Full Judgment Text
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PETITIONER:
KIDAR NATH
Vs.
RESPONDENT:
MANGAT RAI & ORS.
DATE OF JUDGMENT:
31/10/1969
BENCH:
ACT:
Transfer of Property Act (4 of 1882), s. 58 (f), anomalous
mortgage, what is.
Punjab Relief of Indebtedness Act, 1934, s. 30-Whether legal
representatives of debtor entitled to apply for relief-
scope of.
Usurious Loans Act, 1918, ss. 2(3)(a) (b) and (c) and s.
3(2)(e)Scope of.
HEADNOTE:
In a suit for redemption of a mortgage with possession under
a mortgage deed of 1896, the Court declared the amount due
on the mortgages. No payment was made under the decree by
the mortgagor. Instead, on his death, his representatives
applied for relief under s. 30 of the Punjab Relief of
Indebtedness Act, 1934 and the Usurious Loans Act, 1918, as
amended by the East Punjab Amendment Act, 1948. The
applicants were given relief by the High Court and the
representatives of the mortgagee appealed to this Court.
HELD : (1) Under the covenants in the mortgage deed, there
is a stipulated rate of interest payable by the mortgagor,
and the amount recovered from the income was to be first
applied towards interest and the balance towards principal.
It was an anomalous mortgage and not a usufructuary
mortgage. The liability of the mortgagor to pay the money
due under the mortgage and to pay interest accruing due
creates a debt, even if it be assumed that the mortgagee had
no right to enforce the mortgage by sale but only had a
right of foreclosure. [217 H, 218 C]
(2) The obligation is enforceable against the estate of the
debtor in the hands of his legal representatives. When it
is so sought to be enforced, in the absence of an express
provision to the contrary, the representatives may set up
the defence which the original debtor could, if he had been
sued. There is no warrant, therefore, for the contention
that the jurisdiction of ’the court under s. 30 of the
Punjab Relief of Indebtedness Act, is attracted only when
the original debtor is the applicant and not on the
application of his legal representatives. [218 H; 219 Al
(3) The legal representatives were not entitled to claim
the benefit of the Usurious Loans Act, 1918. Section 2(3)
(a) and (b) do not apply to a suit for redemption by the
mortgagor and cl. (c) only applies in those cases where the
security is given after the commencement of the Usurious
Loans Act. [219 G]
(4) The legal representatives were entitled to the benefit
of the Punjab Relief of Indebtedness Act. The
application of s. 30 of the Act does not depend upon the
suit being one to which the Usurious Loans Act applies. Even
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if the suit is not within the definition in s. 2(3) of the
Usurious, Loans Act by virtue of s. 30 of the Punjab Relief
of Indebtedness Act, the amount received by a creditor in
excess of the amount due to him under s. 3 (2) (e) ’of the
Usurious Loans Act is liable to be deducted from twice the
amount actually advanced. [220 E]
214
(5) Section 30 uses the expression "sum found by the court
to have been ’actually advanced.’ Such amount is not the
amount found by the court to be the amount due on taking
account. Therefore, the amount declared by the court as the
amount due cannot be deemed to be the amount actually
advanced, and under s. 30, the-court cannot declare any
amount due under the mortgage which is in excess of twice
the. amount actually advanced less any amount received in
excess of the amount due to the creditor under s. 3(2)(e)
the Usurious Loans Act. [220 HI
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 10 and 1 1
of 1966.
Appeals from the judgement and decree dated May 23, 1961 of
the Punjab High Court in Regular’ First Appeals Nos. 184 of
1954 and 6 of 1955.
C. B. Agarwala and A. D. Mathur, for the appellant, (in
both the appeals).
K. L. Gosain, S. N. Goswami and P. C. Khanna. for respon-
dents Nos. 1 to 4 (in C.A. No. 10 of 1966) and respondents
Nos. 1 to 6 (in S.A. No. II of 1966).
