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Allahabad High Court
Hanuman Rai And Ors. vs Dipan Rai on 14 December, 1926
Equivalent citations: AIR 1927 All 793
Author: I Ahmad


Iqbal Ahmad, J.

1. This is a defendants’ appeal and arises out of a suit for redemption of a mortgage, dated 26th April 1869, executed by the plaintiff’s father in favour of one Dhanraj Rai, predecessor-in-title of the defendants.

2. The suit was decreed by the trial Court conditional on the payment of a sum of Rs. 542-8-0 within a certain time by the plaintiff to the defendants. Both the parties were dissatisfied with the decree with the result that the defendants appealed and the plaintiff filed a cross objection in the lower appellate Court. The lower appellate Court dismissed the appeal filed by the defendants and allowing the cross-objection in part, modified the decree of the trial Court and decreed redemption on payment of Rs. 93.

3. The only point urged in support of the appeal by the learned Counsel for the appellants is that on the true interpretation of the terms of the mortgage-deed, the defendants are entitled to interest at the stipulated rate, not only up to the time fixed for payment by the mortgage-deed, but up to the date of the redemption of the mortgage. This contention of the appellants was upheld by the trial Court, but the lower appellate Court held that it was
not equitable to allow the creditor to pile up the interest when he has already benefited considerably by the usufruct,

and as such refused to allow to the defendants post diem interest on the mortgage-debt.

4. I am unable to agree with the conclusion arrived at by the lower appellate Court. The terms of the mortgage deed are set out in detail in the judgment of the trial Court and are as follows:

Whereas a sum of Rs. 75 is due to Janki Pande on account of a decree in execution of which my property is put up for sale and as money is required for payment of that decree I have herewith borrowed the aforesaid sum from Sheo Dan Rai and paid up the decree. I covenant that I have delivered possession of the property to the aforesaid creditor so that the aforesaid creditor may remain in possession over the aforesaid mortgaged property and pay the rent and other cess thereon and may appropriate the usufruct in lieu of interest and the remaining Rs. 8-8 (interest on the remaining Rs. 70) would be paid by me. When at the end of Jeth 1278 fasli, I pay the whole money, I will take back the property. In case I fail to do so by even one day, the creditor will treat this deed as a sale absolute, and will remain in possession as owner. In case I fail to pay interest also the creditor will have a right to take foreclosure proceedings, hence I have executed this deed of mortgage and in case of non-fulfillment an absolute sale.

5. It would appear from the terms of the deed set out above that no provision was made by that deed as to what was to happen, if at the end of Jeth 1278 fasli, the mortgagor did not discharge the mortgage-debt. There is nothing in that deed to show that the contract, express or implied, between the parties was that the interest was to cease to run after the expiry of the period fixed for payment of the mortgage-money. Notwithstanding the failure of the mortgagor to redeem the mortgage in Jeth 1278 fasli, the relation between the parties continued to be that of the mortgagor and the mortgagee, and in the absence of any clear stipulation to, the contrary to be found in the mortgage-deed, it must be presumed that relation continued on the very terms on which that relation came into existence at the time of the execution of the mortgage. One of these terms was that the money advanced by the mortgagee was to carry interest at a certain rate. In the absence of anything to the contrary it cannot be presumed that the parties intended that the debt advanced by the mortgagee should cease to carry interest after a default was made by the mortgagor in discharging the mortgage debt. The ordinary presumption is that a creditor, who has advanced a debt on interest intends that debt to carry interest till the same is paid off. To hold that the mortgage-debt ceased to carry interest after Jeth 1278 fasli, will be to insert in the mortgage-deed certain terms which are not there. The reason assigned by the learned Judge for disallowing post diem interest is one that does not appeal to me. It was nobody’s case that the interest stipulated by the parties in 1869 was penal. The rights of the parties to a mortgage transaction must be governed and controlled by the terms of the mortgage-deed. In my judgment there was no equity in favour of the plaintiff entitling him to claim redemption of the mortgage without paying the interest after 1278 fasli. It was no fault of the mortgagee, if the interest went on accumulating because of the default of the mortgagor to pay the debt, which he could have and was bound to pay long before the institution of the suit.

6. For the reasons given above, in my judgment, the decision of the trial Court was correct and ought to be restored.

7. The learned District Judge in support of the view taken by him has referred to the case of Balwant Singh v. Gayan Singh [1913] 35 All. 534. As against that decision the learned Counsel for the appellant has relied on the case of Mahadeo Prasad v. Dhiraj Singh A.I.R. 1923 All. 7. The latter case, in my opinion, cannot be distinguished from the case that I have to decide. In that case, as in the present, there was no express stipulation for payment of post diem interest and in that case, as in the present, there was a stipulation that, on failure of the payment of the mortgage-debt at the stipulated time by the mortgagor the mortgagee will become the absolute owner of the property. There as in the present case, the mortgage was a mortgage by conditional sale and as such, the decision of the present appeal must be governed by the decision in the case of Mahadeo Prasad v. Dhiraj Singh A.I.R. 1923 All. 7. In the first place, it appears to me that the decision in the case of Balwant Singh v. Gayan Singh [1913] 35 All. 534 was limited and confined to the particular terms of the deed, that the Court had to consider in that case, and even if it be regarded that the view taken in that case is at variance with the view taken in the case of Mahadeo Prasad v. Dhiraj Singh A.I.R. 1923 All. 7, I think I am justified in following the other Division Bench ruling of this Court and this I do.

8. The result is that I allow the appeal, set aside the decree of the lower appellate Court and restore the decree of the Court of first instance with costs including in this Court fees on the higher scale.

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