1. This is an appeal on behalf of the plaintiffs in a suit to enforce four mortgage securities executed by the members of a Mitakshara family. The members of this family were Dhiku, his two sons, Guli and Gopi, and Anku, the son of Gopi. On the 21st January 1904, Dhiku, Guli and Gopi executed a mortgage in favour of the plaintiffs. On the 17th September 1904, 31st March 1905 and 16th September 1907, Dhiku alone executed three other mortgages in favour of the plaintiffs for different sums. The plaintiffs have joined as parties defendants to the suit, not merely Dhiku and Gopi, but also Anku who, it has been found, was born after the execution pf the latest of the four mortgages. The Subordinate Judge has found that the mortgages were executed for legal necessity, but he has directed a sale of the life-interest only of Dhiku and Gopi, on the ground that as the properties included in the mortgages, formed part of a maintenance grant, it was not competent to the mortgagors to execute a mortgage of the absolute interest, and that, in any view, Anku is not bound by the transactions to which he was not a party. The Subordinate Judge has also disallowed two minor claims, namely, the claim for interest upon a sum of Rs. 810 included in the mortgage of the 16th September 1907, and the claim for a principal sum of Rs. 600 included in that security. The plaintiffs have appealed to this Court, and on their behalf, three points have been urged, namely, first, that the sale of the entire interest in the mortgaged properties should have been ordered; secondly, that interest ought to have been allowed upon the sum of Rs. 810, and, thirdly, that a decree ought to have been made for Rs. 600 included in the fourth mortgage.
2. In so far as the first ground is concerned, it was argued in the Court below on behalf of the infant son of Gopi that in view of the nature of the property, Dhiku and Gopi were not competent to execute a mortgage of the absolute interest and that the infant is not bound by the transactions after the death of his grandfather and father. It appears also to have been contended that as the grant in favour of Dhiku was made by a ghatwal, he never acquired an absolute interest. This latter question has been left open by the Subordinate Judge; but he has held that as the holder of a maintenance grant, Dhiku could not alienate the entire interest in the property to the detriment of his grandson. In our opinion, this question cannot be properly investigated in the suit as framed. We find that in the Court of first instance, upon the application of the plaintiff, Gopi was appointed as the guardian ad litem, of his infant son, Anku. This was obviously not the right course to follow. In his character as one of the mortgagors, Gopi was bound by the doctrine of estoppel not to question the title of the mortgagees; it was not open to him or to his father to contend that the interest which they professed to transfer to the mortgagees could not validly be transferred to the letter. On the other hand, in his character as guardian ad litem of his infant son, it was his duty to put forward every contention which could reasonably be advanced on behalf of the minor, it became his duty to contend that the properly in the hands of Dhiku was ancestral property, that Anku acquired by birth an interest in the equity of redemption, and that he was not bound by the mortgages. In other words, a disinterested guardian could claim on behalf of Anku that he had a title superior to that of the mortgagees and the mortgagors, and, that from this point of view, he was not a proper party to the mortgage suit. It is fairly clear that if the question of the validity of the mortgages which has been sought to be raised on behalf of Anku by his father and which apparently has been decided adversely to his contention, was allowed to be raised in the present suit, the infant, upon attainment of majority, would be entitled to have the decree set aside, on the ground that his interest had not been safeguarded by his father. Under these circumstances, one of two courses is open, namely, either to set aside the decree of the Court of first instance and remand the suit for re-trial with a direction that Gropi should be discharged from the office of guardian of his infant son and an independent person should be appointed in that behalf; or to allow the plaintiffs to elect to have Anku discharged from the suit. Their parties have chosen to adopt the latter course. On behalf of the respondents, who in this Court are represented by the same learned Vakil, an application has been made that Anku be discharged from the suit. On behalf of the plaintiffs, no objection has been taken to the adoption of this course. 'We, therefore, direct that Anku be discharged from the suit. He will thus be in the position he would have occupied if he had never been drawn into this litigation. The question of the nature of the mortgaged properties, therefore, does not arise for consideration, because as we have already explained, it is not open to the mortgagors to contend that they were not competent to transfer the interest which they professed to transfer to the mortgagees. The result will be that an ordinary mortgage decree will be made in favour of the plaintiffs and the sale will be held subject to such direction as may be given by the Deputy Commissioner. What the effect of this sale may he upon the interest of Ankn, if any, must be determined in a separate litigation.