B. Datta, for respondent No. 18 (in C.A. No. IO of 1966)
and respondent No. 24 (in C.A. No. I 1 of 1966).
The Judgment of the Court was delivered by
Shah,J.-On July 20, 1896, Ladhia-grandfather of the
respondents-borrowed Rs. 5,000 from Ramji Dass and as
security for repayment thereof mortgaged with possession
certain agricultural lands and a house. The mortgage amount
was to carry interest at the rate of 12 annas per cent. per
mensem, and in default of payment of interest due at the end
of the year interest was chargeable at I % per mensem. On
May 17, 1897, Ladhia executed in favour of Ramji Dass
another mortgage deed on the same properties for Rs. 800.
Interest under that mortgage was payable at the rate of 2%
per mensem. Ladhia executed a third mortgage deed in favour
of Ramji Dass on May 21, 1897, for Rs. 600. it included the
properties in the two earlier mortgages and 1/12th share in
other lands and two houses. The properties mortgaged in
favour of Ramji Dass were subject to a previous mortgage in
favour of one Shugan Chand. Ramji Dass redeemed that mort-
gage on payment of Rs. 650.
Lekh Ram -son of Ladhia filed a suit for redemption of the
three mortgages. On August 21, 1915, a preliminary mortgage
decree was passed in the suit by the Subordinate Judge,
Hissar. declaring that Rs. 62,293/11/9 were due on the
mortgages. The High Court of Punjab confirmed the decree on
November 24, 1919. But no payment -was made under that
decree, nor was the decree made final.
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Some time in 1951 the representatives of Ladhia applied
under the Punjab Restitution of Mortgaged Lands Act, 1938,
to the Special Collector and obtained an order for
restoration of the agricultural lands. Thereafter the
mortgages remained outstanding only on non-agricultural
properties. The representatives of Ladhia then instituted
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an action in the Court of the Senior Subordinate Judge,
Hissar, for redemption of the non-agricultural properties,
and claimed an account under s. 30 of the Punjab Relief of
Indebtedness Act, 1934, and -also of Usurious Loans Act,
1918, as amended by the East Punjab Amendment Act 4 of 1948.
The representatives of the mortgagee contended, inter‘-
alia, that the suit was barred because no payment was made
pursuant to the preliminary decree in the earlier suit, that
in any event it was declared that the amount due in 1919
under the three mortgages was Rs. 62,293/11/9, and that
decision operated as res judicata, and that account under s.
30 of the Punjab Relief of Indebtedness Act - should ’be
taken on that footing.
The Trial Court held that the mortgage dues were Rs. 7,050;
that the mortgagee had received Rs. 48,571 as income during,
the. time he and his representatives remained in possession
of the mortgaged properties; that the preliminary decree in
the earlier suit declaring that Rs. 62,293/11/9 were due
operated as res judicata; -and that the present action not
being one for recovery of a loan,the rule of Damdupat
incorporated in s. 30 of the Punjab Relief of Indebtedness
Act, 1934 had no application; but s. 2 of the Usurious Loans
Act, 1918, as amended by the East Punjab Act 4 of 1948
applied. The Court held that the mortgagee was entitled,
besides Rs. 62,293/11/9 to Rs. 17,855/4/3 as interest on the
three mortgages and after giving credit for Rs. 48571
received as income, the balance due was Rs. 31,578. The
Trial Court accordingly passed a decree for redemption of
the properties in suit on payment of Rs. 31,578.
In the appeal filed by the parties to the High Court of
Punjab, two questions were referred to a Full Bench
"1. Whether it is open to the legal representatives of a
debtor to invoke the help of s. 30. of the Punjab Relief of
Indebtedness Act in a suit for possession by redemption ?
2. Whether the provisions contained in s. 3 of the
Usurious Loans Act, 1918, as amended in the Punjab, would
govern a suit for redemption of mortgage executed before the
commencement of the Act ?"
The Full Bench answered the first question in the
affirmative, and the second in the negative.
