1. This is a reference by the Munsif of Iswarganj in a suit instituted before him as a Small Cause Court suit.
2. The plaintiffs allege tbatfout of Rs. 150, the nominal consideration for a mortgage by conditional sale in favour of the defendants, the plaintiffs received only Rs. 104. The suit was brought to recover the balance together with interest and Rs. 11 as compensation. When the case came on for hearing, one of the defendants admitted that the plaintiffs had not received the full amount of the consideration but only Rs. 104.
3. The questions referred by the Munsif are:
4. (1) Whether a mortgagor can sue for the recovery of the balance of the mortgage-money not paid to him.
5. (2) If so, whether such a suit is cognizable by a Court of Small Causes.
6. In regard to the first question it, is clear that the claim to which it refers can only be regarded as a claim for the specific performance of so much of an agreement to lend money as has not already been performed. Authority shows that such a claim is not maintainable.
7. In Rogers v. Challis (1859) 27 Beav. 175 : 29 L.J. Ch. 240 : 6 Jur. (N.S.) 334 : 64 E.R. 68 : 7 W.R. 710 : 122 R.R. 361 the defendant agreed to borrow the sum of 1,000 from the plaintiff on certain security. The defendant afterwards obtained better tertas from a third person and refused to perform his agreement with the plaintiff. The plaintiff asked for specific performance which was refused. The Master of the Rolls (Sir John Romilly) said:
It certainly is new to me, tbett this Court has ever entertained jurisdiction in a case where the only personal obligation created is that one person says, if you will lend me the money I will re-pay it and give you gfcod seearity, ind the terms are settled between them. The Court has said that the reason for compelling a specific performance of a contract is because the remedy at law is inadequate or defective. But by what possibility can it be said that the remedy here is inadequate or defective? It is a simple money demand; the plaintiff says, I have sustained pecuniary losa by my money remaining idle, and by my not getting so good an investment for it as you contracted to give me. This is a mere matter of calculation and a Jury would easily assess the amount of the damage which the plaintiff has sustained. I express no opinion whether an action (that is, an action for damages) would or would not lie....
8. In that case an attempt was made to compel a man to borrow money. In Sichel v. Mosenthal (1862) 30 Beav. 871 : 31 L.J. Ch. 386 : 8 Jur. (N.S.) 275 : 5 L.T. 784 : 10 W.R. 283 : 54 B.R. 932 : 132 R.R. 312 an attempt, conversely, to compel a man to lend money was equally unsuccessful. The same learned Judge said:
9. 'It would be quite new to me to hear that this Court could specifically enforce a contract to lend money, and as to compelling a person to borrow money according to his agreement, that was the point which I decided in Rogers v. Ghallis (1859) 27 Beav. 175 : 29 L.J. Ch. 240 : 6 Jur. (N.S.) 334 : 54 E.R. 68 : 7 W.R. 710 : 122 R.R. 361.' He went on to suggest that the proper remedy was an aetion for damages.
10. These cases were cited and approved by the Privy Council in Larios v. Gurety (1873) 5 P.C. 346 : 61 L.J. Ch. 244. where the agreement which it was sought to enforce took the form of a conditional sale.
11. Their Lordships said:
The parties throughout the negotiation which led up to the contract were stipulating for advances of money on one side, and security for those advances on the other : the pleadings state and admit an agreement of that nature; and it seems impossible to treat the cause of action in this case as anything more than the breach of a contract to honour the drafts of the respondent to the extent of the-amount agreed to be advanced, and placed to his credit. And, upon a full consideration of the arguments and authorities, their Lordships are constraine to admit that the Court of Chancery would not have entertained a suit for the specific performance of such an agreement, but would have left the party aggrieved by the breach of it to seek his remedy, where he would find an adequate remedy, in a Court of Law.
12. The case of the South African Territories v. Walligton (1898) A.C. 309 : 67 L.J.Q.B. 470 : 78 L.T. 426 : 46 W.R. 545 : 14 T.L.R. 298 in the House of Lords is to the same effect.
13. Upon the principle so exemplified it is clear that the present suit, regarded as a suit for specific performance of the contract between the parties, does not lie. Non would such a suit or a suit for the rectification of the instrument be cognizable by a Court of Small Causes (Provincial Small Cause Courts Act, 1837, Schedule II, clauses 15 and 16). Both the questions referred must, therefore, be answered in the negative.
14. On the other hand, it is open to the plaintiff to sue in the Small Cause Court for damages for the breach of contract, provided the damages claimed are within the pecuniary jurisdiction of the Court.
15. If the plaintiff is prepared to confine himself to a claim for damages within the jurisdiction of the Court to award, he may be given an opportunity to make the necessary amendments in his plaint and the suit may then be proceeded with. Otherwise the plaint should be returned to him.