3. In so far as the second ground is concerned, it has been contended that interest ought to have been allowed upon the sum of Rs. 810 included in the mortgage of the 16th September 1907. The Subordinate Judge has found that on the 4th January 1905 an endorsement was made on the mortgage bond to the effect that interest to the extent of Rs. 810 had been paid. As a matter of fact, no payment in cash was made, but on the 18th April 1905, a roka was executed by the mortgagors in favour of the mortgagee, for this sum of Rs. 810. Subsequently, the sum due on the roka was included in the security of the 16th September 1907 as part of its consideration. The mortgage carries interest and the plaintiffs contend that interest ought to have been allowed on this sum of Rs. 810 in the same manner as upon the other portion of the consideration for this mortgage security. The Subordinate Judge has disallowed this claim, because, in his opinion, the transaction was fictitious and no payment was made in cash on the 4th January 1905; the parties are in the same position as if the endorsement has not been made and the roka had not been subsequently executed. This view is not sound. There was clearly a novation of the contract, and, but for the provisions of Regulation III of 1872, to which we shall presently refer, it would have been open to the mortgagors to make an endorsement on the mortgage bond to the effect that interest had been paid and also open to the mortgagees to accept a roka for this sum from the mortgagors. As was pointed out by Lord Selborne in the case of (Benjamin) Scarf v. George Jardine 7 A.C. 345 at 351 : 51 L.J.Q.B. 612 : 47 L.T. 258 : 3 W.R. 893 there being a contract in existence, anew contract is substituted for it, either between the same parties or between other parties, and the parties to the original contract mutually consider that by the new contract the original contract is discharged. The test to be applied to determine whether the original contract has been discharged, is, as was explained by the, Judicial Committee in the case of Banshidhar v. The Government of Bengal 9 B.L.R. 364 : 14 M.I.A. 86 : 16 W.R. 11 (P.C.) whether satisfaction has been entered upon the original bond. If the discharge has been entered, the presumption is that the old contract has ceased to exist and the new contract has been substituted in its place. In the case before us, there was an endorsement for satisfaction of interest to the extent of Rs. 810 upon the original bond and a roka was given precisely for this sum of Rs. 810. En the eye of law, therefore, there was a new contract in substitution for the old to the extent of Rs. 810. But it must be remembered that to effect a novation pursuant to an agreement to accept a new contract,, the contract which is substituted must be one capable of enforcement in law, In this connection, we have to consider the effect of Section 6 of the Santhal Parganas Settlement Regulation (III of 1872). That section provides that all the Courts having jurisdiction in, Santhal Parganas shall observe the following rules relating to usury, namely, that interest on any debt or liability for a period exceeding one year shall not be decreed at a rate higher than two per cent, per mensem notwithstanding any agreement to the contrary and no compound interest arising from any intermediate adjustment of account shall be decreed. Upon the facts found by the Subordinate Judge, it is fairly clear that the parties had recourse to the device of a roka to avoid the effect of the statutory provision. If the endorsement of the 4th January 1905 had not been made, the mortgagees would have been able to claim Rs. 810 as interest due upon the mortgage, but they would not have been in a position to claim interest upon this sum. The device adopted was, that although no cash payment was made, an endorsement was made on the mortgage security to the effect that interest had been paid and a roka was taken by the mortgagees for this precise sum, whereupon, when it was included in the mortgage of the 16th September 1907, the mortgagees became entitled to claim interest. In substance, therefore, as a result of the device, they are in a position to claim compound interest. If this claim were to prated, the mortgagees would be permitted to commit a fraud on the statute. The Subordinate Judge has properly excluded the sum of Rs. 810 from the mortgage of the 16th September 1907, and has at the same time ignored the endorsement upon the mortgage bond of the 21st January 1904 on the basis whereof accounts have been taken on the tooting that no payment of interest was made on the 4th January 1905. The second ground therefore, fails.