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A Division Bench of the High Court then held that under the
principle of S. 30 of the Punjab Relief of Indebtedness Act,
the mortgagee’s representatives were entitled to receive Rs.
14,100, being double the amount due as mortgage debt, and
Rs. 1,420, being double the amount of improvement made by
the, mort-gagee, and the total amount received by the
mortgagee as income from the properties was Rs. 45,022, and
deducting. therefrom Rs. 35,810 being the amount received in
excess, the balance of Rs. 9,212 remained. A decree for
redemption on payment of Rs. 6,308 (Rs. 15,520 less Rs.
9,212) was accordingly passed. Against the decree passed by
the High Court, these appeals have been preferred by the
representatives of the mortgagee with certificate granted by
the High Court.
Three questions are raised in these appeals
(1) That S. 30 of the Punjab Relief of Indebtedness Act,
1934 -has no application, because-
(a) there is no debt due; and
(b) that a legal representative of the original mortgagor
cannot obtain the benefit of S. 30;
(2) That the judgment of the Division Bench is
inconsistent with the finding on the second question
recorded by the Full Bench; and
(3) That the. amount declared as due under the preliminary
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decree in the earlier suit was for the purposes of s. 30 of
the Punjab Relief of Indebtedness Act the "amount actually
advanced".
It is urged that s. 30 of the Punjab Relief of Indebtedness
Act, 1934, had no application, for the three mortgages being
usufructuary mortgages there is no debt due by the
mortgagor, nor can the mortgagee enforce recovery of any
debt under the covenants of the mortgagees. The first
mortgage Ext. P-1 dated July 20, 1896 recited that the
mortgagor Ladhia had mortgaged with possession the
properties set out therein for Rs. 5,000. The mortgage deed
contained the following, amongst other, covenants :
"First :-Interest on the mortgage money has been fixed at
Re. -/12/- per cent. per mensem.
Third :-I will be entitled to get from the mortgagee the
income accruing from the mortgaged property after deduction
of the Government revenues therefrom.
Fourth :-I will pay back the principal mortgage money within
a period of six years. In case of default,
217
of payment of the whole or a part of it the mortgaged
property shall be considered as foreclosed in favour of the
mortgagee..........
Fifth :-I will pay the interest year after year. In case of
default I will pay interest on the amount of interest also
at the rate of Re. 1/- per cent. per mensem. The mortgagee
shall also be competent to file a separate suit regarding
the amount of interest in Civil Court and recover the same
from me through it. I shall not have any objection thereto.
Seventh :-Till the principal mortgage money and the interest
are not paid off in full, temporary or permanent transfer of
the mortgaged property by me to -any body else shall ’be
considered illegal and invalid.
The mortgage deed Ext. P-2 dated May 17, 1897, for Rs. 800
contained similar covenants. It also recited that an amount
of Rs. 5,000 was borrowed under a deed dated July 20, 1896,
and the mortgagor agreed to repay the sum within six years
with interest at the rate of Re. -/12/- per cent. per
mensem. By the sixth clause it was provided :
"In case of default, viz., in default of payment of the
mortgage-money and interest along with the previous mortgage
money amounting to Rs. 5,000/- (on the basis of the
mortgage-deed) dated the 20th of July, 1896, agreed to be
paid back within a period of six years, the surplus rights
in the mortgaged property shall be considered as foreclosed
and shall be the absolute property of the mortgagee....."
Exhibit P-3 dated May 21, 1897, also referred to the two
earlier mortgages. By the first clause it recited that the
mortgage Money shall be paid back alongwith the mortgage
money due under the two earlier deeds of mortgage. The
second clause referred to the interest payable on the
mortgage money at the rate of Rs. 2/- per cent.. per mensem.
