of increased interest or otherwise for his forbearance, it can hardly be said that the old debt had been paid off by the acceptance of the renewed bill. In the circumstances of this case I am not prepared to hold that a new contract was substituted for the old debt. The second contention of the appellants must therefore, also fail.

13. The third point is urged as a question of priority, and it is contended that the plaintiff had parted with the title deed after the deposit, and the Defendants 5, 6 and 7 purchased the property after seeing the document in the possession of Defendant No. 1. The plaintiff should be held under the circumstance to have been guilty of gross neglect as provided in Section 78 of the Transfer of Property Act and he is not entitled to enforce his mortgage as against the appellants. The point appears to be not really one of priority but that the plaintiff is precluded by his conduct from enforcing his mortgage against the property in the hands of the appellants. Ordinarily priority of rights created by different transfers is governed by Section 48 of the Transfer of Property Act. The plaintiff would not lose his right unless his conduct was such as to estop him from asserting it. The Subordinate Judge has in his judgment given several reasons for holding that the story of Defendant No. 1 producing the title deed for inspection by the appellants-vendor is absolutely false. He also held that even if the facts were true, the handing over of the title deed for the purpose for which it was alleged to have been done does not amount to gross neglect and would not postpone the mortgage. I agree with his view, but it is unnecessary to go into the question in detail, because it is quite clear on the evidence that even if the title deed was shown by Defendant No. 1 to the vendors of the appellants, those vendors must be held to have notice of the plaintiff's mortgage. What is said on this question is in the evidence of Defendant No. 7. He says that on account of some mistake in the number of the holding as given in the Baynapatra which was executed by Defendant No. 1 in favour of two of the vendors, he wanted to see the title deed. He says:

I then thought the copy of title deed which had been made over to us might be incorrect and called at Defendant No. 1's place to see the original title deed. The Defendant No. 1 said that he had not got the original title deed with him and promised to show us the original 4 or 5 days after.

14. In cross-examination he says:

We never enquired of the Defendant No. 1 where the original title deed was and why it was not with him. It did not strike me that the title deed might have been with any mortgagee when the Defendant No. 1 said that he had not the deed with him. I did not speak of it to our pleader.

15. It would appear from the observations of their Lordships of the Judicial Committee in Imperial Bank of India v. Rai Gyaw Thu A.I.R. 1923 P.C. 211, that abstention from enquiry for title deeds in a place where one knows that mortgages by deposit of title deeds are legal and usual would amount to notice of a mortgage under Section 3 of the Transfer of Property Act. But in this case there was something more. The Defendant No. 1 on being asked to produce the title dead said that he had not got it. When the Defendant No. 1 could not produce the title dead one would naturally expect that the purchaser would enquire what had become of the deed. He did not do so and for this abstention from enquiry he must be fastened with notice of the mortgage which had been effected by the deposit of the deed, and he cannot be heard to say that he was induced to purchase the property as unincumbered on account of the gross neglect of the mortgagee in parting with the title deed. The plaintiff, however, has given very good evidence in support of his plea that he had never parted with the title deed, which was accepted by the Subordinate Judge and that Judge before whom the defendants examined their witnesses including the pleader has disbelieved their evidence. Some attempt was made to show that the pleader's evidence should be accepted. But that pleader was practising before the Subordinate Judge and he knew what sort of a person the pleader was, and he saw the witness in the box. His opinion cannot b9 upset by us on appeal on the mere ground that the witness was a pleader. It unnecessary to comment on the evidence in detail. It is sufficient to say that we agree with the finding of the Subordinate Judge. I am of opinion that the mortgagee cannot be precluded from enforcing his mortgage against the whole of the mortgaged property, and the appellants purchased the property subject to the plaintiffs' mortgage. On these grounds the appeals fail and are dismissed with costs to be paid to the plaintiff-respondents only. There will be one set of hearing-fee for the two appeals.

Panton, J.

16. I agree.


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