4. In so far as the third ground is concerned, it appears that the mortgage of the 16th September 1907 includes a sum of Rs. 600. This sum was stated to be interest due upon a number of loans set out in the mort-gage bond, inclusive of Rs. 810 to which reference has already been made. The Sub ordinate Judge has held that no interest can be claimed as a matter of right by the mortgagee in respect of these loans which were incorporated in the security of the 16th September 1907, and that consequently the agreement to pay interest to the extent of Rs. 600 was an agreement without consideration. The Subordinate Judge has accepted the view that where money has been advanced without an express agreement for payment of interest the creditors not entitled to claim damages in lieu of interest under Section 73 of the Indian Contract Act, in other words, that unless the (XXXII of 1839) are fulfilled, the creditor is not entitled to damages for retention of his money. This view was, no doubt, taken by the Madras High Court in the case of Kamalammal v. Peeru Meera 20 M. 481 : 7 M.L.J. 263 and followed in Bura v. Mailia Shah 104 P.R. 1901 : 9 P.L.R. 1902 and may be assumed to be in accordance with the strict rule of English Common Law Page v. Newman (1829) 9 B. & C. 378 : 33 R.R. 204 : 4 M. and Ry. 305 : 7 L.J.K.B. 267; London Chatham and Dover Ry. v. South Eastern Ry. Co. (1892) 1 Ch. 120 at p. 140 : 61 L.J. Ch. 294 : 65 L.T. 722 : 40 W.R. 194. The contrary view, however, is supported by weighty authority Ghanshiam Singh v Daulat Singh 18 A. 240 : A.W.N. (1896) 55 and Jogeshur Bhagat v. Ghanasham Dass 5 C.W.N. 356 and was accepted by Mr. Justice Banerjee in Surja Narain Mukhopadhya v. Pratap Narain Mukhopadhya 26 C. 955 at. 964 although in that case Sir Francis Maclean, C.J., declined to express any option upon the question raised. The view taken by Mr. Justice Banerjee appears to be in agreement with two decisions of the Judicial Committee in the cases of Chajmal Das v. Brij Bhukan Lal 17 A. 511 : 22 I.A. 199 and Ganesh Bakhsh v. Harihar Bukhsh 26 A. 299 (P.C.) : 31 I.A. 116 : 14 M.L.J. 190 : 6 Bom. L.R. 505 : 8 C.W.N. 421 and was recently followed in Mohamaya Prasad Singh v. Ram Khelawan Singh 15 C.L.J. 684 : 15 Ind. Cas. 911 where the authorities on the subject will be found reviewed. In any view, it is impossible to maintain the position that if the debtor voluntarily agrees, as in the case before us, to pay interest or damages upon sums used or retained, it is still open to him to turn round and contend that the agreement to pay such interest or damages was without consideration. In our opinion, the whole of the sum of Rs. 600 ought not to have been disallowed. It will be observed that this sum of Rs. 600 was taken as damages upon the sum of Rs. 1,649 inclusive of Rs. 810, which we have already held must be excluded from this mortgage bond; the mortgagees are thus entitled approximately to a sum of Rs. 300. The third ground must consequently prevail in part.
5. The result is that this appeal is allowed in part and the decree of the Subordinate Judge varied. An account will be taken in this Court and a self-contained decree drawn up on the footing that Rs. 810 and Rs. 300, in all Rs. 1,110, must be excluded from the mortgage of the 16th September 1907. The account will be taken up to the date fixed for redemption in the judgment of the Subordinate Judge, namely, the 15th February 1911; and upon the amount so determined, interest at the rate of six per cent, per annum -will be allowed till realization.
6. There will be no order for costs in this Court.