The sixth clause recited that till the entire mortgage money
-and interest are not paid off, the mortgagor will not
transfer by sale, mortgage or gift the mortgaged property to
any body else. The seventh clause provides that the money
paid by the mortgagor shall first be credited towards the
interest on the two earlier mortgages and the balance shall
be accounted towards the principal. By the eighth clause it
was provided that the mortgagor will pay interest on the
mortgage money upto the date of redemption of the mortgaged
property.
Under the covenants in each of the deeds of mortgage, there
is a stipulated rate of interest payable by the mortgagor on
the
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mortgage money and the amount recovered from the income is
to be first applied towards the interest and the balance
towards the principal. The mortgagee is also entitled to
recover by suit interest accruing due. The mortgages are
clearly anomalous mortgages.
Section 7 of the Punjab Relief of Indebtedness Act,. 1934,
defines a ’debt’ as inclusive of "all liabilities of a
debtor in cash or in kind, secured or unsecured, payable
under a decree or order of a civil court or otherwise,
whether mature or not, . . . .
The definition of the expression ’debt’ therefore includes
all liabilities of a debtor in cash or in kind, secured or
unsecured. The liability of a mortgagor to pay the money
due, under the mortgage and to pay interest accruing due is
clearly a debt, even if it be assumed that the mortgagee had
no right to enforce the mortgage by sale of the property and
had a right only to foreclose the mortgages. Under the
terms of the mortgage deeds, if the mortgagor pays the
amount due, the mortgagee is bound to release the mortgaged
property. It cannot be said that under the three mortgages
there was no debt due by the mortgagor. Nor do we agree
with counsel for the mortgagee that the benefit of S. 30 of
the Punjab Relief of Indebtedness Act is available only to
the original mortgagor and not to his representatives.
Section 30 of the Punjab Relief of Indebtedness Act by the
first sub-section provides
"In any suit brought after the commencement of this Act in
respect of a debt as defined in section 7, advanced before
the commencement of this Act no court shall pass or execute
a decree or give effect to an award in respect of such debt
for a larger sum than twice the amount of the sum found by
the Court to have been actually advanced, less any amount
already received by a creditor in excess of the amount due
to him under clause (e) of sub-s. (2) of section 3 of the
Usurious Loans Act, 1918."
A suit to redeem property on payment of the amount due on
the mortgage is a suit in respect of a debt; and the Court
is by S. 30 of the Act debarred from passing a decree for a
sum larger than twice the amount of the sum found by the
Court to have been actually advanced. The section imposes,
a restriction, in certain conditions, upon the power of the
Court. It is the nature of the suit which decides the
Court’s jurisdiction : the section makes no reference to the
status of the party claiming relief except in so far as the
definition of debt involves such reference. On the plain
words of the section there is no warrant for the view that
the jurisdiction of the Court is attracted only when the
person who incurred the obligation to pay the debt
personally is a party to the suit and not when his legal
representative is a party. An
219
obligation to pay a debt is not extinguished on the death of
the debtor. The obligation is enforceable against the
estate of the debtor in the hands of his legal
representatives; and when it is so sought to be enforced, in
the absence of an express provision or clear intendment to
the contrary, the representatives may set up the defence
which the original debtor could if he had been sued have
setup. The representatives of the mortgagor were therefore
rightly held entitled to the benefit of s. 30 cl the Punjab
Relief of Indebtedness Act, 1934.
Each of the three mortgages created a debt due ’by the mort-
gagor within the meaning of s. 7 of the Punjab Relief of
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Indebtedness Act, 1934, and a suit filed by the
representatives of the mortgagor for redemption of the
mortgages was a suit in respect of a debt within the meaning
of that section. A suit for redemption of a mortgage
executed before the commencement of the Usurious Loans Act,
1918, was however not a suit to which the Act applied, and
on that account the mortgagor could not claim the benefit of
that Act. Section 2(3) of the Usurious Loans Act defines
"suit to which this Act applies" as meaning any suit-
"(a) for the recovery of a loan made whether before or after
the commencement of this Act; or
(b) for the enforcement of any security taken or any
agreement whether by way of settlement of account or
otherwise made, after the commencement of this Act, in
respect of any loan made either before or after the
commencement of this Act; or
(c) for the redemption of any security given after the
commencement of this Act in respect of any loan made either
before or after the commencement of this Act."
