JUDGMENT
Arnold White, C.J.
1. This is a suit upon a mortgage brought by an assignee of the mortgage. The 1st defendant, who is the 1st respondent in the appeal, is not represented here. But Mr. Ranganadhier has been good enough to argue the case amicus curiæ on his behalf.
2. The first question which has been raised on the appeal is whether the plaintiff is entitled to recover a sum of Rs. 650 with interest as from 1694 or whether he is only entitled to recover a sum of Rs. 800 and odd with interest as from the year 1898. That is the subject-matter of the first issue in the case. The sum of Rs. 650 is stated to be part of the consideration for the mortgager, the mortgagee being one Pitchi Reddi. The present plaintiff is an assignee from Pitchi Reddi’s assignee. By the mortgage instrument it was agreed that this Rs. 650, which represented a debt which, at the time of the mortgage was owed by the mortgagor to one Krishna Reddi, should be discharged by the mortgagee. The mortgagee was able to enter into an arrangement with the mortgagor’s creditor under which instead of paying the fall amount of the debt, he paid Rs. 800 and odd mentioned in the first issue in discharge of the debt owing to the mortgagor’s creditor, i.e., taking interest into account, some Rs. 200 less than the amount mentioned in the mortgage as part of the consideration. The question is: who is entitled to get the benefit of that Rs. 200, the mortgagor or the mortgagee? Now it is quite clear that the object of transaction from the mortgagor’s point of view was to get the liability which he was under to his creditor Krishna Reddi, discharged and by the arrangement which the mortgagee was able to enter into with Krishna Reddi, the mortgagor’s liabilities to Krisnna Reddi were discharged. There is some evidence that the reduction which Krishna Reddi consented to make was at the request of the mortgagor. But there is no evidence that there was anything in the nature of an agreement between the parties that the mortgagor should get the benefit of the reduction and not the mortgagee. And in the absence of any thing in the nature of a contract, I fail to see any principle upon which the mortgagor is entitled to the benefit of this sum as against the mortgagee. It can not be suggested that the mortgagee was a trustee of the mortgagor; and so far as I can see, there is no equity in favour of the mortgagor as against the mortgagee in respect of this sum. I am unable to take the view adopted by the learned Judge that the mortgagor, and not the mortgagee, was entitled to get this sum. The second point raised in this appeal is that which is covered by the second issue, that is, the question whether the 1st defendant in the present suit is entitled to be credited with a certain sum of money. The transactions were a little complicated. But the facts appear to be these: The 1st defendant’s mother had certain claims for maintenance against the 1st defendant’s brother. To satisfy these claims the 1st defendant’s brother executed a promissory-note in favour of the mortgagee. The 1st defendant’s case is that this transaction was a benami transaction and that though the promissory-note was in favour of the mortgagee, it was for the benefit of the 1st defendant. Then the mortgagee sued and got a decree on this note.
3. According to the case for the 1st defendant, he held that decree benami for the 1st defendant. That decree was not executed, but an arrangement was made under Which another pro-note was executed in favour of the mortgagee, this time, as I understand the case, not in favour of the mortgagee as benamidar for the 1st defendant but in favour of the mortgagee absolutely. Now, the effect of that, no doubt, would be that the 1st defendant gave up the benefit of the benami decree in his favour and in substitution for that there was another note given for the benefit of the mortgagee absolutely. That is the 1st defendant’s case, and he says that it was agreed when the second promissory-note was given, that the mortgagee, when he came to enforce his remedy on the mortgage bond against the mortgagor, should credit the mortgagor with the amount of the second promissory note (Ex. V), that is, the amount which he, the mortgagee, was entitled to recover under Exhibit V, against the 1st defendant’s brother. That is a somewhat curious transaction on the face of it. The learned Judge saw his way to hold that this arrangement was in fact made. Again I am unable to take that view. I do not think the evidence is sufficient to establish as a fact that that agreement was entered into between the mortgagor and the mortgagee. It was as I say, a very extraordinary arrangement on the face of it; and there are certain facts connected with it which strike me as very significant and as going a long way to show that this arrangement was never made. In the first place, if this arrangement was made one would have expected that there should have been some sort of record made at that time. The 1st defendant himself in his evidence says “I did not take any receipt from him”–the mortgagee–“or get payment endorsed on my bond “–the suit bond–“when he took Exhibit V”, that is, the pro-note. Another significant fact is that the mortgagee has never sued on this note. The 1st defendant’s evidence was–“The arrangement between Pitchi Reddi”, that is, the mortgagee–“and myself was that the amount due to me should be credited towards my debt due to him. Exhibit V is the document my brother executed to T. Pitchi Reddi. I was present when it was executed. Neither my brother nor his heir paid any portion of the amount due under Exhibit V”. On the other hand, the mortgagee who was called as a witness says in cross-examination: I never agreed with the 1st defendant to credit the maintenance amount due to his mother and for which Gurumurthi executed “to me promissory-note, to the mortgage bond. First defendant did not pay any portion of the costs of the suit I brought in the Kavali Court”. No doubt, as has been pointed out on behalf of the respondent, the evidence of that witness must be discounted by the fact that he parted with his interest in the mortgage bond. But even making due allowance for this fact, it seems to me, having regard to the circumstances to which I have called attention, there is not enough evidence to support the finding of the learned Judge that this agreement was, in fact, entered into. Accordingly with regard to the second point, I must hold that the 1st defendant is not entitled to the credit of this amount. The decree of the District Judge must be modified accordingly. The appeal is allowed with proportionate costs.
Munro, J.
4. As to the first issue what appears is that in Exhibit B, the mortgagee undertook to pay a debt due by the mortgagor to one Krishna Reddi, and that Rs. 650 of the consideration of Exhibit B was thus made up, but that, when the mortgagee paid the debt, some remission was made. The defendants claimed the benefit of this remission and on the ground that the remission was made at the instance of the 1st defendant, the lower Court allowed the claim. Even conceding that the remission was made at the instance of the 1st defendant, unless there is evidence that there was an arrangement between the 1st defendant and the mortgagee that the 1st defendant was to get the benefit of the remission, I think the claim must fail and there is no such evidence. As to the second issue the 1st defendant speaks to the agreement set up, while the mortgagee, Pitchi Reddi, denies it. The 1st defendant admits that he took no receipt from Pitchi Reddi and got no payment endorsed on Exhibit B. If there had been any such agreement as the 1st defendant alleges, I think it very unlikely there would be no writing to support it. I, therefore, agree to the decree proposed by the learned Chief Justice.