Evidently cls. (,a) and (b) of s. 2(3) have no application
to a suit for redemption by the mortgagor, and cl. (c also
will not apply because the security was given before the
commencement of the Act. Clause (c) only applies in those
cases of redemption of securities given after the
commencement of the Act in respect of any loan made either
before or after the commencement of the Act. The
mortgagor’s representatives were, therefore, Dot entitled to
claim the benefit of the Usurious Loans Act, 1918.
The mortgagor’s representatives were still entitled to the
benefit of the Punjab Relief of Indebtedness Act. By s.
30(1) of that Act in a suit filed in respect cl a debt, the
Court is enjoined not to pass a decree for a sum larger than
twice the amount found by the Court to have been actually
advanced, less any amount
220
already received by a creditor in excess of the amount due
to him under cl. (e) of sub-S. (2) of S. 3 of the Usurious
Loans Act, 1918.
Clause (e) of sub-s. (2) of S. 3 of the Usurious Loans Act
was incorporated in that Act by S. 5 of the Punjab Relief of
Indebtedness Act. The clause reads :
"The Court shall deem interest to be excessive if it exceeds
seven and a half per centum per annum simple interest or is
more than two per centum over the Bank rate, whichever is
higher at the time of taking the loan, in the case of
secured loans, or twelve and a half per centum per annum
simple interest in the case of unsecured loans :
Provided..............."
There is nothing in S. 30 of the Punjab Relief of
Indebtedness Act which restricts the benefit of deduction of
amounts in excess of the amount due under cl. (e) of sub-s.
(2) of S. 3 to those suits only to which the Usurious Loans
Act applies. The application of S. 30 of the Punjab Relief
of Indebtedness -Act does not depend upon the suit being one
to which the Usurious Loans Act applies. Even if the suit
is not within the definition in S. 2(3) of the Usurious
Loans Act, by virtue of the express provisions of S. 30 of
the Punjab Relief of Indebtedness Act the amount received by
a creditor in excess of the amount due to him under cl. (e)
of sub-s. (2) of S. 3 of the Usurious Loans Act is liable
to be deducted from twice the amount actually advanced. The
High Court was, therefore, right in directing that the
amount received in excess of the amount due under cl. (e) of
sub-s. (2) of S. 3 of the Usurious Loans Act was liable to
be deducted from twice the amount actually advanced.
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Counsel for the mortgagee’s representatives’ contended that
the decision of the Civil Court in the earlier suit for
redemption which declared -an amount of Rs. 62,293/11/9 due
under the mortgages must be deemed to be the amount actually
advanced by the mortgagee.But the decree in the earlier suit
merely declared the amount due at the date when the decree
was passed : it did not adjudicate that the amount declared
was the amount actually advanced under the three mortgages.
The amount advanced under a mortgage is not the amount found
due on taking account of the mortgage. Section 30 uses the
expression sum found by the Court to have been actually
advanced". If apart from the terms of the Punjab Relief of
Indebtedness Act, the mortgagor war seeking an account of
the mortgage dues, the previous adjudication may be binding.
But the provisions of S. 30 of the Punjab Relief of
Indebtedness Act places an embargo upon the Court
221
declaring any amount due under the mortgage which is in
excess of twice the amount actually advanced less any amount
received in excess of the amount due to the creditor under
cl. (e) of sub-s. (2) of s. 3 of the Usurious Loans Act.
The Court, therefore, could not pass an order directing
payment of an amount larger than the amount which may be
declared due under s. 30 of the Punjab Relief of
Indebtedness Act.
The appeals fail and are dismissed with costs. One hearing
fee.
R.K.P.S. Appeals dismissed.
222